Z E N I T H M I N E R A L S L I M I T E D
A N N U A L R E P O R T 2 0 2 0
ABN: 96 119 397 938
ASX:ZNC
Level 2 / 33 Ord Street
West Perth Western Australia
Phone: +61 8 9226 1110
Email: info@zenithminerals.com.au
www.zenithminerals.com.au
ZENITH MINERALS LIMITED
(ABN 96 119 397 938)
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2020
TABLE OF CONTENTS
Corporate Information .................................................................................................................................... 1
Chairman’s Report ......................................................................................................................................... 2
Review of Operations .................................................................................................................................... 3
Directors’ Report .......................................................................................................................................... 26
Auditors Independence Declaration ............................................................................................................ 41
Consolidated Financial Statements ............................................................................................................. 42
Consolidated Statement of Profit or Loss and Other Comprehensive Income .............................. 42
Consolidated Statement of Financial Position ................................................................................ 43
Consolidated Statement of Changes in Equity ............................................................................... 44
Consolidated Statement of Cash Flows ......................................................................................... 45
Notes to the Consolidated Financial Statements ........................................................................... 46
Directors’ Declaration .................................................................................................................................. 80
Independent Audit Report............................................................................................................................ 81
Corporate Governance Statement .............................................................................................................. 87
Additional Shareholder Information ............................................................................................................. 88
Interest in Mining Tenement ........................................................................................................................ 90
CORPORATE INFORMATION
DIRECTORS
Rodney M Joyce (Non-Executive Chairman)
Michael J Clifford (Managing Director)
Stanley A Macdonald (Non-Executive Director)
Julian D Goldsworthy (Non-Executive Director)
Graham D Riley (Non-Executive Director)
Peter J Bird (Non-Executive Director)
COMPANY SECRETARY
Melinda Nelmes
AUSTRALIAN BUSINESS NUMBER
96 119 397 938
REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS
2nd Floor, 33 Ord Street
WEST PERTH WA 6005
PO Box 1426
WEST PERTH WA 6872
Telephone: +61 (0)8 9226 1110
Email: info@zenithminerals.com.au
Website: www.zenithminerals.com.au
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SYDNEY NSW 2000
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SYDNEY NSW 2001
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WEST PERTH WA 6005
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SOLICITORS
Allion Partners
Level 9/ 863 Hay Street
PERTH WA 6000
Telephone: +61 (0)8 9216 7100
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BANKERS
ANZ
1275 Hay Street
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SECURITIES EXCHANGE LISTING
Australian Securities Exchange
Home Exchange: Perth, Western Australia
Code: ZNC
1
CHAIRMAN’S REPORT
Zenith Minerals Limited
Dear fellow shareholders,
The Company has worked hard in the past year to re-invigorate its exploration portfolio and refocus on gold and
base metals as our core commodities. Challenging times with the COVID19 pandemic restricting inter and
intrastate movements have complicated our efforts to accelerate activity, however our exploration team deserve
great credit for navigating their way through the border closures and maintaining almost constant (and
successful) field activity in Western Australia and Queensland.
The highlight of the year was the discovery of potentially significant gold mineralisation at the Company’s 100%
owned Red Mountain project in Queensland. Our maiden drill program late in the financial year returned several
high-grade gold intersections, and aggressive follow up drilling has continued to suggest a notable greenfields
discovery. At the 100% owned Develin Creek project, where we have a current JORC Mineral Resource of 2.57
million tonnes of massive copper-zinc-gold-silver sulphides, we have generated a new target for drilling, south
of the known deposits. We also announced encouraging initial surface sampling from the new Flanagans gold-
copper project, further enhancing our Queensland project pipeline.
The main focus of our exploration in Western Australia continued to be the 100% owned Split Rocks project,
where Zenith holds a large prospective landholding in a known productive gold belt, with multi-million ounce
deposits along strike, and close to the significant Earl Grey lithium pegmatite deposit.
Multiple drill programs completed by the Company during the year at Split Rocks returned numerous high-grade
gold drill results beneath and along strike of historic workings and beneath the operating Dulcie gold heap leach
mine, where Zenith holds subsurface rights.
Two phases of partner funded drilling at the Earaheedy zinc project in Western Australia reported several zones
of higher grade zinc mineralisation, with further drilling scheduled for late 2020, and other activity funded by
partners, including at the Kavaklitepe gold project in Turkey, is anticipated in coming months, as outlined in the
Managing Director’s Review of Operations overleaf.
We continue to focus on maintaining a high level of targeted exploration, giving shareholders upside exposure
to opportunities generated in-house in our chosen commodities, while protecting the Company’s tight capital
structure, at times by attracting 3rd party funding. Post year end we announced the acquisition of another drill-
ready gold project in NSW (Jackadgery) which further enhances our project book. We generated several other
targets during the year that were on-sold to the benefit of shareholders (Wyoming Rare Earths and Fraser
Range Nickel).
On behalf of the Board I again thank Mick Clifford and his small and hard-working management, technical and
administrative team for their efforts.
In closing, I welcome Peter Bird to the Zenith Board and the Chairman’s role. Peter joined the Board in March
2020 and has been elected as my replacement as Chairman effective 30 September 2020. Peter brings great
experience and technical, commercial and corporate skills and has significantly enhanced our Board capabilities.
Rodney (Mike) Joyce
Chairman
25 September 2020
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Zenith Minerals Limited
REVIEW OF OPERATIONS
FOR THE YEAR ENDING 30th JUNE 2020
PROJECT HIGHLIGHTS
Core Projects
Maiden drill program at Red Mountain Gold Project, Queensland (ZNC 100%)
returned high-grade near surface gold mineralisation including: 13m @ 8.0 g/t Au
from surface. Follow-up drilling recommenced post year end.
18 high-quality gold drill targets outlined on the north eastern portion of Zenith’s
Split Rocks Project Western Australia (ZNC 100%). Drill testing commenced
immediately following the reporting year with high-grade gold mineralisation
intersected at 4 of the 9 prospect areas tested so far. Results included: 32m @ 9.4
g/t Au, including 9m @ 31.4 g/t Au.
Develin Creek Copper-Zinc Project Queensland (ZNC 100%) – sampling returned
high-grade copper (7.58% Cu) at surface defining the new Snook copper prospect,
30km south of current defined polymetallic JORC resources. Follow-up sampling
completed post year end define new drill target for testing.
Post year end a new gold project in New South Wales was secured by Zenith under
an option arrangement, ZNC earning 90%. The Jackadgery Gold Project contains
a “walk-up” drill target. Historic surface trench sampling returned: 160m @ 1.2
g/t Au, with higher grade intervals, including 5m @ 18.0 g/t Au and 5m @ 7.1 g/t
Au. Drill testing planned.
Encouraging first pass geochemical results from new Flanagans Gold Project,
Queensland (ZNC 100%).
Joint Ventures
Discovery of shallow, flat-lying sandstone hosted zinc-lead-silver mineralisation
at Earaheedy JV Western Australia in 2 prospects 10km apart. Results include:
11m @ 4.13% Zn+Pb, 12.8 g/t Ag from 61m
Drilling at the Kavaklitepe gold project in Turkey (38 RC holes for 3,700m)
returned high grade gold, including 20m @ 15.6 g/t Au, 44m @ 1.9g/t Au and 36m
@ 2.1 g/t Au.
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Zenith Minerals Limited
CORPORATE HIGHLIGHTS
Zenith raised $5.1 Million in a heavily oversubscribed placement in July 2020 to
accelerate exploration with focus on its core gold projects
The Company continues to manage its exploration activities based on COVID-19
advice from Federal and Government agencies.
At year end the Company held 4,349,947 ASX:RTR shares valued at $630,742, that
were received as part of consideration under the Earaheedy Zinc joint venture
transaction.
The Company divested its 100% owned Mt Alexander magnetite iron project
located in Western Australia for $250,000 and will receive ten annual payments
of $250,000 each (total $2.5 million) once the project reaches commercial
production, for a total consideration of $2.75 million.
Post year end the Company divested its 100% owned Laramie REE project to dedicated
American REE explorer American Rare Earths Limited (ASX:ARR).
SUMMARY OF ACTIVITIES AND RESULTS
Zenith Minerals has accumulated an extensive project portfolio broadly subdivided as follows:
Gold
Copper-Zinc
JV’s
Split Rocks
100%
Develin Creek
100%
Gold, polymetallic
& battery minerals
Red Mountain
100%
Flanagans
100%
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REVIEW OF OPERATIONS
Zenith Minerals Limited
Maiden drill program
returned high-grade near
surface gold
mineralisation including:
13m @ 8.0 g/t Au from
surface.
Follow-up drilling
recommenced July 2020.
CORE PROJECTS - HIGHLIGHTS
Red Mountain Gold – Queensland (ZNC 100%)
Zenith’s maiden 10 RC hole drill program (780 metres) at the Red Mountain Gold
Project returned near surface high-grade gold results as announced to the ASX on
the 17th June 2020 with subsequent 1m resamples announced post year end 3rd
August 2020. Results included:
• 13m @ 8.0 g/t Au incl 6m @ 16.7 g/t Au from surface;
• 5m @ 3.5 g/t Au incl 2m @ 8.0 g/t Au from 64 m depth;
• 12m @ 1.0 g/t Au from 42m depth incl 4m @ 2.1 g/t Au from 50 m depth,
within broader mineralised interval of 56m @ 0.4 g/t Au from 6m depth.
The initial drill program was considered a significant success with highly
encouraging gold results returned from only a portion of a larger target area. Drilling
tested only 250m of strike of a 1200m long high-order gold anomaly with surface
soil values including: 2.2g/t Au, 1.6 g/t Au, 0.56g/t Au and 0.33 g/t Au and gold in
rocks to 2.0 g/t Au & 114 g/t Ag;
Mineralisation at Red Mountain is considered by Zenith to be analogous to known
gold deposits in Queensland. Evidence includes a zoned system with geochemistry
like that documented at third party owned Queensland gold deposits such as Mt
Wright which is located 65km east of Charters Towers and the nearby Mount
Rawdon Gold Mine.
Planned Activities
A drill rig has now been made available to Zenith on a full-time basis and pending
positive follow-up assay results the rig will work a continuous roster at Red Mountain
over the coming months. Initial follow-up drill lines are shown on Figure 2 and
dependant on results are likely to be expanded to test the full extent of targets.
Drilling recommenced post-year end (refer to ASX Announcement 14th July 2020).
Split Rocks Gold Project – WA (ZNC 100%)
RC drilling
(16 holes)
confirmed bedrock gold
beneath
mineralisation
large
gold
surface
anomaly defined by the
gold
laterite
Dulcie
resources
In early 2020 a 16-hole RC drill program of approximately 2000m successfully
confirmed bedrock gold targets beneath the currently operating Dulcie Heap Leach
Gold Project (DHLGO) - held by a 3rd party. As previously reported gold
mineralisation was successfully intersected in 12 of Zenith’s initial 16 wide spaced
drill holes (ASX release 28th October 2019). Results included:
ZDRC022: 11m @ 2.08 g/t Au from 59m depth, incl. 6m @ 3.32 g/t Au and
ZDRC020: 5m @ 3.23 g/t Au from 8m depth,
ZDRC021: 5m @ 2.04 g/t Au from 34m depth
A major targeting exercise on the north eastern portion of Zenith’s 100% owned
Split Rocks project outlined 18 high-quality gold drill targets that warrant testing.
Zenith’s targeting study identified several, large, high-order geochemical anomalies
(defined by historic auger sampling maximum value 300ppb Au and a mix of Zenith
& historic shallow RAB & aircore drilling) that:
1. have never been or were poorly drill tested,
2. extend over 18km of strike.
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Split Rocks Gold Project – WA (ZNC 100%) (cont.)
3. The anomalies are in several cases coincident with major fault structures and
geological contacts that contain significant gold mineralisation along strike.
18 high-quality gold target
defined by Zenith over
18km of strike.
Post year end an 81-hole (3,604m) aircore drill program was completed testing 9
out of 18 targets defined over the 19km of strike.
Drilling defined high-grade gold at four separate target areas, including:
Initial drill results provide
significant
encouragement with high-
grade gold at 4 prospect
areas
Dulcie North: 32m @ 9.4 g/t Au, incl 9m @ 31.4 g/t Au with the highest
individual 1m sample returning 199.2 g/t Au.
Dulcie Laterite Pit:
o 2m @ 14.5 g/t Au, incl. 1m @ 20.8 g/t Au,
o 18m @ 2.0 g/t Au (EOH) incl. 1m @ 23.7 g/t Au &
o 2m @ 4.7 g/t Au incl. 1m @ 8.3 g/t Au (zone open to north, south, and down
dip to west).
Testing
September 2020.
recommenced
New gold project secured
in NSW.
160m @ 1.2 g/t Au in
historic trenching.
Drilling planned.
Encouraging
reconnaissance results
first pass
Estrela Prospect: 2m @ 9.8 g/t Au (open to north & south)
Dulcie Far North: 5m @ 5.6 g/t Au incl. 4m @ 6.8 g/t Au
Multiple targets remain open in several directions and require follow-up drill testing
to define the limits of gold mineralisation.
Planned Programs
Immediately post year end, a 120-hole follow-up aircore program recommenced at
Split Rocks.
Jackadgery Gold – New South Wales (ZNC 100%)
Post year end the new gold project in New South Wales secured by Zenith under
option arrangement (ASX Release 10th September 2020).
The Jackadgery Gold Project contains a “walk-up” drill target. Historic surface
trench sampling returned:
160m @ 1.2 g/t Au, with higher grade intervals, including
5m @ 18.0 g/t Au and 5m @ 7.1 g/t Au.
Zenith will be the first to test beneath the surface trench area with maiden drill
program. There has been no prior drilling anywhere on the property. Drilling is
planned to commence in the last quarter of 2020.
The Option arrangement requirement is to complete a minimum of a 300m drill
program and at Zenith’s election, make a one-off cash payment of $100,000 to
secure 90% interest in the project.
Flanagans Gold – Queensland (ZNC 100%)
Initial reconnaissance sampling by Zenith confirms high-grade gold, silver and
copper at surface at the Flanagans prospect and nearby Great Blackall copper
prospect. Rock sample results included:
Flanagans – gold to 5.3 g/t Au, silver to 100 g/t Ag and copper to 8.0% Cu
Great Blackall – gold to 3.4 g/t Au, silver to 273 g/t Ag and copper to 13.9%
Cu
Follow-up sampling
commenced
Surface sampling confirms the historically reported local high tenor of gold, silver
and copper mineralisation at both the Flanagans and Great Blackall prospects and
endorses requirement for further exploration activity.
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REVIEW OF OPERATIONS
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Flanagans Gold – Queensland (ZNC 100%) (cont.)
Planned Programs
Further work including additional sampling, geological mapping and possible
geophysical surveys is required to determine the significance of the surface
geochemical samples at Flanagans. The mineralised zone is poorly exposed with
outcrop dominated by surrounding relatively unaltered diorite. Follow-up field work
commenced late in the year.
Develin Creek Copper-Zinc Queensland (ZNC100%)
New copper prospect (Snook) identified 30km south of Zenith’s current JORC
resources. Prospect identified during regional systematic soil sampling campaign.
New
copper prospect
defined (Snook Prospect)
Initial single rock sample from malachite rich (copper-oxide) surface exposure
returned very high copper 7.58% Cu.
Base metal and trace elements of 7.58% copper, 0.48g/t gold, 7.8g/t silver, 0.13%
arsenic, 0.16% lead and 0.3% zinc are like those in rock samples taken at surface
above the known copper-zinc resources.
First
pass
returned 7.58% copper
sampling
Rock geochemistry signature typical of volcanic hosted massive sulphides (VHMS).
Geological reconnaissance mapping and soil sampling outline a 25m wide zone of
gossanous sedimentary (bleached and sheared) rocks over 150m of strike that
occur as discrete units enclosed within basalt that are part of the prospective
Rookwood Volcanics host sequence.
Robust
requires drill testing
target
now
Planned Programs
A robust drill target has been defined at the Snook Copper Prospect – drilling
planned for Oct-Nov 2020.
Earaheedy Zinc JV – Western Australia (ZNC 25% free carry to
BFS)
RC drilling completed by
returns
JV partner –
further encouraging near
surface zinc-lead results
Zenith Minerals (ASX: ZNC) joint venture partner Rumble Resources (ASX: RTR)
announced that RC drilling has confirmed continuity of width and higher-grade Zn–
Pb with Ag at the Chinook and Magazine prospects. The prospects are two shallow,
flat-lying, large-scale unconformity related sandstone hosted Zn-Pb-Ag discoveries
made in January 2020.
Results included: 4m @ 7.36% Zn + Pb at Magazine and 4m @ 5.44% Zn +Pb at
Chinook.
the Zn-Pb-Ag
mineralisation completely open.
Magazine and Chinook are 10.5km apart with
CORPORATE
Zenith announced immediately post year end (7th July 2020), that it had raised $5.1 million, before costs
(“Placement”), to accelerate an active exploration program with a focus on its core gold projects.
The Placement received significant support from new and existing institutional and sophisticated investors, and new
shares were issued under the Company’s available ASX Listing Rule 7.1 and 7.1A placement capacity.
A total of 51 million new fully paid ordinary shares in the Company (“New Shares”) were issued under the Placement,
ranking pari passu with existing fully paid ordinary shares in the Company. The Placement issue price of $0.10 per
New Share represented a 13.0% discount to the last traded price (on 2 July 2020) and a 13.8% discount to the 15-
day VWAP. Settlement was completed on the 13rd July 2020.
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REVIEW OF OPERATIONS
Zenith Minerals Limited
COVID-19 Impact Update
In relation to COVID-19 Zenith’s Board is mindful of the significant impact the virus is having on the community and
is continuing to assess the potential risks associated with its activities. Zenith’s projects are in remote country areas
or on grazing properties where Zenith’s crew are geographically isolated.
The Company continues to act on advice provided by the Federal and State Governments with the health and safety
of Zenith’s crew, contractors, and local stakeholders a priority. Zenith has in place a COVID-19 site health
management plan and requires that all its field crews comply with the requirements of that plan. In addition, the
Company is managing projects across state borders and is ensuring it complies with both Federal and State based
travel and border restrictions by employing, where available local staff and using locally based contractors,
consultants.
Most Zenith office-based personnel in Western Australia have returned to work as normal.
BACKGROUND ON CORE PROJECTS
The Company is focused
on exploration &
evaluation of 4 gold
projects and 1 copper-zinc
project, in Australia.
Project highlights and
activities for the year for
these 5 projects are
included in the preceding
section of this report.
RED MOUNTAIN GOLD-SILVER PROJECT – Queensland (Zenith 100%)
Background on Red Mountain Gold Project
A zone of surface gold and silver mineralisation was discovered by Zenith at Red Mountain in a previously
unrecognised felsic volcanic breccia complex comprising flow banded rhyolite radial dykes, rhyolite ring breccia as well
as granite and gabbro breccias, first identified by Zenith’s field team during initial sampling which returned rock chip
results up to 0.69 g/t gold and 114g/t silver.
September 2019
Further field work by Zenith to follow-up these results returned highly encouraging gold and silver rock chip sample
results up to 2.01 g/t gold and 52.5 g/t silver about 800 metres north of the best results from initial sampling. In addition,
systematic geochemical sampling outlined a large 2km by 1.5km zoned soil anomaly with peak soil gold result of 2.2
g/t Au, refer to ZNC ASX release 24 Sep 2019.
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REVIEW OF OPERATIONS
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Background on Red Mountain Gold Project (cont.)
October 2019
A geophysical survey completed at Red Mountain defined multiple medium strength chargeability (10mv/v)
anomalies, likely to be caused by the presence of sub-surface disseminated sulphides or clay alteration zones,
coincident with the margins of the felsic volcanic breccia complex as announced to the ASX on 25 Oct 2019
(Figure 2).
November 2019
An infill geochemical program completed to define the limits of the high-grade western gold zone outlined a robust
drill target. High-grade soil results from the follow-up sampling up to 1300ppb Au (1.3 g/t Au) supported previous
results of 2210 ppb Au (2.2g/t Au) 1600ppb Au, 550ppb Au and 320ppb Au define a 450m x 50m >100ppb Au
gold soil anomaly, with the southern end of the anomaly grading >500ppb (0.5 g/t Au) over 150m of strike (ZNC
ASX release 25th Nov 2019).
June & August 2020
As outlined in the post year end ASX Release 17th June 2020, the maiden drill program was designed to test
several different geological units and IP geophysical responses.
The initial drill program was a significant success with highly encouraging gold results returned from only a portion
of a larger target area (ASX Release 3rd August 2020). Results included:
13m @ 8.0 g/t Au & 3.2 g/t Ag from surface, including 6m @ 16.7 g/t Au & 5.3g/t Ag.
5m @ 3.5 g/t Au & 54.3 g/t Ag from 64m, including 2m @ 8.0 g/t Au & 109.4 g/t Ag.
Drilling tested 250m of strike of a 1200m long high-order gold anomaly with surface soil values including: 2.2g/t
Au, 1.6 g/t Au, 0.56g/t Au and 0.33 g/t Au and gold in rock chips to 2.0 g/t Au & 114 g/t Ag.
The maiden drill program was designed to test several different geological units and IP geophysical responses.
Key points included:
Gold mineralisation occurs in sericite altered, pyritic and quartz veined granodiorite, granite, diorite and
dolerite host rocks on the western margin of the newly recognised felsic volcanic breccia complex.
Gold mineralisation locally occurs coincident with IP geophysical chargeability highs providing Zenith with a
tool to guide future follow-up drilling. The IP chargeability anomaly extends for approximately 1500m around
the volcanic breccia pipe margin and to date has only been tested by 2 drill holes (Figure 3).
Mineralisation at Red Mountain is considered by Zenith to be analogous to known gold deposits in
Queensland. Evidence includes a zoned system with geochemistry like that documented at third party owned
Queensland gold deposits such as Mt Wright (1.1 Moz Au) which is located 65km east of Charters Towers
and the nearby Mount Rawdon Gold Mine (2.5 Moz Au).
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Figure 1: Red Mountain Project – Location Map
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Figure 2: Red Mountain Plan Showing Initial Drill Results and Planned Follow-up Holes
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Figure 3: Red Mountain Plan Showing Drill Targets for Testing
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SPLIT ROCKS GOLD PROJECT – Western Australia (Zenith 100%)
Background on Split Rocks Project - Gold
Zenith’s Split Rocks project is located within the Southern Cross region in the Forrestania greenstone belt,
approximately halfway between Perth and Kalgoorlie. Several very large current and formerly operated gold mines
located north and south along strike from Zenith’s project area attest to the regional gold endowment of this area.
A major targeting exercise by the Company’s geological team during the year has identified 18 high-quality gold
drill targets in the north eastern sector of the Split Rocks project area (Figures 4 & 5). The study involved integrating
geological, geophysical and geochemical data sets from Zenith’s exploration activities as well as historic exploration
programs that were generally conducted more than 20 years ago, mainly for nickel, when the gold price was
significantly lower than today.
Zenith’s targeting study has identified several, large, high-order geochemical anomalies (defined by historic auger
sampling maximum value 300ppb Au and a mix of Zenith & historic shallow RAB & aircore drilling) that:
1. have never been or were poorly drill tested,
2. extend over 18km of strike.
3.
the anomalies are in several cases coincident with major fault structures and geological contacts that
contain significant gold mineralisation along strike.
Of these 18 targets, 14 required first pass aircore drill testing, whilst a further 4 targets (12 in total) require follow-
up RC drilling to test poorly explored open-ended gold zones such as 2m @ 6.5 g/t Au (end of hole).
Figure 4- Split Rocks Project Location Map Showing Zenith tenements, DHLGO Prospect and Regional Gold
Endowment
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Background on Split Rocks Project – Gold (cont.)
*The Company has an exclusive right to explore the Dulcie Heap Leach Gold Operation (DHLGO) project for
bedrock gold mineralisation beneath the large laterite rich gold cap currently being mined and treated on leases
located contiguous with Zenith’s Split Rocks project licences, located in the Forrestania greenstone belt, Western
Australia (Figure 3).
Zenith completed 2 phases of RC drilling (16 holes for ~2000m) at the Dulcie prospect early in 2020 (ZNC ASX
release 14th Feb 2020) demonstrating that one of the central western Dulcie gold mineralised structures remains
open along strike, particularly to the south. Mineralisation is hosted within quartz veined and sericite altered mafic
volcanic rocks. The results included:
ZDRC022: 10m @ 2.2 g/t Au from 59m depth, incl. 6m @ 3.32 g/t Au and
ZDRC020: 5m @ 3.23 g/t Au from 8m depth.
An 81-hole (3,604m) aircore drill program completed post year end (5th Aug 2020) commenced testing the 18
targets outlined in Zenith’s review. The program defined high-grade gold at four separate target areas (refer to
Figure 5), including:
Dulcie North: 32m @ 9.4 g/t Au, incl 9m @ 31.4 g/t Au with the highest individual 1m sample returning
199.2 g/t Au.
Dulcie Laterite Pit:
o
o
o
2m @ 14.5 g/t Au, incl. 1m @ 20.8 g/t Au,
18m @ 2.0 g/t Au (EOH) incl. 1m @ 23.7 g/t Au &
2m @ 4.7 g/t Au incl. 1m @ 8.3 g/t Au (zone open to north, south, and down dip to west).
Estrela Prospect: 2m @ 9.8 g/t Au (open to north & south)
Dulcie Far North: 5m @ 5.6 g/t Au incl. 4m @ 6.8 g/t Au
Multiple targets remain open in several directions and require follow-up drill testing to define the limits of gold
mineralisation.
Planned Programs
Post year end (September 2020) a 120-hole follow-up aircore program recommenced at Split Rocks.
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Figure 5: Split Rocks Project Gold Targets and Significant Aircore Drill Results (yellow captions) and Areas of
Planned Drilling
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SPLIT ROCKS LITHIUM
Activities During the Year
Re-assaying by Zenith of historic drill pulps for lithium from drilling conducted by CRA in 1987-88 that intersected
a thick flat-lying pegmatite, has returned strongly anomalous lithium.
Drilling by CRA in 1987-88 reported very thick shallow dipping pegmatite intersections - up to 76m downhole
thickness (estimated by Zenith as ~65m true width) in 3 consecutive drill holes on one section over 280m width
within one of Zenith’s newly granted exploration licences. The nearest effective drilling to the south is 590m away
and one RC hole on that section also intersected pegmatite over 8m true width. The shallow dipping pegmatite
body remains open to the north. The pegmatite was not analysed for lithium at the time of drilling (WAMEX Open
file reports a29425 and a26162).
Zenith’s re-assaying indicates that high lithium concentrations occur towards the base of the 50 – 65m thick
pegmatite in all 3 consecutive drill holes. New results include: 34m @ 0.12% Li2O, 23m @ 0.09% Li2O and 34m
@ 0.07% Li2O. As future gold exploration progresses in this area, Zenith will consider a step out drill test of this
lithium target.
Background on Split Rocks Project – Lithium
In addition to the gold targeting exercise, Zenith has also been systematically exploring its 100% owned Split Rocks
project with landholdings of approximately 600 sqkm in the Forrestania greenstone belt for lithium. This emerging
lithium district is host to SQM-Kidman’s Mt Holland/Earl Grey lithium deposit containing 189Mt @ 1.5% Li2O
(KDR:ASX Release 19th Mar 2018).
JACKADGERY GOLD PROJECT – New South Wales (Zenith earning 90%)
Jackadgery Project Background
The privately owned Jackadgery gold project which is located east of Glen Innes in northern New South Wales
(Figure 6) was secured post year end (ASX Release (9th September 2020).
Historic workings at Jackadgery comprise several shallow shafts sunk in the 1870’s and two later, large areas of
surface gold sluicing. These historic gold workings occur in a sequence of Carboniferous-Permian greywacke and
siltstone intruded by small intermediate sub-volcanic trachyte to micro-monzonite of likely Permian or Triassic age.
Quartz veining at surface is relatively widespread with veins dipping generally eastward at 400 to 600. Sulphides
comprise almost entirely pyrite-arsenopyrite +/- pyrrhotite.
The last significant exploration activity was carried out in 1983-85 by Kennecott and Southern Goldfields Ltd.
Activity included a 220m long backhoe trench into weathered quartz veined bedrock across the main (northern)
area of alluvial gold sluicing, which averaged 1.2 g/t Au across the interval 0-160m (with 5m composite assay
intervals ranging up to 18.0 g/t and 7.1 g/t Au). Sample assay repeats of higher-grade zones indicate some degree
of variability in results which is commonly associated with the presence of coarse gold.
In addition, chip channel samples taken across individual quartz veins in an area (20m x 20m) immediately north
west of the trench returned an average of 5.6 g/t Au from 6 samples, whilst sampling of veins in a second area
(40m x 50m) south east of the trench averaged 0.8 g/t Au from 8 samples.
More recent exploration activity by the vendors included an induced polarisation (IP) geophysical survey (3 lines)
over the trench area that defined a sub-surface chargeability high – resistivity high zone coincident with the area of
alluvial gold workings and gold rich quartz stockwork veins identified in the trench.
From the available data the style of gold mineralisation is consistent with intrusion related gold systems. An existing
drill permit will be revised to allow for an initial fence of drill holes to effectively test beneath the wide zone of near
surface gold mineralisation outlined by the historic backhoe trench and the surface rock chip channel samples.
This drill program is anticipated to commence in the 4th calendar quarter this year.
16
REVIEW OF OPERATIONS
Zenith Minerals Limited
Figure 6: Jackadgery Location Map, Geology Base & Regional Gold Endowment
FLANAGANS GOLD PROJECT – Queensland (Zenith 100%)
Flanagans Prospect Background
In April 2020, Zenith announced that it had secured a new 100% owned project in Queensland located only 70km
north east of its Red Mountain gold project. Based on historical exploration activity the Flanagans target is defined
as a poorly exposed 1.5km long by 180m wide zone of sporadic quartz veining hosted in diorite. Individual quartz
veins range in size from 1cm to 1m in width with common goethite boxwork after sulphides. The quartz veins have
been mapped in outcrop and in 6 shallow trenches and described as flat-lying to shallow NE dipping providing
potential for a vertically stacked quartz vein hosted gold mineralised system. Within this overall zone is a smaller
area of historic copper workings (Figure 7).
Previous sampling reported strong gold in rock chips results including: 20 g/t Au, 12.0 g/t Au, 11.5 g/t Au, 5.25 g/t
Au, 3.3 g/t Au, 3.2 g/t Au, 2.6 g/t Au and silver to 70 g/t Ag (QLD Mines Department open file reports cr12556,
cr17773 & cr30978).
17
REVIEW OF OPERATIONS
Zenith Minerals Limited
Flanagans Prospect Background (cont.)
Rock sampling by Zenith confirms the previously reported presence of high levels of gold-silver and copper in
quartz veins at surface with gold results up to 5.3 g/t Au, silver to 100 g/t Ag and copper to 8.0% Cu hosted within
diorite (ZNC ASX Release 22nd June 2020). Mapping showed sporadic outcrop of individual quartz veins at
surface whilst veins observed in a poorly exposed historic 1m deep prospecting pit appear as a carbonate-quartz
stockwork returning 1.15 g/t Au. The previously recorded shallow trenches dug in the 1980s were not located. In
addition, two trial lines of soil sampling were completed along the strike of the Flanagans prospect area, with
samples returning a maximum value of 1.5 g/t Au (1500ppb Au). Although returning several highly anomalous
results, Zenith’s soil sampling correlates poorly spatially with very high historic soil sample results reported by
previous explorers.
Figure 7: Flanagans Gold Target – Geochemical Sampling Results
18
REVIEW OF OPERATIONS
Zenith Minerals Limited
DEVELIN CREEK COPPER-ZINC PROJECT – Queensland (Zenith 100%)
Develin Creek Project Background
The Devein Creek project contains a VMS copper-zinc deposit with an Inferred Mineral Resource (JORC 2012)
of: 2.57Mt @ 1.76% copper, 2.01% zinc, 0.24g/t gold and 9.6g/t silver (2.62% CuEq) released to ASX on the 15th
February 2015 (Figure 8). Upside to resource grades are considered likely with Zenith RC hole twinning previous
1993 percussion hole returning significantly higher copper, zinc, gold and silver grades (300% to 700% higher).
Initial metallurgical testwork results show positive first stage “rougher” recoveries of 90%. The Company holds
exploration permits that cover the highly prospective host rocks over 50km north – south.
Figure 8: Develin Creek Prospects and Geochemical Anomalies
19
REVIEW OF OPERATIONS
Zenith Minerals Limited
LARAMIE RARE EARTH PROJECT – WYOMING USA (Zenith 100%)
Activities During the Year
To continue to focus on its core gold projects in Australia, Zenith announced the divestment of its interest in the
Laramie Rare Earths Project, post year end (refer to ASX Release 6th August 2020).
Background on Laramie REE Project
As announced to the ASX on the 17th Oct 2019, initial rock grab sampling and mapping by Zenith in three key
areas 2 to 3km apart returned up to 0.60% total rare earth oxides (TREO). Follow-up sampling included nine
systematic rock chip sample traverses returned consistent, strong REE mineralisation along their entire lengths
(ASX Release 11th Nov 2019), including: 80m @ 0.40% TREO, 60m @ 0.39% TREO, 60m @ 0.37% TREO, 137m
@ 0.37% TREO, 332m @ 0.26% TREO.
PARTNERED PROJECTS
The Company has continued to implement its strategy
of being an exploration project generator. Projects are
either advanced by the Company’s experienced team
techniques or by
applying
financial
the
partners which have
capability, depending on how the Board believes
shareholders’ best interests are served.
innovative exploration
technical and
Increased Spending
Increasing Chance of Success
Sharing Risk
Current joint ventures where partners are funding
exploration include:
Earaheedy Zinc – Australia (Rumble)
Kavaklitepe Gold - Turkey (Teck affiliate)
Vivash Iron – Australia (Rio Tinto Expl)
American Lithium (Bradda Head Ltd)
EARAHEEDY ZINC PROJECT – WA (Zenith 25% free carry to a BFS, ASX: RTR 75%)
Activities During the Year
Zenith Minerals (ASX: ZNC) joint venture partner Rumble Resources
(ASX: RTR) completed further RC drilling on the Earaheedy Project to
follow-up a large-scale (large tonnage), flat-lying, shallow sandstone
hosted Zn–Pb discovery (refer to ZNC & RTR announcements dated 14th
April 2020 and 4th May 2020).
RC drilling has confirmed continuity of width and higher-grade Zn–Pb
with Ag at the Chinook and Magazine prospects. Results included: 4m @
7.36% Zn + Pb at Magazine and 4m @ 5.44% Zn +Pb at Chinook.
the Zn-Pb-Ag
Magazine and Chinook are 10.5km apart with
mineralisation completely open.
Planned Activities
Follow-up drilling planned for 4th calendar Quarter 2020.
20
Figure 8: Earaheedy & Vivash Project
Locations
REVIEW OF OPERATIONS
Zenith Minerals Limited
Planned Activities (cont.)
Background on Earaheedy Zinc Project
Zenith holds a 25% interest in the Earaheedy Joint Venture with Rumble, with Zenith’s interest free carried until
completion of a Bankable Feasibility Study. In addition, Zenith currently retains a total of 4.4M RTR shares
received as consideration from Rumble.
Rumble outlined a shallow Exploration Target^ at the Earaheedy Project of 40Mt to 100Mt at 3.5% Zn-Pb to 4.5%
Zn-Pb based on recent drilling results, geological understanding of the mineralisation geometry, continuity of
mineralisation and regional geology, highlighting the potential for Earaheedy to be a world class Tier 1 base metal
province.
^The potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufficient exploration to
estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource. Refer
to further details on page 6 of the ZNC-RTR announcement dated 23rd January 2020.
KAVAKLITEPE GOLD PROJECT – TURKEY (ZENITH 23%)
Activities During the Year
A planned drilling program was put on hold due to COVID-19 Turkish government-imposed travel restrictions, with
a potential start date now likely to be September 2020.
Additional roadcut channel sampling was completed during the year within the existing surface soil sample
geochemical anomalies. Gold results from this new work are consistent with previous sampling.
Planned Activities
A program of 5 diamond drill holes (and 12 contingent holes) of approximately 300m depth each are planned to
be completed in 2020 to test for the potential of gold mineralization between the Kuzey Zone and Discovery Zone
beneath a sequence of interpreted flat-lying barren metavolcanics rocks. Zenith believes that if the proposed drill
program is successful in its aims then it could have a significant impact on the project’s potential.
Background on Kavaklitepe Gold Project
Exploration and evaluation of the Kavaklitepe gold project is managed by Teck Anadolu Madencilik Sanayi v.
Ticaret A.S. (“Teck”), a Turkish affiliate of Teck Resources Limited. Drilling to date on two prospect areas has
returned encouraging results. Kuzey Zone drill intersections include:
20m @ 15.6 g/t Au,
16m @ 4.7 g/t Au,
21m @ 3.29 g/t Au,
14m @ 6.09 g/t Au,
16m @ 4.7 g/t,
9m @ 5.2g/t and
7.8m @ 7.3g/t gold,
whilst continuous surface rock chip results include:
54.0m @ 3.33 g/t gold,
10m @ 12.2 g/t Au,
44m @ 3.37 g/t Au,
15m @ 10.10 g/t Au and 6.5m @ 5.18 g/t Au.
In addition, Discovery Zone drill results include: 8.0m @ 0.74 g/t Au, 8.0m @ 1.20 g/t Au and 8.0m @ 1.26 g/t Au.
21
REVIEW OF OPERATIONS
Zenith Minerals Limited
AMERICAN LITHIUM JOINT VENTURE
Activities During the Year
Nil this year.
Background on American Lithium JV
The American Lithium JV includes 5 separate
projects of varying styles including 1 x pegmatite, 2
salt lake brine targets, 1 x lithium clay JORC
resource and an oilfield lithium brine play (Figure 9).
The American Lithium Joint Venture includes a
US$5 million farm-in deal with a private company
controlled by prominent UK investor Jim Mellon
(Bradda Head Ltd) (ASX Release 7th March 2017) to jointly unlock the potential of Zenith’s USA and Mexican
lithium project portfolio.
Figure 9: American Lithium JV Project Locations
VIVASH GORGE IRON PROJECT – WA (ZENITH 100%, OPTION TO RTX)
Activities during the year
During the year RTX completed a 9-hole RC drill program totalling 588m to test for mineralised Brockman Iron
Formation at the Vivash Gorge Iron Project. One drill hole intersected 14m of detrital mineralisation grading
55.9%Fe whilst the best bedrock intersection within the Whaleback Shale Member returned 6m @ 56.3%Fe (ASX
Release 31st January 2020). A follow-up reconnaissance trip to inspect possible new Brockman and Marra
Mamba target areas on the tenement. The preliminary assessment has downgraded the potential for any
enrichment of the iron formations (to high grade iron ore) within these areas.
3D geological modelling work, incorporating the results from the drill program completed in the December 2019
(refer Dec 2019 yearly report), was completed.
Planned Activities
Post year end RTX advised it was not proceeding with an option on the property. Zenith is awaiting return of full
technical data to assess the projects potential.
Background on Vivash Gorge Iron Project
The Vivash Gorge Iron Project (exploration licence E47/3071) is situated approximately 80km west of Tom Price
in the Pilbara region of Western Australia. The project covers approximately 8km of strike of prospective Brockman
and Marra Mamba iron formations along trend of Rio Tinto Iron Ore’s Brockman 4 operating iron ore mine. An
initial drill program was completed on one target area in the December 2019 year.
WARATAH WELL LITHIUM-TANTALUM PROJECT – WA (Zenith 100%)
Activities During the Year
Native title heritage negotiations on hold due to COVID-19.
Background on Waratah Well
The Waratah Well project located in the mid-west of Western Australia contains a lithium-tantalum rich pegmatite
swarm extending over an area of approximately 3km x 2km. Zenith sampling has returned lithium up to 1.92%
Li2O and tantalum up to 1165ppm Ta2O5. Drilling is required to test subsurface potential.
22
REVIEW OF OPERATIONS
Zenith Minerals Limited
NEW OPPORTUNITIES
The Company advises that it is currently in ongoing and incomplete negotiations in connection with several
potential project acquisitions and disposals. This remains an essential generative value process. Project
generation is a core skill of the Company.
This work has included:
the renegotiation of its American Lithium JV in the USA. These discussions are ongoing, and no
agreement has been entered into, and it is currently unknown when or if agreements will be completed.
additionally, new tenure applications have recently been lodged in Queensland.
The Company will provide appropriate disclosure should negotiations and agreements be completed and new
tenure granted.
MINERAL RESOURCE STATEMENT
Mineral Resource Statement
Develin Creek Copper-Zinc-Gold-Silver Project Mineral Resource
There was no change to the Inferred Mineral Resource for the Develin Creek Copper-Zinc-Gold-Silver Projects
previously released to the ASX on the 15th February 2015.
Develin Creek Inferred Mineral Resource (JORC 2012) – February 2015
Deposit
Tonnes
Cu% Grade
Zn% Grade
Ag g/t Grade Au g/t Grade
SULPHIDE CITY
1,796,700
SCORPION
WINDOW
TOTAL
548,900
225,600
2,571,200
1.75
1.98
1.30
1.76
2.37
1.66
-
2.01
9.7
13.0
0.8
9.6
0.23
0.36
0.02
0.24
Red Lake Manganese Mineral Resource
There was no change to the Red Lake Inferred Mineral Resource for manganese previously released to the ASX
in August 2014.
Red Lake Manganese Mineral Resource Estimate as at August 2014
Classification
Reporting Cut-off
Grade
Tonnes
(Mt)
Mn % Fe % SiO2 % Al2O3 % P % S %
LOI
%
Inferred
25% Mn
20% Mn
15% Mn
10% Mn
0.2
0.5
1.1
1.4
30.0
14.1
13.8
25.1
16.1
17.0
20.8
19.0
17.7
20.5
19.1
20.8
7.9
8.9
9.3
9.6
0.24 0.03 12.1
0.25 0.06 11.9
0.24 0.17 11.5
0.26 0.19 11.4
Note: The CSA Mineral Resource was estimated within constraining wireframe solids based on the specified
nominal lower cut-off grade for Mn. The Mineral Resource is quoted from all blocks above the specified Mn cut-
off grade %. Differences may occur due to rounding.
23
REVIEW OF OPERATIONS
Zenith Minerals Limited
Mineral Resource Statement (cont.)
Lockeridge Manganese Mineral Resource
There was no change to the Lockeridge Inferred Mineral Resource for manganese previously released to the ASX
on the 15th April 2015.
Lockeridge Manganese Mineral Resource Estimate as at April 2015
Classification
Reporting Cut-off
Grade
Inferred
20% Mn
15% Mn
10% Mn
Tonnes (Mt) Mn % Fe % Si02% Al2O3 % P % S %
LOI
%
1.0
1.9
2.6
30.2
23.4
20.6
7.0
6.7
6.9
18.9
25.4
27.6
4.1
4.7
5.1
0.12 0.01 5.7
0.15 0.01 10.4
0.16 0.01 12.0
Note: The Mineral Resource was estimated within constraining wireframe solids based on the specified nominal
lower cut-off grade for Mn. The Mineral Resource is quoted from all blocks above the specified Mn cut-off grade
%. Differences may occur due to rounding.
Burro Creek East Mineral Resource
A maiden Inferred Mineral Resource of 42.6Mt @ 818ppm Li and 3.3% K was prepared by independent consulting
group SRK Consulting (UK) Limited in accordance with JORC 2012 guidelines for the near surface lithium clay
mineralisation at the Burro Creek East lithium prospect in Arizona USA, part of the American Lithium joint venture
with Bradda Head Limited (refer to ASX Release 12th August 2019).
Category
Tonnes
(Mt)
Measured
Indicated
-
-
Inferred
42.6
*Notes:
Mean Grade
Contained Metal
Li (ppm)
K (%)
-
-
818
-
-
3.3
Tonnes
LCE
-
-
Tonnes K
-
-
185,000
1,400,000
Mineral Resource statement prepared in accordance with JORC Code 2012 Edition.
Mineral Resources are reported as undiluted. No mining recovery has been applied.
SRK considers there to be reasonable prospects for economic extraction by completing a pit
optimisation and cut-off grade analysis.
Tonnages are reported in metric units.
Rounding as required by reporting guidelines may result in apparent summation differences
between tonnes, grade and contained metal content.
Conversion factor of Li metal to lithium carbonate (LCE) = 5.323
The Mineral Resource was estimated using a 300 ppm L lower cut-off grade. Lithium bearing clays are flat-lying
and near surface with intersections in excess of 20 metre thickness reported at +1000 ppm, illustrating potential
for coherent higher-grade zones.
The Burro Creek East zone is a very small portion of the total lithium clay prospective area held by the joint venture
partners.
Mt Alexander West Iron Mineral Resource
The Mt Alexander Project was sold during the previous year, refer to Zenith ASX release dated 4th June 2019.
24
REVIEW OF OPERATIONS
Zenith Minerals Limited
Mineral Resource Statement (cont.)
Mineral Resource Governance and Internal Controls
Zenith Minerals Limited ensures that the Mineral Resource estimates quoted are subject to governance
arrangements and internal controls. All the Company’s Mineral Resources have been estimated by independent
third-party competent persons or for selected inferred resources by suitably qualified and experienced Company
personnel. All resources have been subject to review by Zenith Minerals Limited technical staff and by a sub-
committee appointed by the Board of Directors.
The Company re-affirms that its Mineral Resources are reported in accordance with the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code) 2012 Edition.
COMPETENT PERSONS STATEMENTS
The information in this report that relates to Zenith Exploration Results and Exploration Targets is based on information
compiled by Mr Michael Clifford, who is a Member of the Australian Institute of Geoscientists and an employee of Zenith. Mr
Clifford has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and
to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Clifford consents to the inclusion in the
report of the matters based on his information in the form and context in which it appears.
The information in this Report that relates to in-situ Mineral Resources at the Develin Creek project is based on information
compiled by Ms Fleur Muller an employee of Geostat Services Pty Ltd. Ms Muller takes overall responsibility for the Report.
She is a Member of the AusIMM and has sufficient experience, which is relevant to the style of mineralisation and type of
deposit under consideration, and to the activity she is undertaking, to qualify as a Competent Person in terms of the
‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012 Edition).
Ms Muller consents to the inclusion in the report of the matters based on her information in the form and context in which it
appears.
The information in this report that relates to the Mineral Resource Estimate and Exploration Target at Burro Creek East is
based on information compiled by Martin Pittuck, who is a Chartered Engineer with the Institute of Materials Minerals and
Mining and an employee of SRK Consulting (UK) Limited. Mr Pittuck has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves'. Mr Pittuck consents to the inclusion of excerpts from the SRK report in this ASX release in the form and
context in which they appear.
25
DIRECTOR’S REPORT
Zenith Minerals Limited
The Directors present their report, together with the financial statements of the consolidated entity, being Zenith
Minerals Limited and subsidiaries ("the Consolidated Entity") it controlled at the end of, or during, the year ended
30 June 2020, and the auditors' report thereon.
1 . DIRECT ORS
The Directors of the Consolidated Entity at any time during or since the end of the financial year and up to the date
of this report, unless otherwise stated are:
Rodney M Joyce
Qualifications :
Experience:
Non-Executive Director, appointed 6 December 2006
Non-Executive Chairman, appointed 9 October 2013
BSc (Hons), MSc, DIC
Mike Joyce is a geologist with over 40 years’ experience in mineral
exploration, following graduation in 1979 with a BSc (Hons) degree in
Geology from Monash University. He also holds a MSc in Mineral Exploration
from the Royal School of Mines, University of London, UK. He was the leader
of a successful gold exploration team at Aberfoyle Resources Ltd,
responsible for significant gold discoveries at Carosue Dam and Davyhurst
in Western Australia prior to joining Giralia Resources NL, initially as
exploration manager. He later became Managing Director of Giralia
Resources NL, prior to its takeover by Atlas Iron Limited.
Other Current Directorships:
None
Former Directorships (last 3
years):
Gascoyne Resources Limited - (Non-Executive Director appointed 20 April
2011 and Non-Executive Chairman from 5 October 2012 to 8 October 2018,
retired 30 April 2020).
Special Responsibilities:
Technical and Corporate
Interest in Shares:
Interest in Options:
Contractual Right to Shares:
13,383,404 ordinary shares
None
None
Michael J Clifford
Managing Director, appointed 18 March 2014
Qualifications:
Experience:
BSc. (Hons), 1987, MSc
Mick Clifford is a geologist with over 30 years’ experience in the exploration
industry. Mick held senior technical and business development roles and
explored for most major metal commodities during a successful career with
Billiton Australia, Acacia Resources and AngloGold Ashanti, rising to the
position of Regional Exploration Manager Australia. Mick was Managing
Director of ASX listed PacMag Metals Ltd from 2005 until its takeover in 2010,
when he co-founded private explorer S2M2 Coal Pty Ltd. He is experienced
in international exploration, exploring for gold, copper and coal and has had
exposure to mining and exploration in Australia, USA, Brazil, Indonesia, PNG,
Angola, Democratic Republic of Congo, Mexico, Mongolia and Turkey.
Other Current Directorships:
Former Directorships (last 3
years):
None
None
Special Responsibilities:
Executive Director
Interest in Shares:
Interest in Options
2,867,524 Ordinary Shares
3,500,000 Unlisted Options
Contractual Right to Shares:
None
26
DIRECTOR’S REPORT
Zenith Minerals Limited
Stanley A Macdonald
Non-Executive Director, appointed 24 April 2006
Experience:
Stan Macdonald has been associated with the mining and exploration
industry for over 25 years.
Other Current Directorships:
None
Former Directorships (last 3
years):
Gascoyne Resources Limited (Non-Executive Director from 20 April 2011,
resigned 8 October 2018)
Special Responsibilities:
Company promotion and project acquisition
Interest in Shares:
Interest in Options
Contractual Right to Shares:
5,570,072 Ordinary Shares
None
None
Julian D Goldsworthy
Non-Executive Director, appointed 29 August 2013
Qualifications:
Experience:
B. App. Sc. (Geology)
Julian was formerly Exploration Manager at Giralia Resources NL prior
to its takeover by Atlas Iron Ltd, and is currently Chief Geologist at
Gascoyne Resources Limited. He has substantial prior experience in
the minerals industry with Newcrest Mining (and its predecessor
led and conducted successful
Newmont Australia) where he
exploration programs for gold in Australia and South America.
Other Current Directorships:
None
Former Directorships (last 3
years):
Gascoyne Resources Limited (Executive Director appointed 2 June
2019, resigned on 2 June 2019)
Special Responsibilities:
Technical and Corporate
Interest in Shares:
Interest in Options
Contractual Right to Shares:
2,726,180 Ordinary Shares
None
None
Graham D Riley
Qualifications:
Experience:
Non-Executive Director, appointed 2 May 2018
B. Juris LLB
Graham is a qualified legal practitioner, having gained his Bachelor of
Law and Bachelor of Jurisprudence Degrees. After 10 years legal
practice as a partner of a commercial firm in Perth, he resigned to
pursue private interests in the resources and exploration sector, where
he continues to act in various non-executive capacities. Graham
previously served as Non-Executive Chairman of Giralia Resources NL,
Buru Energy NL, Entek Energy Limited, Red Hill Iron Limited and a
Director of Adelphi Energy NL. He was also a Non-Executive Director
of Arc Energy Limited.
Other Current Directorships:
None
Former Directorships (last 3
years):
Gascoyne Resources Limited (Non-Executive Director from 19
October 2009, resigned 8 October 2018). Entek Energy Ltd (Non-
Executive Chairman, appointed 1 February 2011, resigned 1
September 2017)
Special Responsibilities:
Legal, Technical and Corporate
Interest in Shares:
Interest in Options
Contractual Right to Shares:
9,000,000 Ordinary Shares
None
None
27
DIRECTOR’S REPORT
Zenith Minerals Limited
Peter J Bird
Qualifications:
Experience:
Non-Executive Director, appointed 30 March 2020
BSc(Hons) (Geology)
Peter Bird has a wide experience in operational mining geology and
exploration in large multinational corporations. He has worked in business
development and treasury, with extensive experience as a mining analyst
and in investor relations and human resources before becoming a company
director. Peter was Deputy Chairman and CEO of Asiamet Resources
Limited, Australia, from 2017 (listed on the AIM market of the London Stock
Exchange), prior to joining Zenith. He has previously served as Managing
Director of Heemskirk Consolidated Ltd, of which he was a joint founder,
and was Non-Executive Chairman of Excelsior Gold Ltd.
Other Current Directorships:
None
Former Directorships (last 3
years):
Asiamet Resources Limited, Australia, listed on the AIM market of the
London Stock Exchange (Deputy Chairman and CEO, appointed 20
February 2017, resigned 31 January 2020)
Special Responsibilities:
Technical and Corporate
Interest in Shares:
Interest in Options
Contractual Right to Shares:
None
None
None
‘Other current directorships’ mentioned above are current directorships for listed entities only,
excluding directorships of all other types of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ mentioned above are directorships held in the last 3 years for
listed entities only, excluding directorships of all other types of entities, unless otherwise state d.
2. COMPANY SECRETARY
Melinda Nelmes CA
Melinda Nelmes was appointed Company Secretary on 20 March 2014.
Melinda is a Chartered Accountant with over 29 years’ experience,
including thirteen years as Chief Financial Officer and Company Secretary
for ASX listed and private companies in the exploration industry, with
companies operating in Australia, USA, Mexico, Indonesia and Turkey.
Prior experience to this includes being a Financial Group Accountant in
the financial services sector. Melinda has valuable experience from
working in accounting firms, including Deloitte, in the audit and corporate
services divisions, gaining experience in various industry sectors including
the mining and resource sector.
3. DIRECTORS' MEETINGS
The number of Directors' meetings (including meeting of committees of directors) and number of meetings
attended by each of the directors of the Group during the financial year are:
Mr R M Joyce
Mr S A Macdonald
Mr J D Goldsworthy
Mr G D Riley
Mr P J Bird
Mr M J Clifford
MEETINGS
CIRCULAR RESOLUTIONS
IN WRITING
A
9
9
9
9
2
9
B
9
9
9
9
2
9
A
14
14
14
14
2
14
B
14
14
14
14
3
14
A = Number of meetings attended
B = Number of meetings held during the time the Directors held office during the year.
28
DIRECTOR’S REPORT
Zenith Minerals Limited
4. REMUNERATION REPORT – AUDITED
The remuneration report is set out under the following main headings:
A. Principles of Compensation
B. Key Management Personnel Remuneration
C. Equity Instruments
The information provided under headings A-C includes remuneration disclosures that are required under the
Corporations Act 2001 and the Corporations Regulations 2001. These disclosures have been transferred from
the financial report and have been audited.
Details of the remuneration of the key management personnel of the Consolidated Entity are set out in
tables provided under heading ‘B. Key Management Personnel Remuneration’. Key management
personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
A. Principles of Compensation - Audited
Compensation levels for key management personnel of the entity are competitively set to attract and retain
appropriately qualified and experienced Directors and Executives.
The objective of the Consolidated Entity’s reward framework is to ensure reward for performance is
competitive and appropriate. The framework aligns executive reward with achievement of strategic
objectives and creation of long-term growth and success for shareholders.
The Board ensures that remuneration satisfies the following criteria:
competitiveness and reasonableness
transparency
acceptability to shareholders
attracts and retains high caliber executives
rewards capability, experience and performance
performance alignment of executive compensation.
The full Board acts on behalf of Nomination and Remuneration Committee matters and is responsible for
determining and reviewing the remuneration packages for its directors and executives. Remuneration of key
management personnel for the year ended 30 June 2020 has been determined by the Board. In this respect
consideration is given to normal commercial rates of remuneration for similar levels of responsibility that is
market competitive and complementary to the reward strategy of the consolidated entity. Alignment to
shareholders interests focuses on pursuing long term growth in shareholder wealth, consisting of growth in
share price and success of the Company within an appropriate control framework. The structure of non-
executive directors’ remuneration and executive remuneration are separate as recommended by Corporate
Governance Council best practice.
Executive Remuneration
The consolidated entity aims to reward executives with a level of remuneration based on their position and
responsibility, which has a mix of both fixed and variable components. The remuneration of executives and
reward framework comprises a combination of:
base pay and non-monetary benefits
performance linked incentives
other remuneration such as superannuation and long service leave.
share based payments
Fixed Compensation
Fixed compensation consists of base compensation (which is calculated on a total basis and includes any FBT
charges related to employee benefits including motor vehicles), as well as employer contributions to
superannuation funds. Compensation levels are reviewed annually by the Board of Directors acting in their
capacity as the Nomination and Remuneration Committee through a process that considers individual and
overall performance of the Consolidated Entity and comparable market remunerations.
29
DIRECTOR’S REPORT
Zenith Minerals Limited
A. Principles of Compensation – Audited (cont.)
Performance Linked Compensation
Performance-linked remuneration consists of long-term incentives in the form of options over ordinary shares
of the Consolidated Entity. Performance-linked remuneration is not based on specific financial indicators such
as earnings or dividends as the Consolidated Entity is at the exploration stage and during this period is expected
to incur operating losses. There is no separate profit-share plan or short-term incentive components.
Long-Term Incentive
Long-term incentives comprise of long service leave and share based payments in the form of share options,
which are granted from time to time to encourage sustained performance in the realisation of strategic
outcomes and growth in shareholder wealth. Options are granted for no consideration and do not carry voting
or dividend entitlements. The exercise price of the options is determined after taking into account the underlying
share price performance during the period leading up to the date of the grant. Subject to specific vesting
conditions, each option is convertible into one ordinary share. There is presently no stated policy restricting
key management personnel from limiting their exposure to risk in relation to options granted. The Board of
Directors acting in their capacity as the Nomination and Remuneration Committee, review the long-term
incentives for executives on an annual basis during its review process of the executive’s performance.
Consequences of Performance on Shareholder Wealth
The overall level of key management personnel compensation takes into account the performance of the
Consolidated Entity over a number of years.
Performance in respect of the current financial year and the previous five financial years is detailed in the table
below:
2020
$
2019
$
2018
$
2017
$
2016
$
Loss attributable to owners of the Group
383,397
695,492
682,929
952,932 1,068,003
Basic Loss per Share
Share Price at financial year end ($)
Changes in share price (from initial listing of 25 cents)
0.002
0.12
-0.13
0.003
0.08
-0.17
0.003
0.18
-0.07
0.005
0.10
-0.15
0.008
0.11
-0.14
During the financial years noted above, there were no dividends paid or other returns of capital made by the
Consolidated Entity to shareholders. The Consolidated Entity’s performance is impacted by a number of factors
including employee performance. The measures of performance of the Consolidated Entity set out in the table
above have been taken into consideration in the determination of appropriate levels of remuneration by the
Board acting in its capacity as the Nomination and Remuneration Committee.
Non-Executive Compensation
Remuneration of Non-executives comprise fees in the form or cash and statutory superannuation entitlements,
quantified by having regard to industry practice and the need to obtain appropriately qualified, independent
persons. Fees may contain non-monetary elements. Fees and payments to non-executive directors have
regard to the demands and responsibilities of their role which covers all main board activities and membership
of applicable sub-committees.
The Board, acting as the Nomination and Remuneration Committee, reviews non-executive director fees and
payments annually. The Board may receive advice from independent remuneration consultants to ensure non-
executive directors’ fees and payments are appropriate and in line with the market. The Chairman’s fees are
determined independently to other non-executive director fees, based on similar comparative roles in the
market place. The Chairman is not present at discussions regarding the determination of his own remuneration.
Non-executives do not receive share options or other incentives.
Total compensation for all non-executive directors, agreed at a general meeting on 14 March 2006 is that the
maximum non-executive director remuneration be $200,000 per annum.
During the financial year ended 30 June 2020, the Chairman’s base fees were $40,000 plus statutory
superannuation of 9.50% per annum. Due to COVID-19, for the last quarter ended 30 June 2020, the Board
implemented voluntary reductions in the Board fees and Managing Director (CEO) salary. Then Chairman’s
fees paid during the financial year ended 30 June 2020 was $36,250 plus superannuation of 9.5% per annum.
30
DIRECTOR’S REPORT
Zenith Minerals Limited
A. Principles of Compensation – Audited (cont.)
Voting and comments made at The Consolidated Entity’s 2019 Annual General Meeting (‘AGM’)
At the 2019 AGM, 98.11% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2019. There was no specific feedback received at the AGM, regarding its remuneration
practices.
B. Key Management Personnel Remuneration - Audited
The following table discloses the remuneration of the key management personnel of the Consolidated
Entity.
The key management personnel of the Consolidated Entity consisted of the following directors:
Mr R M Joyce – Non-Executive Chairman
Mr S A Macdonald – Non-Executive Director
Mr J D Goldsworthy – Non-Executive Director
Mr G D Riley - Non-Executive Director
Mr P J Bird – Non-Executive Director
Mr M J Clifford – Managing Director
and the following persons:
Mrs M J Nelmes – Company Secretary and Chief Financial Officer.
31
DIRECTOR’S REPORT
Zenith Minerals Limited
The key management personnel of Zenith Minerals Limited and subsidiaries include the directors and the following executive officers:-
Short-Term Benefits
Post-
Employment
Benefits
Cash
Salary
& Fees
Cash
Bonus
Non-
Monetary
Benefits
Super-
annuation
Share-
Based
Payments
Options
TOTAL
Other
Long
Term
Benefits
Long
Service
Leave
$
$
$
$
$
$
$
S300A(1)(e)(i) S300A(1)(e)(vi)
Proportion of
Remuneration
Performance
Related
%
Value of
Options as
Proportion of
Remuneration
%
Non- Executive
Directors:
R M Joyce
S A Macdonald
J D Goldsworthy
G D Riley
PJ Bird
Executive
Director:
M J Clifford
Other Key
Management
Personnel:
M J Nelmes
TOTAL
TOTAL
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
36,250
40,000
27,500
30,000
27,500
30,000
27,500
30,000
5,000
-
2020
2019
211,678
232,876
2020
2019
2020
2019
109,660
91,030
445,088
453,906
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,444
3,800
2,612
2,850
2,612
2,850
2,612
2,850
475
-
4,762
3,979
20,109
22,123
-
-
4,762
3,979
10,418
8,648
42,282
43,121
32
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
39,694
43,800
30,112
32,850
30,112
32,850
30,112
32,850
5,475
-
28,395
36,916
264,944
295,894
47,455
12,921
75,850
167,533
112,599
567,982
49,837
550,843
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10.72%
12.48%
28.33%
11.48%
DIRECTOR’S REPORT
Zenith Minerals Limited
Analysis of Bonuses Included in Remuneration – Audited
No short-term incentive cash bonuses have been awarded as remuneration to directors of the Consolidated Entity
or to Consolidated Entity executives.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed Remuneration
Remuneration linked to
performance
2020
2019
2020
2019
Non-Executive Directors:
R M Joyce
S A Macdonald
J D Goldsworthy
G D Riley
P J Bird
Executive Director:
M J Clifford
Other Key Management Personnel:
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
M J Nelmes
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
No key management personnel appointed during the period received a payment as part of his or her
consideration for agreeing to hold the position.
Service Contracts
Remuneration and other terms of employment for the other key management personnel are formalised in service
agreements. The major provisions of the agreement relating to remuneration are set out below.
Rodney Michael Joyce
- Non Executive Chairman, appointed 6 December 2006
- Annually renewable contract
- Base salary of $40,000 per annum plus superannuation of 9.50%
- No notice period is prescribed on termination.
Stanley A Macdonald
- Non Executive Director, appointed 24 April 2006
- Annually renewable contract
- Base salary of $30,000 per annum plus superannuation of 9.50%
- No notice period is prescribed on termination.
Julian D Goldsworthy
- Non Executive Director, appointed 29 August 2013
- Annually renewable contract
- Base salary of $30,000 per annum plus superannuation of 9.50%
- No notice period is prescribed on termination.
Graham D Riley
Peter J Bird
- Non-Executive Director, appointed 2 May 2018
- Annually renewable contract
- Base salary of $30,000 per annum plus superannuation of 9.50%
- No notice period is prescribed on termination.
- Non-Executive Director, appointed 30 March 2020
- Annually renewable contract
- Base salary of $30,000 per annum plus superannuation of 9.50%
- No notice period is prescribed on termination.
33
DIRECTOR’S REPORT
Zenith Minerals Limited
Michael J Clifford
- Managing Director appointed 18 March 2014
Terms of Agreement
Remuneration and
Benefits
- The agreement is annually renewable. To terminate the agreement, the
Consolidated Entity must provide three months’ notice, or the Managing Director
must provide three months’ notice. If serious misconduct is committed by the
executive, the agreement may be immediately terminated by the Consolidated
Entity. On termination, the Consolidated Entity may provide the executive with a
payment in lieu of notice of termination for all or part of the notice period.
- Annual base salary of $255,000 inclusive of 9.50% superannuation for the
financial year ended 30 June 2020. Salary is reviewed annually by the Board
acting as the Nomination and Remuneration Committee.
Melinda J Nelmes
- Company Secretary and Chief Financial Officer, appointed 20 March 2014.
Terms of Agreement
Remuneration and
Benefits
- The agreement is reviewed annually. To terminate the agreement, either party
must provide one months’ notice. If serious misconduct is committed by the
executive, the agreement may be immediately terminated by the Consolidated
Entity. On termination, the Consolidated Entity may provide the executive with a
payment in lieu of notice of termination for all or part of the notice period.
- Permanent part-time agreement of base of 0.4 of a full time equivalent employee
with annual base salary of $200,000 (0.4 of a full time equivalent: $80,000)
inclusive of 9.50% superannuation for the year ending 30 June 2020. Salary is
reviewed annually by the Board acting as the Nomination and Remuneration
Committee.
C. Equity Instruments – Audited
Share-Based Compensation
i) Issue of shares
There were no shares issued to the directors and other key management personnel as part of
compensation during the year ended 30 June 2020 (2019: Nil)
ii) Options
For Zenith Minerals Limited options granted over ordinary shares during the current financial year or
future reporting years affecting remuneration of directors and other key management personnel, the
terms and conditions are as follows:
2020:
Name
Number
Options
Granted
Grant date Expiry date
Exercise
price
Fair value at
grant date
Vesting
Date
M Clifford
2,500,000 25 Nov 2019 25 Nov 2022
$0.087
$0.011358
M Nelmes
750,000 25 Nov 2019 25 Nov 2022
$0.087
$0.011358
M Nelmes
500,000 14 May 2020 14 May 2023 $0.1097
$0.077874
Vests at date of
grant
Vests at date of
grant
Vests at date of
grant
Options granted carry no dividend or voting rights.
34
DIRECTOR’S REPORT
Zenith Minerals Limited
C. Equity Instruments – Audited (cont.)
Values of options over ordinary shares granted, exercised, lapsed for directors and other key management
personnel as part of compensation during the year ended 30 June 2020 are set out below:
Name
Director:
M J Clifford
Other Key
Management
Personnel:
M J Nelmes
Value of
options granted
during the
year
$
Value of options
exercised
during the
year
$
Value of
options lapsed
during the
year
$
Remuneration
consisting of
options for the
year
%
28,395
47,455
-
-
(69,924)
10.72%
(33,667)
28.33%
Shares issued on exercise of options
No options granted under Zenith Minerals Limited’s Employee Option Plan were exercised into ordinary
shares during the year ended 30 June 2020 (2019: Nil).
iii) Ad ditio nal disclosur es relating to ke y m ana g eme nt personn el
Share Holding
The number of shares in Zenith Minerals Limited held during the financial year by each director and other key
management personnel of the Consolidated Entity, including their personally related parties, are set out
below. There were no shares granted during the reporting period as compensation.
Balance at
the start of
the year
Received
as part of
remuneration
Ordinary Shares
Additions
Other changes
2020
Name
Directors:
Rodney M Joyce
Stanley A Macdonald
Julian D Goldsworthy
Graham D Riley
Michael J Clifford
Peter J Bird
Other Key
Management
Personnel:
11,471,489
4,774,346
2,492,346
7,995,000
2,457,876
-
Melinda J Nelmes
200,126
Total
29,391,183
Balance at
the end of
the year
13,383,404
5,570,072
2,726,180
9,000,000
2,867,524
-
240,126
33,787,306
1,911,915
795,726
233,834
1,005,000
409,648
-
40,000
4,396,123
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35
DIRECTOR’S REPORT
Zenith Minerals Limited
C. Equity Instruments – Audited (cont.)
Option Holding
The number of options over ordinary shares in Zenith Minerals Limited held during the financial year by directors
and other key management personnel of the Consolidated Entity, including their personally related parties,
are set out below:
Balance at
the start of
the year
Granted as
Remuner-
ation
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year**
2020
Name
Directors:
Rodney M Joyce
Stanley A Macdonald
Julian D Goldsworthy
Michael J Clifford
Graham D Riley
Peter J Bird
Other Key
Management
Personnel:
-
-
-
2,350,000
-
-
-
-
-
2,500,000
-
-
Melinda J Nelmes
1,000,000
1,250,000
Total
3,350,000
3,750,000
** All options are vested and exercisable at 30 June 2020.
-
-
-
-
-
-
-
-
-
-
-
(1,350,000)
-
-
-
-
-
3,500,000
-
-
(650,000)
1,600,000
(2,000,000)
5,100,000
Other Transactions With Key Management Personnel And Their Related Parties
During the financial year ended 30 June 2020, other transactions with key management personnel and
their related parties were as follows:
i)
Provision of Serviced Office – During the financial year ended 30 June 2020, fees of $7,164
(2019: $7,745) were received from Minasola Pty Ltd, a director related entity of Mr R M Joyce;
fees of $7,164 (2019: $7,745) were received from Creekwood Nominees Pty Ltd, a director
related entity of Mr S A Macdonald and fees of $7,164 from Satinbrook Pty Ltd, a director
related entity of Mr G D Riley (2019: $7,745).
All transactions were made on normal commercial terms and conditions and at market rate.
There are no loans to directors and executives.
This concludes the remuneration report, which is audited.
36
DIRECTOR’S REPORT
Zenith Minerals Limited
5 .
A CT IV IT IE S
The principal activity of the Consolidated Entity during the course of the financial year was mineral
exploration predominantly in Australia and also including Turkey (Europe) and United States of America.
Following listing on ASX on 29 May 2007, the Consolidated Entity commenced exploration activity
wherever it assessed there was an opportunity of success.
There was no significant change in the nature of the activity of the Consolidated Entity during the year.
6 . OPERATING & FINANCIAL REVIEW
Overview
During the year, the Consolidated Entity undertook mineral exploration activities predominantly in Australia.
Objectives
The Group's objectives are to pursue opportunities in exploration and mining for precious and other minerals in
areas which are highly prospective for mineralisation.
Financial Results
The loss for the financial year ended 30 June 2020, attributable to members of the Consolidated Entity,
after income tax is $383,397 (2019: $695,492).
No dividends were paid or recommended for payment during the financial year ended 30 June 2020
(2019: Nil).
Review of Financial Condition
During the year, the net assets of the Consolidated Entity increased by $1,357,025 from $4,435,752 at 30
June 2019 to $5,792,777 at 30 June 2020.
The directors consider that the Consolidated Entity holds a valuable portfolio of mineral tenements with a
carrying value at 30 June 2020 of $3,993,265 (2019: $3,199,220). During the financial year, the consolidated
entity booked an impairment loss on capitalised exploration and evaluation expenditure of $21,027 (2019:
$97,773) following its review of its portfolio of mineral tenements.
In relation to COVID-19 Zenith’s Board is mindful of the significant impact the virus is having on the
community and is continuing to assess the potential risks associated with its activities. Zenith’s projects are
in remote country areas or on grazing properties where Zenith’s crew are geographically isolated. The
Company will continue to act on advice provided by Federal and State Governments with the health and
safety of Zenith’s crew, contractors and local stakeholders a priority. During the last quarter ended 30 June
2020, the Company also assessed measures to reduce discretionary spending in order to conserve cash in
response to on-going equity market volatility including temporary voluntary reductions in the CEO’s salary
and Board fees, whilst still actively assessing opportunities to add quality gold and copper assets to its project
portfolio.
7 . SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 28 October 2019, the Company announced a capital raising by way of a Non-renounceable entitlement
offer to existing shareholders of 1 new fully paid ordinary share for every 6 fully paid ordinary shares held by
eligible shareholders at record date being 5pm (AEDT) on 31st October 2019. A total of 30,245,335 ordinary
ZNC shares were issued raising $1,663,494.
There were no other significant changes in the state of affairs of the Consolidated Entity during the financial
year ended 30 June 2020.
8 . EVENTS SUBSEQUENT TO REPORTING DATE
A capital raising announced to the Australian Securities Exchange (‘ASX’) on 7th July 2020, resulted in:
37
DIRECTOR’S REPORT
Zenith Minerals Limited
8 . EVENTS SUBSEQUENT TO REPORTING DATE (cont.)
-
the placement/issue on 13th July 2020 of 51,000,000 ordinary shares to existing shareholders and
sophisticated investors, pursuant to s.708 of the Corporations Act (Cth) 2001, at $0.10 per share raising
$5,100,000.
- The issue on 13th July 2020 of 2,000,000 unlisted options exercisable at $0.14 on or before 31 December
2023 and 2,000,000 unlisted options exercisable at $0.16 on or before 31 December 2023 associated
with the placement.
On 6th August 2020, Zenith Minerals Limited (‘Zenith’) announced to the ASX that American Rare Earths
(ASX Code: ARR) and Zenith Minerals Limited have executed an option agreement whereby ARR will
acquire 100% of Zenith’s Australian wholly owned subsidiary, Wyoming Rare Pty Ltd which controls the
Laramie REE project held by its 100% owned USA subsidiary Wyoming Rare (USA) Inc. The acquisition
includes payment to Zenith of a non-refundable deposit of $10,000 plus a further $40,000 cash payment and
2,500,000 ARR ordinary shares (price A$0.02 each) upon satisfaction of conditions including the conversion
of exploration permits to mineral leases, which is anticipated to occur in November this year.
On 10th September 2020, Zenith announced to the ASX that it entered into an option agreement in relation
to a new gold project called Jackadgery in New South Wales. Under the option agreement, an option
payment of $10,000 is paid upfront and there is a requirement to complete a minimum of a 300m drill
program within 12 months and at its sole election may then elect to acquire a 90% interest in the project
for a one-off cash payment of $100,000 to one (Ms C McClatchie) of two private vendors, the other (Mr A
Sloot).
In relation to COVID-19 Zenith’s Board is mindful of the significant impact the virus is having on the
community and is continuing to assess the potential risks associated with its activities. The Company will
continue to act on advice provided by Federal and State Governments with the health and safety of Zenith’s
crew, contractors and local stakeholders a priority. Zenith has in place a COVID-19 site health management
plan and requires that all its field crews comply with the requirements of that plan. In addition, the Company
is managing projects across state borders and is ensuring it complies with both Federal and State based
travel and border restrictions by employing, where available local staff and using locally based contractors,
consultants.
No other matter or material event has arisen since 30 June 2020, which has significantly affected or may
significantly affect the Consolidated Entity’s operations, the results of those operations, or the Consolidated
Entity’s future state of affairs.
9 . L IKE L Y DE V E L OP ME NT S
The Consolidated Entity will continue to pursue its policy of acquiring and testing attractive mineral
properties with a view to developing properties capable of economic mineral production.
Further information about likely developments in the operations of the Consolidated Entity and the
expected results of those operations in future financial years has not been included in this report because
disclosure of the information would be likely to result in unreasonable prejudice to the Consolidated Entity.
1 0 . E NV IRO NME NT AL R E GUL AT I ON
The Consolidated Entity is subject to significant environmental regulation in relation to its exploration
activities from the Department of Minerals and Petroleum (West Australian operations), Code of Environmental
Compliance for exploration and mineral development projects, Version 1.1 and provision of the Environmental
Heritage Protection Act 1994 (Queensland operations), State Lands Department of Arizona laws and
regulations (Arizona state lease), The General Mining Act of 1872 United States (Federal Lode mining claims
Arizona), Turkish Mining Law as administered by the Mining Affairs General Directorate of the Ministry of
Energy and Natural Resources (Turkish operations) and aims to ensure that it complies with all relevant
environmental legislation. The directors are not aware of any significant breaches during the period covered by
this report.
1 1 . INDEMNITY AND INSURANCE OF OFF ICERS
The Consolidated Entity has indemnified the Directors and Officers for costs incurred by them in defending
civil or criminal proceedings that may be brought against the Directors and Officers in their capacity, of
38
DIRECTOR’S REPORT
Zenith Minerals Limited
1 1 . INDEMNITY AND INSURANCE OF OFF ICERS (con t.)
the Consolidated Entity, and any other payments arising from liabilities incurred by the Directors and
Officers in connection with such proceedings. This does not include such liabilities that arise from conduct
involving a willful breach of duty by the Directors or Officers of the improper use of their position or of information
to gain advantage for themselves or someone else or to cause detriment to the Consolidated Entity.
During the financial year, the company paid a premium in relation to a contract to insure the Directors and
Officers of the Consolidated Entity against a liability to the extent permitted by the Corporations Act 2001. The
contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
1 2 . INDEMNITY AND INSURANCE OF AUDIT ORS
The Consolidated Entity has not, during or since the end of the financial year, indemnified or agreed to
indemnify the auditor of the company or any related entity against a liability incurred by the auditor.
During the financial year, the Consolidated Entity has not paid a premium in respect of a contract to
insure the auditor of the company or any related entity.
1 3 . S HARE OPT IONS
Shares Under Option
Unissued ordinary shares of Zenith Minerals Limited under option at the date of this report are as follows:
Date options
granted
Expiry date
14 May 2020
14 May 2023
25 November 2019
24 November 2022
28 September 2018
28 September 2021
13 July 2020
13 July 2020
31 December 2023
31 December 2023
Exercise
Price
$0.1097
$0.087
$0.18
$0.14
$0.16
Number under
option
1,200,000
3,950,000
1,650,000
2,000,000
2,000,000
No option holder has any right under the options to participate in any other share issue of the Group.
14. SHARES ISSUED ON THE EXERCISE OF OPTIONS
There were no ordinary shares issued by Zenith Minerals Limited during the year ended 30 June 2020
and up to the date of this report on the exercise of options granted.
15. PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group
for all or any part of those proceedings. The Group was not a party to any such proceedings during the
period.
16. DIVIDENDS
No dividends were paid or provided for during the year.
17. NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor (PKF) for non-audit services provided during the
financial year are outlined in Note 8 to the financial statements.
39
DIRECTOR’S REPORT
Zenith Minerals Limited
17. NON-AUDIT SERVICES (cont.)
The directors are satisfied that the provision for non-audit services during the financial year, by the auditor
(or by another person or firm on the auditor’s behalf), is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services do not compromise the external auditor’s independence
requirements of the Corporations Act 2001 due to the following reasons:
all non-audit services have been reviewed and approved to ensure that they do not impact the
integrity and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional
and Ethics Standards Board, including reviewing or auditing the auditor’s own work, acting in a
management or decision-making capacity for the company, acting as advocate for the company or
jointly sharing economic risks and rewards.
18. OFFICERS OF THE COMPANY WHO ARE FORMER AUDIT PARTNERS OF PKF
There are no officers of the company who are former audit partners of PKF.
19. AUDITORS’ INDEPENDENCE DECLARATION
A copy of the auditors’ independence declaration as required under section 307C of the Corporations
Act 2001 is set out on the following page.
20. AUDITOR
PKF continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
Mr R M Joyce
Chairman
Dated: 25 September 2020
Perth, WA.
40
PKF Perth
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF ZENITH MINERALS LIMITED
In relation to our audit of the financial report of Zenith Minerals Limited for the year ended 30 June 2020, to the
best of my knowledge and belief, there have been no contraventions of the auditor independence requirements
of the Corporations Act 2001 or any applicable code of professional conduct.
PKF PERTH
SHANE CROSS
AUDIT PARTNER
25 SEPTEMBER 2020
WEST PERTH
WESTERN AUSTRALIA
Level 4, 35 Havelock Street, West Perth, WA 6005
PO Box 609, West Perth, WA 6872
T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au
PKF Perth is a member firm of the PKF International Limited family of legally independent firms and does not accept any
responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
41
FINANCIAL STATEMENTS
Zenith Minerals Limited
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE YEAR ENDED 30 JUNE 2020
NOTE
Consolidated Entity
2020
$
2019
$
Revenue from continuing operations
Profit on part disposal of equity investment in Associate
Net fair value gain on other financial asset
Other revenue
Interest revenue
Expense
Employee benefits expenses
Share option based payment
Depreciation
Premises costs
Exploration expenditure expensed
Exploration expenditure write off
Impairment loss on exploration & evaluation expenditure
Net fair value loss on other financial assets
Amortisation expense
Share of losses of Associate accounted for using equity
method
Other operating expenses
Loss before income tax
Income tax expense
Loss after income tax benefit for the year
Other comprehensive income
Items that might be reclassified subsequently to profit or
loss:
5
15
13
6
29
16
17
17
13
18
15
7
10
514,525
107,123
256,276
6,897
1,506
(350,374)
(138,313)
(8,219)
-
(6,122)
(336,467)
(21,027)
-
(22,811)
(9,135)
402,466
-
-
1,712
3,383
(332,741)
(60,912)
(9,718)
(70,200)
(86,760)
(65,079)
(97,773)
(100,891)
-
(35,441)
(289,109)
(243,538)
(295,250)
(88,147)
(383,397)
(695,492)
-
(695,492)
Foreign currency translation
23(a)
(48,320)
Other comprehensive income for the year (net of tax)
(48,320)
(26,829)
(26,829)
Total comprehensive loss for the year
Loss per share
Basic and diluted loss per share
9
(431,717)
(722,321)
Cents
(0.2)
Cents
(0.3)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction
with the notes to the consolidated financial statements.
42
FINANCIAL STATEMENTS
Zenith Minerals Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
NOTE
Consolidated Entity
2020
$
2019
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial asset at fair value through profit or loss
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investment in associate
Financial asset at fair value through profit or loss
Plant and equipment
Right of use asset
Exploration and evaluation expenditure
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liability
Provision for income tax
Employee benefits
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
11
12
13
14
15
13
16
18
17
19
20
10
21
968,107
113,035
630,742
6,894
1,063,317
6,511
43,147
6,789
1,718,778
1,119,764
348,055
6,520
18,492
14,919
3,993,265
275,337
10,015
27,271
-
3,199,220
4,381,251
3,511,843
6,100,029
4,631,607
97,728
50,471
88,147
70,906
129,707
-
-
66,148
307,252
195,855
307,252
195,855
5,792,777
4,435,752
22
23(a)
23(b)
22,134,472
98,636
(16,440,331)
20,475,655
138,131
(16,178,034)
5,792,777
4,435,752
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated
financial statements.
43
FINANCIAL STATEMENTS
Zenith Minerals Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Issued Capital
Reserves
$
$
Accumulated
Losses
$
Total
$
Balance at 1 July 2019
20,475,655
138,131
(16,178,034)
4,435,752
Adjustment for change in accounting
policy
-
-
(8,388)
(8,388)
Restated balance at 1 July 2019
20,475,655
138,131
(16,186,422)
4,427,364
Loss for the period
Other comprehensive income
Total comprehensive income
Transactions with owners,
recorded directly in equity
Issue of shares, net of transaction
costs (note 22)
Issue of employee options (note 23)
Expiry/Cancellation of staff options
(note 23)
-
-
-
-
(48,320)
(48,320)
(383,397)
-
(383,397)
(48,320)
(383,397)
(431,717)
1,658,817
-
138,313
-
-
(129,488)
129,488
-
-
-
1,658,817
138,313
Balance at 30 June 2020
22,134,472
98,636
(16,440,331)
5,792,777
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Issued Capital
Reserves
$
$
Accumulated
Losses
$
Total
$
Balance at 1 July 2018
20,475,655
104,048
(15,482,542)
5,097,161
Loss for the period
Other comprehensive income
Total comprehensive income
Transactions with owners,
recorded directly in equity
Issue of shares, net of transaction
costs (note 22)
Issue of employee options (note 23)
Expiry/Cancellation of staff options
(note 23)
-
-
-
-
-
-
-
(26,829)
(26,829)
(695,492)
-
(695,492)
(26,829)
(695,492)
(722,321)
-
60,912
-
-
-
-
-
60,912
-
Balance at 30 June 2019
20,475,655
138,131
(16,178,034)
4,435,752
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated
financial statements.
44
FINANCIAL STATEMENTS
Zenith Minerals Limited
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
NOTE
Consolidated Entity
2020
$
2019
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Cash paid to suppliers and employees
Payments for capitalised exploration and expenditure
Reimbursement of exploration costs per Farm in agreement
Option fee
Government grants and tax incentives
Interest received
Interest and other finance costs paid
Income tax paid
78,036
(695,054)
(1,165,533)
-
-
86,000
1,627
(4,400)
-
39,103
(640,961)
(993,862)
63,000
60,000
-
3,403
-
(12,481)
NET CASH (USED IN) OPERATING ACTIVITIES
30
(1,699,324)
(1,481,798)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for investments
Proceeds on disposal of investments
Proceeds on sale of tenements
Payments for plant and equipment
NET CASH FROM (USED IN) INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of equity securities
Cost of issuing equity securities
Repayment of lease liability
NET CASH PROVIDED BY FINANCING ACTIVITIES
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the
financial period
Effect of movement in exchange rates on cash held
-
22,176
-
(3,185)
18,991
(189,874)
11,147
250,000
(9,317)
61,956
1,663,494
(29,677)
(71,550)
1,562,267
-
-
-
(118,066)
(1,419,842)
1,063,317
2,449,932
22,856
33,227
CASH AND CASH EQUIVALENTS AT 30 JUNE 2020
11
968,107
1,063,317
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated
financial statements.
45
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1. REPORTING ENTITY
Zenith Minerals Limited and controlled entities (“Consolidated Entity”) is domiciled in Australia, incorporated in
Australia, publicly listed on the ASX and limited by shares. The address of the Consolidated Entity registered
office and principal place of business is Level 2, 33 Ord Street, West Perth, Western Australia, 6005.
The Consolidated Entity is involved in mineral exploration.
2 . BAS IS OF P REPARAT ION
(a) Statement of Compliance
These general-purpose financial statements have been prepared in accordance with Australian
Accounting Standards (AASBs), Interpretations issued by the Australian Accounting Standards Board
(AASB) and the Corporations Act 2001, as appropriate for for-profit orientated entities.
These financial statements of the Consolidated Entity comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Consolidated Financial Statements were approved by the Board of Directors on 25 September
2020. The directors have the power to amend and reissue the financial statements. Comparative information
is for period 1 July 2018 to 30 June 2019.
(b) Basis of Measurement
These financial statements have been prepared on the historical cost and accrual accounting basis,
except for the revaluation of financial assets and liabilities at fair value through profit or loss and financial
assets at fair value through other comprehensive income.
In accordance with the Corporations Act 2001, these financial statements present the results of the
Consolidated Entity with supplementary information about the parent entity being included in at note
33.
(c) Functional and Presentation Currency
These financial statements are presented in Australian dollars, which is the Consolidated Entity’s
functional currency.
(d) Use of Estimates and Judgements
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the Financial Statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenues and
expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other
various factors, including expectations of future events, management believes to be reasonable under
the circumstances. The resulting accounting judgements and estimates will seldom equal the related
actual results. The judgements, estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within
the next financial year are discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the consolidated entity based on known information. Consideration extends to
the suppliers, staffing and geographic regions in which the consolidated entity operates. Other than as
addressed in specific notes, there does not currently appear to be either any significant impact upon the
financial statements or any significant uncertainties with respect to events or conditions which may impact
the consolidated entity unfavourably as at the reporting date.
46
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
2 . BASIS OF P REPARAT ION (cont.)
(d) Use of Estimates and Judgements (cont.)
Income tax
The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant
judgement is required in determining the provision for income tax. There are many transactions and
calculations undertaken during the ordinary course of business for which the ultimate tax determination
is uncertain. The consolidated entity recognises liabilities for anticipated tax audit issues based on the
consolidated entity's current understanding of the tax law. Where the final tax outcome of these matters
is different from the carrying amounts, such differences will impact the current and deferred tax provisions
in the period in which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity
considers it is probable that future taxable amounts will be available to utilise those temporary differences
and losses.
Exploration and evaluation expenditure
The Consolidated Entity capitalises expenditure relating to exploration and evaluation where it is considered
likely to be recoverable or where the activities have not reached a stage which permits a reasonable
assessment of the existence of reserves. Key judgements are applied in considering costs to be
capitalised, including determining those expenditures directly related to these activities and allocating
overheads between those that are expensed and capitalised. While there are certain areas of interest
from which no reserves have been extracted, the directors are of the continued belief that such
expenditure should not be written off since feasibility studies in such areas have not yet concluded.
Factors that could impact the future recoverability include the level of reserves and resources, future
technological changes, costs of drilling and production, production rates, future legal changes and
changes to commodity prices. To the extent that capitalised costs are determined not to be recoverable
in the future, they will be written off in the period in which this determination is made.
As at 30 June 2020, the carrying value of capitalised exploration expenditure is $3,993,265 (2019:
$3,199,220).
Impairment of Non-Financial Assets
The Consolidated Entity assesses impairment at each reporting date by evaluating conditions specific to
the Consolidated Entity and to the particular asset that may lead to impairment of assets. Where an
impairment trigger exists, the recoverable amount of the asset is determined. Fair value less cost of
disposal or value-in-use calculations performed in assessing recoverable amounts incorporate a number
of key estimates. Impairment loss recorded in the current financial year was $21,027 (2019: $97,773).
Share Based Payments
The Consolidated Entity measures the cost of equity settled transactions with consultants and employees
by reference to the fair value of the equity instruments at the date at which they are granted. The fair
value is determined using a Black Scholes model, taking into account the terms and conditions upon
which the instruments were granted. The accounting estimates and assumptions relating to equity settled
share-based payments would not impact carrying amounts of assets and liabilities within the next annual
reporting period but may impact profit or loss and equity.
Estimation of Useful Lives of Assets
The Consolidated Entity determines the useful lives and related depreciation and amortisation charges
for its property, plant & equipment and finite live intangible assets. Events such as technical innovations
or other events could change the useful lives of assets significantly. Depreciation and amortisation
charges will increase where the useful lives are less than the previously estimated lives, or technically
obsolete or non-strategic assets which have been abandoned or sold will be written down or written off.
47
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
2. BAS IS OF P REPARAT ION (cont.)
Fair Value Measurement Hierarchy
The Consolidated Entity is required to classify all assets and liabilities measured at fair value,
using a three level hierarchy which is based on the lowest level of input that is significant to the
entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the measurement date; Level 2: Inputs
other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. In determining
what is significant to fair value there is considerable judgement required. Therefore, the category
the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models.
These include discounted cash flow analysis or use of observable inputs requiring significant
adjustments based on unobservable inputs.
Lease term
In the measurement of both the right-of-use asset and lease liability, the lease term is a significant
component. Judgement is exercised in determining whether there is reasonable certainty that an option
to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease
will not be exercised, when ascertaining the periods to be included in the lease term. In determining the
lease term, all facts and circumstances that create an economical incentive to exercise an extension
option, or not to exercise a termination option, are considered at the lease commencement date. Factors
considered may include the importance of the asset to the consolidated entity's operations; comparison
of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of
significant leasehold improvements; and the costs and disruption to replace the asset. The consolidated
entity reassesses whether it is reasonably certain to exercise an extension option, or not exercise a
termination option, if there is a significant event or significant change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate
is estimated to discount future lease payments to measure the present value of the lease liability at the
lease commencement date. Such a rate is based on what the consolidated entity estimates it would have
to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use
asset, with similar terms, security and economic environment.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below.
These policies have been consistently applied unless otherwise stated.
New or Amended Accounting Standards and Interpretations Adopted
The Consolidated Entity has adopted all of the new or amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted by the Consolidated Entity for the annual reporting period ended 30 June 2020.
The following Accounting Standards and Interpretations are most relevant to the Consolidated Entity:
48
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICI ES (cont.)
AASB 16 Leases
The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases'
and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term
leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised
in the statement of financial position. Straight-line operating lease expense recognition is replaced with a
depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the
recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses
associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117.
However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the
operating expense is now replaced by interest expense and depreciation in profit or loss. For classification
within the statement of cash flows, the interest portion is disclosed in operating activities and the principal
portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the
standard does not substantially change how a lessor accounts for leases.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not
been restated. The impact of adoption on opening retained profits as at 1 July 2019 was as follows:
Operating lease commitments as at 1 July 2019 (AASB 117)
Operating lease commitments discount based on the weighted average incremental
borrowing rate of 5% (AASB 16)
Short-term leases not recognised as a right-of-use asset (AASB 16)
Accumulated depreciation as at 1 July 2019 (AASB 16)
Right-of-use assets (AASB 16)
Lease receivable (AASB 16) – current
Lease receivable (AASB 16) – non-current
Lease liabilities - current (AASB 16)
Lease liabilities - non-current (AASB 16)
Reduction in opening retained profits as at 1 July 2019
1 July
2019
$
139,707
(2,205)
-
(23,869)
113,633
41,633
43,200
28,800
(71,550)
(50,471)
(8,388)
The consolidated entity has applied the following practical expedients when adopting AASB 16 from 1 July
2019:
-
-
-
-
applying a single discount rate to the leases with reasonable similar characteristics;
accounting for leases with a remaining lease term of 12 months as at 1 July 2019 as short-term leases;
excluding any initial direct costs from the measurement of right-of-use assets;
using hindsight in determining the lease term when contract contains options to extend or
terminate the lease
- not apply AASB 16 to contracts that were not previously identified as containing a lease.
49
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Zenith
Minerals Limited (the “Company”) as at 30 June 2020 and the results of all subsidiaries for the year then
ended. Zenith Minerals Limited and its subsidiaries together are referred to in these financial statements
as the ‘Consolidated Entity’ or the ‘Group’.
Subsidiaries are all those entities over which the Consolidated Entity has control. The Consolidated Entity
controls an entity when the Consolidated Entity is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct the activities of
the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated
Entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Consolidated
Entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the Consolidated Entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in
ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference
between the consideration transferred and the book value of the share of the non-controlling interest acquired
is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit
or loss and other comprehensive income, statement of financial position and statement of changes in equity of
the Consolidated Entity. Losses incurred by the Consolidated Entity are attributed to the non-controlling interest
in full, even if that results in a deficit balance.
Where the Consolidated Entity loses control over a subsidiary, it derecognises the assets including goodwill,
liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences
recognised in equity. The Consolidated Entity recognises the fair value of the consideration received and the
fair value of any investment retained together with any gain or loss in profit or loss.
Associates
Associates are entities over which the consolidated entity has significant influence but not control or joint
control. Investments in associates are accounted for using the equity method. Under the equity method, the
share of the profits or losses of the associate is recognised in profit or loss and the share of the movements
in equity is recognised in other comprehensive income. Investments in associates are carried in the
statement of financial position at cost plus post-acquisition changes in the consolidated entity's share of net
assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment
and is neither amortised nor individually tested for impairment. Dividends received or receivable from
associates reduce the carrying amount of the investment.
When the consolidated entity's share of losses in an associate equals or exceeds its interest in the associate,
including any unsecured long-term receivables, the consolidated entity does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the associate.
The consolidated entity discontinues the use of the equity method upon the loss of significant influence over
the associate and recognises any retained investment at its fair value. Any difference between the associate's
carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or
loss.
50
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Operating segments
Operating segments are presented using the ‘management approach’, where the information presented is
on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The
CODM is responsible for the allocation of resources to operating segments and assessing their
performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is the Consolidated Entity’s functional and
presentation currency.
Foreign Currency Transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Foreign Operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates
at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars
using the average exchange rates, which approximate the rate at the date of the transaction, for the period.
All resulting foreign exchange differences are recognised in other comprehensive income through the foreign
currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is
disposed of.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as
part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification
is determined based on both the business model within which such assets are held and the contractual cash
flow characteristics of the financial asset unless, an accounting mismatch is being avoided.
Investments and other financial assets are initially measured at fair value. Transaction costs are included as
part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are
subsequently measured at either amortised cost or fair value depending on their classification. Classification
is determined based on both the business model within which such assets are held and the contractual cash
flow characteristics of the financial asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.
When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is
written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are
classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either:
(i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of
making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value
movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the
consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as
such upon initial recognition.
51
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Loans
Loans are recognised initially at fair value, net of transaction costs. Subsequent to initial recognition loans
are measured at amortised cost using the effective interest method, less any impairment losses.
Finance costs
Finance costs directly attributable to qualifying assets are capitalised as part of the asset. All other finance
costs are expensed in the period in which they are incurred.
Revenue
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is
expected to be entitled in exchange for transferring goods or services to a customer.
For each contract with a customer, the consolidated entity: identifies the contract with a customer; identifies
the performance obligations in the contract; determines the transaction price which takes into account
estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct good
or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a
manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such
as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other
contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount'
method. The measurement of variable consideration is subject to a constraining principle whereby revenue
will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty
associated with the variable consideration is subsequently resolved. Amounts received that are subject to the
constraining principle are recognised as a separate refund liability.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on
either a fixed price or an hourly rate.
Interest
Interest revenue is recognised as interest accrues 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.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary
to match them with the costs that they are intended to compensate.
Income tax
The income tax expense or benefit for the period is the tax payable on the current period's taxable income based
on the income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised in prior periods, where applicable.
52
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Income Tax (cont.)
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect
of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been
enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised
as a liability (or asset) to the extent that it is unpaid (or refundable).
Deferred tax
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates that are expected
to apply in the period in which the liability is settle or the asset realised, based on the tax rates (and tax laws)
that have been enacted or substantively enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and in the timing of the reversal can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax liabilities are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses
The carrying amount of recognised deferred tax assets and unrecognised deferred tax assets is reviewed at
the end of each reporting period and reduced to the extent that it is no longer probably that sufficient future
taxable profits will be available to allow all or part of the asset to be recovered. Previously unrecognised
deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available
to recover the asset.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax
assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and when they
relate to income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the Statement of Financial Position based on c urrent and non-
current classification.
The asset is classified as current when:
i)
It’s either expected to be realised or intended to be sold or consumed in normal operating
cycle;
it’s held primarily for the purpose of trading;
it’s expected to be realised within 12 months after the reporting period; or
the asset is cash or cash equivalent unless restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting period.
ii)
iii)
iv)
All other assets are classified as non-current.
A liability is classified as current when:
i)
ii)
iii)
iv)
it’s either expected to be settled in normal operating cycle;
it’s held primarily for the purpose of trading;
it’s due to be settled within 12 months after the reporting period; or
there is no unconditional right to defer the settlement of the liability for at least 12 months after
the reporting period.
53
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Current and non-current classification (cont.)
All other liabilities are classified as non-current. Deferred tax assets and liabilities are always
classified as non-current.
Impairment
(i)
Financial Assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are
either measured at amortised cost or fair value through other comprehensive income. The measurement of
the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period
as to whether the financial instrument's credit risk has increased significantly since initial recognition, based
on reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset
has become credit impaired or where it is determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss
recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls
over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit
or loss.
(ii)
Non-Financial Assets
The carrying amounts of the Consolidated Entity’s non-financial assets, deferred tax assets, are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds
its recoverable amount. Impairment losses are recognised in profit or loss.
The recoverable amount is the higher of the assets fair value less costs of disposal and value-in-use. In value
in use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount
rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have
independent cash flows are grouped together to form a cash-generating unit.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and at call and deposits with banks or financial institutions and other
short term, highly liquid investments with original maturities of three months or less, which are readily convertible
to cash and which are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on
demand and form an integral part of the Group’s cash management are included as a component of cash and
cash equivalents for the purpose of the statement of cash flows.
Receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less any allowance for expected credit losses. Trade receivables are generally
due for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses
a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been
grouped based on days overdue.
54
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Receivables (cont.)
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less any allowance for expected credit losses. Trade receivables are generally
due for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses
a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been
grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Contract assets
Contract assets are recognised when the consolidated entity has transferred goods or services to the
customer but where the consolidated entity is yet to establish an unconditional right to consideration. Contract
assets are treated as financial assets for impairment purposes.
Customer acquisition costs
Customer acquisition costs are capitalised as an asset where such costs are incremental to obtaining a
contract with a customer and are expected to be recovered. Customer acquisition costs are amortised on a
straight-line basis over the term of the contract.
Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained or
which are not otherwise recoverable from a customer are expensed as incurred to profit or loss. Incremental
costs of obtaining a contract where the contract term is less than one year is immediately expensed to profit
or loss.
Customer fulfilment costs
Customer fulfilment costs are capitalised as an asset when all the following are met: (i) the costs relate directly
to the contract or specifically identifiable proposed contract, (ii) the costs generate or enhance resources of
the consolidated entity that will be used to satisfy future performance obligations; and (iii) the costs are
expected to be recovered. Customer fulfilment costs are amortised on a straight-line basis over the term of
the contract.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. Investments in joint ventures are accounted for using the
equity method. Under the equity method, the share of the profits or losses of the joint venture is recognised
in profit or loss and the share of the movements in equity is recognised in other comprehensive income.
Investments in joint ventures are carried in the statement of financial position at cost plus post-acquisition
changes in the consolidated entity’s share of net assets of the joint venture. Goodwill relating to the joint
venture is included in the carrying amount of the investment and is neither amortised nor individually tested
for impairment. Income earned from joint venture entities reduce the carrying amount of the investment.
Property, plant and equipment
(i) Recognition and Measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment
losses. Cost includes expenditure that is directly attributable to the acquisition of the item.
55
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Property, plant and equipment (cont.)
(i) Subsequent Costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of
the item if it is probable that the future economic benefits embodied within the part will flow to the Consolidated
Entity and its costs can be measured reliably. The costs of the day-to-day servicing of property, plant and
equipment are recognised in profit or loss as incurred.
(ii) Derecognition
An item of property plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds
are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred
directly to retained profits.
(iii) Depreciation
Depreciation is calculated on a reducing balance basis so as to write off the net cost or other revalued amount
of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual
values and depreciation method is reviewed at the end of each annual reporting period.
The following rates are used in the calculation of depreciation:
• Plant and equipment
• Motor vehicles
• Office furniture and fittings
•
Computer and Office Equipment
10% - 33%
25%
10%
33%
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured
at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease
payments made at or before the commencement date net of any lease incentives received, any initial direct
costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be
incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain
ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life.
Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these
assets are expensed to profit or loss as incurred.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised
at the present value of the lease payments to be made over the term of the lease, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's
incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives
receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under
residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend
on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts
are remeasured if there is a change in the following: future lease payments arising from a change in an
56
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Lease liabilities (cont.)
index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties.
When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to
profit or loss if the carrying amount of the right-of-use asset is fully written down.
Exploration and evaluation expenditure
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and
evaluation assets on an area of interest basis. Costs incurred before the Group has obtained the legal rights
to explore an area are recognised in the profit or loss statement.
Exploration and evaluation assets are only recognised if the rights of the area of interest are current and
either:
(i)
(ii)
the expenditures are expected to be recouped through successful development and exploitation of the
area of interest, or by its sale; or
activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable
assessment of the existence or other wise of economically recoverable reserves.
Where a project or area of interest has been abandoned, the expenditure incurred is written off in the year in
which the decision is made.
Trade and other payables
Trade payables and other accounts payable are recognised when the Consolidated Entity becomes obliged
to make future payments resulting from the purchase of goods and services. Due to their short-term nature they
are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid
within 30 days of recognition.
Contract liabilities
Contract liabilities represent the consolidated entity's obligation to transfer goods or services to a customer
and are recognised when a customer pays consideration, or when the consolidated entity recognises a
receivable to reflect its unconditional right to consideration (whichever is earlier) before the consolidated entity
has transferred the goods or services to the customer.
Provisions
Provisions are recognised when the Consolidated Entity has a present obligation as a result of a past event, it is
probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at reporting date, taking into account the risks and uncertainties surrounding the
obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate
specific to the liability.
The increase in the provision due to the passage of time is recognised as a finance cost.
Employee benefits
(i) Short term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected
to be settled within 12 months of the reporting date, are recognised in current other payables in respect of
employees' services up to the reporting date and are measured at the amounts expected to be paid when the
liabilities are settled.
57
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Employee benefits (cont.)
(ii) O t h e r l o n g t e r m e m p l o y e e b e n e f i t s
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer
settlement of the liability. The liability is 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 expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the
reporting date on national government bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
(iii) Share-based payment transactions
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of
services, where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the
option, together with non-vesting conditions that do not determine whether the consolidated entity receives
the services that entitle the employees to receive payment. No account is taken of any other vesting
conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in
equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant
date fair value of the award, the best estimate of the number of awards that are likely to vest and the
expired portion of the vesting period.
The amount recognised in profit or loss for the period is the cumulative amount calculated at each
reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by
applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms
and conditions on which the award was granted. The cumulative charge to profit or loss until settlement of
the liability is calculated as follows:
During the vesting period, the liability at each reporting date is the fair value of the award at that date
multiplied by the expired portion of the vesting period.
From the end of the vesting period until settlement of the award, the liability is the full fair value of the
liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the
cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective of whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not
been made. An additional expense is recognised, over the remaining vesting period, for any modification that
increases the total fair value of the share-based compensation benefit as at the date of modification.
58
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Employee benefits (cont.)
(iii) Share-based payment transactions (cont.)
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or
employee and is not satisfied during the vesting period, any remaining expense for the award is recognised
over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled
award, the cancelled and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date; and assumes that
the transaction will take place either: in the principal market; or in the absence of a principal market, in the
most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interest. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, are used, maximising the
use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making the measurements. Classifications are reviewed each
reporting date and transfers between levels are determined based on a reassessment of the lowest level
input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal
expertise is either not available or when the valuation is deemed to be significant. External valuers are
selected based on market knowledge and reputation. Where there is a significant change in fair value of an
asset or liability from one period to another, an analysis is undertaken, which includes a verification of the
major inputs applied in the latest valuation and a comparison, where applicable, with external sources of
data.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Consolidated Entity,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial years, adjusted for bonus elements in ordinary shares issued during the
year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
59
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Earnings per share (cont.)
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation
to dilutive potential ordinary shares.
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the
cost of acquisition of an asset or as part of an item of expense; or
for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables.
Cash flows are included in the Statement of Cash Flows on a gross basis. The GST component of cash
flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority
is classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to the
tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not
yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended
30 June 2020.
The consolidated entity’s assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the consolidated entity, are set out below:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January
2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition
criteria as well as new guidance on measurement that affects several Accounting Standards. Where the
consolidated entity has relied on the existing framework in determining its accounting policies for
transactions, events or conditions that are not otherwise dealt with under the Australian Accounting
Standards, the consolidated entity may need to review such policies under the revised framework. At this
time, the application of the Conceptual Framework is not expected to have a material impact on the
consolidated entity's financial statements.
60
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
4. OPERATING SEGMENTS
Identification of Reportable Operating Segments
The Consolidated Entity operates in geographical locations, Australia, United States of America (USA),
and Turkey-Europe (as acquired through the 2014 acquisition), and is organised into one operating
segment being mineral, mining and exploration and all of the Consolidated Entity’s resources are
employed for this purpose.
This operating segment is based on the internal reports that are reviewed and used by the Board of
Directors (who are identified as the Chief Operating Decision Makers (‘CODM’)) in asse ssing
performance and in determining the allocation of resources.
The CODM review expenditure in exploration. The accounting policies adopted for internal reporting
to the CODM are consistent with those adopted in the financial statements.
Geographical Information
Sales to external customers
2020
$
2019
$
-
-
-
-
-
-
-
-
Geographical non-current
assets
2020
$
2019
$
3,486,571
2,782,848
114,835
779,845
10,015
718,980
4,381,251
3,511,843
Australia
USA
Turkey
5. REVENUE
Other Revenue
Exploration Income - Profit on Sale Mt Alexander
Exploration Income - Profit on Sale of 75% Tenement Interest
Exploration Income - Option Fee
Exploration Income – Other
Government Grant – COVID-19
Other revenue
Revenue from Continuing operations
6. OTHER REVENUE
Profit on part disposal of right of use asset
Insurance recovery
Consolidated Entity
2020
$
2019
$
-
328,091
-
17,124
141,000
28,310
514,525
250,000
-
60,000
16,039
-
76,427
402,466
Consolidated Entity
2020
$
6,897
-
6,897
2019
$
-
1,712
1,712
61
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
7. OTHER OPERATING EXPENSE
Consolidated Entity
Accounting and Admin Services
Auditors Remuneration
Computer Expenses
Consulting Fee
Legal Expenses
Motor Vehicle Expense
Share Registry and Securities Exchange
Fringe Benefits Tax
Subscriptions, Publications, Memberships
Insurance
Interest on lease liability
Sundry Administration Expenses
8
2020
$
39,950
42,641
16,165
11,400
7,547
3,786
41,235
4,884
7,120
20,869
4,400
89,112
289,109
2019
$
40,875
40,060
13,194
4,202
7,435
6,236
43,940
4,716
8,008
20,443
-
54,429
243,538
8. AUDITOR’S REMUNERATION
During the financial year the following fees were paid or payable for services provided by PKF Perth, the
auditor of the Group:
Consolidated Entity
Audit services
Auditors of the Group
Audit and review of financial report – payable to PKF Perth
Audit and review of financial report – payable to other audit firms
Total remuneration for audit services
Non-audit services
Total Audit Services
9. LOSS PER SHARE
Basic and diluted loss per share – cents
The loss and weighted average number of ordinary shares used in
the calculation of basic and diluted loss per share are as follows:
2020
$
37,400
5,241
42,641
-
42,641
2019
$
40,060
-
40,060
-
40,060
Consolidated Entity
2019
2020
$
$
(0.2)
(0.3)
Loss used in calculation of earnings per share
(383,397)
(695,492)
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share
231,206,707
212,762,128
62
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
10. INCOME TAX EXPENSE
a)
Income Tax Expense
Current tax
Aggregate Income tax expense
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operations
Aggregate income tax expense
Deferred tax - origination and reversal of temporary
Differences
Consolidated Entity
2020
$
2019
$
88,147
88,147
88,147
-
88,147
-
-
-
-
-
-
-
The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the
income tax expense in the financial statements as follows:
Loss before tax
Prima facie tax benefit on loss at 27.5% (2019: 27.5%)
(295,250)
(81,194)
(695,492)
(191,260)
Add:
Tax effect of:
Other non-allowable items
Share based payments
Overs/unders from prior year
Tax losses not recognised (recognised)
Deferred tax balances not recognised (recognised)
Income tax expense on pre-tax net loss
(73,366)
38,036
876
464,707
(260,912)
88,147
18,878
16,751
(538)
337,887
(181,718)
-
Consolidated Entity
2019
2020
The applicable average weighted tax rates are as follows:
30%
0%
Deferred Tax Assets
At 27.5% (2019: 27.5%)
Carry forward losses
Financial Assets
Provisions and accruals
Merger/acquisition costs
Lease liability
Right of use asset
Consolidated Entity
2020
$
2019
$
5,352,208
-
24,862
4,475
1,210
4,376
5,387,131
4,856,601
-
22,347
4,475
-
-
4,883,423
63
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
10. INCOME TAX EXPENSE (cont.)
Deferred Tax Assets (cont.)
Tax benefit of the above Deferred Tax Assets will only be obtained if:
a) The company derives future assessable income or a nature and of an amount sufficient to
enable the benefits to be utilised; and
b) The company continues to comply with the conditions for deductibility imposed by law; and
c) No changes in income tax legislation adversely affect the company in utilising the benefits
Deferred Tax Liabilities
At 27.5% (2019: 27.5%)
Exploration expenditure
Capital raising costs
Property, plant and equipment
Financial asset
Accrued income
Prepayments
Consolidated Entity
2020
$
2019
$
907,176
23,586
5,085
68,795
-
1,343
1,005,985
711,934
18,353
7,500
1,181
33
1,314
740,315
The above Deferred Tax Liabilities have not been recognised as they have given rise to the carry
forward revenue losses for which the Deferred Tax Asset has not been recognised.
11. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Deposits at call
Term deposits
Consolidated Entity
2020
$
2019
$
952,107
1,000
15,000
968,107
1,047,789
528
15,000
1,063,317
a) Reconciliation to cash and cash equivalents at the end of the
year.
The above figures are reconciled to cash and cash
equivalents at the end of the financial year, as shown in the
Statement of Cash Flows, as follows:
Balances as above
Cash and cash equivalents in statement of cash flows
968,107
968,107
1,063,317
1,063,317
The Group’s exposure to interest rate risk and sensitivity analysis for financial assets and liabilities are
disclosed in note 24.
64
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
12. TRADE AND OTHER RECEIVABLES
Current
Lease receivables (i)
Other receivables (ii)
Accrued interest
Consolidated Entity
2020
$
2019
$
33,601
79,434
-
113,035
-
6,390
121
6,511
(i) The Company has a number of sub-leases with various parties which are the same term as the
Company’s lease, i.e. expiry date of 28 February 2021 with an option to extend for another year. They
are on a fixed monthly rent payable within 30 days.
(ii) Other receivables are non-interest bearing and are normally settled on 30 day terms.
None of the consolidated entity’s other receivables are past due (2019: Nil).
13. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
Current
Listed ordinary shares – at fair value
through profit and loss.
Reconciliation
Reconciliation of the fair values at the beginning and end of
the current and previous financial years.
Opening fair value
Additions
Disposals
Revaluation increment/(decrement)
Closing fair value
Consolidated Entity
2020
$
2019
$
630,742
43,147
43,147
350,000
(22,176)
259,771
630,742
49,428
-
(11,147)
4,866
43,147
Non-Current
Unlisted investment – at fair value through profit and loss
6,520
10,015
Reconciliation
Reconciliation of the fair values at the beginning and end of
the current and previous financial years.
Opening fair value
Revaluation decrement
Closing fair value
14. OTHER CURRENT ASSETS
Bonds & deposits
Prepayments
10,015
(3,495)
6,520
115,772
(105,757)
10,015
Consolidated Entity
2020
$
2019
$
2,010
4,884
6,894
2,010
4,779
6,789
65
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
15. INTEREST IN ASSOCIATE
The consolidated entity has a 23% (2019: 30%) interest in Kavak Madencilik A.Ş., which is a for-profit joint
venture established to explore mineral resources in Turkey. The consolidated entity’s investment in Kavak
Madencilik A.Ş. is accounted for using the equity method in the consolidated financial statements.
Summarised statement of financial position of Kavak Madencilik:
Cash and cash equivalents
Trade and other receivables
Other current assets
Exploration and evaluation expenditure
Trade and other payables
Net assets/ equity
Zenith’s 23% share (2019:30%) of Kavak Madencilik’s net
assets
Zenith’s carrying account of
Madencilik
investment
in Kavak
Summarised statement of profit or loss of Kavak Madencilik:
Administration Costs
Loss for the period
Movement Reconciliation:
Balance at beginning of financial year
Payments for investment
Share of loss recognised
Profit on part disposal of investment
Foreign exchange loss
Balance at end of financial year
16. PLANT AND EQUIPMENT
Plant and equipment – at cost
Less: Accumulated depreciation
Motor vehicles – at cost
Less: Accumulated depreciation
66
Consolidated Entity
2020
$
61,373
-
376,447
2,132,283
(1,056,822)
1,513,281
2019
$
10,291
270,693
-
1,443,207
(806,398)
917,793
348,055
275,337
348,055
275,337
(32,448)
(32,448)
(118,136)
(118,136)
Consolidated Entity
2020
$
2019
$
275,337
23,050
(9,135)
107,123
(48,320)
348,055
147,733
189,874
(35,441)
-
(26,829)
275,337
Consolidated Entity
2019
2020
$
$
25,822
(23,620)
2,202
94,652
(86,273)
8,379
25,822
(22,518)
3,304
94,652
(83,480)
11,172
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
16. PLANT AND EQUIPMENT (cont.)
Computer equipment and software – at cost
Less: Accumulated depreciation
29,337
(21,426)
7,911
Consolidated Entity
2020
$
2019
$
54,892
(42,097)
12,795
Carrying Amount
a) Movement Reconciliation
Cost
Consolidated
Balance at 1 July 2018
Additions
Disposals/Write-off
Balance at 30 June 2019
Balance at 1 July 2019
Additions
Disposals/Write-off
Balance at 30 June 2020
Depreciation
Balance at 1 July 2018
Depreciation for the year
Depreciation on asset write off
Balance at 30 June 2019
Balance at 1 July 2019
Depreciation for the year
Depreciation on asset write off
Balance at 30 June 2020
Carrying Amount
At 30 June 2019
At 30 June 2020
18,492
27,271
Plant &
Equipment
Motor
Vehicles
$
$
Computer
Equipment
& Software
$
24,324
1,498
-
25,822
25,822
-
-
25,822
21,489
1,029
-
22,518
22,518
1,102
-
23,620
94,652
-
-
94,652
94,652
-
-
94,652
79,756
3,724
-
83,480
83,480
2,793
-
86,273
46,477
11,004
(2,589)
54,892
54,892
-
(25,555)
29,337
39,721
4,965
(2,589)
42,097
42,097
4,324
(24,995)
21,426
Total
$
165,453
12,502
(2,589)
175,366
175,366
-
(25,555)
149,811
140,966
9,718
(2,589)
148,095
148,095
8,219
(24,995)
131,319
3,304
2,202
11,172
8,379
12,795
7,911
27,271
18,492
17. EXPLORATION AND EVALUATION EXPENDITURE
Balance at beginning of financial year
Capitalised expenditure
Less capitalised expenditure written against proceeds
Less capitalised expenditure reimbursed – Farm in Agreement
Less capitalised exploration expenditure recognised as equity
investment in associate
Less capitalised expenditure written off
Less impairment of exploration expenditure
Balance at end of financial year
67
Consolidated Entity
2019
$
2020
$
3,199,220
1,194,934
(21,909)
-
(21,486)
(336,467)
(21,027)
3,993,265
2,504,425
904,608
-
(46,961)
-
(65,079)
(97,773)
3,199,220
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
17. EXPLORATION AND EVALUATION EXPENDITURE (cont.)
Exploration and Evaluation Assets
The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the
successful development and commercial exploitation or sale of the respective area of interest as well as
maintaining rights of tenure.
During the financial year, the consolidated entity booked an impairment loss on capitalised exploration and
evaluation expenditure of $21,027 (2019: $97,773) following its review of its portfolio of mineral tenements,
whereby decisions have been made for certain areas of interest, not to incur substantial expenditure on
further exploration for and evaluation of mineral resources. Capitalised expenditure written off totaling
$336,467 (2019: $65,079) is as a result of decisions being made for certain areas of interest being
abandoned or the right to explore has expired or will not be renewed.
18. RIGHT OF USE ASSET
Land and buildings – right of use asset
Less: Accumulated depreciation
Consolidated Entity
2020
$
2019
$
37,730
(22,811)
14,919
-
-
-
The company leases land and buildings for its offices under a two-year agreement. There is an option to
renew for a further twelve months at the discretion of the landlord. The Company sub-leased 68.8% of the
offices, and has thus reclassified this portion of the right-of-use asset to lease receivables (refer note 12).
19. TRADE AND OTHER PAYABLES
Current
Other payables (a)
Accrued fees and employment expenses (b)
Consolidated Entity
2019
2020
$
$
36,827
60,901
97,728
44,467
85,240
129,707
Terms and Conditions
Terms and conditions relating to the above financial instruments
a) Other payables are non-interest bearing and are normally settled on 30 day terms.
b) Sundry creditors and accruals are non-interest bearing and have an average term of 30 days.
20. LEASE LIABILITIES
Current liabilities
Lease Liabilities
21. EMPLOYEE BENEFITS
Current liabilities
Employee benefits
Consolidated Entity
2019
2020
$
$
50,471
50,471
-
-
Consolidated Entity
2019
2020
$
$
70,906
70,906
66,148
66,148
68
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
22. ISSUED CAPITAL
(a) Share capital
Fully paid ordinary shares
Balance at beginning of year
2020
Shares
No.
2020
$
2019
Shares
No.
2019
$
212,762,128
20,475,655
212,762,128
20,475,655
Issue of ordinary shares
30,597,902
1,688,494
Costs of issue
-
(29,677)
-
-
-
-
Total
2020
243,360,030
22,134,472
212,762,128
20,475,655
During the year to 30 June 2020, the following changes to equity securities took place:
(i) On 20 August 2019, 352,567 fully paid ordinary shares were issued at $0.07091 for consideration
amounting to $25,000, for geochemical assay data.
(ii) On 28 October 2019, the Company announced a capital raising by way of a Non-renounceable
entitlement offer to existing shareholders of 1 new fully paid ordinary share for every 6 fully paid ordinary
shares held by eligible shareholders at record date being 5pm (AEDT) on 31st October 2019. A total of
30,245,335 ordinary ZNC shares were issued raising $1,663,494.
(b) Ordinary Shares
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the Group. All shares rank equally with regard to the Group’s residual
assets. Ordinary shares do not have a par value.
(c) Options
Information relating to Zenith Minerals Limited’s Employee Option Plan, including details of options issued,
exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set
out in Note 29.
(d) There is no current on market share buy-back.
69
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
23. RESERVES AND RETAINED LOSSES
(a) Reserves
Options reserve
Balance at beginning of financial year
Issue of Staff Options
Expired/cancelled staff options (refer note 29)
Balance at end of financial year
Foreign Currency Translation Reserve
Balance at beginning of financial year
Foreign currency translation
Balance at end of financial year
Consolidated Entity
2019
2020
$
$
200,048
138,313
(129,488)
208,873
(61,917)
(48,320)
(110,237)
139,136
60,912
-
200,048
(35,088)
(26,829)
(61,917)
Total Reserves
98,636
138,131
(b) Accumulated losses
Movements in accumulated losses were as follows:
Balance at beginning of financial year
Adjustment for change in accounting policy
Expired staff options (refer note 29)
Loss for the year
Balance at end of financial year
Options Reserve
(16,178,034)
(8,388)
129,488
(383,397)
(15,482,542)
-
-
(695,492)
(16,440,331)
(16,178,034)
The options reserve is used to recognise the benefit on the issue of options.
Foreign Currency Reserve
The reserve is used to recognise exchange differences arising from the translation of the financial
statements of foreign operations to Australian dollars.
24. FINANCIAL INSTRUMENTS
Overview
The Consolidated Entity has exposure to the following risks from their use of financial instruments:
Credit risk
Liquidity risk
Market risk
This note presents information about the Consolidated Entity’s exposure to each of the above risks, their
objectives, policies and processes for measuring and managing risk and the management of capital.
The Consolidated Entity does not use any form of derivatives as it is not at a level of exposure that requires
the use of derivatives to hedge its exposure. Exposure limits are reviewed by management on a continuous
basis. The Consolidated Entity does not enter into or trade financial instruments, including derivative financial
instruments, for speculative purposes.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. Management monitors and manages the financial risks relating to the operations of the
Consolidated Entity through regular reviews of the risks identified.
Credit Risk
Credit risk is the risk of financial loss to the Consolidated Entity if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Consolidated Entity’s
receivables from customers and investment securities. For the Consolidated Entity, it arises from receivables
due from director related parties. At the reporting date there were no significant concentrations of credit risk.
70
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
24. FINANCIAL INSTRUMENTS (cont.)
The consolidated entity does not hold any collateral.
Cash and Cash Equivalents
The Consolidated Entity limits its exposure to credit risk by only investing in liquid securities and only with counter
parties that have an acceptable credit rating.
Trade and Other Receivables
As the Consolidated Entity operates in the mining explorer sector, it does not have trade receivables and
therefore is not exposed to credit risk in relation to trade receivables.
Exposure to Credit Risk
The carrying amount of the Consolidated Entity’s financial assets represents the maximum credit exposure. The
Consolidated Entity’s maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Other receivables
Financial asset at fair value through profit or loss
Impairment Losses
Consolidated Entity
2019
2020
$
$
968,107
113,035
637,262
1,718,404
1,063,317
6,511
53,162
1,122,990
None of the Consolidated Entity’s other receivables are past due (2019: Nil). The allowance accounts in
respect of financial assets are used to record impairment losses unless the Consolidated Entity is satisfied
that no recovery of the amount owing is possible, at that point the amount is considered irrecoverable and is
written off against the financial asset directly. At 30 June 2020 the Consolidated Entity does not have any
collective impairment on its other receivables (2019: Nil).
Guarantees
The Consolidated Entity’s policy is to not provide financial guarantees. No guarantees have been
provided during the year.
Liquidity Risk
Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they
fall due. The Consolidated Entity’s approach to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity (mainly cash and cash equivalents) to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Consolidated Entity’s reputation. The Consolidated Entity manages liquidity risk by maintaining
adequate reserves by continuously monitoring forecast and actual cash flows. The Consolidated Entity
does not have any external borrowings.
The following are the contractual maturities of financial liabilities, including estimat ed interest
payments and excluding the impact of netting agreements. The cashflows in the maturity analysis
below are not expected to occur significantly earlier than contractually disclosed above.
Consolidated Entity – 30 June 2020
Non-derivatives
Weighted Average
Interest Rate
Contractual
cash flows
1 year
or less
1 to 2
years
2 to 5
years
Over 5
years
Non-interest bearing
Other payables*
Interest bearing
Lease liability
-
5%
97,728
97,728
50,471
50,471
-
-
-
-
-
-
* The weighted average interest rate on other payables is Nil% as it is non-interest bearing.
71
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
24. FINANCIAL INSTRUMENTS (cont.)
Consolidated Entity - 30 June 2019
Non-derivative
Non Interest
Bearing
Weighted
Average Interest
Rate
Contractual
cash flows
1 year
or less
1 to 2
years
2 to 5
years
Over 5
years
Non-interest bearing
Other payables*
-
129,707 129,707
-
-
-
*The weighted average interest rate on other payables is Nil% as it is non interest bearing.
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Consolidated Entity’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
Currency Risk
The Consolidated Entity is exposed to foreign currency risk through foreign exchange rate
fluctuations when it enters into certain transactions denominated in foreign currency. Foreign
exchange risk arises from future commercial transactions and recognised financial assets and
financial liabilities denominated in a currency that is not the entity’s functional currency. The risk is
measured using sensitivity analysis and cash flow forecasting.
At 30 June, the carrying amount of the Consolidated Entity’s financial assets denominated in foreign
currencies as detailed below.
Financial Assets
Cash and cash equivalents denominated in US dollars
Consolidated Entity
2020
$
2019
$
4,420
445,281
A 5% movement in foreign exchange rates would increase or decrease the loss before tax by
$221(2019: $22,264).
Interest Rate Risk
The Consolidated Entity is exposed to interest rate risk, however to maintain liquidity, cash is invested for
periods generally not exceeding 90 Days.
Cash Flow Sensitivity Analysis for Variable Rate Instruments
A change of 100 basis points in interest rates at the reporting date would have increased (decreased)
equity and profit or loss by the amounts shown below. The analysis is performed on the same basis as for
2019.
2020
Profit or Loss
2019
Profit or Loss
100 bp
Increase
$
100 bp
Decrease
$
100 bp
Increase
$
100 bp
Decrease
$
Cash & cash equivalents
9,681
(9,681)
10,633
(10,633)
Fair Values
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
72
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
24. FINANCIAL INSTRUMENTS (cont.)
Fair Value Hierarchy
The table below details the consolidated entity’s assets and liabilities, measured or disclosed at fair value,
using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
Level 3: Unobservable inputs for the asset or liability.
Consolidated –
30 June 2020
Assets
Financial assets at fair value
through profit or loss
Total Assets
Consolidated –
30 June 2019
Assets
Financial assets at fair value
through profit or loss
Total Assets
Level 1
$
Level 2
$
Level 3
$
630,742
6,520
630,742
6,520
Level 1
$
Level 2
$
Level 3
$
43,147
10,015
43,147
10,015
Total
$
637,262
637,262
Total
$
53,162
53,162
-
-
-
-
There were no transfers between levels during the financial year.
The carrying amounts of other receivables, trade and other payables are assumed to approximate their fair
values due to their short-term nature.
Valuation techniques for fair value measurements categorised within level 2:
Unquoted investments have been valued using their share of the net asset value.
Capital Management
The Consolidated Entity’s objectives when managing capital is to safeguard the Consolidated Entity’s
ability to continue as a going concern, so as to maintain a strong capital base sufficient to maintain future
exploration and development of its projects.
In order to maintain or adjust the capital structure, the Consolidated Entity may return capital to
shareholders, issue new shares or sell assets for in-specie distributions. The Consolidated Entity’s focus
has been to raise sufficient funds through equity to fund exploration and evaluation activities.
The Consolidated Entity monitors capital on the basis of the gearing ratio, however there are no external
borrowings as at reporting date. The Consolidated Entity encourages employees to be shareholders
through the issue of free options to employees.
There were no changes in the Consolidated Entity’s approach to capital management during the financial
year. The Consolidated Entity is not subject to any externally imposed capital requirements.
73
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
25. OPERATING LEASE COMMITMENTS
Not later than one year
Later than one year but not later than two years
26. EXPLORATION COMMITMENTS
Consolidated Entity
2020
$
2019
$
-
-
-
75,950
51,400
127,350
The Consolidated Entity has certain obligations to perform minimum exploration work and expend
minimum amounts on works on mining tenements in order to retain its interests in these tenements,
which would be approximately $616,000 during the next 12 months (2019: $574,192). There are no
commitments beyond 12 months in relation to tenements. These obligations may be varied from
time to time, subject to approval and are expected to be fulfilled in the normal course of operations
of the entity.
27. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key Management Personnel Compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated Entity
2019
$
2020
$
449,850
42,282
75,850
567,982
457,885
43,121
49,837
550,843
Information regarding key management personnel compensation is provided in the Remuneration
Report section of the Directors Report.
28. RELATED PARTY TRANSACTIONS
(a) Parent Entity and Ultimate Controlling Parent
Zenith Minerals Limited is the parent entity and ultimate controlling entity of the Group.
(b) Subsidiaries
Interests in subsidiaries are set out in Note 32.
(c) Key Management Personnel
Disclosures relating to key management personnel are set out in Note 27.
(d) Transactions with Related Parties
The following transactions occurred with related parties during the financial year:
ii) Provision of Serviced Office – During the financial year ended 30 June 2020, there was fee
revenue of:
a. $7,164 (2019: $7,745) from Minasola Pty Ltd, a director related entity of Mr R M Joyce;
b. $7,164 (2019: $7,745) from Creekwood Nominees Pty Ltd, a director related entity of
Mr S A Macdonald;
c. $7,164 (2019: $7,745) from Satinbrook Pty Ltd, a director related entity of Mr G D Riley.
74
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
28. RELATED PARTY TRANSACTIONS (cont.)
(e) Outstanding balances arising from transactions with related parties
The following balances arising from transactions with related parties are outstanding as at 30
June 2020:
Current receivables:
Trade and other receivables
Current payables:
Accrued fees and employment expenses
Consolidated Entity
2020
$
2019
$
-
-
6,390
30,112
(f) There were no loans to or from related parties at the current and previous reporting date.
All transactions were made on normal commercial terms and conditions and at market rates.
29. SHARE BASED PAYMENTS
Employee Option Plan
The establishment of the Zenith Minerals Limited's Employee Option Plan was approved by Directors
resolution dated 27 February 2007. A current version of the Zenith Minerals Limited's Employee Option
Plan was approved by shareholders at the Annual General Meeting held on 24th November 2016 and three
years later on 20th November 2019.
The Board may offer free options to persons ("Eligible Persons") who are:
i)
full time, part time or casual employees, a contractor or an associated body corporate of the Company
who have accepted a written offer of engagement; or
ii) Directors of the company or any subsidiary based on a number of criteria including contribution to the
Consolidated Entity, period of employment, potential contribution to the Consolidated Entity in the future
and other factors the Board considers relevant.
Options granted under the plan carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share, in any event no later than thirty days, after
the receipt of a properly executed notice of exercise and application monies. The Consolidated Entity will
issue to the option holder, the number of shares specified in that notice. The Consolidated Entity will apply
for official quotation of all shares issued and allotted pursuant to the exercise of the options.
Options may not be transferred other than to an associate of the holder.
Set out below is the summary of options granted under the plan:
2020:
Grant Date
Expiry Date Exercise
Price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Number
Number
Number
14 May 2020 14 May 2023
$0.1097
25 Nov 2019 24 Nov 2022
$0.087
-
-
1,200,000
3,950,000
28 Sep 2018 28 Sep 2021
$0.18
1,650,000
29 Nov 2016 29 Nov 2019
$0.161 2,500,000
-
-
4,150,000
5,150,000
-
-
-
-
-
Expired or
Forfeited
during the
year
Number
-
-
-
Balance at
end of the
year
Exercisable
at end of
the year
Number
Number
1,200,000
1,200,000
3,950,000
3,950,000
1,650,000
1,650,000
(2,500,000)*
-
-
(2,500,000)
6,800,000
6,800,000
* 2,500,000 $0.161 unlisted options expired on 29 November 2019. These had a fair value of $0.05179 each.
75
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
29. SHARE BASED PAYMENTS (cont.)
Employee Option Plan (cont.)
2019:
Grant Date
Expiry Date Exercise
Price
Balance at
start of the
year
Granted
during the
year
Exercised
during the
year
Number
Number
Number
Expired or
Forfeited
during the
year
Number
28 Sep 2018 28 Sep 2021
$0.18
-
1,650,000
29 Nov 2016 29 Nov 2019
$0.161
2,500,000
-
2,500,000
1,650,000
-
-
-
-
-
-
Balance at
end of the
year
Exercisable
at end of
the year
Number
Number
1,650,000
1,650,000
2,500,000
2,500,000
4,150,000
4,150,000
Zenith Minerals Limited
Outstanding at the beginning of the period
Exercised during the period
Granted during the period
Forfeited during the period
Lapsed during the period
Outstanding at end of the period
Exercisable at the end of the period
Weighted
average
exercise
price
2020
$0.17
-
Number of
Options
Weighted
average
exercise
Price
Number of
options
2020
2019
2019
4,150,000
$0.16
2,500,000
-
-
-
$0.092
5,150,000
$0.18
1,650,000
-
-
$0.161
(2,500,000)
$0.11
$0.11
6,800,000
6,800,000
-
-
$0.17
$0.17
-
-
4,150,000
4,150,000
The weighted average remaining contractual life of share options outstanding at the end of the year was
2.20 years (2019: 1.14 years). The weighted average exercise price during the financial year was $0.11
(2019: $0.17).
For the options granted during the 2020 financial year, the valuation model inputs used in the Black-
Scholes Model to determine the fair value at the grant date, are as follows:
2020:
Grant date
Expiry date
25 Nov 2019
24 Nov 2022
14 May 2020 14 May 2023
2019:
Grant date
Expiry date
28 Sep 2018
28 Sep 2021
Share
price at
grant
date
$0.055
$0.085
Share
price at
grant
date
$0.115
Exercise
price
Expected
volatility
Dividend
yield
$0.087
$0.1097
50.55%
206.16%
-
-
Exercise
price
Expected
volatility
Dividend
yield
$0.18
65.34%
-
Risk-
free
interest
rate
0.69%
0.26%
Risk-
free
interest
rate
2.06%
Fair value
at grant
date
$0.011358
$0.077874
Fair value
at grant
date
$0.036916
The expected price volatility is based on the historical volatility (based on the remaining life of the
options), adjusted for any expected changes to future volatility due to public available information.
Total expense recognised as share-based payments for the 2020 financial year was $138,313 (2019:
$60,912).
76
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
30. RECONCILIATION OF LOSS BEFORE INCOME TAX EXPENSE TO NET CASH USED
IN OPERATING ACTIVITIES
Loss for the year
Add:
Non-cash items
Share of losses of Associate accounted for using equity method
Net fair value (gain)/loss on other financial assets
Exploration expenditure written off
Impairment loss on exploration & evaluation expenditure
Depreciation and amortization
Plant and equipment written off
Foreign exchange (gain)/loss
Share based payment
Profit on disposal of party equity investment in associate
Profit on sale of tenements
Changes in operating liabilities:
Decrease/(Increase) in trade and other receivables
Decrease/(Increase) in other assets
Decrease/(Increase) in exploration expenditure capitalised
Decrease/(Increase) in right of use asset
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in provision for income tax
Increase/(Decrease) in employee benefits
Increase/(Decrease) in lease liabilities
Net cash (used in) operating activities
Consolidated Entity
2019
2020
$
$
(383,397)
(695,492)
9,135
(256,276)
336,467
21,027
31,030
561
(22,856)
138,313
(107,123)
(328,091)
35,441
100,891
65,079
97,773
9,718
-
(33,227)
60,912
-
(250,000)
(106,524)
(105)
(1,159,412)
(37,730)
(40,881)
88,147
4,758
113,633
(1,699,324)
36,234
(60)
(946,901)
-
54,415
(12,481)
(4,100)
-
(1,481,798)
(a) Non-cash investing and financing activities.
During 2020, there were no non-cash investing and financing activities to disclose other than those in
Note 29.
31. SUBSEQUENT EVENTS
A capital raising announced to the Australian Securities Exchange (‘ASX’) on 7th July 2020, resulted in:
i.
the placement/issue on 13th July 2020 of 51,000,000 ordinary shares to existing shareholders and
sophisticated investors, pursuant to s.708 of the Corporations Act (Cth) 2001, at $0.10 per share raising
$5,100,000.
ii. The issue on 13th July 2020 of 2,000,000 unlisted options exercisable at $0.14 on or before 31 December
2023 and 2,000,000 unlisted options exercisable at $0.16 on or before 31 December 2023 associated
with the placement.
On 6th August 2020, Zenith Minerals Limited (‘Zenith’) announced to the ASX that American Rare Earths
(ASX Code: ARR) and Zenith Minerals Limited have executed an option agreement whereby ARR will
acquire 100% of Zenith’s Australian wholly owned subsidiary, Wyoming Rare Pty Ltd which controls the
Laramie REE project held by its 100% owned USA subsidiary Wyoming Rare (USA) Inc. The acquisition
includes payment to Zenith of a non-refundable deposit of $10,000 plus a further $40,000 cash payment and
2,500,000 ARR ordinary shares (price A$0.02 each) upon satisfaction of conditions including the conversion
of exploration permits to mineral leases, which is anticipated to occur in November this year.
On 10th September 2020, Zenith announced to the ASX that it entered into an option agreement in relation
to a new gold project called Jackadgery in New South Wales. Under the option agreement, an option
payment of $10,000 is paid upfront and there is a requirement to complete a minimum of a 300m drill
program within 12 months and at its sole election may then elect to acquire a 90% interest in the project
for a one-off cash payment of $100,000 to one (Ms C McClatchie) of two private vendors, the other (Mr A
Sloot).
77
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
31. SUBSEQUENT EVENTS (cont.)
In relation to COVID-19, Zenith’s Board is mindful of the significant impact the virus is having on the community
and is continuing to assess the potential risks associated with its activities. The Company will continue to act
on advice provided by Federal and State Governments with the health and safety of Zenith’s crew, contractors
and local stakeholders a priority. Zenith has in place a COVID-19 site health management plan and requires
that all its field crews comply with the requirements of that plan. In addition, the Company is managing projects
across state borders and is ensuring it complies with both Federal and State based travel and border
restrictions by employing, where available, local staff and using locally based contractors and consultants.
No other matter or material event has arisen since 30 June 2020, which has significantly affected or may
significantly affect the Consolidated Entity’s operations, the results of those operations, or the Consolidated
Entity’s future state of affairs.
3 2 . S U B S I D I A R I E S
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly
owned subsidiaries in accordance with the accounting policy described in note 3.
Name
Nanutarra Minerals Pty Ltd
Earaheedy Minerals Pty Ltd
S2M2 Coal Pty Ltd
Kalicoal Pty Ltd
Mamucoal Pty Ltd
S2M2 Eastern Coal Pty Ltd
BlackDragon Energy (Aus) Pty Ltd
Zenolith (USA) LLC.
Zacatecas Minerals Pty Ltd
Fossil Prospecting Pty Ltd
Caldera Metals Pty Ltd
Wyoming Rare Pty Ltd
Wyoming Rare (USA) Inc. (1)
Principal place of
business/country of
incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Australia
Australia
Australia
Australia
USA
Ownership interest
2020
%
100%
100%
100%
100%
100%
100%
100%
45%
100%
100%
100%
100%
100%
2019
%
100%
100%
100%
100%
100%
100%
100%
45%
100%
100%
100%
100%
0%
The Consolidated Entity is incorporated in Australia and its principle activity is exploration.
(1) Wyoming Rare (USA) Inc. was incorporated in Wyoming on 1st August 2019.
33. PARENT ENTITY DISCLOSURES
As at and throughout the financial year ended 30 June 2020, the parent entity of the Group was Zenith
Minerals Limited.
Result of Parent Entity:
Profit (loss) for the period
Other comprehensive income (loss)
Total Comprehensive Income (loss) for the period
Financial Position of Parent Entity at Year End:
Current assets
Total Assets
Current liabilities
Total Liabilities
78
2020
$
2019
$
(723,856)
-
(723,856)
(660,760)
-
(660,760)
1,717,759
5,208,285
985,924
4,120,150
219,105
219,105
195,856
195,856
NOTES TO THE FINANCIAL STATEMENTS
Zenith Minerals Limited
33. PARENT ENTITY DISCLOSURES (cont.)
Total Equity of the Parent Entity Comprising of:
Share capital
Reserves
Retained earnings/(losses)
2020
$
2019
$
22,134,472
208,873
(17,354,165)
20,475,655
200,048
(16,751,408)
4,989,180
3,924,295
The Parent Entity has no guarantees at 30 June 2020 (2019:Nil)
Contingent Assets and Liabilities
There are no contingent assets and liabilities at reporting date (2019: Nil) other than what is disclosed in Note
36.
34. DIVIDENDS
No dividends have been paid or provided for.
35. CONTINGENT ASSETS AND LIABILITIES
On the 14th May 2020, the Company announced to the ASX that it proposes to grant unlisted options to
directors under the Company’s Employee Share Option Plan, as follows:
-
-
to Non-Executive Directors, Peter Bird, Julian Goldsworthy, Stan Macdonald and Graham Riley: 1.25
million unlisted options with a 3-year term each expiring 14 May 2023 and exercisable at $0.1097 each
(being the price that is 43% above the most recent 5-day VWAP).
to Managing Director Mick Clifford 2 million unlisted options with a 3-year term expiring 14 May 2023 and
exercisable at $0.1097 each (being the price that is 43% above the most recent 5-day VWAP).
The issue of unlisted options under the Company’s Employee Share Option Plan to the directors is subject to
shareholder approval, to be sought at the Company’s next General Meeting.
There are no other contingent assets and liabilities at reporting date (2019: Nil).
79
DIRECTORS’ DECLARATION
Zenith Minerals Limited
1.
In the opinion of the directors of Zenith Minerals Limited:
(a)
the Financial Statements and notes thereto, are in accordance with the Corporations Act 2001,
including:
i) giving a true and fair view of the Consolidated Entity's financial position as at 30 June 2020 and
Remuneration Report marked as audited, and its performance for the financial year ended on
that date; and
ii) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements;
(b)
(c)
the Financial Report also complies with International Financial Reporting Standards as issued
by the International Accounting Standards Board as disclosed in note 2(a);
there are reasonable grounds to believe that the Company and the Consolidated Entity will be able
to pay its debts as and when they become due and payable.
2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to s.295(5) (a) of the Corporations Act
2001.
On behalf of the Directors
Mr R M JOYCE
Chairman
Dated: 25 September 2020
PERTH, WA
80
PKF Perth
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ZENITH MINERALS LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Zenith Minerals Limited (the company), which comprises
the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss
and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies
and other explanatory information, and the directors’ declaration of the company and the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time during the financial
year.
In our opinion the accompanying financial report of Zenith Minerals Limited is in accordance with the Corporations
Act 2001, including:
i) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its
performance for the year ended on that date; and
ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the consolidated entity 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.
Level 4, 35 Havelock Street, West Perth, WA 6005
PO Box 609, West Perth, WA 6872
T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au
PKF Perth is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of
any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
81
PKF Perth
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current year. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate audit opinion
on these matters. For each matter below, our description of how our audit addressed these matters are
provided in that context.
1. Valuation of capitalised exploration expenditure
Why significant
How our audit addressed the key audit matter
As at 30 June 2020 the carrying value of
exploration and evaluation assets was $3,993,265
(2019: $3,199,220), as disclosed in Note 17. This
represents 65% of total assets of the consolidated
entity.
The consolidated entity’s accounting policy in
respect of exploration and evaluation expenditure
is outlined in Note 3.
Significant judgement is required:
determining whether
facts
and
in
circumstances indicate that the exploration
and evaluation assets should be tested for
impairment in accordance with Australian
Accounting Standard AASB 6 Exploration for
and Evaluation of Mineral Resources (“AASB
6”); and
in determining the treatment of exploration
and evaluation expenditure in accordance
with AASB 6, and the consolidated entity’s
accounting policy. In particular:
o whether the particular areas of interest
meet the recognition conditions for an
asset; and
o which elements of exploration and
for
evaluation expenditures qualify
capitalisation for each area of interest.
Our work included, but was not limited to, the
following procedures:
conducting a detailed review of management’s
assessment of
trigger events
impairment
prepared in accordance with AASB 6 including:
o assessing whether the rights to tenure of
the areas of interest remained current at
reporting date as well as confirming that
to be
rights
renewed for tenements that will expire in
the near future;
tenure are expected
to
o holding discussions with the directors and
management as to the status of ongoing
exploration programmes for the areas of
interest, as well as assessing if there was
evidence that a decision had been made to
discontinue activities in any specific areas
of interest; and
o obtaining and assessing evidence of the
consolidated entity’s future intention for the
areas of interest, including reviewing future
budgeted expenditure and related work
programmes.
of
assessment
considering whether exploration activities for the
areas of interest had reached a stage where a
reasonable
economically
recoverable reserves existed;
testing, on a sample basis, exploration and
evaluation expenditure incurred during the year
for compliance with AASB 6 and
the
consolidated entity’s accounting policy; and
assessing the appropriateness of the related
disclosures in Note 3 and 17.
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PKF Perth
2. Valuation of Investment in Associate
Why significant
How our audit addressed the key audit matter
The consolidated entity has a 23% interest in an
associate, Kavak Madencilik, which is a for-profit
joint venture established for mineral exploration
activities in Turkey. As at 30 June 2020, the value
of the investment in the consolidated entity is
$348,055 (2019: $275,337) as detailed in Note 15.
The consolidated entity’s accounting policy in
respect of joint ventures is outlined in Note 3.
The estimates and judgements in relation to the
valuation of
the capitalised exploration and
evaluation expenditure have a significant impact
on Kavak Madencilik’s position and performance,
which effects the consolidated entity’s investment
in Kavak Madencilik and its share of the loss
recognised in the Consolidated Statement of Profit
or Loss and Other Comprehensive
Income
totalling $9,135 (2019: $35,441) as detailed in
Note 15.
Our work included, but was not limited to, the
following procedures:
considering the control relationship to confirm
that equity accounting is appropriate;
assessing the work performed by the component
auditor on Kavak Madencilik to ensure in
accordance with relevant auditing standards,
including in particular:
o addressing the capitalisation of exploration
IFRS 6
in accordance with
costs
Exploration For and Evaluation of Mineral
Resources; and
o addressing the potential impact of the
impairment triggers within IFRS 6.
ensuring all other component auditor instructions
provided by us were followed and addressed
appropriately;
reviewing the foreign exchange translation of the
movements within the investment during the
year, to confirm that it is reasonable and in
accordance with AASB 121 The Effect of
Changes in Foreign Exchange Rates;
reviewing the calculation of the part disposal of
the interest in associate reducing its interest from
30% to 23%, to ensure that this was in
accordance with AASB 128 Investments in
Associates and Joint Ventures; and
assessing the appropriateness of the related
disclosures in Notes 3 and 15.
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PKF Perth
3.
Implementation of AASB 16 Leases
Why significant
How our audit addressed the key audit matter
We have evaluated the application of AASB 16 and
tested the resulting impact on the consolidated
statement of financial position and consolidated
statement of profit or Loss and other comprehensive
income.
We have assessed whether
the accounting
regarding leases is consistent with the definitions of
AASB 16 including factors such as lease term,
discount rate and measurement principles.
Specifically, our work in this area included:
Discussions with management regarding the
first-time adoption methodology and checking
calculations
including
transition,
on
adjustments to opening balances;
Assessing the integrity of the consolidated
lease workings and
entity’s AASB 16
calculations prepared by management;
For
Assessing key
the
judgements,
the relevant
including
internal borrowing rate and renewal dates;
leases, we agreed
the
consolidated entity’s inputs in the AASB 16
lease calculation model in relation to those
leases to the relevant terms of the underlying
signed lease agreements;
Substantive
testing of capitalised
lease
calculations and the relevant unwinding of the
lease asset and lease liability; and
Assessing the adequacy of the disclosures
made by management in the consolidated
financial statements.
The 30 June 2020 financial year was the first year
of adoption of Australian Accounting Standard
AASB 16 Leases. The consolidated entity has
recognised a right of use asset of $14,919, a lease
receivable of $33,601 and lease liability of $50,471
as at 30 June 2020 as detailed in Notes 12, 18 and
20 respectively.
AASB 16 replaces the existing standard AASB 117
and specifies how the consolidated entity will
recognise, measure, present and disclose leases.
The Standard provides a single lessee accounting
model, requiring lessees to recognise assets and
liabilities for all leases unless the lease term is 12
months or less or the underlying asset has a low
value.
The implementation of AASB 16 is considered a
key audit matter due to:
the complexity and judgements involved in the
application of AASB 16; and
the adjustment to the consolidated entity’s
assets and liabilities as at 30 June 2020 and 1
July 2019 as a result of the implementation of
AASB 16.
The modified retrospective approach was applied
for the conversion to AASB 16. The comparable
figures from the prior year’s periods were not
adjusted.
The consolidated entity has disclosed its adoption
of AASB 16, including key judgements, in notes 2
and 3 to the consolidated financial statements.
Other Information
Those charged with governance are responsible for the other information. The other information comprises the
information included in the consolidated entity’s annual report for the year ended 30 June 2020, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon, with the exception of the Remuneration Report.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
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PKF Perth
In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using a going
Responsibilities of 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 consolidated entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the consolidated entity 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 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 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 Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
consolidated entity’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 consolidated entity’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 consolidated entity 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 consolidated entity to express an opinion on the group financial report. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
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PKF Perth
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 with the Directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
Opinion
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 Zenith Minerals Limited for the year ended 30 June 2020 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
PKF PERTH
SHANE CROSS
AUDIT PARTNER
25 SEPTEMBER 2020
WEST PERTH
WESTERN AUSTRALIA
86
CORPORATE GOVERNANCE STATEMENT
Zenith Minerals Limited
CORPORATE GOVERNANCE STATEMENT
Zenith Minerals Limited and its subsidiaries (‘Group’) Corporate Governance Statement outlines the main
corporate governance practices of Zenith Minerals Limited and its subsidiaries (‘Group’) in place throughout the
financial year ended 30 June 2020, which comply with the 3rd Edition of the Australian Securities Exchange
(‘ASX’) Corporate Governance Principles and Recommendations of the ASX Corporate Governance Council,
unless otherwise stated.
The Group’s Corporate Governance Statement for the financial year ending 30 June 2020 is current as at 25th
September 2020 and has been approved by the Board of Directors of Zenith Minerals Limited.
The Corporate Governance Statement
https://www.zenithminerals.com.au/corporate-governance-policies/.
is available on
the Zenith Minerals Limited website at
The company’s ASX Appendix 4G, which is a checklist that cross-references the ASX Principles and
Recommendations to the relevant disclosures in either this statement, the Annual Report or the company website,
is contained in the website at www.zenithminerals.com.au.
87
ADDITIONAL SHAREHOLDERS INFORMATION
Zenith Minerals Limited
In Compliance with ASX Requirements
The shareholder information set out below was applicable as at 16 September 2020.
1.
DISTRIBUTION OF EQUITY SECURITIES
a) Analysis of numbers of shareholders by size of holding – ordinary fully paid shares (ZNC)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of
Shareholders
Number of Fully
Paid Ordinary
Shares
441
449
231
676
256
159,287
1,066,414
1,943,461
24,699,542
266,491,326
2,053
294,360,030
b) Number of shareholders holding less than a marketable parcel – 850 (at 16 September 2020).
2.
PARTICULARS OF TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest holders of quoted shares are listed below:
Shareholder Shares Issued
J P MORGAN NOMINEES AUSTRALIA PTY LTD
1 HSBC CUSTODY NOM (AUSTRALAI) LIMITED
2
3 MS NADA GRANICH
4 MS SUZI QUELI MIQUILINI
5 GALLOWAY LTD
6 GDR PTY LTD
7 ABINGDON NOMINEES PTY LTD
8 BREAMLEA PTY LTD
9 MR AUSTIN SYDNEY EVAN MILLER
10 OLMA PRIVATE EQUITY FUND LP
11 CUSTODIAL SERVICES LTD
12 PERSHING NOMINEES LTD
13 CITICORP NOMINEES PTY LIMITED
14 TINTERN (VIC) PTY LTD
15 STRUVEN NOMINEES PTY LTD
16 MR JOHN BEVAN TILBROOK & MRS PAULINE TILBROOK &
MR JOHN EDWIN TILBROOK
17 YANDAL INVESTMENTS PTY LTD
18 MR JOHN ALBERT JAMES RYAN & MRS CHANTHA RYAN
19 ABINGDON NOMINEES PTY LTD
20 EQUITY TRUSTEES LIMITED
Fully Paid Ordinary Shares
Number held
% of total
29,039,789
15,385,028
13,383,404
11,398,001
9,345,455
9,000,000
7,446,353
6,826,364
6,279,171
5,600,000
5,283,787
5,040,000
4,285,218
4,028,228
3,647,834
3,301,014
3,262,417
3,000,000
2,831,976
2,800,000
9.87%
5.23%
4.55%
3.87%
3.17%
3.06%
2.53%
2.32%
2.13%
1.90%
1.80%
1.71%
1.46%
1.37%
1.24%
1.12%
1.11%
1.02%
0.96%
0.95%
TOTAL FOR TOP 20:
151,184,039
51.36%
88
ADDITIONAL SHAREHOLDERS INFORMATION
Zenith Minerals Limited
3 . V O T I N G R I G H T S
Ordinary Shares: At general meetings of the Company, each member entitled to vote may vote in person
or by proxy or attorney or representative. On a show of hands every person who is a member or a
representative of a member has one vote, and on a poll every person present in person or by proxy or
attorney has one vote for each share held.
Options: No voting rights.
4.
SUBSTANTIAL SHAREHOLDERS
Substantial shareholders in the Company are:
Ordinary Shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
5.
UNQ UOT E D E Q UIT Y S E CUR IT IE S
The following unquoted options are on issue:
Number
held
29,039,789
15,385,028
% Interest
9.87%
5.23%
Number on
Issue
Number of
Holders
Options issued under the Company’s Employee Option Plan to take up
ordinary shares:
- Exercisable at 18 cents each by 28 September 2021
- Exercisable at 8.87 cents each by 24 November 2022
- Exercisable at 10.97 cents each by 14 May 2023
1,650,000(1)
3,950,000(2)
1,200,000(3)
Unlisted options exercisable at 14 cents expiring 31 December 2023
Unlisted options exercisable at 16 cents expiring 31 December 2023
2,000,000(4)
2,000,000(5)
4
4
4
1
1
(1) Persons holding 20% or more:
M J Clifford
M J Nelmes
61%
21%
(2) Persons holding 20% or more:
M J Clifford
(3) Persons holding 20% or more:-
M J Nelmes
A D’hulst
(4) Persons holding 20% or more:
C G Nominees (Australia) Pty Ltd
(5) Persons holding 20% or more:
C G Nominees (Australia) Pty Ltd
89
63%
42%
42%
100%
100%
INTERESTS IN MINING TENEMENTS
Zenith Minerals Limited
INTERESTS IN MINING TENEMENTS
PROJECT
LOCATION
Earaheedy
Earaheedy
Earaheedy
Vivash Gorge
Develin Creek
Develin Creek
Flanagans
Cardinals
Red Mountain
Waratah Well
Waratah Well
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
Split Rocks
WA
WA
WA
WA
QLD
QLD
QLD
WA
QLD
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
TENEMENT
NUMBER
E69/2733
E69/3414
R69/2
HOLDER
Zenith Minerals Limited
Zenith Minerals Limited
Zenith Minerals Limited
E47/3071
Zenith Minerals Limited
EPM16749
EPM17604
Kalicoal Pty Ltd
Kalicoal Pty Ltd
ZENITH
MINERALS
INTEREST
100%
100%
100%
RTX Option
to Purchase
100%
100%
STATUS
Granted
Granted
Granted
Granted
Granted
Granted
EPM27487
Zenith Minerals Limited
100%
Granted
E45/4445
S2M2 Eastern Coal Pty Ltd
100%
Granted
EPM26384 Black Dragon Energy (AUS) Pty Ltd
100%
Granted
E59/2170 Black Dragon Energy (AUS) Pty Ltd
E59/2321 Black Dragon Energy (AUS) Pty Ltd
E77/2375 Black Dragon Energy (AUS) Pty Ltd
E77/2394 Black Dragon Energy (AUS) Pty Ltd
E77/2395 Black Dragon Energy (AUS) Pty Ltd
E77/2386 Black Dragon Energy (AUS) Pty Ltd
E77/2388 Black Dragon Energy (AUS) Pty Ltd
E77/2453 Black Dragon Energy (AUS) Pty Ltd
E77/2454 Black Dragon Energy (AUS) Pty Ltd
E77/2455 Black Dragon Energy (AUS) Pty Ltd
E77/2456 Black Dragon Energy (AUS) Pty Ltd
E77/2457 Black Dragon Energy (AUS) Pty Ltd
E77/2513 Black Dragon Energy (AUS) Pty Ltd
E77/2514 Black Dragon Energy (AUS) Pty Ltd
E77/2515 Black Dragon Energy (AUS) Pty Ltd
E77/2615 Black Dragon Energy (AUS) Pty Ltd
E77/2616 Black Dragon Energy (AUS) Pty Ltd
P77/4506 Black Dragon Energy (AUS) Pty Ltd
P77/4507 Black Dragon Energy (AUS) Pty Ltd
P74/379 Black Dragon Energy (AUS) Pty Ltd
E74/634 Black Dragon Energy (AUS) Pty Ltd
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Split Rocks-Dulcie
WA
P77/4102
RR & Assoc & Highscore PL
# 100% below
6m subject to
option
agreement &
royalty
Split Rocks-Dulcie
Split Rocks-Dulcie
Split Rocks-Dulcie
Split Rocks-Dulcie
Split Rocks-Dulcie
Split Rocks-Dulcie
Split Rocks-Dulcie
Split Rocks-Dulcie
Split Rocks-Dulcie
WA
WA
WA
WA
WA
WA
WA
WA
WA
M77/1250
RR & Assoc & Highscore PL
As above
L77/226
RR & Assoc & Highscore PL
As above
P77/4368
RR & Assoc & Highscore PL
As above
L77/256
L77/244
RR & Assoc & Highscore PL
As above
RR & Assoc & Highscore PL
As above
M77/1267
RR & Assoc & Highscore PL
As above
M77/1246
RR & Assoc & Highscore PL
As above
P77/4032
RR & Assoc & Highscore PL
As above
M77/581
RR & Assoc & Highscore PL
As above
90
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
INTERESTS IN MINING TENEMENTS
Zenith Minerals Limited
PROJECT
LOCATION
TENEMENT
NUMBER
HOLDER
ZENITH
MINERALS
INTEREST
STATUS
Kavaklitepe
Turkey
EL20079861
Empire International
AnadoluMadencilikAnonim
Sirketi
~20%
Granted
San Domingo
Arizona – USA
San Domingo
Arizona – USA
San Domingo
Arizona - USA
Wilson Salt Flat
Nevada – USA
Spencer
Nevada - USA
Burro Creek
Arizona - USA
Burro Creek
Arizona - USA
Wickieup – Big
Sandy
Arizona - USA
State Mineral
Exploration Permits
08-118824 &
08-118825
Federal Claims
1 to 69
San Domingo WP28,
Midnight Owl #2,
RPZ1
Federal Claims 1 to
168
Federal Claims 1 to
146
Federal Claims BC1 to
BC4, 11-92022 to 11-
92029, 11-86283, 08-
120901 & 003
Federal Claims ZL1 to
ZL46, CP1 to CP12
Federal Claims Placer
Claims W17 to Z60,
W64 to W83,
W85 to W130,
W133 to W138,
W141 to W144,
W146 to W206,
W231 to W262,
W266 to W270,
W273 to W276,
W281 to W283,
W287 to W288,
W294 to W296,
W302 to W304,
W310 to W336.
Federal Lode Claims
Z1 o Z71.
Zenolith (USA) Inc.
* Bradda
Head
confirming its
55% interest
Granted
Zenolith (USA) Inc.
As above
Granted
Zenolith (USA) Inc.
As above
Granted
Zenolith (USA) Inc.
As above
Granted
Zenolith (USA) Inc.
As above
Granted
Zenolith (USA) Inc.
As above
Granted
Zenolith (USA) Inc.
As above
Granted
Zenolith (USA) Inc.
As above
Granted
# Refer to ASX Release dated 21st March 2019
* Bradda Head Ltd earning initial 55% - Refer to ASX release dated 7th March 2017
91