The fair value for all share options, as detailed below, are determined using a binomial option pricing method that takes into account the
exercise price, the term of the option, the probability of exercise, the share price at grant date and expected volatility of the underlying share,
the expected dividend yield and the risk-free interest rate for the term of the option.
The inputs used for the valuations are tabled below for each class of option issued.
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected
volatility reects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual
outcome. The probability of the performance conditions occurring, where applicable are included in determining the fair value of the options.
a) Valuation of the Voluntary Holding Lock Shares
As part of the acquisition consideration of Erin Mineral Resources Limited (EMRL), Voluntary Holding Lock shares were issued to the
EMRL shareholders as performance based consideration relating to the EMRL assets.
The Voluntary Holding Lock shares (VHL Shares) may only be released from their holding lock upon the earlier of the following being satised:
a) a change in control of the Company; or
b) the Company achieving an enterprise value of at least $25 million for ten consecutive trading days.
The VHL Shares will be fully paid ordinary shares that will rank equally with all existing shares on issue.
If, within 5 years from the date of issue of the VHL shares, the milestone is not reached by the EMRL assets and there is no change of
control event, in relation to MGC, the VHL Shares will be cancelled by way of selective capital reduction or share buyback at a price of
$0.000001 per share.
The VHL shares were included in the acquisition fair value of exploration and evaluation expenditure, and amortised over a period of 5
years. Amounts are written off in line with treatment of exploration and evaluation expenditure.
As at 30 June 2017 the shares were fully amortised.
The Performance Shares are contingent on the completion of certain milestones. The directors currently assess the likelihood
of these milestones being achieved at nil and therefore no value is assigned to these performance shares.
Assets, liabilities, nancial performance and cash ow information for the EMRPL Group were considered immaterial.
The gain on disposal of subsidiary includes a deconsolidation adjustment totalling $33,167.
Notes to the Financial Statements
| Annual Report 2018