Financial Report
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ABN: 67 072 595 576
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CONSOLIDATED FINANCIAL REPORT FOR THE YEAR ENDED
31 DECEMBER 2015
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Page
Corporate Directory 1
Directors' Report 2
Consolidated Statement of Comprehensive Income 31
Consolidated Statement of Financial Position 32
Consolidated Statement of Changes in Equity 33
Consolidated Statement of Cash Flows 34
Notes to the Consolidated Financial Statements 35
Directors' Declaration 104
Auditor's Independence Declaration 105
Independent Auditor's Report 106
Directors Anthony Lloyd Non-Executive Chairman and Acting CEO Mark Stowell Non-Executive Director
Philippe Monier Non-Executive Director Jesus Fernandez Non-Executive Director Dennis Wilkins Non-Executive Director
Christopher Eger Alternate Non-Executive Director
Company Secretary Dennis Wilkins
Registered office and Ground Floor
Corporate Office 20 Kings Park Road West Perth WA 6005 Australia
Telephone: +61 8 9389 2111
Facsimile: +61 8 9389 2199
Website: www.mawsonwest.com
Email: [email protected]
Auditors Ernst & Young
11 Mounts Bay Road Perth WA 6000 Australia
Share Registry Australia Computershare Level 2
45 St Georges Terrace Perth WA 6000 Australia
Canada
Computershare
100 University Avenue 8th Floor
Toronto, Ontario M5J 2Y1
Stock Exchange Listing Toronto Stock Exchange (TSX - MWE)
Your Directors present their report on the consolidated entity (referred to hereafter as the "Group") consisting of Mawson West Limited ("Mawson West" or the "Company") and its controlled entities for the year ended 31 December 2015 (the "Year" or the "period"). Mawson West is a company limited by shares that is incorporated and domiciled in Australia. Unless noted otherwise, all amounts stated are expressed in United States dollars and have been rounded to the nearest
$1,000 (where rounding is applicable).
DIRECTORS
The names and details of the Company's Directors in office during the year and until the date of this report are as follows. (Directors were in office for this entire period unless otherwise stated)
Anthony Lloyd Non-Executive Chairman and Acting CEO (Appointed Acting CEO 1 February 2015)
Mark Stowell Non-Executive Director Philippe Monier Non-Executive Director
Jesus Fernandez Non-Executive Director (Appointed 22 January 2015) Dennis Wilkins Non-Executive Director (Appointed 3 August 2015)
Christopher Eger Alternate Non-Executive Director to Jesus Fernandez (Appointed 7 September 2015)
Bruce McFadzean Chief Executive Officer & Managing Director (Employment ended and resigned as Director on 31 January 2015)
Mark Hohnen Non-Executive Director (Resigned 29 January 2015)
PRINCIPAL ACTIVITIES
The principal activities of the Group during the period are copper and silver concentrate production, mineral exploration and development in the Democratic Republic of Congo ("DRC"). There has been no significant change in the nature of these activities during the period. The Group commenced production of copper and silver concentrate at Dikulushi in July 2010 and the Kapulo project achieved commercial production on 1 July 2015.
REVIEW OF OPERATIONS
The increasing weakness of copper prices during the second half of 2015 resulted in unprofitable and unsustainable mining operations at Kapulo at current volumes produced despite the implementation of aggressive cost cutting measures and restructuring plans. This in turn contributed to the deterioration of the Company's financial position, such that it is currently having difficulties satisfying its current liabilities in a timely manner. The Company announced on March 2, 2016, the decision to place Kapulo on care and maintenance ("C&M") with a view to preserve the value of the Kapulo resource. The prevailing commodity prices and operating performance at Kapulo triggered an impairment of $59.8 million (before tax) for the year against the carrying value of the Kapulo assets.
In order to fund the C&M plan above, the Company's majority shareholder, Galena Private Equity Resources Fund LP ("Galena"), has agreed on 2 March 2016 to provide Mawson West's subsidiary, Anvil Mining Congo SA ("AMC"), with an interest free, secured loan for these purposes in an amount up to US$20.0 million. In partial consideration for the loan, the Company has issued Galena warrants exercisable to acquire up to 2,744,200,000 ordinary shares of the Company at an exercise price of C$0.01 per share until 31 December 2017.