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Berkeley Energia Ltd

Berkeley Energia - Annual Report to Shareholders

RNS Number : 3407C
Berkeley Energia Limited
28 September 2018
 

BERKELEY ENERGIA LIMITED

2018

ANNUAL REPORT | INFORME ANUAL

 

ABN 40 052 468 569

CORPORATE DIRECTORY | DIRECTORIO CORPORATIVO

 

Berkeley Minera Espana, S.A.

Carretera SA-322, Km 30

37495 Retortillo

Salamanca

Spain

Spain

Australia

Spain

United Kingdom

Australia

Spain

Australia


Share Registry

Spain

IBERCLEAR

Plaza de la Lealtad, 1, 28014 Madrid

Spain

 

United Kingdom

Computershare Investor Services PLC

The Pavilions, Bridgewater Road

Bristol BS99 6ZZ

Telephone:     +44 370 702 0000

Australia
Computershare Investor Services Pty Ltd

Level 11, 172 St Georges Terrace

 


CONTENTS | CONTENIDO




Directors' Report


Consolidated Statement of Profit or Loss and Other Comprehensive Income


Consolidated Statement of Financial Position


Consolidated Statement of Changes in Equity


Consolidated Statement of Cash Flows


The following sections are available in the full version of the 2018 Annual Report on the Company's website at www.berkeleyenergia.com: 


Notes to and forming part of the Financial Statements


Directors' Declaration


Auditor's Independence Declaration


Independent Auditor's Report


Corporate Governance


Mineral Resources and Ore Reserves Statement


ASX Additional Information


 

The Company also advises that an Appendix 4G (Key to Disclosures: Corporate Governance Council Principles and Recommendations) and 2018 Corporate Governance Statement have been released today and are also available on the Company's website.

 

DIRECTORS' REPORT

30 JUNE 2018

 

The Directors of Berkeley Energia Limited submit their report on the Consolidated Entity consisting of Berkeley Energia Limited ('Company' or 'Berkeley' or 'Parent') and the entities it controlled at the end of, or during, the year ended 30 June 2018 ('Consolidated Entity' or 'Group').

OPERATING AND FINANCIAL REVIEW

 

Highlights

 

Berkeley is a high impact, clean energy company focused on bringing its wholly owned Salamanca mine into production.

 

During and subsequent to the end of the financial year, the Company successfully listed on both the Main Board of the London Stock Exchange and the Madrid, Barcelona, Bilbao and Valencia Stock Exchanges.

 

The Company is now the only mining company listed in Spain, the country that was the birth place of mining giant, Rio Tinto.

 

Both listings, London and Spain, represent a major step forward for the Company as it progresses with the Salamanca mine, providing economic stimulus and creating badly needed jobs in a region with some of the highest levels of unemployment in Europe.

 

The mine continues to receive strong support among key stakeholders in Spain, reflecting the growing awareness of the benefits this potential €250 million investment will bring to a region that has had over 120,000 people leave it in the last five years.

 

The Company's focus this year has been on conducting a detailed project review, aimed at ensuring that the optimal capital and operating costs are achieved. This was finalised subsequent to the end of the year and a further €9 million of potential capital cost savings have been identified.

 

The Company, which already sits at the bottom of the cost curve, will continue to identify any further areas for potential cost savings as it continues towards construction. 

 

The arrival of the forecast supply demand deficit in the uranium market could be hastened as further production cuts have been announced whilst demand continues to grow.

 

There are currently 59 reactors under construction globally, a 25 year high in nuclear growth. An additional 170 are planned over the next decade and over 350 proposed by 2030.

 

The Salamanca mine is expected to reach production as the market enters the long-awaited supply/demand deficit that industry experts have called both fundamental and unavoidable.

Highlights for and subsequent to the year include:

 

·      Listed on the Main Board of the London Stock Exchange and the Madrid, Barcelona, Bilbao and Valencia Stock Exchanges

o   A key step forward for the Company, which reflects its size and maturity and provides options for future growth potential;

o   The Company believes both listings will provide increased liquidity for its investor base and provide access to significant new pools of capital, both in the UK and across Europe; and

o   The listings are expected to deliver a higher profile for the Company in European markets, including local Spanish ownership of the Company's shares.

 

·      Announced further cost savings:

o   Identified further opportunities to reduce the initial capital expenditure required to bring the mine into production by a potential ~€9 Million; and

o   Savings will be achieved through optimisation of plant capacities, outsourcing of peripheral infrastructure and reducing initial throughput for production from the Retortillo deposit.

 

·      Completed a strategic investment of up to US$120m with the Oman sovereign wealth fund:

o   Shareholders overwhelmingly voted to approve the strategic investment and the Company received the initial US$65 million tranche of funding in November 2017 which funds the capital costs for production; and

o   Mr Deepankar Panigrahi, Investment Manager in the Private Equity division of the fund joined the Board as a Non-Executive Director.

 

·      Strong support from key stakeholders:

o   Over 200 of Salamanca's business community came together in support for the Company's potential €250 million investment in the region; and

o   The government of Castilla y Leon demonstrated its continued support for the mine in June when it rejected a resolution from opposition groups requesting that the Company's €250 million investment be halted.

 

·      Uranium market:

o   Further production cuts during the year and more expected going forward as uranium supply continues to move into deficit;

o   Demand continues to grow across the world as governments and NGOs are increasingly advocating the inclusion of nuclear in their clean energy mix, the UK Government is committing £200 million to the development of the nuclear power industry;

o   The Company has 2.75 million pounds of U3O8 under contract for the first six years, with a further 1.25 million pounds of optional volume, at an average price above US$42, compared with a spot price of $22 per pound; and

o   The Company will continue to progressively build its offtake book and has granted the Oman sovereign wealth fund the right to match any future long-term offtake transactions.

·      Exploration:

o   Exploration focused on identifying additional targets with similar characteristics to Zona 7 continued during the year; and

o   The anomalies found in the soil sampling programme carried out during the year were confirmed and a drill programme targeting the main anomalies is now being designed.

 

The Company is in an extremely strong financial position with A$101 million in cash.

Operations

Listed on Main Board of London Stock Exchange and the Madrid, Barcelona, Bilbao and Valencia Stock Exchanges

During the year the Company announced its admission to the London Stock Exchange for trading on its Main Market and simultaneously delisted from AIM.

The Prospectus was duly passported across to Spain and the Company listed on the Madrid, Barcelona, Bilbao and Valencia Stock Exchanges on the 18 July 2018.

Given the geographic location of the Salamanca mine and the size and maturity of the Company and its operations, listing on both the Main Board of the London Stock Exchange and the Spanish Stock Exchanges was considered appropriate to provide the Company with options for its future growth potential.

The Company believes that the listings will provide increased liquidity for its investor base and access to significant new pools of capital including large Spanish institutional shareholders, mutual funds and pension funds as well as retail shareholders in Europe, many of which could not be accessed previously.

Furthermore, the listings are expected to deliver a higher profile for the Company in European markets, including for local Spanish ownership of the Company's shares which is considered an important strategic consideration.

The Company is now the only mining company listed on the Spanish Stock Exchanges. At the end of the first day of trading the Company's shares closed up 50%, the best debut on the Madrid Stock Exchange for 18 years.

 

Both listings represent a major step forward for the Company as it continues with development at the Salamanca mine.

 

Berkeley Energia completed strategic investment of up to US$120m with Oman sovereign wealth fund

 

During the year, shareholders overwhelmingly voted to approve the strategic investment agreement with the Oman sovereign wealth fund ('SGRF').

 

All Conditions Precedent were met and the Company received the initial US$65 million tranche of funding in November 2017.

 

The investment comprises an interest-free and unsecured convertible loan note of US$65 million which can be converted into ordinary shares at 50 pence per share upon commissioning of the mine, as well as an options package exercisable at an average price of 85 pence per share contributing an additional US$55 million if exercised.

Detailed development identified further potential cost savings

With funding in place, a cost review undertaken by the Company has identified a number of opportunities to reduce the initial capital expenditure required to bring the mine into production.

Potential savings of up to €9 Million (based on the Front-End Engineering and Design ('FEED') estimate as announced on 6 July 2017) arise from:

 

·     optimisation of plant capacities within the overall process design,

·     outsourcing of peripheral infrastructure, and

·     reducing initial throughput for production from the Retortillo deposit and right-sizing of the associated plant.

The proposed modifications remain consistent with the future expansion of production from Zona 7 and Alameda.

The initiatives proposed will be taken forward to detailed engineering in parallel with the commencement of planned on-site construction activity, including site preparation, bulk earthworks and initial civil construction works.

Continued support from key stakeholders

Berkeley is one of the largest investors in the Castilla y León region, which has some of the highest levels of unemployment in the EU, especially amongst young people. The local villages of Retortillo and Villavieja de Yeltes have seen their population decline by 30% in the last 20 years.

The government of the region demonstrated its continued support for the Salamanca mine in June when it rejected a resolution from opposition groups requesting that the Company's potential €250 million investment be halted. 

This decision reinforces the support the Company received in June when over 200 members of Salamanca's business community came together in support for the Company's investment, which will create 2,500 jobs in a region which has had over 120,000 people leave it over the past five years.

Representatives of local businesses, contractors, suppliers and the heads of local business associations met in Salamanca and discussed how they could help support the mine development.

Employment and training

The project is located in an area that has suffered badly from intergenerational unemployment and rural desertification.

To date, the Company has received a total of 22,740 job applications. Over 7,300 of these came from residents of the Salamanca region alone; with 400 of those coming from villages surrounding the project and of those, over 115 from Villavieja alone.

The University of Salamanca has estimated that for this type of business there will be a multiplier factor of 5.1 indirect jobs for every direct job created, resulting in over 2,500 direct and indirect jobs being created as a consequence of the Company's investment in the area.

To date, over 120 locals have attended courses organised by the Company and over 25% of residents from the local area have applied for jobs. The Company currently has a work force of nearly 70 people and over a quarter of these have been recruited from towns in the immediate vicinity.

 

Training programmes, which have been historically well attended and oversubscribed, will continue to run throughout the year ensuring that sufficient people from the local communities are qualified for jobs created during the construction and mining phases.

Commitment to the community

The Company has invested more than €70 million developing the Salamanca mine over the past decade and plans to invest an additional €250 million over the life of the project.

The Company has signed Cooperation Agreements with the highly supportive local municipalities, demonstrating its commitment to fostering positive relationships with these communities.

To date, through these agreements, the Company has provided Wifi networks for local villages, built play areas for children, repaired sewage water plants, upgraded sports facilities, and sponsored various sporting events and local festivals.

The Company has worked tirelessly over the past decade to develop positive and mutually beneficial relationships with the local communities and will continue to do so as construction ramps up. 

 

The Company's extensive community efforts bore fruit recently when the local football team it sponsors gained promotion to the Spanish second division.

Committed to the highest environmental standards

 

The Salamanca mine is being developed to the highest international standards and the Company's commitment to the environment remains a priority. It holds certificates in Sustainable Mining and Environmental Excellence which were awarded by AENOR, an independent Spanish government agency. The Company was re-awarded both certificates following a consultation process with the agency.

The mine has been designed according to the very latest thinking on sustainable mining. The extraction and treatment areas will be continuously rehabilitated as operations progress and with minimum disturbance during operations. Once operations are complete, all areas utilised by the Company will be fully restored to an improved agricultural state.

As part of the Environmental Licence and the Environmental Measures Plan over 30,000 young oak trees will be planted over an area of 75 to 100 hectares. The first 20,000 of these will be planted in the nearby municipality of Vitigudino over an area of more than 500 hectares currently used by cattle farmers. 

Strong uranium market fundamentals

The Salamanca mine is expected to reach production as the market enters a supply/demand deficit that industry experts have called both fundamental and unavoidable.

US and EU utilities looking to re-contract will be competing with Chinese and Japanese reactor demand, which may lead to higher spot and term contract prices.

These utilities, which represent 50% of global demand, have 665Mlbs of re-contracting requirement by 2027 as high priced 2005-2007 contracts run off; while 59 reactors are currently under construction globally, a 25 year high in nuclear growth. An additional 170 planned over the next decade and over 350 proposed by 2030.

On the supply side, the top two producers in the world Kazatomprom and Cameco, are taking a meaningful amount of production out of the market. Kazatomprom will reduce production by 20% over three years - equivalent to 25mlbs.

Meanwhile Cameco's total production in 2018 is expected to fall to 9.2mlbs while their delivery commitment remains at 33mlbs. The Company believes that there will be likely buyers in the spot market in order to make up some of the shortfall.

Further production cuts were announced during the year, with Paladin Energy announcing in May that it's Langer Heinrich mine in Namibia would be placed on care and maintenance.

The uranium spot price has risen lately to US$27.35 per pound.

Offtake programme and notable increase in public tender activity

The Company currently has 2.75 million pounds of U3O8 concentrate under long term contracts over the first six years of production. Potential exists to increase annual contracted volumes further as well as extend the contracts by a total of 1.25 million pounds.

The Company has maintained its preference to combine fixed and market related pricing across its contracts in order to secure positive margins in the early years of production whilst ensuring the Company remains exposed to potentially higher prices in the future.

Across the portfolio, the average fixed price per pound of contracted and optional volumes is above US$42 per pound. This compares favourably with the current spot price of around US$27.35 per pound.

The investment agreement signed with the Oman sovereign wealth fund grants the fund the right to match future long term uranium offtake transactions. This right to match is subject to an annual cap (on a rolling 12-month basis) which cannot exceed the greater of 1 million pounds of U3O8 concentrate per annum or 20% of annual production.

The Company intends to increase its offtaking activity this year once full construction of the mine is underway and will participate in public and private offtake opportunities with global utilities, reporting regularly on progress.

Exploration programme expanded targeting Zona 7 style deposits 

The soil sampling programme continued throughout the year, focusing on identifying additional targets with similar characteristics to the Zona 7 and Retortillo deposits.

The process involves developing a fingerprint of the Zona 7 discovery (where a low radiometric anomaly existed) and the Retortillo deposit and looking for repetitions of these unique signatures in other areas of interest and then matching these with co-incident radon and geochemical anomalies and finally placed in a geological and structural setting.

During the year, the anomalies found in the soil sampling programme carried out at Salamanca II in the March 2018 quarter were confirmed. As with previous soil sampling campaigns, anomalies were detected by applying geostatistical data analysis to the Ionic Leach™ results, a method which allows for very high levels of detection of uranium and other economic minerals. This was supported by radiometric surveying and radon ground concentration measures.

The radon gas ground concentration surveying was particularly successful and was able to detect emanations from uranium orebodies more than 150 metres deep. After reviewing the latest ground radiometric campaigns, some anomalies detected remain open. Therefore, prospecting areas have been increased to test for extensions of these anomalies in Salamanca II region. A drill programme targeting the main anomalies is now being designed.

The Company is focused on finalising the ground radiometric and radon concentration surveying, which will feed in to the design of the drill programme to ensure the areas with the highest exploration potential are being targeted.

 

Corporate

 

Appointment of SGRF Nominee Director

Mr Deepankar Panigrahi, Investment Manager in the Private Equity division of SGRF joined the Board as a Non-Executive Director on 30 November 2017. 

Mr Panigrahi has extensive experience across a variety of sectors and geographies covering all stages of the private equity process, including post investment management. Mr Panigrahi holds an Undergraduate and Master's degree in Economics with Distinction and Honours from the University of Michigan followed by an MBA from Cambridge University.

Results of Operations

The Consolidated Entity's net loss after tax for the year ended 30 June 2018 was $4,748,000 (2017: $16,050,000). Significant items contributing to the year end loss and substantial differences from the previous year include the following:

(i)         Exploration and evaluation expenses of $12,040,000 (2017: $11,045,000), which is attributable to the Group's accounting policy of expensing exploration and evaluation expenditure incurred subsequent to the acquisition of the rights to explore and up to the successful completion of definitive feasibility studies and permitting for each separate area of interest. The increased exploration and evaluation expenditure for the year ended 30 June 2018 reflects additional activities undertaken at site during the year.

(ii)        Business development expenses of $1,989,000 (2017: $2,697,000) which includes the Groups investor relations activities including but not limited to public relations costs, marketing and digital marketing, conference fees, travel costs, consultant fees, broker fees and stock exchange admission costs. The decrease in costs is predominantly due to the Company's focus on its EU listings during the year which has been recognised separately as discussed below.

(iii)       Non-cash share-based payments expense of $545,000 (2017: $1,020,000) was recognised in respect of incentive securities granted to directors, employees and key consultants. The Company's policy is to expense the incentive securities over the vesting period (which for Performance Rights is generally the life of the security). The decrease in this expense is a direct result of less incentive securities on issue.

(iv)       Non-cash fair value gain of $15,881,000 (2017: nil) of the convertible note and unlisted options issued to SGRF ('SGRF Options'). These financial liabilities increase or decrease in value in correlation with the Company's share price. As the convertible note and SGRF Options convert into shares, the liabilities will be reclassified to equity and will require no cash settlement by the Company.

 

Commercially, the intentions of both SGRF and the Company prior to completing the convertible note transaction was to enter into an equity arrangement. The Company has however complied with the accounting standards and accounted for the convertible note as a financial liability.

 

Under the ASX Listing Rules, the convertible note and SGRF Options are defined as equity securities.

 

Due to the conversion terms of the convertible note leading to the issuance of a variable number of ordinary shares in the Company in return for conversion of the convertible note, the Company is required under the accounting standards to account for the convertible note as a current financial liability at fair value through profit and loss, despite the Company having no obligation to extinguish the convertible note using its cash resources.

The Group also incurred one off costs to issue the convertible note and SGRF Options of $2,697,000.

(v)        One off listing expenses of $777,000 (2017: nil) for the Company's successful listing on the Main board of the London Stock Exchange and the Spanish Stock Exchanges.

(vi)       Recognition of interest income of $1,034,000 (2017: $464,000). The large increase in interest income reflects the larger cash position of the Group during the year.

Financial Position

At 30 June 2018, the Group is in an extremely good financial position with cash reserves of $100,935,000.

The Group had net assets of $46,780,000 at 30 June 2018 (2017: $48,467,000), a decrease of 3% compared with the previous year. This decrease is consistent with the higher cash balance offset by the recognition of the non-cash financial liabilities at fair value through profit and loss (the convertible note and SGRF Options).

Business Strategies and Prospects for Future Financial Years

Berkeley's strategic objective is to create long-term shareholder value by becoming a uranium producer in the near term, through the development and construction of the Salamanca mine.

To achieve its strategic objective, the Company currently has the following business strategies and prospects:

·      Progress with seeking further offtake partners. The Company has maintained its preference to combine fixed and market related pricing across its contracts in order to secure positive margins in the early years of production whilst ensuring the Company remains exposed to potentially higher prices in the future;

·      Advance the Salamanca mine through the development phase into the main construction phase and then into production;

·      Continue to progress permitting and maintain the required licences to develop and operate at the Salamanca mine;

·      Continue to explore the Company's portfolio of tenements in Spain targeting further Zona 7 style deposits aimed at making new discoveries and converting some of the 29.6 million pounds of Inferred resources into the mine schedule with the objective of maintaining annual production at over 4 million pounds a year on an ongoing basis; and

·      Assess other mine development opportunities at the Salamanca mine.

As with any other mining projects, all of these activities are inherently risky and the Board is unable to provide certainty that any or all of these activities will be able to be achieved.  The material business risks faced by the Company that are likely to have an effect on the Company's future prospects, and how the Company manages these risks, include but are not limited to the following:

Mining licences and government approvals required - With the mining licence, environmental licence and the authorisation of exceptional land use already obtained at the Salamanca mine, the next two major approvals for the mine includes the Urbanism Licence by the relevant municipal authority and the Construction Authorisation by the Ministry of Ecological Transition for the treatment plant as a radioactive facility. The Company is currently seeking an express resolution from the local municipality on the award of the Urbanism Licence. As the municipality is currently without a general secretary, who normally approves this kind of licence, the Urbanism Licence has been forwarded to the Diputación de Salamanca ('Diputación') for their review and comments. Subsequent to the end of the year, the Diputación issued a notice to the municipality recommending that the Urbanism Licence should not be awarded until two outstanding items regarding the licence are resolved, which the Company is working towards to resolve. The timing of the award of the Urbanism Licence continues to remain uncertain, is outside of the Company's control, and is unlikely to be received imminently. As a result, the construction and commissioning phases of the Salamanca mine are expected to commence late in 2018 and 2019 respectively, as previously advised, subject to the award of the Urbanism Licence and all other relevant permits and approvals.

Various appeals have also been made against a number of permits and approvals discussed above, as allowed for under Spanish law, and the Company expects that further appeals will be made against these and future authorisations and approvals in the ordinary course of events. Whilst none of these appeals have been finally determined, no precautionary or interim measures have been granted in relation to the appeals regarding the award of licences and authorisations at the Salamanca mine to date. However, the successful development of the Salamanca mine will be dependent on the granting of all permits and licences necessary for the construction and production phases, in particular the award of the Urbanism Licence and Construction Authorisation which will allow for the construction of the plant as a radioactive facility with both approvals currently outstanding.

The Company has received more than 120 favourable reports and permits for the development of the mine to date, however with any development project, there is no guarantee that the Company will be successful in applying for and maintaining all required permits and licences to complete construction and subsequently enter into production. If the required permits and licences are not obtained, then this could have a material adverse effect on the Group's financial performance, which may lead to a reduction in the carrying value of assets and may materially jeopardise the viability of the Salamanca mine and the price of its Ordinary Shares.

The Company's activities are subject to Government regulations and approvals - Any material adverse changes in government policies or legislation of Spain that affect uranium mining, processing, development and mineral exploration activities, income tax laws, royalty regulations, government subsidies and environmental issues may affect the viability and profitability of the Salamanca mine. No assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could adversely impact the Group's mineral properties;

Additional requirements for capital - The issue of the US$65 million Convertible Note and SGRF Options to SGRF has provided the Company the funds to complete the upfront capital items at the Salamanca mine, subject to the SGRF Options being exercised early. Due to the delays in the receipt of final permits as discussed above (the receipt of express resolution on the Urbanism Licence and the Construction Authorisation) the Company has been funding its ongoing working capital requirements which has reduced the amount available to fund full construction. This position will continue for so long as the final permits remain outstanding, unless the SGRF Options are exercised early. As a result of these delays, the Company expects that following receipt of the permits and in order to fully fund the full construction of the Salamanca mine into steady state production, it will be required to raise additional funding in order to meet the capital costs of the mine development and to fund working capital until positive cash flows are achieved. As a result, it is expected that the Salamanca mine will not reach steady state production prior to 2020 and that fully funding full construction and reaching steady state production will be dependent on the SGRF Options being exercised or alternative funding being secured;

The Company may be adversely affected by fluctuations in commodity prices - The price of uranium has fluctuated widely since the Fukushima nuclear power plant disaster in March 2011 and is affected by further numerous factors beyond the control of the Company. Future production, if any, from the Salamanca mine will be dependent upon the price of uranium being adequate to make these properties economic. The Company currently does not engage in any hedging or derivative transactions to manage commodity price risk, but as the Company's Project advances, this policy will be reviewed periodically;

The Group's projects are not yet in production - As a result of the substantial expenditures involved in mine development projects, mine developments are prone to material cost overruns versus budget. The capital expenditures and time required to develop new mines are considerable and changes in cost or construction schedules can significantly increase both the time and capital required to build the mine; and

Global financial conditions may adversely affect the Company's growth and profitability - Many industries, including the mineral resource industry, are impacted by these market conditions. Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and energy markets, and a lack of market liquidity. A slowdown in the financial markets or other economic conditions may adversely affect the Company's growth and ability to finance its activities.

DIRECTORS

The names of Directors in office at any time during the financial year or since the end of the financial year are:

 

Mr Ian Middlemas                   Chairman

Mr Paul Atherley                      Managing Director and CEO

Mr Deepankar Panigrahi      Non-Executive Director (appointed 30 November 2017)

Mr Nigel Jones                        Non-Executive Director

Mr Adam Parker                      Non-Executive Director

Mr Robert Behets                   Non-Executive Director

 

Unless otherwise disclosed, Directors held their office from 1 July 2017 until the date of this report.

CURRENT DIRECTORS AND OFFICERS

Ian Middlemas 

Chairman

Qualifications - B.Com, CA

Mr Middlemas is a Chartered Accountant, a member of the Financial Services Institute of Australasia and holds a Bachelor of Commerce degree.  He worked for a large international Chartered Accounting firm before joining the Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive corporate and management experience, and is currently a director with a number of publicly listed companies in the resources sector. 

Mr Middlemas was appointed a Director and Chairman of Berkeley Energia Limited on 27 April 2012. During the three year period to the end of the financial year, Mr Middlemas has held directorships in Constellation Resources Limited (Novemberr 2017 - present), Apollo Minerals Limited (July 2016 - present), Cradle Resources Limited (May 2016 - present), Paringa Resources Limited (October 2013 - present), Prairie Mining Limited (August 2011 - present), Salt Lake Potash Limited (January 2010 - present), Equatorial Resources Limited (November 2009 - present), Piedmont Lithium Limited (September 2009 - present), Sovereign Metals Limited (July 2006 - present), Odyssey Energy Limited (September 2005 - present) and Syntonic Limited (April 2010 - June 2017).

Paul Atherley

Managing Director and CEO

Qualifications - B.Sc, MAppSc, MBA, ARSM

Mr Atherley is a highly experienced senior resources executive with wide ranging international and capital markets experience. He graduated as mining engineer from Imperial College London and has held numerous senior executive and board positions during his career. He served as Executive Director of the investment banking arm of HSBC Australia where he undertook a range of advisory roles in the resources sector. He has completed a number of acquisitions and financings of resource projects in Europe, China, Australia and Asia.

Mr Atherley was based in Beijing from 2005 to 2015 and developed strong connections within Chinese business, industry bodies and senior government officials, including the most senior levels of the state owned energy companies. Until recently he was the Chairman of the British Chamber of Commerce in China, Vice Chairman of the China Britain Business Council in London and served on the European Union Energy Working Group in Beijing. He has been a regular business commentator on China and the resources sector, hosting events in Beijing and appearing on CCTV News and China Radio International as well as BBC, CNBC and other major news channels.

Mr Atherley is a strong supporter of Women in STEM and has established a scholarship which provides funding for young women to further their education in science and engineering.

Mr Atherley was appointed a director of Berkeley Energia Limited on 1 July 2015. During the three year period to the end of the financial year, Mr Atherley has also held directorships in Rift Valley Resources (May 2018 - present), Leyshon Resources Limited (May 2004 - present) and Leyshon Energy Limited (January 2014 - July 2017).

Deepankar Panigrahi

Non-Executive Director

Qualifications - MS, MBA

Mr Panigrahi is an Investment Manager in the Private Equity division of SGRF and has extensive experience across a variety of sectors and geographies covering all stages of the private equity process, including post investment management. Mr Panigrahi holds an Undergraduate and Master's degree in Economics with Distinction and Honours from the University of Michigan followed by an MBA from Cambridge University.

Mr Panigrahi was appointed a director of the Company on 30 November 2017. Mr Panigrahi has not been a Director of another listed company in the three years prior to the end of the financial year.

Nigel Jones

Non-Executive Director

Qualifications - MA OXON (Alumnus of London Business School where Mr Jones completed a Corporate Finance Programme)

Mr Jones has thirty years' experience in the international mining sector. He has considerable corporate development and marketing expertise, including being responsible for the negotiation of key uranium supply agreements for Rio Tinto.

Mr Jones spent two decades at Rio Tinto, where ultimately he held the position of Global Head of Business Development and prior to that Managing Director of Rio Tinto Marine, Head of Investor Relations and Marketing Director, Uranium.

Mr Jones was recently appointed as Head of Private Side Capital Markets at ICBC Standard Bank, the global markets subsidiary of ICBC Bank, which is the world's largest bank by assets.

Mr Jones was appointed a Director of Berkeley Energia Limited on 7 June 2017. Mr Jones has not been a Director of another listed company in the three years prior to the end of the financial year.

Adam Parker

Non-Executive Director

Qualifications - MA.Chem (Hons), ASIP

Mr Parker joined the Company after a long and successful career in institutional fund management in the City of London spanning almost three decades, including being a co-founder of Majedie Asset Management, which today manages assets of approximately £14 billion.

Mr Parker began his career in 1987 at Mercury Asset Management (subsequently acquired by Merrill Lynch and now part of BlackRock) and left in 2002 when he co-founded Majedie Asset Management.

Mr Parker was instrumental in building Majedie Asset Management into the successful investment boutique that it is today. He managed funds including the Majedie UK Opportunities Fund, the Majedie UK Smaller Companies Fund and a quarter of the Majedie UK Focus Fund.

Mr Parker was appointed a Director of Berkeley Energia Limited on 14 June 2017. Mr Parker has not been a Director of another listed company in the three years prior to the end of the financial year.

Robert Behets 

Non-Executive Director

Qualifications - B.Sc (Hons), FAusIMM, MAIG

Mr Behets is a geologist with over 25 years' experience in the mineral exploration and mining industry in Australia and internationally. He was instrumental in the founding, growth and development of Mantra Resources Limited, an African focused uranium company, through to its acquisition by ARMZ for approximately A$1 billion in 2011. Prior to Mantra, Mr Behets held various senior management positions during a long career with WMC Resources Limited.

Mr Behets has a strong combination of technical, commercial and managerial skills and extensive experience in exploration, mineral resource and ore reserve estimation, feasibility studies and operations across a range of commodities, including uranium, gold and base metals. He is a Fellow of The Australasian Institute of Mining and Metallurgy, a Member of the Australian Institute of Geoscientists and was also previously a member of the Australasian Joint Ore Reserve Committee ('JORC').

Mr Behets was appointed a Director of the Company on 27 April 2012.  During the three year period to the end of the financial year, Mr Behets has held directorships in Constellation Resources Limited (June 2017 - present), Apollo Minerals Limited (October 2016 - present), Equatorial Resources Limited (February 2016 to present), Piedmont Lithium Limited (February 2016 to May 2018) and Cradle Resources Limited (May 2016 to July 2017).

Mr Dylan Browne

Company Secretary

Qualifications - B.Com, CA, AGIA

Mr Browne is a Chartered Accountant and Associate Member of the Governance Institute of Australia (Chartered Secretary) who is currently Company Secretary for a number of ASX and European listed companies that operate in the resources sector. He commenced his career at a large international accounting firm and has since been involved with a number of exploration and development companies operating in the resources sector, based from London and Perth, including Apollo Minerals Limited, Prairie Mining Limited and Papillon Resources Limited. Mr Browne successfully listed Prairie on the Main Board of the London Stock Exchange and the Warsaw Stock Exchange in 2015 and recently oversaw Berkeley's listings on the Main Board LSE and the Madrid, Barcelona, Bilboa and Valencia Stock Exchanges. Mr Browne was appointed Company Secretary of the Company on 25 October 2012. Mr Browne was appointed Company Secretary of the Company on 29 October 2015.

OTHER KMP

Mr Francisco Bellón del Rosal (Francisco Bellón)

Chief Operations Officer

Qualifications - M.Sc, MAusIMM

Mr Bellón is a Mining Engineer specialising in mineral processing and metallurgy with over 20 years' experience in operational and project management roles in Europe, South America and West Africa. He held various senior management roles with TSX listed Rio Narcea Gold Mines during a 10 year career with the company, including Plant Manager for El Valle/Carles process facility and Operations Manager prior to its acquisition by Lundin Mining in 2007. During this period, Mr Bellón was involved in the development, construction, commissioning and production phases of a number of mining operations in Spain and Mauritania including El Valle-Boinás / Carlés (open pit and underground gold-copper mines in northern Spain), Aguablanca (open pit nickel-copper mine in southern Spain) and Tasiast (currently Kinross' world class open pit gold mine in Mauritania). He subsequently joined Duro Felguera, a large Spanish engineering house, where as Manager of the Mining Business, he managed the peer review, construction and commissioning of a number of large scale mining operations in West Africa and South America in excess of US$1B. Mr Bellón joined Berkeley Energia Limited in May 2011.

Mr Sean Wade

Chief Commercial Officer

Qualifications - MA

Mr Wade is an experienced corporate executive with broad experience across natural resources and emerging markets. He commenced his career at Cazenove & Co and spent 20 years in a variety of roles in capital markets where he was involved in numerous transactions involving mining and other resource companies.

He subsequently led the communications strategy for Asia Resource Minerals (previously Bumi PLC) and more recently oversaw a wide-ranging communications portfolio for TBC Bank PLC, Georgia's largest universal bank.

Mr Wade holds a Masters degree in Social Anthropology from Cambridge University

PRINCIPAL ACTIVITIES

The principal activities of the Consolidated Entity during the year consisted of mineral exploration and development. There was no significant change in the nature of those activities.

DIVIDENDS

No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2018 (2017: nil).

EARNINGS PER SHARE

 


2018
Cents

2017
Cents

Basic and diluted loss per share

(1.51)

(6.88)

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Other than as disclosed below, there were no significant changes in the state of affairs of the Consolidated Entity during the year.

(i)      On 6 July 2017, the Company announced that the capital cost for the construction of the Salamanca mine has reduced to €82.3 million (US$93.8 million), a 1% reduction over previous estimates, confirming the project's status as one of the lowest cost uranium mine developments in the world today;

(ii)     On 12 July 2017, the Company announced that the primary crusher for the Salamanca mine had been delivered to site, marking a key milestone in the future construction of the Salamanca mine;

(iii)    On 30 November 2017 following shareholder approval, the Company completed an investment agreement with SGRF agreeing to invest up to US$120 million which comprised an interest-free and unsecured convertible loan note of US$65 million, as well as an options package exercisable at an average price of 85 pence per share contributing an additional US$55 million if exercised; and

(iv)    On 6 June 2018, the Company completed the admission of its shares to the main market of the London Stock Exchange following approval of its prospectus by the UK Listing Authority. 

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

(i)      On 9 July 2018, the Company announced that a capital cost review initiated by the Company has identified a number of opportunities to reduce the capital expenditure to bring the Salamanca mine into production with potential savings of €9 million (based on the FEED estimate in July 2017) which will be taken forward to detailed engineering; and

(ii)     On 18 July 2018, the Company became Spain's only listed mining company following the admission of its shares to the Madrid, Barcelona, Bilboa and Valencia Stock Exchanges. 

Other than as outlined above, as at the date of this report there are no matters or circumstances, which have arisen since 30 June 2018 that have significantly affected or may significantly affect:

·      the operations, in financial years subsequent to 30 June 2018, of the Consolidated Entity;

·      the results of those operations, in financial years subsequent to 30 June 2018, of the Consolidated Entity; or

·      the state of affairs, in financial years subsequent to 30 June 2018, of the Consolidated Entity.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Consolidated Entity's operations are subject to various environmental laws and regulations under the relevant government's legislation. Full compliance with these laws and regulations is regarded as a minimum standard for all operations to achieve. Instances of environmental non-compliance by an operation are identified either by external compliance audits or inspections by relevant government authorities.

There have been no significant known breaches by the Consolidated Entity during the financial year.

In September 2012, Berkeley qualified for certification in accordance with ISO 14001 of Environmental Management, which sets out the criteria for an environmental management system, and UNE 22480 of Sustainable Mining Management, which allows for the systematic monitoring and tracking of sustainability indicators, and is useful in the establishment of targets for constant improvement. These certificates are renewed following annual audits established by the regulations, with the most recent audit successfully completed in July 2015.

INFORMATION ON DIRECTORS' INTERESTS IN SECURITIES OF BERKELEY

 


Interest in Securities at the Date of this Report

Current Directors

Ordinary Shares(i)

Incentive Options(ii)

Performance Rights(iii)

Ian Middlemas

9,300,000

-

-

Paul Atherley

3,193,622

2,000,000

1,850,000

Deepankar Panigrahi

-

-

-

Nigel Jones

35,000

-

-

Adam Parker

200,000

-

-

Robert Behets

2,490,000

-

480,000

Notes

(i)         "Ordinary Shares" means fully paid ordinary shares in the capital of the Company.

(ii)         "Incentive Options" means an unlisted option to subscribe for 1 Ordinary Share in the capital of the Company

(iii)        "Performance Rights" means the right to subscribe to 1 Ordinary Share in the capital of the Company upon the completion of specific performance milestones by the Company.

SHARE OPTIONS AND PERFORMANCE RIGHTS

At the date of this report the following Incentive Options, Performance Rights, convertible notes and other unlisted options have been issued over unissued Ordinary Shares of the Company:

•     3,500,000 Incentive Options exercisable at £0.20 on or before 30 June 2019;

•     3,603,000 Performance Rights expiring on 31 December 2018;

•     4,643,000 Performance Rights expiring on 31 December 2019;

•     Convertible note with a principal amount US$65 million convertible into shares 100,880,000 shares at a price of £0.50 per share expiring 30 November 2021 ('Convertible Note'); and

•     SGRF Options as follows:

·      10,089,000 unlisted options exercisable at £0.60 each, vesting on conversion of the Convertible Note and expiring the earlier of 12 months after vesting or on 30 November 2022;

·      15,133,000 unlisted options exercisable at £0.75 each, vesting on conversion of the Convertible Note and expiring the earlier of 18 months after vesting or on 30 May 2023; and

·      25,222,000 unlisted options exercisable at £1.00 each, vesting on conversion of the Convertible Loan Note and expiring the earlier of 24 months after vesting or on 30 November 2023.

These Incentive Options and Performance Rights do not entitle the holders to participate in any share issue of the Company or any other body corporate. During the year ended 30 June 2018, 3,850,000 Ordinary Shares were issued as a result of the exercise of 3,850,000 Incentive Options and no Ordinary Shares were issued as a result of the conversion of Performance Rights. Subsequent to the end of the financial year and up and until the date of this report, no Ordinary shares have been issued as a result of the exercise of Incentive Options, SGRF Options or conversion of Performance Rights or Convertible Note.

MEETINGS OF DIRECTORS

The following table sets out the number of meetings of the Company's Directors and the board committees held during the year ended 30 June 2018, and the number of meetings attended by each director. During the year the Board resolved to establish a Remuneration and Nomination Committee.

The Board as a whole currently performs the functions of an Audit Committee and Risk Committee, however this will be reviewed should the size and nature of the Company's activities change.

 


Board Meetings

Remuneration and Nomination Committee(i)

Current Directors

Number Eligible to Attend

Number Attended

Number Eligible to Attend

Number Attended

Ian Middlemas

5

5

-

-

Paul Atherley

5

4

-

-

Deepankar Panigrahi

4

4

-

-

Nigel Jones

5

5

2

2

Adam Parker

5

4

2

2

Robert Behets

5

5

2

2

Notes

(i)         All Remuneration and Nomination Committee meetings during the year were considered and approved by means of written resolutions of committee members.

REMUNERATION REPORT (AUDITED)

 

This report details the amount and nature of remuneration of each director and executive officer of the Company.

 

Details of Key Management Personnel

 

The Key Management Personnel ('KMP') of the Group during or since the end of the financial year were as follows:

 

Directors

Mr Ian Middlemas                               Chairman

Mr Paul Atherley                                  Managing Director and CEO

Mr Deepankar Panigrahi                   Non-Executive Director (appointed 30 November 2017)

Mr Nigel Jones                                    Non-Executive Director

Mr Adam Parker                                  Non-Executive Director

Mr Robert Behets                                Non-Executive Director

 

Current KMP

Mr Francisco Bellón                           Chief Operations Officer

Mr Dylan Browne                                Company Secretary

Mr Sean Wade                                    Chief Commercial Officer (appointed 1 May 2018)

 

Former KMP

Mr Javier Colilla                                  Chief Administrations Officer (ceased as KMP 1 July 2017)

Mr Hugo Schumann                           Chief Commercial Officer (ceased as KMP 1 January 2018)

Mr Paul Thomson                               Chief Financial Officer (resigned 5 April 2018)

 

There were no other key management personnel of the Company or the Group. Unless otherwise disclosed, the Key Management Personnel held their position from 1 July 2017 until the date of this report.

 

Remuneration Policy

 

The remuneration policy for the Group's KMP has been developed by the Board taking into account the size of the Group, the size of the management team for the Group, the nature and stage of development of the Group's current operations and market conditions and comparable salary levels for companies of a similar size and operating in similar sectors.

 

In addition to considering the above general factors, the Board has also placed emphasis on the following specific issues in determining the remuneration policy for key management personnel:

•     the Group is currently focused on undertaking development and construction activities;

•     risks associated with resource companies whilst exploring and developing projects; and

•     other than profit which may be generated from asset sales (if any), the Group does not expect to be undertaking profitable operations until sometime after the successful commercialisation, production and sales of commodities from one or more of its current projects, or the acquisition of a profitable mining operation.

Remuneration and Nomination Committee

 

During the year and in response to the Company receiving at least 25% of votes cast against the Remuneration Report at the 2016 and 2017 AGM, the Board resolved to establish an independent Remuneration and Nomination Committee ('Remcom') to oversee the Group's remuneration and nomination responsibilities and governance. The remuneration committee members consist of three independent non-executive directors being Mr Parker (as Chair), Mr Jones and Mr Behets.

 

The Remcom's role is to determine the remuneration of the Company's executives, oversee the remuneration of KMP, and approve awards under the Company's long-term incentive plan ('LTIP').

The Remcom review's the performance of executives and KMP and set the scale and structure of their remuneration and the basis of their service/consulting agreements. In doing so, the Remcom will have due regard to the interests of shareholders.

In determining the remuneration of executives and KMP, the Remcom seeks to enable the Company to attract and retain executives of the highest calibre. In addition, the Remcom decides whether to grant incentives securities in the Company and, if these are to be granted, who the recipients should be.

 

Remuneration Policy for Executives

 

The Group's remuneration policy is to provide a fixed remuneration component and a performance based component (Incentive Options, Performance Rights and cash bonuses, see below). The Board believes that this remuneration policy is appropriate given the considerations discussed in the section above and is appropriate in aligning KMP objectives with shareholder and business objectives.

 

Fixed Remuneration

Fixed remuneration consists of base salaries, as well as employer contributions to superannuation funds and other non-cash benefits. Non-cash benefits may include provision of motor vehicles, housing and health care benefits.

Fixed remuneration will be reviewed annually by the Remcom. The process consists of a review of Company and individual performance, relevant comparative remuneration externally and internally and, where appropriate, external advice on policies and practices.

 

Performance Based Remuneration - Short Term Incentive

Some KMP are entitled to an annual cash bonus upon achieving various key performance indicators ('KPI's'), as set by the Board. Having regard to the current size, nature and opportunities of the Company, the Board has determined that these KPI's will include measures such as successful completion of exploration activities (e.g. completion of exploration programmes within budgeted timeframes and costs), development activities (e.g. completion of feasibility studies and initial infrastructure), corporate activities (e.g. recruitment of key personnel and project financing) and business development activities (e.g. project acquisitions and capital raisings). On an annual basis, after consideration of performance against key performance indicators, the Board determines the amount, if any, of the annual cash bonus to be paid to each KMP. During the financial year the Remcom concluded that no bonus (2017: $680,000) is to be paid, or is payable to KMP. The Remcom will be reviewing the Company's short term incentive remuneration for KMP and is only likely to complete this review prior to the end of the 2018 calendar year. The maximum amount that can be paid to KMP pursuant to their contracts is disclosed in the "Employment Contracts with Directors and KMP" section below.

 

Performance Based Remuneration - Long Term Incentive

The Group has adopted a LTIP comprising the 'Berkeley Performance Rights Plan' (the 'Plan') to reward KMP and key employees for long-term performance. Shareholders approved the Plan in April 2013 at a General Meeting of Shareholders and Performance Rights were issued under the Plan in May 2013 and March 2014. Shareholders approved the renewal of the Plan in July 2015.

The Plan provides for the issuance of unlisted performance share rights ('Performance Rights') which, upon satisfaction of the relevant performance conditions attached to the Performance Rights, will result in the issue of an Ordinary Share for each Performance Right. Performance Rights are issued for no consideration and no amount is payable upon conversion thereof.

To achieve its corporate objectives, the Company needs to attract and retain its key staff, whether employees or contractors. The Board believes that grants made to eligible participants under the Plan provides a powerful tool to underpin the Company's employment and engagement strategy, and that the implementation of the Plan will:

(a)        enable the Company to recruit, incentivise and retain KMP and other eligible employees and contractors needed to achieve the Company's strategic objectives;

(b)        link the reward of eligible employees and contractors with the achievements of strategic goals and the long term performance of the Company;

(c)        align the financial interest of participants of the Plan with those of Shareholders; and

(d)        provide incentives to participants of the Plan to focus on superior performance that creates Shareholder value.

Performance Rights granted under the Plan to eligible participants will be linked to the achievement by the Company of certain performance conditions as determined by the Board from time to time. These performance conditions must be satisfied in order for the Performance Rights to vest. Upon Performance Rights vesting, Ordinary Shares are automatically issued for no consideration. If a performance condition of a Performance Right is not achieved by the expiry date then the Performance Right will lapse.

During the financial year, Performance Rights had been on issue or granted to certain KMP and other employees and consultants with the following performance conditions:

(a)        Project Construction Milestone means completion of approximately 25% of the project development phase, as per the project development schedule and budget approved by the Board in accordance with the Definitive Feasibility Study before 31 December 2018; and

(b)        Production Milestone means achievement of first uranium production before 31 December 2019.

In addition, the Group may provide unlisted Incentive Options to some KMP as part of their remuneration and incentive arrangements in order to attract and retain their services and to provide an incentive linked to the performance of the Group. The Board's policy is to grant Incentive Options to KMP with exercise prices at or above market share price (at time of agreement).  As such, Incentive Options granted to KMP are generally only of benefit if the KMP has performed to the level whereby the value of the Company has increased sufficiently to warrant exercising the Incentive Options granted. No Incentive Options were issued to KMP during the current financial year.

 

Other than service-based vesting conditions (if any), there were no additional performance criteria on the Incentive Options granted to KMP, as given the speculative nature of the Group's activities and the small management team responsible for its running, it is considered that the performance of KMP and the performance and value of the Group are closely related.

 

The Company prohibits executives entering into arrangements to limit their exposure to Unlisted Options and Performance Rights granted as part of their remuneration package.

Remuneration Policy for Non-Executive Directors

 

The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and responsibilities. Given the current size, nature and risks of the Company, incentive options have been used to attract and retain Non-Executive Directors.  The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required.

The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at a General Meeting. The maximum aggregate amount that may be paid to Non-Executive Directors in a financial year is $350,000, as approved by shareholders at a Meeting of Shareholders held on 6 May 2009. Director's fees paid to Non-Executive Directors accrue on a daily basis.  Fees for Non-Executive Directors are not directly linked to the performance of the economic entity. However, to align Directors' interests with shareholder interests, the Directors are encouraged to hold shares in the Company. Given the size, nature and opportunities of the Company, Non-Executive Directors may receive Incentive Options or Performance Rights in order to secure and retain their services.

 

Fees for the Chairman were set at $50,000 per annum (2017: $50,000) (including post-employment benefits).

 

Fees for Non-Executive Directors' were set at $45,000 per annum (2017: $30,000) (including post-employment benefits). These fees cover main board activities only. Non-Executive Directors may receive additional remuneration for other services provided to the Company, including but not limited to, membership of committees.

 

During the 2018 financial year, no Incentive Options or Performance Rights were granted to Non-Executive Directors.

 

The Company prohibits Non-Executive Directors entering into arrangements to limit their exposure to Incentive Options granted as part of their remuneration package.

 

Relationship between Remuneration and Shareholder Wealth

 

During the Group's exploration and development phases of its business, the Board anticipates that the Company will retain future earnings (if any) and other cash resources for the operation and development of its business.  Accordingly, the Company does not currently have a policy with respect to the payment of dividends and returns of capital. Therefore, there was no relationship between the Board's policy for determining, or in relation to, the nature and amount of remuneration of KMP and dividends paid and returns of capital by the Company during the current and previous four financial years.

 

The Board does not directly base remuneration levels on the Company's share price or movement in the share price over the financial year and the previous four financial years. Discretionary annual cash bonuses are based upon achieving various non-financial KPIs as detailed under 'Performance Based Remuneration - Short Term Incentive' and are not based on share price or earnings. As noted above, a number of KMP have also been granted Performance Rights and Incentive Options, which generally will be of greater value should the value of the Company's shares increase (subject to vesting conditions being met), and in the case of options, increase sufficiently to warrant exercising the Incentive Options granted.

 

Relationship between Remuneration of KMP and Earnings

 

As discussed above, the Group is currently undertaking exploration and development activities, and does not expect to be undertaking profitable operations until sometime after the successful commercialisation, production and sales of commodities from one or more of its current projects.

 

Accordingly, the Board does not consider earnings during the current and previous four financial years when determining, and in relation to, the nature and amount of remuneration of KMP.

 

The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at a General Meeting.  Fees for Non-Executive Directors are not linked to the performance of the economic entity.  However, to align Directors' interests with shareholder interests, the Directors are encouraged to hold shares in the Company and Non-Executive Directors have received Performance Rights and Incentive Options in order to secure their services and as a key component of their remuneration.

 

General

 

Where required, KMP receive superannuation contributions (or foreign equivalent), currently equal to 9.5% of their salary, and do not receive any other retirement benefit. From time to time, some individuals have chosen to sacrifice part of their salary to increase payments towards superannuation.

 

All remuneration paid to KMP is valued at cost to the company and expensed. Incentive Options and Performance Rights are valued using an appropriate valuation methodology. The value of these Incentive Options and Performance Rights is expensed over the vesting period.

 

KMP Remuneration

 

Details of the nature and amount of each element of the remuneration of each Director and other KMP of the Company or Group for the financial year are as follows:


Short-term Benefits


Non-Cash


Percentage


2018

Salary & Fees
$

Cash Incentive
$

Other Non-Cash Benefits (7)
$

Post Employ-ment Benefits
$

Share-Based Payments
(6)
$

Total
$

of Total Remunerat-ion that Consists of Options/ Rights
%

Percent-age Perform-ance Related
%

Directors









Ian Middlemas

45,600

-

-

4,332

-

49,932

-

-

Paul Atherley

478,981

-

-

-

156,483

635,464

24.62

24.62

Deepankar Panigrahi(1)

26,250

-

-

-

-

26,250

-

-

Nigel Jones

45,029

-

-

-

-

45,029

-

-

Adam Parker

58,500

-

-

-

-

58,500

-

-

Robert Behets

41,097

-

-

3,903

14,333

59,333

24.16

24.16

Current KMP









Francisco Bellón

299,978

-

47,244

21,398

94,461

463,081

20.40

20.40

Sean Wade(2)

48,922

-

-

-

-

48,922

-

-

Dylan Browne

125,088

-

-

-

36,935

162,023

22.80

22.80

Former KMP









Paul Thomson(3)

252,633(4)

-

-

-

(24,980)

227,653

-

-

Hugo Schumann(5)

318,732(5)

-

-

-

26,834

345,566

15.30

15.30

Total

1,740,810

-

47,244

29,633

304,066

2,121,753



Notes

(1)      Mr Panigrahi was appointed a Director on 30 November 2017.

(2)      Mr Wade was appointed as Chief Commercial Officer on 1 May 2018

(3)      Mr Thomson resigned as Chief Financial Officer on 5 April 2018.

(4)      Includes three months' notice period.

(5)      Mr Schumann ceased as Chief Commercial Officer (and KMP) on 1 January 2018. Includes a transaction payment of $170,196 paid to Meadowbrook Enterprises Limited (A company Mr Schumann is a shareholder of) following the completion of the SGRF fund raising transaction completed during the year.

(6)      Share-based payments are measured for by using a Black-Scholes valuation method and are expensed over the vesting period of the Performance Rights or Incentive Options issued. Performance Rights are linked to the achievement by the Company of certain performance conditions as determined by the Board from time to time with the Performance Rights only of any value to the holder if the performance conditions are satisfied prior to the expiry of the respective Performance Rights.

(7)      Other Non-Cash Benefits includes payments made for housing and car benefits.


Short-term Benefits


Non-Cash


Percentage


2017

Salary & Fees
$

Cash Incentive
$

Other Non-Cash Benefits(5)
$

Post Employ-ment Benefits
$

Share-Based Payments
(6)
$

Total
$

of Total Remunerat-ion that Consists of Options/ Rights
%

Percent-age Perform-ance Related
%

Directors









Ian Middlemas

45,600

-

-

4,332

-

49,932

-

-

Paul Atherley

459,754

422,852

-

-

309,294

1,191,900

25.95

61.43

Nigel Jones(1)

3,115

-

-

-

-

3,115

-

-

Adam Parker(2)

1,757

-

-

-

-

1,757

-

-

Robert Behets

27,398

-

-

2,603

31,424

61,425

51.16

51.16

James Ross(3)

25,634

-

-

2,435

23,347

51,416

45.41

45.41

Other KMP









Francisco Bellón

281,791

86,705

45,197

19,808

178,366

611,867

29.15

43.32

Javier Colilla

281,791

14,451

37,978

19,808

178,366

532,394

33.50

36.22

Paul Thomson(4)

151,564

21,143

-

-

24,980

197,687

12.64

23.33

Hugo Schumann

252,453

84,570

-

-

181,441

518,464

35.00

51.31

Dylan Browne

109,451

50,744

-

-

81,623

241,818

33.75

54.74

Total

1,640,308

680,465

83,175

48,986

1,008,841

3,461,775



Notes

 

(1)      Mr Jones was appointed a Director on 7 June 2017.

(2)      Mr Parker was appointed a Director on 14 June 2017.

(3)      Mr Ross retired as a Director on 7 June 2017.

(4)      Mr Thomson was appointed as Chief Financial Officer on 12 January 2017.

(5)      Other Non-Cash Benefits includes payments made for housing and car benefits.

(6)      Share-based payments are measured for by using a Black-Scholes valuation method and are expensed over the vesting period of the Performance Rights or Incentive Options issued. Performance Rights are linked to the achievement by the Company of certain performance conditions as determined by the Board from time to time with the Performance Rights only of any value to the holder if the performance conditions are satisfied prior to the expiry of the respective Performance Rights.

Incentive Options and Performance Rights Granted to KMP

No Incentive Options and Performance Rights were issued to KMP of the Group during the year ended 30 June 2018.

 

Details of the value of Incentive Options granted, exercised or lapsed for each KMP of the Company or Group during the financial year are as follows:

 

2018

Value of Incentive Options granted during the year
$

Value of Incentive Options exercised during the year
$

Value of Incentive Options included in remuneration for the year
$

Percentage of remuneration that consists of Incentive Options
%

Directors





Paul Atherley

-

940,000(1)

-

-

Other KMP





Francisco Bellón

-

352,500(2)

-

-

Notes

(1)      On 29 June 2018, Mr Atherley exercised 2,000,000 Incentive Options. The value of the Incentive Options exercised was calculated by using the closing price on that date (A$0.73) less the exercise price £0.15 (A$0.26).

(2)      On 29 June 2018, Mr Bellón exercised 750,000 Incentive Options. The value of the Incentive Options exercised was calculated by using the closing price on that date (A$0.73) less the exercise price £0.15 (A$0.26).

 

Employment Contracts with Directors and KMP

Current Directors

Mr Ian Middlemas, Non-Executive Chairman, has a letter of appointment dated 29 June 2015 confirming the terms and conditions of his appointment. Effective from 1 July 2013, Mr Middlemas has received a fee of $50,000 per annum inclusive of superannuation.

Mr Paul Atherley, Managing Director and CEO, has a letter of appointment dated 1 January 2018 confirming the terms and conditions of his appointment as the Managing Director. Mr Atherley's appointment letter is terminable pursuant to the Company's Constitution. Mr Atherley receives a fee of £25,000 per annum pursuant to this appointment letter. In addition, Mr Atherley is engaged under a consultancy deed with Selection Capital Ltd ('Selection Capital') dated 1 January 2018. The agreement specifies the duties and obligations to be fulfilled by Mr Atherley as CEO. There is 12 month rolling term and either party may terminate with three months written notice. No amount is payable in the event of termination for material breach of contract, gross misconduct or neglect. Selection Capital receives an annual consultancy fee of £250,000 and will be eligible for an annual cash incentive of up to £250,000 to be paid upon successful completion of key performance indicators as determined by the Board. In addition, Selection Capital will be entitled to receive a payment of £275,000 in the event of a change in control clause being triggered by the Company, subject to the payment being in compliance with the Corporations Act.

Mr Nigel Jones and Mr Panigrahi, Non-Executive Directors, have letters of appointment with Berkeley Energia Limited dated 5 June 2017 and 30 September 2018 respectively confirming the terms and conditions of his appointment. Both receive a fee of $45,000 per annum.

Mr Adam Parker, Non-Executive Director, has a letter of appointment with Berkeley Energia Limited dated 5 June 2017 confirming the terms and conditions of his appointment. Effective from 28 August 2017, Mr Parker receives a fee of $45,000 per annum for his Board duties and $15,000 for chairing the Remcom.

Mr Robert Behets, Non-Executive Director, has a letter of appointment dated 29 June 2015 confirming the terms and conditions of his appointment. Effective 1 July 2017, Mr Behets has received a fee of $45,000 per annum inclusive of superannuation. Mr Behets also has a services agreement with the Company dated 18 June 2012, which provides for a consultancy fee at the rate of $1,200 per day for management and technical services provided by Mr Behets. Either party may terminate the agreement without penalty or payment by giving two months' notice.

Current other KMP

Mr Francisco Bellón, has a contract of employment dated 14 April 2011 and amended on 1 July 2011, 13 January 2015 and 16 March 2017. The contract specifies the duties and obligations to be fulfilled by the Chief Operations Officer. The contract has a rolling term and may be terminated by the Company giving six months' notice, or 12 months in the event of a change of control of the Company. In addition to the notice period, Mr Bellón will also be entitled to receive an amount equivalent to statutory unemployment benefits (approximately 25,000) and statutory severance benefits (equivalent to 45 days remuneration per year worked from 9 May 2011 to 11 February 2012, and 33 days remuneration per year worked from 12 February 2012 until termination). No amount is payable in the event of termination for neglect of duty or gross misconduct. Mr Bellón receives a fixed remuneration component of €190,000 per annum plus compulsory social security contributions regulated by Spanish law, as well as the provision of accommodation in Salamanca and a motor vehicle.

Mr Dylan Browne, Company Secretary, had a letter of appointment dated 29 October 2015 confirming the terms and conditions of his appointment. Mr Browne's appointment letter was terminable pursuant to the Company's Constitution and he received a fee of £5,500 per annum pursuant to this appointment letter. In addition Candyl Limited ('Candyl'), a company of which Mr Browne is a director and shareholder, has a consultancy agreement with the Company, which specifies the duties and obligations to be fulfilled by Mr Browne as the Company Secretary. Either party could terminate the agreement with three months written notice. No amount is payable in the event of termination for material breach of contract, gross misconduct or neglect.

Candyl received an annual consultancy fee of £60,500. Both the appointment letter and Candyl consulting agreement were terminated effective 31 October 2017. On 1 November 2017, Mr Browne entered into a new consulting agreement which specified the duties and obligations to be fulfilled by Mr Browne as the Company Secretary. Either party can terminate the new agreement with three months written notice or payment in lieu. No amount is payable in the event of termination for material breach of contract, gross misconduct or neglect. Under the new consultancy agreement, Mr Browne receives a consultancy fee of $10,000 per month.

Equity instruments held by Key Management Personnel

Incentive Options and Performance Right holdings of KMP

2018

Held at
1 July 2017

Granted as Compen-sation

Vested Options exercised

Net Other Changes

Held at
30 June 2018

Vested and exerciseable at 30 June 2018

Directors







Ian Middlemas

-

-

-

-

-

-

Paul Atherley

5,850,000

-

(2,000,000)

-

3,850,000

2,000,000

Deepankar Panigrahi

-(1)

-

-

-

-

-

Nigel Jones

-

-

-

-

-

-

Adam Parker

-

-

-

-

-

-

Robert Behets

480,000

-

-

-

480,000

-

Other KMP







Francisco Bellón

2,750,000

-

(750,000)

-

2,000,000

750,000

Javier Colilla

2,750,000

-

-

-

2,750,000(2)

-

Paul Thomson

400,000

-

-

(400,000)(3)

-(4)

-

Hugo Schumann

1,100,000

-

-

-

1,100,000(5)

-

Sean Wade

-(6)

-

-

-

-

-

Dylan Browne

360,000

-

-

-

360,000

-

Notes

(1)      As at appointment date being 30 November 2017

(2)      As of cessation as a KMP being 1 July 2017

(3)      Performance rights forfeited following resignation on 5 April 2018

(4)      As of resignation date being 5 April 2018

(5)      As of cessation as a KMP being 1 January 2018

(6)      As at appointment date being 1 May 2018

Shareholdings of KMP

 

2018

Held at
1 July 2017

Granted as Compen-sation

Options exercised/Rights converted

On market purchase/ (sale)

Held at
30 June 2018

Directors






Ian Middlemas

9,300,000

-

-

-

9,300,000

Paul Atherley

1,369,000

-

2,000,000

-

3,369,000

Deepankar Panigrahi

-(1)

-

-

-

-

Nigel Jones

-

-

-

-

-

Adam Parker

-

-

-

200,000

200,000

Robert Behets

2,490,000

-

-

-

2,490,000

Other KMP






Francisco Bellón

700,000

-

750,000

(300,000)

1,150,000

Javier Colilla

810,555

-

-

-

810,555(2)

Paul Thomson

-

-

-

-

-(3)

Hugo Schumann

-

-

-

-

-(4)

Sean Wade

-(5)

-

-

-

-

Dylan Browne

100,000

-

-

(100,000)

-

Notes

(1)      As at appointment date being 30 November 2017

(2)      As at cessation as KMP being 1 July 2017

(3)      As at resignation date being 5 April 2018

(4)      As at cessation as KMP being 1 January 2018

(5)      As at appointment date being 1 May 2018

 

End of Remuneration Report.

AUDITOR'S AND OFFICERS' INDEMNITIES AND INSURANCE

Under the Constitution the Company is obliged, to the extent permitted by law, to indemnify an officer (including Directors) of the Company against liabilities incurred by the officer in that capacity, against costs and expenses incurred by the officer in successfully defending civil or criminal proceedings, and against any liability which arises out of conduct not involving a lack of good faith.

During the financial year, the Company has paid an insurance premium to insure Directors and officers of the Company against certain liabilities arising out of their conduct while acting as a Director or Officer of the Company. Under the terms and conditions of the insurance contract, the nature of liabilities insured against cannot be disclosed.

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.

NON-AUDIT SERVICES

During the year, the Company's auditor, Ernst & Young, received, or is due to receive, $118,000 (2017: $81,000) for the provision of non-audit services. The Directors are satisfied that the provision of non-audit services is compatible with the general standard and independence for auditors imposed by the Corporations Act.

ROUNDING

 

The amounts contained in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) where noted ($000) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191. The Company is an entity to which this legislative instrument applies.

AUDITOR'S INDEPENDENCE DECLARATION

The auditor's independence declaration is on page 59 of the Annual Report.

This report is made in accordance with a resolution of the Directors made pursuant to section 298(2) of the Corporations Act 2001.

For and on behalf of the Directors

 

 

 

 

 

 

PAUL ATHERLEY

Managing Director and CEO

 

28 September 2018

 

 

 

Forward Looking Statement

Statements regarding plans with respect to Berkeley's mineral properties are forward-looking statements. There can be no assurance that Berkeley's plans for development of its mineral properties will proceed as currently expected. There can also be no assurance that Berkeley will be able to confirm the presence of additional mineral deposits, that any mineralisation will prove to be economic or that a mine will successfully be developed on any of Berkeley's mineral properties.

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2018

 



2018
$000

2017
$000





Revenue


1,034

464

Corporate and administration expenses


(1,588)

(1,752)

Exploration and evaluation expenses


(12,040)

(11,045)

Business development expenses


(1,989)

(2,697)

Share-based payment expenses


(545)

(1,020)

Listing expenses


(777)

-

Costs to issue convertible note


(2,697)

-

Fair value movement on non-cash settled financial liabilities


15,881

-

Foreign exchange movements


(2,027)


Loss before income tax


(16,050)

Income tax benefit/ (expense)


-

-

Loss after income tax


(4,748)

(16,050)





Other comprehensive income, net of income tax:




Items that may be classified subsequently to profit or loss:




Exchange differences arising on translation of foreign operations


1,430

(344)

Other comprehensive income, net of income tax


1,430

(344)

Total comprehensive loss for the year attributable to Members of Berkeley Energia Limited


(3,318)

(16,394)





Basic and diluted loss per share (cents per share)


(1.51)

(6.88)

 

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying Notes

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2018

 



2018
$000

2017
$000

ASSETS




Current Assets




Cash and cash equivalents


100,935

34,815

Trade and other receivables


1,849

1,478

Total Current Assets


102,784

36,293




Non-current Assets




Exploration expenditure


8,203

7,945

Property, plant and equipment


11,534

9,799

Other financial assets


527

160

Total Non-current Assets


20,264

17,904




TOTAL ASSETS


123,048

54,197




LIABILITIES




Current Liabilities




Trade and other payables


909

5,208

Provisions


550

522

Non-cash settled convertible note liability


69,552

-

Non-cash settled option liability


5,257

-

Total Current Liabilities


76,268

5,730




TOTAL LIABILITIES


76,268

5,730




NET ASSETS


46,780

48,467




EQUITY




Equity attributable to equity holders of the Company




Issued capital


169,633

168,051

Reserves


1,549

107

Accumulated losses


(124,402)

(119,691)




TOTAL EQUITY


46,780

48,467

 

The above Statement of Financial Position should be read in conjunction with the accompanying Notes

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2018

 


Issued Capital

Share- Based Payments Reserve

Foreign Currency Translation Reserve

Accumulated Losses

Total Equity


$000

$000

$000

$000

$000

As at 1 July 2017

168,051

2,791

(2,684)

(119,691)

48,467

Total comprehensive loss for the period:






-

-

-

(4,748)

(4,748)

Other Comprehensive Income:

Exchange differences arising on translation of foreign operations

-

-

1,430

-

1,430

Total comprehensive income/(loss)

-

-

1,430

(4,748)

(3,318)

1,105

-

-

-

1,105

479

(479)

-

-

-

(2)

-

-

-

(2)

-

(212)

-

-

(212)

-

(37)

-

37

-

-

740

-

-

740

As at 30 June 2018

169,633

2,803

(1,254)

(124,402)

46,780







As at 1 July 2016

129,515

2,768

(2,340)

(103,641)

26,302

Total comprehensive loss for the period:






Net loss for the year

-

-

-

(16,050)

(16,050)

Other Comprehensive Income:

-

-

(344)

-

(344)

Total comprehensive income/(loss)

-

-

(344)

(16,050)

(16,394)

39,745

-

-

-

39,745

58

-

-

-

58

(2,217)

-

-

-

(2,217)

-

(224)

-

-

(224)

950

(950)

-

-

-

-

1,197

-

-

1,197

As at 30 June 2017

168,051

2,791

(2,684)

(119,691)

48,467

 

The above Statement of Changes in Equity should be read in conjunction with the accompanying Notes

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2018

 


2018
$000

2017
$000




Cash flows from operating activities



Payments to suppliers and employees

(20,176)

(12,701)

Interest received                      

698

460

Net cash outflow from operating activities                                           

(19,478)

(12,241)




Cash flows from investing activities



Proceeds from sale of royalty

-

6,531

Payments for property, plant and equipment

(1,461)

(8,135)

Net cash outflow from investing activities

(1,461)

(1,604)




Cash flows from financing activities



Proceeds from issue of securities

1,088

39,756

Transaction costs from issue of securities

-

(2,217)

Proceeds from issued of convertible note and options

85,823

-

Transaction costs from issue pf convertible note and options

(2,697)

-

Net cash inflow from financing activities

84,214

37,539




Net increase in cash and cash equivalents held

63,275

23,694

Cash and cash equivalents at the beginning of the financial year

34,815

11,348

Effects of exchange rate changes on cash and cash equivalents

2,845

(227)

Cash and cash equivalents at the end of the financial year

100,935

34,815

 


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