Speciality Metals International Limited Annual Report 2019

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Page | 40 No provision for income tax is considered necessary in respect of the Company for the period ended 30 June 2019. Deferred tax assets have not been recognised in respect of these items because it is not probable in the short to medium term that these assets will be realised. The Group has total tax losses at 30 June 2019 of $20,324,832 (2018: $19,040,298). A future income tax benefit which may arise from tax losses of 27.5% of approximately $5,589,329 will only be obtained if: - The Parent and the Subsidiaries derive future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; - The Parent and the Subsidiaries continue to comply with the conditions for deductibility imposed by the law; and - No changes in tax legislation adversely affect the Parent and the Subsidiaries in realising the benefit from the deductions for the losses, i.e. current tax legislation permits carried forward tax losses to be carried forward indefinitely. No franking credits are available for subsequent years. Tax consolidation The tax consolidation scheme is applicable to the Company. As at the date of this report the Directors have not assessed the financial effect, if any, the scheme may have on the Company and the consolidated entities and accordingly the Directors have not made a decision whether or not to be taxed as a single entity. The financial effect of the tax consolidation scheme on the Group has not been recognised in the financial statements. 4. FINANCIAL ASSETS & OTHER NON-CURRENT ASSETS 2019 2018 $ $ Current Non-refundable deposit on purchase of Mt Carbine Quarries Pty Ltd 1 - 130,000 Refundable deposit on purchase of Mt Carbine Quarries Pty Ltd 1 - 670,000 Total current - 800,000 Non-Current Shares in listed companies: Sovereign Gold Company Ltd 1,289 6,317 Inventory (Mt Carbine Quarry) 2 7,545,413 - 7,546,702 6,317 1 On 18 April 2018, the Company executed a Sale and Purchase Agreement (SPA) with Mt Carbine Quarries Pty Ltd (MCQ) for the 100% acquisition of Mt Carbine Quarries Pty Ltd, an entity that owns and operates the Mt Carbine Quarry along with Mining Leases ML 4867 and ML 4919. Upon the completion of the transaction on 28 June 2019 the non- refundable deposit was reclassified as part of the acquisition price whilst the refundable portion of the deposit was returned to Speciality Metals’ as per the SPA. 2 Mt Carbine Quarry inventory recognised upon the 100% acquisition of Mt Carbine Quarries Pty Ltd on 28 June 2019.