TIDMHMI
RNS Number : 4541E
Harvest Minerals Limited
30 June 2023
Harvest Minerals Limited / Index: LSE / Epic: HMI / Sector:
Mining
30 June 2023
Harvest Minerals Limited ('Harvest' or the 'Company')
Final Results
Harvest Minerals Limited, the AIM-listed organic fertiliser
producer, is pleased to announce its audited Final Results for the
year ended 31 December 2022, extracts from which are set out below.
The Annual Report & Accounts will today be made available on
the Company's website and posted to Shareholders, where
appropriate. The Company will shortly be posting out its Notice of
AGM to Shareholders and a further announcement will be made in this
regard.
REVIEW OF OPERATIONS
Arapua Fertiliser Project (Arapua)
Arapua is the Company's principal business unit and currently
its sole source of revenue. The Company's focus during the year,
and in prior years, has been developing Arapua and progressing it
to commercial production and revenue generation. 2022 saw
operations accelerate at Arapua resulting in total sales of 150,000
tonnes of its organic fertilizer, KP Fértil(R), which included
33,000 tonnes of advanced sales that had been invoiced but did not
meet the definition of revenue in the year under accounting
standards. This revenue will be accounted for in 2023. Accordingly,
a total sales volume of 117,000 tonnes of KP Fértil(R) has been
recorded for the year an increase of 38% on the 85,030 tonnes sold
in 2021, and more than double the 54,115 tonnes sold in 2020. This
sales performance represents a 29% CAGR (Compound Annual Growth
Rate) over the last three years.
Over the course of 2022, Harvest continued to receive positive
agronomic results proving the effectiveness of KP Fértil(R). 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. 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.
In recognition of the importance of ongoing agronomic test work
and the sales support from demonstration plots, throughout 2022,
the Company continued to develop and sponsor its own in-house
fieldwork and test farm initiatives, which have proven to be
extremely popular with customers.
Miriri Phosphate Project
During 2022, the Company made the decision to not proceed with
the Project because both the geological and economic merits did not
reach Harvest's minimum investment criteria. Specifically, Harvest
concluded that a direct shipping operation would not be possible as
the majority of the ore is at depth and the extraction of the ore
and corresponding over burden rendered the Project relatively
uneconomic.
Accordingly, Harvest has terminated its agreement with the
Vendors (as defined in the Company's 29 November 2021 RNS) and
relinquished its interest in the Project. No further payments are
due to the Vendors.
RESULTS OF OPERATIONS
The Group made a maiden net profit after taxation for the year
ended 31 December 2022 of $197,797 (31 December 2021: loss of
$4,168,072), which included non-cash expenses. The following is a
reconciliation from net profit to earnings, before interest,
taxations, depreciation, and amortisation (EBITDA) and adjusted
EBITDA:
31 December 31 December
2022 2021
$'m $'m
Net Profit / (Loss) 0.2 (4.2)
Interest 0.1 -
Tax 0.3 -
Depreciation 0.4 0.2
Amortisation 0.4 0.1
------------ ------------
EBITDA 1.4 (3.9)
Impairment - trade receivables 0.5 3.3
Impairment - capitalised exploration 0.6 0.6
------------ ------------
Adjusted EBITDA 2.5 0.0
============ ============
The net assets of the Group at 31 December 2022 were $9,713,742
(31 December 2021: $8,612,280) and its cash position was $2,723,509
(31 December 2021: $1,708,001).
DIVIDS
No dividend was paid or declared by the Company in the year
ended 31 December 2022 and up to the date of this report. The Board
continues to review its dividend policy and expects over time to
return cash to shareholders through a combination of dividends and
share buybacks as profitability allows.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2022
Consolidated
Notes Year ended Year ended
31 December 31 December
2022 2021
$ $
Revenue from fertiliser sales 4 8,625,474 4,860,679
Cost of goods sold 5 (2,866,298) (1,267,798)
------------- -------------
Gross profit 5,759,176 3,592,881
------------- -------------
Interest income 42,865 14,287
Other income 564 2,706
Profit on sale of motor vehicle 8,185 -
Foreign exchange gain (52,252) 112,031
Accounting and audit fees (205,341) (178,392)
Advertising fees (300,072) (316,054)
Consultants fees (105,693) (108,102)
Directors fees (771,774) (772,322)
Depreciation (139,176) (26,113)
Legal fees (32,712) (5,508)
Wages & Salaries (1,029,084) (490,052)
Interest expense (144,190) (8,588)
Public company costs (216,438) (216,009)
Rent and outgoings expenses - (750)
Travel expenses (620,282) (692,064)
Other expenses 6 (658,438) (1,157,761)
Impairment trade receivable
expense 9 (553,154) (600,817)
Impairment exploration expense 14 (509,604) (3,317,445)
------------- -------------
Profit / (loss) from continuing
operations before income tax 472,580 (4,168,072)
------------- -------------
Income tax expense 7 (274,783) -
------------- -------------
Profit / (loss) from continuing
operations after income tax 197,797 (4,168,072)
------------- -------------
Net profit / (loss) for the
year 197,797 (4,168,072)
------------- -------------
Other comprehensive income
/ (loss)
Item that may be reclassified subsequently
to profit or loss
Foreign currency translation 903,665 (543,680)
------------- -------------
Other comprehensive income
/ (loss) for the year 903,665 (543,680)
------------- -------------
Total comprehensive income
/ (loss) for the year 1,101,462 (4,711,752)
------------- -------------
Basic and diluted earnings
/ (loss) per share (cents per
share) 25 0.11 (2.24)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
Consolidated
Notes 31 December 31 December
2022 2021
$ $
CURRENT ASSETS
Cash and cash equivalents 8 2,723,509 1,708,001
Trade and other receivables 9 514,724 1,909,730
Inventories 10 195,882 63,129
------------- -------------
TOTAL CURRENT ASSETS 3,434,115 3,680,860
------------- -------------
NON-CURRENT ASSETS
Trade and other receivables 9 320,025 281,698
Plant and equipment 12 2,891,499 1,111,314
Mine properties 13 4,055,486 3,691,160
Deferred exploration and evaluation
expenditure 14 48,118 454,462
------------- -------------
TOTAL NON-CURRENT ASSETS 7,315,128 5,538,634
------------- -------------
TOTAL ASSETS 10,749,243 9,219,494
------------- -------------
CURRENT LIABILITIES
Trade and other payables 15 513,389 278,696
Borrowings 16 53,270 51,567
------------- -------------
TOTAL CURRENT LIABILITIES 566,659 330,263
------------- -------------
NON-CURRENT LIABILITIES
Provision for rehabilitation 17 276,435 74,983
Borrowings 16 192,407 201,968
------------- -------------
TOTAL NON-CURRENT LIABILITIES 468,842 276,951
------------- -------------
TOTAL LIABILITIES 1,035,501 607,214
------------- -------------
NET ASSETS 9,713,742 8,612,280
------------- -------------
EQUITY
Contributed equity 18 43,328,219 43,328,219
Reserves 19 962,411 58,746
Accumulated losses 20 (34,576,888) (34,774,685)
TOTAL EQUITY 9,713,742 8,612,280
------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
Foreign currency
Contributed Accumulated translation
equity losses reserve Option reserve Total
$ $ $ $ $
Balance as at 1 January 2022 43,328,219 (34,774,685) (3,482,302) 3,541,048 8,612,280
------------ ------------- ----------------- --------------- ------------
Total comprehensive loss for the
year
Profit for the year - 197,797 - - 197,797
Other comprehensive income - - 903,665 - 903,665
------------ ------------- ----------------- --------------- ------------
Total comprehensive income - 197,797 903,665 - 1,101,462
Transactions with owners in their
capacity as owners
Shares to be issued as part of - - - - -
acquisition
At 31 December 2022 43,328,219 (34,576,888) (2,578,637) 3,541,048 9,713,742
------------ ------------- ----------------- --------------- ------------
Balance as at 1 January 2021 43,048,343 (30,606,613) (2,938,622) 3,541,048 13,044,156
------------ ------------- ----------------- --------------- ------------
Total comprehensive loss for the
year
Loss for the year - (4,168,072) - - (4,168,072)
Other comprehensive loss - - (543,680) - (543,680)
------------ ------------- ----------------- --------------- ------------
Total comprehensive loss - (4,168,072) (543,680) - (4,711,752)
Transactions with owners in their
capacity as owners
Shares to be issued as part of
acquisition 279,876 - - - 279,876
At 31 December 2021 43,328,219 (34,774,685) (3,482,302) 3,541,048 8,612,280
------------ ------------- ----------------- --------------- ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2022
Consolidated
Notes Year ended Year ended
31 December 31 December
2022 2021
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 9,005,869 3,628,268
Payments to suppliers and employees (6,422,528) (4,454,154)
Interest (paid) / received (101,325) 5,699
------------- -------------
NET CASH PROVIDED/(USED) IN OPERATING
ACTIVITIES 8 2,482,016 (820,187)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of project - (174,119)
Purchase of plant and equipment (2,035,861) (332,217)
Proceeds from sale of motor vehicle 8,185 -
Payments for mine properties - (187,023)
Payments for exploration and evaluation
expenditure (40,147) (2,433)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (2,067,823) (695,792)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 16 1,274,816 253,535
Repayment of borrowings 16 (1,349,394) -
------------- -------------
NET CASH PROVIDED/(USED) BY FINANCING
ACTIVITIES (74,578) 253,535
------------- -------------
Net increase/(decrease) in cash held 339,615 (1,262,444)
Cash and cash equivalents at beginning
of year 1,708,001 2,992,727
Effect of exchange rate fluctuations
on cash held 675,893 (22,282)
------------- -------------
CASH AND CASH EQUIVALENTS AT OF
FINANCIAL YEAR 8 2,723,509 1,708,001
------------- -------------
NOTES TO THE FINANCIAL STATEMENTS AT AND FOR THE YEARED 31
DECEMBER 2022
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 2022 was authorised for
issue in accordance with a resolution of the Directors on 30 June
2023.
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 30.
(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 2022, the Directors have
reviewed all 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 2022. In the year ended 31 December 2022, the Directors
have reviewed all 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. There was no material
impact on the Group accounting policies.
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 2022. 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.
Where 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 against 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
overtime 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 2022, and the prior year to 31 December 2021.
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
25).
(v) Comparative figures
When required by Accounting Standards, comparative figures have
been adjusted to conform to changes in presentation for the current
financial year.
(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.
Provision for rehabilitation
The Group is responsible for rehabilitation related to
environmental recovery costs at the Arapua mine site. The Group
records these costs against production and is reflected in the cost
of goods sold mine operating costs. 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.
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 2022
Segment revenue - 8,625,474 8,625,474
Segment profit/(loss) before income
tax expense (1,322,466) 1,795,046 472,580
31 December 2022
Segment assets 639,017 10,110,226 10,749,243
------------ ----------- -------------
Segment liabilities 301,786 733,715 1,035,501
------------ ----------- -------------
Additions to non-current assets - 2,076,008 2,076,008
------------ ----------- -------------
Continuing operations
Australia Brazil Consolidated
$ $ $
31 December 2021
Segment revenue - 4,860,679 4,860,679
Segment loss before income tax expense (1,266,608) (2,901,464) (4,168,072)
31 December 2021
Segment assets 1,249,119 7,970,375 9,219,494
------------ ------------ -------------
Segment liabilities 58,833 548,381 607,214
------------ ------------ -------------
Additions to non-current assets - 975,659 975,659
------------ ------------ -------------
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
2022 2021
$ $
Fertiliser revenue 8,625,474 4,860,679
Total revenue 8,625,474 4,860,679
------------ ------------
NOTE 5: COST OF GOODS SOLD
31 December 31 December
2022 2021
$ $
Mine operating costs 2,005,008 723,417
Royalty expense 342,187 279,610
Rehabilitation expense/(reversal) (62,003) 15,028
Depreciation 226,824 132,925
Amortisation 354,282 116,818
------------ ------------
Total cost of goods sold 2,866,298 1,267,798
------------ ------------
NOTE 6: OTHER EXPENSES
31 December 31 December
2022 2021
$ $
Site administration expenses 263,469 637,968
Site office consumables 176,781 202,273
Brazilian social contribution taxes 100,950 28,961
Telephone and internet 52,213 5,103
Bank fees 37,525 12,632
Insurance 16,494 2,628
Other 11,006 268,196
------------ ------------
Total other expenses 658,438 1,157,761
------------ ------------
NOTE 7: INCOME TAX BENEFIT
31 December 31 December
2022 2021
$ $
Income Tax
(a) Income tax (expense) / benefit
Major component of tax (expense) / benefit
for the year:
Current tax (274,783) -
Deferred tax - -
(274,783) -
------------ ------------
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:
Profit/(loss) from continuing operations
before income tax expense/(benefit) 472,580 (4,168,072)
------------ ------------
Income tax expense/(benefit) calculated at
25% (2021: 26%) 118,145 (1,083,699)
Non-deductible expenses/(benefit) 156,638 -
Income tax benefit not brought to account - 1,083,699
Income tax expense/(benefit) 274,783 -
------------ ------------
The tax rate used in the above reconciliation is the corporate
tax rate of 25% payable by Australian corporate entities on taxable
profits under Australia tax law.
(c) Unused tax losses
Unused tax losses 17,805,255 19,009,380
------------ ------------
Potential tax benefit not recognised at 25%
(2021: 26%) 4,451,314 4,942,439
------------ ------------
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
2022 2021
Reconciliation of Cash and Cash Equivalents $ $
Cash comprises:
Cash at bank 2,723,509 1,708,001
2,723,509 1,708,001
------------ ------------
31 December 31 December
2022 2021
$ $
Reconciliation of operating profit/(loss)
after tax to the cash flows from operations
Profit/(loss) from ordinary activities after
tax 197,797 (4,168,072)
Non cash items
Depreciation charge 366,000 159,038
Amortisation charge 354,282 116,818
Rehabilitation (reversal)/charge (62,003) 15,028
Impairment of exploration and evaluation
expenditure 509,604 3,317,445
Impairment of trade receivable 553,154 600,817
Income taxes incurred 27,752 -
Profit on disposal of motor vehicle (8,185) -
Foreign exchange loss/(gain) 52,252 (112,031)
Other non-cash items 12,560 -
Change in assets and liabilities
(Increase) / Decrease in trade and other
receivables 175,411 (881,332)
(Increase) / Decrease in inventories (132,753) 57,990
Increase / (Decrease) in trade and other
payables and provisions 436,145 74,112
Net cash outflow from operating activities 2,482,016 (820,187)
------------ ------------
NOTE 9: TRADE AND OTHER RECEIVABLES
31 December 31 December
2022 2021
$ $
Current
Trade receivables from contracts with customers(1) 1,606,440 2,425,381
Expected credit loss (1,260,749) (600,817)
------------ ------------
345,691 1,824,564
Prepayment - 40,897
Cash Advances 161,762 27,098
GST receivable 7,271 6,430
Other - 10,741
514,724 1,909,730
------------ ------------
31 December 31 December
2022 2021
$ $
Non-current
Refundable security deposit 2,919 484
Recoverable taxes 317,106 281,214
320,025 281,698
------------ ------------
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) The Company recognised an impairment expense relating to the
trade debtors balance as at 31 December 2022 for the amount of
$553,154 (2021: $600,817) from third parties. In September 2020,
the Company instigated legal proceedings to recover the debt owed
by Agrocerrado Produtos Agricolas ("Agrocerrado"). 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. In February
2023, the Company received confirmation that in the execution
lawsuit against Agrocerrado, the Court rejected Agrocerrado's
motion to dismiss the execution.
The Company considers the amount to be fully recoverable and
continues to pursue recovery. Company has no control over the
timing of the judicial processes.
NOTE 10: INVENTORY
31 December 31 December
2022 2021
$ $
Raw Materials at cost 9,298 37,953
Finished goods at cost 186,584 25,176
Closing balance 195,882 63,129
------------ ------------
During the year, there was an impairment expense of $nil (2021:
$nil) 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 Equity Holding Equity Holding
of Incorporation 31 December 31 December
2022 2021
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%
BF Mineração Ltda Brazil 100% 100%
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
31 December 31 December
2022 2021
Plant and Equipment $ $
Cost 3,569,909 1,599,802
Accumulated depreciation and foreign exchange (860,796) (539,424)
------------ ------------
Net carrying amount 2,709,113 1,060,378
------------ ------------
Computer Equipment and Software
Cost 51,057 7,529
Accumulated depreciation and foreign exchange (8,010) (2,809)
------------ ------------
Net carrying amount 43,047 4,720
------------ ------------
Furniture, Fixtures and Fittings
Cost 21,415 9,767
Accumulated depreciation and foreign exchange (6,482) (5,543)
------------ ------------
Net carrying amount 14,933 4,224
------------ ------------
Motor Vehicles
Cost 197,340 72,939
Accumulated depreciation and foreign exchange (72,934) (30,947)
------------ ------------
Net carrying amount 124,406 41,992
------------ ------------
Total Plant and Equipment 2,891,499 1,111,314
------------ ------------
Movements in Plant and Equipment 31 December 31 December
2022 2021
$ $
Plant and Equipment
At beginning of the year 1,060,378 991,319
Effect of foreign exchange rate 165,309 (99,452)
Additions 1,837,518 314,459
Depreciation charge for the year (354,092) (145,948)
------------ ------------
2,709,113 1,060,378
------------ ------------
Computer Equipment and Software
At beginning of the year 4,720 3,875
Effect of foreign exchange rate 531 20
Additions 42,743 2,178
Depreciation charge for the year (4,947) (1,353)
43,047 4,720
------------ ------------
Furniture, Fixtures and Fittings
At beginning of the year 4,224 3,097
Effect of foreign exchange rate 300 (75)
Additions 10,663 2,483
Depreciation charge for the year (254) (1,281)
14,933 4,224
------------ ------------
Motor Vehicles
At beginning of the year 41,992 39,184
Effect of foreign exchange rate 7,707 167
Additions 144,937 13,097
Disposals (10,874) -
Depreciation charge for the year (59,356) (10,456)
124,406 41,992
------------ ------------
Total Plant and Equipment 2,891,499 1,111,314
------------ ------------
NOTE 13: MINE PROPERTIES
31 December 31 December
2022 2021
$ $
At beginning of the period 3,691,160 4,188,916
Additions - 187,023
Rehabilitation obligation(1) 259,928 -
Amortisation change for the period (354,282) (116,818)
Net exchange difference on translation 458,680 (567,961)
Balance at the end of the period 4,055,486 3,691,160
-------------- --------------
(1) During the year ended 31 December 2022, the Company
re-established its rehabilitation obligations based a revised mine
closure plan conducted by an independent third-party
consultant.
NOTE 14: DEFERRED EXPLORATION AND EVALUATION EXPITURE
31 December 31 December
2022 2021
$ $
At beginning of the year 454,462 3,317,445
Acquisition of Miriri Phosphate Project - 453,986
Exploration expenditure during the year 40,147 2,433
Impairment loss (509,604) (3,317,445)
Net exchange differences on translation 63,113 (1,957)
Total exploration and evaluation 48,118 454,462
------------ ------------
The impairment loss for 31 December 2022 is in respect to
expenditure on the Miriri Project. The Company made the decision
not to proceed with the Project because both the geological and
economic merits did not reach Harvest's minimum investment
criteria.
The impairment loss for 31 December 2021 is in respect to
expenditure on the Sergi and Mandacaru Projects. The reason the
Company has elected to write-off the value of these assets is
because given the progress being made at Arapua and the Company's
expectations that near term initiatives will focus on short-term
cash generative assets, it is not appropriate from a financial
audit perspective to maintain a value attributable to the Sergi and
Mandacaru projects given the Company has no expectation of a return
from these investments in the short term. The Company will continue
to hold these assets and will regularly review a range of factors,
including the Company's financial position, market conditions and
so on in determining whether to progress exploration activity
further.
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
2022 2021
$ $
Trade and Other Payables
Trade payables 242,706 115,298
Accruals 176,895 148,052
Tax Payable 93,788 15,346
513,389 278,696
------------ ------------
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: BORROWINGS
31 December 31 December
2022 2021
$ $
Current
Secured Loans payable 53,270 51,566
53,270 51,566
------------ ------------
Non-current
Secured Loans payable 192,407 201,968
192,407 201,968
-------- --------
On 28 September 2021, the Group obtained a secured debt facility
with Banco Santander with a five-year term totalling $R3,000,000.
The debt is secured against the solar power facility at the Arapua
Fertiliser Project. As at 31 December 2022, the Group recorded
$245,677 (2021: $253,535) of the secured loan as a payable.
Reconciliation in liabilities from financing activities:
Bank loan Total
$ $
1 January 2020 - -
Loan drawdown 253,535 253,535
------------ ------------
31 December 2021 253,535 253,535
------------ ------------
Loan drawdowns 1,274,816 1,274,816
Repayments (1,349,394) (1,349,394)
Interest expense 144,190 144,190
Effect of exchange rate (77,470) (77,470)
------------ ------------
31 December 2022 245,677 245,677
------------ ------------
NOTE 17: PROVISIONS
31 December 31 December
2022 2021
$ $
Provision for rehabilitation 276,435 74,983
------------ ------------
276,435 74,983
------------ ------------
The provision for rehabilitation relates to environmental
recovery costs at the Arapua mine site. The Group records these
costs against production and is reflected in the cost of goods sold
mine operating costs (see note 5).
NOTE 18: CONTRIBUTED EQUITY
31 December 31 December
2022 2021
$ $
(a) Contributed equity
Ordinary shares fully paid 43,328,219 43,328,219
------------ ------------
31 December 2022 31 December 2021
(b) Movements in shares on issue No. of $ No. of $
shares shares
At beginning of the year 185,835,884 43,328,219 185,835,884 43,048,343
Shares to be issued as part of
an acquisition(1) 3,333,333 - - 279,876
Share issue costs - - - -
------------ ----------- ------------ ------------
At ending of the year 189,169,217 43,328,219 185,835,884 43,328,219
------------ ----------- ------------ ------------
(1) On 29 November 2021, the Company entered into an agreement
to acquire 100% of the ordinary shares of BF Mineração Ltda for
cash and shares. The shares were settled and issued on 8 July 2022,
but the fair value was recorded at the date of the transaction in
the prior financial year.
(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 $9,713,742 at 31 December 2022 (31
December 2021: $8,612,280). 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 26 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.
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 19: RESERVES
31 December 31 December
2022 2021
$ $
Reserves
Option reserve 3,541,048 3,541,048
Foreign currency translation reserve (2,578,637) (3,482,302)
------------ ------------
962,411 58,746
------------ ------------
31 December 31 December
Movements in Reserves 2022 2021
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 (3,482,302) (2,938,622)
Foreign currency translation 903,665 (543,680)
------------ ------------
(2,578,637) (3,482,302)
------------ ------------
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 20: ACCUMULATED LOSSES
31 December 31 December
2022 2021
$ $
Movements in accumulated losses were as
follows:
At beginning of the year (34,774,685) (30,606,613)
Profit/(loss) for the year 197,797 (4,168,072)
-------------- --------------
At 31 December (34,576,888) (34,774,685)
-------------- --------------
NOTE 21: EXPITURE COMMITMENTS
31 December 31 December
2022 2021
$ $
Within one year - -
After one year but not longer than five years - -
After five years 6,948,228 6,189,177
------------ ------------
6,948,228 6,189,177
------------ ------------
These obligations have arisen pursuant to the Sergi acquisition
agreement. The amounts are only due if the development of the Sergi
project commences and reaches material milestones. As disclosed in
Note 14, the Company has elected to write off the value of the
Sergi project.
NOTE 22: AUDITOR'S REMUNERATION
31 December 31 December
2022 2021
$ $
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 47,500 48,500
------------ ------------
NOTE 23: SUBSEQUENT EVENTS
There have been no significant events subsequent to 31 December
2022.
NOTE 24: 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 $nil (31 December 2021:
$22,457). $nil (31 December 2021: $nil) 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 $237,225 (31 December 2021: $272,663). $nil (31 December
2021: $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 $186,000 (31 December 2021: $202,324).
$nil (31 December 2021: $nil) 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 25: EARNINGS/(LOSS) PER SHARE
31 December 31 December
2022 2021
$ $
Earnings/(loss) used in calculating basic
and dilutive EPS 197,797 (4,168,072)
------------ ------------
Number of Shares
Weighted average number of ordinary shares
used in calculating basic earnings/(loss)
per share: 188,064,194 185,835,884
------------ ------------
Effect of dilution:
Share options - -
Adjusted weighted average number of ordinary
shares used in calculating diluted earnings/(loss)
per share: 188,064,194 185,835,884
------------ ------------
Earnings/(loss) per share - basic and diluted
(in cents per share) 0.11 (2.24)
============ ============
NOTE 26: 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.
Below is a maturity analysis of undiscounted financial
liabilities:
2022 Weighted Carrying Less 1 year More Total
average amount than to 5 years than 5 Contractual
interest $ 1 year $ years cash flows
rate $ $ $
%
Trade and other
payables - 513,389 513,389 - - 513,389
Borrowings - fixed
rate 15.12% 245,677 53,270 192,407 - 245,677
------------ ------------ ------------------ ------------------ -------------
At ending of the
year 759,066 566,659 192,407 - 759,066
------------ ------------ ------------------ ------------------ -------------
2021 Weighted Carrying Less 1 year More Total
average amount than to 5 years than 5 Contractual
interest $ 1 year $ years cash flows
rate $ $ $
%
Trade and other
payables - 278,696 278,696 - - 278,696
Borrowings - fixed
rate 15.12% 253,534 51,566 201,968 - 253,534
------------ ------------ ------------------ ------------------ -------------
At ending of the
year 532,230 330,262 201,968 - 532,230
------------ ------------ ------------------ ------------------ -------------
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other
payables and borrowings. As at 31 December 2022 and 31 December
2021 all trade and other payables are contractually matured within
60 days and so the carrying value equals the contractual cash
flows. The fair value of borrowings are based on nominal amounts
within the agreements and no assumptions have been used to
determine the present value of the future payments based on a
discount rate as the amounts are deemed insignificant. The
principal payments are contractually required in Brazilian
Reals.
(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 2022 are GBP 128,146 (A$227,564) and USD
249,253 (A$365,667) (2021: GBP 631,273 (A$1,174,855) and USD 9,260
(A$12,753)).
Foreign currency sensitivity analysis
A 10% increase and decrease in the GBP and USD against the
Australian dollar would lead to a $59,323 increase / decrease in
profit (2021: $118,761 increase / decrease in profit).
(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
2022 2021
$ $
Cash and cash equivalents 2,723,509 1,708,001
Borrowings (245,677) (253,534)
------------ ------------
Net cash and cash equivalents 2,477,832 1,454,467
------------ ------------
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
2022 2021 2022 2021
--------------------------
$ $ $ $
-------------------------- -------------- -------------- ------------ ------------
Increase 100 basis
points 24,778 14,545 24,778 14,545
Decrease 100 basis
points (24,778) (14,545) (24,778) (14,545)
-------------------------- -------------- -------------- ------------ ------------
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 2021 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 2022, 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 27: CONTINGENT LIABILITIES
There are no known contingent liabilities as at 31 December 2022
(31 December 2021: $nil).
NOTE 28: 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 2022.
The balance of the franking account is $nil as at 31 December
2022 (31 December 2021: $nil).
NOTE 29: 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
2022 2021
$ $
Short term employee benefits 786,488 777,607
Post-employment benefits - -
Share based payments - -
Total remuneration 786,488 777,607
------------ ------------
NOTE 30: PARENT ENTITY INFORMATION
The following details information related to the parent entity,
Harvest Minerals Limited, at 31 December 2022. The information
presented here has been prepared using consistent accounting
policies as presented in note 2.
Parent
31 December 31 December
2022 2021
$ $
Current assets 639,017 1,249,119
Non current assets 9,397,478 7,442,960
------------- ---------------
Total Assets 10,036,495 8,692,079
------------- ---------------
Current liabilities 301,786 58,833
Non current liabilities 20,967 20,966
------------- ---------------
Total Liabilities 322,753 79,799
------------- ---------------
Net Assets 9,713,742 8,612,280
------------- ---------------
Issued capital 43,328,219 43,328,219
Reserves 3,541,048 3,541,048
Accumulated losses (37,155,525) (38,256,987)
------------- ---------------
Total Equity 9,713,742 8,612,280
------------- ---------------
Parent
31 December 31 December
2022 2021
$ $
Loss for the year (1,101,462) (4,711,752)
------------- ---------------
Total comprehensive loss for the year (1,101,462) (4,711,752)
------------- ---------------
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).
**ENDS**
For further information, please visit www.harvestminerals.net or
contact:
Harvest Minerals Limited Brian McMaster (Chairman) Tel: +44 (0) 203 940
6625
------------------------- -------------------------- -------------------------------
Strand Hanson Limited Ritchie Balmer Tel: +44 (0) 20 7409
Nominated & Financial James Spinney 3494
Adviser
------------------------- -------------------------- -------------------------------
Tavira Securities Jonathan Evans Tel: +44 (0) 20 3192
Broker 1733
------------------------- -------------------------- -------------------------------
St Brides Partners Ana Ribeiro harvest@stbridespartners.co.uk
Ltd Isabel de Salis
Financial PR
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