for personal use only - asx2019/10/30 · analysis of the results from an auger geochemical program...

SPECTRUM METALS LIMITED | Annual Report 20191

M E T A L S L I M I T E D

Annual Report2019

ABN 94 115 770 226

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Corporate DirectoryDIRECTORS Mr Alexander Hewlett Executive Chairman

Mr Paul Adams Managing Director

Mr James Croser Technical Executive Director

Mr Nader El Sayed Non-Executive Director

COMPANY SECRETARY Mr Mark Pitts P: +61 8 9316 9100 F: +61 8 9315 5475

REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS Suite 2/827 Beaufort Street Mt. Lawley WA 6052 E: [email protected] www.spectrummetals.com.au

SHARE REGISTRY

Security Transfer Registrars Pty Ltd PO Box 535, Applecross WA 6953 770 Canning Highway, Applecross WA 6153 P: +61 8 9315 2333 F: +61 8 9315 2233 E: [email protected]

AUDITORS KPMG 235 St. Georges Terrace Perth WA 6000

COMPANY INFORMATION Incorporated in Western Australia, August, 2005 Listed on the Australian Securities Exchange (ASX) Home Exchange: Perth Code: SPX (Ordinary Shares)

COMPETENT PERSONS STATEMENT Where reference is made to previously released announcements of exploration results in this report, the Company confirms that it is not aware of an new information or data that materially affects the information included in those announcements and all material assumptions and technical parameters underpinning the exploration results included in those announcements continue to apply and have not materially changed.

2SPECTRUM METALS LIMITED | Annual Report 2019

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ContentsCorporate Directory 02

Chairman’s Address 05

Review of Operations 07

Directors’ Report 23

Auditor’s Independence Declaration 35

Consolidated Statement of Profit or Loss and Other Comprehensive Income 37

Consolidated Statement of Financial Position 38

Consolidated Statement of Cash Flows 39

Consolidated Statement of Changes in Equity 40

Notes to the Consolidated Financial Statements 41

Directors’ Declaration 63

Independent Auditor’s Report 64

ASX Additional Information 68

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Chairman’s AddressDear fellow Spectrum Shareholders,

It is with great pleasure that I write to you this year fresh from the discovery of our new high-grade gold system just north of the old open pit at our newly acquired “Penny West” gold project.

The financial year started with the withdrawal of our option to purchase a North American gold project due to the terrible and unforeseen Carr fire in Northern California and a then a return of focus to West Australian gold assets.

The first asset acquisition was the “First Hit” gold project located approximately 50km east of the town of Menzies, then two weeks later the company also announced it had acquired the Penny West gold project.

Drilling commenced by mid-February 2019 at Penny West to prove the hypothesis of potential faulted offset positions at this historical high grade open pit, and almost immediately in our second hole SPRWRC002 a drill intersection returned a lab assay of [email protected]/t from 128m1 with follow up Reverse Circulation (“RC”) holes in the vicinity returning [email protected]/t from 149m and [email protected]/t from 135m from holes SPWRC016 and SPWRC018 respectively2.

Following these early results, it became immediately apparent that the company was onto a very exciting discovery at the newly named “Penny North” prospect and all energy and effort was made to extend the high-grade mineralisation within the region.

In less than five months, from commencement of drilling to the end of the financial year, the company had completed 12,676m of RC drilling and expanded the initial discovery from one hole to a system that currently continues through 900m of strike through the Penny West/North project area. Importantly, a further 1.5km of untested strike continues north to the Columbia and Magenta prospects where limited previous drilling has already identified a high-grade gold system.

The market reaction to the discovery has been very encouraging and it is pleasing to see that our shareholders also share in the view of the Board that this is a very valuable asset. A capital raise of $5.0m at 2.4c per share was completed in April 2019 to allow the company to fast track its exploration efforts.

The financial year ended 30 June 2019 has been an amazing one for your company. I would like to thank all our various stake holders who have assisted with the significant change and growth that has occurred. The future for Spectrum and our lead asset at Penny West looks very bright with what can still only be described as the early stages of a fantastic discovery. I look forward to updating all shareholders as we move our project forward and welcome any new shareholders on our exciting journey.

Yours sincerely

Alexander Hewlett

Executive Chairman

1 refer ASX announcement 5 March 2019

2 refer ASX announcement 20 March 2019


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Review of OperationsThe 2019 financial year has been pivotal for Spectrum Metals Limited (“Spectrum” or “the Company”) and its shareholders. In last year’s report we noted our withdrawal from the option agreement to purchase the Washington Gold Project in California in mid-August 2018. A global project search then ensued with Spectrum settling on a domestic high-grade gold strategy. In October 2018, Spectrum acquired two high-grade gold projects in Western Australia.

On 4 October we announced the acquisition of the First Hit Gold Project, located 50km west of the town of Menzies in the northern Goldfields. Situated at the northern end of the Riverina District, the First Hit project comprised a previous underground gold operation completed in 2002. The First Hit acquisition was then quickly followed on 11 October 2018 with the acquisition of the Penny West Gold Project located in the Murchison District of Western Australia. The small Penny West open pit mine was completed in 1992 and was famous in WA’s mining history as being one of the highest-grade open pit mines in the modern era up to that point with a reconciled grade through the Youanmi processing plant of 21.8 grams per tonne gold.

In addition, Spectrum continued to evaluate the greenfields Whaleshark project located in the Ashburton Province of northern Western Australia, 50km east of the town of Onslow.

Figure 1. Spectrum Metals Project Location Map


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Review of Operations

OPERATIONAL HIGHLIGHTS FROM FY2019Highlights from the Company’s operations in the 2019 financial year include:

• The acquisition of the First Hit mine was completed on 16 October 2018. A structural study and new model of the underground workings and lode system identified potential drill sites for deep RC and/or diamond drilling of high-grade targets immediately below the existing mine infrastructure.

• The acquisition of Penny West was concluded in December 2018. Analysis of the results from an auger geochemical program completed during the 2H 2018 identified 6 high-priority geochemical targets from a total of 18 gold anomalies.

• A structural re-interpretation of the Penny West geology database identified potential for a faulted off-set position of the previously mined Penny West lode to the north.

• A 5,500m Phase I reverse circulation drilling program started in mid-February and on 5th March 2019, Spectrum announced the discovery of a very high-grade gold intersection to the north of the old open pit and rapidly designed and implemented a follow up drill campaign.

• By the end of March 2019, Spectrum had identified a robust, predictable, high-grade shoot in this location and named the new discovery “Penny North”.

• In April 2019, Spectrum completed a capital raise of $5.0m before costs at a price of 2.4c per share.

• An 11,000m Phase II reverse circulation drilling program started in early May and expanded the Phase I drilling campaign in all directions. Drilling continued throughout the remainder of the 2019 financial year and is continuing today.

• In early June, Spectrum completed the field component of a Sub-Audio Magnetics (SAM) survey covering an area of 4km2 centred on the strike extent of the Penny West Shear zone between Penny West and the northern lease boundary.

• By the end of June, Spectrum had drilled 63 holes at the Penny West Gold Project for 12,676 meters.

• The discovery of the Penny North high-grade gold system has been a transformational event for the company and has thrown new light on the potential of the Youanmi goldfield to host additional gold mineralisation, to the benefit of Spectrum shareholders and those of our immediate neighbours.


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PENNY WEST GOLD PROJECT

The Penny West Gold Project is located approximately 150km south east of Mt Magnet and approximately 120km south west of Sandstone. The Penny West acquisition was announced on 16 October 2018 and was settled on 11 December 2018.

The initial acquisition comprised two Mining leases (M57/180 and M57/196) covering approximately 878.24Ha. Spectrum acquired the Penny West project for $50,000 in cash and $950,000 in Spectrum shares from private vendors that had held the project since 2012. An Exploration License (E57/1087) located immediately east of M57/180 was acquired from a private vendor in January 2019 and covers 446Ha. The Youanmi Shear zone (YSZ), which is an important structure at the Youanmi mining centre 25km to the north, is interpreted to lie along the lease boundary between M57/180 and E57/1087.

Figure 2. Location Map of Penny West Project on Yilgarn Geology


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Figure 4. Penny West open Pit looking south and Spectrum’s RC drilling at Penny North

Figure 3. Tenement Map for the Penny West Project


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The gold mineralisation mined within the Penny West open pit mine was discovered by Eastmet/Metana in 1989 via soil sampling program with a +30 parts per billion (ppb) gold anomaly. A shallow angled RAB (Rotary Air Blast) program was subsequently undertaken on wide, mine-grid east-west line spacings north and south along the Penny West Shear Zone. Anomalous gold was found in the RAB program and this was followed up with a campaign of reverse circulation (RC) drilling and diamond drilling to drill out the deposit.

Penny West was distinguished by its grade. The reconciled high-grade production from the Penny West open pit through the Youanmi gravity/CIL processing plant was 121,000 tonnes at 21.8 g/t gold for a total of 84,800 ounces. In 1991-1992, Penny West was one of the highest- grade open pit gold mines ever mined in the modern era in Western Australia up to that time.

Geologically, the Penny North gold mineralisation is located close to the contact between a basal granodiorite unit and an overlying dioritic unit subjected to amphibolite facies metamorphism. Overlying the amphibolite is a series of ultramafic and mafic units some of which have been subjected to mylonitisation. The lode can also appear wholly within the granodiorite unit.

In early January Spectrum announced the results of a 1,227-hole auger geochemistry program undertaken by the vendors earlier in 2018 but whose samples had not been submitted for assay. Spectrum had the samples submitted for a 33-element suite analysis and on 16 January 2019 the company announced the results.

Individual elements, element ratios and Principal Component Analysis (PCA) have been used to aid in the understanding of the geological and surficial environment at the Penny West Project and was used to define and prioritise gold anomalies from the auger samples. Principal Component Analysis of the multi-element data shows that Gold at Penny West is associated with Ag, As, Cd, Cu, Pb, Zn ±Bi, ±Sb, ±W. The program had defined 18 geochemical anomalies including 6 high-priority targets.

Standout anomalies were seen around the Penny West open pit area and at several locations north around the Columbia-Magenta prospects.

Figure 5. Gold and lead geochemistry over the Penny West Project area

Gold Geochemistry Lead Geochemistry


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Spectrum’s Phase I reverse circulation (RC) drilling campaign stated in mid-February 2019. On 5 March, Spectrum announced the gold results from the first hole submitted for assay (SPWRC002) with an intersection of 14m at 14.4 g/t gold from 124m including 8m at 23.3 g/t gold from 128m (SPX Announcement “New High Grade Discovery at Penny West”, 5 March 2019). The discovery was made by following up an isolated RC intersection of 1m at 6.47 g/t gold in hole 4PWRC0110.

As a result of the discovery the company rapidly designed and implemented an amended Phase I program to follow up on the discovery. By the end of March 2019, Spectrum had completed approximately 20 holes into the Penny North discovery at an approximate 20m by 20m drill spacing. The Phase II program comprised 11,500m and commenced in early May, focusing on expanding the boundaries of a high-grade shoot defined during the Phase I program. By the end of the financial year, Spectrum had drilled a total of 63 holes for 12,767m. Most of these holes were drilled into Penny North.

Additional holes were also drilled below the Penny West open pit with a significant intersection of 5m at 28.9 g/t gold from 203m in hole SPWRC006. The deepest and southern-most hole drilled at that point. Together with the new discovery at Penny North, the Penny West mineralised zone extended over a strike length of 650m at the end of the financial year.

Figure 6. Long section with gram meter contours at Penny North (looking west)Note: Refer ASX Announcement Further High-Grade Extensions at Penny North 25 June 2019


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Of particular interest was the significant amount of free gold that was being panned from the RC drill chips. Using this qualitative method, the Spectrum Geology Team was able to gain a rapid understanding of the tenor of the mineralisation in the field, without the requirements to have assays from the laboratory to define the positions of the next part of the drill program. In this way, Spectrum ensured that the limits of the high-grade shoot could be determined in the field and the geologists could make decisions on the next drill hole placement immediately. This enabled the extents of the high-grade shoot to be determined expeditiously with as few holes as possible.

Located 1.5km north and along strike of the Penny West open pit is the Columbia-Magenta prospect. This locality has been drilled by previous owners, mostly by Eastmet-Metana in the early 1990’s. The Columbia-Magenta Prospect has outcropping geology and sits as a topographic high against the flat surroundings. Exposed quartz veins can be found in a number of small shafts and pits in the area that were mined by the ‘old timers’ in the early 1900’s.

During the Phase I RC drilling program, Spectrum drilled three (3) holes at the Magenta Prospect. The aim of the drilling was to ascertain the continuity in mineralisation within fresh rock down dip of the previously drilled holes. All three holes drilled by Spectrum intersected gold mineralisation with the best intersection in SPWRC009 of 3m at 5.0 g/t gold including 1m at 11.5 g/t from 86m.

Figure 7. Expanded long section through Penny West and Penny North Main Lode, with gram metre contoursNote: Refer ASX Announcement Further High-Grade Extensions at Penny North 25 June 2019


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Figure 8. Long projection looking west at the Columbia-Magenta prospect with spectrum hole traces and intercepts. Note: Refer to ASX announcement High Grade Intercepts from Magenta and Penny North 30 April 2019

Figure 9. Regional Long Section between Penny West and Columbia-Magenta ProspectsNote: Refer to ASX announcement High Grade Intercepts from Magenta and Penny North 30 April 2019


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A focus for future exploration will be at Columbia-Magenta and the geochemical anomalies in the vicinity, in addition to the largely unexplored ‘gap zone’ between Penny North and Columbia.

During the final quarter of FY2019, Spectrum also completed initial metallurgical studies using two composite samples from Holes SPWRC002 and SPWRC016 from Penny North.

The Overall Mass Balance for both composites for the mill – gravity – leach flowsheet is tabled below.

Parameter SPWRC 002 SPWRC 018

Total Sample Mass Received (kg) 17.43 13.665

Assay Head Grade (g/t) 20.5 25.3

Recalculated Head Grade (g/t) 25.1 24.7

Gravity Concentrate Mass (g) 27.3 17.4

Total Gravity Stage Recovery (%) 76.9% 10.6%

Leach Feed Grade (g/t) 5.8 22.2

Leach Stage Recovery (% of Leach Feed) 96.4% 99.0%

Tails/Residue Grade (g/t) 0.213 0.216

Total Recovery (%) 99.2% 99.1%

Table 1. Summary Metallurgical test work results Note: Refer to ASX Announcement: Further high-grade results from Penny North 25 June 2019

Further work will be required through a comprehensive program which will include comminution testing to determine hardness and energy requirements, grind size studies and consumables optimisation.

Highlights from the metallurgical test work include:

• Exceptional total overall (gravity + leach) recoveries of 99.1% and 99.2% achieved for the two composites.

• Composite SPWRC002 displayed gravity recoverable gold of 76.9%.

• Composite samples are free-milling and highly amenable to a conventional crush-grind-gravity-leach flowsheet.

In addition to the discovery and definition of the high-grade shoot at Penny North, Spectrum completed the field component of a Sub-Audio Magnetics (SAM) survey over the Penny West Shear system. This will improve upon the wider spaced magnetic survey completed in 2015.


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It is hoped that the SAM survey, which has proven to be very successful recently at other gold projects in the Yilgarn Craton, will provide additional evidence for structural features that bisect the Penny West shear zone. Spectrum believes that north-west and south-east striking structures that bisect suitable host lithologies or prospective lithological contacts play an important role in the distribution of gold within the Penny West Shear system. The SAM survey, which combines magnetic and conductivity data over an area of 4km2, will hopefully assist in the definition of these structures.

Figure 10. SAM survey area over Penny West Shear on 2015 magnetic survey Note: Refer to ASX Announcement: Multiple Targets Identified at Penny West 29 August 2019


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FIRST HIT GOLD PROJECT

Spectrum acquired the First Hit Gold Project (“First Hit”) in early October 2018 from a private vendor for $100,000 in cash and $100,000 in Spectrum shares. The First Hit underground mine commenced operations in 2001 and was completed in December 2002 and operated by Barra Resources in a strategic alliance with Barminco, an underground mining contractor company.

An underground decline was pushed to a vertical depth of 220m with levels placed approximately every 20m. The First Hit mine consisted of two short strike length silica-sulphide lodes, with a number of high-grade drill intercepts below the current extents of the underground infrastructure.

Figure 11. First Hit Project Location Map


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The Riverina / First Hit project area covers part of the Mount Ida greenstone belt. The Mt Ida greenstone belt is a north striking belt of predominantly metamorphosed (upper greenschist - amphibolite facies) mafic and ultramafic rocks, which form the western boundary of the Eastern Goldfields geological terrane. The major structure in this belt is the Ida Fault, a deep mantle tapping crustal suture that trends north and dips to the east. It marks the western boundary of the Kalgoorlie Terrane (~2.7 Ga) of the Eastern Goldfields Province against the Barlee Terrane (~3.0 Ga) of the Southern Cross Province to the west. To the east the belt is bounded by the Ballard fault, a continuation of the strike extensive Zulieka shear.

The old Riverina and First Hit Mines are contained within a sequence of meta-basalts with minor intercalations of meta-sediments sandwiched between ultramafic rocks. All rocks display a northerly strike with near vertical dipping foliation throughout. Shear zones within the rock sequences are common and, where intense, they have been referred to as mylonite zones.

Figure 12. Tenement location Map for First Hit Project


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Numerous smaller gold occurrences are present within the project area and are intimately related to the structural geology of the area. Most gold mineralisation occurs in faults and fractures displaying brittle characteristics and occasionally in more ductile shear structures that coincide with north-striking ultramafic rocks.

The First Hit Gold Mine is hosted by a relatively thick north-northeast trending, steep-dipping massive meta-basalt unit, that is bounded to the east and west by ultramafic rocks. The meta-basalt unit is fine to medium-grained and has been partially overprinted by regional carbonate alteration away from the ore zone. This unit displays a weak to moderate foliation in places and has been intruded by numerous dolerite, intermediate, and felsic dykes. Both the dolerite and intermediate dykes occur as small discontinuous randomly oriented intrusions.

During the year, Spectrum completed desk-top studies to model the underground infrastructure and previously mined lodes to gain an understanding of the structural controls to gold mineralisation and to define drill targets, particularly below the decline.

Both the Kylies Lode and Evans Lode were modelled again using empirical data from the underground assay database. All Underground Channel sample data was transformed into MGA from mine grid prior to modelling from the primary source of the data.

Spectrum believe there is potential for structural repeats along strike and the company notes the lack of deep drilling north and south of the known extents of mineralisation.

Detailed modelling of the lode structure then enabled an analysis of the occurrence of high grades from the drilling compared to the dip of the structure. In generally, high grade intersections from the historical drilling can be correlated with shallower dips on the First Hit structure.

Figure 13. Intersections and pierce points in the First Hit structure with mined lodes and UG infrastructureNote: Refer ASX Announcement Investor Presentation 27 February 2019


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WHALESHARK PROJECT

The Whaleshark project is located approximately 50km due east of Onslow, Western Australia on the Yarraloola (SD 50-06) 1:250,000 and Yarraloola 2054 1:100,000 topographic map sheets. Access to the project area from Onslow is via the Onslow Road south, thence on station tracks as seen in Figure 14 below. The project consists of two granted exploration licences covering an area of 49km2.

The tenements are prospective for gold and copper with a previous drilling campaign, conducted by WMC Ltd, reported anomalous gold from one hole in a structurally complex magnetic unit at depth.

Previous drilling has indicated that the cover sequence can reach up to +150m in places. Regional and local geology over the cover sequence has largely been interpreted from geophysical surveys, the projection of exposed geology from the adjacent Ashburton Province and from drilling into basement rocks.

Figure 14. Whaleshark Project Tenement MapFigure 15. Basement geology interpreted from geophysical data with priority exploration areas


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Spectrum undertook a ground-based Moving Loop Transient Electromagnetic (MLTEM) geophysical survey in December 2017 over three key areas deemed prospective for the accumulation of metal deposits. Three prospects were targeted by the MLTEM survey (Whaleshark, North, Central and South Prospects) with approximately 7.2 line kilometres of MLTEM data being recorded on 7 lines over the three prospects from 142 stations. A depth to basement study was also completed as was magnetic edge detection feature modelling

During the 2019 Financial year, Spectrum undertook a data review with the aim of refining optimal drilling locations. However, as the year progressed, and in particular, during the 2H of FY19, it became apparent that the Whaleshark Project no longer fit with the company’s new strategic agenda. On the 24 May 2019 both E08/2924 and E08/2972 where surrendered. In addition, several new exploration license applications made by Spectrum covering interesting geophysical anomalies where withdrawn.

Figure 15. Basement geology interpreted from geophysical data with priority exploration areas


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Directors’ ReportThe directors present their report on the Group, comprising Spectrum Metals (referred to in these financial statements as “the Company” or “Spectrum”) and its wholly owned subsidiaries (the “Group”), together with the financial report for the year ended 30 June 2019 and the audit report thereon.

1. DIRECTORSThe names and details of the Company’s directors in office during the financial year or since the end of the financial year are set out below. Unless otherwise indicated, all Directors held their position as a Director throughout the entire year and up to the date of this report, and held no directorships in the past three years in other ASX listed entities.

ALEXANDER HEWLETT Executive Chairman

Alexander Hewlett is a qualified Geologist graduating from the University of Western Australia. Mr Hewlett is highly skilled at project identification and acquisition and has a flair for company and investor communications. He has raised significant funds for both domestic and international projects in the mining and exploration sector and has served on several boards on the ASX.

Mr Hewlett is a member of the Australasian Institute of Mining and Metallurgy and is currently a director of Hammer Metals Limited and Black Cat Syndicate Limited.

PAUL ADAMS Managing Director

Paul Adams is a qualified Geologist. Mr Adams was recently the Director – Head of Research and Natural Resources with DJ Carmichael Pty Limited, where he gained considerable experience in equity capital markets and equity research with a focus in small to mid-cap resource companies across a large range of commodities. Prior to DJ Carmichael Pty Limited, Mr Adams held technical and senior roles with Metana Minerals, Dominion Mining, Australian Goldfields and Placer Dome, where he held senior technical roles at the giant

mesothermal-epithermal Porgera gold-silver mine in Papua New Guinea and as Chief Mine Geologist and Development Manager at the Granny Smith Mine in Western Australia.

Mr Adams also holds a Graduate Diploma in Applied Finance and Investment from the Financial Securities Institute of Australia (Finsia). Mr Adams is currently a director of Kalamazoo Resources Limited.

JAMES CROSER Technical Executive Director (Appointed 15 November 2018)

James Croser is a qualified mining engineer, with 20 years of operations, technical and management experience in the Australian mining sector. Mr Croser is currently Director of Vaportrail Pty Ltd, a privately-owned mining consultancy business. Mr Croser has served previously on the Board for ASX-listed mining companies Kalgoorlie Mining Company Ltd & Resources & Energy Group Ltd, while also founding & developing several private mining companies across Western Australia in recent years. Mr Croser has held statutory mine management positions for Perilya Ltd and La Mancha Resources Ltd, including as inaugural underground manager for the definitive feasibility study & construction of the one-million-ounce Frog’s Leg Gold Mine.

Mr Croser holds a bachelors degree from the Western Australian School of Mines and is a holder of a Western Australian First Class Mine Managers’ Certificate. Mr Croser has not held directorships in any other listed companies in the past three years.

NADER EL SAYED Non-Executive Director

Nader El Sayed is currently the Chief Executive Officer of Multiplant Holdings, a mining and civil services business in Western Australia. His previous roles include a senior management position with KPMG providing assurance, capital markets and other advisory services to key Australian and international resource companies. Mr El Sayed brings a wealth of risk management, corporate governance, strategic and financial experience to the Board.

Mr El Sayed holds a Bachelor of Commerce (Banking & Finance), Masters (Accounting) and has completed the Australian Institute of Chartered Accountants program. He is a Non-executive director of Hammer Metals Limited.

DAVIDE BOSIO Non-Executive Director (Resigned 15 November 2018)


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Directors’ Report

2. COMPANY SECRETARYMARK PITTS

Mr Pitts is a Chartered Accountant with over 25 years’ experience in statutory reporting and business administration. He has been directly involved with, and consulted to, a number of public companies holding senior financial management positions. He is a Partner in the corporate advisory firm Endeavour Corporate providing secretarial support, corporate and compliance advice to a number of ASX listed public companies.

3. DIRECTORS’ MEETINGThe number of meetings of directors held during the year and the number of meetings attended by each director while they were a director was as follows.

Board Meetings

Director A B

Alexander Hewlett 9 9

Paul Adams 9 9

James Croser 5 5

Nader El Sayed 9 9

Davide Bosio 4 4

A Number of meetings held whilst a directorB Number of meetings attended.

There are no separate board committees established. The whole board sits as a committee when that is required.

4. DIRECTORS’ INTERESTSInterests in the shares and options of the Group as at the date of this report:

Director Ordinary Shares Options Performance Rights

Alexander Hewlett 10,200,000 20,000,000 6,666,666

Paul Adams 1,818,182 20,000,000 6,666,666

James Croser 4,449,091 15,000,000 6,666,666

Nader El Sayed - 14,500,000 -

Options over ordinary shares granted to the Directors of the Company as part of their remuneration and other movements during the year are:

Director Balance at 1 July 2018

Granted during the year Changes – other Balance at 30 June

2019

Alexander Hewlett 10,000,000 - - 10,000,000

Paul Adams - 10,000,000 - 10,000,000

James Croser - - - -

Nader El Sayed 7,500,000 - - 7,500,000


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Directors’ Report

5. DIVIDENDSNo dividends have been paid or declared by the Company since the incorporation of the Company.

6. PRINCIPAL ACTIVITIESThe principal activity of the Group during the course of the financial year was the exploration and evaluation of mineral resources.

There were no significant changes in the nature of activities during the year.

7. OPERATING AND FINANCIAL REVIEWOverview

On 22 August the Company withdrew from the option agreement over the Washington Gold Project in California given the Carr Wild Fire that destroyed much of the surface infrastructure of the project. During the weeks that followed the Board assessed in excess of 20 projects over a number of commodities and jurisdictions and in October entered into agreements to purchase The First Hit Gold Mine near Menzies in the north eastern Goldfields and the Penny West gold project located in the Murchison Province of WA. Purchases of the two properties were concluded in October and December of 2019 respectively.

The Company’s focus in the second half of the financial year was on the Penny West Project. In February 2019, a 5,500-meter reverse circulation (RC) drilling campaign was conducted and on 5 March 2019, the Company released its first results, with the discovery of a new zone, named Penny North, located just 150m north of the previously mined (1991-1992) Penny West open pit. Drilling continued at Penny North in an expanded RC program until the end of March 2019, marking the end of the Phase I drilling campaign.

By the end of March, the discovery of a very high-grade gold shoot at Penny North had been confirmed which appeared to be of a similar tenor and width to the original lode mined in the early 1990’s at Penny West.

During April 2019, planning and preparation was made for the Phase II campaign, envisaged to initially consist of 11,000 meters of RC drilling. Additionally, during April, the Company raised $5.0m before costs at 2.4 cents per share for an extended drilling campaign to expand the newly discovered Penny North mineralisation.

The Phase II RC drilling campaign continued through the end of the financial year and is continuing. As at 30 June, the Company had completed 63 holes at the Penny West Gold Project for 12,676 meters.

The Company also conducted a data review at First Hit and modelled the First Hit lodes and underground infrastructure. Drill design and planning for an RC drilling program was also completed.

Finally, a data review was also completed at the Whaleshark and Marlin projects near Onslow in the Ashburton Province of WA. Following the review, a decision was reached to relinquish the tenements to focus on the Murchison and eastern Goldfields projects.

Operating Results for the Year

The net loss of the Group for the year ended 30 June 2019 was $1,565,839 (2018: $952,657).

The major items of expenditure were director’s remuneration totalling $214,288 (2018: $162,334), project evaluation expenses of $43,692 (2018: $306,572), exploration expenditure impairment of $121,635 (2018: Nil) share-based payments expense of $648,504 (2018: $216,076) and professional services expense of $380,394 (2018: $218,849).

Financial Position

Cash in bank at the end of the year was $4,165,015 (2018: $1,544,566).


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Directors’ Report

8. SIGNIFICANT EVENTS AFTER THE BALANCE DATEOn 5 July 2019 at the Company’s General Meeting of Shareholders, shareholders approved the adoption of the Company’s Incentive Option and Performance Rights Plan (“Employee Share and Option Plan” or “ESOP”), the issue of 46,500,000 options to Directors and consultants to the Company at various exercise dates and prices, and 19,999,999 performance rights to Executive Directors with various performance conditions and terms. These securities were issued on 10 July 2019.

On 1 August 2019 the Company announced the successful completion of a placement of 116,000,000 ordinary shares at $0.0625 per share raising $7,250,000 before costs, which will be used to significantly increase the exploration activities of the Company.

Other than the above, there are no matters or circumstances that have arisen since the end of the financial year that have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group, in future financial years.

9. LIKELY DEVELOPMENTS AND EXPECTED RESULTSThe Company expects to continue exploration of its First Hit and Penny West projects, while remaining open to reviewing new mining and exploration opportunities to further grow the Company’s business.

10. ENVIRONMENTAL REGULATIONThe exploration activities of the Group are subject to environmental regulations imposed by various regulatory authorities, particularly those relating to ground disturbance and the protection of rare and endangered flora and fauna. The Group has complied with all material environmental requirements up to the date of this report. The directors believe that the Group has adequate systems in place for the management of its environmental responsibilities and are not aware of any breaches of the regulations during the period covered by this report.

11. OPTIONSAs at the date of this report unissued ordinary shares or interest of the Company under option are

Date options granted Number of shares under option

Number vested and exercisable

Exercise price of option Expiry date of option

4 May 2018 32,500,000 32,500,000 $0.015 30 June 2021

4 May 2018 15,000,000 15,000,000 $0.010 4 May 2023

6 July 2018 10,000,000 10,000,000 $0.015 31 May 2023

19 September 2018 10,000,000 10,000,000 $0.015 30 June 2021

10 July 2019 6,500,000 6,500,000 $0.015 30 June 2023

10 July 2019 13,333,332 13,333,332 $0.025 26 March 2022

10 July 2019 13,333,332 13,333,332 $0.030 26 March 2022

10 July 2019 13,333,334 13,333,334 $0.035 26 March 2022

5,000,000 ordinary shares have been issued by the Company on exercise of options at $0.010 on 8 August. No other ordinary shares have been issued since the end of the financial year upon the exercise of options.


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12. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND AUDITORSThe Group has paid premiums to insure the Directors against liabilities incurred in the conduct of the business of the Group and has provided right of access to Group records. In accordance with common commercial practice, the insurance policy prohibits disclosure of the amount of the premium and the nature of the liability insured against.

13. REMUNERATION REPORT - AUDITEDThis report outlines the remuneration arrangements in place for key management personnel of Spectrum Metals Limited (the “Group”).

Remuneration levels for directors and executives are competitively set to attract the most qualified and experienced candidates, taking into account prevailing market conditions and the experience and qualifications of individuals.

In accordance with best practice corporate governance the structure of non-executive directors and executive remuneration is separate and distinct.

The following persons acted as key management personnel of the company during or since the end of the financial year:

Mr P Adams (Managing Director) (Appointed 25 May 2018)

Mr A Hewlett (Executive Chairman) (Appointed 8 March 2017)

Mr J Croser (Technical Executive Director) (Appointed 15 November 2018)

Mr D Bosio (Non-Executive Director) (Appointed 22 December 2017, resigned 15 November 2018)

Mr N El-Sayed (Non-Executive Director) (Appointed 25 October 2017)

Mr M Pitts (Company Secretary) (Appointed 3 July 2017)

Non-executive director remuneration and employment terms

The Board has set remuneration at a level which provides the Company with the ability to attract and retain directors of the highest calibre whilst incurring a cost which is acceptable to the shareholders.

Each of the non-executive directors receives a fixed fee for their services as directors. There is no direct link between remuneration paid to any of the directors and corporate performance such as bonus payments for achievement of certain key performance indicators.

The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The latest determination was on 26 August, 2011 when shareholders approved aggregate remuneration of $300,000 per year.

Non-executive directors’ base fees are presently $30,000 per annum. The Company also pays superannuation contributions at the statutory rate, or an amount in lieu, in addition to these amounts.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The board considers the fees paid to non-executive directors of comparable companies when undertaking the annual review process. The non-executive directors are not employed under contract and their current remuneration is set out as follows:

Director Remuneration

Mr N El Sayed Fees of $30,000 plus statutory superannuation guarantee contribution.


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Executive remuneration and employment terms

Executives receive a fixed remuneration set to provide a base level commensurate with their position and responsibilities within the Company and so as to align the interests of executives with those of shareholders and ensure total remuneration is competitive by market standards.

In addition, executives are entitled to participate in equity-based remuneration plans to recognise ability and effort, provide incentive to improve Company performance, attract appropriate persons and promote loyalty. In the case of executive directors, this participation is subject to shareholder approval.

The relationship between remuneration policy and company performance has not yet been established due to the Company being in an exploration phase.

EXECUTIVE SERVICE AGREEMENT – ALEXANDER HEWLETT – EXECUTIVE CHAIRMAN

The Company has entered into an employment agreement and a consulting agreement with Mr Hewlett in which Mr Hewlett has been appointed the Company’s Executive Chairman.

Mr Hewlett is paid an annual salary of $65,000, plus statutory superannuation guarantee contributions, related to his role as Executive Chairman. Furthermore, Mr Hewlett is paid a day rate of $1,000 per day plus GST for consulting services provided to the Company.

These agreements may be terminated after twelve months from the commencement of the agreement by either the Company or Mr Hewlett by providing 3 months prior notice to the other party, or at any time by the Company with 1 month’s prior notice in an instance where a persistent breach of the conditions of employment occur. The Company can also terminate the agreement immediately and without prior notice for significant breaches or in other certain limited circumstances.

EXECUTIVE SERVICE AGREEMENT - PAUL ADAMS – MANAGING DIRECTOR AND CEO

The Company has entered into an employment agreement with Mr Adams in which Mr Adams has been appointed the Company’s managing director and Chief Executive Officer.

Mr Adams is paid an annual salary of $225,000 effective from 15 May 2019, plus statutory superannuation guarantee contributions. The Company has also agreed to reimburse Mr Adams for reasonable expenses incurred in carrying out his role.

Additionally, upon commencement as a director, Mr Adams was issued 10,000,000 unlisted options in two tranches of 5,000,000 options each. The first tranche vested on 30 November 2018 and the options are exercisable on or before 31 May 2023 at 1.5 cents per share. The second tranche vested on 31 May 2019 and the options are exercisable on or before 31 May 2023 at 1.5 cents per share. These options were issued in July 2018.

The employment agreement may be terminated by either the Company or Mr Adams by providing 3 months prior notice to the other party, or by the Company with 1 month’s prior notice in an instance where a persistent breach of the conditions of employment occur. The Company can also terminate the agreement immediately and without prior notice for significant breaches or in other certain limited circumstances


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EXECUTIVE SERVICE AGREEMENT – JAMES CROSER –TECHNICAL EXECUTIVE DIRECTOR

The Company has entered into an executive services agreement with Mr Croser in which Mr Croser has been appointed the Company’s Technical Executive Director.

Mr Croser is paid an annual salary of $140,000 effective from 15 May 2019, plus statutory superannuation guarantee contributions. The Company has also agreed to reimburse Mr Croser for reasonable expenses incurred in carrying out his role.

The employment agreement may be terminated by either the Company or Mr Croser by providing 3 months prior notice to the other party, or by the Company with 1 month’s prior notice in an instance where a persistent breach of the conditions of employment occur. The Company can also terminate the agreement immediately and without prior notice for significant breaches or in other certain limited circumstances.

Financial Performance

The tables below set out summary information about the Company’s earnings and movements in shareholder wealth for the last 5 years:

30 June 2019 $

30 June 2018 $

30 June 2017 $

30 June 2016 $

30 June 2015 $

Total Income 14,741 33,785 47,105 177,848 40,465

Loss after tax (1,565,839) (952,657) (231,131) (2,028,841) (4,606,991)

Share price at start of year $0.009 $0.005 $0.005 $0.006 $0.048

Share price at end of year $0.023 $0.009 $0.005 $0.005 $0.006

Loss per share (cents per share) 0.16 0.17 0.07 0.76 2.67


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Directors’ ReportDe

tails

of r

emun

erat

ion

for t

he y

ear e

nded

30

June

201

9

Deta

ils o

f the

nat

ure

and

amou

nt o

f eac

h m

ajor

ele

men

t of r

emun

erat

ion

of e

ach

Key

Man

agem

ent P

erso

nnel

of t

he C

ompa

ny a

re:

Year

End

ed 3

0 Ju

ne 2

019

Shor

t Ter

m E

mpl

oyee

Ben

efit

Post

Em

ploy

men

t Be

nefit

Shar

e Ba

sed

Paym

ents

Key

Man

agem

ent P

erso

nnel

Dire

ctor

s Sa

lary

or F

ees

$

Fees

for O

ther

Se

rvic

es P

rovi

ded

$

Cash

Bon

us

$

Term

inat

ion

Paym

ents

$

Supe

rann

uatio

n $

Opt

ions

Is

sued

$

Opt

ions

U

niss

ued3

$

Tota

l $

Exec

utiv

e

Mr A

Hew

lett

65

,000

-65

,000

4-

6,17

5-

117,

700

253,

875

Mr P

Ada

ms

185,

625

--

-17

,634

51,9

7411

7,70

037

2,93

3

Mr J

Cro

ser1

67,8

47-

--

6,44

5-

199,

800

274,

092

Non-

Exec

utiv

e

Mr N

El S

ayed

30

,000

--

-2,

850

-82

,390

115,

240

Mr D

Bos

io2

12,0

83-

-10

,000

2,09

8-

-24

,181

Secr

etar

y

Mr M

Pitt

s -

44,5

00-

--

-35

,310

79,8

10

Tota

l Key

Man

agem

ent P

erso

nnel

36

0,55

544

,500

65,0

0010

,000

35,2

0251

,974

552,

900

1,12

0,13

1

Not

es:

1 Mr J

Cro

ser w

as a

ppoi

nted

on

15 N

ovem

ber 2

018

2 Mr D

Bos

io w

as a

ppoi

nted

on

22 D

ecem

ber 2

017

and

resi

gned

on

15 N

ovem

ber 2

018

3 Rel

ates

to th

e va

lue

of o

ptio

ns is

sued

to K

ey M

anag

emen

t Per

sonn

el o

n 10

Jul

y 20

19 fo

llow

ing

appr

oval

at t

he C

ompa

ny’s

gene

ral m

eetin

g on

5 J

uly

2019

. The

shar

e-ba

sed

paym

ent e

xpen

se h

as b

een

reco

gnis

ed in

fina

ncia

l yea

r end

ed 3

0 Ju

ne 2

019

on th

e ba

sis t

hat t

he se

rvic

es re

late

d to

the

gran

t wer

e pe

rform

ed d

urin

g th

at y

ear.

The

valu

e of

thes

e sh

are-

base

d pa

ymen

ts re

pres

ents

non

-cas

h in

cent

ives

pro

vide

d to

dire

ctor

s whi

ch h

ave

yet t

o be

real

ised

by

the

reci

pien

ts.

4 On

30 O

ctob

er 2

018

the

Boar

d re

solv

ed to

pay

Mr H

ewle

tt a

cash

bon

us o

f $65

,000

to re

cogn

ise

the

addi

tiona

l wor

k pr

ovid

ed b

y M

r Hew

lett

in a

dditi

on to

his

dut

ies a

s ex

ecut

ive

dire

ctor

. No

spec

ific c

ondi

tions

wer

e ap

plie

d to

the

gran

ting

of th

is b

onus

and

no

bonu

s sch

eme

rem

ains

in p

lace

subs

eque

nt to

the

gran

ting

of th

is a

d-ho

c bon

us


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tails

of r

emun

erat

ion

for t

he y

ear e

nded

30

June

201

8

Year

End

ed 3

0 Ju

ne 2

019

Shor

t Ter

m E

mpl

oyee

Ben

efit

Post

Em

ploy

men

t Ben

efit

Shar

e Ba

sed

Paym

ents

Key

Man

agem

ent P

erso

nnel

Dire

ctor

s Sa

lary

or F

ees

$

Fees

for O

ther

Se

rvic

es P

rovi

ded

$

Term

inat

ion

Paym

ents

$

Supe

rann

uatio

n $

Opt

ions

Is

sued

$

Opt

ions

U

niss

ued3

$

Tota

l $

Exec

utiv

e

Mr A

Hew

lett

55

,667

--

5,28

863

,800

-12

4,75

5

Mr P

Ada

ms

23,4

78-

-2,

230

8,72

6-

34,4

34

Non

-Exe

cutiv

e

Mr A

Moy

le3

17,7

3875

0-

1,49

6-

-19

,984

Mr L

Cha

ruck

yj4

25,6

97-

--

15,9

50-

41,6

47

Mr N

El S

ayed

520

,000

--

1,90

047

,850

-69

,750

Mr D

Bos

io6

15,0

009,

132

-2,

293

63,8

00-

90,2

25

Secr

etar

y

Mr M

Pitt

s7 -

42,0

00-

-15

,950

-57

,950

Mr G

Bod

en &

Ms N

For

de8

-3,

009

--

--

3,00

9

Tota

l Key

Man

agem

ent P

erso

nnel

157,

580

54,8

91-

13,2

0721

6,07

6-

441,

754

Not

es:

1 Mr A

Hew

lett

was

app

oint

ed o

n 8

Mar

ch 2

017

2 Mr P

Ada

ms w

as a

ppoi

nted

on

25 M

ay 2

018

3 Mr A

Moy

le re

sign

ed o

n 15

Dec

embe

r 201

74 M

r L C

haru

ckyj

resi

gned

on

9 M

arch

201

85 M

r N E

l Say

ed w

as a

ppoi

nted

on

25 O

ctob

er 2

017

6 Mr D

Bos

io w

as a

ppoi

nted

on

22 D

ecem

ber 2

017

7 Mr M

Pitt

s was

app

oint

ed a

s Com

pany

Sec

reta

ry o

n 3

July

201

7. R

emun

erat

ion

paid

to M

r Pitt

s rep

rese

nts p

aym

ents

to E

ndea

vour

Cor

pora

te P

ty L

td, c

harg

ed to

incl

ude

com

pany

secr

etar

ial,

acco

untin

g an

d fin

anci

al a

dmin

istra

tion

dutie

s.8 R

emun

erat

ion

paid

to M

r G B

oden

repr

esen

ts p

aym

ents

to B

oden

Cor

pora

te S

ervi

ces P

ty L

td (B

CS) c

harg

ed a

t hou

rly ra

tes f

or ti

me

spen

t by

Mr B

oden

and

oth

er

empl

oyee

s of B

CS, i

nclu

ding

join

t sec

reta

ry, M

s For

de, f

or co

mpa

ny se

cret

aria

l, ac

coun

ting

and

finan

cial

adm

inist

ratio

n ac

tiviti

es. M

s For

de re

sign

ed o

n 31

Mar

ch 2

017

and

Mr B

oden

resi

gned

on

31 J

uly

2017


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Share Holdings and Transactions of Key Management Personnel:

The movement during the reporting period in the number of ordinary shares in the Group held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

Key Management Personnel

Balance at 1 July 2018 / Appointment

Net Change Other1

Shares issued on exercise of options

Balance at 30 June 2019 /

Resignation

Mr A Hewlett 7,500,000 2,700,000 - 10,200,000

Mr P Adams - 1,818,182 - 1,818,182

Mr J Croser 3,540,000 909,091 - 4,449,091

Mr D Bosio - - - -

Mr N El Sayed - - - -

Mr M Pitts - 1,818,182 - 1,818,182

Total 11,040,000 7,245,455 - 18,285,455

1 On-market and Off-market transfers

Options Holdings and Transactions of Key Management Personnel:

The movement during the reporting period in the number of options over ordinary shares in the Group held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

Key Management Personnel

Balance at 1 July 2018 / Appointment

Granted as remuneration

Net Change OtherBalance at

30 June 2019

Vested and exercisable at 30 June 2019

Mr A Hewlett 10,000,000 - - 10,000,000 10,000,000

Mr P Adams - 10,000,0001 - 10,000,000 10,000,000

Mr D Bosio 10,000,000 - - 10,000,000 10,000,000

Mr N El Sayed 7,500,000 - - 7,500,000 7,500,000

Mr M Pitts 2,500,000 - - 2,500,000 2,500,000

Total 30,000,000 10,000,000 - 40,000,000 40,000,000

1 The options granted to Mr Adams vested in two tranches of 5,000,000 options each on 30 November 2018 and 31 May 2019 respectively. The options may be cancelled upon Mr Adams resignation or termination in accordance with the terms of the grant.


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Key Management Personnel Transactions:

The following table provides the total amount of transactions which have been entered into with related parties for the relevant financial year exclusive of GST:

Related Party YearPurchases from related parties

$

Sales to related parties

$

Amount owed by related parties

$

Amounts owed to related parties

$

A J Moyle & Associates Pty Ltd 2019 - - - -

2018 3,113 - - -

Boden Corporate Services Pty Ltd 2019 - - - -

2018 3,009 - - -

Endeavour Corporate Pty Ltd 2019 27,710 - - 3,820

2018 14,501 - - 5,907

Related party payables are non-interest bearing and are normally settled on 30-day terms.

A J Moyle & Associates Pty Ltd

The Company had entered into an agreement with A J Moyle & Associates, a company related to Mr Alexander Moyle, for the provision of geological consulting services, until the date of his resignation.

Boden Corporate Services Pty Ltd

The Company had engaged the services of Boden Corporate Services, a company related to Mr Graeme Boden, for the provision of company secretarial and accounting services. The contract was terminated by Mr Boden during the previous financial year and Mr Boden resigned as Company Secretary effective 31 July 2017.

Endeavour Corporate Pty Ltd

The Company had engaged the services of Endeavour Corporate Pty Ltd (“Endeavour”), a company related to Mr Mark Pitts, for the provision of company secretarial and accounting services, upon his appointment as Company Secretary on 3 July 2017.

- END OF AUDITED REMUNERATION REPORT -


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14. PROCEEDINGS ON BEHALF OF THE COMPANYNo person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

15. NON -AUDIT SERVICESThe current and previous auditors did not provide any non-audit services to the Company during the year ended 30 June 2019 (2018: $Nil).

16. AUDITORS INDEPENDENCE DECLARATIONThe lead auditor’s independence declaration under Section 307C of the Corporations Act 2001 is set out on page 15 and forms part of the Directors Report for the year ended 30 June 2019.

Signed at Perth this 25th day of September 2019 in accordance with a resolution of the directors made pursuant to s298(2) of the Corporations Act 2001.

Alexander Hewlett

Executive Chairman


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Auditor’s Independence Declaration

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

Lead Auditor’s Independence Declaration under

Section 307C of the Corporations Act 2001

To the Directors of Spectrum Metals Limited

I declare that, to the best of my knowledge and belief, in relation to the audit of Spectrum Metals Limited for the financial year ended 30 June 2019 there have been:

i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

ii. no contraventions of any applicable code of professional conduct in relation to the audit.

KPMG R Gambitta Partner

Perth

25 September 2019



Lead Auditor’s Independence Declaration under

Section 307C of the Corporations Act 2001

To the Directors of Spectrum Metals Limited

I declare that, to the best of my knowledge and belief, in relation to the audit of Spectrum Metals Limited for the financial year ended 30 June 2019 there have been:

i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

ii. no contraventions of any applicable code of professional conduct in relation to the audit.


Perth

25 September 2019


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Consolidated Statement of Profit or Loss & Other Comprehensive Income For the year ended 30 June 2019

For the year ended 30 June

Note2019

$2018

$

Income

Interest received 5(a) 14,264 3,855

Profit on disposal of assets - 29,324

Other Income 477 606

Total Income 14,741 33,785

Expenses

Directors’ remuneration (214,288) (162,334)

Depreciation expense 13 (1,578) -

Project evaluation expense (43,692) (306,572)

Exploration expenditure impaired 12 (121,635)

Professional services expense (380,394) (218,849)

Employee benefits expense (1,366) -

Share-based payment expense 17 (648,504) (216,076)

Other expenses from operating activities (169,122) (82,611)

Total Expenses (1,580,580) (986,442)

Loss before income tax (1,565,839) (952,657)

Income tax benefit/(expense) 6 - -

Loss for the Year Attributable to the Owners of the Company (1,565,839) (952,657)

Other Comprehensive Income - -

Total Comprehensive Loss for the Year Attributable to the Owners of the Company (1,565,839) (952,657)

Loss per share

Loss per share 7 Cents Cents

- Basic and diluted loss per share for the year (0.16) (0.17)

The accompanying notes form part of these financial statements.


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Consolidated Statement of Financial Position As at 30 June 2019

Note30 June

2019 $

30 June 2018

$

ASSETS

Current Assets

Cash and cash equivalents 9 4,165,015 1,544,566

Trade and other receivables 10 52,649 20,747

Security bonds 11 - 3,492

Total Current Assets 4,217,664 1,568,805

Non-Current Assets

Security Bonds 11 14,480 -

Exploration and Evaluation Expenditure 12 3,192,012 72,764

Plant and equipment 13 124,042 -

Total Non-Current Assets 3,330,534 72,764

TOTAL ASSETS 7,548,198 1,641,569

LIABILITIES

Current Liabilities

Trade and other payables 14 507,561 44,857

Total Current Liabilities 507,561 44,857

TOTAL LIABILITIES 507,561 44,857

NET ASSETS 7,040,637 1,596,712

EQUITY

Equity attributable to equity holders of the Company

Issued capital 15 27,279,289 20,918,029

Reserves 16 1,074,830 426,326

Accumulated losses (21,313,482) (19,747,643)

TOTAL EQUITY 7,040,637 1,596,712



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Consolidated Statement of Cash Flows For the year ended 30 June 2019

For the year ended 30 June

Note2019

$2018

$

Cash flows from operating activities

Payments to suppliers and employees (625,255) (454,356)

Net cash flows used in operating activities 9 (625,255) (454,356)

Cash flows from investing activities

Interest received 14,264 3,855

Proceeds from sale of plant and equipment - 55,455

Purchase of plant and equipment (127,759) -

Payment of bonds (14,480) (3,492)

Project evaluation expenditure - (306,572)

Exploration & evaluation Expenditure (1,907,729) (72,764)

Net cash flows used in investing activities (2,035,704) (323,518)

Cash flows from financing activities

Proceeds from issue of shares/exercise of options 5,650,000 1,777,778

Cost of shares issued (368,592) (66,667)

Net cash flows used in financing activities 5,281,408 1,711,111

Net increase/(decrease) in cash and cash equivalents 2,620,449 933,237

Cash and cash equivalents at beginning of year 1,544,566 611,329

Cash and cash equivalents at end of the year 9 4,165,015 1,544,566



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Consolidated Statement of Changes in Equity For the year ended 30 June 2019

NoteIssued Capital

$

Reserves $

Accumulated Losses

$

Total Equity

$

At 1 July 2017 19,417,168 - (18,794,986) 622,182

Loss for the year - - (952,657) (952,657)

Other Comprehensive loss - - - -

Total Comprehensive loss - - (952,657) (952,657)

Issue of share capital 15 1,777,778 - - 1,777,778

Share Issue Costs 15 (106,667) - - (106,667)

Issue of share capital in lieu of costs 15 40,000 - - 40,000

Issue of options 15 (210,250) 426,326 - 216,076

At 30 June 2018 20,918,029 426,326 (19,747,643) 1,596,712

Loss for the year - (1,565,839) (1,565,839)

Other Comprehensive loss - - - -

Total Comprehensive loss - (1,565,839) (1,565,839)

Issue of share capital for cash 15 5,600,000 - - 5,600,000

Issue of share capital for asset acquisitions 15 1,054,852 - - 1,054,852

Exercise of options 15 50,000 - - 50,000

Share Issue Costs 15 (343,592) - - (343,592)

Share-based payments 17 - 648,504 - 648,504

At 30 June 2019 27,279,289 1,074,830 (21,313,482) 7,040,637



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Notes to the Consolidated Financial Statements 1. CORPORATE INFORMATIONSpectrum Metals Limited (the “Company”) is a company domiciled in Australia. The Company’s registered office is Suite 2, 827 Beaufort Street, Mt. Lawley WA.

The financial report of the Group comprising Spectrum Metals Limited and its wholly owned subsidiary for the year ended 30 June 2019 was authorised for issue in accordance with a resolution of the directors on 25th September, 2019.

Spectrum Metals Limited is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange.

The Company’s principal activity is exploration and extraction of mineral resources.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Basis of Preparation

The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and applicable Australian Accounting Standards. The financial report has also been prepared on a historical cost basis.

The financial report is presented in Australian dollars.

The financial report complies with Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Group comply with International Financial Reporting Standards (‘IFRS’).

(b) Going Concern

The financial statements have been prepared on a going concern basis which assumes the settlement of liabilities and the realisation of assets in the normal course of business.

(c) New accounting standards and interpretations

In the year ended 30 June 2019, the Group has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current annual reporting period. It has been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group accounting policies.

A number of new standards, amendments to standards and interpretations are effective for annual reporting periods beginning after 1 July 2019 and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the Group. The Group does not plan to adopt any standards early and the extent of the impact has not been determined.

New Standards and Interpretations Not Yet Adopted

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are not yet effective and have not been applied in preparing this financial report.


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Notes to the Consolidated Financial Statements

• AASB 16 Leases provides a new lessee accounting model requiring the recognition of assets and liabilities for all leases with a term greater than 12 months, unless the underlying asset is of low value. It requires the lessee to recognise a right-of-use asset, representing the rights to use the underlying lease asset and a lease liability representing the obligation of lease payments. AASB 16 is effective for annual periods beginning on or after 1 January 2020 with early adoption permitted. The impact on the Group’s financial assets and financial liabilities of the adoption of AASB 16 has yet to be determined but is unlikely to be material.

• AASB 2017-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based Payment Transactions. The standard makes amendments to AASB 2 Share-based Payment. The amendments address the accounting for the effects of vesting and non-vesting conditions and the accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled, is effective for annual reporting periods beginning on or after 1 January 2019 and it is not expected that this will have a significant impact on the consolidated financial statements.

(d) Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

- Plant and equipment - over 5 to 15 years

An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. Depreciation recognised upon assets utilised directly on exploration and evaluation activities is capitalised to the relevant area of interest in accordance with Note 2(f) below.

(e) Exploration, evaluation and development expenditure

Exploration and evaluation costs are capitalised as incurred. Expenditure is accumulated in respect of each separate area of interest. Acquisition, exploration, evaluation and development costs are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through the sale or successful development and exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. When an area of interest is abandoned or the Directors decide that it is not commercial, any accumulated expenditure in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated expenditure written off to the extent that it is considered to be unrecoverable in the future. Amortisation is not charged on expenditures carried forward in respect of areas of interest in the development phase until production commences. Costs incurred before the Company has obtained the legal rights to explore are recognised in the Statement of Profit or Loss and Other Comprehensive Income.

(f) Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets, other than deferred tax assets (see accounting policy 2(p)) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.


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The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(g) Trade and other receivables

Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within periods ranging from 30 days to 90 days.

Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance.

The amount of the impairment loss is recognised in the statement of profit or loss and other comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of profit or loss and other comprehensive income.

(h) Trade and Other Payables

Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

Other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months.


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(i) Cash and cash equivalents

Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(j) Business combinations

Business combinations occur where an acquirer obtains control over one or more businesses.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial instrument, are recognised as expenses in profit or loss when incurred.

The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

(k) Employee benefits

Short-term employee benefits:

Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.

The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part of current trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position.

Other long-term employee benefits:

Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on Corporate bonds that have maturity dates that approximate the terms of the obligations. Any re-measurements for changes in assumptions of obligations for other long-term employee benefits are recognised in profit or loss in the periods in which the changes occur.


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The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions.

DEFINED CONTRIBUTION SUPERANNUATION BENEFITS:

All employees of the Group, located in Australia receive defined contribution superannuation entitlements, for which the Group pays the fixed superannuation guarantee contribution (currently 9.50% of the employee’s average ordinary salary) to the employee’s superannuation fund of choice. All contributions in respect of employees’ defined contribution entitlements are recognised as an expense when they become payable. The Group’s obligation with respect to employees’ defined contribution entitlements is limited to its obligation for any unpaid superannuation guarantee contributions at the end of the reporting period. All obligations for unpaid superannuation guarantee contributions are measured at the (undiscounted) amounts expected to be paid when the obligation is settled and are presented as current liabilities in the Group’s statement of financial position.

(m) Share-based payment transactions

The cost of the options granted to employees is measured by reference to the fair value at the date at which they are granted. The fair value is normally determined through the use of the Black-Scholes option pricing model.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the best available information at reporting date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/ or service conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see note 7).


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(n) Leases

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments.

Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases.

Operating lease payments are recognised as an expense in the statement of profit and loss and other comprehensive income on a straight-line basis over the lease term.

(o) Interest income

Interest income is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.

(p) Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax:

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Statement of Profit and Loss and Other Comprehensive Income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Consolidated Entity’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax:

Deferred income tax is provided on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

• except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:


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• except where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of profit and loss and other comprehensive income.

Other taxes:

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(q) Operating Segments

AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. Spectrum Metals Limited has only one operation, exploration for minerals, consequently the Group does not report segmented operations.


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(r) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Group and Entities (including special purpose entities) controlled by the Group (its subsidiaries). The parent controls an entity when it 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 over the entity. A list of the subsidiaries is provided in note 23. The financial statements of the subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the group. Control exists where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing when the group controls another entity.

Unrealised gains or transactions between the group and its associates are eliminated to the extent of the group’s interests in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group.

When the group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss.

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESCapital Management:

The Board’s objective when managing capital is to maintain a strong capital base so as to safeguard the Group’s ability to continue as a going concern. The management of the Group’s capital is performed by the Board.

There were no changes in the Group’s approach to capital management during the year.

Financial Instruments:

The Group’s financial instruments include cash, short-term deposits, and trade creditors, which are disclosed in the accompanying notes.

It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken.

The main risks arising from the Group’s financial instruments are interest rate risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk:

The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s cash and cash equivalents.

The Group’s policy is to manage its interest risk by having monies on deposits varying in maturity.


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Credit risk:

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. This arises principally from cash and cash equivalents and trade and other receivables.

There are no significant concentrations of credit risk within the Group. The carrying amount of the Group’s financial assets represents the maximum credit risk exposure, represented as follows:

2019 $

2018 $

Cash and cash equivalents 4,165,015 1,544,566

Trade and other receivables 52,649 20,747

4,217,664 1,565,313

Risk Exposures and Responses

Liquidity Risk:

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Group’s funding and liquidity management requirements. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the maturities and interest rate risk for the Group’s financial instruments. The tables have been drawn up based on the undiscounted cash flows of the financial instruments based on the earliest date on which the Group can be required to pay or call on the financial instrument. The following tables also include the weighted average effective interest rate for each financial instrument subject to interest rate risk.

Year ended 30 June 2019 Less than 1 month $

1-3 months $

Total $

Financial Assets

Interest Bearing

Cash and cash equivalents 1,165,015 3,000,000 4,165,015

Non-Interest Bearing

Trade and other receivables 52,649 - 52,649

Total Financial Assets 1,217,664 3,000,000 4,217,664

Financial Liabilities


Trade and other payables 507,561 - 507,561

Total Financial Liabilities 507,561 - 507,561

Net Financial Assets 710,103 3,000,000 3,710,103


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Year ended 30 June 2018 Less than 1 month $

1-3 months $

Total $

Financial Assets

Interest Bearing

Cash and cash equivalents 1,544,566 - 1,544,566

Non-Interest Bearing -

Trade and other receivables 20,747 - 20,747

Total Financial Assets 1,565,313 - 1,565,313

Financial Liabilities


Trade and other payables 44,857 - 44,857

Total Financial Liabilities 44,857 - 44,857

Net Financial Assets 1,520,456 - 1,520,456

Fair value:

The fair value of assets and liabilities are approximate to their carrying amounts.

Interest rate sensitivity:

A sensitivity of 2 per cent has been selected as this is considered reasonable given the current level of both short-term and long-term interest rates. A 2% movement in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant:

Profit or loss Equity

2% increase

2% decrease

2% increase

2% decrease

2019: Cash and cash equivalents 83,300 (83,300) 83,300 (83,300)

2018: Cash and cash equivalents 30,891 (30,891) 30,891 (30,891)


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4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTYIn the application of the Group’s accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Significant accounting estimates and assumptions:

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting year are:

Exploration and evaluation expenditure

Determining the recoverability of exploration and evaluation expenditure capitalised in accordance with the Group’s accounting policy (refer note 2(e)), requires estimates and assumptions as to future events and circumstances, in particular, whether successful development and commercial exploitation, or alternatively sale, of the respective areas of interest will be achieved. Critical to this assessment is estimates and assumptions as to ore reserves, the timing of expected cash flows, exchange rates, commodity prices and future capital requirements. Changes in these estimates and assumptions as new information about the presence or recoverability of an ore reserve becomes available, may impact the assessment of the recoverable amount of exploration and evaluation assets. If, after having capitalised the expenditure under accounting policy 2(e), a judgement is made that recovery of the expenditure is unlikely, an impairment loss is recorded in the statement of profit and loss and other comprehensive income in accordance with accounting policy 2(f).

As at 30 June 2019, capitalised exploration and evaluation totalled $3,192,012 (2018: $72,764).

5. INCOME AND EXPENSES

2019 $

2018 $

(a) Finance income

Bank interest income 14,264 3,855

Total finance income 14,264 3,855

(b) Depreciation expense

Depreciation 1,578 -


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6. INCOME TAXMajor components of income tax expense for the years ended 30 June 2019 and 2018 are:

2019 $

2018 $

Current income tax charge - -

Deferred Income tax expense - -

Income tax expense/(benefit) - -

A reconciliation of income tax expense/(benefit) applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the Group’s effective income tax rate for the years ended 30 June 2019 and 2018 is as follows:

2019 $

2018 $

Loss before income tax (1,565,839) (952,657)

At the statutory income tax rate of 27.5% (2018: 27.5%) (430,606) (261,981)

Add non-deductible expenses:

Impairment expenses on capitalised exploration and fixed assets 33,450 -

Share-based payments 178,339 59,421

Entertainment 1,851 645

(216,966) (201,825)

Tax Losses and Timing Differences not recognised 216,966 201,825

Income tax (benefit)/expense - -

Unrecognised deferred tax assets at 30 June relate to the following:

Deferred income tax assets at 27.5% (2018: 27.5%):

Share Issue Costs 132,809 85,777

Accrued expenses 106,393 6,600

Unused Tax Losses 5,117,565 5,040,254

Total Deferred income tax assets 5,356,767 5,132,631

The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not possible at this stage of exploration to explicitly confirm the probability that future taxable profit will be available against which the Company can utilise these benefits.


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7. LOSS PER SHAREBasic loss per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

The following reflects the loss and share data used in the basic and diluted loss per share computations:

2019 $

2018 $

Net loss attributable to equity holders from continuing operations (1,565,839) (952,657)

Number Number

Weighted average number of ordinary shares for basic loss per share

973,465,691 549,393,751

Adjusted weighted average number of ordinary shares for diluted loss per share

973,465,691 549,393,751

There is no dilution from the outstanding options as the Group is making a loss and therefore all potentially dilutive ordinary shares are considered anti-dilutive.

8. DIVIDENDS PAID AND PROPOSED No dividends have been paid or proposed (2018: $Nil).

9. CASH AND CASH EQUIVALENTS

2019 $

2018 $

Cash at bank and in hand 4,165,015 1,544,566

4,165,015 1,544,566

Reconciliation from the net loss after tax to the net cash flows from operations:

Net Loss (1,565,839) (952,657)

Adjustments for:

Depreciation 1,578 -

Project evaluation and exploration expenditure 121,635 306,572

Share-based payment expense 648,504 216,076

Interest received (14,264) (3,855)

(Gain) / loss from disposal of assets - (29,324)

Changes in assets and liabilities:

(increase)/decrease in trade and other receivables 28,410 (6,522)

(increase)/decrease in prepayments - 6,236

(decrease)/increase in trade and other payables 154,721 9,118

Net cash from operating activities (625,255) (454,356)


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10. TRADE AND OTHER RECEIVABLES Major components of income tax expense for the years ended 30 June 2019 and 2018 are:

2019 $

2018 $

GST refundable 52,649 20,696

Trade receivables - 51

52,649 20,747

Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due:

11. OTHER ASSETS

2019 $

2018 $

Current

Security bonds - 3,492

Non- current

Security bonds 14,480 -

14,480 3,492

12. EXPLORATION AND EVALUATION EXPENDITURE The following table is a reconciliation of movements in exploration and evaluation expenditure during the year.

2019 $

2018 $

Reconciliation:

Balance at the beginning of the year 72,764 -

Acquisitions:

- Acquisition of First Hit 199,852 -

- Acquisition of Penny West 1,000,000 -

- Other tenement acquisitions 12,500 -

Total acquisitions 1,212,352 -

Expenditure incurred 2,026,392 72,764

Depreciation expense capitalised 2,138 -

Expenditure written-off or impaired (121,635) -

Balance at the end of the year 3,192,012 72,764


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During the year the majority of the tenements comprising the Whaleshark project were relinquished, and accordingly, the carrying value of that project has been written off.

Included in the expenditure incurred for the year is an amount of $256,469 (2018: $8,453) relating to capitalised director’s fees which were directly attributable to exploration activities.

During the financial year the following acquisitions of exploration projects/tenements were completed via the payment of shares and/or cash:

Cash consideration

Share consideration

Total consideration

Acquisition of First Hit 100,000 99,852 199,852

Acquisition of Penny West 50,000 950,000 1,000,000

Additional tenement acquisition 7,500 5,000 12,500

Total exploration acquisitions for the year 157,500 1,054,852 1,212,352

The ultimate recovery of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial exploitation or sale of the respective areas of interest at an amount greater than or equal to carrying value.

13. PLANT AND EQUIPMENT

Plant & Equipment 2019 $

2018 $

Balance at the beginning of the year - 26,130

Additions 127,758 -

Disposals - (26,130)

Depreciation expense for the year (1,578) -

Exploration asset depreciation, capitalised (2,138) -

Balance at the end of the year 124,042 -

At 30 June:

Cost 127,758

Accumulated depreciation (3,716) -

Net carrying amount 124,042 -

14. TRADE AND OTHER PAYABLES (CURRENT)

2019 $

2018 $

Trade payables & accruals 484,623 44,857

Payroll liabilities 22,938 -

507,561 44,857


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15. ISSUED CAPITAL 2019

$2019

No. of shares2018

$2018

No. of shares

Ordinary Shares:

Issued and fully paid 27,279,289 1,264,515,167 20,918,029 707,626,626

Movement in ordinary shares on issue:

At 1 July 20,918,029 707,626,626 19,417,168 480,404,406

Issue of shares for cash 5,600,000 358,333,333 1,777,778 222,222,220

Issue of shares in lieu of costs - - 40,000 5,000,000

Issue of shares to acquire exploration assets1 1,054,852 193,555,208 - -

Issue of shares on exercise of options 50,000 5,000,000 - -

Costs of capital raised (343,592) - (316,917) -

At 30 June 27,279,289 1,264,515,167 20,918,029 707,626,626

1 Refer note 12.

The shares do not have a par value.

During the financial year ended 30 June 2019 the following events affected the Company’s issued capital:

1. On 8 October 2018, the Company issued 150,000,000 shares to raise $600,000 before costs;

2. On 16 October 2018, the Company acquired the First Hit project via the payment of cash and issue of 19,464,300 shares, valued at $99,852;

3. On 7 December 2018, the Company acquired the Penny West project via the payment of cash and issue of 172,727,272 shares, valued at $950,000;

4. On 10 December 2018, the Company acquired a tenement adjacent to the Penny West project via the payment of cash and issue of 1,363,636 shares, valued at $5,000;

5. On 1 April 2019, 2,500,000 options were exercised at a price of $0.01 per share, raising $25,000; and

6. On 16 April 2019, the Company issued 210,833,333 shares, comprising 2,500,000 shares on the exercise of options at $0.01 and 208,333,333 shares for total gross proceeds of $5,000,000, before costs of the issue.

2019 No.

2018 No.

Options outstanding over ordinary shares:

Unlisted options exercisable at 1.5 cents on or before 30 June 2021 32,500,000 32,500,000

Unlisted options exercisable at 1.0 cents on or before 4 May 2023 20,000,000 25,000,000

Unlisted options exercisable at 1.5 cents on or before 31 May 2023 10,000,000 -

Unlisted options exercisable at 1.5 cents on or before 30 June 2021 10,000,000 -

Balance at 30 June 72,500,000 57,500,000

Vested and exercisable at 30 June 72,500,000 57,500,000

Options carry no voting rights until converted to fully paid ordinary shares.


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16. RESERVES 2019

$2018

$

Share-based payment reserve:

At 1 July 426,326 -

Options issued to Directors, former Director and executives - 207,350

Options issued to broker as Costs of capital raised - 210,250

Options issued to corporate advisor 19,000 -

Expense recognised for Options to Managing Director1 51,974 8,726

Expense recognised for Options to Directors and consultants2 577,530 -

At 30 June 1,074,830 426,326

1 The options issued to P Adams during the year were partially-expensed in the previous period in accordance with the terms of the vesting conditions and the assessed grant date being the date of the commencement of his employment. The remaining expense has been recognised in the current period.

2 The expense recognised in the current year relates to 46,500,000 options at various expiry dates and exercise prices issued to directors and consultants to the Company, which were approved by shareholders on 5 July 2019 and issued on 10 July 2019. These options were issued in relation to services provided to the Group during the current year and therefore have been expensed in the corresponding financial year.

The share-based payment reserve is used to record the fair value of options and other equity instruments issued.

17. SHARE-BASED PAYMENTS

2019 $

2018 $

The following share-based payments were made during the year:

Shares issued in lieu of share issue costs - 40,000

Options issued to Directors, former Director and Executives - 207,350

Options issued to broker in payment of share issue costs - 210,250

Options issued to corporate advisor 19,000 -

Expense recognised for Options to Managing Director 51,974 8,726

Expense recognised for Options to Directors and consultants 577,530 -

648,504 466,326


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The number and weighted average exercise price of share options on issue is as follows:

Number of options

Weighted Average Exercise Price

Outstanding at 1 July 2017 - -

Granted during the year 57,500,000 $0.013

Expired / lapsed or exercised during the year - -

Outstanding at 30 June 2018 57,500,000 $0.013

Vested and exercisable at 30 June 2018 57,500,000 $0.013

Outstanding at 1 July 2018 57,500,000 $0.013

Granted during the year 20,000,000 $0.015

Expired / lapsed or exercised during the year (5,000,000) $0.01

Outstanding at 30 June 2019 72,500,000 $0.014

Vested and exercisable at 30 June 2019 72,500,000 $0.014

The fair value of the options issued during the year was determined by reference to the Black-Scholes option pricing model. The key inputs and valuations are summarised as follows:

Managing Director Options Broker Options

Underlying security spot price on grant date $0.009 $0.005

Exercise price $0.015 $0.015

Grant date 25 May 2018 19 Sep 2018

Expiration date 31 May 2023 30 Jun 2021

Life (years) 5.02 2.78

Volatility 100% 100%

Risk free rate 2.32% 2.30%

Dividend Yield 0% 0%

Number of options 10,000,000 10,000,000

Valuation per option $0.00607 $0.0019

Valuation per tranche $60,700 $19,000

Remaining life (years) 3.92 2.00

The options issued to the Company’s Managing Director were not issued until the financial year ended 30 June 2019, however they relate to his employment period from his commencement date of 25 May 2018 and therefore part of the total expense was recognised during the comparative financial year. These options have two equal tranches of 5,000,000 options which vested on 30 November 2019 and 31 May 2020 respectively.


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46,500,000 options at various expiry dates and exercise prices, issued to directors and consultants to the Company, were approved by shareholders on 5 July 2019 and issued on 10 July 2019. These options were issued in relation to services provided to the Group during the current year and therefore have been expensed in the corresponding financial year. The fair value of these options has been determined by reference to the Black-Scholes option pricing model. The key inputs and valuations are summarised as follows:

Consultant Options

Director Options – T1



Underlying security spot price on grant date $0.022 $0.022 $0.022 $0.022

Exercise price $0.015 $0.025 $0.030 $0.035

Grant date 5 Jul 2019 5 Jul 2019 5 Jul 2019 5 Jul 2019

Expiration date 30 Jun 2023 26 Mar 2022 26 Mar 2022 26 Mar 2022

Life (years) 4.00 2.74 2.74 2.74

Volatility 100% 100% 100% 100%

Risk free rate 0.99% 0.96% 0.96% 0.96%

Dividend Yield 0% 0% 0% 0%

Number of options 6,500,000 13,333,332 13,333,332 13,333,336

Valuation per option $0.0164 $0.0126 $0.0117 $0.0110

Valuation per tranche $106,600 $168,000 $156,000 $146,667

Remaining life (years) 4.00 2.74 2.74 2.74

18. COMMITMENTS Tenement commitments:

In order to maintain current rights of tenure to exploration tenements the Company is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State Governments within Australia. These obligations may be reset when application for a mining lease is made and at other times. The Group has a minimum expenditure commitment on tenure under its control.

The Company can apply for exemption from compliance with the minimum exploration expenditure requirements. Due to the nature and scale of the Company’s exploration activities the Company is unable to estimate its likely tenement holdings and therefore minimum expenditure requirements more than 1 year ahead.

These obligations are not provided for in the financial report and are payable:

Consolidated Company

30 June 2019 30 June 2018 30 June 2019 30 June 2018

Current yearly minimum exploration expenditure commitment

186,380 57,000 - -

Other than the above, the Directors of Spectrum Metals Limited consider that there are no other material contingencies or commitments outstanding as at 30 June 2019.


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19. CONTINGENT ASSETS AND LIABILITIESThere were no contingent assets or liabilities at 30 June 2019 (2018: Nil).

20. RELATED PARTY DISCLOSURE (a) Remuneration of Key Management Personnel

Components of key management personnel compensation included in ‘directors’ remuneration’ is as follows:

2019 $

2018 $

Short-term employee benefits 360,555 166,712

Fees for other services provided 44,500 45,759

Cash Bonuses 65,000 -

Termination Payments 10,000 -

Post-employment benefits 35,202 13,207

Share-based payments 604,874 216,076

Total compensation included in directors’ remuneration 1,120,131 441,754

(b) Key Management Personnel Transactions

The following table provides the total amount of transactions which have been entered into with related parties for the relevant financial year exclusive of GST:

Related Party Year

Purchases from related

parties $

Sales to related parties

$

Amount owed by related

parties $

Amount owed to related

parties $

A J Moyle & Associates Pty Ltd 2019 - - - -

2018 3,113 - - -

Boden Corporate Services Pty Ltd 2019 - - - -

2018 3,009 - - -

Endeavour Corporate Pty Ltd 2019 27,710 - - 3,820

2018 14,501 - - 5,370

Related party payables are non-interest bearing and are normally settled on 30-day terms.


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A J Moyle & Associates Pty Ltd

The Company has entered into an agreement with A J Moyle & Associates, a company related to Mr Alexander Moyle, for the provision of geological consulting services. Mr Moyle resigned as a Director of the Company on 15 September 2017.

Boden Corporate Services Pty Ltd

The Company engaged the services of Boden Corporate Services, a company related to Mr Graeme Boden, for the provision of company secretarial and accounting services where fees charged were in accordance with normal charge out rates for Mr Boden and other employees of the service company. Mr Boden resigned as Company Secretary on 31 July 2017.

Endeavour Corporate Pty Ltd

The Company had engaged the services of Endeavour Corporate Pty Ltd (“Endeavour”), a company related to Mr Mark Pitts, for the provision of company secretarial and accounting services, upon his appointment as Company Secretary on 3 July 2017.

21. SIGNIFICANT EVENTS AFTER THE BALANCE DATE On 5 July 2019 at the Company’s General Meeting of Shareholders, shareholders approved the adoption of the Company’s Incentive Option and Performance Rights Plan (“Employee Share and Option Plan” or “ESOP”), the issue of 46,500,000 options to Directors and consultants to the Company at various exercise dates and prices, and 19,999,999 performance rights to Executive Directors with various performance conditions and terms. These securities were issued on 10 July 2019. The share-based payment expense for the 46,500,000 options has been recognised in this financial year on the basis that the services were rendered in this financial year by the recipients of the options.

On 1 August 2019 the Company announced the successful completion of a placement of 116,000,000 ordinary shares at $0.0625 per share raising $7,250,000 before costs, which will be used to significantly increase the exploration activities of the Company.

Other than the above, there are no matters or circumstances that have arisen since the end of the financial year that have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group, in future financial years.

22. AUDITORS’ REMUNERATION

2019 $

2018 $

The auditor of the Company is KPMG

Amounts received or due and receivable for:

• Audit of the financial report 24,980 24,000

• Half-year review 8,160 8,000

32,690 32,000


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23. SUBSIDIARIESDetails of the Group’s subsidiaries at the end of the reporting period are as follows:

Proportion of ownership interest and voting power held by the Group

Name of subsidiary Principal activity Place of

incorporation and operation

30 June 2019 30 June 2018

Zebra Minerals Pty Ltd Mineral Exploration Australia 100% 100%

Red Dirt Mining Pty Ltd Mineral Exploration Australia 100% -

Spectrum Metals Limited is the head entity. Red Dirt Mining Pty Ltd was incorporated during the period.

24. PARENT ENTITY INFORMATIONThe accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the same as those applied in the consolidated financial statements with the exception of investments in subsidiaries.

FINANCIAL PERFORMANCE:

2019 $

2018 $

Loss for the year (1,565,839) (952,657)

Other Comprehensive Income - -

Total Comprehensive Income / Loss for the year (1,565,839) (952,657)

FINANCIAL POSITION:

ASSETS

Current Assets 4,217,664 1,568,805

Non-Current Assets 3,010,680 72,764

Total Assets 7,228,344 1,641,569

LIABILITIES

Current Liabilities 187,706 44,857

Non-Current Liabilities - -

Total Liabilities 187,706 44,857

EQUITY

Issued capital 27,279,289 20,918,029

Reserves 1,074,830 426,326

Accumulated losses (21,313,482) (19,747,643)

Total Equity 7,040,638 1,596,712


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Directors’ DeclarationCONTINGENCIES OF THE PARENT ENTITY:

There are no contingent liabilities at 30 June 2019 (2018: None)

COMMITMENTS OF THE PARENT ENTITY:

There are no commitments of the parent entity at 30 June 2019 (2018: None)

In accordance with a resolution of the directors of Spectrum Metals Limited, I state that:

In the opinion of the Directors of Spectrum Metals Limited (‘the Company’):

(a) the consolidated financial statements and notes and the remuneration report in the Directors’ report, are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001; and

(iii) the financial statements and notes thereto are in compliance with International Financial Reporting Standards issued by the International Accounting Standards Board, as stated in note 2 to the financial statements.

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The Directors have been given a declaration required by section 295A of the Corporations Act 2001 for the financial year ended 30 June 2019 by the CEO and Company Secretary.

On behalf of the Board

Alex Hewlett

Executive Chairman

25 September 2019


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Independent Auditor’s Report




To the shareholders of Spectrum Metals Limited

Report on the audit of the Financial Report

Opinion

We have audited the Financial Report of Spectrum Metals Limited (the Company).

In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including:

• giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year ended on that date; and

• Complying with Australian Accounting Standards and the Corporations Regulations 2001.

The Financial Report comprises:

• Consolidated statement of financial position as at 30 June 2019

• Consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity, and consolidated statement of cash flows for the year then ended

• Notes including a summary of significant accounting policies

• Directors’ Declaration.

The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report.

We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.

Key Audit Matter

A Key Audit Matter is a matter that, in our professional judgement, was of most significance in our audit of the Financial Report of the current period.

This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.






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Exploration and Evaluation Assets

Refer to Note 12 of the Financial Report

The key audit matter How the matter was addressed in our audit

Exploration and evaluation expenditure capitalised (E&E) is a key audit matter due to:

• the significance of the activity to the Group’s business and the balance (being 42% of total assets); and

• the greater level of audit effort to evaluate the Group’s application of the requirements of the industry specific accounting standard AASB 6 Exploration for and Evaluation of Mineral Resources, in particular the conditions allowing capitalisation of relevant expenditure and presence of impairment indicators. The presence of impairment indicators would necessitate a detailed analysis by the Group of the value of E&E, therefore given the criticality of this to the scope and depth of our work, we involved senior team members to challenge the Group’s determination that no such indicators existed.

In assessing the conditions allowing capitalisation of relevant expenditure, we focused on:

• the determination of the areas of interest (areas)

• documentation available regarding rights to tenure, via licensing, and compliance with relevant conditions, to maintain current rights to an area of interest and the Group’s intention to continue the relevant E&E activities;

• the Group’s determination of whether the E&E are expected to be recouped through successful development and exploitation of the area of interest

In assessing the presence of impairment indicators, we focused on those that may draw into question the commercial continuation of E&E activities for First Hit and Penny West areas where significant capitalised E&E exists. In addition to the assessments above, we paid particular attention to results from latest activities regarding the existence or otherwise of economically recoverable reserves/commercially viable quantity of reserves.

Our audit procedures included:

• Evaluating the Group’s accounting policy to recognise exploration and evaluation assets using the criteria in the accounting standard;

• We assessed the Group’s determination of its areas of interest for consistency with the definition in the accounting standard. This involved analysing the licenses in which the Group holds an interest and the exploration programmes planned for those for consistency with documentation such as license related technical conditions, and planned work programmes;

• For each area of interest, we assessed the Group’s current rights to tenure by corroborating the ownership of the relevant license to government registries and evaluating agreements in place with other parties. We also tested for compliance with conditions, such as minimum expenditure requirements, on a sample of licenses;

• We tested the Group’s additions to E&E for the year by evaluating a statistical sample of recorded expenditure for consistency to underlying records, the capitalisation requirements of the Group’s accounting policy and the requirements of the accounting standard;

• We evaluated Group documents, such as minutes of Board meetings, for consistency with their stated intentions for continuing E&E in certain areas. We corroborated this through interviews with key operational and finance personnel.



















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Other Information

Other Information is financial and non-financial information in Spectrum Metals Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the Other Information.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.

In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we 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.

We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report.

Responsibilities of the Directors for the Financial Report

The Directors are responsible for:

• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001

• implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error

• Assessing the Group’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objective is:

• 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. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this Financial Report.

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our Auditor’s Report.


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Report on the Remuneration Report

Opinion

In our opinion, the Remuneration Report of Spectrum Metals Limited for the year ended 30 June 2019, complies with Section 300A of the Corporations Act 2001.

Directors’ 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 responsibilities

We have audited the Remuneration Report included in section 13 of the Directors’ report for the year ended 30 June 2019.

Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.


Perth

25 September 2019


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ASX Additional InformationQUOTED SECURITIES

The security holders’ information set out below was applicable as at 2 October 2019.

(i) Distribution of Security Numbers

Ordinary Shares

Category (size of holding) Shareholders Shares

1 – 1,000 60 14,353

1,001 – 5,000 77 296,509

5,001 – 10,000 259 2,153,889

10,001 – 100,000 1,094 53,973,289

100,001 and over 872 1,329,077,127

Total 2,362 1,385,515,167

There are 227 shareholders holding less than a marketable parcel at a price of $0.069, totalling 871,017 shares.

(ii) Voting Rights

On a show of hands every person present who is a member or a proxy, attorney or representative of a member has one vote and upon a poll every person present who is a member or a proxy, attorney or representative of a member shall have one vote for each share held. There are no voting rights attached to the quoted options.


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ASX Additional Information

(iii) Twenty Largest Security Holders

The names of the twenty largest holders of ordinary shares are listed below:

Name Number of Ordinary Shares % of Issued Capital

HSBC CUSTODY NOM AUST LTD 145,631,490 10.51

PATINA RES PL 120,909,091 8.73

CHALICE GOLD MINES LTD 71,903,182 5.19

PLATEAUX RES PL 25,909,091 1.87

CITICORP NOM PL 22,665,390 1.64

BERNE NO 132 NOM PL (718434 A/C) 21,091,238 1.52

BARTON ANTHONY P + C H (A P BARTON PERSON) 20,821,569 1.50

STATTON NOM PL 20,250,000 1.46

BARTON ANTHONY P + C H (BARTON S/F A/C) 19,900,000 1.44

AUST HERITAGE GRP PL (AUST HERITAGE A/C) 18,418,648 1.33

CHARUCKYJ LEONID 18,155,000 1.31

UNIVL OIL AUST PL (ANTHONY P BARTON F) 17,000,000 1.23

ROCK THE POLO PL (ROCK THE POLO A/C) 16,650,000 1.20

WICKSTEED MARK (WICKSTEED A/C) 16,464,300 1.19

IMPERIUM NOM PL 14,100,000 1.02

BALD WINGNUT PL 14,034,847 1.01

DJ CARMICHAEL PL 14,000,000 1.01

L & E FISHER NOM PL (FISHERS S/F A/C) 14,000,000 1.01

TENSTAR TRADING LTD 14,000,000 1.01

BLAKE ROGER + ERICA L (MANDY S/F A/C) 13,042,402 0.94

Total 349,615,727 46.12


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ASX Additional Information

(iv) Substantial Shareholders

The names of the substantial shareholders listed in the Company’s share register as at 2 October 2019 were:

Name Number of Ordinary Shares % of Issued Capital

1832 Asset Management L.P. 128,814,000 9.30

Patina Resources Pty Ltd 120,909,091 8.73

Anthony Barton and Associates 107,500,000 7.76

Chalice Gold Mines Ltd 71,903,182 5.19

(v) On market buy back

There is no on-market buy-back scheme in operation for the Company’s listed shares.

(vi) Tenement Schedule

Tenement Interests as at 2 October 2019

Location Tenement Percentage Held

Penny West, Western Australia M57/180 100

Penny West, Western Australia M57/196 100

Penny West, Western Australia E57/1087 100

First Hit, Western Australia M30/099 100

First Hit, Western Australia M30/091 100

First Hit, Western Australia P30/1088 100

First Hit, Western Australia P30/1125 100

First Hit, Western Australia P30/1137 Pending

Peedamulla, Western Australia E08/3048 Pending


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SPECTRUM METALS LIMITED Suite 2/827 Beaufort Street Inglewood WA 6052 E: [email protected] www.spectrummetals.com.au

ABN 94 115 770 226

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for personal use only - asx2019/10/30 · analysis of the results from an auger geochemical program...

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