TERRAMIN AUSTRALIA LIMITED

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1 TERRAMIN AUSTRALIA LIMITED ABN & Controlled Entities Contents Appendix 4D 2 Directors Report 3 Auditor s Independence Declaration 5 Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income 6 Consolidated Interim Statement of Financial Position 7 Consolidated Interim Statement of Changes in Equity 8 Consolidated Interim Statement of Cash Flows 9 Condensed Notes to the Consolidated Interim Financial Statements 10 Directors Declaration 17 Independent Review Report 18

2 Appendix 4D Results for Announcement to the Market ABN Previous Corresponding Period Dividend Information Net Tangible Assets Per Security $'000 Up/Down % Movement Revenue from ordinary activities Loss after tax from ordinary activities (2,526) up Amount per share (cents) Franked amount per share (cents) Tax rate for franking credit Interim dividend per share Nil Nil Nil Final dividend per share Nil Nil Nil Net tangible assets per security This information should be read in conjunction with the Annual Financial Report of Terramin Australia Limited and its controlled entities and any public announcements made in the period by Terramin Australia Limited in accordance with the continuous disclosure requirements of the Corporations Act 2001 (Cth) and the Australian Securities Exchange Listing Rules. Additional Appendix 4D disclosure requirements can be found in the Directors Report and the consolidated financial statements for the half-year ended 30. The entities controlled by the Company during the period has not changed since the last reporting period. This report is based on the consolidated financial statements of Terramin Australia Limited and its controlled entities, which have been reviewed by Grant Thornton. The Independent Review Report provided by Grant Thornton is included in the consolidated financial statements. 2

3 Directors Report Your Directors present their report on the consolidated entity comprising Terramin Australia Limited (the Company or Terramin) and its controlled entities (the Group) for the half-year ended 30 and the review report thereon. Terramin is a public company, limited by shares incorporated and domiciled in Australia. This report should be read in conjunction with the Company s Annual Financial Report. BOARD OF DIRECTORS The following persons were Directors of the Company during the whole of the half-year and up to and including the date of this report (unless stated otherwise): Mr Feng (Bruce) Sheng 2 Mr Michael Kennedy Mr Kevin McGuinness 1 Mr Angelo Siciliano Mr Wang Xinyu 2 Executive Chairman Deputy Chairman - Non-Executive Non-Executive Director Non-Executive Director Executive Director 1. Mr. McGuinness is Chair of the Audit and Risk Committee and the Nominations and Remuneration Committee. 2. Mr. Sheng and Mr. Wang were appointed Executive Chairman and Executive Director respectively by the board on 11 January. REVIEW OF OPERATIONS Principal Activities During the period there were no significant changes in the nature of the Group s principal activities. The Group continued to focus on the development of and exploration for base and precious metals (in particular zinc, lead and gold) and other economic mineral deposits. Tala Hamza Zinc Project (Terramin 65%) The Tala Hamza Zinc Project is 100% owned by Western Mediterranean Zinc Spa (WMZ). Terramin has a 65% shareholding in WMZ. The remaining 35% is held by two Algerian Government owned companies: Enterprise National des Produits Miniers Non-Ferreux et des Substances Utiles Spa (ENOF) (32.5%) and Office National de Recherche Géologique et Minière (ORGM) (2.5%). WMZ was formed following a resolution of the State Participation Council (CPE) to create a joint venture between ENOF and Terramin for the development and mining of the Tala Hamza zinc-lead deposit. During the period, the joint venture partners have continued working together to ensure that all aspects of the Definitive Feasibility Study (DFS) is accepted by the relevant decision makers within the Algerian regulator. The partners have continued to provide all the required information to the Algerian regulator in the format that the regulator requires for the mining lease approval. Terramin is awaiting a formal approval from its partners for the lodgement of the mining lease and expects to be in a position to update the market on the outcome later in. Bird-in-Hand Gold Project (Terramin 100% through its wholly owned subsidiary Terramin Exploration Pty Ltd) The Bird-in-Hand Gold Project is located approximately 30km north of Terramin s existing mining and processing facilities at the Angas Zinc Mine in Strathalbyn. The project has a high grade Gold Resource which is amenable to underground mining. Subject to required regulatory approvals, the Bird-in- Hand material will be processed utilising the facilities at Angas which can be modified to process gold-bearing material. The existing tailings dam at Angas has the capacity to hold all the Bird-in-Hand tailings. During the reporting period, the Company continued to engage with the Department for Energy and Mining (DEM) in respect of the draft Mining Lease Proposal (MLP) for the development of the Bird-in-Hand Gold Project. Feedback was received from the mining regulators, the Environment Protection Agency (EPA) and Department for Environment and Water (DEW) which the Company is reviewing and incorporating into the MLP. The Company continues to prepare for a Managed Aquifer Recharge (MAR) drilling program to further calibrate the groundwater modelling and subsequently confirm the best locations for the water reinjection bores for the mining operation, as required by the DEM and DEW. In addition to consultation with government bodies, the Company has also continued its ongoing community consultation in line with the Company s Community Engagement Plan. This is providing key information to refine the outcomes that will be used to develop the detailed regulatory triggers for every environmental aspect of the project, as well as ongoing consultation regarding the construction, operation and rehabilitation of the area after mine closure. Adelaide Hills Exploration Project (Terramin 100% and through its wholly owned subsidiary Terramin Exploration Pty Ltd) The Adelaide Hills project consists of twelve contiguous exploration tenements that cover 3,702km 2 stretching 120km between Victor Harbor and Kapunda. This project area is considered prospective for gold, copper, lead, zinc and rare earth elements. A strategic review is currently being undertaken in order to deliver against Terramin s long term goal of identifying 1 million ounces of gold within Terramin s South Australian exploration tenement holding. Non-core projects will be reviewed for their potential to generate joint-venture / farm-out value. During the period, Terramin s Kapunda Project joint venture partner and in-situ recovery (ISR) specialist Environmental Copper Recovery SA Pty Ltd (ECR) submitted samples to CSIRO for mineral characterisation and lixiviant suitability testing. In February, Terramin released a resource estimate for the Kapunda deposit. The estimate was restricted to the top 100m which hosts copper species that are readily leachable. Terramin also commenced optimisation activities during the quarter, aimed at developing expansion cases that could add additional value to the project. All optimisation and expansion cases will require approval from Algerian regulators, supported by robust feasibility level studies. Terramin commenced long lead time planning for the expansion cases while awaiting approval for the initial Tala Hamza development works. 3

4 Directors Report (continued) South Gawler Project (formerly Gawler Ranges Project) (Terramin 100% through its wholly owned subsidiary Menninnie Metals Pty Ltd) The South Gawler Project is located along the southern margin of the Gawler Ranges, northern Eyre Peninsula, South Australia. The project comprises a group of seventeen Exploration Licences totalling 8,321km 2. The Project area is prospective for a range of deposit styles that host combinations of gold, silver, copper, molybdenum, lead, zinc, rare earth elements, graphite, and tin ± tungsten. The Project hosts the Menninnie Dam deposit, the largest undeveloped lead-zinc deposit in South Australia. During the reporting period, the Evolution Mining Ltd (Evolution) completed its stage 1 expenditure obligations under the earn-in and Joint Venture Agreement wih Menninnie Metals (See ASX announcement dated 22 ) and withdrew from the project. Geological mapping and first-pass geophysical and geochemical data collected during the period funded by Evolution has enabled Menninnie Metals to locate two new prospect areas containing IOCG-style breccia outcrops,and to make significant progress towards defining the best IOCG drilling targets on one of its more advanced prospects. Angas Zinc Mine (Terramin 100%) The Angas Zinc Mine is located 2km outside the town of Strathalbyn, 60km from Adelaide. The mine is currently under care and maintenance pending the resumption of exploration at depth and near mine and evaluation of the development of the Bird-in-Hand Gold Project. The site remains in compliance with all lease conditions. Environment The Group (in particular the Company s Angas Zinc Mine and the Bird-in-Hand Gold Project) is subject to significant environmental regulation under both Commonwealth and South Australian legislation in relation to its exploration, development and mining activities. Exploration licences and mining leases are issued subject to various obligations as to environmental monitoring and rehabilitation, and ongoing compliance with all relevant legislative obligations. The Group s Directors, employees and consultants are committed to achieving a high standard of environmental performance and, in this regard, the Board considers and if required addresses these issues through the Audit and Risk Committee. No environmental incidents were recorded during the period with all environmental monitoring areas directly related to site activities within compliance. Insofar as the Directors are aware, there have been no material breaches or other material instances of non-compliance, nor any recorded known areas of outstanding non-compliance, with any applicable environmental legislation or other regulations. Corporate During the reporting period, the Board restructured the executive team with the appointment of Mr Richard Taylor as Chief Executive Officer and Mr Simon Iacopetta as Chief Financial Officer and Company Secretary. No existing options have been exercised or expired. No new options were issued in the period. A total of 300,497 Share Rights issued to the previous Chief Executive Offier in converted into fully paid ordinary shares during the reporting period. FINANCIAL The consolidated loss of the Group after providing for income tax and non-controlling interest was $2.35 million for the halfyear ended 30 (: $0.6 million). Finance costs of $0.9 million were recorded for the period, representing borrowing costs and interest expense on borrowings. The Angas Zinc Mine (AZM) rehabilitation provision was revalued using updated interest and inflation rates resulting in a $0.04 million gain being recognised for the period. Other administration costs of $0.6 million were incurred in relation to corporate administration and Angas mine site care and maintenance activities. The consolidated net asset position as at 30 was $49.9 million (: $51.9 million) with current liabilities exceeding current assets by $15.7 million (: $12.3 million). No dividends were paid during the interim period and the Directors have not recommended the payment of a dividend. SUBSEQUENT EVENTS On 14 August, the Company restructured its Standby Term Facility. The existing unsecured facility was increased from $3.25 million to $5.25 million on similar terms, and will be secured in accordance with the terms of the existing facility. In the Directors opinion, no other events or circumstances have arisen since the end of the financial period that have significantly affected or may significantly affect the operations of the Company or the Group, the results of those operations or the state of affairs of the Group in future financial years that have not been otherwise disclosed in this report. AUDITOR S INDEPENDENCE DECLARATION A copy of the auditor s Independence Declaration, as required under section 307C of the Corporations Act 2001, follows the Directors Report. ROUNDING OF AMOUNTS The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument 2016/191 and in accordance with the Instrument, amounts in the financial report have been rounded off to the nearest thousand dollars, unless otherwise stated. Signed in Melbourne on the 23 rd day of August in accordance with a resolution of the Board of Directors. Feng Sheng Executive Chairman 4 Kevin McGuinness Non-Executive Director

5 Auditor s Independence Declaration TERRAMIN AUSTRALIA LIMITED & CONTROLLED ENTITIES 5

6 Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income Note Raw materials, consumables and other direct costs (186) (352) Employee expenses (1,060) (662) Depreciation and amortisation 6 (23) (22) Rehabilitation Provision Adjustment 38 1,693 Other expenses 5 (645) (561) Profit/(loss) before net financing costs and income tax (1,876) 96 Finance income Finance costs 5 (923) (734) Net finance costs (922) (731) Loss before income tax (2,798) (635) Income tax benefit Loss for the period (2,526) (635) Attributable to: Owners of the Company (2,354) (533) Non-controlling interest (172) (102) Loss for the period (2,526) (635) Other comprehensive (loss)/income Items that may be reclassified subsequently to profit or loss: Foreign currency translation differences for foreign operations 536 (394) Other comprehensive (loss)/income for the period 536 (394) Total comprehensive (loss) for the period attributable to equity holders of the Company (1,990) (1,029) Attributable to: Owners of the Company (1,818) (927) Non-controlling interest (172) (102) Total comprehensive loss for the period (1,990) (1,029) (Loss) per share attributable to the ordinary equity holders of the Company: Note Basic (loss) per share - (cents per share) 13 (a) (0.13) (0.03) Diluted (loss) per share - (cents per share) 13 (b) (0.13) (0.03) The consolidated interim statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to the financial statements. 6

7 Consolidated Interim Statement of Financial Position as at 30 Assets Note December Cash and cash equivalents ,698 Trade and other receivables Other assets Total current assets 1,352 2,843 Non-current assets Inventories Property, plant and equipment 6 8,476 8,497 Exploration and evaluation 7 61,059 59,627 Total non-current assets 70,168 68,756 TOTAL ASSETS 71,520 71,599 Liabilities Current liabilities Trade and other payables 2,565 1,737 Borrowings 9 14,181 13,061 Provisions Total current liabilities 17,024 15,121 Non-current liabilities Borrowings Provisions 10 4,561 4,548 Total non-current liabilities 4,567 4,559 TOTAL LIABILITIES 21,591 19,680 NET ASSETS 49,929 51,919 EQUITY Share capital , ,318 Reserves 14 (6,950) (7,442) Accumulated losses (172,263) (169,909) Total equity attributable to equity holders of the Company 36,149 37,967 Non-controlling interest 13,780 13,952 TOTAL EQUITY 49,929 51, Includes $32,500 of restricted cash to support bonds and credit card facilities. The consolidated interim statement of financial position is to be read in conjunction with the notes to the financial statements. 7

8 Consolidated Interim Statement of Changes in Equity Share capital Share based payments reserve Translation reserve Accumulated losses Total Noncontrolling interest Balance at 1 January 215, (7,532) (169,909) 37,967 13,952 51,919 Loss for the period (2,354) (2,354) (172) (2,526) Other comprehensive (loss)/income Foreign currency translation differences Total other comprehensive (loss)/income Total equity Total comprehensive (loss)/income for the period (2,354) (1,818) (172) (1,990) Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary shares Share issue costs Share rights issued Share rights converted to ordinary shares 44 (44) Total contributions by and distributions to owners 44 (44) Balance at , (6,996) (172,263) 36,149 13,780 49,929 Share capital Share based payments reserve Translation reserve Accumulated losses Total Noncontrolling interest Total equity Balance at 1 January 204,054 9,014 (5,815) (175,859) 31,394 14,136 45,530 Loss for the period (533) (533) (102) (635) Other comprehensive (loss)/income Foreign currency translation differences - - (394) - (394) - (394) Total other comprehensive (loss)/income - - (394) - (394) - (394) Total comprehensive (loss)/income for the period - - (394) (533) (927) (102) (1,029) Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary shares 4, ,000-4,000 Share issue costs (252) (252) - (252) Share rights issued Share rights converted to ordinary shares 22 (22) Total contributions by owners 3, Balance at ,824 9,058 (6,209) (176,392) 34,281 14,034 48,315 The consolidated interim statement of changes in equity is to be read in conjunction with the notes to the financial statements. 8

9 Consolidated Interim Statement of Cash Flows TERRAMIN AUSTRALIA LIMITED & CONTROLLED ENTITIES Cash from operating activities: Payments to suppliers and employees (2,007) (808) Financing costs and interest paid (5) (234) Interest received 1 3 Total cash (used in) operating activities (2,011) (1,039) Cash flows from investing activities: Payments for purchase of property, plant and equipment (4) (10) Exploration and evaluation expenditure (1,014) (2,739) Net cash (used in) investing activities (1,018) (2,749) Cash flows from financing activities: Proceeds from the issue of share capital - 4,000 Payment of transaction costs on debt and/or equity - (1,168) Proceeds from borrowings 1,270 1,212 Repayment of borrowings (123) (1,194) Net cash from financing activities 1,147 2,850 Other activities: Net (decrease) in cash and cash equivalents (1,882) (938) Net foreign exchange differences 1 - Cash and cash equivalents at beginning of the period 2,698 1,037 Cash and cash equivalents at end of the period The consolidated interim statement of cash flows is to be read in conjunction with the notes to the financial statements. 9

10 Condensed Notes to the Consolidated Interim Financial Statements NOTE 1: REPORTING ENTITY Terramin Australia Limited is a listed public company, incorporated and domiciled in Australia. The consolidated interim financial report as at and for the half-year ended 30, covers the consolidated entity of Terramin Australia Limited and its controlled entities (together referred to as the Group). NOTE 2: BASIS OF PREPARATION (a) Statement of Compliance (d) Going Concern The financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. During the interim period, the Group incurred a loss of $2.35 million, bringing accumulated losses to $172.3 million. As at 30, the Group s current liabilities exceeded its current assets by $15.7 million and the Group had a net cash outflow of $3.0 million from operating and investing activities for the period. The consolidated interim financial report is a general purpose financial report that has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 (Cth). The consolidated interim financial report was authorised for issue by the Directors on the 23 rd day of August. (b) Reporting Basis The consolidated interim financial report does not include full disclosures of the type normally included in an annual financial report, and therefore it is recommended that this financial report be read in conjunction with the annual financial report for the year ended 31 December, and any public announcements made by the Company during the interim reporting period in accordance with continuous disclosure requirements arising under the Australian Securities Exchange Listing Rules and the Corporations Act 2001 (Cth). Where required by accounting standards, comparative figures have been reclassified to conform with changes in presentation in the current interim financial period. The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument 2016/191 and in accordance with the Instrument, amounts in the financial report have been rounded off to the nearest thousand dollars, unless otherwise stated. This report has been prepared in Australian dollars on the basis of historical costs, except for plant and equipment and derivative financial instruments measured at fair value and the provision for mine rehabilitation measured at the present value of future cash flows. (c) Estimates The preparation of the interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. In preparing this consolidated interim financial report, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report as at and for the year ended 31 December. The financial report has been prepared on a going concern basis as the expectation is that the Group can raise additional equity or restructure debt when required. The Group s ability to raise equity will rely on investor confidence in the development of the Bird-in-Hand Gold Project or that the $43.4 million investment in the Tala Hamza Zinc Project can be realised through mining or sale. The Directors note that the matters outlined above indicate material uncertainty, which may cast significant doubt on the ability of the Group to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. As at the date of this report, the Directors believe that the Group has adequate resources to continue to explore, evaluate and develop the Group s areas of interest and support to date from Asipac Group Pty Ltd (Asipac) will ensure the Company has sufficient funds to meet its obligations. Subject to market conditions the Directors believe there are reasonable grounds to conclude that the Company will be able to raise funds by way of equity, debt financing or sale of assets to fund anticipated activities and meet financial obligations. For the reasons outlined above, the Board has prepared the financial report on a going concern basis. NOTE 3: SIGNIFICANT ACCOUNTING POLICIES The accounting policies applied by the Group in the consolidated interim financial report are the same as those applied by the Group in its consolidated financial report as at and for the year ended 31 December, with the exception of the following: New standards adopted as at 1 January AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments (2014) became effective for periods beginning on or after 1 January. Accordingly, the Group applied AASB 15 and AASB 9 for the first time to the interim period ended 30. Changes to the Group s accounting policies arising from these standards are summarised below: AASB 15 Revenue from Contracts with Customers AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and several revenue-related Interpretations. The new Standard has been applied as at 1 January. There is no impact to the Group s historical financial results given the company is not currently in production. 10

11 Condensed Notes to the Consolidated Interim Financial Statements (continued) AASB 9 Financial Instruments Recognition and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and initial measurement of financial assets Financial assets are classified according to their business model and the characteristics of their contractual cash flows. Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). Subsequent measurement of financial assets For the purpose of subsequent measurement, financial assets, other than those designated and effective as hedging instruments, are classified into the following four categories: Financial assets at amortised cost Financial assets at fair value through profit or loss (FVTPL) Debt instruments at fair value through other comprehensive income (FVTOCI) Equity instruments at FVTOCI All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. Financial assets at amortised cost Financial assets with contractual cash flows representing solely payments of principal and interest and held within a business model of hold to collect contractual cash flows are accounted for at amortised cost using the effective interest method. The Group s trade and most other receivables fall into this category of financial instruments. Classification and measurement of financial liabilities As the accounting for financial liabilities remains largely unchanged from AASB 139, the Group s financial liabilities were not impacted by the adoption of AASB 9. However, for completeness, the accounting policy is disclosed below. The Group s financial liabilities include borrowings and trade and other payables. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interestrelated charges are reported in profit or loss are included within finance costs or finance income. Borrowings classified as amortised cost under AASB 139. They are continued to be accounted for at amortised cost under AASB 9. Reconciliation of financial instruments on adoption of AASB 9 The table below shows the classification of each class of financial asset and financial liability under AASB 139 and AASB 9 as at 1 January : Financial assets AASB 139 classification AASB 9 classification AASB 139 carrying amount AASB 9 carrying amount Trade and other receivables Loans and receivables Amortised cost Financial liabilities Borrowings Amortised cost Amortised cost 13,072 13,072 11

12 Condensed Notes to the Consolidated Interim Financial Statements (continued) NOTE 4: SEGMENT REPORTING For management purposes, the Group is organised into business units based on geography and has two reportable operating segments: Australia explores, develops and mines zinc, lead and gold deposits Northern Africa developing a zinc and lead deposit No operating segments have been aggregated to form the above reportable operating segments. Revenue Australia Northern Africa Consolidated External customers Total revenue Results Depreciation and amortisation (23) (22) - - (23) (22) Interest income Interest expense (535) (408) - - (535) (408) Loss before income tax (2,308) (343) (490) (292) (2,798) (635) Income tax expense (Loss)/gain for the year for the operating segment (2,036) (343) (490) (292) (2,526) (635) (Loss)/gain for the year attributable to non-controlling interest - - (172) (102) (172) (102) (Loss) for the year attributable to equity holders of the Company (2,036) (343) (318) (190) (2,354) (533) Operating assets 28,036 25,266 43,484 43,570 71,520 68,836 Operating liabilities 21,487 19, ,311 21,591 20,521 Other disclosures Capital expenditure 1 1,816 1, ,593 1,949 3, Capital expenditure consists of additions of property, plant and equipment and exploration and evaluation assets. There are no transactions other than cash funding between reportable segments. 12

13 Condensed Notes to the Consolidated Interim Financial Statements (continued) NOTE 5: OTHER INCOME & EXPENSES Other Expenses Audit Fees Consultants Travel Other Corporate Costs (50) (40) (257) (295) (94) (88) (244) (138) Total other expenses (645) (561) Finance income Interest income 1 3 Total finance income 1 3 Finance costs Interest on borrowings (535) (408) Unwinding of discount on mine rehabilitation provision (113) (51) Other borrowing costs Total finance costs NOTE 6: PROPERTY, PLANT AND EQUIPMENT Freehold land Buildings and other infrastructure Plant and equipment Construction in progress (275) (275) (923) (734) Opening carrying amount 1 January 4, ,220-8,497 Additions Disposals Transfers Depreciation and amortisation - - (23) - (23) Foreign currency movement - - (31) - (31) Carrying amount at 30 4, ,199-8,476 Total Freehold land Buildings and other infrastructure Plant and equipment Construction in progress Opening carrying amount 1 January 4, ,251-8,531 Additions Disposals Transfers (14) - Depreciation and amortisation - (3) (41) - (44) Foreign currency movement - - (4) - (4) Carrying amount at 31 December 4, ,220-8,497 Total 13

14 Condensed Notes to the Consolidated Interim Financial Statements (continued) NOTE 7: EXPLORATION AND EVALUATION ASSETS Exploration and evaluation December Opening carrying amount 59,627 56,278 Additions 1,916 4,948 Exploration write-off - - Foreign currency movement (484) (1,599) Total exploration and evaluation 61,059 59,627 Exploration and evaluation assets by location Tala Hamza Zinc Project (Terramin 65%) 43,368 42,734 Adelaide Hills Project (Terramin 100%) 1,551 1,451 Bird-in-Hand Gold Project (Terramin Exploration Pty Ltd 100%) 10,649 9,964 Menninnie Zinc Project (Menninnie Metals Pty Ltd 100%, farm-out joint venture) 5,491 5,478 Total exploration and evaluation 61,059 59,627 The Oued Amizour exploration license PEM6911 expired on 31 January. Terramin is able to apply for a grace period under the Algerian Mining Act. However, discussions with the Ministry have indicated that this is unnecessary as a Mining Lease applicaiton has been prepared. The joint venture partners have continued working together to ensure that all aspects of the revised DFS are acceptable to the relevant decision makers within the Algerian regulator. Recoverability of the carrying amount of the exploration and evaluation assets is dependent on either the successful development and commercial mining or sale of respective areas of interest. NOTE 8: INVENTORIES NOTE 9: BORROWINGS Current December Lease liabilities Loans - secured 2 10,920 10,801 Loans - unsecured 3 3,250 2,250 Non-current 14,181 13,061 Lease liabilities 6 11 Total non-current borrowings 6 11 Financing facilities Loan facilities - available 14,250 14,250 Loan facilities - undrawn - (1,000) Loan facilities - drawn 14,250 13,250 Less: unamortised transaction costs (80) (199) Carrying amount at balance date 14,170 13,051 Guarantee facility - available 4 5,315 5,315 Guarantee facility - undrawn - - Guarantee facility - drawn 5,315 5, The Group has an insurance premium funding arrangement at the reporting date. 2. As at the reporting date, the Group had fully drawn down the two secured loan facilities provided by Asipac. Interest is payable half yearly on the facilities and is fixed at a base rate of 8%. Asipac have committed to not call the payment of this interest until the expiry of the facility. The facilities have a term expiring on 31 October. 3. As at the reporting date, the group has fully drawn down it s unsecured short-term facility provided by Asipac. The facility has a term expiring 31 October. Interest is fixed at a base rate of 8%, payable upon the expiry of the facility. Non-current December Raw materials and consumables Total inventories at the lower of cost and net realisable value A guarantee facility has been provided by Investec Bank PLC (Investec) in relation to rehabilitation bonds required by DEM over the ML Inventories of mining supplies are recognised as non-current to reflect the period in which they will be utilised. 14

15 Condensed Notes to the Consolidated Interim Financial Statements (continued) NOTE 10: PROVISIONS Current December Employee benefits Total current provisions Non-current Employee benefits Mine rehabilitation 4,506 4,432 Total non-current provisions 4,561 4,548 NOTE 12: ISSUED CAPITAL Table of issued capital : The mine rehabilitation provision is recognised for the estimated cost of rehabilitation, decommissioning, restoration and long term monitoring of areas disturbed during operation of the Angas Zinc Mine up to reporting date but not yet rehabilitated. The provision is based upon current cost estimates with a contingency and has been determined on a discounted basis with reference to current legal requirements and technology. The provision has been calculated using a risk free discount rate of 2.59% (December : 2.57%). The rehabilitation is expected to occur following the processing of ore from the Birdin-Hand Gold Project (subject to regulatory approvals). NOTE 11: FAIR VALUE OF ASSETS AND LIABILITIES The fair values of the financial assets and liabilities of the Group are equal to the carrying amount in the financial report. In the case of loans and borrowings it is considered that the variable rate debt and associated credit margin is in line with current market rates and therefore is carried in the interim financial report at fair value. Type of Share Issue Date of issue Number of ordinary shares on issue Issue Price $ Opening balance 1 January 1,869,177, ,318 Share rights converted 1 2-Jan , Share rights converted 1 4-Apr , Closing balance 30 1,869,478, ,362 Share issue costs - Issued Capital 215, During the period, following the completion of the performance conditions, 300,497 share rights were converted to ordinary shares in accordance with the terms of the Terramin Employee Share Rights Plan. Table of issued capital for the year ended 31 December : Share capital Type of Share Issue Date of issue Number of ordinary shares on issue Issue Price $ Opening balance 1 January 1,795,996, ,054 Share placement 02-Feb-17 25,000, ,000 Share rights converted 04-Apr , Share rights converted 03-Jul , Share rights converted 04-Oct , Share Placement 27-Sep-17 37,500, ,300 Share Placement 04-Oct-17 10,119, ,700 Closing balance 31 December 1,869,177, ,120 Share issue costs (802) Share capital Issued Capital 215,318 15

16 Condensed Notes to the Consolidated Interim Financial Statements (continued) NOTE 13: EARNINGS PER SHARE NOTE 15: SHARE BASED PAYMENTS (a) Basic (loss)/earnings per share There were no share based payments made during the period. Loss for the period attributable to the equity holders of the Company (2,354) (533) Ordinary shares on issue 1,869,478,040 1,821,137,218 Weighted average number of ordinary shares 1,869,404,636 1,816,607,313 Basic loss per share (cents) (0.13) (0.03) (b) Diluted (loss)/earnings per share Diluted (loss) per share (cents) (0.13) (0.03) The calculation of diluted loss per share does not include potential ordinary shares on issue as doing so would have the effect of reducing the amount of the loss per share. NOTE 14: RESERVES (a) Foreign currency translation reserve Dec Balance at the beginning of the year (7,532) (5,815) Adjustment arising on translation to presentation currency 536 (1,717) Balance at the end of the year (6,996) (7,532) Table of share rights movements for the period ended 30 : Date Number of share rights Price Share rights Opening balance 1 January 423, Share rights converted 2-Jan-18 (162,615) 0.13 (22) Share rights converted 4-Apr-18 (137,882) 0.16 (22) Closing balance , NOTE 16: EVENTS OCCURRING AFTER THE REPORTING PERIOD On 14 August, the Company restructured its Standby Term Facility. The existing unsecured facility was increased from $3.25 million to $5.25 million on similar terms, and will be secured in accordance with the terms of the existing facility. In the Directors opinion, no other events or circumstances have arisen since the end of the financial period that have significantly affected or may significantly affect the operations of the Company or the Group, the results of those operations or the state of affairs of the Group in future financial years that have not been otherwise disclosed in this report. (b) Share based payments reserve Dec Balance at the beginning of the year 90 9,014 Transfer of lapsed options to retained earnings - (8,946) Share rights issued during the period - 88 Share rights converted during the period (44) (66) Balance at the end of the year Total reserves (6,950) (7,442) 16

17 Directors Declaration The Directors of the Company declare that: The financial statements and notes, as set out on pages 6 to 16: (a) comply with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001; and (b) give a true and fair view of the consolidated entity s financial position as at 30 and of its performance for the half-year ended on that date. In the Directors opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in Melbourne on the 23 rd day of August in accordance with a resolution of the Board of Directors. Feng Sheng Executive Chairman Kevin McGuinness Non-Executive Director 17

18 Independent Review Report to the Members of Terramin Australia Limited 18

19 Independent Review Report to the Members of Terramin Australia Limited (continued) TERRAMIN AUSTRALIA LIMITED & CONTROLLED ENTITIES 19

20 Unit Glen Osmond Road Fullarton, 5063 South Australia t: f: e: w: TERRAMIN AUSTRALIA LIMITED