ANNUAL FINANCIAL REPORT
30 JUNE 2018
ABN 49 112 609 846
Managing Director
Non-Executive Director
Non-Executive Director
Directors
Steven Michael
Dr Frazer Tabeart
Nicholas Ong
Company Secretary
Matthew Foy
Registered Office
Unit 18, 40 St Quentin Avenue
Claremont WA 6010
Telephone
Facsimile
Email
(08) 9383 3330
(08) 9486 4799
info@arrowminerals.com.au
Auditors
Pitcher Partners BA&A Pty Ltd
Level 11, 12-14 The Esplanade
Perth WA 6000
Bankers
National Australia Bank Limited
Level 14, 100 St Georges Terrace
Perth WA 6000
Share Registry
Advanced Share Registry Service
110 Stirling Highway
Nedlands WA 6009
Stock Exchange Listing
The Company is listed on the Australian Securities Exchange Limited (ASX)
ASX: Code:
AMD
AMDOA
Managing Director’s Letter
Directors’ Report
Corporate Governance Statement
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to and forming part of the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information
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63
Front cover: Rainy Rocks outcrop at Strickland Gold Project
Managing Director’s Letter
Dear Shareholder,
On behalf of your Directors, I am pleased to present Arrow Minerals Limited’s (Arrow or the Company)
2018 Annual Report and Financial Statements.
On 5 December 2017, shareholders approved the change of company name from Segue Resources Limited
to Arrow Minerals Limited. This was a significant moment in the Company’s history, representing a change
in strategic focus from the previous exploration assets of the Company to the Strickland Gold Project and
Malinda Lithium Project.
As part of this change, Arrow has entered into a joint venture with Independence Group NL over the
Plumridge Nickel Project and disposed of its interests in the Pardoo Nickel Project, Pilbara Gold Project
and Plumridge Gold Project. The asset sales and capital raisings completed during the year have left Arrow
in a strong financial position and the Company can now move forward with two exceptional exploration
assets, an outstanding technical team and considerable financial resources.
Prior to renaming and recapitalising the Company, Arrow completed maiden drilling programmes at both
the Strickland Gold and Malinda Lithium Projects, with significant mineralisation confirmed at each project.
This has given the Company’s board and management confidence to aggressively pursue both projects,
with each having the potential to become a “company maker”.
The Strickland Gold Project is 100% owned by Arrow and covers 1,200km2 of exploration licences,
approximately 100km west of Menzies and 180km north-east of Southern Cross, in the Eastern Goldfields
of Western Australia. The project covers over 150 strike kilometres of the Evanston, South Elvire and
Yerilgee Greenstone Belts. Very limited gold exploration has been undertaken in this region, as the main
focus for the past 15-20 years has been on the region’s iron ore potential.
Given the large tenement package and potential for considerable gold mineralisation, Arrow is undertaking
systematic exploration with a focus on the “right work at the right scale”. To this end, we have completed
1km x 1km BLEG sampling over the entire project area and combined this with geological and geophysical
datasets to develop 19 camp-scale gold targets (T1 – 19). The challenge now for Arrow is to continually
assess, progress and re-assess each target to ensure we are moving the project forward quickly and sensibly.
At the Malinda Lithium Project, Arrow completed a maiden reverse circulation drilling programme over the
Tomahawk, T-Bone, Blade and Flank Prospects. Ore-grade lithium and tantalum mineralisation was
intersected at each prospect, with additional testwork confirming spodumene as the primary lithium-
bearing mineral in the majority of the high-grade (+2.0% Li2O) samples. Arrow is currently assessing both
the lithium and tantalum potential of the project, aided by recently acquired high-resolution aerial imagery
and additional geological and geochemical data.
During the year, the Company spent $3 million on exploration which was funded through disposing of
non-core assets, the sale of a 51% interest in the Plumridge Nickel Project to IGO, share placements and
an option entitlement issue. Arrow has ended the year in a very strong financial position, with cash,
receivables and listed investments worth over $5 million. The Company is able to continue its aggressive
exploration strategy at the Strickland Gold Project, where drilling continues to deliver exciting results,
without the need for additional funding. I would like to thank Arrow’s shareholders for their continued
support and look forward to advancing our gold, lithium and nickel assets.
Steven Michael
Managing Director
Arrow Minerals Limited
2018 Annual Report
Page 1
Directors’ Report
Your directors submit their report for Arrow Minerals Limited (formerly Segue Resources Limited) for the
year ended 30 June 2018.
DIRECTORS AND MANAGEMENT
The names of Arrow Minerals Limited’s (Arrow or the Company) directors that held office during the year
and until the date of this report are as below. Directors were in office for this entire period.
Mr Steven Michael Managing Director and Chief Executive Officer
Dr Frazer Tabeart
Non-Executive Director
Mr Nicholas Ong
Non-Executive Director
Mr Steven Michael – Managing Director & Chief Executive Officer
Mr Michael has extensive experience in the global resources sector specialising in corporate
finance and equity capital markets. He has over 20 years’ experience in natural resources
with RBC Capital Markets, Macquarie Bank and NM Rothschild & Sons.
Mr Michael holds a B.Com, is a Member of the Institute of Chartered Accountants in Australia
and is a member of the Australia Institute of Company Directors.
Other current directorships
Nil.
Former directorships in last 3 years
Nil.
Dr Charles (Frazer) Tabeart – Non-Executive Director, Chair of Remuneration Committee
Dr Tabeart is a graduate of the Royal School of Mines with a PhD and Honours in Mining
Geology. He has over 25 years’ experience in international exploration and mining projects,
including 16 years with WMC Resources and 9 years with the Mitchell River Group of
Companies. Whilst at WMC, Dr Tabeart managed Cu-Au and Ni-Cu exploration portfolios
in the Philippines, Mongolia and southern Africa. At Mitchell River Group, Dr Tabeart has led
African Energy Resources through the discovery and acquisition of several coal and uranium
deposits in Botswana and Zambia, building a portfolio comprising 8.7 billion tonnes of
thermal coal.
Dr Tabeart is a member of the Australian Institute of Geoscientists and a member of the
Society of Economic Geologists.
Other current directorships
Dr Tabeart is currently Executive Director of African Energy Resources Limited, an ASX listed
power development and generation company, Managing Director of ASX listed Polarx Ltd,
Director of Mitchell River Group Pty Ltd (a private project generation and development
company) and principal of Geogen Consulting Pty Ltd, a consultant to the minerals industry.
Former directorships in last 3 years
Nil.
Page 2
2018 Annual Report
Arrow Minerals Limited
Mr Nicholas Ong – Non-Executive Director, Chair of Audit & Risk Committee
Mr Ong was a Principal Adviser at the ASX in Perth and brings ten years’ experience in listing
rules compliance and corporate governance to the board. Mr Ong was an active member of
the ASX JORC Group and has overseen the admission of in excess of 100 companies to the
official list of the ASX.
Mr Ong is a member of Governance Institute Australia and has a MBA from the University
of Western Australia.
Other current directorships
Mr Ong is currently Chairman of ASX listed Vonex Limited and Non-Executive Director of
CoAssets Ltd, Helio Energy Limited and Black Star Petroleum Limited.
Former directorships in last 3 years
Non-Executive Director of Auroch Minerals Ltd, Excelsior Gold Limited, Fraser Range Metals
Group Limited, Tianmei BG Corp Ltd, Bojun Agriculture Holdings Limited and Jiajiafu Modern
Agriculture Limited.
Dean Tuck – Exploration Manager
Mr Tuck has over ten years’ experience in international exploration with BHP Billiton, Talisman
Mining and several private companies. Mr Tuck has been a part of multiple discoveries at
Talisman Mining and BHP Billiton and been responsible for the discovery of the Malinda LCT
Pegmatites in the Gascoyne Province.
Mr Tuck holds a BSc in Geoscience from the University of Texas (Dallas) and is a member of
the Australian Institute of Geoscientists and a member of the Society of Economic Geologists.
Matthew Foy – Company Secretary
Mr Foy was previously a Senior Adviser at the ASX, has over ten years’ experience in
facilitating the compliance of listed companies. Mr. Foy is a qualified Chartered Secretary
and possesses core competencies in publicly listed and unlisted company secretarial,
administration and governance disciplines. His expertise is in corporate, commercial and
securities law with an emphasis on capital raisings and mergers and acquisitions. He
contributes general corporate and legal skills along with a strong knowledge of the ASX
requirements.
Mr Foy is a member of Governance Institute Australia, has a Graduate Diploma (Applied
Finance) from FINSIA and a B.Com from the University of Western Australia.
AUDITOR
Pitcher Partners BA&A Pty Ltd was appointed on 6 June 2018 in accordance with Section 327 of the
Corporations Act 2001. The appointment follows the resignation of Pitcher Partners Corporate & Audit
(WA) Pty Ltd. The change of auditor has occurred as part of an internal restructure within Pitcher Partners.
PRINCIPAL ACTIVITIES
The principal activity of the Company during the year was mineral exploration in Western Australia. There
were no significant changes in the nature of the Company’s principal activities during the year.
RESULTS OF OPERATIONS
The net operating loss for the year ended 30 June 2018 was $1,171,587 (30 June 2017: Loss of $887,642).
Arrow Minerals Limited
2018 Annual Report
Page 3
REVIEW OF OPERATIONS
Exploration during the year focussed on the Strickland
Gold Project and Malinda Lithium Project. Maiden drilling
programmes were successfully completed at both
projects, with highly encouraging results received. Arrow
entered into sale or joint venture agreements on its
remaining four projects (Figure 1).
The Company completed close to 30,000m of drilling at
the Strickland Gold Project targeting the T1, T2, T6, T8
and T11 Prospects. The drilling confirmed gold
mineralisation in several different geological settings,
each having distinct characteristics analogous to known
gold deposits across Western Australia. Significant gold
results include 15m @ 1.5g/t including 3m @ 6.7g/t at
the T1 Prospect and 48m @ 0.7g/t including 21m @
1.1g/t at the T2 Prospect.
reverse circulation
four outcropping pegmatites
At the Malinda Lithium Project, Arrow completed a
(RC) drilling
maiden 17 hole
programme over
in
September 2017. Drilling intersected up to 2.0% Li2O
(lithium) and over 800ppm Ta2O5 (tantalum). In addition,
XRD analysis of high-grade lithium samples confirmed the
primary lithium-bearing mineral as spodumene.
In February 2018, Arrow sold a 51% interest in the
Plumridge Nickel Project to Independence Group NL
(ASX: IGO) (IGO) for $1,500,000. IGO can increase its interest in the joint venture to 90% through the
expenditure of $5,000,000 over four years. IGO owns the Nova Nickel Mine in the southern portion of the
Fraser Range Province and is the is the largest tenement holder in the Fraser Range.
Figure 1: Project location map
STRICKLAND GOLD PROJECT
Eastern Goldfields, Western Australia
The Strickland Gold Project covers 1,200km2 of highly
prospective greenstone belts, 100km west of Menzies and
180km north of Southern Cross in the Eastern Goldfields
of Western Australia. The Project covers over 150 strike
kilometres of the Evanston, South Elvire and Yerilgee
Greenstone Belts which straddle the Evanston and un-
named Yerilgee Shear Zones (Figure 2).
Over the past year, Arrow has completed a project-wide
geochemical survey (BLEG sampling) which has been
integrated with geophysical and geological datasets to
identify 19 camp-scale gold prospects (Figure 3). Gold
camps have the potential to host multiple gold deposits
within a major lithostructural zone (i.e. Jundee, Kundana,
Ora Banda) or single significant deposits (i.e. Bronzewing,
Wallaby, Darlot).
Page 4
2018 Annual Report
Arrow Minerals Limited
Figure 2: Strickland Gold Project location map
Initial wide-spaced soil sampling has been completed over the majority of these target areas, with significant
gold-in-soil anomalies defined at each prospect. Several prospects contain multiple gold-in-soil anomalies.
Figure 3: 19 camp-scale gold prospects at Strickland Gold Project
In late 2017, Arrow completed a maiden scout drilling programme over the T1, T2, T6, T8 and T11 Prospects
to confirm the presence of gold mineralisation and understand the weathering profile at each prospect for
suitability of different drilling and geophysical techniques. In addition, two diamond holes were drilled at
the T1 and T2 Prospects for structural and petrophysical analysis.
The drill programme consisted of 10,000m of aircore and RC drilling, with several lines drilled across the
central portion of each Prospect. Drilling confirmed gold mineralisation at all five prospects and enhanced
the understanding of the regional and local geology. Significant gold results include:
15m @ 1.5g/t Au including 3m @ 6.7g/t Au (T1 Prospect);
48m @ 0.7g/t Au including 21m @ 1.1g/t Au (T2 Prospect);
27m @ 0.6g/t Au & 18.7g/t Ag including 7m @ 1.0g/t Au & 59.3g/t Ag (T6 Prospect); and
27m @ 0.6g/t Au including 1m @ 9.0g/t Au (T8 Prospect).
Arrow Minerals Limited
2018 Annual Report
Page 5
Following the successful scout drilling programme in late 2017, Arrow commenced the first significant
prospect-scale drilling programme at the T1, T2, T6 and T8 Prospects in February 2018. The aircore
programme consisted of wide spaced drilling completed across and beyond the limits of gold-in-soil
anomalies to understand the nature of the regolith, better define underlying geology and delineate bedrock
gold anomalism at the base of weathering (saprolite/bedrock interface) and potential structural controls.
A total of 1,097 holes for 19,200m (average hole depth of 18m) were drilled across the four prospects on
an initial 400m x 80m spacing. Some lines were closed in to 40m or 20m spacing where depth to basement
was shallow. The drill programme was highly successful, with gold mineralisation confirmed at each
Prospect within several different geological settings, each having distinct characteristics analogous to known
gold deposits across Western Australia. This will enable more efficient and effective future exploration
programmes, targeting key mineralised structures.
T1 Prospect
Arrow completed wide-spaced aircore drilling at the T1a
and T1b Prospects located in the Evanston Greenstone
Belt. The T1 Prospect is defined by two 3.5km x 1.0km
gold-in-soil anomalies and is within a mineralised zone
which hosts the historical Evanston Mine and numerous
historical prospector workings at Rainy Rocks and Yahoo.
A total of 412 holes were drilled for 5,254m (average hole
depth 13m) on a nominal 400m x 40m spacing over the
majority of the T1a and T1b prospects (Figure 4).
The aircore drilling programme defined key mineralised
structural corridors at T1a and T1b and identified
prospective lithostructural features for follow up drill
testing. In addition, drilling at the T1a Prospect continues
to produce significant drill intercepts with aircore hole
BARAC0945 intersecting 33m @ 0.3g/t from 0m, including
3m @ 0.9g/t from 27m. This intercept is immediately
along strike from BARAC0136 which intersected 15m @
1.5g/t including 3m @ 6.7g/t from 12m depth (Figure 5).
In addition to drilling, detailed mapping and litho-
structural interpretation has been ongoing at T1, which
has significantly enhanced the understanding of the
underlying geology and structural controls on gold
anomalism and mineralisation.
Drilling at T1a intersected a highly prospective structural
corridor leading into a recumbently folded banded iron-
ultramafic package which is analogous to the Copperhead
gold deposit in the Southern Cross Belt which had
historical gold production of over 1 million ounces.
Petrophysical results from diamond core drilled in 2017
has confirmed that mineralisation at the T1 Prospect has
a strong induced polarisation (IP) and resistivity contrast
with surrounding unmineralised lithological units. As
such, a ground IP survey will be carried out over the T1a
Prospect in late 2018 to assist in identifying drill targets
for RC drill testing.
Figure 4: T1a & T1b bedrock gold anomalies
Figure 5: T1a Prospect – significant drill intercepts
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2018 Annual Report
Arrow Minerals Limited
T2 Prospect
The T2 prospect is located in the Mt Elvire greenstone belt adjacent to the regionally significant Evanston
Shear and has been defined by a 5km x 1.5km gold-in-soil anomaly. The T2 prospect was first drilled in
July 2017, with BARRC007 intersecting 48m @ 0.7g/t from 27m including 21m @ 1.1g/t and 3m @ 2.3g/t.
An additional seven RC holes (882m) were completed, with hole BARRC030 intersecting 3m @ 0.4g/t from
9m including 1m @ 1.1g/t.
In addition, Arrow completed a diamond drill hole to confirm mineralisation and controlling structures as
well as collect samples for petrophysics. The diamond hole (BARDD002) twinned RC hole BARRC007 and
confirmed the magnitude and thickness of mineralisation with assay results of 34m @ 0.5g/t from 32m
including 1m @ 2.0g/t, 7m @ 1.0g/t and 1m @2.9g/t.
In early 2018, Arrow completed a total of 213
aircore drill holes for 3,539m (average hole depth
of 17m) at the T2 Prospect. In addition to drilling,
detailed mapping and litho-structural interpretation
has been ongoing, which has significantly enhanced
the understanding of the underlying geology and
structural controls on gold mineralisation. The
combined programme has delineated four gold in
bedrock anomalies (Figure 6):
T2a - 2.3km x 200m gold-in-bedrock anomaly
hosted between the granite and greenstone,
with coincident Bi-Mo-Te anomalism;
T2b - 3.5km x 300m gold-in-bedrock anomaly
hosted at the intersection of a major N-S
sheared ultramafic
contact with mafic
amphibolite and cross cutting structures with
coincident As-Bi-Mo-Te-W anomalism;
T2c - 1.0km x 200m gold-in-bedrock anomaly
located within a brecciated BIF sequence near
the hinge of the thrusted syncline with
coincident Sb-W-Bi-Mo anomalism; and
T2d - 2.5km x 200-500m wide gold-in-soil
anomaly located within a 10-20m wide sheared
granite with intense epidote alteration and
quartz
Bi-Te
anomalism.
veining with
coincident
Figure 6: T2 Prospect – gold in bedrock anomalies
A substantial amount of transported cover was encountered at T2, resulting in a mix of broad transported,
in situ and masked geochemical anomalies. The aircore drilling programme has defined discrete bedrock
targets at T2a and T2b and identified key geological structures. In addition, drilling at the T2c Prospect,
where soil sampling was ineffective due to transported cover, produced 41m @ 0.2g/t from 32m, including
3m @ 0.9g/t.
Arrow has contracted a high-resolution aeromagnetic survey at T2, which will be completed prior to the
completion of the first pass drilling across the T2c and T2d Prospects, which is expected in late 2018. The
aircore drilling programme at the T2 Prospect will include the completion of tight spaced fenceline drilling
over T2c and T2d. In addition, Arrow will complete a ground IP survey over the T2b Prospect in late 2018,
aimed at identifying drill targets for RC drill testing.
Arrow Minerals Limited
2018 Annual Report
Page 7
T6 Prospect
The T6 prospect is located in the Yerilgee greenstone belt and was defined by a 4.2km x 1.3km gold-in-
soil anomaly, adjacent to a late stage granitic intrusion and a project scale NNE trending structure. In the
first half of the Period, Arrow completed 29 aircore holes across three fence lines and six RC holes.
Three RC holes were drilled into a well mineralised porphyry to the south-east and three holes interested
a quartz-breccia/BIF contact in the north-west of the prospect. BARRC025 returned a significant intersection
of 27m @ 0.6g/t Au and 18.7g/t Ag from 8m, with higher grade intercepts including 1m @ 1.5g/t Au and
128g/t Ag and 1m @ 2.1g/t Au and 41.2g/t Ag from 16m.
T6 is interpreted to be a regional anticline of high magnesium basalts, sedimentary iron formations and
ultramafics, which have been faulted and intruded by a number of mineralised felsic porphyrys and dacites.
Drilling of the southern line intersected alteration associated with the contact of high magnesium basalts
and a felsic porphyry intrusion. Drilling also intersected a 10 – 40m wide brecciated quartz vein along a
sedimentary iron formation/ultramafic contact with a porphyry intrusion in the north-west of the prospect.
The presence of high silver and bismuth associated with the gold potentially indicates a precursor VMS,
intrusion related component to the mineralised system. Such a mineralised system would be similar to Ora
Banda, Mt Pleasant or Chalice gold deposits.
Following the success of the initial aircore drill programme, Arrow completed an additional 394 holes for
7,937m (average hole depth of 20m) on a 400m x 80m spacing at the T6 Prospect. The aircore drilling
programme intersected bedrock gold mineralisation in multiple adjacent drill lines across four bedrock
anomalies, ranging from 1.5km to 3.5km in strike length (Figure 7).
Figure 7: T6 Prospect – plan view showing gold grade contours and significant drill results
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2018 Annual Report
Arrow Minerals Limited
The aircore drilling programme has delineated four gold in bed rock anomalies at T6:
T6a - 1.5km x 300m gold-in-bedrock anomaly hosted within a BIF-ultramafic-sediment package
adjacent to a felsic porphyry intrusion;
T6b - 1.7km x 300m gold-in-bedrock anomaly hosted around narrow BIFs within a felsic and ultramafic
volcanic package;
T6c - 3.5km x 300m gold-in-bedrock anomaly located along a major shear bend at the contact of felsic
and lamprophyre intrusions and ultramafic volcanics; and
T6d - 3km x 100-500m wide gold-in-bedrock anomaly located along several splays off a major project
scale shear and a mineralised porphyry intrusion.
The T6a Prospect has produced significant drill intercepts, including:
56m @ 0.8g/t from 0m to EOH, including 24m @ 1.6g/t and 9m @ 3.3g/t (BARAC0477);
34m @ 0.3g/t from 0m, including 6m @ 0.6g/t and 3m @ 0.9g/t (BARAC0457); and
45m @ 0.4g/t from 6m, including 8m @ 0.9g/t and 1m @ 2.1g/t (BARRC025).
Arrow has interpreted the gold bearing horizon at T6a as a siliceous sulfidic unit within the lower BIF
(Figure 8). The mineralised unit has a true width of around 50m and has been confirmed through drilling
over a strike length of 1.5kms. The T6b Prospect has a similar mineralised horizon, potentially structurally
offset, with a strike length of 1.5kms.
Figure 8: T6 Prospect – section A-AA showing significant gold intersections
In addition, end of hole multielement analysis returned multiple zones of As-Sb-Bi-Mo-Te-W anomalism
(>10x crustal abundance) in proximity to interpreted key structures. These pathfinder elements are
indicative of orogenic gold systems and indicate a highly fertile mineralisation system.
Arrow Minerals Limited
2018 Annual Report
Page 9
T8 Prospect
Arrow completed a total of 78 holes for 2,484m (average
hole depth of 32m) on a 400m x 80m spacing at the T8
Prospect (Figure 9). The aircore drilling programme has
delineated a 1.8km x 400m gold bedrock anomaly which
remains open to the south along a mineralised structure.
Importantly, the soil anomaly has proven to be largely in-
situ, directly overlying bedrock mineralisation.
The drill programme has also significantly enhanced the
understanding of the geological setting and structural
controls on mineralisation. Massive quartz breccias and
quartz carbonate veins were intersected in the drilling
with minor felsic dykes intruding the local structures.
Gold mineralisation was associated with these structures
and will be a focus of future in-fill drill programmes.
Two sections across the T8 Prospect (Figure 10 and
Figure 11) demonstrate the thickness and extent of gold
mineralisation in the saprolite and cover sequences.
Some of the better results include:
57m @ 0.16g/t from 0m, including 3m @ 0.61g/t and
3m @ 0.40g/t (BARAC0244);
45m @ 0.13g/t from 0m, including 3m @ 0.54g/t and
3m @ 0.37g/t (BARAC0246); and
27m @ 0.41g/t from 0m, including 3m @ 1.13g/t and
3m @ 0.55g/t (BARRC013).
Figure 9: T8 Prospect – plan view showing gold in
bedrock drill results
Figure 10: T8 Prospect – section A-AA showing significant gold intersections
Figure 11: T8 Prospect – section B-BB showing significant gold intersections
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Arrow Minerals Limited
Aeromagnetic Survey and Geological Mapping
During the Period, Arrow flew an airborne magnetic survey over a large portion of the Strickland Gold
Project to provide 100m line spaced coverage over the southern portion of the Yerilgee Greenstone Belt
and a detailed survey at the T1 Prospect to assist with geological mapping and interpretation.
The aeromagnetic survey over the T1 Prospect consisted of 25m flight lines which has significantly increased
the resolution of the magnetic data (Figure 12). The T1 Prospect is a largely stripped terrain with abundant
outcropping fresh rock. The high-resolution magnetics were used in conjunction with detailed geological
mapping to focus the aircore drilling programme on areas of structural and geochemical anomalism.
Following the success of the close spaced airborne magnetic survey, close spaced magnetic surveys are
planned to be flown at T2, T6, T8-14.
Figure 12: T1a Prospect – detailed magnetic survey (left) vs regional magnetic survey (right)
MALINDA LITHIUM PROJECT
Gascoyne Region, Western Australia
The Malinda Lithium Project is located 120km
north-east of Gascoyne Junction in the Gascoyne
Region of Western Australia
(Figure 13).
Exploration conducted by Arrow in 2017 identified
several lithium and tantalum-bearing pegmatites
associated with fertile granite intrusions.
Arrow completed a maiden 17 hole RC drilling
programme over four outcropping pegmatites in
September 2017. The 2,430m RC drill programme
was designed to test the thickness, depth and
orientation of the lithium-caesium-tantalum (LCT)
prospects which had been defined by previous soil
sampling and rock chip programmes. The drilling
resulted in the identification of thick moderately
dipping pegmatites at three of the main prospects
and assays have confirmed the mineralisation
potential at the Tomahawk, Blade and T-Bone Prospects.
Figure 13: Malinda Lithium Project – location map
Arrow Minerals Limited
2018 Annual Report
Page 11
Arrow submitted 10 samples >1.5% Li2O for mineralogical determination by X-ray Diffraction (XRD). XRD
analysis has confirmed the presence of spodumene and holmquistite as well as lithium micas. The highest
grade samples (all +2.0% Li2O) contain spodumene as the main lithium-bearing mineral.
In 2018 Arrow acquired a high resolution (3cm) aerial image and digital terrain model over the prospect
area. The high resolution aerial image is being used to identify and map the outcropping occurrences of
the pegmatites in conjunction with ground mapping to determine the distribution and structural controls
on the pegmatite swarms.
Litho-structural mapping and interpretation is being used to systematically rock chip pegmatite occurrences
across the prospect to identify the fractionation trends of the pegmatite system. This information will be
used to target drilling over thicker and more mineralised zones within the pegmatite swarm.
The detailed imagery and ground mapping have identified strike continuations of the Tomahawk pegmatite
under thin transported cover material (Figure 14). Arrow has confirmed pegmatite subcrops through the
transported material, significantly enhancing the prospectivity of the northern areas to host highly
fractionated and well-mineralised pegmatites.
Figure 14: Malinda Project showing new pegmatite zones and rock chips
PLUMRIDGE NICKEL PROJECT
Fraser Range Province, Western Australia
Plumridge Nickel Joint Venture (Arrow 49%, Independence Group NL 51%)
The Plumridge Nickel Project consists of eight exploration licences covering 2,500km2 in the Fraser Range
Province of Western Australia. The Project is highly prospective for massive nickel-copper sulphides and is
located 200km north of the Nova Operation (Nova) which is 100%-owned by Independence Group NL
(ASX: IGO) (IGO) and produced 22.3kt Ni and 10.0kt Cu in FY2018.
During the Period, Arrow’s previous joint venture partner, MMG Exploration Pty Ltd (MMG), completed a
4,000m RC drilling programme at the Plumridge Nickel Project. The drilling programme commenced at
the end of October 2017 and consisted of 11 holes targeting seven electro-magnetic (EM) conductors.
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2018 Annual Report
Arrow Minerals Limited
The drill programme provided significant exploration data and materially improved the geological
understanding of this landholding, which remains highly prospective for the discovery of nickel-copper
deposits. In December 2017, MMG elected to withdraw from the Plumridge Nickel Project prior to earning
any interest in the Project.
On 5 February 2018, Arrow announced it had entered into a joint venture with IGO covering the Plumridge
Nickel Project. The key terms of the Plumridge Nickel Joint Venture are:
IGO acquired a 51% interest in the Project by paying Arrow $1,500,000 in cash;
IGO and Arrow entered into an unincorporated joint venture over the Project, with IGO managing all
exploration activities;
IGO can increase its interest in the Project to 90% through the expenditure of $5,000,000 over four
years; and
IGO can accelerate earning its 90% Project interest by paying Arrow cash equal to the amount
remaining for the joint venture earn-in.
IGO is the largest tenement holder and explorer in the Fraser Range, with 14,500km2 of exploration licences
under management. Since acquiring Nova in late 2015, IGO has undertaken considerable regional
exploration in the Fraser Range and continues to spend over $20 million per annum on regional exploration.
During the Period, IGO commenced exploration at the Project, utilising the geophysical datasets acquired
by Arrow and MMG over the past three years, including the recently acquired HeliTEM airborne
electromagnetic survey. IGO has completed an infill ground gravity survey over several tenements and
acquired 2,633 line kilometres of airborne electromagnetics using Spectrem. In addition, planning and
logistics in preparation for the upcoming regional aircore drilling programme was completed, including
lodging POWs, planning out gridlines and an anthropological review.
PILBARA GOLD PROJECT
Pilbara Region, Western Australia
During the Period, Arrow announced it executed definitive agreements with Pacton Gold Inc. (TSXV: PAC)
(Pacton) for the sale and joint venture of the Pilbara Gold Project which consists of two exploration licences
and two exploration licence applications totalling 609km2 in the Pilbara Region of Western Australia.
Pacton acquired a 51% interest in the Pilbara Gold Project through the payment of C$300,000 with an
additional C$200,000 to be paid upon granting of the exploration licence applications (C$100,000 paid on
the grant of each application) (Tranche 1).
In addition to the cash payments, Pacton issued Arrow C$250,000 of shares at a price of C$0.23 per share
with a 1 for 1 attaching warrant (3 year term, exercisable at C$0.35). Arrow received 1,086,957 common
shares and 1,086,957 warrants in Pacton.
Following completion of Tranche 1, Pacton has the option to acquire an additional 29% ownership interest
in the Pilbara Gold Project, increasing its interest to 80%, by:
Incurring exploration expenditure of C$500,000 within 12 months; and
Issuing Arrow with C$250,000 worth of Pacton shares at the 5-day volume weighted average price
immediately prior to the date of issue.
Once Pacton has reached an 80% interest in the Pilbara Gold Project, Arrow will be free-carried for the first
C$5,000,000 of expenditure. Arrow will receive a Discovery Bonus of C$500,000 in cash upon Pacton
publishing a gold resource at the Pilbara Gold Project of over 100,000oz in accordance with National
Instrument 43-101 (TSXV equivalent of the JORC Code).
Arrow Minerals Limited
2018 Annual Report
Page 13
Arrow retains all rights to explore, mine and extract lithium, caesium and tantalum.
Subsequent to the Period, on 23 August 2018, Arrow advised it had agreed to dispose of its remaining
49% interest in the Pilbara Gold Project to Pacton for consideration of C$1,000,000 in cash and 2,000,000
Pacton Shares (Consideration).
In addition to receiving the Consideration, Arrow retains the following rights and obligations:
Pacton will pay Arrow C$200,000 upon granting of the exploration licence applications, with C$100,000
paid on the grant of each application;
Arrow will receive a Discovery Bonus of C$500,000 in cash upon Pacton publishing a gold resource at
the Project of over 100,000oz in accordance with National Instrument 43-101 (TSXV equivalent of the
JORC Code); and
Arrow retains all rights to explore, mine and extract lithium, caesium and tantalum.
PLUMRIDGE GOLD PROJECT
Fraser Range Province, Western Australia
The Company surrendered four tenements comprising the Plumridge Gold Project. Arrow entered into an
agreement to sell its geological dataset relating to a portion of the Plumridge Gold Project to an unrelated
party for total consideration of $125,000.
PARDOO NICKEL PROJECT
Pilbara Region, Western Australia
The Company’s joint venture partner, Caeneus Minerals Limited (ASX: CAD) (Caeneus) acquired the
remaining 20% of the Pardoo Nickel Project for consideration of $200,000 to be paid in two instalments
comprising $100,000 that was paid upon signing and an additional $100,000 on or before 12 December
2018.
Competent Persons Statement
The information in this report that relates to Exploration Results is based on information compiled by Mr Dean
Tuck who is a Member of the Australian Institute of Geoscientists. Mr Tuck is a full-time employee of Arrow and
has more than five years’ experience which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012
Edition of the “Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves”. Mr
Tuck consents to the inclusion in the report of the matters based on his information in the form and context in
which it appears. Additionally, Mr Tuck confirms that the entity is not aware of any new information or data that
materially affects the information contained in the ASX releases referred to in this report.
CORPORATE AND FINANCIAL
Change of Company Name
During the Period, the Company obtained shareholder approval to change the Company’s name with the
Australian Securities and Investments Commission from Segue Resources Limited to Arrow Minerals Limited.
The effective date for the change of company name and ticker code on ASX was 6 December 2017.
Page 14
2018 Annual Report
Arrow Minerals Limited
Pro-Rata Non-Renounceable Options Entitlement Issue
On 25 October 2017, the Company announced a one-for-four pro-rata non-renounceable options
entitlement issue of 43,147,987 new listed options (Option) to acquire fully paid ordinary shares in the
capital of the Company (Offer). The Options were issued for $0.01 per Option and are exercisable at 10¢
each on or before 31 December 2019.
On 1 December 2017, Arrow advised that following the close of the Offer and placement of shortfall, a
total of 43,147,987 Options were issued to raise gross proceeds of $431,479.
IGO Strategic Investment in Arrow
In addition to entering into the Plumridge Nickel Joint Venture, IGO subscribed for $1,000,000 of shares in
Arrow at a price of 2.9¢ per share, and one attaching listed option for every two shares subscribed for at
a strike price of 10¢ with an expiry of 31 December 2019 (IGO Placement).
The IGO Placement was subject to shareholder approval obtained at a meeting on 6 April 2018. The IGO
Placement is subject to a voluntary escrow, with 50% of the IGO Placement escrowed for 6 months from
the subscription date and the remaining 50% escrowed for 12 months from the subscription date. Subject
to regulatory approval, IGO will be given the right to participate in equity raisings on a pro-rata basis.
Oversubscribed Placement
On 5 February 2018, Arrow advised it had completed a placement to sophisticated investors on the same
terms as the IGO Placement (being at an issue price of 2.9¢ per share with one option (AMDOA) for every
two shares) to raise $2,650,000 (Placement).
The Placement was heavily oversubscribed with support from new institutional and professional investors
together with existing shareholders. The Placement was completed in two tranches, with Tranche 1 (48.75%
of shares to be issued in the Placement comprising 26,463,792 shares pursuant to Listing Rule 7.1 and
18,085,861 pursuant to Listing Rule 7.1A) issued under the Company’s existing placement capacities and
Tranche 2 (46,829,670 shares or 51.25% of shares and 100% of the options issued in the Placement) were
subject to shareholder approval obtained on 6 April 2018.
Change of Auditor
During the Period, the Company advised that Pitcher Partners BA&A Pty Ltd had been appointed as the
Company’s Auditors with effect from 6 June 2018. The appointment follows the resignation of Pitcher
Partners Corporate & Audit (WA) Pty Ltd, and ASIC’s consent to their resignation. The change of auditor
has occurred as part of an internal restructure within Pitcher Partners.
Lapse of Options
On 18 February 2018, 428,471 unquoted options exercisable at 35.0¢ lapsed.
Subsequent to the Period on 3 August 2018, the Company advised that 714,285 options exercisable at
12.6¢ had lapsed.
The capital structure of Arrow, as at date of directors’ report, is set out below:
Quoted Securities
Ordinary shares on issue (ASX:AMD)
Options exercisable at 10.0¢ on or before 31/12/2019 (ASX:AMDOA)
Unquoted Securities
Options exercisable at 17.5¢ on or before 30/6/2019
Options exercisable at 7.0¢ on or before 31/12/2019
306,976,322
120,872,133
8,571,408
13,146,469
Arrow Minerals Limited
2018 Annual Report
Page 15
EVENTS AFTER THE BALANCE SHEET DATE
Exploration Development Incentive Scheme
Subsequent to the Period, on 1 August 2018, Arrow advised that it was participating in the Federal
Government’s Exploration Development Incentive (EDI) Scheme for the 2016/2017 tax year. The process is
administered by the Australian Taxation Office.
The EDI enables eligible exploration companies to create exploration credits (EDI Credits) by giving up a
portion of its tax losses and distributing these EDI Credits to its shareholders. Australian tax resident
shareholders that are issued with an EDI Credit will be entitled to a refundable tax offset (for shareholders
who are individuals or superannuation funds) or franking credits (for shareholders who are companies).
The Company’s carry forward tax losses will be reduced by the amount of EDI Credits created.
Arrow claimed EDI expenditure of $1,487,586 for the 2017 income tax year. Arrow shareholders received
a pro-rata distribution of $409,086 of EDI Credits, which equates to 0.13¢ per share.
Lapse of Options
On 3 August 2018, the Company advised that 714,285 options exercisable at 12.6¢ had lapsed.
Employee Share Scheme Buy-Back
On 17 August 2018, the Company bought back, for no consideration, 1,435,713 shares previously issued
under the Employee Share Scheme.
Sale of 49% Interest in Pilbara Gold to Pacton Gold Inc.
On 23 August 2018, Arrow advised it had agreed to dispose of its remaining 49% interest in the Pilbara
Gold Project to Pacton for consideration of C$1,000,000 in cash and 2,000,000 Pacton Shares
(Consideration). The agreement enables Pacton to acquire a 100% interest in the Project, while preserving
the Arrow’s rights under the original Sale and Joint Venture Agreement, including rights to explore for
lithium-caesium-tantalum minerals and future success payments.
On 21 September 2018, the Company advised that Pacton received final acceptance from the TSX Venture
Exchange for the Share Sale Agreement dated 20 August 2018 to purchase the Company’s 49% interest in
the Pilbara Gold Project.
Other than the above, there have been no events subsequent to balance date of a nature that would
require disclosure.
SIGNIFICANT CHANGE IN THE STATE OF AFFAIRS
There were no events of a material nature that have affected significantly the results or state of affairs of
the Company.
REVIEW AND RESULTS OF OPERATIONS
The principal activity of the Company and its subsidiaries (the Group) during the year were mineral
exploration. The net loss for the year ended 30 June 2018 was $1,171,587 (2017: Loss of $887,642).
Summary of Financial Position
At 30 June 2018, the Group’s cash reserves were $3,758,484 (2017: $731,716). The increase in cash was
due to capital raisings of $5,142,784 (2017: $2,432,804) and asset sales of $1,934,000 (2017: $124,803). Net
assets of the Group as at 30 June 2018 were $12,977,261 (2017: $8,756,565).
ENVIRONMENTAL REGULATION
The Company is subject to and compliant with all aspects of environmental regulation of its exploration
activities. The Directors are not aware of any environmental law that is not being complied with.
Page 16
2018 Annual Report
Arrow Minerals Limited
Future Developments
The Group will continue to explore its Barlee Gold, Malinda Lithium and Plumridge Nickel Projects in
Western Australia; and
The Group continues to review new project venture opportunities which are consistent with its strategy
to become a diversified minerals explorer.
Dividends
No dividend has been paid since the end of the financial period and no dividend is recommended for the
current year.
Proceedings on Behalf of the Group
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for
the purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under
section 237 of the Corporations Act 2001.
REMUNERATION REPORT (AUDITED)
Remuneration of directors and executives is referred to as compensation throughout this report. The term
‘key management personnel’ refers to those persons having authority and responsibility for planning,
directing and controlling the activities of the Group including directors of the Company and other
executives.
The following were key management personnel of the Company at any time during the previous and
current financial year and have been in office for the entire period unless indicated otherwise:
Mr Steven Michael
Managing Director
Mr Nicholas Ong
Non-Executive Director
Dr Frazer Tabeart
Non-Executive Director
Mr Matthew Foy
Company Secretary
Mr Dean Tuck
Exploration Manager
Compensation levels for directors and key management personnel of the Company are competitively set
to attract and retain appropriately qualified and experienced directors and executives.
The Board is responsible for compensation policies and practices. The Board, where appropriate, seeks
independent advice on remuneration policies and practices, including compensation packages and terms
of employment.
The compensation structures explained below are designed to attract suitably qualified candidates, reward
the achievement of strategic objectives, and achieve the broader outcome of creation of value for
shareholders. The compensation structures take into account a number of factors, including length of
service, particular experience of the individual concerned, and overall performance of the Company.
A remuneration consultant has not been employed by the Company to provide recommendations in respect
of remuneration, given the size of the Group and its current structure.
Cash bonuses equal to a maximum of 50% of salary may be paid, at the discretion of the Board, as part of
the Short Term Incentive Plan.
Arrow Minerals Limited
2018 Annual Report
Page 17
Non-Executive Directors
Total remuneration for all Non-Executive Directors, is not to exceed $250,000 per annum as approved by
shareholders. This does not include Consulting Fees.
Non-Executive Directors received a fixed fee for their services of $28,000 per annum (excl. GST) for services
performed.
There is no direct link between remuneration paid to any Non-Executive Directors and corporate
performance. There are no termination or retirement benefits for Non-Executive Directors (other than
statutory superannuation).
Remuneration
Details of the remuneration of the Key Management Personnel of Arrow are set out in the following table.
Currently, directors are responsible for the management of the Group.
Salary
& fees
$
Post
employment
benefits1
$
Long
service
leave
$
Equity settled
share based
payments
$
Total
$
Proportion
remuneration
rec’d in shares
%
311,077
61,923
7,484
28,000
28,000
-
-
76,488
42,434
36,379
456,972
70,434
64,379
17%
60%
57%
25,823
98,060
26%
40,184
7,484
221,308
214,354
904,199
19%
25%
Company secretary
M Foy
64,133
8,104
Exploration manager
D Tuck
159,060
590,270
15,110
85,137
283,333
26,916
4,590
24,000
24,000
-
-
Company secretary
M Foy
60,000
5,700
Exploration manager
D Tuck4
84,583
475,916
8,035
40,651
26,687
10,938
14,063
336,936
34,938
38,063
8%
31%
37%
(7,147)
58,553
-
12,214
56,755
104,832
577,912
12%
10%
Includes Superannuation.
Dr Frazer Tabeart’s Director fees were paid directly to his related party, Geogen Consulting Pty Ltd.
Director fees for Mr Nicholas Ong were paid to Minerva Corporate Pty Ltd, a related entity.
1.
2.
3.
4. Mr Tuck commenced on 18 November 2016.
Page 18
2018 Annual Report
Arrow Minerals Limited
30 June 2018
Directors
S Michael
F Tabeart2
N Ong3
30 June 2017
Directors
S Michael
F Tabeart2
N Ong3
-
-
-
-
-
-
-
-
4,590
Share Based Remuneration
Options
No options were granted to directors for remuneration during the financial year and there were no
outstanding options over ordinary shares held by directors at 30 June 2018.
Shares
On 17 April 2014, shareholder approval was received for the adoption of an employee incentive scheme,
known as the Employee Share Plan (ESP or Plan).
The objective of the ESP is to attract directors with suitable qualifications, skills and experience to plan,
carry out and evaluate the Company’ Strategy and to motivate and retain those directors.
A material feature of the Plan is the issue of Shares pursuant to the Plan may be undertaken by way of
provision of a limited-recourse, interest free loan to be used for the purposes of subscribing for the Shares.
The term of each loan will be 3 years from the date of issue of the Shares, subject to earlier repayment in
accordance with the terms of the Plan (e.g. ceasing to be an employee of the Company or an event of
insolvency).
The Shares issued to the Eligible Participants will be fully paid ordinary shares in the capital of the Company
issued on the same terms and conditions as the Company’s existing Shares, other than being subject to a
holding lock until such time as the respective restriction conditions have been satisfied, including the
completion of any restriction period, and any Loan has been extinguished or repaid under the terms of the
Plan.
Although these are shares for legal and taxation purposes, Accounting Standards require they be treated
as options for accounting purposes.
See Note 19 Share based payments for further details.
ESP Terms and Conditions
Participants in the ESP may be directors of the Company or any of its subsidiaries or any other related
body corporate of the Company.
Issue price: The issue price of each Share will be a 1% discount to the volume weighted average of the
Company’s Shares over the 5 days of trading on the ASX immediately prior to the issue of the Plan Shares,
or such other price as the Board determines.
Restriction Conditions: Shares may be subject to restriction conditions relating to milestones (such as a
period of employment) or escrow restrictions that must be satisfied before the Shares can be sold,
transferred, or encumbered. Shares cannot be sold, transferred or encumbered until any loan in relation
to the Shares has been repaid or otherwise discharged under the Plan.
Extension of Escrow Condition: If an Eligible Participant ceases to be an Eligible Participant as a result of
an occurrence other than certain bad leaver occurrences prior to the satisfaction of all Restriction
Conditions, the escrow restriction applied under the Escrow Condition in relation to the Plan Shares held
by the Participant will be extended by 6 months.
Where a Milestone Condition in relation to Shares is not satisfied by the due date, or becomes incapable
of satisfaction in the opinion of the Board, the Company may, unless the Milestone Condition is waived by
the Board, either:
(i) buy back and cancel the relevant Shares within 12 months of the date the restriction condition
was not satisfied or was waived (or became incapable of satisfaction) under Part 2J.1 of the
Corporations Act in consideration for the cancellation of any Loan granted;
Arrow Minerals Limited
2018 Annual Report
Page 19
(ii) cancel the relevant Shares within 12 months of the date the restriction condition was not satisfied
or was waived (or became incapable of satisfaction) under Part 2J.1 of the Corporations Act in
consideration for the cancellation of any Loan granted; or
(iii) in the event that such a buy-back or cancellation of Shares cannot occur, require the Participant
to sell the Shares as soon as reasonably practicable either on the ASX and give the Company the
sale proceeds (Sale Proceeds), which the Company will apply in the following priority:
(A)
(B)
first, to pay the Company any outstanding Loan Amount (if any) in relation to the Shares
and the Company’s reasonable costs in selling the Shares;
second, to the extent the Sale Proceeds are sufficient, to repay the Participant any cash
consideration paid by the Participant or Loan Amount repayments (including any cash
dividends applied to the Loan Amount) made by or on behalf of the Participant; and
(C)
lastly, any remainder to the Company to cover its costs of managing the Plan.
Restriction on transfer: Other than as specified in the Plan, Participants may not sell or otherwise deal
with a Share until the Loan Amount in respect of that Share has been repaid and any restriction conditions
in relation to the Shares have been satisfied or waived. The Company is authorised to impose a holding
lock on the Shares to implement this restriction.
For details of ESP shares issued in the previous financial year refer to the remuneration report of the 2017
Annual Report.
On 22 November 2017 shareholder approval was received for Dr Frazer Tabeart and Messrs Steven Michael
and Nicholas Ong to subscribe for additional shares under the Plan.
A full summary of the ESP was set out in the Notice of General Meeting dated 19 October 2017.
At the general meeting of the Company, held on 29 July 2015, shareholders approved the provision of a
limited-recourse, interest free loan to each of Messrs Michael, Tabeart and Ong, for the purpose of
subscribing for shares in the Company (Plan Shares). The Plan Shares are subject to a holding lock until
the relevant milestones set out below have been met:
Milestones
1.
Identification of three (3) mafic/ultramafic intrusions with a geochemical signature fertile for nickel-
copper sulphides.
2. Drill intersection of a fresh mafic intrusion hosting nickel-copper sulphides of at least 2m @ 1.5% Ni.
3. Multiple drill holes (>3) hosting nickel-copper sulphides indicating the potential for economic grades
and tonnages.
4. Completion of capital raising/s or farm-in joint ventures totalling $4 million by no later than 31
December 2017.
5. Completion of a sale or farm-out of non-core exploration assets totalling at least $1 million by 31
December 2017.
On 18 October 2016 shareholder approval was received to vary the Original Milestones as follows:
Replacement Milestones
1. Identification of a MLEM conductor or mafic/ultramafic intrusion considered fertile for nickel-copper
sulphides.
2. MMG completes the Stage 1 sole funding expenditure condition of $1.5 million by 31 December 2017.
Page 20
2018 Annual Report
Arrow Minerals Limited
3. MMG meets the Stage 1 minimum exploration condition for 2018 by spending $6.5 million before 31
December 2019, including $1.5 million to be spent before 31 December 2017.
The maximum number of shares issued to each of Messrs Michael, Tabeart, Ong, Foy and Tuck is as follows:
Mr Steven Michael
Dr Frazer Tabeart
Mr Nicholas Ong
Mr Matthew Foy
Mr Dean Tuck
1,428,571
857,143
857,143
571,430
642,856
On 22 November 2017, shareholder approval was received for provision of a limited-recourse, interest free
loan to each of Messrs Michael, Tabeart and Ong, for the purpose of subscribing for shares in the Company
(Plan Shares). The Plan Shares are subject to a holding lock until the relevant milestones set out below
have been met:
1. Discover a mineralised prospect of at least 10 gram-metres gold, or 10% metres lithium or 10% metres
nickel.
2. Announce a JORC-compliance resource of:
100,000oz of gold at a minimum grade of 1.0g/t Au (or equivalent for other metals); or
10,000 tonnes of lithium at a minimum grade of 1.0% Li2O; or
20,000 tonnes of nickel at a minimum grade of 2.0% Ni (+Cu, PGE).
3. Complete a pre-feasibility study on a resource estimate as defined in Milestone 2.
4. Combined capital raising of $3 million at an average issue price at least 75% of the 15-day VWAP prior
to each issue.
5. Total shareholder return exceeding +25% over a 12 month period.
6. Continue to be an employee or Director of Arrow until 31 December 2018.
On 1 December 2017 an additional issue was made of 5,600,000 Plan Shares. These shares have been
valued using the Black Scholes Model with the following inputs for the relevant milestones.
Number of shares
4,200,000
1,400,000
Milestones 1-5
Milestone 6
Underlying share price
Exercise price
Expected volatility
Expiry date (years)
Expected dividends
Risk-free rate
Value per option
$0.052
-
315%
3
-
1.67%
$0.0517
$0.052
-
315%
1
-
1.67%
$0.0470
Arrow Minerals Limited
2018 Annual Report
Page 21
The maximum number of Plan Shares was reduced by 5% and the Plan Shares issued to each of Messrs
Michael, Tabeart, Ong, Foy and Tuck is as follows:
Mr Steven Michael
1,900,000
Dr Frazer Tabeart
Mr Nicholas Ong
Mr Matthew Foy
Mr Dean Tuck
Share holding
356,250
356,250
475,000
1,425,000
The number of ordinary shares in the Company held during the financial period by each Director of Arrow
Minerals Limited and any other key management personnel of the Company, including their personally
related parties, are set out below:
Opening
balance
Nos.
Granted as
remuneration6
Nos.
Net other
change
Nos.
Closing
balance
Nos.
30 June 2018
Directors
Mr Steven Michael
Dr Frazer Tabeart
Mr Nicholas Ong
Company Secretary
2,515,713
1,500,000
1,192,857
2,000,000
375,000
375,000
(128,571)1
(283,036)2
(147,321)3
4,644,284
1,591,964
1,420,536
Mr Matthew Foy
1,117,701
500,000
153,5514
1,771,252
Exploration manager
Mr Dean Tuck
1.
Comprising:
1,410,107
7,736,378
1,500,000
4,750,000
137,0085
(268,369)
3,047,115
12,475,151
a.
b.
Cancellation of 371,429 Employee Share Plan Shares following expiration of term; and
Purchase of 500,000 shares @3.0¢ pursuant to Share Purchase Plan on 31/7/17.
Comprising the cancellation of 283,036 Employee Share Plan Shares following expiration of term.
Comprising the cancellation of 147,321 Employee Share Plan Shares following expiration of term.
Comprising:
2.
3.
4.
a.
b.
c.
d.
e.
Purchase of 35,000 shares pursuant to placement @3.0¢;
Purchase of 107,150 shares on market;
Purchase of 344,829 shares pursuant to placement @2.9¢;
Sale of 237,000 shares on market; and
Cancellation of 96,428 Employee Share Plan Shares following expiration of term.
5.
Comprising:
a.
b.
c.
d.
Purchase of 283,333 shares pursuant to placement @3.0¢;
Sale of 93,000 shares on market;
Purchase of 93,104 shares pursuant to placement @2.9¢; and
Cancellation of 146,429 Employee Share Plan Shares following expiration of term.
6.
Subject to meeting vesting conditions, which remained unvested.
Page 22
2018 Annual Report
Arrow Minerals Limited
Opening
balance
Nos.
Granted as
remuneration1
Nos.
Net other
change2
Nos.
Closing
balance
Nos.
30 June 2017
Directors
Mr Steven Michael
119,050,000
Dr Frazer Tabeart
Mr Nicholas Ong
Company Secretary
25,000,000
22,750,000
50,000,000
30,000,000
30,000,000
(166,534,287)
(53,500,000)
(51,557,143)
2,515,713
1,500,000
1,192,857
Mr Matthew Foy
20,000,000
20,000,000
(38,882,299)
1,117,701
Exploration manager
Mr Dean Tuck
-
25,000,000
(23,589,893)
186,800,000
155,000,000
(334,063,622)
1,410,107
7,736,378
1.
2.
Subject to meeting vesting conditions, which remain unvested.
Changes due to a 1 for 35 share consolidation and the cancellation of shares pursuant to the Employee Share Plan.
Option holding
The number of options in the Company held during the financial period by each Director of Arrow Minerals
Limited and any other key management personnel of the Company, including their personally related
parties, are set out below:
Opening
balance
Nos.
Granted as
Options
remuneration exercised
Nos.
Nos.
Net other
change1
Nos.
Closing
balance
Nos.
30 June 2018
Directors
Mr Steven Michael
Dr Frazer Tabeart
Mr Nicholas Ong
Company Secretary
Mr Matthew Foy
Exploration manager
Mr Dean Tuck
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
653,572
375,000
298,215
653,572
375,000
298,215
693,407
693,407
803,201
2,823,395
803,201
2,823,395
1.
Purchased pursuant to a pro-rata non-renounceable options entitlement issue, exercisable at $0.10 on or before 31 December 2019.
Service Agreements
As at the date of this report, the Company had service agreements with the following executives:
Steven Michael – Managing Director and Chief Executive Officer (CEO)
Commenced on 5 June 2014 with no set term. If the Company wishes to terminate the contract, other
than if Mr Michael commits any act of serious misconduct, the Company is obliged to give 3 months’
written notice or pay out 3 months of Annual Salary and pay a termination payment equivalent of 3 months’
annual salary. If Mr Michael wishes to terminate the contract he must provide 3 months’ notice. Mr
Michael will be paid a fee of $25,000 per month for his services as Managing Director and CEO.
Arrow Minerals Limited
2018 Annual Report
Page 23
Dean Tuck – Exploration Manager
Commenced on 18 November 2016 with no set term. If the Company wishes to terminate the contract,
other than if Mr Tuck commits any act of serious misconduct, the Company is obliged to give 3 months’
written notice or pay out 3 months of Annual Salary. If Mr Tuck wishes to terminate the contract he must
provide 3 months’ notice. Mr Tuck will be paid a fee of $14,167 per month for his services as Exploration
Manager.
Transactions with key management personnel
The Company entered into a service agreement with Minerva Corporate Pty Ltd effective 2 April 2014 for
the provision of Directorial and Company Secretarial services. Messrs Ong & Foy are related parties of
Minerva Corporate Pty Ltd and Arrow Minerals Ltd.
This service agreement was amended in August 2014 to exclude Company Secretarial services.
During the year, an amount of $33,387 (2017: $26,400) inclusive of GST was paid or payable in relation to
these services. There is an amount of $3,300 included in trade creditors on account of these services (2017:
$2,200).
All of the Director fees for Mr Ong were remitted to Minerva Corporate Pty Ltd during the current and
prior year.
Mr Foy continues to provide Company Secretarial services as an employee of Arrow.
Dr Tabeart’s remuneration for the year was paid directly to his related party, Geogen Consulting Pty Ltd.
During the year, an additional $1,200 was paid to Geogen Consulting Pty Ltd for consulting services.
The Company entered into a service agreement with Mitchell River Group Pty Ltd effective 6 July 2016 for
the provision of exploration database management services. Dr Tabeart is a related party of Mitchell River
Group Pty Ltd and Arrow Minerals Limited.
During the year, an amount of $25,990 (2017: $29,673) inclusive of GST was paid or payable in relation to
these services.
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties.
Other Financial Information
The following table shows gross income, profits/(losses) and dividends for the last five years for the listed
entity, as well as the share prices at the end of the respective financial years. The Board is of the opinion
that these results can be attributed, in part, to the previously described remuneration policy.
Revenue
Net loss before tax
Net loss after tax
30 June
2018
$
7,462
1,171,587
1,171,587
Share price at start of year (cents)
Share price at end of year (cents)
Basic loss per share (cents)
Diluted loss per share (cents)
2.6
2.5
0.574
0.436
30 June
2017
$
10,999
887,642
887,642
0.3
2.61
0.867
0.867
30 June
2016
$
30 June
2015
$
30 June
2014
$
10,250
9,040
14,330
794,509
2,438,493
1,456,132
794,509
2,438,493
1,456,132
0.2
0.3
0.03
0.03
1.0
0.2
0.12
0.12
0.2
1.0
0.19
0.20
1.
Note that on 13 April 2017 there was a 1 for 35 share consolidation.
Page 24
2018 Annual Report
Arrow Minerals Limited
Adoption of Remuneration Report by Shareholders
The adoption of the Remuneration Report for the financial year ended 30 June 2017 was put to the
shareholders of the Company at the Annual General Meeting held 22 November 2017. The resolution was
passed without amendment on a show of hands (95.5% of proxies voted in favour). The Company did not
receive any specific feedback at the AGM or throughout the year on its remuneration practices.
End of Remuneration Report
Directors’ Interests in the Shares and Options of the Company
As at the date of this report, the relevant direct and indirect interest of each director in the shares and
options of Arrow Minerals Limited were:
Ordinary shares
Nos.
5,015,713
1,875,000
1,567,857
Options
Nos.
653,572
375,000
375,000
Mr Steven Michael
Dr Frazer Tabeart
Mr Nicholas Ong
Shares under Options
No options were exercised during the 2018 financial year and no shares have been issued from the exercise
of options since year-end to the date of this report. No person entitled to exercise any option has or had,
by virtue of the option, a right to participate in any share issue of any other body corporate. The names
of all holders of options are entered into the Company’s register, inspection of which may be made free
of charge.
The following options over ordinary shares of the Company existed at reporting date:
Nos.
Exercise price
714,285
8,571,408
13,146,469
120,872,133
143,304,295
$0.1261
$0.1751
$0.0701
$0.1002
Expiry date
3 August 2018
30 June 2019
31 December 2019
31 December 2019
1.
2.
These options are unlisted.
These options are listed.
Meetings of Directors
The following directors’ meetings (including meetings of committees of directors) were held during the
year and the number of meetings attended by each of the directors during the year were:
Director’s meetings
Remuneration Committee Audit & Risk Committee
eligible
to attend
meetings
attended
eligible
to attend
meetings
attended
eligible
to attend
meetings
attended
Directors
Steven Michael
Nicholas Ong
Frazer Tabeart
4
4
4
4
4
4
-
1
1
-
1
1
-
1
1
-
1
1
Arrow Minerals Limited
2018 Annual Report
Page 25
Officers’ and Auditor Indemnities and Insurance
During the year, the Company paid an insurance premium to insure certain officers of the Company. The
officers of the Company covered by the insurance policy include the Directors named in this report.
The Directors’ and Officers’ Liability Insurance provides cover against all costs and expenses that may be
incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may
be brought against the officers in their capacity as officers of the Company or a related body corporate.
The insurance policy does not contain details of the premium paid in respect of individual officers of the
Company. Disclosure of the nature of the liability cover and the premium paid is subject to a confidentiality
clause under the insurance policy.
The Company has entered into an agreement with the Directors and certain officers to indemnify these
individuals against any claims and related expenses which arise as a result of work completed in their
respective capabilities.
The Company nor any of its related bodies corporate have provided any insurance for any auditor of the
Company or a related body corporate.
Non-Audit Services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties
where the auditor’s expertise and experience with the Company and/or Group are important.
Details of the amount paid or payable to the auditor (Pitcher Partners Corporate & Audit (WA) Pty Ltd and
Pitchers Partners BA&A Pty Ltd) or its associates for the audit and non-audit services provided during the
year are set out in Note 2 to this report.
The Directors are satisfied that the provision of the non-audit services during the year by the auditor is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The Directors are satisfied that the services disclosed below did not compromise the external auditor’s
independence for the following reasons:
• All non-audit services are reviewed and approved by the audit committee prior to commencement to
ensure they do not adversely affect the integrity and objectivity of the auditor; and
•
The nature of the services provided does not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2017/191, the
amounts in the Directors’ report and in the financial report have been rounded to the nearest dollar.
Auditor’s Independence Declaration
We have obtained an independence declaration from our auditors which is included on page 28.
Signed in accordance with a resolution of the directors
Steven Michael
Managing Director
Perth, 28 September 2018
Page 26
2018 Annual Report
Arrow Minerals Limited
Corporate Governance Statement
The Board of Directors of Arrow Minerals Limited is responsible for the corporate governance of the
consolidated entity. The Board guides and monitors the business and affairs of Arrow Minerals Limited on
behalf of the shareholders by whom they are elected and to whom they are accountable.
Arrow Minerals Limited’s corporate governance practices were in place throughout the year ended 30 June
2018 and were compliant with the ASX Governing Council’s best practice recommendations, unless
otherwise stated.
Information on Corporate Governance is available on the Company’s website at:
https://arrowminerals.com.au/corporate-governance/
Arrow Minerals Limited
2018 Annual Report
Page 27
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF ARROW MINERALS LIMITED
In relation to the independent audit for the year ended 30 June 2018, to the best of my
knowledge and belief there have been:
(i)
No contraventions of the auditor independence requirements of the Corporations
Act 2001; and
(ii)
No contraventions of APES 110 Code of Ethics for Professional Accountants.
This declaration is in respect of Arrow Minerals Limited and the entities it controlled during
the year.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 28 September 2018
Pitcher Partners is an association of Independent firms Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2018
Notes
Continuing Operations
Finance income
Gain on disposal of controlling interest
4b
Revaluation of financial assets
Profit on sale of tenements
Employee benefits expenses
Occupancy costs
2018
$
7,462
887,313
443,832
387,300
(545,223)
(28,953)
Write off of exploration & evaluation assets
8
(1,767,288)
Finance costs
Depreciation
Share based payment expenses
Administration and other expenses
Loss before tax from continuing operations
Income tax benefit
Loss after tax from continuing operations
(9,297)
(37,788)
(229,498)
(414,351)
(1,306,491)
134,904
(1,171,587)
2
3
2017
$
10,999
-
-
124,803
(495,128)
(33,900)
-
-
(6,956)
(56,756)
(518,825)
(975,763)
88,121
(887,642)
Other comprehensive income/(loss)
Items that may be classified subsequently to profit or loss
Movement in foreign currently translation reserve
Other comprehensive income/(loss) for the year
-
-
-
-
Total comprehensive loss for the year attributable to members of the company
(1,171,587)
(887,642)
Basic loss per share
– From continuing operations
– From total operations
Diluted loss per share
– From continuing operations
– From total operations
14
14
Cents
(0.574)
(0.574)
Cents
(0.436)
(0.436)
Cents
(0.867)
(0.867)
Cents
(0.867)
(0.867)
The above statement should be read in conjunction with the accompanying notes.
Arrow Minerals Limited
2018 Annual Report
Page 29
Consolidated Statement of Financial Position
As at 30 June 2018
Notes
2018
$
2017
$
ASSETS
Current assets
Cash and cash equivalents
Investments in associates
Other financial assets
Trade and other receivables
Prepayments
Total current assets
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Leave provisions
Interest bearing liabilities
Total current liabilities
Non-current liabilities
Leave provisions
Interest bearing liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
4
5
6
7
8
9
10
11
11
12
13
3,758,484
731,716
544,284
720,701
195,266
9,911
5,228,646
8,041,647
301,077
8,342,724
-
-
54,606
5,913
792,235
8,283,225
122,029
8,405,254
13,571,370
9,197,489
335,437
73,575
28,423
437,435
34,920
121,754
156,674
235,232
62,122
15,426
312,780
27,436
100,708
128,144
594,109
440,924
12,977,261
8,756,565
35,136,180
1,614,933
30,404,876
953,954
(23,773,852)
(22,602,265)
12,977,261
8,756,565
The above statement should be read in conjunction with the accompanying notes.
Page 30
2018 Annual Report
Arrow Minerals Limited
Consolidated Statement of Changes in Equity
As at 30 June 2018
Issued
capital
$
Share
based
payment
reserve
$
Foreign Available-for-sale Option Accumulated
currency
translation
reserve
$
reserve
reserve
losses
$
$
$
Total
equity
$
At 1 July 2016
27,872,072
1,282,372
(476,281)
(150)
91,257
(21,714,623)
7,054,647
Loss for the year 2017
Other comprehensive loss
Total comprehensive loss
Issue of Shares
(net of costs)
Issue of Options
(net of costs)
Share based payments
Total transactions with
equity holders
-
-
-
2,532,804
-
-
-
-
-
-
-
56,756
2,532,804
56,756
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(887,642)
(887,642)
-
-
(887,642)
(887,642)
-
-
-
-
2,532,804
-
56,756
2,589,560
As at 30 June 2017
30,404,876
1,339,128
(476,281)
(150)
91,257
(22,602,265)
8,756,565
At 1 July 2017
30,404,876
1,339,128
(476,281)
(150)
91,257
(22,602,265)
8,756,565
Loss for the year 2018
Other comprehensive loss
Total comprehensive loss
Issue of Shares
(net of costs)
Issue of Options
(net of costs)
Share based payments
Total transactions with
equity holders
-
-
-
4,731,304
-
-
-
-
-
-
-
229,498
4,731,304
229,498
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
431,481
-
431,481
(1,171,587)
(1,171,587)
-
-
(1,171,587)
(1,171,587)
-
-
-
-
4,731,304
431,481
229,498
5,392,283
As at 30 June 2018
35,136,180
1,568,626
(476,281)
(150)
522,738
(23,773,852) 12,977,261
The above statement should be read in conjunction with the accompanying notes.
Arrow Minerals Limited
2018 Annual Report
Page 31
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
(1,033,289)
(1,058,635)
Notes
2018
$
2017
$
Interest income received
Income tax refund
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of controlling interests
Proceeds from the sale of tenements
Payment for exploration and evaluation activities
Payment for property, plant and equipment
Net cash used in investing activities
CASH FLOW FROM FINANCING ACTIVITIES
4
4b
7,462
134,904
(890,923)
309,000
1,625,000
(2,966,965)
(155,303)
(1,188,268)
10,999
88,121
(959,515)
-
124,803
(1,526,884)
(19,552)
(1,421,633)
Proceeds from issue of shares and options, net of issue costs
5,142,784
2,432,804
Repayment of lease liabilities
Interest paid
(27,528)
(9,297)
(4,434)
(1,490)
Net cash from financing activities
5,105,959
2,426,880
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
4
3,026,768
731,716
3,758,484
45,732
685,984
731,716
The above statement should be read in conjunction with the accompanying notes.
Page 32
2018 Annual Report
Arrow Minerals Limited
Notes to and forming part of the Consolidated Financial Statements
1. CORPORATE INFORMATION
Arrow Minerals Limited (the “Company”) is a limited company incorporated in Australia. The consolidated
financial report of the Company for the year ended 30 June 2018 comprises the Company and its
subsidiaries (together referred to as the “Group”).
The financial report was authorised for issue by the directors on 28 September 2018.
The nature of the operation and principal activities of the Group are described in the attached Directors’
Report.
The accounting policies set out below have been applied consistently to all periods presented in the
consolidated financial report and by all entities in the consolidated entity.
A. Statement of Accounting Policies
These are for-profit general purpose financial statements have been prepared in accordance with Australian
Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board,
Australian Accounting Interpretations and the Corporations Act 2001.
Compliance with IFRS
The consolidated financial statements of the Group also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Basis of Preparation
Historical cost convention
These financial statements have been prepared on an accruals basis and are based on historical costs
except where stated otherwise in the notes. Cost is based on the fair values of the consideration given in
exchange for assets.
Going Concern
The financial report has been prepared on a going concern basis.
The Consolidated Statement of Comprehensive Income shows that the Group incurred a net loss of
$1,171,587 during the year ended 30 June 2018 (2017: Loss of $887,642). The Consolidated Statement of
Financial Position shows that the Group had cash and cash equivalents of $3,758,484 (2017: $731,716).
The Directors are confident that the Group will be able to continue as a going concern and meet its current
liabilities as and when they fall due.
On this basis no adjustments have been made to the financial report relating to the recoverability and
classification of the carrying amount of assets or the amount and classification of liabilities that might be
necessary should the Group not continue as a going concern. Accordingly, the financial report has been
prepared on a going concern basis.
B. Functional and Presentation of Currency
These consolidated financial statements are presented in Australian dollars, which is the Group’s functional
currency and the presentation currency of the consolidated entity.
Translation of foreign operations:
As at the reporting date the assets and liabilities of foreign operations are translated into the presentation
currency at the rate of exchange ruling at the reporting date and the statement of comprehensive income,
statement cash flows and statement of changes in equity are translated at the weighted average exchange
rates for the year. The exchange differences arising on the retranslation are recognised in other
Arrow Minerals Limited
2018 Annual Report
Page 33
comprehensive income and accumulated balances are carried forward as a separate component of equity.
On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that
particular foreign operation is recognised in the income statement.
C. Use of Estimates and Judgements
The preparation of financial statements require management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision affects both current and future periods.
Significant accounting judgments
In the process of applying the Group’s accounting policies, management has made the following judgments,
apart from those involving estimations, which have the most significant effect on the amounts recognised
in the financial statements.
Exploration and evaluation assets
The Group’s accounting policy for exploration and evaluation expenditure is set out at Note 1(L). The
application of this policy necessarily requires management to make certain estimates and assumptions as
to future events and circumstances. Any such estimates and assumptions may change as new information
becomes available. If, after having capitalised expenditure under the policy, it is concluded that the
expenditures are unlikely to be recovered by future exploitation or sale, then the relevant capitalised amount
will be written off to the profit or loss.
Share based payments (refer Note 19)
The Group measures the cost of equity settled share based payments at fair value at the grant date using
the Binomial model taking into account the exercise price, the term of the option, the impact of dilution,
the share price at grant date, the expected volatility of the underlying share, the expected dividend yield
and risk free interest rate for the term of the option.
Existence of significant influence
Through the shareholder agreement, Arrow Minerals Limited is guaranteed one seat on the board of Arrow
(Pilbara) Pty Ltd and participates in all significant financial and operating decisions. The Group has therefore
determined that it has significant influence over this entity, even though it only holds 49% of the voting
rights.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting
period are:
(i)
Impairment of assets
In determining the recoverable amount of assets, in the absence of quoted market prices, estimations are
made regarding the present value of future cash flows using asset-specific discount rates and the
recoverable amount of the asset is determined. Value-in-use calculations performed in assessing
recoverable amounts incorporate a number of key estimates.
Page 34
2018 Annual Report
Arrow Minerals Limited
(ii) Commitments - Exploration
The Group has certain minimum exploration commitments to maintain its right of tenure to exploration
permits. These commitments require estimates of the cost to perform exploration work required under
these permits.
(iii) Benefit from carried forward tax losses
The future recoverability of the carried forward tax losses are dependent upon Group’s ability to generate
taxable profits in the future in the same tax jurisdiction in which the losses arise. This is also subject to
determinations and assessments made by the taxation authorities. The recognition of a deferred tax asset
on carried forward tax losses (in excess of taxable temporary differences) is dependent on management’s
assessment of these two factors. The ultimate recoupment and the benefit of these tax losses could differ
materially from management’s assessment.
D. Basis of Consolidation
The consolidated financial statements are those of the Group, comprising the financial statements of Arrow
“the parent entity” and of all entities which the parent entity controls. The Group controls an entity when
it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity,
using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting
policies, which may exist.
Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions are eliminated in preparing the consolidated financial statements. Subsidiaries are eliminated
from the date on which control is established and are de-recognised from the date that control ceases.
Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is
no evidence of impairment.
E. Revenue Recognition
Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances and duties and taxes paid. The following specific recognition
criteria must also be met before revenue is recognised:
Interest income is recognised as it accrues using the effective interest method.
F.
Income Tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income
based on the notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted
or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts
of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception
is made for certain temporary differences arising from the initial recognition of an asset or a liability. No
deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a
transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
Arrow Minerals Limited
2018 Annual Report
Page 35
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount
and tax bases of investments in controlled entities where the parent entity is able to control the timing of
the reversal of the temporary differences and it is probable that the differences will not reverse in the
foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
directly in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the taxation authority
and the Group intends to settle its current tax assets and liabilities on a net basis.
G. Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value,
and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the consolidated
statement of financial position.
H. Trade and Other Receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less
provision for doubtful debts. Trade receivables are due for settlement no more than 120 days from the
date of recognition.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off. A provision for doubtful receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of
receivables. The amount of the provision is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the original effective interest rate. The amount
of the provision is recognised in the profit or loss.
I.
Investments and Other Financial Assets
The Group determines the classification of its financial instruments at initial recognition and carries its
financial instruments at fair value. Financial assets and financial liabilities are recognised when the entity
becomes a party to the contractual provisions to the instrument. For financial assets, this is the equivalent
to the date that the entity commits itself to either the purchase or sale of the asset.
Fair value is the measurement basis, with the exception of held-to-maturity investments and loans and
receivables which are measured at amortised cost using the effective rate method. Changes in fair value
are either taken to the profit or loss or to an equity reserve.
Fair value is determined based on current bid prices for all quoted investments. If there is not an active
market for a financial asset fair value is measured using established valuation techniques.
The Group assesses at each balance date whether there is objective evidence that a financial asset or group
of financial assets are impaired. In the case of equity securities classified as available-for-sale, a significant
or prolonged decline in the fair value of a security below its cost is considered in determining whether the
security is impaired. If any such evidence exists, the cumulative loss is removed from equity and recognised
in the profit or loss.
Page 36
2018 Annual Report
Arrow Minerals Limited
J.
Investments in Associates
An associate is an entity over which the Group has significant influence. Significant influence is the power
to participate in the financial and operating policy decisions of the entity but is not control or joint control
of those policies. Investments in associates are accounted for in the consolidated financial statements by
applying the equity method of accounting, whereby the investment is initially recognised at cost (including
transaction costs) and adjusted thereafter for the post-acquisition change in the Group’s share of net assets
of the associate. In addition, the Group’s share of the profit or loss of the associate is included in the
Group’s profit or loss.
The carrying amount of the investment includes, when applicable, goodwill relating to the associate. Any
discount on acquisition, whereby the Group’s share of the net fair value of the associate exceeds the cost
of investment, is recognised in profit or loss in the period in which the investment is acquired.
Profits and losses resulting from transactions between the Group and the associate are eliminated to the
extent of the Group’s interest in the associate.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group
discontinues recognising its share of further losses unless it has incurred legal or constructive obligations
or made payment on behalf of the associate. When the associate subsequently makes profits, the Group
will resume recognising its share of those profits once its share of the profits equals the share of the losses
not recognised.
Changes in Ownership Interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as
transactions with equity owners of the group. A change in ownership interest results in an adjustment
between the carrying amounts of the controlling and non-controlling interests to reflect their relative
interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling
interests and any consideration paid or received is recognised in a separate reserve within equity
attributable to owners of Arrow Minerals Limited.
When the Group ceases to consolidate or equity account for an investment because of a loss of control,
joint control or significant influence, any retained interest in the entity is remeasured to its fair value with
the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture
or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect
of that entity are accounted for as if the group had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognised in other comprehensive income are reclassified to profit
or loss.
If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence
is retained, only a proportionate share of the amounts previously recognised in other comprehensive
income are reclassified to profit or loss where appropriate.
K. Property, Plant and Equipment
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. The
cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where
relevant, of the costs of dismantling and removing the items and restoring the site on which they are
located, and an appropriate proportion of production overheads. Where parts of an item of property, plant
and equipment have different useful lives, they are accounted for as separate items of property, plant and
equipment.
Subsequent Costs
The Group recognises in the carrying amount of an item of Property, plant and equipment the cost of
replacing part of such an item when that cost is incurred if it is probable that the future economic benefits
Arrow Minerals Limited
2018 Annual Report
Page 37
embodied within the item will flow to the Group and the cost of the item can be measured reliably. All
other costs are recognised in the statement of comprehensive income as an expense as incurred.
Depreciation
Depreciation is charged to the profit or loss on a straight-line or diminishing value basis over the estimated
useful lives of each part of an item of property, plant and equipment. The estimated useful lives in the
current and comparative periods are as follows:
Plant and equipment
straight-line
over 3 to 10 years
Motor vehicles
straight-line
over 4 years
The residual value, the useful life and the depreciation method applied to an asset are reassessed at least
annually.
De-recognition
Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the item) is included in the profit or loss in the period the
item is derecognised.
L. Exploration and Evaluation Expenditure
Exploration and evaluation expenditure, including the costs of acquiring the licences, are capitalised as
exploration and evaluation assets on an area of interest basis. Costs incurred before the Group has obtained
the legal rights to explore an area are recognised in the profit or loss.
Exploration and evaluation assets are only recognised if the rights of the area of interest are current and
either:
1.
the expenditures are expected to be recouped through successful development and exploitation or
from sale of the area of interest; or
2. activities in the area of interest have not, at the reporting date, reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active
and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine
technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying
amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and
evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash
generating unit shall not be larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of
interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first
tested for impairment and then reclassified to mining property and development assets within property,
plant and equipment.
When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated
costs in respect of that area are written off in the financial period the decision is made.
M. Impairment of Assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
Page 38
2018 Annual Report
Arrow Minerals Limited
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows (cash generating units).
N. Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of
recognition.
O. Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and
rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease's inception
at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The
corresponding rental obligations, net of finance charges, are included in other short-term and long-term
payables.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the
profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The property, plant and equipment acquired under finance leases
is depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if
there is no reasonable certainty that the group will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group
as lessee are classified as operating leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.
P. Contributed Equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Q. Goods and Service Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
Where the GST incurred on the purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part
of the expense item as applicable; and
Receivable and payable are stated with the amount of GST included.
The amount of GST recoverable from the taxation authority is included as part of the receivables in the
Statement of financial position. The amount of GST payable to the taxation authority is included as part
of the payables in the Statement of financial position.
Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis and the GST
component of cash flows arising from investing and financing activities, which is recoverable from, or
payable to, the taxation authority, are classified as operating cash flows.
R. Share Based Payments
Equity-settled share-based payments with employees and others providing similar services are measured
at the fair value of the equity instrument at the grant date. Fair value of shares is measured by reference
to the quoted market price. Fair value of options is measured by use of valuation techniques. The expected
life used in the model has been adjusted, based on management’s best estimate, for the effects of non-
transferability, exercise restrictions, and behavioural considerations.
Arrow Minerals Limited
2018 Annual Report
Page 39
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually
vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its
estimate of the number of equity instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the equity settled employee benefits reserve.
S. Earnings per Share
Basic Earnings per Share – is calculated by dividing the profit attributable to equity holders of the company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial period, adjusted for bonus elements in ordinary shares
issued during the period.
Diluted Earnings per Share – adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
T. Comparatives
When required by Accounting Standards, comparative figures have been adjusted to conform to changes
in presentation for the current financial year.
U. Rounding
The Company has applied the relief available to it in ASIC Legislative Instrument 2016/191 and accordingly,
certain amounts included in the Directors’ report and in the financial report have been rounded off to the
nearest $1 (where rounding is applicable), under the option available to the Company under ASIC
Corporations.
V. New standards and Interpretations
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued
by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective
for the current annual reporting period. Adoption of these standards has had no impact on the Group’s
Financial Statements:
New Standards and Interpretations Not Yet Adopted
Pronouncement
Nature of Change
Effective Date
AASB 9 Financial
Instruments
AASB 9
Recognition and Measurement.
replaces AASB 139 Financial
Instruments:
1 January 2018
Except for certain trade receivables, an entity initially
measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss,
transaction costs.
Debt instruments are subsequently measured at fair value
through profit or loss (FVTPL), amortised cost, or fair value
through other comprehensive income (FVOCI), on the basis
of their contractual cash flows and the business model under
which the debt instruments are held.
There is a fair value option (FVO) that allows financial assets
on initial recognition to be designated as FVTPL if that
eliminates or significantly reduces an accounting mismatch.
Page 40
2018 Annual Report
Arrow Minerals Limited
Pronouncement
Nature of Change
Effective Date
Equity instruments are generally measured at FVTPL.
However, entities have an irrevocable option on an
instrument-by-instrument basis to present changes in the
in other
fair
comprehensive
subsequent
reclassification to profit or loss.
value of non-trading
(OCI) without
instruments
income
For financial liabilities designated as FVTPL using the FVO,
the amount of change in the fair value of such financial
liabilities that is attributable to changes in credit risk must
be presented in OCI. The remainder of the change in fair
value is presented in profit or loss, unless presentation in
OCI of the fair value change in respect of the liability’s credit
risk would create or enlarge an accounting mismatch in
profit or loss.
All other AASB 139 classification and measurement
requirements for financial liabilities have been carried
forward into AASB9, including the embedded derivative
separation rules and the criteria for using the FVO.
The incurred credit loss model in AASB 139 has been
replaced with an expected credit loss model in AASB 9.
The requirements for hedge accounting have been amended
to more closely align hedge accounting with
risk
management, establish a more principle-based approach to
hedge accounting and address inconsistencies in the hedge
accounting model in AASB 139.
AASB 15 replaces all existing revenue requirements in
Australian Accounting Standards (AASB 111 Construction
Contracts, AASB 118 Revenue, AASB Interpretation 13
Customer Loyalty Programmes, AASB Interpretation 15
Agreements for the Construction of Real Estate, AASB
Interpretation 18 Transfers of Assets from Customers and
AASB Interpretation 131 Revenue –Barter Transactions
Involving Advertising Services) and applies to all revenue
arising from contracts with customers, unless the contracts
are in the scope of other standards, such as AASB117 (or
AASB 16 Leases, once applied).
The core principle of AASB 15 is that an entity recognises
revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to
which an entity expects to be entitled in exchange for those
goods or services.
AASB 16 requires lessees to account for all leases under a
single on balance sheet model in a similar way to finance
leases under AASB 117 Leases. The standard includes two
recognition exemptions for lessees – leases of ’low-value’
assets (e.g., personal computers) and short-term leases (i.e.,
1 January 2018
1 January 2019
AASB 15 Revenue
from Contracts with
Customers
AASB 16 Leases
Arrow Minerals Limited
2018 Annual Report
Page 41
Pronouncement
Nature of Change
Effective Date
leases with a lease term of 12 months or less). At the
commencement date of a lease, a lessee will recognise a
liability to make lease payments (i.e., the lease liability) and
an asset representing the right to use the underlying asset
during the lease term (i.e., the right-of-use asset).
Lessees will be required to separately recognise the interest
expense on the lease liability and the depreciation expense
on the right-of-use asset.
Lessees will be required to remeasure the lease liability upon
the occurrence of certain events (e.g., a change in the lease
term, a change in future lease payments resulting from a
change in an index or rate used to determine those
payments). The lessee will generally recognise the amount
of the re-measurement of the lease liability as an adjustment
to the right-of-use asset.
Lessor accounting is substantially unchanged from today’s
accounting under AASB117. Lessors will continue to classify
all leases using the same classification principle as in AASB
117 and distinguish between two types of leases: operating
and finance leases.
The Group has assessed the above new standards and interpretations are to not expected to have a material
impact on the Group's financial statements.
Page 42
2018 Annual Report
Arrow Minerals Limited
2. REVENUE AND EXPENSES
Loss from continuing operations includes:
Depreciation expense
Employee benefits expense includes:
Employee benefits, including directors’ fees
Superannuation expenses
Share based payments
Auditors' remuneration - for audit or review of financial report
Pitcher Partners BA&A Pty Ltd
Pitcher Partners Corporate & Audit (WA) Pty Ltd
Auditors' remuneration - for other services
Pitcher Partners BA&A Pty Ltd – Other Assurance Services
Pitcher Partners (WA) Pty Ltd - Taxation
3.
INCOME TAX
(a) The major components of income tax expense / (benefit) comprise of:
Current tax benefit
Deferred tax benefit
Under / (over) provision in prior years
2018
$
37,826
457,950
87,274
229,498
774,721
17,500
10,500
28,000
2,000
8,750
10,750
2018
$
-
-
(134,904)
(134,904)
2017
$
6,956
440,203
54,925
56,756
551,884
-
27,000
27,000
-
6,966
6,966
2017
$
-
-
(88,121)
(88,121)
(b) Reconciliation of prima facie tax on continuing operations to income tax benefit:
Profit / (loss) before tax for the year
(1,306,491)
(975,763)
Tax benefit @ 27.5% tax rate (Australia) (2017: 27.5%)
Adjustments for:
Entertainment
Consolidation exit adjustment
Share based payments
Under / (over) provision in prior years
Unrecognised DTA on tax losses
Income tax expense / (benefit) attributable to profit
(c) Components of deferred taxes
Deferred tax asset:
Tax losses
Provisions & accruals
Capital & borrowing costs
Offset against deferred tax liability / not recognised
Deferred tax liability:
Prepayments
Investments
Exploration expenditure
Offset against deferred tax assets / not recognised
Net deferred tax asset / (liability)
Arrow Minerals Limited
2018 Annual Report
(359,285)
(268,335)
610
61,592
63,112
(134,904)
233,950
(134,904)
8,393,966
35,336
100,181
(8,529,483)
(585)
(271,869)
(2,098,221)
2,370,675
-
426
-
15,608
(88,121)
252,301
(88,121)
8,436,765
32,191
45,468
(8,514,424)
(98)
-
(1,962,718)
1,962,816
-
Page 43
3.
INCOME TAX (continued)
(d) Deferred tax assets / liabilities not brought to account
Temporary differences
Operating tax losses
Capital losses
2018
$
2017
$
(2,234,723)
7,984,867
634,269
6,384,412
(1,884,134)
7,727,229
174,424
6,017,519
The tax benefits of the above deferred tax assets will only be obtained if:
- the Group derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised;
- the Group continues to comply with the conditions for deductibility imposed by law; and
- no changes in income tax legislation adversely affect the Group in utilising the benefits.
(e) Tax consolidation
For the purposes of income tax legislation, the Company and its 100% controlled Australian entity have elected to form a
tax consolidated group.
4. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Deposits at call
(a) Reconciliation of loss for the year to operating cash flows
Loss for the year
Cash flows excluded from profit attributable to operating activities:
Finance costs on interest bearing liabilities
Adjustments for non-cash items:
Write off of exploration & evaluation Assets
Share based payment expense
Depreciation expense
Gain on disposal of controlling interest
Gain on disposal of tenements
Revaluation of financial assets
Movement in working capital items:
(Increase) / decrease in trade and other receivables
(Increase) / decrease in prepayments
Increase / (decrease) in trade and other payables
Net cash used in operating activities
(b) Disposal of controlling interest
2018
$
1,758,484
2,000,000
3,758,484
2017
$
711,338
20,378
731,716
(1,171,587)
(887,642)
9,297
1,490
1,767,288
229,498
37,788
(887,313)
(387,300)
(443,832)
(140,660)
(3,998)
99,896
(890,923)
-
56,756
6,956
-
(124,803)
-
(29,355)
(848)
17,931
(959,515)
During the year the Group disposed of a 51% controlling interest in Arrow (Pilbara) Pty Ltd. Aggregate details of this
transaction are:
Cash consideration
Non-cash consideration
Total consideration
Assets and liabilities held at disposal date:
Exploration and evaluation assets
Non-controlling equity interests
Net gain on disposal
Net cash received
2018
$
309,000
257,500
566,500
223,471
223,471
544,284
887,313
309,000
2017
$
-
-
-
-
-
-
-
-
Page 44
2018 Annual Report
Arrow Minerals Limited
5.
INVESTMENT IN ASSOCIATE
Set out below are the material associates of the Group. The entity listed below have share capital consisting solely of
ordinary share. The proportion of ordinary shares held by the Group equals the voting rights held by the Group.
Name
Classification
Place of
Business/
Incorporation
Proportion of
Ordinary Share Measurement
Interest
2018
2017
Method
Carrying Amount
2018
2017
Arrow (Pilbara) Pty Ltd
Associate
Perth, Australia
49%
100%
Equity Method
$544,284
-
Arrow (Pilbara) Pty Ltd is a private entity undertaking exploration activities in the Pilbara region of Western Australia. During
the year, the Group disposed of a 51% controlling interest in the wholly-owned subsidiary to Pacton Gold Inc., a Canadian
listed company, for consideration of C$500,000 in cash and C$250,000 in Pacton shares.
At the date Arrow (Pilbara) Pty Ltd became an associate, and at 30 June 2018, the $223,471 net assets of the entity related
only to exploration & evaluation assets.
For the year ended 30 June 2018, the interest in associate did not make a contribution to the Group profit or loss.
6. OTHER FINANCIAL ASSETS
Shares in Caeneus Minerals Limited
Shares in Pacton Gold Inc.
Financial assets at fair value through profit or loss
7.
TRADE AND OTHER RECEIVABLES
Bond
GST receivable
Other debtors
8. EXPLORATION AND EVALUATION ASSETS
Balance at the beginning of the year
Expenditure incurred during the year
Fair value of tenements on acquisition
Write offs recognised during the year
Balance at the end of the year
The asset balance comprises of:
Strickland Gold Project
Malinda Lithium Project
Plumridge Nickel and Gold Projects
Deralinya Project
Pardoo Nickel Project
2018
$
19,369
701,332
720,701
2018
$
2,825
92,441
100,000
195,266
2018
$
8,283,225
1,525,710
-
(1,767,288)
8,041,647
3,323,978
1,160,057
3,557,612
-
-
8,041,647
2017
$
-
-
-
2017
$
2,825
51,781
-
54,606
2017
$
6,487,391
1,695,834
100,000
-
8,283,225
2,135,963
732,028
4,877,700
409,572
127,962
8,283,225
At the date of acquisition, the directors assess the fair value of Next Advancements Pty Ltd (included within the Malinda
Lithium Project) at $150,000. The value of the equity issued as part of the acquisition totalling $125,000 was valued based
on the Company’s 20-day VWAP of $0.001 per share.
The acquisition of Next Advancements Pty Ltd has been accounted for as an asset acquisition and recognised at fair value
at acquisition.
The ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on successful development
and commercial exploitation.
Arrow Minerals Limited
2018 Annual Report
Page 45
9. PROPERTY, PLANT AND EQUIPMENT
Motor vehicle
- At cost
- Accumulated depreciation
Total motor vehicle
Caravan
- At cost
- Accumulated depreciation
Total office equipment
Office equipment
- At cost
- Accumulated depreciation
Total office equipment
Office Improvements
- At cost
- Accumulated depreciation
Total computer equipment
Field equipment
- At cost
- Accumulated depreciation
Total field equipment
2018
$
205,858
(36,615)
169,243
45,764
(2,933)
42,831
-
-
-
92,191
(3,188)
89,003
-
-
-
2017
$
126,940
(5,341)
121,599
-
-
-
4,897
(4,467)
430
31,251
(31,251)
-
12,829
(12,829)
-
Total property, plant and equipment
301,077
122,029
Movements in carrying amounts:
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of
the current financial year:
Motor
Vehicle
$
-
126,940
(5,341)
Balance at 1 July 2016
Additions
Depreciation Expense
Balance at 30 June 2017
121,599
Additions
Depreciation Expense
78,919
(31,237)
Balance at 30 June 2018
169,243
Caravan
$
-
-
-
-
45,764
(2,933)
42,831
Office
Equipment
Office
Improvements
Field
Equipment
$
2,047
-
(1,617)
430
-
(430)
-
$
$
-
-
-
-
92,191
(3,188)
89,003
-
-
-
-
-
-
-
Total
$
2,047
126,940
(6,958)
122,029
216,874
(37,788)
301,077
Chattel mortgages:
The carrying value of plant and machinery held under chattel mortgages at 30 June 2018 was $169,243 (2017: $121,599).
10. TRADE AND OTHER PAYABLES
Trade creditors and accruals
2018
$
335,437
335,437
2017
$
235,232
235,232
Trade creditors are generally settled on 30 to 90 day terms.
Page 46
2018 Annual Report
Arrow Minerals Limited
11.
INTEREST BEARING LIABILITIES
Current
Obligations under chattel mortgage (Note 17)
8%
2021
Interest rate Maturity
Non-Current
Obligations under chattel mortgage (Note 17)
8%
2021
12.
ISSUED CAPITAL
2018
$
28,423
28,423
121,754
121,754
2018
2017
$
15,426
15,426
100,708
100,708
2017
Ordinary shares full paid
306,976,322
133,464,700
(a) Movement in ordinary share capital
Balance at 1 July 2016
15 August 2016 – Acquisition of Next Advancements Pty Ltd
5 September 2016 – Acuity Placement
19 October 2016 – Employee Share Plan
17 November 2016 – Placement
22 November 2016 – Placement
22 November 2016 – Employee Share Plan
13 April 2017 – Buyback of ESP Shares
13 April 2017 – 1 for 35 Consolidation
16 June 2017 –Placement
23 June 2017 – Share Buy back
Costs of issue
Balance at 30 June 2017
Balance at 1 July 2017
31 July 2017 - Placement
8 September 2017 - Placement
14 November 2017 – Option exercise
1 December 2017 – ESP Issue
13 February 2019 - Placement
22 March 2018 – Land access payment
16 April 2018 – Placement
27 April 2018 – ESP Issue
27 April 2018 – Share Buy back
Costs of issue
Balance at 30 June 2018
Nos.
2,899,070,242
100,000,000
112,000,000
130,000,000
500,000,000
100,000,000
25,000,000
(17,000,000)
(3,739,098,483)
27,492,939
(3,999,998)
133,464,700
133,464,700
4,616,696
34,510,552
2,666,667
5,600,000
44,549,653
592,768
81,312,429
750,000
(1,087,143)
306,976,322
$
27,872,072
100,000
500,000
-
1,000,000
200,000
-
-
-
824,923
-
(92,119)
30,404,876
30,404,876
138,451
1,035,317
186,667
-
1,291,940
20,000
2,358,060
-
-
(299,131)
35,136,180
Terms and conditions of ordinary shares
Ordinary shares have the right to receive dividends as declared, and in the event of winding up the Company, to participate
in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid upon shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Arrow Minerals Limited
2018 Annual Report
Page 47
(b) Unexpired share options
The following options over ordinary shares of the Company existed at reporting date:
Expiry date
03/08/2018
30/06/2019
31/12/2019
31/12/2019
Nos.
714,282
8,571,408
13,146,469
120,872,133
143,304,292
1. These options are unlisted.
2. These options are listed.
Exercise
Price ($)
0.1261
0.1751
0.0701
0.1002
Movements
Options outstanding as at 1 July 20161
Granted1
Options outstanding at 30 June 2017
Granted
Exercised
Expired
Options outstanding at 30 June 2018
1. Post 1 for 35 consolidation.
Nos.
7,944,721
8,571,408
16,516,129
136,685,269
(2,666,667)
(7,230,439)
143,304,292
13. RESERVES
Option reserve (i)
Foreign currency reserve (ii)
Available for sale reserve (iii)
2018
$
2,091,364
(476,280)
(150)
1,614,933
2017
$
1,430,385
(476,281)
(150)
953,954
(i) The option reserve relates to shares & options granted by the Company to its employees and suppliers. The 2018 movement
relates to the ESP share based payments expensed during the year.
(ii) Exchange differences relating to the translation of the results and net assets of the Group’s foreign operations from their
functional currencies to the Group’s presentation currency (i.e. Australian dollars) are recognised directly in other
comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences previously
accumulated in the foreign currency translation reserve (in respect of translating the net assets of foreign operations) are
reclassified to profit or loss on the disposal of the foreign operation.
(iii) The available for sale reserve represents fair value gains / (losses) on available for sale investments recognised in equity.
14. LOSS PER SHARE
The following data reflect the income and share numbers used in calculation of the basic and diluted loss per share:
Weighted average number of shares
(post 1 for 35 consolidation)
Loss from continuing operations
Loss from total operations
Basic loss per share:
- From continuing operations
- From total operations
Unit
2018
2017
Nos.
204,139,144
102,357,901
$
$
cents
cents
(1,171,587)
(1,171,587)
(887,642)
(887,642)
(0.574)
(0.574)
(0.867)
(0.867)
Page 48
2018 Annual Report
Arrow Minerals Limited
Anti-dilutive equity instruments not considered in
diluted loss per share
Nos.
143,304,292
16,516,129
Diluted loss per share:
- From continuing operations
- From total operations
15. CONTINGENT ASSETS AND LIABILITIES
cents
cents
(0.436)
(0.436)
(0.867)
(0.867)
During the year, the Group disposed of 51% of Arrow (Pilbara) Pty Ltd to Pacton Gold Inc. a Canadian listed company for
consideration of C$500,000 in cash and C$250,000 in Pacton shares. Of the cash consideration, C$200,000 was deferred,
contingent on the granting of two exploration licence applications, with C$100,000 paid on the grant of each application. The
contingent asset has not been recognised as a receivable at 30 June 2018 as the receipt of the amount is dependent on the
outcome of the licence applications.
The Group had no other contingent assets or liabilities at reporting date or in subsequent periods.
16. SUBSEQUENT EVENTS
Subsequent to the Period, Arrow advised that 714,285 options exercisable at $0.126 on or before 3 August 2018 had expired
unexercised.
On 17 August 2018, the Company bought back, for no consideration, 1,435,713 shares previously issued under the
Employee Share Scheme.
On 23 August 2018, the Company advised that it had disposed of its 49% interest in the Pilbara Gold Project to Pacton Gold
Inc. for consideration of C$1,000,000 in cash and 2,000,000 in Pacton shares.
On 21 September 2018, the Company advised that Pacton Gold Inc. had received final acceptance from the TSX Venture
Exchange for the Share Sale Agreement dated 20 August 2018 to purchase the Company’s 49% interest in the Pilbara Gold
Project.
Other than the above, there were no other subsequent events after the reporting date.
17. COMMITMENTS
Exploration & evaluation commitments
The Group has certain minimum obligations in pursuance of the terms and conditions of tenement licences in the forthcoming
year. Whilst these obligations are capable of being varied from time to time, in order to maintain current rights of tenure to
mining tenements, the Group will be required to outlay $593,000 in 2018/19 ($1,262,000 in 2017/18). Exploration
commitments include requirements under joint ventures for tenements held by other entities.
Leasing commitments
The Company’s lease for office accommodation expired at the end of July 2018 and the Company entered into a new 3 year
lease from 31 May 2018 at an annual cost of $51,200.
The expenditure commitment for the Group for later than 2 years but not later than 5 years is uncertain as the tenements
require re-application prior to this date of which the outcome is not certain.
Up to 1 year
Between 1 and 5 years
Later than 5 years
2018
$
644,200
98,133
-
742,333
2017
$
1,291,580
2,926,000
-
4,217,580
Chattel Mortgages
The Group has finance leases and hire purchase contracts for various items of plant and machinery. The Group’s obligations
under finance leases are secured by the lessor’s title to the leased assets. Future minimum lease payments under finance
leases and hire purchase contracts, together with the present value of the net minimum lease payments are, as follows:
Arrow Minerals Limited
2018 Annual Report
Page 49
Up to 1 year
Between 1 and 5 years
Later than 5 years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
2018
2017
Minimum
payments
$
Present
value of
payments
$
Minimum
payments
$
Present
value of
payments
$
39,007
135,320
-
174,327
(24,150)
150,177
28,423
121,754
-
150,177
-
150,177
23,701
116,928
-
140,629
(24,495)
116,134
15,426
100,708
-
116,134
-
116,134
18. RELATED PARTY & KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Parent and subsidiaries
The parent entity and the ultimate parent entity of the Group is Arrow Minerals Limited, a company listed on the Australian
Securities Exchange.
The components of the Group are:
Parent
Arrow Minerals Limited
Controlled entities
Arrow (Pardoo) Limited
Edurus Resources SA
Arrow (Strickland) Pty Ltd
Arrow (Malinda) Pty Ltd
Arrow (Deralinya) Pty Ltd
Arrow (Plumridge) Pty Ltd
Arrow (Pilbara) Pty Ltd1
Incorporated
2018
2017
Extent of control
Australia
-
-
Australia
South Africa
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
1 Sold subsequent to year end, refer to note 16.
(b) Key management personnel disclosures
The key management personnel compensation included employee benefit and director compensation expenses are as
follows:
Short-term employee benefits
Post-employment benefits
Long service leave
Equity compensation benefits
2018
$
590,270
85,137
7,484
221,308
904,199
2017
$
475,916
40,651
4,590
56,755
577,912
Further information regarding key management personnel has been provided in the Remuneration Report.
(c) Transactions with key management personnel
The Company entered into a service agreement with Minerva Corporate Pty Ltd effective 2 April 2014 for the provision of
Directorial and Company Secretarial services. Messrs Ong & Foy are related parties of Minerva Corporate Pty Ltd and
Arrow Minerals Ltd.
This service agreement was amended in August 2014 to exclude Company Secretarial services.
Page 50
2018 Annual Report
Arrow Minerals Limited
During the year an amount of $33,387 (2017: $26,400) inclusive of GST was paid or payable in relation to these services.
There is an amount of $3,300 included in trade creditors on account of these services (2017: $2,200).
All of the Director fees for Mr Ong were remitted to Minerva Corporate Pty Ltd during the current and prior year.
Mr Foy continues to provide Company Secretarial services as an employee of Arrow.
Dr Tabeart’s remuneration for the year was paid directly to his related party, Geogen Consulting Pty Ltd. During the year,
an additional $1,200 was paid to Geogen Consulting Pty Ltd for consulting services.
The Company entered into a service agreement with Mitchell River Group Pty Ltd effective 6 July 2016 for the provision of
exploration database management services. Dr Tabeart is a related party of Mitchell River Group Pty Ltd and Arrow Minerals
Limited.
During the year, an amount of $25,990 (2017: $29,673) inclusive of GST was paid or payable in relation to these services.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties.
19. SHARE BASED PAYMENTS
Share based payments are provided to directors, consultants and other advisors.
The issue to each individual director, consultant or advisor is controlled by the Board and the ASX Listing Rules. Terms and
conditions of the payments, including the grant date, vesting date, exercise price and expiry date are determined by the
Board, subject to shareholder approval where required.
The following share-based payments were made during the financial year.
Beneficiary
Expense
2018 Mugarinya Community
Land access
2017
Various vendors
Acquisition of Next Advancements Pty Ltd
Shares
Nos.
Options
Nos.
592,768
592,768
100,000,000
100,000,000
-
-
-
-
Value
$
20,000
20,000
100,000
100,000
Valuation
Shareholder approval was received on 22 November 2017 for the issue of 5,600,000 shares to directors.
Shareholder approval was received on 18 October 2016 for the issue of 110,000,000 shares to directors.
The issue of Shares pursuant to the Plan may be undertaken by way of provision of a limited-recourse, interest free loan to
be used for the purposes of subscribing for the Shares.
The Shares issued to the Eligible Participants will be fully paid ordinary shares in the capital of the Company issued on the
same terms and conditions as the Company’s existing Shares, other than being subject to a holding lock until such time as
the respective restriction conditions have been satisfied, including the completion of any restriction period, and any Loan
has been extinguished or repaid under the terms of the Plan.
Although these are shares for legal and taxation purposes, Accounting Standards require they be treated as options for
accounting purposes.
The shares have been valued applying a Binomial model.
Number of Plan Shares
Grant date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Vesting date
Expected life (years)
Share price ($)
Share price at grant date ($)
Valuation of shares
2018
2018
2017
4,200,000
22 Nov 2017
0.00%
315%
1.92%
Various
2.25
0.052
0.052
0.0517
1,400,000
22 Nov 2017
0.00%
315%
1.69%
1 Year
1 Year
0.052
0.052
0.0470
110,000,000
18 Oct 2016
0.00%
223%
1.69%
Various
2.25
0.003
0.003
0.0028
Arrow Minerals Limited
2018 Annual Report
Page 51
Refer to the Remuneration Report for full details of vesting periods and restrictive conditions to be achieved.
Historical share price volatility has been the basis for determining expected share price volatility as it is assumed that this is
indicative of future volatility.
20. OPERATING SEGMENTS
The Company operates in one operating and geographic segment being mineral exploration, and evaluation in Western
Australia for the year ended 30 June 2018.
21. FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from their use of financial instruments:
- credit risk
- liquidity risk
- market risk
This note presents information about the Group’s exposure to each of the above risks, its objectives, policies and processes
for measuring and managing risk, and the management of capital. The Board of Directors has overall responsibility for the
establishment and oversight of the risk management framework. Management monitors and manages the financial risks
relating to the operations of the group through regular reviews of the risks.
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from receivables from customers and cash and cash equivalents.
All cash balances are held with recognised institutions limiting the exposure to credit risk. There are no formal credit approval
processes in place.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum
exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables – rental bond
Financial assets are neither past due nor impaired.
Exposure to interest rate risk
The Group’s maximum exposure to interest rates at the reporting date was:
2018
$
3,758,484
2,825
3,761,309
2017
$
731,716
2,825
734,541
2018
Financial Assets – Current
Cash and cash equivalents
Financial Liabilities – Current
Interest bearing liabilities
Financial Liabilities – Non-Current
Interest bearing liabilities
2017
Financial Assets – Current
Cash and cash equivalents
Financial Liabilities – Current
Interest bearing liabilities
Financial Liabilities – Non-Current
Interest bearing liabilities
Range of
effective interest
rate
%
Carrying
amount
$
Fixed interest
rate
$
Total
$
0 - 2.2
3,758,484
3,758,484
3,758,484
7.95
7.95
28,423
28,423
28,423
121,754
121,754
121,754
0 - 2.2
731,716
731,716
731,716
7.95
7.95
15,426
15,426
15,426
100,708
100,708
100,708
Page 52
2018 Annual Report
Arrow Minerals Limited
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s
reputation.
The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash
flows.
Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of
60 days, including the servicing of financial obligations.
The Group has no access to credit standby facilities or arrangements for further funding or borrowings in place.
The maturity profile of Group's financial assets and liabilities are:
2018
Cash and cash equivalents
Trade and other receivables
Trade and other payables
2017
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Carrying
amount
$
3,758,484
2,825
(315,837)
3,445,472
731,716
2,825
(207,732)
526,809
Up to 6
months
$
3,758,484
2,825
(315,837)
3,445,472
731,716
2,825
(207,732)
526,809
The maturity profile disclosed are the contractual undiscounted cash flows.
(c) Market risk
Market risk is the risk that changes in market prices will affect the Group’s income or the value of its holdings of financial
instruments.
Foreign currency risk:
The Group is exposed to foreign exchange risk through its Canadian Dollar denominated investment as a result of its holding
in Pacton Gold Inc. The exposure of this investment is demonstrated within the following table showing the impact of
reasonably possible changes in foreign exchange rates, with all other variables constant, on the Group’s consolidated
statement of profit or loss and other comprehensive income.
Judgements of reasonably possible movements
between the Canadian dollar and Australian dollar
Increase 10%
Decrease 10%
Effect on Post Tax Loss ($)
Increase/(decrease)
2017
2018
Effect on Equity ($)
Increase/(decrease)
2017
2018
70,133
(70,133)
-
-
(70,133)
70,133
-
-
A sensitivity of 10% movement has been used as this is considered reasonable and is derived from a review of historical
movements and management’s judgement of future trends.
Interest rate risk:
The Group holds the majority of its cash and cash equivalents within a current account attracting a weighted interest rate of
1.72% pa (2017: 2.00% pa).
The Group’s sensitivity to movement in interest rates is shown in the summarised sensitivity analysis table below.
2018
Cash and cash equivalents
2017
Cash and cash equivalents
Carrying amount
$
Interest rate risk
+100 bps
Profit
$
Equity
$
-100 bps
Profit
$
Equity
$
3,758,484
37,585
(37,585)
(37,585)
37,585
731,716
7,317
(7,317)
(7,317)
7,317
Arrow Minerals Limited
2018 Annual Report
Page 53
(d) Fair value of financial instruments
The fair value of Group's financial instruments at reporting date are:
Cash and cash equivalents
Trade and other receivables
Financial investments
Trade and other payables
2018
Carrying
amount
$
Fair
value
$
2017
Carrying
amount
$
Fair
value
$
3,758,484
2,825
720,701
(315,837)
4,166,173
3,758,484
2,825
720,701
(315,837)
4,166,173
731,716
2,825
-
(207,732)
526,809
731,716
2,825
-
(207,732)
526,809
The directors consider the carrying amount of the financial instruments to be a reasonable approximation of their fair value
on account of the short maturity cycle.
The fair value of the Group’s financial assets in quoted equity shares held in Pacton Gold Inc. and Caeneus Minerals Limited,
traded on an active market is based on quoted (unadjusted) market prices at the end of the reporting period. The quoted
market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.
2018
Assets measured at fair value:
quoted equity shares
Date of
valuation
Total
$
Quoted prices
in active
markets
(Level 1)
$
Significant
observable
inputs
(Level 2)
$
Significant
unobservable
inputs
(Level 3)
$
Shares in Pacton Gold Inc.
Shares in Caeneus Minerals Limited
30 June 2018
30 June 2018
701,332
19,369
701,332
19,369
-
-
-
-
(e) Capital management policy
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business.
There were no changes in the Group’s approach to capital management during the year. Neither the Company nor any of
its subsidiaries are subject to externally imposed capital requirements. The Group defines capital as cash and cash
equivalents plus equity. The Board of Directors monitors capital on an ad-hoc basis. No formal targets are in place for
return on capital, or gearing ratios as the Group has not derived any income from their mineral exploration.
22. PARENT ENTITY INFORMATION
(a) Financial position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
2018
$
5,228,646
8,342,724
13,571,370
594,109
594,109
12,977,261
35,136,180
1,614,933
(23,773,852)
12,977,261
2017
$
788,209
8,257,844
9,046,053
440,917
440,917
8,605,136
30,404,876
1,446,560
(23,246,300)
8,605,136
Page 54
2018 Annual Report
Arrow Minerals Limited
(b) Financial performance
Loss for the year
(c) Commitments
2018
$
1,171,587
1,171,587
2017
$
1,089,167
1,089,167
The Company entered into a service agreement with Minerva Corporate Pty Ltd effective 2 April 2014 for the provision of
Directorial services. Mr Ong is a related party of Minerva Corporate Pty Ltd.
This service agreement was amended in August 2014 to exclude Company Secretarial services.
During the year an amount of $33,387 (2017: $26,400) inclusive of GST was paid or payable in relation to these services.
There is an amount of $3,300 included in trade creditors on account of these services (2017: $2,200).
The Company entered into a service agreement with Mitchell River Group Pty Ltd effective 6 July 2016 for the provision of
exploration database management services. Dr Tabeart is a related party of Mitchell River Group Pty Ltd and Arrow Minerals
Limited.
During the year, an amount of $25,990 (2017: $29,673) inclusive of GST was paid or payable in relation to these services.
(d) Contingencies
The Company has no contingent assets or liabilities at the reporting date.
Arrow Minerals Limited
2018 Annual Report
Page 55
Directors’ Declaration
In accordance with a resolution of the Board of Directors, I state that:
In the opinion of the Directors:
1. The consolidated financial statements and accompanying notes set out on pages 29 to 55 are in
accordance with the Corporations Act 2001, including:
a. giving a true and fair view of the Group’s financial position at 30 June 2018 and of its
performance for the year ended on that date: and
b. complying with Accounting Standards and Corporations Regulations 2001; and
2. There are reasonable grounds to believe that the Group will be able to pay its debts as and when
they become due and payable; and
3. This declaration has been made after receiving the declarations required to be made to the Directors
in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June
2018.
4. The consolidated financial statements and notes are also in compliance with International Financial
Reporting Standards as disclosed in Note 1(a).
On behalf of the Board
Steven Michael
Managing Director
Perth, 28 September 2018
Page 56
2018 Annual Report
Arrow Minerals Limited
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARROW MINERALS LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Arrow Minerals Limited “the Company” and its
controlled entities “the Group”, which comprises the consolidated statement of financial
position as at 30 June 2018, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(a)
(b)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of
its financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Financial Report section of our report. We are independent of the Group in accordance
with the auditor independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants “the Code” that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of the Company, would be in the same terms if given to the
directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Pitcher Partners is an association of Independent firms Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARROW MINERALS LIMITED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the key audit matter
Carrying value of exploration and evaluation
assets
Refer to Note 1(c), (l), (m) & 8
As disclosed in Note 8 of the financial report, as
at 30 June 2018, the Group held capitalised
exploration and evaluation assets of $8,041,647.
The carrying value of exploration and evaluation
expenditure is assessed for impairment by the
Group when facts and circumstances indicate
that the exploration and evaluation expenditure
may exceed its recoverable amount.
The determination as to whether there are any
indicators
to require an exploration and
evaluation asset to be assessed for impairment,
involves a number of judgments including but
not limited to:
• whether the Group has tenure of the
tenement;
• whether the Group has sufficient funds
to meet the tenement minimum
expenditure requirements; and
• whether there is sufficient information
for a decision to be made that the area
of interest is not commercially viable.
Our procedures included, amongst others:
Considering the Group’s right to explore in the
included
relevant area of
obtaining
supporting
and
documentation. We also considered the status
of the exploration licences as it related to tenure.
interest, which
assessing
Considering the Group’s intention to carry out
significant exploration and evaluation activity in
the relevant exploration area,
including an
assessment of the Group’s cash-flow forecast
models, discussions with senior management
and Directors as to the intentions and strategy of
the Group.
Considering whether the exploration activities
within each area of interest have reached a stage
where the commercial viability of extracting the
resource could be determined.
Assessing the adequacy of the disclosures
included within the financial report.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARROW MINERALS LIMITED
Disposal of Controlling Interest
Refer to Note 1(j) & 5
During the year, the Group disposed of a 51%
interest in the shares of Arrow (Pilbara) Pty Ltd.
The Group was required to calculate the gain on
disposal, which was complex due to the detailed
terms in the agreement and inherent complexity
of the transaction.
There were key terms assessed and judgements
made by management including but not limited
to:
• Assessment of
and/or control;
significant
interest
interest
• Measurement of 49%
in
associate under the equity method; and
• Assessment of fair value of Arrow
(Pilbara) Pty Ltd’s net assets on
disposal.
Our procedures included, amongst others:
Obtaining an understanding of the key terms
within the sale agreement between the Group
and Pacton Gold
Inc., ensuring that the
transaction has been recorded and disclosed in
accordance with the terms of this agreement.
Re-performing the calculations of the gain on
disposal by
consideration
received to the carrying value of the identified
assets and liabilities.
comparing
the
Agreeing the consideration received from the
the bank statements and share
sale
certificates.
to
Assessing the adequacy of the disclosures
included within the financial report.
Share Based Payments
Refer to Note 1(r) & 19
Share based payments represent $229,498 of
the Group’s expenditure.
Our procedures included, amongst others:
Share based payments must be recorded at fair
value of the service provided, or in the absence
of such, at the fair value of the underlying equity
instrument granted.
In calculating the fair value there are a number
of
judgements management must make,
including but not limited to:
estimating expected future share price
volatility;
expected dividend yield; and
risk-free rate of interest.
Obtaining an understanding of the relevant
controls associated with the preparation of the
valuation model used to assess the fair value of
share based payments, including those relating
to volatility of the underlying security and the
appropriateness of the model used for valuation.
challenging
Critically evaluating and
the
methodology and assumptions of management
in their preparation of valuation model, agreeing
inputs to
internal and external sources of
information as appropriate.
Assessing the Group’s accounting policy as set
out within Note 1(r) for compliance with the
requirements of AASB 2 Share-based Payment.
Assessing the adequacy of the disclosures
included within the financial report.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARROW MINERALS LIMITED
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2018, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained in the audit or otherwise
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in
this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether
due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARROW MINERALS LIMITED
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in
the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were
of most significance in the audit of the financial report of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ARROW MINERALS LIMITED
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended
30 June 2018. In our opinion, the Remuneration Report of Arrow Minerals Limited, for the
year ended 30 June 2018, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 28 September 2018
Additional Information
Shareholders Information
The following additional information is required by the Australian Securities Exchange Ltd in respect of
listed public companies only.
Information as at 12 September 2018.
1. Shares on Issue
Total number of issued fully paid ordinary shares is 306,976,322. In addition, the Company has 120,872,133
quoted options exercisable at 10¢ on or before 31 December 2019.
2. Distribution of Holders
Shareholders
No. of Holders No. of Shares
Quoted Optionholders
No. of Holders No. of Options
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
> 100,000
Total
81
96
105
1,070
421
1,773
9,444
268,631
808,506
43,097,428
262,792,313
306,976,322
3. Unmarketable Parcels
39
89
126
217
131
602
17,366
294,116
903,619
7,335,414
112,321,618
120,872,133
The number of holders of less than a marketable parcel of fully paid shares is 675.
4. Substantial Shareholders
Shareholders who hold 5% or more of the issued capital of the Company as per substantial shareholder
notices lodged with ASX are listed below.
Name
Number of Shares Held
Percentage Held
Independence Group NL
Croesus Mining Pty Ltd
34,482,759
15,467,978
11.23%
5.03%
5. Restricted Securities
There are no restricted securities currently on issue.
6. Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary Shares
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a
meeting or by proxy has one vote on a show of hands.
Options
There are no voting rights attached to any class of options that is on issue.
7. On-market Buy-Back
Currently there is no on-market buy-back of the Company’s securities.
Arrow Minerals Limited
2018 Annual Report
Page 63
8 Top 20 Holders – Ordinary Shares
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Independence Group NL
Havelock Mining Investment Ltd
Croesus Mining Pty Ltd
Tubechangers Pty Ltd
Shelley Kathleen Lewis
Steven Michael
Fairbrother Holdings Pty Ltd
BNP Paribas Nominees Pty Ltd
Phillip Roger Lee Schmidt
Ocean Reef Holdings Pty Ltd
Croesus Mining Pty Ltd
Ian Michael Paterson Parker
Peter Howells
Brian Peter Byass
Citicorp Nominees Pty Limited
Khe Sanh Pty Ltd
Craig Mickle
Dean Tuck + Dianne Tuck
Tracie Louise Cielak <4-Cie A/C>
Gail Myrtle McConnon
Totals: Top 20 holders of AMD ORDINARY FULLY PAID
Total Remaining Holders Balance
Total Holders Balance
Units
34,482,759
11,103,002
10,582,265
4,867,600
4,420,133
4,242,856
3,675,000
3,572,341
3,001,000
3,000,000
3,000,000
3,000,000
2,771,517
2,706,250
2,317,515
2,296,981
2,100,000
2,067,856
2,000,000
2,000,000
107,207,075
199,769,247
306,976,322
9. Top 20 Holders – Quoted Options Exercisable at 10¢ on or before 31 December 2019
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Independence Group NL
Zenix Nominees Pty Ltd
Ian Michael Paterson Parker
Camrina Pty Ltd
Croesus Mining Pty Ltd
Croesus Mining Pty Ltd
Yuan-Hsiang Chung
Havelock Mining Investment Ltd
Tubechangers Pty Ltd
M & K Korkidas Pty Ltd
Pot of Gold Enterprises Pty Ltd
Furong Zhang
Khe Sanh Pty Ltd
Luke Kukulj
HSBC Custody Nominees (Australia) Limited
Earl Grant Pty Ltd
Eric Peter Murphy + Mrs Kim Lea Murphy
Richmond Resources Pty Ltd
Ocean Reef Holdings Pty Ltd
Grasmere Nominees Pty Ltd
Totals: Top 20 holders of AMDOA EX10¢ EXP31/12/2019
Total Remaining Holders Balance
Total Holders Balance
Units
17,241,380
13,793,105
6,125,000
5,750,000
5,122,024
4,328,038
3,366,007
2,775,751
2,477,550
1,800,000
1,680,224
1,172,795
1,125,000
1,100,000
1,090,713
1,080,000
1,050,000
1,000,000
1,000,000
1,000,000
74,079,344
46,792,789
120,872,133
% of Units
on issue
11.23
3.62
3.45
1.59
1.44
1.38
1.20
1.16
0.98
0.98
0.98
0.98
0.90
0.88
0.75
0.75
0.68
0.67
0.65
0.65
34.92
65.08
100.00
% of Units
on Issue
14.26
11.41
5.07
4.76
4.24
3.58
2.78
2.3
2.05
1.49
1.39
0.97
0.93
0.91
1.0
0.89
0.87
0.83
0.83
0.83
61.29%
38.71%
100.00%
Page 64
2018 Annual Report
Arrow Minerals Limited
10. Unquoted Securities
As at 12 September 2018 the following options over un-issued shares were on issue:
8,571,408 options exercisable at $0.175 on or before 30 June 2019.
13,146,469 options exercisable at $0.07 on or before 31 December 2019.
11. Unquoted Equity Security Holders with Greater than 20% of an Individual Class
As at 12 September 2018 no class of unquoted securities had holders with greater than 20% of the class
on issue.
12. Company Secretary
The name of the Company Secretary is Matthew Foy.
13. Registered Address
The address of the principal registered office is Unit 18, 40 St Quentin Avenue, Claremont WA 6010.
Telephone (08) 9383 3330.
14. Registers
The registers of securities are held at the following address:
Advance Share Registry
110 Stirling Highway
Nedlands WA 6009
Arrow Minerals Limited
2018 Annual Report
Page 65
Tenement Schedule as at 12 September 2018
Tenement ID
Holder
Interest
Granted
Expiry
E09/1618
Arrow (Malinda) Pty Ltd & Zeus Resources Ltd
E09/2169
Arrow (Malinda) Pty Ltd
E09/2170
Arrow (Malinda) Pty Ltd
E09/2197
Arrow (Malinda) Pty Ltd
E09/2198
Arrow (Malinda) Pty Ltd
E09/2283
Arrow (Malinda) Pty Ltd
E16/495
E16/498
Arrow (Strickland) Pty Ltd
Arrow (Strickland) Pty Ltd
E28/1475
Arrow (Plumridge) Pty Ltd & Independence Group NL
E28/22661
E28/22671
Arrow (Plumridge) Pty Ltd & Independence Group NL
Arrow (Plumridge) Pty Ltd & Independence Group NL
E28/2317
Arrow (Plumridge) Pty Ltd & Independence Group NL
E30/488
E30/493
E30/494
E30/503
Arrow (Strickland) Pty Ltd
Arrow (Strickland) Pty Ltd
Arrow (Strickland) Pty Ltd
Arrow (Strickland) Pty Ltd
E39/1084
Arrow (Plumridge) Pty Ltd & Independence Group NL
E39/1709
Arrow (Plumridge) Pty Ltd & Independence Group NL
E39/1710
Arrow (Plumridge) Pty Ltd & Independence Group NL
E39/1731
Arrow (Plumridge) Pty Ltd & Independence Group NL
35%
100%
100%
100%
100%
100%
100%
100%
49%
49%
49%
49%
100%
100%
100%
100%
49%
49%
49%
49%
16/05/2011
15/05/2021
16/05/2017
15/05/2022
16/05/2017
15/05/2022
28/04/2017
27/04/2022
28/04/2017
27/04/2022
Application
03/07/2017
02/07/2022
Application
17/11/2004
16/11/2018
25/07/2013
24/07/2018
23/04/2013
22/04/2018
22/01/2014
21/01/2019
05/04/2017
04/04/2022
04/07/2017
03/07/2022
11/07/2017
10/07/2022
Application
11/01/2006
10/01/2019
30/05/2014
29/05/2019
09/04/2013
08/04/2023
17/11/2004
16/11/2018
E39/2088
Arrow (Plumridge) Pty Ltd
100%
Application
E45/18662
E45/42792
E45/46712
Arrow (Pardoo) Pty Ltd
Arrow (Pardoo) Pty Ltd
Arrow (Pardoo) Pty Ltd
E45/5042
Arrow (Pilbara) Pty Ltd
E45/5042
Arrow (Pilbara) Pty Ltd
E47/3476
Arrow (Pilbara) Pty Ltd
E47/3478
Arrow (Pilbara) Pty Ltd
E77/2403
Arrow (Strickland) Pty Ltd
E77/2416
Arrow (Strickland) Pty Ltd
E77/2432
Arrow (Strickland) Pty Ltd
1. Subject to Extension of Term application.
2. Tenements are held on trust awaiting transfer to Caeneus Minerals Limited.
0%
0%
0%
49%
49%
49%
49%
100%
100%
100%
09/02/2004
08/02/2019
03/12/2014
02/12/2019
27/03/2017
26/03/2022
Application
Application
17/11/2016
16/11/2021
17/11/2016
16/11/2021
21/04/2017
20/04/2022
03/07/2017
02/07/2022
16/10/2017
15/10/2022
Page 66
2018 Annual Report
Arrow Minerals Limited
www.arrowminerals.com.au