TIDMHMI
RNS Number : 4527D
Harvest Minerals Limited
29 June 2021
Harvest Minerals Limited / Index: LSE / Epic: HMI / Sector:
Mining
29 June 2021
Harvest Minerals Limited ('Harvest' or the 'Company')
2020 Annual Report & Accounts
Harvest Minerals Limited, the AIM listed remineraliser producer,
is pleased to announce its final audited results for the year ended
31 December 2020. The Company's Annual Report & Accounts will
today be uploaded to Harvest's website, and the accounts posted to
shareholders, where appropriate.
REVIEW OF OPERATIONS
Arapua Fertiliser Project (Arapua)
Arapua is the Company's principal business unit and the
currently the sole source of the Company's revenue. The Company's
focus throughout the period (and prior periods) has been
substantially on developing Arapua and progressing it to commercial
production and revenue generation. 2020 was a landmark year for
operations at the Company's Arapua Fertiliser Project. A key
turning point was in February 2020 when Harvest was awarded the
full mining and environmental permits, granting the Company full
tenure over the asset and allowing it to mine and process up to
400Ktpa of ore. This is above the current processing capacity;
however, both the environmental permit capacity and production
capacity can be increased as demand requires.
Over the 2020 year, Harvest also successfully executed the
expansion of its Product Storage Facility to 30,000 tonnes, a
three-fold increase in finished product storage capacity, along
with the expansion of the Mining Area to 78,894m2, a four-fold
increase. These expansions, which were self-funded and completed
approximately 30% under budget, provide the flexibility to increase
production, dry ore and allow for additional run of mine at times
of peak demand for the Company's product.
The unexpected onset of the Covid-19 pandemic created a
significant period of volatility for Harvest and its customers.
Despite this, given the strength of our product and the team's
determination, Harvest boosted its sales efforts by adding further
to its experienced sales workforce, which is now comprised of 7
associates/agronomists split into two regional teams. It also
includes a third-party network of 20 resale centres. In total
during the calendar year 2020, the Company commercialised 54,155
tonnes of KP Fértil(R), 82% placed in the second half of the year,
and superior to our previously stated target of 50,000 tonnes.
While Harvest expects to reach significantly higher sales targets
overtime, the Company is very encouraged by the distribution of its
product and repeat orders from key clients in such short period of
time since commercialisation less than two years ago.
Harvest has previously stated that in broad terms, "breakeven"
is represented by sales of approximately 40,000 tonnes of KP
Fértil(R), accordingly, having sold 54,000 tonnes represents
Harvest achieving its maiden profit on a cash accounting basis.
Note, however, that these financial statements are prepared on an
accrual accounting basis.
Over the course of 2020, Harvest continuously received positive
agronomic results proving the effectiveness of KP Fértil(R) when
compared to competitors' products. The agronomical tests are a
critical component in the growth of the Company's product
development and market outreach.
One key accomplishment was the completion and positive outcome
of the long-term agronomical tests in coffee cultivation, which
started in 2017, using KP Fértil(R) as a source of potassium ('K')
and phosphate ('P') for coffee plants at one of the Veloso
Agropecuária ('Veloso') coffee plantations in Minas Gerais state,
Brazil. The trials consisted of two years of applying a potassium
and phosphate fertiliser and a third final year of applying no
additional source of potassium and phosphate (fertiliser
suppression) to test the effectiveness of different sources of
potassium and phosphate. The results confirmed that KP Fértil(R)
can and should be used to replace conventional fertilisers as a
source of potassium and phosphate. It showed that superior results
in coffee are enhanced when used in association with coffee compost
(coffee straw), increasing the value of the coffee produced by
increasing the proportion of the larger coffee cherries and
yield.
Agronomic tests using KP Fértil(R) have also returned superior
yield performance in sugarcane plantation areas compared to the
more traditional and widely used reactive phosphate fertiliser.
Likewise, superior yield performance has been achieved in carrot
crops when compared to the current widely used standard
application. These results, among other proven positive tests in
other cultures, reinforce the versatility of Harvest's product and
its wide application optionality and are instrumental for the
Company's commercial team in increasing its client portfolio.
Sergi, Capela & Mandacaru Projects
Given the scale of activity currently being undertaken at
Arapua, the Company did not materially advance either of its Sergi,
Capela or Mandacaru projects during the period to 31 December 2020.
In February 2021, the Company relinquished its exploration license
over its 51% interest in the Capela Potash Project ("Capela") in
Brazil as it was deemed non-core to the Company's current
strategy.
Impact of COVID-19
On 31 January 2020, the World Health Organisation ('WHO')
announced a global health emergency because of a new strain of
coronavirus originating in Wuhan, China (COVID-19 outbreak) and the
risks to the international community as the virus spread globally
beyond its point of origin. Because of the rapid increase in
exposure globally, on 11 March 2020, the WHO classified the
COVID-19 outbreak as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at
the date of this report. Management is actively monitoring the
global situation and its impact on the Group's financial condition,
liquidity, operations, suppliers, industry, and workforce. Given
the daily evolution of the COVID-19 outbreak and the global
responses to curb its spread, the Group continues to monitor the
situation very closely, with a primary focus on the health,
wellbeing and safety of all employees. The Group has implemented
extensive business continuity procedures to ensure ongoing
operations with minimal disruptions. To date there has been minimal
impact to the Group.
Notwithstanding, sales for the year ended 31 December 2020
exceeded budget, with 82% of sales achieved in the second half of
the year.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2020
Consolidated
Notes 12 months 6 months ended
ended 31 December 31 December
2020 2019
$ $
Revenue from fertiliser sales 4 1,952,159 1,443,281
Cost of goods sold 5 (710,639) (813,254)
------------------- ---------------
Gross profit 1,241,520 630,027
------------------- ---------------
Interest income 1,953 649
Other income 1,249 606
Foreign exchange gain (27,447) 322,732
Accounting and audit fees (151,583) (71,000)
Advertising fees (245,825) (90,623)
Consultants fees (516,469) (356,927)
Directors fees (788,256) (396,831)
Depreciation (15,626) (8,854)
Legal fees (43,136) (14,961)
Wages & Salaries (359,535) (213,269)
Interest expense (962) -
Public company costs (219,253) (121,569)
ROU depreciation charge (71,327) -
Rent and outgoings expenses (25,231) (77,208)
Travel expenses (485,196) (342,015)
Other expenses 6 (658,542) (170,801)
Impairment expenses 14 (956,918) -
------------------- ---------------
Loss from continuing operations
before income tax (3,320,584) (910,044)
------------------- ---------------
Income tax benefit 7 - -
------------------- ---------------
Loss from continuing operations
after income tax (3,320,584) (910,044)
------------------- ---------------
Net loss for the year (3,320,584) (910,044)
------------------- ---------------
Other comprehensive income
/ (loss)
Item that may be reclassified subsequently
to profit or loss
Foreign currency translation (2,398,695) (267,894)
------------------- ---------------
Other comprehensive income
/ (loss) for the year (2,398,695) (267,894)
------------------- ---------------
Total comprehensive loss for
the year (5,719,279) (1,177,938)
------------------- ---------------
Basic and diluted loss per
share (cents per share) 23 (1.79) (0.49)
Consolidated Statement of Financial Position
as at 31 December 2020
Consolidated
Notes 31 December 31 December
2020 2019
$ $
CURRENT ASSETS
Cash and cash equivalents 8 2,992,727 8,057,934
Trade and other receivables 9 1,651,013 1,856,289
Inventories 10 121,119 126,838
------------- -------------
TOTAL CURRENT ASSETS 4,764,859 10,041,061
------------- -------------
NON-CURRENT ASSETS
Plant and equipment 12 1,037,475 1,048,158
Mine properties 13 4,188,916 3,774,444
Deferred exploration and evaluation
expenditure 14 3,317,445 4,116,578
------------- -------------
TOTAL NON-CURRENT ASSETS 8,543,836 8,939,180
------------- -------------
TOTAL ASSETS 13,308,695 18,980,241
------------- -------------
CURRENT LIABILITIES
Trade and other payables 15 204,584 184,758
------------- -------------
TOTAL CURRENT LIABILITIES 204,584 184,758
------------- -------------
NON-CURRENT LIABILITIES
Provision for rehabilitation 59,955 32,048
------------- -------------
TOTAL CURRENT LIABILITIES 59,955 32,048
------------- -------------
TOTAL LIABILITIES 264,539 216,806
------------- -------------
NET ASSETS 13,044,156 18,763,435
------------- -------------
EQUITY
Issued capital 16 43,048,343 43,048,343
Reserves 17 602,426 3,001,121
Accumulated losses 18 (30,606,613) (27,286,029)
TOTAL EQUITY 13,044,156 18,763,435
------------- -------------
Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
Foreign currency
Accumulated translation
Issued capital losses reserve Option reserve Total
$ $ $ $ $
Balance as at 1 January 2020 43,048,343 (27,286,029) (539,927) 3,541,048 18,763,435
--------------- ------------- ----------------- --------------- ------------
Total comprehensive loss for the
year
Loss for the year - (3,320,584) - - (3,320,584)
Other comprehensive income - - (2,398,695) (2,398,695)
--------------- ------------- ----------------- --------------- ------------
Total comprehensive loss - (3,320,584) (2,398,695) - (5,719,279)
Transactions with owners in
their
capacity as owners
Shares issued as part of - - - - -
Placement
Warrants Issued - - - - -
Share issue costs - - - - -
At 31 December 2020 43,048,343 (30,606,613) (2,938,622) 3,541,048 13,044,156
--------------- ------------- ----------------- --------------- ------------
Balance at 1 July 2019 43,048,343 (26,375,985) (272,033) 3,541,048 19,941,373
--------------- ------------- ----------------- --------------- ------------
Total comprehensive loss for the
year
Loss for the year - (910,044) - - (910,044)
Other comprehensive loss - - (267,894) (267,894)
--------------- ------------- ----------------- --------------- ------------
Total comprehensive loss - (910,044) (267,894) - (1,177,938)
Transactions with owners in
their
capacity as owners
Shares issued as part of - - - - -
Placement
Warrants Issued - - - - -
Share issue costs - - - - -
At 31 December 2019 43,048,343 (27,286,029) (539,927) 3,541,048 18,763,435
--------------- ------------- ----------------- --------------- ------------
Consolidated Statement of Cash Flows
for the year ended 31 December 2020
Consolidated
Notes 12 months ended 6 months ended
31 December 31 December
2020 2019
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 1,634,106 1,093,580
Payments to suppliers and employees (3,227,473) (2,656,979)
Interest (paid) / received 991 649
---------------- ---------------
NET CASH USED IN OPERATING ACTIVITIES 8 (1,592,376) (1,562,750)
---------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment (449,671) (1,362)
Payments for exploration and evaluation
expenditure (203,745) (101,427)
Payments for mine properties (1,655,270) -
---------------- ---------------
NET CASH PROVIDED BY / (USED IN) INVESTING
ACTIVITIES (2,308,686) (102,789)
---------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
NET CASH PROVIDED BY FINANCING ACTIVITIES - -
---------------- ---------------
Net (decrease) / increase in cash held (3,901,062) (1,665,539)
Cash and cash equivalents at beginning
of year 8,057,934 9,499,814
Effect of exchange rate fluctuations
on cash held (1,164,145) 223,659
---------------- ---------------
CASH AND CASH EQUIVALENTS AT OF
FINANCIAL YEAR 8 2,992,727 8,057,934
---------------- ---------------
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: CORPORATE INFORMATION
The financial report of Harvest Minerals Limited ("Harvest
Minerals" or "the Company") and its controlled entities ("the
Group") for the year ended 31 December 2020 was authorised for
issue in accordance with a resolution of the Directors on 25 June
2021.
Harvest Minerals Limited is a company limited by shares
incorporated in Australia whose shares are publicly traded on the
AIM market operated by the London Stock Exchange.
The nature of the operations and the principal activities of the
Group are described in the Directors' Report.
NOTE 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 Australian Accounting
Standards, Australian Accounting Interpretations, other
authoritative pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001. The Group is a for profit
entity for financial reporting purposes under Australian Accounting
Standards.
The financial report has been prepared on an accrual basis and
is based on historical costs, modified, where applicable, by the
measurement at fair value of selected non-current assets, financial
assets and financial liabilities. Material accounting policies
adopted in preparation of this financial report are presented below
and have been consistently applied unless otherwise stated.
The presentation currency is Australian dollars.
Going Concern
These financial statements have been prepared on the going
concern basis, which contemplates the continuity of normal business
activities and the realisation of assets and settlement of
liabilities in the normal course of business.
(b) Parent entity information
In accordance with the Corporations Act 2001, these financial
statements present the results of the Group only. Supplementary
information about the parent entity is disclosed in note 28.
(c) Compliance statement
The financial report complies with Australian Accounting
Standards which include Australian equivalents to International
Financial Reporting Standards (AIFRS). Compliance with AIFRS
ensures compliance with International Financial Reporting Standards
(IFRS).
(d) Changes in accounting policies and disclosures
During the year ended 31 December 2020, the Directors have
reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Group's operations and
effective for current reporting periods beginning on or after 1
January 2020.
In the year ended 31 December 2020, the Directors have reviewed
all of the new and revised Standards and Interpretations issued by
the AASB that are relevant to the Group's operations and effective
for the current reporting period.
The Directors have also reviewed all new Standards and
Interpretations that have been issued but are not yet effective for
the year ended 31 December 2020. As a result of this review the
Directors have determined that there is no impact, material or
otherwise, of the new and revised Standards and Interpretations on
the Group's business and, therefore, no change is necessary to the
Group accounting policies.
New and amended accounting standards and interpretations have
been published but are not mandatory. The Group has decided against
early adoption of these standards, and has determined the potential
impact on the financial statements from the adoption of these
standards and interpretations is not material to the Group.
(e) Mine Properties
Mine properties represent the accumulation of all exploration,
evaluation and development expenditure incurred in respect of areas
of interest in which mining has commenced or is in the process of
commencing. When further development expenditure is incurred in
respect of mine property after the commencement of production, such
expenditure is carried forward as part of the mine property only
when substantial future economic benefits are thereby established,
otherwise such expenditure is classified as part of the cost of
production.
Amortisation is provided on a unit of production basis which
results in a write off of the cost proportional to the depletion of
the proven and probable mineral reserves. The net carrying value of
each area of interest is reviewed regularly and to the extent to
which this value exceeds its recoverable amount, the excess is
either fully provided against or written off in the financial year
in which this is determined.
The Group provides for environmental restoration and
rehabilitation at site which includes any costs to dismantle and
remove certain items of plant and equipment. The cost of an item
includes the initial estimate of the costs of dismantling and
removing the item and restoring the site on which it is located,
the obligation for which an entity incurs when an item is acquired
or as a consequence of having used the item during that period.
This asset is depreciated on the basis of the current estimate
of the useful life of the asset. In accordance with AASB 137
Provisions, Contingent Liabilities and Contingent Assets the Group
is also required to recognise as a provision the best estimate of
the present value of expenditure required to settle this
obligation. The present value of estimated future cash flows is
measured using a current market discount rate.
Stripping costs
Costs associated with material stripping activity, which is the
process of removing mine waste materials to gain access to the
mineral deposits underneath, during the production phase of surface
mining are accounted for as either inventory or a non-current asset
(non-current asset is also referred to as a 'stripping activity
asset').
To the extent that the benefit from the stripping activity is
realised in the form of inventory produced, the Group accounts for
the costs of that stripping activity in accordance with the
principles of AASB 102 Inventories. To the extent the benefit is
improved access to ore, the Group recognises these costs as a
non-current asset provided that:
-- it is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the Group;
-- the Group can identify the component of the ore body for
which access has been improved; and
-- the costs relating to the stripping activity associated with
that component can be measured reliably.
Stripping activity assets are initially measured at cost, being
the accumulation of costs directly incurred to perform the
stripping activity that improves access to the identified component
of ore plus an allocation of directly attributable overhead costs.
In addition, stripping activity assets are accounted for as an
addition to, or as an enhancement to, an existing asset.
Accordingly, the nature of the existing asset determines:
-- whether the Group classifies the stripping activity asset as tangible or intangible; and
-- the basis on which the stripping activity asset is measured
subsequent to initial recognition
In circumstances where the costs of the stripping activity asset
and the inventory produced are not separately identifiable, the
Group allocates the production stripping costs between the
inventory produced and the stripping activity asset by using an
allocation basis that is based on volume of waste extracted
compared with expected volume, for a given volume of ore
production.
(f) Revenue
Revenue arises mainly from the sale of fertiliser. The Group
generates revenue in Brazil. To determine whether to recognise
revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
The revenue and profits recognised in any period are based on
the delivery of performance obligations and an assessment of when
control is transferred to the customer.
In determining the amount of revenue and profits to record, and
related statement of financial position items (such as contract
fulfilment assets, capitalisation of costs to obtain a contract,
trade receivables, accrued income and deferred income) to recognise
in the period, management is required to form a number of key
judgements and assumptions. This includes an assessment of the
costs the Group incurs to deliver the contractual commitments and
whether such costs should be expensed as incurred or
capitalised.
Revenue is recognised either when the performance obligation in
the contract has been performed, so 'point in time' recognition or
'over time' as control of the performance obligation is transferred
to the customer.
For contracts with multiple components to be delivered such as
fertiliser, management applies judgement to consider whether those
promised goods and services are (i) distinct - to be accounted for
as separate performance obligations; (ii) not distinct - to be
combined with other promised goods or services until a bundle is
identified that is distinct or (iii) part of a series of distinct
goods and services that are substantially the same and have the
same pattern of transfer to the customer.
Transaction price
At contract inception the total transaction price is estimated,
being the amount to which the Group expects to be entitled and has
rights to under the present contract. The transaction price does
not include estimates of consideration resulting from change orders
for additional goods and services unless these are agreed. Once the
total transaction price is determined, the Group allocates this to
the identified performance obligations in proportion to their
relative stand-alone selling prices and recognises revenue when (or
as) those performance obligations are satisfied.
For each performance obligation, the Group determines if revenue
will be recognised over time or at a point in time. Where the Group
recognises revenue over time for long term contracts, this is in
general due to the Group performing and the customer simultaneously
receiving and consuming the benefits provided over the life of the
contract.
For each performance obligation to be recognised over time, the
Group applies a revenue recognition method that faithfully depicts
the Group's performance in transferring control of the goods or
services to the customer. This decision requires assessment of the
real nature of the goods or services that the Group has promised to
transfer to the customer. The Group applies the relevant output or
input method consistently to similar performance obligations in
other contracts.
When using the output method the Group recognises revenue on the
basis of direct measurements of the value to the customer of the
goods and services transferred to date relative to the remaining
goods and services under the contract. Where the output method is
used, in particular for long term service contracts where the
series guidance is applied, the Group often uses a method of time
elapsed which requires minimal estimation. Certain long term
contracts use output methods based upon estimation of number of
users, level of service activity or fees collected.
If performance obligations in a contract do not meet the over
time criteria, the Group recognises revenue at a point in time.
This may be at the point of physical delivery of goods and
acceptance by a customer or when the customer obtains control of an
asset or service in a contract with customer-specified acceptance
criteria.
Disaggregation of revenue
The Group disaggregates revenue from contracts with customers by
contract type, which includes only fertiliser as management
believes this best depicts how the nature, amount, timing and
uncertainty of the Group's revenue and cash flows.
Performance obligations
Performance obligations categorised within this revenue type
include the debtor taking ownership of the fertiliser product.
(g) Inventories
Inventories are valued at the lower of cost and net realisable
value.
Costs incurred in bringing each product to its present location
and condition is accounted for as follows:
-- Raw materials - purchase cost; and
-- Finished goods - cost of direct materials and labour and an
appropriate proportion of variable and fixed overheads based on
normal operating capacity.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
(h) Basis of Consolidation
The consolidated financial statements comprise the financial
statements of Harvest Minerals Limited and its subsidiaries as at
31 December 2020, and the prior period six months to 31 December
2019.
Subsidiaries are all those entities over which the Company has
control. The Company controls an entity when the Company is exposed
to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its
power to direct the activities of the entity.
The financial statements of the subsidiaries are prepared for
the same reporting period as the parent Company, 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-company transactions have
been eliminated in full. Subsidiaries are fully consolidated from
the date on which control is obtained by the Company and cease to
be consolidated from the date on which control is transferred out
of the Company.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. The acquisition method of
accounting involves recognising at acquisition date, separately
from goodwill, the identifiable assets acquired, the liabilities
assumed and any non-controlling interest in the acquiree. The
identifiable assets acquired and the liabilities assumed are
measured at their acquisition date fair values.
The difference between the above items and the fair value of the
consideration (including the fair value of any pre-existing
investment in the acquiree) is goodwill or a discount on
acquisition.
A change in the ownership interest of a subsidiary that does not
result in a loss of control, is accounted for as an equity
transaction.
(i) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the
Company's controlled entities are measured using the currency of
the primary economic environment in which the entity operates ('the
functional currency'). The functional and presentation currency of
Harvest Minerals Limited is Australian dollars. The functional
currency of the overseas subsidiaries is Brazilian Reals.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year--end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement
of Comprehensive Income.
(iii) Group entities
The results and financial position of all the Company's
controlled entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency
different from the presentation currency are translated into the
presentation currency as follows:
-- assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that statement of financial position;
-- income and expenses for each statement of comprehensive
income are translated at average exchange rates (unless this is not
a reasonable approximation of the rates prevailing on the
transaction dates, in which case income and expenses are translated
at the dates of the transactions); and
-- all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities are taken to
foreign currency translation reserve. When a foreign operation is
sold or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange differences are
recognised in the statement of comprehensive income, as part of the
gain or loss on sale where applicable.
(j) Plant and Equipment
Each class of plant and equipment is carried at cost less, where
applicable, any accumulated depreciation and impairment losses.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. Repairs and maintenance expenditure is charged to the
statement of comprehensive income during the financial period in
which it is incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a
straight line basis over their useful lives to the Group commencing
from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets
are:
Class of Fixed Asset Depreciation Rate
Plant and equipment 33% - 50%
Furniture, Fixtures and Fittings 10%
Computer and software 20%
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each statement of financial position
date.
Derecognition
Additions of plant and equipment are derecognised upon disposal
or when no further future economic benefits are expected from their
use or disposal. Gains and losses on disposals are determined by
comparing proceeds with the carrying amount. These gains and losses
are recognised in the statement of comprehensive income.
(k) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset's recoverable amount. An
asset's recoverable amount is the higher of its fair value less
costs to sell and its value in use and is determined for an
individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets of the
Group and the asset's value in use cannot be estimated to be close
to its fair value. In such cases the asset is tested for impairment
as part of the cash generating unit to which it belongs. When the
carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, the asset or cash-generating unit is considered
impaired and is written down to its recoverable amount.
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. Impairment losses relating to
continuing operations are recognised in the statement of
comprehensive income.
An assessment is also made at each reporting date as to whether
there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A
previously recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the asset's
recoverable amount since the last impairment loss was recognised.
If that is the case the carrying amount of the asset is increased
to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset
in prior years. Such reversal is recognised in profit or loss.
After such a reversal the depreciation charge is adjusted in
future periods to allocate the asset's revised carrying amount,
less any residual value, on a systematic basis over its remaining
useful life.
(l) Deferred exploration and evaluation expenditure
Exploration and evaluation expenditure incurred by or on behalf
of the Group is accumulated separately for each area of interest.
Such expenditure comprises net direct costs and an appropriate
portion of related overhead expenditure but does not include
general overheads or administrative expenditure not having a
specific nexus with a particular area of interest.
Each area of interest is limited to a size related to a known or
probable mineral resource capable of supporting a mining operation.
Exploration and evaluation expenditure for each area of interest is
carried forward as an asset provided that one of the following
conditions is met:
-- such costs are expected to be recouped through successful
development and exploitation of the area of interest or,
alternatively, by its sale; or
-- exploration and evaluation activities in the area of interest
have not yet reached a stage which permits a reasonable assessment
of the existence or otherwise of economically recoverable reserves,
and active and significant operations in relation to the area are
continuing.
Expenditure which fails to meet the conditions outlined above is
written off. Furthermore, the directors regularly review the
carrying value of exploration and evaluation expenditure and make
write downs if the values are not expected to be recoverable.
Identifiable exploration assets acquired are recognised as
assets at their cost of acquisition, as determined by the
requirements of AASB 6 Exploration for and Evaluation of Mineral
Resources. Exploration assets acquired are reassessed on a regular
basis and these costs are carried forward provided that at least
one of the conditions referred to in AASB 6 is met.
Exploration and evaluation expenditure incurred subsequent to
acquisition in respect of an exploration asset acquired is
accounted for in accordance with the policy outlined above for
exploration expenditure incurred by or on behalf of the entity.
Acquired exploration assets are not written down below acquisition
cost until such time as the acquisition cost is not expected to be
recovered. When an area of interest is abandoned, any expenditure
carried forward in respect of that area is written off.
Expenditure is not carried forward in respect of any area of
interest/mineral resource unless the Group's rights of tenure to
that area of interest are current.
(m) 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.
AASB 9's impairment requirements use more forward-looking
information to recognise expected credit losses. The Group
considers a broader range of information when assessing credit risk
and measuring expected credit losses, including past events,
current conditions, reasonable and supportable forecasts that
affect the expected collectability of the future cash flows of the
instrument.
(n) Cash and Cash Equivalents
Cash and cash equivalent in the statement of financial position
include cash on hand, deposits held at call with banks and other
short term highly liquid investments with original maturities of
three months or less. Bank overdrafts are shown as current
liabilities in the statement of financial position. For the purpose
of the statement of cash flows, cash and cash equivalents consist
of cash and cash equivalents as described above and bank
overdrafts.
(o) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be
reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any
provision is presented in the statement of comprehensive income net
of any reimbursement.
If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time
value of money, and where appropriate, the risks specific to the
liability.
Where discounting is used, the increase in the provision due to
the passage of time is recognised as a finance cost.
(p) Trade and other payables
Liabilities for trade creditors and other amounts are measured
at amortised cost, which is the fair value of the consideration to
be paid in the future for goods and services received that are
unpaid, whether or not billed to the Group.
(q) Income Tax
Deferred income tax is provided for on all temporary differences
at balance date between the tax base of assets and liabilities and
their carrying amounts for financial reporting purposes.
No deferred income tax will be recognised from the initial
recognition of goodwill or of an asset or liability, excluding a
business combination, where there is no effect on accounting or
taxable profit or loss.
No deferred income tax will be recognised in respect of
temporary differences associated with investments in subsidiaries
if the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary differences will
not reverse in the near future.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or liability is
settled. Deferred tax is charged or credited in the statement of
comprehensive income except where it relates to items that may be
charged or credited directly to equity, in which case the deferred
tax is adjusted directly against equity.
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 future tax
profits will be available against which deductible temporary
differences can be utilised.
The amount of benefits brought to account or which may be
realised in the future is based on tax rates (and tax laws) that
have been enacted or substantially enacted at the balance date and
the anticipation that the Group will derive sufficient future
assessable income to enable the benefit to be realised and comply
with the conditions of deductibility imposed by the law. The
carrying amount of deferred tax assets is reviewed at each balance
date and only recognised to the extent that sufficient future
assessable income is expected to be obtained.
Income taxes relating to items recognised directly in equity are
recognised in equity and not in the statement of comprehensive
income.
Deferred tax assets and deferred tax liabilities are offset only
if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax assets and
liabilities relate to the same taxable entity and the same taxation
authority.
(r) Issued capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
(s) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit /
loss attributable to equity holders of the Company, excluding any
costs of servicing equity other than dividends, by the weighted
average number of ordinary shares, adjusted for any bonus
elements.
Diluted earnings per share
Diluted earnings per share is calculated as profit / loss
attributable to members of the Company, adjusted for:
-- costs of servicing equity (other than dividends);
-- the after tax effect of dividends and interest associated
with dilutive potential ordinary shares that have been recognised
as expenses; and
-- other non-discretionary changes in revenues or expenses
during the period that would result from the dilution of potential
ordinary shares;
divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus
elements.
(t) Goods and services tax
Revenues, expenses and assets are recognised net of the amount
of GST/sales tax, except where the amount of GST/sales tax incurred
is not recoverable from the relevant Tax Authority. In these
circumstances, the GST/sales tax is recognised as part of the cost
of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position are
shown inclusive of GST/sales tax.
The net amount of GST/sales tax recoverable from, or payable to,
the Tax Authority is included as part of receivables or payables in
the statement of financial position.
Cash flows are presented in the statement of cash flows on a
gross basis, except for the GST component of investing and
financing activities, which is receivable from or payable to the
ATO, being disclosed as operating cash flows.
(u) Share based payment transactions
The Group provides benefits to individuals acting as, and
providing services similar to employees (including Directors) of
the Group in the form of share based payment transactions, whereby
individuals render services in exchange for shares or rights over
shares ('equity settled transactions').
There is currently an Employee Share Option Scheme (ESOS) in
place, which provides benefits to Directors and individuals
providing services similar to those provided by an employee.
The cost of these equity settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted. The fair value is determined by using an option
pricing formula taking into account the terms and conditions upon
which the instruments were granted.
In valuing equity settled transactions, no account is taken of
any performance conditions, other than conditions linked to the
price of the shares of Harvest Minerals ('market conditions'). The
cost of the 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 Company, will ultimately vest. This opinion is formed based
on the best available information at balance date. No adjustment is
made for the likelihood of the market performance conditions being
met as the effect of these conditions is included in the
determination of fair value at grant date. The statement of
comprehensive income charge or credit for a period represents the
movement in cumulative expense recognised at the beginning and end
of the period.
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market
condition. 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 the modification.
Where an equity settled award is cancelled, it is treated as if
it had vested on the date of the 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 awards are treated as if they were a modification
of the original award, as described in the previous paragraph.
The cost of equity-settled transactions with non-employees is
measured by reference to the fair value of goods and services
received unless this cannot be measured reliably, in which case the
cost is measured by reference to the fair value of the equity
instruments granted. The dilutive effect, if any, of outstanding
options is reflected in the computation of loss per share (see note
23).
(v) Comparative figures
When required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial year. The comparative figures are for the six months to
31 December 2019.
(w) Operating segments
Operating segments are presented using the 'management
approach', where the information presented is on the same basis as
the internal reports provided to the Chief Operating Decision
Makers ('CODM'). The CODM is responsible for the allocation of
resources to operating segments and assessing their
performance.
(x) Fair value measurement
When an asset or liability, financial or non-financial, is
measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes
that the transaction will take place either in the principle
market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interest. For
non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Assets and liabilities measured at fair value are classified,
into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements.
Classifications are reviewed each reporting date and transfers
between levels are determined based on a reassessment of the lowest
level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements,
external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant.
External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an
asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs
applied in the latest valuation and a comparison, where applicable,
with external sources of data.
(y) Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that may have a financial impact on the entity and
that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Valuation of mine property
The group uses the concept of life of mine to determine the
amortisation of mine properties. In determining life of mine, the
Group prepares mineral reserve estimates which by their very
nature, require judgements, estimates and assumptions.
Where the proved and probable reserve estimates need to be
modified, the amortisation expense is accounted for prospectively
from the date of the assessment until the end of the revised mine
life (for both the current and future years).
The Group defers advanced stripping costs incurred during the
production stage of its mining operations. This calculation
requires the use of judgements and estimates, such as estimates of
tonnes of waste to be removes over the life of the mining area and
economically recoverable reserve extracted as a result. Changes in
a mine's life and design may result in changes to the expected
stripping ratio (waste to mineral reserves ratio). Any resulting
changes are accounted for prospectively.
Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and
evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease
itself or, if not, whether it successfully recovers the related
exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the
level of proved, probable and inferred mineral resources, future
technological changes which could impact the cost of mining, future
legal changes (including changes to environmental restoration
obligations) and changes to commodity prices and exchange
rules.
To the extent that capitalised exploration and evaluation
expenditure is determined not to be recoverable in the future, this
will reduce profits and net assets in the period in which this
determination is made.
In addition, exploration and evaluation expenditure is
capitalised if activities in the area of interest have not yet
reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves. To the
extent that it is determined in the future that this capitalised
expenditure should be written off, this will reduce profits and net
assets in the period in which this determination is made.
Functional currency translation reserve
Under Accounting Standards, each entity within the Group is
required to determine its functional currency, which is the
currency of the primary economic environment in which the entity
operates. Management considers the Brazilian subsidiaries to be
foreign operations with Brazilian Reals as the functional currency.
In arriving at this determination, management has given priority to
the currency that influences the labour, materials and other costs
of exploration activities as they consider this to be a primary
indicator of the functional currency.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a
degree of estimation and judgement. It is based on the lifetime
expected credit loss, grouped based on days overdue, and makes
assumptions to allocate an overall expected credit loss rate for
each group. These assumptions include recent sales experience,
historical collection rates, the impact of the COVID-19 pandemic
and forward-looking information that is available. Refer to note 9
for further information. The actual credit losses in future years
may be higher or lower.
NOTE 3: SEGMENT INFORMATION
For management purposes, the Group is organised into one main
operating segment, which involves mining exploration processing and
sale of fertiliser. All of the Group's activities are interrelated,
and discrete financial information is reported to the Board (Chief
Operating Decision Makers) as a single segment. No revenue is
derived from a single external customer.
Accordingly, all significant operating decisions are based upon
analysis of the Group as one segment. The financial results from
this segment are equivalent to the financial statements of the
Group as a whole. Revenue earned by the Group is generated in
Brazil and all of the Group's non-current assets reside in
Brazil.
Continuing operations
Australia Brazil Consolidated
$ $ $
31 December 2020
Segment revenue - 1,952,159 1,952,159
Segment loss before income tax expense (1,796,414) (1,524,170) (3,320,584)
31 December 2020
Segment assets 2,773,182 10,535,513 13,308,695
------------ ------------ -------------
Segment liabilities 96,505 168,034 264,539
------------ ------------ -------------
Additions to non-current assets - 2,308,685 2,308,685
------------ ------------ -------------
Continuing operations
Australia Brazil Consolidated
$ $ $
31 December 2019
Segment revenue - 1,443,281 1,443,281
Segment loss before income tax expense (795,171) (114,873) (910,044)
31 December 2019
Segment assets 8,017,479 10,962,762 18,980,241
---------- ----------- -------------
Segment liabilities 114,645 102,161 216,806
---------- ----------- -------------
Additions to non-current assets - 102,789 102,789
---------- ----------- -------------
NOTE 4: REVENUE FROM CONTRACTS WITH CUSTOMERS
The Group derives its revenue from the sale of goods at a point
in time in the major category of Fertiliser. This is consistent
with the revenue information that is disclosed for each reportable
segment under AASB 8.
31 December 31 December
2020 2019
$ $
Fertiliser revenue 1,952,159 1,443,281
Total revenue 1,952,159 1,443,281
------------ ------------
NOTE 5: COST OF GOODS SOLD
31 December 31 December
2020 2019
$ $
Mine operating costs 134,269 667,587
2% Net Smelter Return 38,806 -
Royalty expense 40,169 24,778
Inventory impairment expense 229,423 -
Depreciation and amortisation 267,972 120,889
------------ ------------
Total cost of goods sold 710,639 813,254
------------ ------------
NOTE 6: OTHER EXPENSES
31 December 31 December
2020 2019
$ $
Site administration expenses 342,349 -
Site office consumables 195,938 -
Insurance 1,772 23,402
Telephone and internet 648 43
Other 117,835 147,356
------------ ------------
Total other expenses 658,542 170,801
------------ ------------
NOTE 7: INCOME TAX BENEFIT
31 December 31 December
2020 2019
$ $
Income Tax
(a) Income tax benefit
Major component of tax benefit for the year:
Current tax - -
Deferred tax - -
- -
------------ ------------
b) Numerical reconciliation between aggregate
tax benefit recognised in the statement of
comprehensive income and tax benefit calculated
per the statutory income tax rate.
A reconciliation between tax benefit and
the product of accounting loss before income
tax multiplied by the Group's applicable
tax rate is as follows:
Loss from continuing operations before income
tax benefit (3,320,584) (910,044)
------------ ------------
Income tax benefit calculated at 27.5% (2019:
27.5%) (913,161) (250,262)
Non-deductible expenses - -
Income tax benefit not brought to account 913,161 250,262
Income tax benefit - -
------------ ------------
The tax rate used in the above reconciliation is the corporate
tax rate of 27.5% payable by Australian corporate entities on taxable
profits under Australia tax law.
(c) Unused tax losses
Unused tax losses 19,349,881 15,248,449
------------ ------------
Potential tax benefit not recognised at 27.5%
(2019: 26.0%) 5,321,217 3,964,597
------------ ------------
The benefit of the tax losses will only be obtained if:
(i) the Group derives future assessable income in Australia of a
nature and of an amount sufficient to enable the benefit from the
deductions for the losses to be realised, and
(ii) the Group continues to comply with the conditions for
deductibility imposed by tax legislation in Australia and
(iii) no changes in tax legislation in Australia adversely
affect the Group in realising the benefit from the deductions for
the losses.
NOTE 8: CASH AND CASH EQUIVALENTS
31 December 31 December
2020 2019
Reconciliation of Cash and Cash Equivalents $ $
Cash comprises:
Cash at bank 2,992,727 8,057,934
2,992,727 8,057,934
------------ ------------
31 December 31 December
2020 2019
$ $
Reconciliation of operating loss after tax
to the cash flows from operations
Loss from ordinary activities after tax (3,320,584) (910,044)
Non cash items
Depreciation charge 140,802 95,787
Amortisation charge 142,797 33,956
Impairment of exploration and evaluation 956,918 -
expenditure
Impairment of inventory 229,423 -
Foreign exchange gain 27,447 (322,732)
Change in assets and liabilities
(Increase) / Decrease in trade and other
receivables 205,276 (326,743)
(Increase) / Decrease in inventories 5,719 (42,249)
Increase / (Decrease) in trade and other
payables 19,826 (90,725)
Net cash outflow from operating activities (1,592,376) (1,562,750)
------------ ------------
NOTE 9: TRADE AND OTHER RECEIVABLES - CURRENT
31 December 31 December
2020 2019
$ $
Debtors(1) 1,531,181 1,685,515
Prepayment 36,417 46,099
Cash Advances 47,366 63,350
Refundable security deposit 15,636 40,146
GST receivable 8,967 7,899
Other 11,446 13,280
1,651,013 1,856,289
------------ ------------
Trade debtors, other debtors and goods and services tax are
receivable on varying collection terms. Due to the short-term
nature of these receivables, their carrying value is assumed to
approximate their fair value. Some debtors are given industry
standard longer payment terms which may cross over more than one
accounting period. These trade terms are widely used in the
agricultural market in Brazil and are considered industry
norms.
(1) Included in the debtors balance as at 31 December 2020 is an
amount receivable of $607,127 from a third party, Agrocerrado
Produtos Agricolas ("Agrocerrado"). In September 2020, the Company
instigated legal proceedings to recover the debt. On 25 September
2020, the Tribunal de Justiça do Estado de Minas Gerais issued
judgment against Agrocerrado for the full amount of the debt plus
costs. The Company took steps to enforce the judgment.
Subsequently, Agrocerrado presented a preliminary defence and
applied to Court to stay the Company from enforcing the judgment.
The Company has filed a response and is awaiting a decision of the
Court in respect to Agrocerrado's application.
The Company considers the amount to be fully recoverable and as
such, no impairment has been made.
NOTE 10: INVENTORY
31 December 31 December
2020 2019
$ $
Raw Materials 39,423 9,491
Finished goods 81,696 117,347
Closing balance 121,119 126,838
------------ ------------
During the year, there was an impairment expense of $229,423 in
relation to finished goods.
NOTE 11: INVESTMENT IN SUBSIDIARIES
The consolidated financial statements incorporate the assets,
liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2(h).
Name of Entity Country of Equity Holding Equity Holding
Incorporation 31 December 31 December
2020 2019
Triumph Tin Mining Pty Limited Australia 100% 100%
Lotus Mining Pty Limited Australia 100% 100%
Triunfo Mineracao do Brasil Ltda Brazil 100% 100%
HAG Fertilizantes Ltda Brazil 99.99% 99.99%
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
31 December 31 December
2020 2019
$ $
Plant and Equipment
Cost 1,307,130 1,235,795
Accumulated depreciation and foreign exchange (315,811) (255,088)
------------ ------------
Net carrying amount 991,319 980,707
------------ ------------
Computer Equipment and Software
Cost 5,360 3,006
Accumulated depreciation and foreign exchange (1,485) (1,505)
------------ ------------
Net carrying amount 3,875 1,501
------------ ------------
Furniture, Fixtures and Fittings
Cost 7,416 10,539
Accumulated depreciation and foreign exchange (4,319) (4,533)
------------ ------------
Net carrying amount 3,097 6,006
------------ ------------
Motor Vehicles
Cost 59,963 74,560
Accumulated depreciation and foreign exchange (20,779) (14,616)
------------ ------------
Net carrying amount 39,184 59,944
------------ ------------
Total Plant and Equipment 1,037,475 1,048,158
------------ ------------
Movements in Plant and Equipment 12 months 6 months
to to
31 December 31 December
2020 2019
$ $
Plant and Equipment
At beginning of the year 980,707 1,106,955
Effect of foreign exchange rate (299,606) (40,253)
Additions 438,594 1,362
Depreciation charge for the year (128,376) (87,357)
------------- -------------
991,319 980,707
------------- -------------
Computer Equipment and Software
At beginning of the year 1,501 1,783
Effect of foreign exchange rate (533) (75)
Additions 3,346 -
Depreciation charge for the year (439) (207)
3,875 1,501
------------- -------------
Furniture, Fixtures and Fittings
At beginning of the year 6,006 7,104
Effect of foreign exchange rate (1,745) (299)
Additions - -
Depreciation charge for the year (1,164) (799)
3,097 6,006
------------- -------------
Motor Vehicles
At beginning of the year 59,944 70,341
Effect of foreign exchange rate (17,668) (2,973)
Additions 7,731 -
Depreciation charge for the year (10,823) (7,424)
39,184 59,944
------------- -------------
Total Plant and Equipment 1,037,475 1,048,158
------------- -------------
NOTE 13: MINE PROPERTIES
12 months 6 months
to to
31 December 31 December
2020 2019
$ $
At beginning of the period 3,774,444 3,926,179
Additions 1,655,270 -
Amortisation change for the period (79,612) (33,956)
Net exchange difference on translation (1,161,186) (117,779)
Balance at the end of the period 4,188,916 3,774,444
------------- -------------
NOTE 14: DEFERRED EXPLORATION AND EVALUATION EXPITURE
12 months 6 months
to to
31 December 31 December
2020 2019
$ $
At beginning of the year 4,116,578 4,022,593
Acquisition of Sergi Potash Project 200,000 100,000
Exploration expenditure during the year 3,745 1,427
Impairment loss (956,918) -
Net exchange differences on translation (45,960) (7,442)
Total exploration and evaluation 3,317,445 4,116,578
------------- -------------
The impairment loss is in respect to expenditure on the Capella
Project as a result of the Company relinquishing its exploration
licence for this project in February 2021.
The ultimate recoupment of costs carried forward for exploration
expenditure is dependent on the successful development and
commercial exploitation or sale of the respective mining areas.
NOTE 15: TRADE AND OTHER PAYABLES
31 December 31 December
2020 2019
$ $
Trade and Other Payables
Trade payables 28,421 103,623
Accruals 154,471 57,649
Tax payable 21,692 23,486
204,584 184,758
------------ ------------
Trade creditors, other creditors and goods and services tax are
non-interest bearing. Due to the short-term nature of these
payables, their carrying value is assumed to approximate their fair
value.
NOTE 16: ISSUED CAPITAL
31 December 31 December
2020 2019
$ $
(a) Issued capital
Ordinary shares fully paid 43,048,343 43,048,343
-------------- ------------
12 months to 6 months to
31 December 2020 31 December 2019
(b) Movements in shares on issue No. of shares $ No. of shares $
At beginning of the year 185,835,884 43,048,343 185,835,884 43,048,343
Shares issued to Directors and - - - -
Employees
-------------- ----------- -------------- ------------
185,835,884 43,048,343 185,835,884 43,048,343
Share issue costs - - - -
-------------- ----------- -------------- ------------
At ending of the year 185,835,884 43,048,343 185,835,884 43,048,343
-------------- ----------- -------------- ------------
(c) Ordinary shares
The Company does not have authorised capital nor par value in
respect of its issued capital. Ordinary shares have the right to
receive dividends as declared and, in the event of a winding up of
the Company, to participate in the proceeds from sale of all
surplus assets in proportion to the number of and amounts paid up
on shares held. Ordinary shares entitle their holder to one vote,
either in person or proxy, at a meeting of the Company.
(d) Capital risk management
The Group's capital comprises share capital, reserves less
accumulated losses amounting to $13,044,156 at 31 December 2020 (31
December 2019: $18,763,435). The Group manages its capital to
ensure its ability to continue as a going concern and to optimise
returns to its shareholders. The Group was ungeared at year end and
not subject to any externally imposed capital requirements. Refer
to note 24 for further information on the Group's financial risk
management policies.
(e) Share options and warrants
As at balance date, there were nil unissued ordinary shares
under options and nil unissued ordinary shares under warrants.
The details of the options at balance date and m ovements in
issued options that expired in the previous period are as
follows:
Exercise Exercise
at 14p at 10p
by 31/12/19 by 25/10/19
Balance at 1 July 2019 2,755,125 600,000
Expired during the year (2,755,125) (600,000)
Balance at 31 December 2019 - -
------------ ------------
No option holder has any right under the options to participate
in any other share issue of the Company or any other entity.
No options were exercised during or since the end of the
financial year.
NOTE 17: RESERVES
31 December 31 December
2020 2019
$ $
Reserves
Option reserve 3,541,048 3,541,048
Foreign currency translation reserve (2,938,622) (539,927)
------------ ------------
602,426 3,001,121
------------ ------------
12 months 6 months
to to
31 December 31 December
Movements in Reserves 2020 2019
Option reserve $ $
At beginning of the year 3,541,048 3,541,048
Options issued - -
------------- -------------
3,541,048 3,541,048
------------- -------------
The share based payment reserve is used to record the value of
equity benefits provided to Directors and Executives as part of
their remuneration and non-employees for their services.
Foreign currency translation reserve
At beginning of the year (539,927) (272,033)
Foreign currency translation (2,398,695) (267,894)
------------ ----------
(2,938,622) (539,927)
------------ ----------
The foreign exchange differences arising on translation of the
foreign controlled entities are taken to the foreign currency
translation reserve, as described in note 2(i). The reserve is
recognised in the statement of comprehensive income when the net
investment is disposed of as part of the gain or loss on sale where
applicable.
NOTE 18: ACCUMULATED LOSSES
12 months 6 months
to to
31 December 31 December
2020 2019
$ $
Movements in accumulated losses were as follows:
At beginning of the year (27,286,029) (26,375,985)
Loss for the year (3,320,584) (910,044)
------------- -------------
At 31 December (30,606,613) (27,286,029)
------------- -------------
NOTE 19: EXPITURE COMMITMENTS
31 December 31 December
2020 2019
$ $
Within one year - -
After one year but not longer than five years 2,500,000 4,050,804
After five years 6,189,177 6,440,020
------------ ------------
8,689,177 10,490,824
------------ ------------
These obligations have arisen as a result of certain
acquisitions that were undertaken in prior years as summarised
below.
Capela Potash Project
Harvest acquired a 51% interest in the Capela Potash project in
the Sergipe State, Brazil in 2015 as announced on 28 August 2014.
The total consideration was payable over several years subject to
certain conditions. The remaining elements of the consideration are
as follows:
-- The issue of further shares in the Company to the value of
$400,000, not before 31 December 2014, on the identification of 10
million tonnes of carnallite or sylvite with a minimum grade of 10%
KCI;
-- The issue of further shares in the Company to the value of
$800,000, not before 31 July 2015, on the identification of a JORC
inferred reserve with the minimum of 25 million tonnes with a
minimum grade of more than 10% of KCI;
-- The issue of further shares in the Company to the value of
$1,000,000, not before 31 December 2015, if the Company completes a
scoping study, feasibility study or another study that confirms the
economic feasibility under the JORC Code;
-- Drill two (2) holes for a total of 700m.
The elements of the consideration noted above have not been
fulfilled as at 31 December 2020 and have therefore been recorded
as commitments above. On 11 February 2021, the exploration licence
over the Capela project was relinquished as per disclosure in note
21, and will not be applicable in subsequent periods.
Sergi Potash Project
Harvest acquired a 100% interest in the Sergi Potash Project in
the Sergipe State, Brazil in 2015 as announced on 20 April 2015.
The total consideration was payable over several years subject to
certain conditions. The remaining elements of the consideration are
as follows:
-- On achieving minimum horizon of 10 meters of carnallite or
sylvite with a minimum grade of 10%, payment of 6,000,000 fully
paid ordinary shares in the Company;
-- On achieving a JORC (2012) inferred reserve with the minimum
of 25 million tonnes with a minimum grade of more than 10% of KCl,
payment of 6,000,000 fully paid ordinary shares in the Company;
-- On achieving a successful scope or feasibility study that
confirms the economic feasibility under the JORC rules, payment of
6,000,000 post-consolidation fully paid ordinary shares in the
Company; and
-- On commencing of commercial production, payment of $6,000,000.
The elements of the consideration noted above have not been
fulfilled as at 31 December 2020 are have therefore been recorded
as commitments above.
Arapua Fertilizer Project
Harvest acquired a 100% interest in the Arapua Fertilizer
Project in the State of Minas Gerais in Brazil in 2014. The terms
of the acquisition included:
-- a total payment of US$1,000,000 at the commencement of
commercial production, which was paid during the year; and
-- a Net Smelter Return Royalty to the vendors of 2%.
On 27 February 2020, the Agência Nacional de Mineração granted
the Company a full mining permit for the Company's 100% owned
Arapua Fertiliser Project in Brazil. Commercial production
commenced during the year and a royalty amount of $40,169 (2019:
$24,778) was paid. Furthermore, a 2% Net Smelter Return royalty of
$38,806 was accrued for and recorded as an expense in the Company's
income statement as disclosed in note 5. The future 2% Net Smelter
Return Royalty has not been recorded as a commitment as it is
difficult to quantify.
Mandacaru Phosphate Project
As announced on the on 21 December 2015, Harvest acquired a 100%
interest in the Mandacaru Phosphate Project in the Ceara State,
Brazil. The terms of the acquisition include a Net Smelter Return
Royalty to the vendors of 2%, capped at an aggregate amount of
US$1,000,000. The 2% Net Smelter Return Royalty has not been
recorded as a commitment as it is difficult to quantify.
If the Group decides to relinquish and/or does not meet the
obligations, assets recognised in the Statement of Financial
Position may require review to determine the appropriateness of
carrying values. The sale, transfers or farm-out of exploration
rights to third parties will reduce or extinguish the above
obligations.
NOTE 20: AUDITOR'S REMUNERATION
31 December 31 December
2020 2019
$ $
The auditor of Harvest Minerals Limited is
HLB Mann Judd.
Amounts received or due and receivable for:
- Audit or review of the financial report
of the entity and any other entity in the
Consolidated group 48,500 17,000
------------ ------------
NOTE 21: SUBSEQUENT EVENTS
As announced on 11 February 2021, the Company relinquished its
exploration licence over, and returned to the National Mining
Agency its 51% interest in the Capela Potash Project ("Capela") in
Brazil, to dedicate its resources and to ensure the continued
growth trajectory at its 100% owned revenue generating Arapua
Fertiliser Project ('Arapua' or the 'Project').
NOTE 22: RELATED PARTY DISCLOSURES
The ultimate parent entity is Harvest Minerals Limited. Refer to
note 11 for a list of all subsidiaries within the Group.
Garrison Capital (UK) Limited, a company in which Mr McMaster is
a director, provided the Company with management services including
IT and administrative support totalling $61,701 (6 months to 31
December 2019: $46,153). $5,420 (31 December 2019: $4,323) was
outstanding at year end.
FFA Legal Ltda, a company in which Mr Azevedo is a director,
provided the Group with legal and accounting services in Brazil
totalling $240,740 (6 months to 31 December 2019: $152,738). $110
(31 December 2019: $nil) were outstanding at year end.
Palisade Business Consulting Pty Ltd, a company in which Mr
James is a director and shareholder, provided the Company with
accounting and company secretarial services and provided a serviced
office. Fees for Mr James' services as a director and company
secretary are paid into this company. Fees received by Palisade
Business Consulting totalled $130,550 (6 months to 31 December
2019: $84,000). $nil (31 December 2019: $17,600) was outstanding at
year end.
These transactions have been entered into on normal commercial
terms and conditions no more favourable than those available to
other parties unless otherwise stated.
NOTE 23: LOSS PER SHARE
31 December 31 December
2020 2019
$ $
Loss used in calculating basic and dilutive
EPS (3,320,584) (910,044)
------------ ------------
Number of Shares
Weighted average number of ordinary shares
used in calculating basic earnings / (loss)
per share: 185,835,884 185,835,884
------------ ------------
Effect of dilution:
Share options - -
Adjusted weighted average number of ordinary
shares used in calculating diluted loss per
share: 185,835,884 185,835,884
------------ ------------
NOTE 24: FINANCIAL RISK MANAGEMENT
Exposure to interest rate, liquidity and credit risk arises in
the normal course of the Group's business. The Group does not hold
or issue derivative financial instruments.
The Group uses different methods as discussed below to manage
risks that arise from these financial instruments. The objective is
to support the delivery of the financial targets while protecting
future financial security.
(a) Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting obligations associated with financial
liabilities.
The Group manages liquidity risk by maintaining sufficient cash
facilities to meet the operating requirements of the business and
investing excess funds in highly liquid short-term investments. The
responsibility for liquidity risk management rests with the Board
of Directors.
Alternatives for sourcing the Group's future capital needs
include the cash position and the issue of equity instruments.
These alternatives are evaluated to determine the optimal mix of
capital resources for our capital needs. We expect that, absent a
material adverse change in a combination of our sources of
liquidity, present levels of liquidity along with future capital
raising will be adequate to meet our expected capital needs.
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other
payables. As at 31 December 2020 and 31 December 2019 all financial
liabilities are contractually maturing within 60 days.
(b) Foreign currency exchange rate risk
The Company holds cash balances in foreign currencies (Great
British Pounds ('GBP') and United States Dollars ('USD')). The
carrying amounts of the Group's foreign currency denominated cash
balances at 31 December 2020 are GBP 1,525,919 (A$2,702,656) and
USD 9,260 (A$13,714).
Foreign currency sensitivity analysis
A 10% increase and decrease in the GBP and USD against the
Australian dollar would lead to a $271,637 increase / decrease in
results (2019: $792,511 increase / decrease in results).
(c) Interest rate risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows or the fair value of
financial instruments.
The Group's exposure to market risk for changes to interest rate
risk relates primarily to its earnings on cash and term deposits.
The Group manages the risk by investing in short term deposits.
31 December 31 December
2020 2019
$ $
Cash and cash equivalents 2,992,727 8,057,934
------------ ------------
Interest rate sensitivity
The following table demonstrates the sensitivity of the Group's
statement of comprehensive income to a reasonably possible change
in interest rates, with all other variables constant.
Consolidated
Judgements of reasonably Effect on Post Tax Earnings Effect on Equity
possible movements
Increase/(Decrease) including accumulated
losses
Increase/(Decrease)
-------------------------- ------------------------------ --------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
--------------------------
$ $ $ $
-------------------------- -------------- -------------- ------------ ------------
Increase 100 basis
points 29,927 80,579 29,927 80,579
Decrease 100 basis
points (29,927) (80,579) (29,927) (80,579)
-------------------------- -------------- -------------- ------------ ------------
A sensitivity of 100 basis points has been used as this is
considered reasonable given the current level of both short term
and long term Australian Dollar interest rates. The change in basis
points is derived from a review of historical movements and
management's judgement of future trends. The analysis was performed
on the same basis in the December 2019 Financial Year.
(d) Credit risk exposures
Credit risk represents the risk that the counterparty to the
financial instrument will fail to discharge an obligation and cause
the Group to incur a financial loss. The Group's maximum credit
exposure is the carrying amounts on the statement of financial
position. The Group holds financial instruments with credit worthy
third parties.
At 31 December 2020, the Group held cash at bank. These were
held with financial institutions with a rating from Standard &
Poors of -AA or above (long term).
(e) Fair value of financial instruments
The carrying amounts of financial instruments approximate their
fair values.
(f) Capital management
The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business. There were no changes in the
Group's approach to capital management during the year. The Group
is not subject to externally imposed capital requirements.
NOTE 25: CONTINGENT LIABILITIES
There are no known contingent liabilities as at 31 December 2020
or 31 December 2019.
NOTE 26: DIVIDENDS
No dividend was paid or declared by the Company in the period
since the end of the financial year and up to the date of this
report. The Directors do not recommend that any amount be paid by
way of dividend for the period ended 31 December 2020.
The balance of the franking account is Nil as at 31 December
2020 (31 December 2019: Nil).
NOTE 27: KEY MANAGEMENT PERSONNEL DISCLOSURE
Details of the nature and amount of each element of the
emoluments of the Key Management Personnel of the Group for the
financial year are as follows:
Consolidated
31 December 31 December
2020 2019
$ $
Short term employee benefits 805,135 434,773
Post-employment benefits - -
Share based payments - -
Total remuneration 805,135 434,773
------------ ------------
NOTE 28: PARENT ENTITY INFORMATION
The following details information related to the parent entity,
Harvest Minerals Limited, at 31 December 2020. The information
presented here has been prepared using consistent accounting
policies as presented in note 2.
Parent
31 December 31 December
2020 2019
$ $
Current assets 2,773,182 8,017,479
Non current assets 10,388,446 10,881,568
------------- -------------
Total Assets 13,161,628 18,899,047
------------- -------------
Current liabilities 96,505 114,645
Non current liabilities 20,967 20,967
------------- -------------
Total Liabilities 117,472 135,612
------------- -------------
Net Assets 13,044,156 18,763,435
------------- -------------
Issued capital 43,048,343 43,048,343
Share based payment reserve 3,541,048 3,541,048
Accumulated losses (33,545,235) (27,825,956)
------------- -------------
Total Equity 13,044,156 18,763,435
------------- -------------
Loss for the year (5,719,279) (2,799,660)
------------- -------------
Total comprehensive loss for the year (5,719,279) (2,799,660)
------------- -------------
Guarantees
Harvest Minerals Limited has not entered into any guarantees in relation
to the debts of its subsidiary.
Other Commitments
There are no commitments to acquire property, plant and equipment
other than as disclosed in this report.
Accounting Policies
Harvest Minerals Limited applies accounting policies consistent with
that of the Group which is detailed in note 2(a).
NOTE 29: IMPACT OF COVID-19
On 31 January 2020, the World Health Organisation ('WHO')
announced a global health emergency because of a new strain of
coronavirus originating in Wuhan, China (COVID-19 outbreak) and the
risks to the international community as the virus spread globally
beyond its point of origin. Because of the rapid increase in
exposure globally, on 11 March 2020, the WHO classified the
COVID-19 outbreak as a pandemic.
The full impact of the COVID-19 outbreak continues to evolve at
the date of this report. Management is actively monitoring the
global situation and its impact on the Group's financial condition,
liquidity, operations, suppliers, industry, and workforce. Given
the daily evolution of the COVID-19 outbreak and the global
responses to curb its spread, the Group continues to monitor the
situation very closely, with a primary focus on the health,
wellbeing and safety of all employees. The Group has implemented
extensive business continuity procedures to ensure ongoing
operations with minimal disruptions. To date there has been minimal
impact to the Group.
This announcement contains inside information.
**ENDS**
For further information, please visit www.harvestminerals.net or
contact:
Harvest Minerals Limited Brian McMaster (Chairman) Tel: +44 (0)20
3940 6625
Strand Hanson Limited James Spinney Tel: +44 (0)20
Nominated & Financial Ritchie Balmer 7409 3494
Adviser Georgia Langoulant
Shard Capital Partners Damon Heath Tel: +44 (0)20 7186
Broker 9900
St Brides Partners I sabel de Salis E : info@stbridespartners.co.uk
Ltd Charlie Hollinshead
Financial PR
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END
FR FLMFTMTBTMIB
(END) Dow Jones Newswires
June 29, 2021 02:30 ET (06:30 GMT)
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