Indian Pacific Resources Limited
(ACN 139 847 555)
Annual Report
Year 31 December 2019
Directors' report
Auditor's independence statement
Consolidated statement of profit or loss
and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report
CONTENTS
2
4
5
6
7
8
9
37
38
Page 1
DIRECTORS' REPORT
DIRECTORS' REPORT
The directors present their report, together with the financial statements of Indian Pacific Resources
Limited (ACN 139 847 555) (hereafter referred to as the "Company"), for the financial year ended 31
December 2019.
Principal Activities
The principal activities of the Company during the financial year were exploration for iron ore in
Madagascar. There was no significant change in the nature of these activities during the year,
Operating Results, Review of Operations for the Year and Significant Changes in State of Affairs
The net loss after tax attributable to shareholders of Indian Pacific Resources Limited of $945,983 the year
ended 31 December 2019 (the net loss after tax for the previous financial year was A$350,788). The
increase in the net loss largely results from the recognition of remuneration for directors and management
for the period 1 July 2016 to 30 June 2019. In 2016, the board of directors agreed that they would not
seek any emoluments from the Company until such time as it raised a minimum of $2.5 million. The board
of directors proposed for the remuneration to be settled by way of the issue of shares. The increase in the
loss is partly offset by settlement for fees outstanding from the withdrawal from the LSE listing for
significantly less than expected.
No significant changes in the Company's state of affairs occurred during the financial year.
Dividends
No dividends were declared and paid during the year.
Events After Balance Date
On 30 January 2020, the World Health Organisation declared the coronavirus outbreak (COVID-19) a
"Public Health Emergency of International Concern" and on March 10, 2020, declared COVID-19 a
pandemic. The operations of the Company could be negatively impacted by the regional and global
outbreak of COVID-19 and may impact the Company's results and its ability to source funding for the next
reporting year.
As at the date of this report, the full effect of the outbreak remains uncertain. The effects are likely to be
significant but cannot be reliably estimated or quantified. The Group will monitor the ongoing
developments and be proactive in mitigating the impact on its operations.
On 25 March 2020, shareholders approved the issue of 31,830,000 fully paid ordinary shares to directors
and management, including directors who have resigned and directors removed from office The shares
were issued at 2 cents or a 15% premium to the previous share issue with shares to the three directors
subject to a "lock-up" based on continuation of services for 2 years.
The Company and Cline Mining Corporation agreed a valuation for the Company to acquire its 25% equity
interest in the Iron Ore Corporation of Madagascar sari and conversion of its rights to fully paid ordinary
shares under the Deeds of Variation. Cline agreed to a payment of US$192,500 to be converted into
Australian dollars on the completion date and the fully paid ordinary shares to be issued at 2.5 cents per
fully paid ordinary shares.
The Company retained Bentleys, Dentons Australia, Harbury Capital Limited and Wardell Armstrong
International pic as consultants to and lead the Company through the listing process on the Australian
Securities Exchange.
Page 2
DIRECTORS' REPORT
Environmental Issues
The Company's projects are subject to the laws and regulations regarding environmental matters in
Madagascar Many of the activities and operations of the Company cannot be carried out without prior
approval from and compliance with all relevant authorities. The company conducts its activities in an
environmentally responsible manner and in accordance with all applicable laws. However, the company
could be subject to liability due to risks inherent to its activities, such as accidental spills, leakages or other
unforeseen circumstances.
Information on Directors
The following persons were the directors in office during the period 1 January 2019 to 31 December 2019
and since year-end unless otherwise stated:
PG Bibby (Non-executive Director), appointed 3 July 2015
MA Burridge (Non-executive Director), resigned 5 May 2019
SL Fabian (Non-executive Director), appointed 23 January 2017
JM Madden (Executive Director and Company Secretary), appointed 6 October 2009
DL Wu (Non-executive Director and Chairman), removed on 23 August 2019
Options
No options over issued shares or interests in the Company were granted during or since the end of the
financial year and there were no options outstanding at the date of this report.
Proceedings on Behalf of Company
The Company has no outstanding or pending litigation whether brought by the Company or brought
against the Company by a third party.
Non-Audit Services
There were no non-audit services provided by the Company's external auditor.
Auditor's Independence Declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act
2001 is set out on page 4.
This report of the directors is signed in accordance with a resolution of the Board of Directors.
J e d
PG Bibby
Chairman
Dated this 5 August 2020
Page s
Bentleys
> THINKiNG AHEAD
Bentleys Audit & Corporate
(WA) Pty Ltd
House
2*6 3t
orges fefrace
Pe^f- WA 60CC
are WA 6650
AS\ 3^ ' 21 22Z 8C2
-ci 8 9226 J50C
To The Board of Directors
Auditor's Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit Partner for the audit of the financial statements of Indian Pacific Resources
Limited for the financial year ended 31 December 2019, I declare that to the best of my
knowledge and belief, there have been no contraventions of
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit
Yours faithfully
BENTLEYS
Chartered Accountants
DOUG BELL CA
Partner
Dated at Perth this 5^ day of August 2020
AWVraaV
GLOBAL.
Accwta
} A
iGfS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME
Note
31 December
2019
$
2018
$
Total revenue and other Income
6
202
6,514
Expenditure
Administration costs
Employee costs
Deferment of settlement terms for acquisition of
Ore Corporation of Madagascar sarl costs
Finance costs
Contractors and consultants
Exchange fluctuation
Listing costs
Travel
Other
Total expenditure
Loss before tax for year
Income tax (expense)/benefit
7
8
53,408
752,948
20,000
94,225
56,459
(156,826)
87,660
6,381
914,255
74,486
76,053
53,131
47,711
85,704
3.651
340,736
(914,053)
(334,222)
Net loss
(914,053)
(334,222)
Net loss for the year attributable to:
Non-controlling interests
Owners of Indian Pacific Resources Limited
Items that have been or may be subsequently
reclassified to profit or loss
Translation reserve
Non-controlling interests
Owners of Indian Pacific Resources Limited
Total comprehensive income for the year
Total comprehensive income for the year
attributable to:
Non-controlling interests
Owners of Indian Pacific Resources Limited
31,930
(945,983)
(914,053)
16,566
(350,788)
(334,222)
13,071
(50.550)
(37,479)
(7,161)
60,004
52,843
45,001
(981.438)
(936,437)
9.405
(283,623)
(274,218)
The accompanying notes form part of these financial statements
Page 5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note
31 December
2019
$
2018
$
Assets
Current assets
Cash and cash equivalents
Receivables
Other
Total current assets
Non-current assets
Exploration and evaluation
Property plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Payables
Provisions
Borrowings and other liabilities
Deferred consideration
Total current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Other contributed equity
Reserves
Accumulated losses
Equity attributable to shareholders of IPR
Attributable to non-controlling interests
Total equity
10
11
1 2
13
14
15
16
17
18
19
20
21
22
23
2,091,819
14,419
2,807
2.109,045
83,538
5.739
2,842
92,119
3,133,129
2,970,267
12,831
3,145.960
5.255.005
2,970,267
3,062.386
775,361
23,857
161,802
961,020
231.686
21,293
240,000
407.340
900,319
961,020
900,319
4,293,985
2,162,067
18,832,748
15.971,191
221,893
(161,038)
(110.488)
(14,734,436)
(13,788,453)
4,159,167
134,818
2,072,250
89,817
4,293,985
2,162.067
The accompanying notes form part of these financial statements
Page 6
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CONSOLIDATED STATEMENT OF CASH FLOWS
Note
31 December
31 December
2019
$
2018
$
Cash flows from/(usecl) In operating activities
Payments to employees and suppliers
Interest received
(259,103)
(250,346)
202
497
Net cash flows from/(used) in operating activities
29
(258,901)
(249,849)
Cash flows from/(used) In investing activities
Proceeds from sale of tenements
Settlement of acquisition of IGCM
Exploration and evaluation expenditure
Property plant and equipment
Net cash flows from/(used) in investing activities
Cash flows from financing activities
Proceeds from share issues
Equity raising costs
Proceeds from borrowings
Net cash flows
Cash and cash equivalents as at the start of
the financial period
Exchange fluctuation
Cash and cash equivalents as at the end of
(253,478)
(200,562)
(12,831)
(466,871)
2,732,349
(49,777)
100,000
2,782,572
6,017
(81,622)
(75,605)
8,700
8,700
2,056,800
(316,754)
83,538
(48,519)
400,292
the financial period
1 0
2,091,819
83,538
The accompanying notes form part of these financial statements
Page 8
Note 1
Corporate information
NOTES TO THE FINANCIAL STATEMENTS
The Financial Statements of Indian Pacific Resources Limited (hereafter referred to as the "parent
entity") and its controlled entities comprising Malagasy Holdings (Tratramarina Pty Ltd (formerly
Malagasy Exploration and Mining Pty Ltd) and its controlled entity Universal Exploration
Madagascar sari) and Malagasy Holdings (Bekisopa) Pty Ltd (formerly I PR Services Pty Ltd) and
its controlled entity Iron Ore Corporation of Madagascar sari) for the financial year ended 31
December 2019.
The Financial Statements were authorised for issue in accordance with a resolution of the Board of
Directors on 5 August 2020.
The parent entity is as at the date of this annual report an unlisted public entity limited by shares
incorporated in Australia.
The principal activities of the parent entity are exploration for ferrous metals.
Note 2(a)
Basis of preparation and accounting policies
Preparation
This general purpose financial report has been prepared in accordance with Australian Accounting
Standards Board (hereafter referred to as "AASB") standards and other authoritative
pronouncements of the AASB and the Corporations Act 2001.
The financial report has been prepared on an historical cost basis.
The financial report is presented in Australian dollars.
The Statement of Comprehensive Income for both 2019 and 2018 covers the period 1 January to
31 December in each year.
Statement of compliance
The financial report complies with Australian Accounting Standards as issued by the AASB and
International Financial Reporting Standards as issued by the International Accounting Standards
Board.
Going concern
The Group recorded a net loss of $945,983 (2018: $350,788) and incurred cash outflows from
operating and investing activities of $725,772 for the year ended 31 December 2019 (2018:
$325,454). Its investing activities including, the once-off extinguishment of the deferred
consideration payable to Cline Mining Corporation of $253,478. As at 31 December 2019, the
Group had working capital of $1,946,428 (excluding accrued remuneration for directors and
management of $636,601 and amount due to Cline Mining Corporation to be extinguished by way
of the issue of fully paid ordinary shares). The Group had a working capital deficiency in the
previous year of $808,200.
The Group has ongoing operating and expenditure cash flow plans in relation to its Exploration
interests together with its ongoing corporate and operating expenditure requirements. Expenditure
on exploration is inclusive of, but not limited to, those amounts identified in Notes 25 and 26. To
fulfil the expenditure requirements contemplated by those plans, the Group will require additional
funding.
These conditions give rise to a material uncertainty that may cast significant doubt upon the
Groups ability to continue as a going concern.
The ongoing operation of the Group is dependent upon:
(i)
The Group raising sufficient additional funding from shareholders or other parties;
Page 9
NOTES TO THE FINANCIAL STATEMENTS
(ii)
The group converting existing loans to equity and if necessary, deferring deferred payment
arrangements; and
(iii)
The Group reducing expenditure in line with available funding.
The directors have prepared a cash flow forecast, which indicates that the Group will have
sufficient cash flows to meet all commitments and working capital requirements for the 12-month
period from the date of signing this financial report. Included in this forecast is a successful listing
of the Company on the Australian Securities Exchange,
Based on the cash flow forecast and other factors referred to above, the directors are satisfied that
the going concern basis of preparation is appropriate. In particular, given the Group's history of
raising capital to date, the directors are confident of the Group's ability to raise additional funds as
and when they are required.
Should the Group be unable to continue as a going concern it may be required to realise its assets
and extinguish its liabilities other than in the normal course of business and at amounts different to
those stated in the financial statements. The financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or to the amount and
classification of liabilities thai might result should the Group be unable to continue as a going
concern and meet its debts as and when they fall due.
Critical accounting estimates
The preparation of the financial report requires the use of certain critical accounting estimates. It
also requires management to exercise judgement in the process of applying the group's
accounting policies. The areas involving a higher degree of judgement or complexity or areas
where assumptions and estimates are significant to the financial report are disclosed in Note 3.
Note 2(b)
Capital management policy
The goal of management is to ensure that the Group continues as a going concern whilst
simultaneously managing the dilution. The Group seeks to add value through its exploration and
evaluation activities so that new issues of shares can be undertaken at a premium to previous
issues.
The Group is involved in high risk exploration and therefore, it looks to raise equity rather than debt
or quasi-equity instruments.
Note 2(c)
Principles of consolidation
The consolidated financial statements comprise the financial statements of Indian Pacific
Resources Limited and its controlled entities as at and for the period ended 31 December each
year (the Group).
Controlled entities are those entities over which the Group has the power to govern the financial
and operating policies to obtain benefits from their activities. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when assessing whether a
group controls another entity.
The financial statements of the controlled entities are prepared for the same reporting period as the
parent entity, using consistent accounting policies, in preparing and consolidated financial
statements, all inter-parent entity balances, transactions, unrealised gains and losses resulting
from the intra-group transactions have been eliminated in full.
Controlled entities are fully consolidated from the date on which control is obtained by the Group
and cease to be consolidated from the date on which control is transferred out of the Group.
Page 10
NOTES TO THE FINANCIAL STATEMENTS
Investments in controlled entitles by Indian Pacific Resources Limited are accounted for at cost in
the separate financial statements of the parent entity less any impairment charges.
The acquisition of controlled entities is accounted for using the acquisition method of accounting.
The acquisition method of accounting involves recognising at acquisition date, separately from
goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in
the entity acquired. The identifiable assets acquired, and the liabilities assumed are measured at
their acquisition date fair values.
The difference between the identifiable assets acquired less the liabilities assumed and the fair
value of the consideration is goodwill or discount on acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For
purposes of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash-generating units that are expected to
benefit from the combination, irrespective of whether other assets or liabilities of the acquired entity
are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is
disposed of, the goodwill associated with the operation disposed of is included in the carrying
amount of the operation when determining the gain or loss on disposal of the operation. Goodwill
disposed of in this circumstance is measures based on the relative values of the operation
disposed of and the portion of the cash-generating unit retained.
Non-controlling interests are allocated their share of net profit after tax in the statement of
comprehensive income and are presented within equity in the consolidated statement of financial
position, separately from the equity of the owners of the parent entity.
Total comprehensive income within a controlled entity is attributed to the non-controlling interest
even if that results in a deficit balance.
A change in the ownership interest of a controlled entity that does not result in a loss of control, is
accounted for as an equity transaction.
A change in the ownership interest of a controlled entity, without a loss of control, is accounted for
as an equity transaction, if the Group loses control over a controlled entity, it:
(i)
Derecognises the assets (including goodwill) and liabilities of the controlled entity;
(ii)
Derecognises the carrying amount of any non-controlling interest;
(iii)
Derecognises the cumulative translation differences recorded in equity;
(iv)
Recognises the fair value of the consideration received;
(v)
Recognises the fair value of any investment retained;
(vi)
Recognises any surplus or deficit in the Statement of Comprehensive Income statement;
and
(vii) Reclassifies the parent entity's share of components previously recognised in other
comprehensive income to Statement of Comprehensive Income or retained earnings, as
appropriate.
Page 11
NOTES TO THE FINANCIAL STATEMENTS
Note 2(d)
Foreign currency translation
The financial report of the Group is presented in Australian dollars, which is the functional and
presentation currency of the parent entity. Each entity in the Group determines is own functional
currency.
On consolidation, the assets and liabilities of foreign operations are translated into Australian
dollars at the rate of exchange prevailing at the reporting date and the income statements for
foreign operations are translated at exchange rates prevailing at the dates of the transactions. The
exchange differences arising on translation for consolidation are recognised in other
comprehensive income.
Note 2(e)
Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which the Group is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract with
a customer, the Group:
identifies the contract with a customer;
identifies the performance obligations in the contract:
determines the transaction price which takes into account estimates of variable
consideration and the time value of money;
allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and
recognises revenue when or as each performance obligation is satisfied in a manner that
depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the
customer such as discounts, rebates and refunds, any potential bonuses receivable from the
customer and any other contingent events. Such estimates are determined using either the
'expected value' or 'most likely amount" method. The measurement of variable consideration is
subject to a constraining principle whereby revenue will only be recognised to the extent that it is
highly probable that a significant reversal in the amount of cumulative revenue recognised will not
occur. The measurement constraint continues until the uncertainty associated with the variable
consideration is subsequently resolved. Amounts received that are subject to the constraining
principle are recognised as a refund liability.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable
to the financial assets.
Note 2(f)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period's
taxable income based on the applicable income tax rate adjusted by changes in deferred tax
assets and liabilities attributable to temporary differences and to unused tax losses.
The current tax charge is calculated on the basis of the tax laws acted or substantively enacted at
the end of the reporting period.
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial report of
the Group. Deferred income tax; however, is not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit and loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the end
of the financial period and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Page 12
NOTES TO THE FINANCIAL STATEMENTS
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 assets and liabilities are offset when there is a legally enforceable right to offset
current tax assets and liabilities and when the deferred tax balances relate to the same tax
authority Current tax assets and tax liabilities are offset where the entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to realise the asset and settle the
liability simultaneously.
Current and deferred tax is a recognised in Statement of Comprehensive Income, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In
this case, the tax is also recognised in other comprehensive income or directly in equity,
respectively.
Note 2(g)
Leases
The Group has applied AASB 16 Leases to its lease obligations. Under this new standard, the
group is required to recognise all right of use assets and lease liabilities, except for short-term (12
months or fewer) and low value leases, on the balance sheet. The lease liability is initially
measured at the present value of future lease payments for the lease term. Where a lease contains
an extension option, the lease payments for the extension period will be included in the liability if
the Group is reasonably certain that it will exercise the option. The liability includes variable lease
payments that depend on an index or rate but excludes other variable lease payments. The right of
use asset at initial recognition reflects the lease liability, initial direct costs and any lease payments
made before the commencement date of the lease less any lease incentives and, where
applicable, provision for dismantling and restoration.
The Group has recognised depreciation of right of use assets and interest on lease liabilities in the
statement of comprehensive income over the lease term. Separate the total amount of cash paid
into a principal portion (presented within financing activities) and interest portion (which the Group
presents in operating activities) in the cash flow statement.
The Group has measured the rights to use as if AASB 16 has applied since the commencement
date of the lease arrangements and used the incremental borrowing rate at the date of transition.
Under this approach the Group has capitalised the rights to use and recorded the present value of
obligations to pay as a liability by applying a single incremental borrowing rate with an adjustment
to the opening balance of accumulated losses.
The Group has assessed the financial implications of application of AASB 16 Leases and
concluded that there is no impact.
Note 2(h)
Impairment of assets
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment or more frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are tested 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.
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 which are largely independent of the cash flows from other
assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that
suffered impairment are reviewed for possible reversal of the impairment at the end of each
financial period.
Note 2(1)
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at banks and at
hand and short-term deposits with an original maturity of three months or less.
Page 13
NOTES TO THE FINANCIAL STATEMENTS
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and
cash equivalents as defined above, net of outstanding bank overdrafts.
Note 2(j)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest rate method, less provision for impairment. Trade receivables are
generally due for settlement within 30 days.
The amount of impairment allowance 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 impairment is recognised in Statement of Comprehensive Income within other
expenses. When a trade receivable for which an impairment allowance had been recognised
becomes uncollectible in a subsequent financial period, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against other
expenses in Statement of Comprehensive Income.
Note 2(k)
Investments and other financial assets
Classification
The Group classifies its financial assets in the following categories; financial assets at fair value
through Statement of Comprehensive Income , loans and receivables, held-to-maturity investments
and available-for-sale financial assets. The classification depends on the purpose for which the
investments were acquired. Management determines the classification of its investments at initial
recognition and, re-evaluates this designation at the end of each financial period.
(0
(H)
Financial assets at fair value through Statement of Comprehensive Income
Financial assets at fair value through Statement of Comprehensive Income include financial
assets held for trading. A financial asset is classified in this category if acquired principally
for the purpose of selling in the short-term. Derivatives are classified as held for trading
unless they are designated as hedges. Assets in this category are classified as current
assets.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are included in current assets,
except for those with maturities greater than 12 months after the financial period which are
classified as non-current assets.
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at
amortised cost. Gains or losses are recognised in profit and loss through the amortisation process
and when the financial liability is derecognised.
Re-classification
The Group may choose to reclassify a non-derivative trading financial asset out of the held-for-
trading category if the financial asset is no longer held for the purpose of selling it in the near term.
Financial assets other than loans and receivables are permitted to be reclassified out of the held-
for-trading category only in rare circumstances arising from a single event that is unusual and
highly unlikely to recur in the near term. In addition, the Group may choose to reclassify financial
assets that would meet the definition of loans and receivables out of the held-for-trading or
available-for-sale categories if the Group has the intention and ability to hold these financial assets
for the foreseeable future or until maturity at the date of reclassification. Reclassifications are
made at fair value as of the reclassification date. Fair value becomes the new cost or amortised
cost as applicable, and no reversals of fair value gains or losses recorded before reclassification
date are subsequently made. Effective interest rates for financial assets reclassified to loans and
Page 14
NOTES TO THE FINANCIAL STATEMENTS
receivables and held-to-maturity categories are determined at the reclassification date. Further
increases in estimates of cash flows adjust effective interest rates prospectively.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date - the date on which
the Group commits to purchase or sell the asset. Investments are initially recognised at fair value
plus transaction costs for all financial assets not carried at fair value through Statement of
Comprehensive Income. Financial assets carried at fair value through Statement of
Comprehensive Income, are initially recognised at fair value and transaction costs are expensed in
Statement of Comprehensive Income. Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired or have been transferred and the Group
has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments
recognised in other comprehensive income are reclassified to Statement of Comprehensive
Income as gains and losses from investment securities.
Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the
effective interest method. Available-for-sale financial assets and financial assets at fair value
through Statement of Comprehensive Income are subsequently carried at fair value. Gains or
losses arising from changes in the fair value of the 'financial assets at fair value through Statement
of Comprehensive Income ' category are presented in Statement of Comprehensive Income within
other income or other expenses in the period in which they arise.
Changes in the fair value of monetary securities denominated in a foreign currency and classified
as available-for-sale are analysed between translation differences resulting from changes in
amortised cost of the security and other changes in the carrying amount of the security. The
translation differences related to changes in the amortised cost are recognised in Statement of
Comprehensive Income, and other changes in carrying amount are recognised in other
comprehensive income. Changes in the fair value of other monetary and non-monetary securities
classified as available-for-sale are recognised in other comprehensive income.
Impairment
The Group assesses at the end of each financial period whether there is objective evidence that a
financial asset or group of financial assets is 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 as an indicator that the securities are impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss - measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognised in Statement of Comprehensive Income - is reclassified from equity and
recognised in Statement of Comprehensive Income as a reclassification adjustment. Impairment
losses recognised in Statement of Comprehensive Income on equity instruments classified as
available-for-sale are not reversed through Statement of Comprehensive Income.
If there is evidence of impairment for any of the Group's financial assets carried at amortised cost,
the loss is measured as the difference between the asset's carrying amount and the present value
of estimated future cash flows, excluding future credit losses that have not been incurred. The
cash flows are discounted at the financial asset's original effective interest rate. The loss is
recognised in Statement of Comprehensive Income.
Note 2(1)
Property, plant and equipment
Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts,
net of their residual values, over their estimated useful lives or, in the case of leasehold
improvements and certain leased plant and equipment, the shorter lease term as follows:
Computer hardware and software 3 years
Page 15
NOTES TO THE FINANCIAL STATEMENTS
Exploration equipment 5 years
Motor vehicles 4 years
Office furniture and fittings 5 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each financial period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount.
These are included in Statement of Comprehensive Income. When revalued assets are sold, it is
the Group's policy to transfer any amounts included in other reserves in respect of those assets to
retained earnings.
Note 2(m)
Exploration and evaluation expenditure
Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest'
method. Once the legal right to explore has been acquired, exploration and evaluation expenditure
is charged to Statement of Comprehensive Income as incurred, unless the board of directors
conclude that a future economic benefit is more likely to be realised.
Exploration and evaluation expenditure is capitalised provided the rights to tenure of the area of
interest are current and either:
(i)
(ii)
the exploration and evaluation activities are expected to be recouped through successful
development and exploitation of the area of interest or, alternatively, by its sale;
the exploration and evaluation activities in the area of interest have not at the end of a
financial period reached a stage that permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves, and active and significant operations in, or
relating to, the area of interest are continuing.
When the technical feasibility and commercial viability of extracting a mineral resource have been
demonstrated then any capitalised exploration and evaluation expenditure is reclassified as
capitalised mine development. Prior to this reclassification, capitalised exploration and evaluation
expenditure is assessed for impairment.
Impairment
The carrying amount of capitalised exploration and evaluation expenditure is assessed for
impairment at the cash generating unit level whenever facts and circumstances suggest that the
carrying amount of the asset may exceed its recoverable amount.
Impairment exists when the carrying amount of an asset or cash-generating unit exceeds its
estimated recoverable amount. The asset or cash-generating unit is then written down to its
recoverable amount. Any impairment losses are recognised in Statement of Comprehensive
Income.
Note 2{n)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end
of financial period which are unpaid. The amounts are unsecured and are usually paid within 30
days of recognition.
Note 2(o)
Provisions
Provisions for legal claims and make good obligations are recognised when the Group has a
present legal or constructive obligation as a result of past events, it is probable that an outflow of
Page 16
NOTES TO THE FINANCIAL STATEMENTS
resources will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any one item included in the same
class of obligations may be small.
Provisions are measured at the present value of management's best estimate of the expenditure
required to settle the present obligation at the end of the financial period. The discount rate used
to determine the present value is a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. The increase in the provision due to the
passage of time is recognised as interest expense.
Note 2(p)
Employee benefits
0)
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and
accumulating sick leave expected to be settled within 12 months after the end of the period
in which the employees render the related service are recognised in respect of employees'
services up to the end of the reporting period and are measured at the amounts expected to
be paid when the liabilities are settled. The liability for annual leave and accumulating sick
leave is recognised in the provision for employee benefits. All other short-term employee
benefit obligations are presented as payables.
(H) Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled
within 12 months after the end of the period in which the employees render the related
service is recognised in the provision for employee benefits. These long-term benefits are
measured as the present value of expected future payments to be made in respect of
services provided by employees up to the end of the reporting period using the projected
unit credit method. Consideration is given to future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted
using market yields at the end of the reporting period on national government bonds with
terms to maturity and currency that match, as closely as possible, the estimated future cash
outflows.
(Hi)
Termination benefits
Termination benefits are payable when employment is terminated before the normal
retirement date, or when an employee accepts voluntary redundancy in exchange for these
benefits. The Group recognises termination benefits when it is demonstrably committed to
either terminating the employment of current employees according to a detailed formal plan
without possibility of withdrawal or to providing termination benefits as a result of an offer
made to encourage voluntary redundancy. Benefits falling due more than 12 months after
the end of the reporting period are discounted to present value.
Note 2(q)
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. Incremental costs directly attributable to the issue of
new shares or options for the acquisition of a business are not included in the cost of the
acquisition as part of the purchase consideration.
If the Group reacquires its own equity instruments, for example, as the result of a share buy-back,
those instruments are deducted from equity and the associated shares are cancelled. No gain or
Page 17
NOTES TO THE FINANCIAL STATEMENTS
loss is recognised in Statement of Comprehensive Income and the consideration paid including
any directly attributable incremental costs (net of income taxes) is recognised directly in equity.
Note 2{r)
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no
longer at the discretion of the entity, on or before the end of the reporting period but not distributed
at the end of the financial period.
Note 2(s)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the
GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of
the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The
net amount of GST recoverable from, or payable to. the taxation authority is included with other
receivables or payables in the Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from
investing or financing activities which are recoverable from, or payable to the taxation authority, are
presented as operating cash flows.
Note 2(t)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
board of directors, the chief operating decision making body, which is responsible for the allocation
of resources and performance assessment of the operating segments.
Note 2(u)
New Accounting Standards for Application in Future Periods
AASB 2016-1 Amendments to Australian Accounting Standards - Recognition of Deferred Tax
Assets for Unrealised Losses
The amendments clarify that an entity needs to consider whether tax law restricts the sources of
taxable profits against which it may make deductions on the reversal of deductible temporary
difference related to unrealised losses.
Furthermore, the amendments provide guidance on how an entity should determine future taxable
profits and explain the circumstances in which taxable profit may include the recovery of some
assets for more than their carrying amount. The Group applied amendments retrospectively.
However, their application has no effect on the Group's financial position and performance as the
Group has no deductible temporary differences or assets that are in the scope of the
amendments.
li. AASB 2016-2 Amendments to Australian Accounting Standards - Disclosure Initiative:
Amendments to AASB 107
The amendments require entities to provide disclosure of changes in their liabilities arising from
financing activities, including both changes arising from cash flows and non-cash changes (such
as foreign exchange gains or losses).
However, their application has no effect on the Group's financial position and performance as the
Group has no deductible temporary differences or assets that are in the scope of the
amendments.
in. AASB 2017-2 Amendments to Australian Accounting Standards - Further Annual Improvements
2014-2016 Cyde
Page 18
NOTES TO THE FINANCIAL STATEMENTS
The amendments clarify that the disclosure requirements in AASB 12, other than those in
paragraphs B10-B16, apply to an entity's interest in a subsidiary, a joint venture or an associate (or
a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal
group that is classified) as held for sale.
However, their application has no effect on the Group's financial position and performance as the
Group has no deductible temporary differences or assets that are in the scope of the
amendments.
Note 3
Significant accounting judgments and estimates
The preparation of the Group's financial statements in conformity with International Financial
Reporting Standards requires management to make judgments, estimates and assumptions that
affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting period.
Estimates and assumptions are continuously evaluated and are based on management's
experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. However, actual outcomes can differ from these estimates.
In particular, information about significant areas of estimation uncertainty considered by
management in preparing the financial statements is described below.
(i)
(H)
Functional currency
The functional currency of foreign operations has been determined as Australian dollars.
This outcome has resulted from examination of the prevailing facts and circumstances,
including the basis on which the entities incur obligations for exploration and evaluation
activities and the basis on which the foreign operations are funded.
Exploration and evaluation expenditure
The application of the Group's accounting policy for exploration and evaluation expenditure
requires judgment in determining whether it is likely that future economic benefits are likely
from future exploitation or sale or where activities have not reached a stage which permits a
reasonable assessment of the existence of reserves. The determination of a resource, in
accordance with the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves, the JORC Code 2012 Edition, is itself an estimation process
that requires varying degrees of uncertainty depending on sub-classification and these
estimates directly impact the point of deferral of exploration and evaluation expenditure.
The deferral policy requires management to make certain estimates and assumptions about
the future events or circumstances, in particular, whether an economically viable extraction
operation can be established. Estimates and assumptions made may change if new
information becomes available.
Significant judgement is required in determining whether it is likely that future economic
benefits will be derived from the capitalised exploration and evaluation expenditure. In the
judgement of the Directors, at 31 December 2019 exploration activities in each area of
interest have not yet reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves. Active and significant
operations in relation to each area of interest are continuing and nothing has come to the
attention of the Directors to indicate future economic benefits will not be achieved. The
Directors are continually monitoring the areas of interest and are exploring alternatives for
funding the development of areas of interest when economically recoverable reserves are
confirmed.
If. after expenditure is capitalised, information becomes available suggesting that the
recovery of expenditure is unlikely or exploration activities in the area have ceased, the
amount capitalised is written off in Statement of Comprehensive Income in the period when
the new information becomes available.
Page 19
Note 4
Financial risk management objectives and policies
NOTES TO THE FINANCIAL STATEMENTS
The Group's principal financial instruments comprise of cash and short-term deposits and
other financial assets.
The main purpose of these financial instruments is to invest funds raised by the Group until
utilised in exploration activities.
The Group has other financial instruments such as current receivables and payables arising
from corporate activities.
The main risks arising from the Group's financial instruments are interest rate risk, foreign
currency risk, credit risk and liquidity risk. The Chief Financial Officer is responsible for the
management of the Group's financial risk. The Chief Financial Officer updates the board of
directors regularly on financial risk management measures that he implements.
Risk exposures and responses
Interest rate risk
The Group is exposed to market interest rates on moneys it has deposited with Australian
banking institutions in form of short-term deposits.
At the end of the financial period, the Group had the following financial assets exposed to
Australian variable interest rate risk:
The main risks arising from the Group's financial instruments are interest rate risk, foreign
currency risk, credit risk and liquidity risk. The Chief Financial Officer is responsible for the
management of the Group's financial risk. The Chief Financial Officer updates the board of
directors regularly on financial risk management measures that he implements.
Risk exposures and responses
Interest rate risk
The Group is exposed to market interest rates on moneys it has deposited with Australian
banking institutions in form of short-term deposits.
At the end of the financial period, the Group had the following financial assets exposed to
Australian variable interest rate risk:
31 December
2019
$
2018
$
Cash and cash equivalents
2,091,819
83,538
At the end of the financial period, the Group had no financial liabilities exposed to variable
interest rate risks.
The Group's cash management policy is to invest surplus funds at the best available rate
received from Westpac Banking Corporation.
Set out below is a sensitivity analysis of the financial implications of interest rate risk
exposure as at the end of the financial year. If interest rates had moved, with all other
variables constant, profit aftertax and equity would have been:
Page 20
NOTES TO THE FINANCIAL STATEMENTS
31 December
2019
$
2018
$
32,630
(10,877)
7,257
(2,419)
32,428
(10,675)
6,760
(1.922)
Profit after tax
Higher/(lower)
+1% (100 basis points)
-1% (100 basis points)
Equity
Higher/(lower)
+1% (100 basis points)
-1% (100 basis points)
The movement in equity is directly linked to the movement in the Statement of
Comprehensive Income as the Group does not undertake any interest rate hedging.
Foreign currency risk
The Group has incurred a number of US obligations which it extinguished through the
purchase of US dollars. At balance date, these US obligations outstanding are recorded as
payables in the Statement of Financial Position. The Group will continue to incur US dollar
financial obligations into the future as some of items acquisition obligations are
denominated in US dollars and the Banque Centrale de Malgache has mandated through its
regulatory role to limit the number of foreign currencies in which Malagasy entities can
conduct business to Euros and US dollars.
As at 31 December 2019, the Group had US dollar payables $161,802 (2018: $407,340).
The Group holds its cash balances in US dollars and transfers US dollars to Madagascar as
and when required. The Group has identified its Australian dollar exposes and exchanges
US dollars for Australian dollars when it considers market conditions are advantageous.
The table below sets out the financial impact of the strengthening or weakening of the
Australian dollar against the US dollar on a profit after tax and equity basis as at the end of
the financial year, with all other variables constant:
Profit after tax
Higher/(lower)
+5% AUD/USD exchange rate
-5% AUD/USD exchange rate
Equity
Higher/(lower)
+5% AUD/USD exchange rate
-5% AUD/USD exchange rate
Commodity price risk
31 December
2019
$
2018
$
104,512
(115,514)
(28,202)
31,171
104,512
(115,514)
(28,202)
31,171
Presently, the principal activities of the Group are the exploration and evaluation of ferrous-
based minerals in Madagascar and, as at the date of this financial report, does not have any
commodity price risk exposure from the production of ferrous-based minerals.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash
equivalents and other receivables. The parent entity invests only in short-term deposits with
institutions that have AA /A-1+ with a stable outlook rating. In Madagascar, the Group
Page 21
NOTES TO THE FINANCIAL STATEMENTS
banks with Banque Malgache de /'Ocean Indien, a banking institution controlled by Banque
populaire-Caisse d'espame. BPCE is rated A+/A-1+ with a stable outlook rating. The Group
maintains minimal cash balances in its Malagasy controlled entities.
Current receivables are monitored on an ongoing basis with the result that the Group's
exposure to bad debts is not significant.
Concentration risk
The Group does not have any concentration risk.
Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and the ability of the Group to
meet these obligations as and when they fall due.
The Group does not have any external borrowings; however, the Group will need additional
equity funds in order to explore and evaluate its ferrous-based minerals in Madagascar.
The maturity analysis of financial assets and financial liabilities is set out below:
Year ended 31 December 2019
0-30
Days
31-60
Days
61-90
Days
91-180
Days
Total
Financial assets
Cash and cash equivalents
2,091,819
Receivables
Other current assets
Financial liabilities
Payables
Other payables
Net maturity
14,419
2,807
2,109,045
(100,436)
2,008,609
2,091,819
14,419
2,807
2,109,045
(100,436)
(836,727)
(836,727)
(836,727)
1,171,882
Year ended 31 December 2018
0-30
Days
31-60
Days
61-90
Days
91-180
Days
Total
Financial assets
Cash and cash equivalents
Receivables
Other current assets
Financial liabilities
Payables
Other payables
Net maturity
83,538
5,739
2,842
92,119
(15.000)
(240,000)
77,119
(240,000)
83,538
5,739
2,842
92,119
(216,686)
(231,686)
(407,340)
(647,340)
(624,026)
(786,907)
Fair values
All financial assets and liabilities recognised in the Statement of Financial Position, whether
they are carried at cost or fair value, are recognised as amounts that represent a
reasonable approximation of fair values unless otherwise stated in the applicable notes.
Non-cash settlement
Other payables set in the above as at 31 December 2019 of $816,727 are to be
extinguished by way of the issue of fully paid ordinary shares rather than settlement by way
of cash.
Page 22
Note 5
Segment reporting
NOTES TO THE FINANCIAL STATEMENTS
The group operates solely in the mining exploration industry.
The Group determines operating segments by reference to internal reports that are
reviewed and used by the executive management team, being the chief operating decision
makers (CODMs) in assessing performance and determining the allocation of resources.
The CODMs consider the exploration expenditure in relation to the tenements held in
Madagascar, however discrete financial information is not provided in relation individual
tenements. On this basis, these tenements are not considered to be discrete operating
segments.
Note 6
Total revenue and other income
Other income
Proceeds from sale of tenement
Interest on short-term deposits
Note 7
Listing Costs
31 December
2019
$
2018
$
202
202
6,017
497
6,514
The Company abandoned its LSE listing in 2017 following the withdrawal of its broker,
Panmure Gordon & Co, which was subject to a takeover when the marketing commenced.
PG&Co refocused its business on larger transactions under new management which meant
the transaction with the Company was not of a magnitude that PG&Co wished to pursue.
The Company negotiated settlements with parties retained for the listing which resulted in
an over-accrual of $156,826.
Note 8
Income tax
2019
$
2018
$
Accounting profitless)
(914,053)
(334,222)
At the statutory income tax rate
applicable to the Company 27.5% (2018: 27.5%)
251,365
91,911
Tax losses for the current year for which
no deferred tax asset is recognised
Capital losses
Exchange fluctuation
Implicit interest
Listing costs
Share-based accruals
Income tax (expense)/benefit
(21,638)
(15,526)
(5,500)
(25,423)
(183,278)
17,219
14,611
(20,915)
(102,826)
Deferred tax assets are recognised for the carry-forward of unused tax losses and unused
tax credits to the extent that it is probable taxable profits will be available against which the
unused tax losses/credits can be utilised.
Page 23
NOTES TO THE FINANCIAL STATEMENTS
The Group has unrecognised tax losses that are available indefinitely of $7,505,072 (2018:
$7,375,361) to carry forward against future taxable income and unrecognised tax capital
losses that are available indefinitely of $6,531,564 (2018: $6,531,564) to carry forward
against future taxable capital gains.
Note 9
Dividends paid and proposed
No dividends were paid during the financial year and no dividend is proposed to be paid as
at the end of the financial year, 31 December 2019.
Note 10
Cash and cash equivalents
Cash in hand
Cash at bank
Short-term deposits
Note 11
Receivables-current
31 December
2019
$
2018
$
42
2,088,664
3,113
2,091,819
42
13,458
70,038
83,538
31 December
2019
$
2018
$
GST input credits
14,419
5,739
Receivables are non-interest bearing and are generally on 30 to 90-day terms.
Note 12
Other current assets
Bonds
2,807
2,842
31 December
2019
$
2018
$
Page 24
Note 13
Exploration and evaluation
NOTES TO THE FINANCIAL STATEMENTS
At start of financial year
Additions
Impairment
31 December
2019
$
2018
$
2,970,267
162,862
2,880,650
89,617
At end of financial year
3,133,129
2,970,267
The carrying value of exploration and
evaluation expenditure at balance date is
represented by the following projects:
Ambodilafa
Bekisopa
Tratramarina
1,398,820
1,380,354
741,722
992,587
636,546
953,367
3,133,129
2,970,267
Ambodilafa Farm-in Agreement
On 22 August 2012, the Company entered into a Farm-in Agreement with Jubilee Platinum
pic which entitled the Company to earn a 90% interest in commodities other than platinum
group elements, London Metal exchange traded metals and chrome.
Under the Farm-in Agreement, the Company will earn its interest in the commodities in
three stages:
Stage 1 US$1.0 million expenditure
51%
Stage 2 US$1.0 million expenditure
Stage 3 US$1.0 million expenditure
81% (cumulative)
90% (cumulative)
The Company is required to give notice to Jubilee each time it has expended US$1.0 million
under the Farm-in Agreement. Jubilee has 30 days from the date of notice to inform the
Company whether it wishes to take the unearned interest available to it through jointly
funding all future work programmes. If Jubilee does not elect to take the unearned interest,
the Company has automatic rights to move the next stage and earn additional interest in the
commodities. Under the Farm-in Agreement the Company will have sole and exclusive
rights to explore the Ambodilafa tenements in each stage.
Where the Company has earned a 90% interest in the commodities and Jubilee does not
elect to take up the unearned interest, the Company has a right to buy-out the unearned
interest for $1.5 million through either shares or cash or a royalty or a combination of these
methods.
As at balance date, 31 December 2019 the Company had earned an 90% equity interest in
the Ambodilafa tenements. The Company has advised Jubilee that it would elect to buy-out
the residual interest by way of a royalty; however, as at the date of this report the Company
and Jubilee have not formalised this arrangement.
Bekisopa Share Sale and Purchase Agreement
On 16 June 2014, the Company acquired Iron Ore Corporation of Madagascar sari pursuant
to a Share Sale and Purchase Agreement and the simultaneous execution of a
Shareholders Agreement with Cline Mining Corporation. Under the terms and conditions of
the Share Sale and Purchase Agreement, the Company paid Cline US$25,000 (the "First
Instalment") on execution of the above-mentioned agreement and agreed to pay, on 17
June 2019, a further US$175,000 (the "Second Instalment"). In addition, the Company
Page 25
NOTES TO THE FINANCIAL STATEMENTS
agreed to pay outstanding annual administration fee {frais d'administration annuel) to the
Bureau of Cadastre Mines of Madagascar {Bureau du Cadastre Minier de Madagascar or
BCMM) as well as settling outstanding liabilities in Madagascar.
The value of the Group's exploration and evaluation expenditure is dependent on the ability
of the Company to obtain further funding to enable it to:
continue exploration in the areas of interest;
meet tenement renewal payments to continue to satisfy rights to tenure: and
the recoupment of costs through successful development and exploitation of the
areas of interest, or alternatively by their sale.
On 27 October 2016, the Company renegotiated its obligations to Cline through an
extension to the payment of the Second Instalment due under the Share Sale and Purchase
Agreement. The Second Instalment was extended to 17 June 2018 with an option for the
Company to extend the payment date a further 6 months to 17 December 2018.
The Company has agreed to issue Cline US$50,000 in fully paid ordinary shares on listing
of the Company on an exchange and, if the Company exercises its option to extend
payment of the Second Instalment by a further 6 months, US$25,000 in fully paid ordinary
shares based on the 30-day volume-weighted average price immediately prior to the date of
extension.
On 13 December 2019, the Company extinguished its obligations to Cline under the Share
Sale & Purchase Agreement with the payment of A$253,478. Further, on 25 July 2020, the
Company and Cline agreed terms for the Company to acquisitions its 25% equity position in
IOCM and convert its rights under the Deeds of Variation to the Share Sale & Purchase
Agreement by way of the issue of fully paid ordinary shares.
In October 2017, the Ministry of Mines lifted the moratorium on the renewal, transfer and
transformation of existing tenements: however, the progress in addressing the backlog has
been slow. Malagasy counsel for the Company has concluded that the renewal and
transformation applications submitted to the BCMM for permits held by the Company and
confirmed that in each case the application was made in a form, which was acceptable to
the BCMM and is deemed to hold beneficial title to these tenements. Accordingly,
Malagasy counsel see no evidence, which would suggest that the Ministry of Mines would
withhold its approval in respect of the renewal of the permits concerned and at this point in
time the company has access to these tenements.
The Company deferred the payment of the 2019/2020 administration fees for a number of
tenements associated with the Ambodilafa and Tratramarina projects. The Bureau du
Cadastre Miner de Madagascar advised tenement holders that it would not cancel any
tenements that renewal fees became in arrears as a result of the failure of the government
to grant, renew or transform tenements. The decision by the Company was consistent with
other miners and explorers who have demanded the government address the shortcomings
of previous administrations.
The Company has sighted BCMM approved renewals and transformation of its tenements.
The documents are now awaiting ministerial seal which is expected during the course of
2020. On receipt of renewals the Company will pay the BCMM approximately A$70,000 in
administration fees plus penalties. The Company has accrued the 2019/20 administration
fees outstanding as at 31 December 2019.
Page 26
Note 14
Property plant and equipment
NOTES TO THE FINANCIAL STATEMENTS
Cost
Opening balance
Additions
Closing balance
Accumulated depreciation
Opening balance
Depreciation
Closing balance
Net carrying value
Note 15
Payables-current
Trade payables
Other payables
31 December
2019
$
2018
$
12,831
12,831
12,831
31 December
2019
$
2018
$
100,436
674,925
775,361
231,686
231,686
Trade payables are non-interest bearing and are normally settled on 30-day terms. Other
payables are also non-interest bearing and have an average term of 30 days.
Due to the short-term nature of these payables, the carrying amounts recorded in the
financial statements for trade payables.
The amount disclosed as Other payables includes $636,601 which relates to the amounts
due to directors of the Company from 1 July 2016 to 30 June 2019 which was extinguished
by the issue of fully paid ordinary shares in the Company at 2 cents per share by way of
resolutions approved by shareholders at a general meeting on were the subject to a general
meeting of shareholders on 25 March 2020.
Note 16
Provisions-current
Annual leave
23,857
21,293
31 December
2019
$
2018
$
Page 27
Note 17
Borrowings and other liabilities
NOTES TO THE FINANCIAL STATEMENTS
Opening balance
Convertible notes Issued
Finance cost
Convertible notes converted into fully paid
ordinary shares
Closing balance
31 December
2019
$
2018
$
240,000
100,000
20,000
(360,000)
240,000
240,000
Pursuant to a Convertible Note instrument Tranche 1, Baker Steel Resources Trust
provided the Company with A$200.000 for working capital in July 2017 with associated
borrowing costs of $40,000. The loan instrument is convertible, on shareholder approval,
into fully paid ordinary shares of 1 cent per share.
On 3 June 2019, the Company and Baker Steel Resources Trust agreed to a Tranche 2
convertible note facility of $100,000 with associated borrowing costs of $20,000 on the
same terms and conditions as Tranche 1.
On 13 August 2019, Baker Steel Resources Trust exercised its rights to convert its
convertible note Tranche 1 and Tranche 2 into 36,000,000 fully paid ordinary shares in the
Company.
Note 18
Deferred consideration
Current
31 December
2019
$
2018
$
Cline Mining Corporation
161,802
407,340
On 16 June 2014, the Company acquired Iron Ore Corporation of Madagascar sari pursuant
to a Share Sale and Purchase Agreement and the simultaneous execution of a
Shareholders Agreement with Cline Mining Corporation. Under the terms and conditions of
the Share Sale and Purchase Agreement, the Company paid Cline US$25,000 on execution
of the above-mentioned agreement and agreed to pay, on 17 June 2018, a further
US$175,000.
The Company has accounted for the amount due to Cline on a net present value basis
using a discount rate of 4% and adjusting the US dollar amount for exchange fluctuation.
On 27 October 2017, the Company renegotiated its obligations to Cline through an
extension to the payment of the Second Instalment due under the Share Sale and Purchase
Agreement. The Second Instalment was extended to 17 June 2018 with an option for the
Company to extend the payment date a further 6 months to 17 December 2018.
The Company has agreed to issue Cline US$50,000 in fully paid ordinary shares on listing
of the Company on an exchange and, if the Company exercises its option to extend
payment of the Second Instalment by a further 6 months, US$25,000 in fully paid ordinary
shares based on the 30-day volume-weighted average price immediately prior to 17 June
2018.
The Company and Cline entered into a further extension to the settlement of the Second
Instalment due under the Share Sale and Purchase agreement on 12 December 2018 for a
Page 28
NOTES TO THE FINANCIAL STATEMENTS
period of 12 months for US$37,500 in fully paid ordinary shares based on the 30-day
volume-weighted average price immediately prior to 12 December 2019.
On 13 December 2019, the Company extinguished its obligation to Cline (principal
excluding interest and penalties) under the Share Sale and Purchase Agreement with the
cash payment of $253,478 and agreed on 25 July 2020 to acquire its 25% equity interest in
Iron Ore Corporation of Madagascar sari as well as extinguish its obligation to Cline under
the Deeds of Variation through the issue of fully paid ordinary share sin the Company at 2.5
cents per fully paid ordinary shares.
Note 19
Contributed equity
At 31 December 2017
189,295,579
15,929,635
Number
$
Issue of shares
Reimbursement of directors for
out-of-pocket expenses
Settlement of amount due to Jubilee
Metals Group pic for Ambodilafa costs
Share issues
712,644
12,400
1,175,632
500,000
2,388,276
20,456
8,700
41,556
At 31 December 2018
191,683,855
15,971,191
Issue of shares
Conversion of convertible note Tranche 1 and 2
by Baker Steel Resources Trust
36,000,000
360,000
Equity raising costs
Settlement of creditors
Share Placement
Equity raising costs
4,027,685
2,349,310
70,082
40,878
144,279,081
2,510,456
186,656,076
2,981,416
186,656,076
2,861,557
(119,859)
At 31 December 2019
378,339,931
18,832,748
Ordinary shares
Ordinary shares have the rights to receive dividends as declared and. in the event of
winding up, participate in the proceeds from the sale of all surplus assets in proportion to
the number of, and amounts paid up on, the shares held.
Each fully paid ordinary share carries one vote.
Ordinary shares issued to shareholders since incorporation have had no par value.
Options over ordinary shares
There are no options over ordinary shares on issue.
Page 29
NOTES TO THE FINANCIAL STATEMENTS
Performance shares
On 26 October 2016, the Company entered into a Heads of Agreement with Westridge
Management international Pty Ltd whereby the latter was entitled to performance rights
equal to 12% of the total number of shares after raised a minimum of $2.5 million on listing
the Company on the London Stock Exchange, Westridge did not achieve the milestone to
be awarded the performance shares and accordingly, the arrangement with Westridge
lapsed on 30 September 2017 when the Company abandoned the listing.
Note 20
Other contributed equity
31 December
2019
$
2018
$
Balance at start of the financial period
221,893
Other contributed equity relates to monies received from investors for shares have not been
issued as at balance date.
Note 21
Translation reserve
31 December
2019
$
2018
$
Opening balance
(110,488)
(177,653)
Translation of foreign currency financial
statements into the functional currency
(50,550)
67,165
Transfer of exchange fluctuation for
previous years from accumulated losses
Closing balance
(161.038)
(110,488)
Note 22
Accumulated losses
31 December
2019
$
2018
$
Balance at start of the financial period
(13,788,453)
(13,437,665)
Net loss for the year
(945,983)
(350.788)
(14,734,436)
(13,788.453)
Page 30
Note 23
Non-controlling interests
NOTES TO THE FINANCIAL STATEMENTS
Share capital
Reserves
Accumulated losses
Loans contributed by Indian Pacific Resources
Limited and assigned to Cline
31 December
2019
$
2018
$
2,552
62,893
(68,091)
(2,646)
2,552
75,964
(100,021)
(21,505)
137,464
111,322
(134,818)
(89,817)
Pursuant to the Shareholders Agreement, the Group is required to fund all expenditures by
way of loans to Iron Ore Corporation Of Madagascar sari until the payment of the Second
Instalment set out in the Share Sale and Purchase Agreement and assign 25% of the loans
made to Cline Mining Corporation.
Following the payment of the Second Instalment, both shareholders of IOCM must fund
their share of expenditure by way of interest-free loans in proportion to their respective
interests in the uncertificated shares of IOCM. The Group extinguished its obligation to pay
the Second Instalment on 13 December 2019 and accordingly, Cline is required to fund its
share of expenditure from 1 January 2020.
Under the Shareholders Agreement if a party fails to fund its share of the Cash Call made
by IOCM to fund its expenditure, the non-defaulting shareholder can serve a Notice of
Default on the defaulting shareholder and, if the defaulting does not rectify its default within
60 days, the non-defaulting share is entitled to exercise its right to dilute the defaulting
shareholder by 50% of each default. Where the defaulting shareholder's equity interest falls
below 5%, the defaulting shareholder is required to assign its equity interest and its
shareholder loans to the non-defaulting shareholder for zero consideration and accordingly,
will have no rights to any assets or obligation for any liabilities in IOCM.
Note 24
List of controlled entities
The financial statements include the financial statements of the parent entity and the
controlled entities listed in the following table:
Name
Incorporation
2019
2018
Country of
% equity interest
Malagasy Holdings (Bekisopa)
Australia
100
100
Pty Limited
- Iron Ore Corporation of
Malagasy sari
Madagascar
Malagasy Holdings (Tratramarina)
Australia
Pty Limited
- Universal Exploration
Madagascar sari
Madagascar
75
100
100
75
100
100
Page 31
Note 25
Commitments
NOTES TO THE FINANCIAL STATEMENTS
Exploration and evaluation expenditure commitments
Under 99-022 Mining Code (portant Code minier), the Group does not have any expenditure
commitments on its tenements other than the annual renewal fees {frais annuel
d'administration) which are payable to the Madagascar Mining Cadastre Bureau {Bureau du
Cadastre Minier de Madagascar).
The annual renewal fees for Ambodilafa tenements, held by Mineral Resources of
Madagascar sari, an entity controlled by Jubilee Platinum pic, are approximately $10,000 for
the 2019-2020 renewal period. Mineral Resources of Madagascar sari is the entity through
which the Company earns its equity interest in the Ambodilafa tenements
The Company deferred the payment of the 2019/2020 administration fees for a number of
tenements associated with the Ambodilafa and Tratramarina projects. The Bureau du
Cadastre Miner de Madagascar advised tenement holders that it would not cancel any
tenements that renewal fees became in arrears as a result of the failure of the government
to grant, renew or transform tenements. The decision by the Company was consistent with
other miners and explorers who have demanded the government address the shortcomings
of previous administrations.
The Company has sighted BCMM approved renewals and transformation of its tenements.
The documents are now awaiting ministerial seal which is expected during the course of
2020. On receipt of renewals the Company will pay the BCMM approximately A$70,000 in
administration fees plus penalties. The Company has accrued the 2019 administration fees
outstanding as at 31 December 2019.
Note 26
Financial obligations of the Company and its controlled entity Universal Exploration
Madagascar sari
The Company
Ambodilafa tenements
On 22 August 2012, the Company entered into a Farm-in Agreement with Jubilee Platinum
pic which entitled the Company to earn a 90% interest in commodities other than platinum
group elements, London Metal exchange traded metals and chrome.
Under the Farm-in Agreement, the Company will earn its interest in the commodities in
three stages;
Stage 1 US$1.0 million expenditure
51%
Stage 2 US$1.0 million expenditure
81% (cumulative)
Stage 3 US$1.0 million expenditure
90% (cumulative)
The Company is required to give notice to Jubilee each time it has expended US$1.0 million
under the Farm-in Agreement. Jubilee has 30 days from the date of notice to inform the
Company whether it wishes to take the unearned interest available to it through jointly
funding all future work programmes. If Jubilee does not elect to take the unearned interest,
the Company has automatic rights to move the next stage and earn additional interest in the
commodities. Under the Farm-in Agreement the Company will have sole and exclusive
rights to explore the Ambodilafa tenements in each stage.
Where the Company has earned a 90% interest in the commodities and Jubilee does not
elect to take up the unearned interest, the Company has a right to buy-out the unearned
interest for $1.5 million through either shares or cash or a royalty or a combination of these
methods.
As at balance date, 31 December 2019 the Company had earned an 90% equity interest in
the Ambodilafa tenements. The Company has advised Jubilee that it would elect to buy-out
Page 32
NOTES TO THE FINANCIAL STATEMENTS
the residual interest by way of a royalty; however, as at the date of this report the Company
and Jubilee have not formalised this arrangement.
Bekisopa tenements
On 16 June 2014, the Company acquired Iron Ore Corporation of Madagascar sari pursuant
to a Share Sale and Purchase Agreement and the simultaneous execution of a
Shareholders Agreement with Cline Mining Corporation. Under the terms and conditions of
the Share Sale and Purchase Agreement, the Company paid Cline US$25,000 on execution
of the above-mentioned agreement and agreed to pay, on 17 June 2014, a further
US$175,000. In addition, the Company agreed to pay outstanding annual administration
fee (frais d'administration annuel) to the Bureau of Cadastre Mines of Madagascar {Bureau
du Cadastre Minierde Madagascar or BCMM) as well as settling outstanding liabilities in
Madagascar,
On 27 October 2016, the Company renegotiated its obligations (principal excluding interest
and penalties) due to Cline Mining Corporation for the Bekisopa DSO project. Under the
revised terms the Company has move its outstanding obligations from June 2017 to June
2018 on the issue of US$50,000 in shares in the Company on its listing and an option to
extend the outstanding obligation to December 2018 for a further US$25,000 in shares.
On 13 December 2019, the Company extinguished its obligation to Cline under the Share
Sale and Purchase Agreement with the payment of A$253,478. Further, on 25 July 2020
the Company agreed with Cline to acquire its remaining 25% equity interest in IOCM as well
as convert its rights to fully paid ordinary shares under the Deeds of Variation at a price of
2.5 cents per fully paid ordinary shares.
Universal Exploration Madagascar sari
On 23 June 2011, Universal Exploration Madagascar sari (UEM) acquired two Reserved
Licences for Small Mining Developers {du Permis Reserve Aux Petits Exploitants ou
Permis) prospective for magnetite (the Tratramarina West tenements) by paying
US$200,000 and agreeing to pay, on the election of UEM. US$250,000 (First Option) and
US$350,000 (Second Option) in 2012 and 2013, respectively, if UEM sari elects to continue
to explore and expend monies on the permits. In addition, if Universal Exploration
Madagascar sari undertakes a Mine Development that incorporates magnetite ore sourced
from the Tratramarina West tenements, a royalty of 0.35% will be paid on the net sales
revenue generated on magnetite concentrate produced from the Tratramarina West
prospects. The Tratramarina West tenements are adjacent to the Tratramarina East.
The parent entity exercised the First Option during the course of the financial year and
exercised the Second Option on 26 February 2013.
Following the exercise of the Second Option, the outstanding obligation of UEM under the
Mining Permit Sale Agreement is a royalty equal to 0.35% of net sales revenue.
Note 27
Events after balance date
On 30 January 2020, the World Health Organisation declared the coronavirus outbreak
(COVID-19) a "Public Health Emergency of International Concern" and on March 10, 2020,
declared COVID-19 a pandemic. The operations of the Company could be negatively
impacted by the regional and global outbreak of COVID-19 and may impact the Company's
results and its ability to source funding for the next reporting year.
As at the date of this report, the full effect of the outbreak remains uncertain. The effects
are likely to be significant but cannot be reliably estimated or quantified. The Group will
monitor the ongoing developments and be proactive in mitigating the impact on its
operations.
On 25 March 2020, shareholders approved the issue of 31, 830,000 fully paid ordinary
shares to directors and management, including directors who have resigned and directors
Page 33
NOTES TO THE FINANCIAL STATEMENTS
removed from office. The shares were issued at 2 cents or a 15% premium to the previous
share issue with shares to the three directors subject to a "lock-up" based on continuation of
services for 2 years.
The Company and Cline Mining Corporation agreed a valuation for the Company to acquire
its 25% equity interest in the Iron Ore Corporation of Madagascar sari and conversion of its
rights to fully paid ordinary shares under the Deeds of Variation. Cline agreed to a payment
of US$192,500 to be converted into Australian dollars on the completion date and the fully
paid ordinary shares to be issued at 2.5 cents per fully paid ordinary shares.
The Company retained Bentleys, Dentons Australia, Harbury Capital Limited and Wardell
Armstrong International pic as consultants to and lead the Company through the listing
process on the Australian Securities Exchange.
Note 28
Related party disclosures
Directors
The directors of the parent entity during the financial period were;
PG Bibby
MA Burridge (resigned 5 May 2019)
SL Fabian
JM Madden
DL Wu (removed on 23 August 2019)
Mr MA Burridge is Managing Partner for Baker Steel Capital Managers. One of the funds
run by Baker Steel is the Baker Steel Resources Trust and during the course of the financial
year ended 31 December 2018 the Group received a convertible note facility from Baker
Steel Resources Trust of A$200,000 with an accompanying borrowing fee of A$40,000. At
that time, Mr MA Burridge did not participate in the Investment Committee or sit on the
board of directors of Baker Steel Resources Trust.
The board of directors agreed on October 2016 that they would not seek any emoluments
from the Company until such time as it raised a minimum of $2.5 million and. if that figure
was achieved, any amount agreed to be paid to directors would be subject to shareholder
approval and settled by way of the issue of fully paid ordinary shares. On 25 March 2020,
shareholders approved the issue of 31,830,000 fully paid ordinary shares at 2 cents per
ordinary in accordance with the process agreed by the board of directors in 2016.
Page 34
NOTES TO THE FINANCIAL STATEMENTS
Note 29
Cash flow statement reconciliation
31 December
2019
$
2018
$
Net loss after tax
(914,053)
(334,222)
Adjusted for;
Exchange fluctuation
Finance costs
Deferment of settlement terms for acquisition of
Ore Corporation of Madagascar sari costs
Proceeds from sale of tenements
Provisions
Share-based payments
Changes in other current assets and
current liabilities:
Current assets
Receivables
Other
Current liabilities
Payables
56,459
20,000
2,785
40,878
85,704
53,131
(6,017)
2,732
(8,680)
36
(1,812)
22,628
543,674
(258,901)
(71,993)
(249,849)
Note 30
Key management personnel
Details of key management personnel
Chief Financial Officer
and parent entity Company Secretary
JM Madden
Non-executive directors
PG Bibby
MA Burridge (resigned 5 May 2019)
SL Fabian
DL Wu (removed on 23 August 2019)
Compensation of key management personnel
Compensation paid to key management personnel is as follows:
31 December
2019
$
2018
$
Short-term employee benefits
715,351
Post-employment benefits
Other long-term benefits
715,351
The board of directors agreed on October 2016 that they would not seek any emoluments
from the Company until such time as it raised a minimum of $2.5 million and, if that figure
was achieved, any amount agreed to be paid to directors would be subject to shareholder
approval and settled by way of the issue of fully paid ordinary shares. On 25 March 2020,
Page 35
NOTES TO THE FINANCIAL STATEMENTS
shareholders approved the issue of 31,830,000 fully paid ordinary shares at 2 cents per
ordinary in accordance with the process agreed by the board of directors in 2016. The
remuneration for 2019 included cash remuneration of $78,750 and non-cash remuneration
of $636,601.
Note 31
Parent entity
The following table sets out selective financial information relating to Indian Pacific
Resources Limited the parent entity of the Group:
Current assets
Exploration and evaluation
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued and paid-up capital
Other contributed equity
Accumulated losses
31 December
2019
$
2018
$
2,088,353
2,205,632
4,293,985
844,523
79,093
2,115,311
2,194,404
873,557
844,523
3,449,462
873,557
1.320,847
18,832,748
15,971.191
221,893
(15,605,179)
(14,650,344)
Profit (loss) after tax for the parent entity
Total comprehensive profit (loss) for the parent entity
(954,835)
(954,835)
(419,521)
(419,521)
Note 32
Auditor's remuneration
31 December
2019
$
2018
$
Amounts paid or due for payable to
Bentleys
Audit or review of the financial report
20,000
15,000
- amounts relating to previous year
Other services
20,000
15,000
Note 33
Contingent liabilities
The Company has no contingent liabilities, other than that disclosed in Note 26.
Page 36
DIRECTORS' DECLARATION
In accordance with a resolution of the board of directors of Indian Pacific Resources Limited. I state that
In the opinion of the board of directors;
(a)
financial statements, the accompanying notes to the financial statements and the additional
disclosures set out in the Directors' Report are in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a true and fair view of the Company's financial position as at 31 December 2019 and
of their performance for the period ended on that date; and
complying with Australian Accounting Standards (including Australian Accounting
Interpretations) and Corporations Regulations 2001\
(b)
(c)
the financial statements and notes also comply with International Financial Reporting Standards as
issued by the International Accounting Standard Board, as disclosed in Note 2(a): and
there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
on behalf of the Board of Directors
A
PG Bibby
Chairman
5 August 2020
age 37
Bentleys
THINKING AHEAD
Bentleys Audit & Corporate
(WA) Pty Ltd
moon House
&XQC&
1 e'V' WA 60f
PO Box ~"5
•stefs Square WA 6850
•21 222t
1 8 9226 450(
Independent Auditor's Report
To the Members of Indian Pacific Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Indian Pacific Resources Limited ("the
Company") and its subsidiaries ("the Consolidated Entity), which comprises the
statement of financial position as at 31 December 2019, the statement of profit or loss
and other comprehensive income, the statement of changes in equity and the 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 Consolidated Entity is In accordance with
the Corporations Act 2001, including;
(i)
giving a true and fair view of the Consolidated Entity's financial position as
at 31 December 2019 and of its financial performance for the year then
ended; and
(ii)
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards
as disclosed in Note 2(a).
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 Consolidated Entity 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 believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
A\\\u\a\
GLOBAL
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^ Audit
independent Auditor's Report
To the Members of Indian Pacific Resources Limited (Continued)
Bentleys
>
Material Uncertainty Related to Going Concern
We draw attention to Note 2(a) in the financial report which indicates that the Consolidated Entity incurred a net
loss of $945,983 during the year ended 31 December 2019. As stated in Note 2(a), these events or conditions,
along with other matters as set forth in Note 2(a), indicate that a material uncertainty exists that may cast
significant doubt on the Consolidated Entity's ability to continue as a going concern. Our opinion is not modified
in this respect of this matter.
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 31 December 2019, 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 Consolidated Entity 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 Note 3,
the directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Consolidated Entity's ability 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 Consolidated Entity 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.
Independent Auditor's Report
To the Members of Indian Pacific Resources Limited (Continued)
Bentleys
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.
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 Consolidated Entity's intemal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropnateness 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 Consolidated Entity'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 Consolidated Entity 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 Consolidated Entity to express an opinion on the financial report We are
responsible for the direction, supervision and performance of the Consolidated Entity 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.
Independent Auditor's Report
To the Members of Indian Pacific Resources Limited (Continued)
Bentleys
>
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.
BENTLEYS
Chartered Accountants
DOUG Bl
CA
Partner
Dated at Perth this 5m day of August 2020