2017 Annual Report
Contents
About Us
Chairman’s Letter
Managing Director’s Letter
Board of Directors
Our Team
Projects Overview
FY2017 & FY2018 Milestones
Financial Summary
Full Year Report
Directors’ Report
Auditor’s Independence Declaration
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 Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Mineral Licences
JORC Competent Persons’ Statements
Securities Information
Corporate Directory
1
2
3
4
6
8
14
15
16
31
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34
35
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63
67
68
69
Mission Statement
We will become a mid-tier mineral
producer with a focus on mineral
deposits and projects in the Middle
East region.
We will deliver maximum
shareholder value through
profitable growth, development of
low cost operations and through
stability and sustainability over
time.
Core Values
Excellence
Alara will pursue excellence and
will strive for relevant best practice
combined with a fit-for-purpose
approach through continuous
improvement and teamwork in all
aspects of our business.
To achieve our goals we will
ensure our employees and
business partners have the
appropriate skills and resources to
perform their work effectively and
efficiently. We will foster an open
and supportive environment in all
activities and relationships.
Respect
Alara will show consideration for
and value our employees, our
Joint Venture and other business
partners, our customers, our
suppliers, our communities and
governments, and the social and
physical environment in which we
operate.
Integrity
Alara and its employees are
committed to fairness and honesty
and will operate with transparency
and accountability at all levels of
the business.
About Us
Daris & Al Hadeetha Copper-Gold Projects (Oman)
Khnaiguiyah Zinc-Copper Project (Saudi Arabia)
Head Office: Perth, Australia
For the past 10 years, Alara Resources’ primary activities have been in mineral exploration and resource
development, particularly in the burgeoning mining sectors of the Middle East.
Having completed two positive feasibility studies, Alara is now focused on building its project portfolio in
Oman, with the aim of further increasing its resource base and becoming a profitable mineral producer.
The past year has seen the announcement of Alara’s maiden Ore Reserve estimate for the Washihi deposit
at the Al Hadeetha Copper-Gold Project in Oman. An updated environmental report is currently under
review, pre-requisite to receiving mining approval.
Alara Resources Limited ABN: 27 122 892 71912017 Annual Report
Chairman’s letter
The stage is set for FY2018 to be
Alara’s best year yet.
James D Phipps
Non-Executive Chairman
FY2017 saw an improved global environment for commodities, in particular those relevant to Alara’s copper
mining exploration projects in Oman, with copper up 35%. It also saw licensing process improvements in both
Oman and Saudi Arabia, improvements which Alara’s management team are exploiting to advance the
Company’s interests in those jurisdictions. Finally FY2017 also saw the announcement of a maiden ore reserve
and an 81% increase in our Indicated Resource at our Al Hadeetha Copper-Gold Project in Washihi, Oman.
FY2018 will be pivotal for Alara, as it makes the transition from pure exploration towards a mix of exploration
and production. Key milestones for FY2018 will include the:
Licensing of our Al Hadeetha Project;
Commencement of mine construction of our Al Hadeetha Project; and
Construction of our first mineral processing plant in Oman.
Efforts to expand the Company’s portfolio of exploration projects are afoot, although the first priority of the
board and management for FY2018 is to secure the Washihi Mining Licence for the Al Hadeetha Project and
to be fully prepared to move out smartly as soon as that licence is issued. This means having in place the
financing, EPC, operations and other contractual arrangements necessary to succeed when the licence is
issued. Management is making excellent progress on these matters.
I thank my fellow board members for their invaluable input throughout the year and for their disciplined
approach towards realising our mission of becoming a mid-tier mineral producer with a focus on mineral
deposits and projects in the Middle East region, while delivering maximum shareholder value through profitable
growth, development of low cost operations and through stability and sustainability over time.
For their outstanding efforts in this regard, and for their constant exemplification of our core values of
excellence, respect and integrity, I acknowledge and thank our CEO, Justin Richard, and the rest of our
management team.
The stage is set for FY2018 to be an exciting year for Alara – one which I look forward to sharing with our
shareholders.
James D Phipps
Alara Resources Limited ABN: 27 122 892 71922017 Annual Report
Managing Director’s letter
The Company is on the verge of constructing its first mineral
processing plant in Oman.
2017 marked the tenth anniversary of Alara Resources’ listing on the Australian Stock Exchange. After starting
with projects in Australia, Chile and Peru, in 2010 Alara acquired an interest in its first JV Copper Project in
Oman.
For the next seven years, the Company’s primary focus was on its middle-east projects. Over 50,000m of
exploratory drilling was completed in Saudi Arabia and Oman, culminating in two bankable feasibility studies
and JORC Ore Reserve estimates1.
The Company is now on the verge of constructing its first mineral processing plant in Oman2.
Despite some approval processes taking longer than anticipated, the Company’s JV projects continue to edge
forward, with a string of recent approvals in Oman boding well for environmental clearance and grant of the
pending mining licence at Washihi.
Governments in the gulf region are continuing to implement change to promote foreign investment, particularly
into the mining sector. Mining has been identified as a key growth area to diversify the economy and reduce
reliance on oil related revenues. Alara’s JV projects are propped ready to capitalise on these initiatives as we
enter the next wave of development.
Alara participated in two Australian business delegations to Saudi over the last year3. These visits with
government and industry leaders explored avenues of mutual interest and collaboration between Australia and
Saudi Arabia, especially in the mining sector. Key government decisions are still to be made, but the
Khnaiguiyah Project has been identified as a ‘priority project4.
During the last financial year, Alara completed an infill drilling program and upgraded resource estimate in
Oman. The updated resource model included an 81% increase in the Indicated Resource estimate5.
In December 2016, the Company announced a maiden ore reserve estimate for the Al Hadeetha Copper-Gold
Project (Washihi site)6. Since then, progress has been made with regard to project finance, offtake, CSR,
improved water supply options and project cost savings.
Copper prices are up 35% since last year’s annual report and growing supply deficits indicate continuing price
support, if not further rises.
In light of these and other positive developments, the way is prepared for Alara’s seven year investment into
mineral exploration in Oman to pay off, and pave the way for further development of adjoining and nearby
exploration licences, including Mullaq, Al Ajal and Daris which show clear evidence of ancient copper mining
activity.
Until then, we’re persistently working toward grant of a mining licence, until that perseverance is rewarded.
Justin Richard
1 Refer Alara’s ASX Announcements dated 18 April 2013, 30 April 2013, 23 December 2015, 1 April 2016 and 15 December 2016.
2 A 1Mtpa copper concentration plant - refer Alara’s ASX Announcement dated 1 April 2016.
3 First business delegation was led by the Hon Stephen Ciobo MP, Minister for Trade, Tourism and Investment and the second by the Hon Keith Pitt MP,
Assistant Minister for Trade, Tourism and Investment. Delegation visits included Saudi government ministers, Saudi Arabian Mining Company Ma’aden,
and other key government and industry bodies with interests in the mining sector.
4 CEDA oversee government mechanisms to make Saudi Vision 2030 a reality and target potential obstacles or delays, including through the Project
Management Office established to identify and facilitate development of ‘priority projects’.
5 The increase was from 6.84MT@ 0.9%Cu and 0.17g/t Au to 12.39MT@ 0.89%Cu & 0.22g/t Au (using 0.25% Cu cut-off). Refer Alara’s ASX
Announcement dated 19 September 2016.
6 Refer Alara’s ASX Announcement dated 15 December 2016.
Alara Resources Limited ABN: 27 122 892 71932017 Annual Report
Board of Directors
James D Phipps
B.A. (Philosophy), J.D. (Law)
Non-Executive Chairman of the Board
A business lawyer by background, Mr Phipps is a strategic adviser and business executive
with decades of international and Middle East experience.
During the last decade, Mr Phipps has served in a variety of board and management
leadership roles in a variety of sectors including mining, heavy industry (tissue paper
manufacturing), consumer products, sports talk radio, and sports entertainment (English
football). Mr Phipps currently chairs Shout TV, Inc. and Flashvote, Inc., Lindon, Utah,
businesses in the sports entertainment, fan engagement, consumer activation and social
media space.
Mr Phipps has experience in corporate turnarounds and has served as chief executive or
general manager at a number of companies in a turn-around capacity. He brings experience
to the board in the context of Alara's G.C.C. endeavours, where Mr Phipps has been involved
one way or another for over two decades.
Justin Richard
LLB, MBA, FCSA, FCIS
Managing Director
Mr Richard joined Alara in 2011 and in 2013 relocated from Perth to Riyadh as Alara’s Country
Manager for the Middle East. In 2015, he was appointed Managing Director and is currently
based in Oman.
Prior to joining Alara, Mr Richard worked as Senior Commercial Officer with Bateman
Engineering (Australia), Corporate Counsel for UGL Limited’s resources division and as a
lawyer in Minter Ellison’s Construction, Engineering and Infrastructure group.
Before entering the legal profession, Mr Richard enjoyed a successful career in private
enterprise as Managing Director of Irrigate Australia.
Mr Richard holds a MBA from London Business School, a Bachelor’s degree in Law from
University of Western Australia and is a Fellow of the Governance Institute of Australia.
Alara Resources Limited ABN: 27 122 892 71942017 Annual Report
Vikas Jain
MBA
Non-Executive Director
Mr Jain holds an MBA obtained in the USA and as a wealth of experience encompassing
around 15 years in the field of mineral exploration and allied activities, including open-pit
mining.
Mr Jain is currently Managing Director and CEO of the Indian company South West Pinnacle
Exploration P/L, a company he founded in 2006 and under his leadership grew to become a
leading exploration company in India.
After starting in mineral exploration, South West Pinnacle has since added coal-bed methane
production, transportation, geophysical logging and other geological activities to its domain.
Atmavireshwar Sthapak
BASc, MTech (Applied Geology)
Executive Director
Mr Sthapak is a geologist specialising in mineral resource exploration and evaluation studies.
He joined Alara in 2011, making valuable contributions to the Company as an Exploration
Manager and a Study Manager based in Muscat, including discovery of large VMS copper
mineralisation extensions at the Washihi project in Oman.
Prior to Alara, Mr Sthapak’s career spanned 10 years with ACC / ACC-CRA Ltd, and 10 years
with Rio Tinto (Australasia) where he was awarded a Rio Tinto Discovery Award in 2009. He
has worked on world class deposits, including Mt. Isa type copper deposits in Australia, and
copper, gold and diamond mines on four continents.
Ian Gregory
BBus, FGIA, FCIS, F Fin, MAICD
Company Secretary
Mr Gregory is a professionally well-connected Director and Company Secretary with over 30
years’ experience in the provision of company secretarial, governance and business
administration services with listed and unlisted companies in a variety of industries, including
oil and gas, exploration, mining, mineral processing, banking and insurance. He also has
expertise which includes launching successful start-up operations through the development of
the company secretarial role and board reporting processes.
Mr Gregory currently consults on company secretarial and governance matters to a number
of listed companies.
Prior to founding his own consulting Company Secretarial business in 2005 Mr Gregory was
the Company Secretary of Iluka Resources Ltd (6 years), IBJ Australia Bank Ltd Group, the
Australian operations of The Industrial Bank of Japan (12 years), and the Griffin Coal Mining
Group of companies (4 years). He is a past member and Chairman of the Western Australian
Branch Council of Governance Institute of Australia (GIA) and has also served on the National
Council of GIA.
Alara Resources Limited ABN: 27 122 892 71952017 Annual Report
Our Team
Justin Richard (MBA, LLB, FCSA, FCIS)
Joined Alara in August 2011
Managing Director
Based in Oman
As a corporate lawyer and business manager, Mr Richard has played a key role in
establishing and maintaining Alara’s international joint venture operations, including new
business relationships to facilitate ongoing project development in the region. After joining
Alara in Australia as General Counsel, he relocated to Riyadh in 2013 as Country Manager
for the Middle East.
Atmavireshwar Sthapak (BASc, MTech (Applied Geology))
Joined Alara in November 2011
Executive Director
Based in Oman
Mr Sthapak joined Alara as an Exploration Manager and Study Manager, and is a geologist
specialising in mineral resource exploration and evaluation studies. His valuable
contributions include the discovery of large VMS copper mineralisation extensions at the Al
Hadeetha Project (Washihi) in Oman.
Ian Gregory (BBus, FGIA, FCIS, F Fin, MAICD)
Joined Alara in June 2015
Company Secretary
Based in Australia
Mr Gregory is a Director and Company Secretary with over 30 years of experience in the
provision of company secretarial, governance and business administration services with
listed and unlisted companies in a variety of industries, including oil and gas, exploration,
mining, mineral processing, banking and insurance. He also has expertise which includes
launching successful start-up operations through the development of the company
secretarial role and board reporting processes.
Tina Newbon (AdvDipAcc, AdvDipBusAdmin)
Joined Alara in January 2011
Office Manager
Based in Australia
Mrs Newbon is a highly experienced administrator and joined Alara as Executive Assistant
to the CEO. Since then she has been involved in many aspects of the business including
office administration, human resources, corporate affairs, finance, leasing/relocation, ASX
requirements and IT management. Mrs Newbon has over 15 years of experience in
administration, finance and projects including BGC Blokpave, Shell Australia, WA Gas
Networks and BHP Billiton.
Rexin Kamilas (MCom, Tally)
Joined Alara in November 2011
Finance & Administration Manager
Based in Oman
Mr Kamilas is an experienced administrator who has been working for over eight years in
Oman. He joined Alara as an Administrative and Accounting Assistant and has since been
involved in business procurement, auditing, leasing, travel, insurance, banking and payroll
for the Company’s projects in both Saudi Arabia and Oman.
Alara Resources Limited ABN: 27 122 892 71962017 Annual Report
Mindy Ku (BSc, CPA)
Contractor, joined Alara in April 2017
Corporate Services
Based in Australia
Mrs Ku is the Managing Director of Corporate Board Services. She has over 15 years of
international experience in financial analysis, financial reporting (annual report, half-year,
quarterly), management accounting, compliance reporting, board reporting, company
secretarial services and office management across multiple jurisdictions (Australia,
Malaysia, UK, Sweden and Norway) including ASX listed companies, public and private
companies.
Jason Williams
Contractor, joined Alara in June 2013
Technical Adviser
Based in Australia
Mr Williams is a skilled professional with over 15 years of experience in project management
across multi-discipline teams including sub-contractor management within the Power
Generation, Oil & Gas and Mining/Mineral Processing industries. His experience includes
estimating, tender evaluation, contract management/scope of work development, fabrication
management, construction management and commissioning, maintenance and shutdown
work on a wide range of facilities within these industries.
Venkatesan Ganesan (MBA, CPA, ACA, ACS, CBV)
Contractor, joined Alara in September 2017
Corporate Financial Adviser
Based in Dubai
Mr Ganesan runs a boutique advisory services firm in Dubai and India. He has spent over
15 years in a Big-4 financial advisory practice and has advised a variety of industry clients
on transaction matters. He also spent six years in an upstream E&P business at the start of
his career. Mr Ganesan is currently assisting Alara in optimising development stage capital.
Al Hadeetha Investments LLC
Partnership commenced in 2011
Joint Venture Partner – Al Hadeetha Copper-Gold Project
Based in Oman
Al Hadeetha Investments LLC is a private company owned by the family of Sayyid Khalid Al
Busaidi, an entrepreneur-cum-educationist, who is the Founder and Chairman of Al Nab’a
Group. Al Nab’a is one of the largest employers and a Top 10 brand in Oman. The Group’s
services include Integrated Facilities Management, Soft Services, Catering Services,
Infrastructure development and Equipment trade.
Al Tamman Trading Establishment LLC
Partnership commenced in August 2010
Joint Venture Partner – Daris Copper-Gold Project
Based in Oman
Al Tamman Trading Establishment LLC is a wholly owned subsidiary company of Muscat
Overseas Group. The Company’s objective is to utilise the mineral wealth of Oman, including the
development and improvement of the mineral industry, its products and derivatives and related
industries. Al Tamman’s operations include chromite, manganese and marble mining.
Alara Resources Limited ABN: 27 122 892 71972017 Annual Report
Projects Overview
Alara currently has three Projects in the Middle East:
Al Hadeetha Copper-Gold Project in Oman, Feasibility Study completed, Mining Licence pending
Daris Copper-Gold Project in Oman, Scoping Study, Advanced Scoping Study completed, Mining Licence
application submitted
Khnaiguiyah Zinc-Copper Project in Saudi Arabia, Feasibility Study completed, Mining Licence to be re-
issued
Alara Resources Limited ABN: 27 122 892 71982017 Annual Report
Oman
Al Hadeetha Copper-Gold Project (formerly Washihi Project)
Alara – 70%, Al Hadeetha Investments LLC – 30%, of Al Hadeetha Resources LLC
Drilling at Washihi site
The Al Hadeetha Project is located approximately 80–160km east and southeast of Alara's Daris Copper-Gold
Project, and comprises three Exploration Licences which cover 105km2, and applications for three Mining
Licences.
In December 2016, Alara announced a maiden JORC Ore Reserve statement of 9.7Mt (@ 0.88 Cu and 0.22g/t
Au) based on the Washihi JORC Resource statement (using 0.25% Cu cut-off) of:
Indicated Resource of 12.39MT @ 0.89%Cu & 0.22g/t Au
Inferred Resource of 3.71MT @ 0.79%Cu & 0.23g/t Au
Shallow gold mineralisation in Gossan was also identified (Inferred Resource of 0.31MT @ 0.51g/t Au) outside
the main ore body.
Mining Licences are issued by the Public Authority of Mining (PAM) after PAM has reviewed and approved the
Project, and clearance/no objections letters are received from other relevant authorities. PAM completed its
review early 2017 and is now working with the Company to secure necessary clearances. Clearance from the
Ministry of Environment and Climate Affairs (MECA) is still outstanding.
Alara Resources Limited ABN: 27 122 892 71992017 Annual Report
Last year MECA officials attended a community consultation meeting last year, with a good show of support
for the Project coming from the community. The latest correspondence from MECA gave instruction to re-
submit the Project’s Environmental Impact Assessment (EIA) through an accredited environmental
consultancy firm. The Omani firm that first prepared the EIA was approved at the time of the original
submission, but later discontinued providing environmental services and their accreditation lapsed.
Consequently, Alara engaged another firm to review and update the EIA. The revised EIA was completed and
resubmitted to MECA in September 2017. The new regulations provide for MECA to respond within thirty days.
Alara is currently preparing draft documentation to establish a Public Private Partnership (PPP) for construction
and maintenance of a STP supplying water to the Project and local community. Under the PPP proposal, a
25km pipeline from the town of Al Mudhaibi will deliver 2,500 cubic metres of treated water per day to the site.
When compared with the previously identified water source 75km away from the Project site (Nizwa), the Al
Mudhaibi pipeline route covers relatively
terrain with manageable relief. Significant
flat, barren
environmental/community benefits will also derive from a fivefold increase over the existing town water
treatment capacity.
Washihi site visit with government officers and community leaders
Alara Oman team with Al Hadeetha JV partner, Sayyid Khalid Al Busaidi, Chairman of the Al Nab’a Group
Alara Resources Limited ABN: 27 122 892 719102017 Annual Report
Daris Copper-Gold Project
Alara – 50% with right to increase to 70%, Al Tamman Trading Establishment LLC – 50%, of Daris Resources LLC
The Daris Copper-Gold Project is located 150km west of Muscat, the capital of Oman. The Project comprises
one Mineral Excavation Licence of approximately 587km2 with applications for two Mining Licences covering
4.5km2.
The Project has a JORC Mineral Resource Estimate (Measured and Indicated) of 240Kt sulphide ore at 2.37%
Cu and 183Kt oxide ore at 0.72% Cu.
The proximity to the capital city, a paved highway and copper extraction facilities (at Washihi) should assist in
the development of early cash flow from any discoveries made in the Project area.
Alara Resources Limited ABN: 27 122 892 719112017 Annual Report
The Daris Project has received clearance from the Ministry of Environment and Climate Affairs.
For Daris mineral resources which also include copper oxide ore, we will pursue new developments in metal
extraction involving leaching processes with process generated biodegradable substances. This technology is
known to have been tested in Australia and South America and has demonstrated very high recoveries of
metal from both low grade copper oxide and sulphide ores.
Daris Project site
Alara’s MD with Daris JV Partner, Mohammed Salahuddin Khan (GM) and the Al Tamman team
Alara Resources Limited ABN: 27 122 892 719122017 Annual Report
Saudi Arabia
Khnaiguiyah Zinc-Copper Project
The Khnaiguiyah Zinc-Copper Project is located adjacent to bitumen road ~200km west of Riyadh (capital city)
near the major Riyadh to Jeddah highway. The Project previously comprised one Mining Licence which was
cancelled in or about December 2015 before zinc mining operations commenced7.
The Definitive Feasibility Study for the Khnaiguiyah Project was completed in April 2013, and confirmed a
technically and financially robust project with a mine life of 13 years at 2Mtpa, projected US$257M capex, 2.8
year pay-back, A$2.074B Life of Mine (LOM) revenues and A$0.873B LOM EBITDA (at base case Zn/Cu
prices).
In August 2017, Alara’s legal representative attended a hearing before the Board of Grievances in Riyadh and
reported the judge decided to submit the case for consideration. The next hearing was scheduled for late
October.
Alara is continuing to pursue other channels to advance the Khnaiguiyah Project to production, including those
established with the assistance of Austrade and the recent Australian business delegation to Riyadh.
7 For further details refer Alara’s ASX Announcement dated 23 December 2013.
Alara Resources Limited ABN: 27 122 892 719132017 Annual Report
FY2017 Milestones Achieved
In-fill drilling results announced
Completion of renounceable rights issue (closed oversubscribed)
July 2016
August 2016
Upgraded mineral resource estimate for Al Hadeetha Copper Gold Project (Washihi)
September 2016
Maiden Ore Reserve statement for Al Hadeetha Copper Gold Project (Washihi)
December 2016
Project Management Consultant appointed
Offtake Agreement
Project approval from Ministry of Tourism
December 2016
March 2017
June 2017
FY2018 Projected Oman Milestones
Project approval from Ministry of Heritage and Royal Omani Police
Achieved
Environmental Approval for Al Hadeetha Project
Mining Licence issued for Al Hadeetha Project
EPC contractor appointed
Project construction commenced
Mining Licence issued for Daris Project
Alara Resources Limited ABN: 27 122 892 719142017 Annual Report
Financial Summary
Full year total comprehensive income was $0.6m compared to a loss of $31.7m in 2016.
The reduced loss in 2017 is primarily the result of the additional provision for impairment of exploration
expenditure of $33.9 million on the Khnaiguiyah Zinc-Copper Project in Saudi Arabia in 2016. The
underlying Loss Before Income Tax was $460,774 compared to a loss of $32.4 million in 2016.
Interest income revenue of $37,753 was lower than the $199,708 recorded in 2016 due to lower cash
balances held for the full year and lower interest rates during 2017.
Total Operating Expenses were $556,704 in 2017 compared to $292,905 in 2016 as a result of additional
consultants engaged.
The Consolidated Entity had a closing cash balance as at 30 June 2017 of $1.9 million.
Consolidated net cash outflows were higher in 2017 than 2014 due to additional exploration and evaluation
work carried out on the Al Hadeetha Copper-Gold Project and the Daris Copper-Gold Project in Oman.
Key Financial Numbers
Consolidated Profit & Loss Summary
Total revenue
Total expenses
Loss before tax
Income tax benefit
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Consolidated Balance Sheet Summary
Total assets
Total liabilities
Net assets
Total equity
Consolidated Cash Flow Summary
Operating activities
Investing activities
Financing activities
Opening cash
Net cash movement
Effect of exchange rate changes on cash
Closing cash
Consolidated EPS
Basic earnings/(loss) per share – cents
Diluted earnings/(loss) per share – cents
Weighted average ordinary shares
2017
$’000
38
(499)
(461)
56
(179)
(584)
2017
$’000
10,018
(432)
9,586
9,586
2017
$’000
(557)
(813)
1,901
1,366
531
(11)
1,886
2017
(0.04)
(0.04)
585m
2016
$’000
200
(32,614)
(32,414)
301
365
(31,748)
2016
$’000
9,083
(618)
8,465
8,465
2016
$’000
(293)
(1,632)
2,367
937
442
(13)
1,366
2016
(7.42)
(7.42)
412m
Alara Resources Limited ABN: 27 122 892 719152017 Annual Report
The Directors present their report on Alara Resources Limited (Company or Alara or AUQ) and the entities it controlled at the end of or during the
financial year ended 30 June 2017 (the Consolidated Entity).
REVIEW OF OPERATIONS
Al Hadeetha Copper-Gold Project
(Alara - 70%: Al Hadeetha Investments LLC – 30%, of Al Hadeetha Resources LLC (AHR))
Oman
Completion of a successful rights issue in Q1 helped move Alara to announce its maiden Ore Reserve for the Al Hadeetha Copper Gold project in
Oman1. The announcement followed a revision of the Resource Model which incorporated an 81% increase in Indicated Copper Gold Mineral
Resource (from 6.84MT@ 0.90%Cu and 0.17g/t Au to 12.39MT@ 0.89%Cu & 0.22g/t Au (using 0.25% Cu cut-off))2.
Updates to the Al Hadeetha feasibility study took account of 1) the new mining schedule (incorporating the mineral resource upgrade), 2) the
maiden ore reserve statement, and 3) copper price forecast trends.
Base Case financial modelling on the Feasibility study for the Al Hadeetha Copper Gold Project shows robust returns as follows:
Forecast Revenue US$ 452 million over 10.4 years.
Forecast EBITDA over the same period US$ 159 million
Pre-Start Capital Expenditure of US$ 49.74 million
FCFF – Free Cash flow available in 10.4 years US$ 96 million
Project NPV of US$ 39 million
Forecast IRR of 26%
The study built on ~$10 million in prior exploration and study work completed by Alara between 2011 and 2015, including scoping study, options
analysis study, advanced scoping study and an update to the Advanced Scoping Study.
The base case used a flat copper price of $5,593/t (cf. recent copper prices of >$6,000/t3) indicating the Project has potential to deliver even better
returns if copper price forecasts and underlying supply constraints are realised.
A summary of case scenarios and associated financial returns are summarised in Tables 1 and 2 below.
Table 1. Copper and Gold prices used for Base Case, Market Case and High Case
Case Scenario
Base Case
Market Case
High Case
World Bank forecast copper metal price (nominal) for 2019 fixed for
Life of Mine.
Economist Intelligence Unit forecast price for Copper until 2019
and thereafter flat.
Higher of Economist Intelligence Unit and World Bank Copper
price forecast until 2025, thereafter flat for remaining Project life
Table 2. Financial Summary of Base Case, Market Case and High Case.
Cu
US$/t
Au
US$/oz
5,593 for Life of Mine
$1,200/oz
Minimum 5,907 and
maximum 6,171
Minimum 5,593 and
maximum 7,000
$1,200/oz
$1,200/oz
Total Revenue
US$ millions
Total Opex
US$ millions
EBITDA
US$ millions
NPV
US$ millions
Case Scenario
Base Case
Market Case
452
479
High Case
*NPV is based on a discount rate of 8.92%
521
271
271
271
159
186
228
39
55
73
IRR
26%
33%
37%
During the period, the Public Authority of Mining approved the project with issuance of a mining licence now pending, subject to permitting by the
other regulatory authorities. The Ministry of Environment and Climate Affairs (‘MECA’) have issued instructions asking for the Environmental Impact
Assessment (EIA) report (originally submitted in 2013 by a consultancy firm approved by MECA) to be submitted through a consultant listed on
MECA’s 2017 register. MECA also advised that new regulations require MECA to provide its response to the EIA within 30 days of submission.
In accordance with the provisions of the Shareholders Agreement, Al Hadeetha Resources LLC entered a Loan Agreement with Al Hadeetha
Investments LLC for up to US$2 million to help cover its operating expenses.
1
2
3
Refer Alara’s ASX Announcement of 15 December 2016.
Refer Alara’s ASX Announcement dated 19 September 2016.
LME cash price was $6,353/t at 11 August 2017.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 2
Alara Resources Limited ABN: 27 122 892 719162017 Annual Report
Daris Copper-Gold Project
(Alara - 50% with option to increase to 70%: Al Tamman Trading Establishment LLC – 50%, of Daris Resources LLC (DRL))
Oman
The Daris project comprises two high grade deposits within the 587km² exploration licence, which includes two mining licence applications covering
4.5km². The project fits well with a ‘hub and spoke’ model, which provides for processing of Daris ore at the Al Hadeetha copper concentration plant
to be built 100km to the south. However, new leach processing methods are also being investigated which could allow Daris to operate as a stand-
alone project. The processing method has been tested on deposits in Australia and South America and yielded very high recoveries of metal from
both low grade copper oxide and sulphide ores.
Khnaiguiyah Zinc-Copper Project
Saudi Arabia
The Khnaiguiyah project includes the development and operation of an open-cut zinc-copper mine and associated infrastructure over an
approximate 13-year mine life.
Alara Resources has invested over $30m into this project, including:
over $3 million in payments to its former joint venture partners for transfer of the Mining Licence to the joint venture company; and
over $23 million to produce a definitive feasibility study with Proved and Probable JORC Reserves of 26.1Mt at 3.3% Zn and 0.24% Cu
and a Base Case Project NPV of $172 million at a zinc price of US$2,315/t4.
The project reached an impasse after the former licence holder, United Arabian Mining Company LLC, wrote to the Deputy Minister for Mineral
Resources asking to halt transfer of the mining licence to the JV company, as required under the JV agreement.
In December 2015, Alara announced it had been advised of the cancellation of the Khnaiguiyah Mining Licence. Alara funded and is now in the
unique position of holding the only bankable feasibility study for the project, and remains open to any reasonable solution for advancing the project
into production.
Other Developments
Oman and Saudi Arabia
Previous public reports have referred to the establishment of Mining Development Oman (‘MDO’), a consortium of four state-owned agencies (i.e.
the State General Reserve Fund, the Oman Investment Fund, the Oman Oil Company and the Oman National Investments Development
Company) with a focus on both upstream and downstream activities in the mining sector.
Earlier this year, Sheikh Abdullah bin Salim Al Salmi, President of Oman’s stock market regulator CMA, reported MDO was in the process of
obtaining a licence from the Public Authority for Mining, and that MDO would have a paid-up capital of OMR100 million (AUD$350m) and be
offering 40 per cent of its shares to the investing public.
It is also reported that Oman’s Public Authority of Mining has engaged SRK Consulting and supporting firms Mayer Brown and Wood Mackenzie to
prepare a mining strategy aimed at attracting local and international investment.
In March, Alara announced it had entered an offtake agreement with Statdrome Pte Ltd. Under the agreement, annual concentrate production of
approximately 35,000 wmt would be supplied to Statdrome at regular intervals. The agreement includes provision for a pre-payment of US$6m to
assist in funding project construction and leaves open the possibility of supplying concentrate to an Omani smelter if applicable.
Board of Grievances
During the period, there were several hearings before the Board of Grievances relating to claims between Manajem and Alara that commenced in
20145.
At the latest hearing, the parties confirmed they were not seeking to make further submissions and the judge agreed to consider the facts that are
now before the court. The next hearing is scheduled on 21 October 2017.
4
5
Compared to the LME price of >$3,000/t as at 28 August 2017 and the High Case of US$2,373/t (see page 21 of the 2013 Annual Report).
For further background, refer to Alara’s ASX Announcement dated 3 May 2016.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 3
Alara Resources Limited ABN: 27 122 892 719172017 Annual Report
Corporate Information
Alara is a company limited by shares that is incorporated and domiciled in Western Australia.
Cash Position
The Company’s cash position at 30 June 2017 was A$1.9 million (30 June 2016: A$1.4 million).
In August 2016, a total of 72,287,857 shares were offered to eligible shareholders under a Rights Issue at an issue price of $0.02 (2 cents) per
share. The Rights Issue closed oversubscribed showing a high level of support from the Company’s shareholders and new investors. The Company
opted to not issue additional shares and returned unsubscribed funds to investors who missed the closing deadline for shortfall shares.
Funds were utilised to incorporate additional 5.55mt high grade copper and gold mineralisation into the Resource Model and declare a maiden
Reserve for the Al Hadeetha Copper-Gold project6 and advance mining licence applications in Oman.
During the period, the Company’s partner in the Al Hadeetha project started contributing to the JV operating costs. During the year ended 30 June
2017, the Company requested drawdowns of OMR 63,706 (equivalent of A$215,939). On 9 July 2017, the Company requested a further drawdown
of OMR 35,718 (A$121,070).
Share Options
During the year, the Company issued 19,214,695 fully paid ordinary shares. These were pursuant to the exercise of listed options exercisable at
$0.02 per option expiring 30 April 2017.
Company Officer Changes
On 31 March 2017 Elizabeth Hunt resigned as a Company Secretary with Ian Gregory (appointed 30 June 2015) continuing in that role. The
Company acknowledged the valued contributions made by Ms Hunt and Mining Corporate since August 2015.
Effective 1 April 2017, Corporate Board Services took over the outsourced company secretarial and accounting services for the Company.
Mr Jason Williams was appointed alternate director for the Companies wholly owned subsidiaries.
Principal Activities
The principal activities of entities within the Consolidated Entity during the year were the exploration, evaluation and development of mineral
exploration and evaluation in Oman.
Significant Changes in the State of Affairs
There have been no significant changes in the state of affairs of the Consolidated Entity save as otherwise disclosed in this Directors’ Report or the
financial statements and notes thereto.
Dividends
No dividends have been paid or declared during the financial year.
6
Refer Alara’s ASX announcement dated 15 December 2016.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 4
Alara Resources Limited ABN: 27 122 892 719182017 Annual Report
Operating Results
Consolidated
Total revenue
Total expenses
Loss before tax
Income tax benefit
Loss after tax
Loss per Share
2017
$
37,753
(498,527)
(460,774)
55,840
(404,934)
2016
$
199,708
(32,613,851)
(32,414,143)
301,306
(32,112,837)
Consolidated
Basic and Diluted profit/(loss) per share (cents)
Weighted average number of ordinary shares outstanding during the year used in the
calculation of basic loss per share
2017
(0.04)
2016
(7.42)
584,929,630
412,463,414
Cash Flows
Consolidated
Net cash flow used in operating activities
Net cash flow from investing activities
Net cash flow provided by financing activities
Net change in cash held
Cash held at year end
Financial Position
Outlined below is the Consolidated Entity’s Financial Position and prior year comparison.
Consolidated Entity
Cash
Trade and other receivables
Exploration and evaluation
Other assets
Total assets
Trade and other payables
Financial liabilities
Provisions
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Parent interest
Non-controlling interest
Total equity
2017
$
(556,704)
(596,781)
1,684,566
531,081
1,885,556
2017
$
1,885,556
72,299
7,996,698
63,854
10,018,407
115,368
215,939
100,676
431,983
2016
$
(292,905)
(1,631,567)
2,366,780
442,308
1,365,691
2016
$
1,365,691
318,260
7,327,012
72,482
9,083,445
439,903
439,903
178,082
617,985
9,586,424
8,465,460
65,169,992
208,726
(53,568,320)
11,810,398
(2,223,974)
9,586,424
63,485,425
367,395
(53,309,794)
10,543,026
(2,077,566)
8,465,460
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 5
Alara Resources Limited ABN: 27 122 892 719192017 Annual Report
Securities in the Company
Issued Capital
Fully paid ordinary shares and unlisted options on issue in the Company as at the date of this report are as follows:
Fully paid ordinary shares
Unlisted Options
Quoted
on ASX
597,517,589
Total
597,517,589
Listed
options
–
–
Total
597,517,589
597,517,589
During and subsequent to the end of the financial year, the following unlisted options were issued:
№ of Options
Date of Issue
Description of Options
Exercise Price
Date of Issue
Original Expiry
Date
3,000,000
9 March 2017
$0.04 (expiring 9 March 2020)
Unlisted Options7
$0.04
9 March 2017
9 March 2020
Likely Developments and Expected Results
The Consolidated Entity intends to continue exploration, evaluation and development activities in relation to its mineral exploration and evaluation in
future years. The results of these activities depend on a range of technical and economic factors and also industry, geographic and company
specific issues. In the opinion of the Directors, it is inappropriate to make predictions on the likely results of the Consolidated Entity’s activities in
Saudi Arabia prior to the Khnaiguiyah Mining licence being secured. In Oman, there is an expectation that construction of the Al Hadeetha Copper
Gold Project will commence, subject to the Washihi Mining Licence being granted later in 2017.
Environmental Regulation and Performance
The Consolidated Entity holds licences and abides by Acts and Regulations issued by the relevant mining and environmental protection authorities
of the various countries in which the Consolidated Entity operates. These licences, Acts and Regulations specify limits and regulate the
management of discharges to the air, surface waters and groundwater associated with exploration and mining operations as well as the storage
and use of hazardous materials. There have been no significant breaches of the Consolidated Entity's licence conditions.
7 On 9 March 2017, the Company issued 3,000,000 unlisted options exercisable at $0.04 expiring on or before 9 March 2020. This was granted under the Company’s Employee Share
Option Plan approved by shareholders at the 19 November 2014 Annual General Meeting.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 6
Alara Resources Limited ABN: 27 122 892 719202017 Annual Report
Board of Directors
The names and details of the directors of the Company in office during the financial year and until the date of this report are as follows.
Names, qualifications, experience and special responsibilities of current Directors
James D. Phipps
BA (Philosophy), JD (Law)
Previously Alternate Director to HRH Prince Abdullah (from 28 October 2013 to 1 November 2014)
Non-Executive Chairman
Appointed Chairman 31 July 2015; Appointed Director 1 November 2014;
Experience
James Phipps is a strategic advisor, business executive and lawyer with extensive international and Middle East experience. James serves as
principal advisor to His Royal Highness Prince Abdullah bin Mosaad bin Abdulaziz Al Saud, providing strategic advice relative to a worldwide
portfolio of businesses, properties and investments. James was (until May 2016) Co-Chairman of Sheffield United Football Club, the first "United"
and the first association football club worldwide and a founding member of the English Premier League. James also chairs Flashvote Inc., Shout
TV, Inc., Delaware corporations engaged in the sports entertainment business. James sits on the board of the publicly listed Saudi Paper
Manufacturing Company, the leading manufacturer of tissue paper products in the Gulf Region. James has experience in corporate turnarounds
and has served as chief executive or general manager at different companies in a turn-around capacity. James brings experience to the Board in
the context of Alara's Middle East and G.C.C. endeavours.
Special Responsibilities
Chairman of the Remuneration and Nomination Committee and Member of the Audit Committee.
Other Directorships in Listed Companies in Past 3 Years
Saudi Paper Manufacturing Company (Saudi Stock Exchange (Tadawul): Code 2300) – November 2011 to June 2016.
Justin J Richard
LLB, GradDipACG, MBA, FGIA, FCIS
Managing Director
Appointed 16 June 2015
Experience
Justin Richard had been the Company’s General Counsel since 2011 when he took up residence in the Middle East as Alara’s Country Manager for
Saudi Arabia. His role later expanded to include management of Alara’s joint venture companies in Oman and has played a key role in establishing
and developing the Company’s joint venture businesses and stakeholder relationships.
After being appointed CEO in 2015, he lead the company through capital restructuring to complete a feasibility study and maiden ore reserve
statement for the Al Hadeetha Copper Gold project in Oman. He has also established new relationships in Saudi Arabia to navigate the impasse on
the Khnaiguiyah Zinc Copper project in preparation for the mining licence being reissued. Prior to joining Alara, Mr Richard worked with UGL
Resources and Minter Ellison Lawyers. He has a MBA from London Business School, a law degree from the University of Western Australia and is
a Fellow of the Governance Institute in Australia and the UK.
Alternate Director
On 22 June 2015, Justin Richard appointed Ian E. Gregory as his Alternate Director8. Ian Gregory was also appointed joint Company Secretary on
30 June 2015.9 Ian Gregory’s experience and qualifications are set out below.
Other Directorships in Listed Companies in Past 3 Years
None
Ian E. Gregory
BBus, FGIA, FCIS, F Fin, MAICD
Appointed 30 June 2015
Experience
Ian Gregory is a highly regarded Director and Company Secretary with over 30 years’ experience in the provision of governance and business
administration services covering a variety of industries, including oil and gas, exploration, mining, mineral processing, banking and insurance. Prior
to founding his own consulting business in 2005, he was the Company Secretary of Iluka Resources Limited (ASX:ILU), IBJ Australia Bank Ltd
Group, the Australian operations of The Industrial Bank of Japan, and the Griffin Coal Mining Group of companies. Ian Gregory is a past member of
the Western Australian Branch Council of Governance Institute of Australia (GIA), a past Chairman of that body and has also served on the
National Council of GIA. Ian Gregory is also currently Company Secretary of a number of other ASX listed and private companies and consults on
company secretarial and governance matters to various listed and unlisted companies.
Other Directorships in Listed Companies in Past 3 Years
Phoenix Gold Limited
8
9
Pursuant to Clause 10.1 of the Company’s Constitution.
Refer Alara’s 1 July 2015 ASX Announcement: Appointment of Joint Company Secretary.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 7
Alara Resources Limited ABN: 27 122 892 719212017 Annual Report
Atmavireshwar Sthapak
Bachelor of Applied Science and Master of Technology, Applied Geology
Executive Director
Appointed 22 September 2015 as Non-Executive Director
Appointed 3 February 2016 as Executive Director
Experience
Atmavireshwar Sthapak is a geologist specializing in mineral resource exploration and evaluation studies. He joined Alara in 2011, making valuable
contributions to the Company as an Exploration Manager and a Study Manager based in Muscat; including discovery of large VMS copper
mineralisation extensions at the Washihi project in Oman and recent resource upgrade at Washihi. Prior to Alara, his career spanned 10 years with
ACC / ACC-CRA Ltd, and 10 years with Rio Tinto (Australasia) where he was awarded a Rio Tinto Discovery Award in 2009. He has worked on
world class deposits; including Mt. Isa type copper deposits in Australia, and copper, gold and diamond mines on four continents.
Special Responsibilities
Member of the Audit Committee and Remuneration and Nomination Committee.
Other Directorships in Listed Companies in Past 3 Years
None
Vikas Jain
MBA
Non-Executive Director
Appointed 6 April 2016
Experience
Vikas Jain holds an MBA obtained in the USA and has a vast experience of around 15 years in the field of mineral exploration and allied activities.
He is currently Managing Director and CEO of the Indian Company South West Pinnacle Exploration P/L, founded by him in 2006. Under his
leadership and able guidance, this company has grown manifold and at present is a premier exploration company in India. The company started
primarily as mineral exploration company and gradually added Coal Bed Methane (CBM) exploration and production, Geophysical logging,
transportation and other geological activities into its domain. He also has wide experience in open cast mining of various minerals and allied
activities through his earlier stint with other companies as well as existing exposure in other family run business/interest.
Special Responsibilities
Chairman of the Audit Committee and Member of the Remuneration and Nomination Committee.
Other Directorships in Listed Companies in Past 3 Years
None
Retired Directors
All the directors held office during the year and up to the date of this report.
Company Secretaries
Ian E. Gregory
BBus, FGIA, FCIS, F Fin, MAICD
Experience
Refer to Mr Gregory’s details on the previous page.
Retired Company Secretary
The following Company Secretary resigned during the financial year:
Elizabeth Hunt – 31 August 2015 to 31 March 2017.
Appointed 30 June 2015
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 8
Alara Resources Limited ABN: 27 122 892 719222017 Annual Report
Directors’ Interests in Shares and Options
As at the date of this report, the relevant interests of the Directors in shares and options held in the Company are:
James Phipps
Justin Richard
Atmavireshwar Sthapak
Vikas Jain
Ian Gregory
Fully Paid Ordinary Shares
–
30,757,03710
1,951,45111
34,285,23012
–
Options
–
–
–
–
–
Directors’ Meetings
The number of meetings and resolutions of directors (including meetings of committees of directors) held during the year and the number of
meetings (or resolutions) attended by each director were as follows:
Name of Director
Appointment / Resignation
James Phipps
Justin Richard
Atmavireshwar
Sthapak
Vikas Jain
Ian Gregory
(Alternate Director to
Justin Richard)
Appointed 1 November 2014;
appointed member of
Audit Committee and
Remuneration Committee
30 June 2016
Appointed 16 June 2015
Appointed 22 September 2015
Appointed 6 April 2016
Appointed 22 June 2015
Board
Audit Committee
Meetings
Attended
Maximum
Possible
Meetings
Meetings
Attended
Maximum
Possible
Meetings
Remuneration and
Nomination Committee
Maximum
Possible
Meetings
Meetings
Attended
10
12
11
9
–
12
12
12
12
–
4
6
5
6
6
6
2
2
2
2
2
2
Audit Committee
The Audit Committee currently comprises Non-Executive Directors, Vikas Jain (as Chairman) (since 6 April 2016), James Phipps (since 30 June
2015) and Atmavireshwar Sthapak (since 28 September 2016).
The Audit Committee has a formal charter to prescribe its objectives, duties and responsibilities, access and authority, composition, membership
requirements of the Committee and other administrative matters. Its function includes reviewing and approving the audited annual and reviewed
half-yearly financial reports, ensuring a risk management framework is in place, reviewing and monitoring compliance issues, reviewing reports
from management and matters related to the external auditor. The Audit Committee Charter may be viewed and downloaded from the Company’s
website.
10 Refer Alara’s 13 June 2017 ASX Announcement: Appendix 3Y.
11 Refer Alara’s 10 May 2017 ASX Announcement: Appendix 3Y.
12 Refer Alara’s 9 August 2016 ASX Announcement: Appendix 3Y.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 9
Alara Resources Limited ABN: 27 122 892 719232017 Annual Report
REMUNERATION REPORT
The following information in the Remuneration Report has been audited. This Remuneration Report details the nature and amount of remuneration
for each Director and Company Executive (being a company secretary or senior managers with authority and responsibility for planning, directing
and controlling the major activities of the Company or Consolidated entity, directly or indirectly) (Key Management Personnel) of the Consolidated
Entity in respect of the financial year ended 30 June 2017.
Key Management Personnel
Directors
James Phipps
Justin Richard
Atmavireshwar Sthapak
Vikas Jain
Ian Gregory
Executives
Ian Gregory
Elizabeth Hunt
Non-Executive Director (appointed 1 November 2014); Non-Executive Chairman (from 31 July 2015);
Alternate Director to HRH Prince Abdullah (until 1 November 2014)
Managing Director (appointed 16 June 2015); Country Manager, Saudi Arabia and Oman
Executive Director (first appointed 22 September 2015)
Non-Executive Director (appointed 31 March 2016)
Alternate Director to Justin Richard (appointed 30 June 2015)
Company Secretary (appointed 30 June 2015)
Company Secretary (appointed 31 August 2015, resigned: 31 March 2017)
Remuneration and Nomination Committee
The Remuneration and Nomination Committee currently comprises Non-Executive Directors, James Phipps (member since 30 June 2015 and
Chairman since 31 July 2015) and Vikas Jain (since 6 April 2016) and Atmavireshwar Sthapak (since 28 June 2016).
The Remuneration and Nomination Committee has a formal charter to prescribe its purpose, key responsibilities, composition, membership
requirements, powers and other administrative matters. The Committee has a remuneration function (with key responsibilities to make
recommendations to the Board on policy governing the remuneration benefits of the Managing Director and Executive Directors, including equity-
based remuneration and assist the Managing Director to determine the remuneration benefits of senior management and advise on those
determinations) and a nomination function (with key responsibilities to make recommendations to the Board as to various Board matters including
the necessary and desirable qualifications, experience and competencies of Directors and the extent to which these are reflected in the Board, the
appointment of the Chairman and Managing Director, the development and review of Board succession plans and addressing Board diversity). The
Remuneration and Nomination Committee Charter may be viewed and downloaded from the Company’s website.
Remuneration Policy
The Board (with guidance from the Remuneration and Nomination Committee) determines the remuneration structure of all Key Management
Personnel having regard to the Consolidated Entity’s strategic objectives, scale and scope of operations and other relevant factors, including
experience and qualifications, length of service, market practice, the duties and accountability of Key Management Personnel and the objective of
maintaining a balanced Board which has appropriate expertise and experience, at a reasonable cost to the Company. The Board recognises that
the performance of the Company depends upon the quality of its Directors and Executives. To achieve its financial and operating objectives, the
Company must attract, motivate and retain highly skilled Directors and Executives.
The Company embodies the following principles in its remuneration framework:
Provide competitive rewards to attract and retain high calibre Executives.
Structure remuneration at a level that reflects the Executive’s duties and accountabilities and is competitive.
Remuneration Structure
The structure of non-executive director and executive director remuneration is separate and distinct.
Director Remuneration
Objective
The Board seeks to set aggregate remuneration (for directors) at a level which provides the Company with the ability to attract and retain directors
of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Company’s constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from
time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The latest
determination was at the General Meeting held on 26 May 2011 where shareholders approved an aggregate remuneration of $275,000 per year.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is
reviewed annually. The Board considers fees paid to non-executive directors of comparable companies when undertaking the annual review
process. Each non-executive director receives a fee for being a director of the Company and for sitting on relevant board committees. The fee size
is commensurate with the workload and responsibilities undertaken.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 10
Alara Resources Limited ABN: 27 122 892 719242017 Annual Report
Managing Director and Senior Executive Remuneration
Objective
The Company aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the
Company and so as to ensure total remuneration is competitive by market standards. Formal employment contracts are entered into with the
Managing Director and senior executives. Details of these contracts are outlined later in this report.
Consequences of Company Performance on Shareholder Wealth
In considering the Company’s performance and benefits for shareholder wealth, the Board have regard to the following information in relation to the
current financial year and the previous four financial years:
Basic earnings/(loss) per share – cents
Dividend – cents per share
2017
(0.04)
–
2016
(7.42)
–
2015
(0.67)
–
2014
0.30
–
2013
(2.84)
–
Net Profit/(Loss) attributable to members
(258,526)
(30,595,088)
(1,661,238)
732,003
(6,579,965)
Market Capitalisation
$8.4m
$14m
$4m
$12.1m
$12.1m
Fixed Remuneration
During the financial year, the Key Management Personnel of the Company are paid a fixed base salary/fee per annum plus applicable employer
superannuation contributions, as detailed below (Details of Remuneration Provided to Key Management Personnel).
Performance Related Benefits/Variable Remuneration
Performance related benefits/variable remuneration payable to Key Management Personnel is disclosed in the table Details of Remuneration
Provided to Key Management Personnel. Justin Richard was paid expat allowances, including house, school, travel and medical insurance and
Atmavireshwar Sthapak was paid allowances including house, travel and medical insurance.
Special Exertions and Reimbursements
Pursuant to the Company’s Constitution, each Director is entitled to receive:
Payment for the performance of extra services or the undertaking of special exertions at the request of the Board and for the purposes of
the Company.
Payment for reimbursement of all reasonable expenses (including traveling and accommodation expenses) incurred by a Director for the
purpose of attending meetings of the Company or the Board, on the business of the Company, or in carrying out duties as a Director.
Post-Employment Benefits
Other than employer contributions to nominated complying superannuation funds or gratuity of Key Management Personnel (where applicable) and
entitlements to accrued unused annual and long service leave (where applicable), the Company does not presently provide retirement benefits to
Key Management Personnel.
The Company notes that shareholder approval is required where a Company proposes to make a “termination payment” (for example, a payment in
lieu of notice, a payment for a post-employment restraint and payments made as a result of the automatic or accelerated vesting of share based
payments) in excess of one year’s “base salary” (defined as the average base salary over the previous 3 years) to a director or any person who
holds a managerial or executive office.
Long Term Benefits
Other than early termination benefits disclosed in ‘Employment Contracts’ below, Key Management Personnel have no right to termination
payments save for payment of accrued unused annual and long service and/or end of service leave (where applicable).
ALARA RESOURCES LIMITED
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Alara Resources Limited ABN: 27 122 892 719252017 Annual Report
Details of Remuneration Provided to Key Management Personnel
Short-term benefits
Cash payments
Key Management
Person
Perfor-
mance
based
At risk
STI
Options
related
Salary,
and fees
Allo-
wances(i)
Cash
Bonus
Non-
cash(ii)
Other(iii)
Super-
annuation
Fixed
2017
%
%
%
%
$
$
Executive Directors:
Justin Richard
Atmavireshwar
Sthapak
–
–
100%
100%
Non-Executive Directors:
James Phipps
Vikas Jain
Ian Gregory
Executives:
–
–
–
–
100%
100%
–
–
Company Secretary:
Elizabeth Hunt(v)
–
100%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
282,150
205,383
148,341
24,723
75,000
50,000
–
–
113,655
–
–
–
–
–
Notes:
(i) Allowances is based on the executive agreement and may include company car allowance,
rent allowance and security bond, and school allowance received from subsidiaries and
related joint venture entities.
(ii) Non-cash benefits include net annual leave expensed but not paid during the year.
Post-employment
benefits
Other
long-term
benefits
Equity
based
benefits
End of
Service(iv) /
Termi-
nation
$
11,484
6,179
–
–
–
–
–
Other
Options
Total
$
–
–
–
–
–
–
–
$
–
–
–
–
–
–
$
595,349
182,876
75,000
50,000
–
–
–
113,655
$
–
–
–
–
–
–
–
$
$
17,695
78,637
3,633
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
(iii) Other short-term benefits consist of exchange gain/(loss) due to foreign
currency translation from Oman Riyal to Australia Dollars and Saudi Riyal
to Australian Dollars on Mr Richard’s salary.
(iv) Under Omani labour law, an End of Service Gratuity is payable upon termination of employment.
(v) Resigned on 31 March 2017, remuneration paid to Mining Corporate Pty Ltd.
Post-employment
benefits
Other
long-term
benefits
Equity
based
benefits
Key Management
Person
Perfor-
mance
based
At risk
STI
Options
related
Salary,
and fees
Allo-
wances(i)
Cash
Bonus
Fixed
Short-term benefits
Cash payments
2016
%
%
%
%
$
$
Non-
cash(ii)
$
Other(iii)
Super-
annuation
$
Executive Directors:
Justin Richard
H. Shanker Madan(v)
Atmavireshwar
Sthapak(vi)
–
58%
100%
42%
28%
72%
Non-Executive Directors:
Ian Williams(vii)
James Phipps
Vikas Jain(viii)
Ian Gregory
Executives:
–
–
–
–
–
100%
100%
100%
–
–
Company Secretary:
Victor Ho(ix)
Elizabeth Hunt(x)
–
–
100%
100%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
282,150
247,234
77,220
–
118,137
12,521
50,716
4,167
72,977
11,806
–
–
16,781
111,947
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,039
65,055
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
End of
Service(iv) /
Termi-
nation
$
6,843
–
–
$
–
–
–
2,177
18,750
–
–
–
–
–
–
–
–
–
–
–
–
Other
Options
Total
$
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
$
608,321
77,220
181,374
25,094
72,977
11,806
–
–
16,781
111,947
Notes:
(i) Allowances is based on the executive agreement and may include company car allowance,
rent allowance and security bond, and school allowance received from subsidiaries and
related joint venture entities.
(ii) Non-cash benefits include net annual leave expensed but not paid during the year.
(iii) Other short-term benefits consist of exchange gain/(loss) due to foreign
currency translation from Oman Riyal to Australia Dollars and Saudi Riyal
to Australian Dollars on Mr Richard’s salary.
(iv) Under Omani labour law, an End of Service Gratuity is payable upon termination of employment.
(v) Appointed 31 July 2015 and resigned 31 March 2016.
(vi) Appointed 2 September 2015 with remuneration and allowances commencing January 2016.
(vii) Resigned 31 July 2015, termination payment was accrued at 30 June 2015.
(viii) Appointed 6 April 2016
(ix) Resigned 31 August 2015.
(x) Appointed 31 August 2015, remuneration paid to Mining Corporate Pty Ltd.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 12
Alara Resources Limited ABN: 27 122 892 719262017 Annual Report
Equity Based Benefits
The Company has not provided equity based benefits (e.g. grant of shares or options) to Key Management Personnel during the financial year. The
Company received approval by shareholders at the 2016 AGM for issuing a total of up to 72,000,000 options with varying exercise prices, expiry
dates and milestones to be reached to James Phipps, Justin Richard and Atmavireshwar Sthapak (including grant of mining licence and financing
for the Al Hadeetha Project, and commencing construction on the Khnaiguiyah Zinc Copper Project). Refer to the ASX Announcement for further
detail. Milestones 2, 3 and 4 were not reached in time and no options were granted to Key Management Personnel during the year.
There were 4,250,000 shares issued as a result of the exercise of options previously held by Key Management Personnel during the financial year.
Options Lapsed During the Year
During and subsequent to the end of the financial year, listed options lapsed without being exercised, as detailed below:
№ of Options
Date of Lapse
Description of
Listed Options
228,792,805
30 April 2017
$0.02
(14 October 2015) Listed Options13
Exercise Price
Date of Issue
Expiry Date
$0.02
14 October 2015
30 April 2017
Details of Shares Held By Key Management Personnel
2017
Name of Director/KMP
Justin Richard(i)
Atmavireshwar Sthapak(ii)
James Phipps
Vikas Jain
Ian Gregory
Elizabeth Hunt(iii)
Balance at
1 July 2016
20,500,000
–
–
30,000,000
–
–
Balance at
appointment
Ordinary Fully Paid Shares
Net change
10,257,037
900,000
–
4,285,230
–
–
Balance at
cessation
–
Notes: (i) Mr Richard submitted a request for trading approval to the Company on 3 occasions during the relevant period.
(ii) Mr Sthapak submitted a request for trading approval to the Company on 2 occasions during the relevant period.
(iii) Resigned 31 March 2017.
Ordinary Fully Paid Shares
2016
Name of Director/KMP
Justin Richard(i)
H. Shanker Madan(ii)
Atmavireshwar Sthapak(iii)
Ian Williams(iv)
James Phipps
Vikas Jain(v)
Ian Gregory
Victor Ho(vi)
Elizabeth Hunt(vii)
Balance at
1 July 2015
–
713
100,000
–
–
–
–
Balance at
appointment
–
713
–
–
30,000,000
–
Net change
20,500,000
–
–
–
–
–
–
–
–
Balance at
cessation
713
100,000
–
Balance at
30 June 2017
30,757,037
900,000
–
34,285,230
–
Balance at
30 June 2016
20,500,000
713
–
100,000
–
30,000,000
–
–
–
Notes: (i) Mr Richard submitted a request for trading approval to the Company on at least 1 occasion during the relevant period. (ii) Appointed 31 July 2015 and resigned 31 March 2016
(iii) Appointed 22 September 2015 (iv) Resigned 31 July 2015 (v) Appointed 6 April 2016 (vi) Resigned 31 August 2015 (vii) Appointed 31 August 2015.
The following Key Management Personnel retired during the 2017 year with balances at cessation:
Elizabeth Hunt – 31 March 2017: Nil shares
13 Refer Alara’s 10 May 2017 ASX Announcement: Appendix 3B
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 13
Alara Resources Limited ABN: 27 122 892 719272017 Annual Report
Granted
and
vested
during
year
–
Vested
and
exercisabl
e at 30
June 2017
–
–
–
–
–
–
–
–
–
–
–
Granted
and
vested
during
year
–
Vested
and
exercisabl
e at 30
June 2016
20,000,000
Details of Options Held By Key Management Personnel
2017
Balance at
1 July
2016
20,000,000
Name of
Director/KMP
Justin Richard
Atmavireshwar
Sthapak
James Phipps
Vikas Jain
Ian Gregory
Elizabeth Hunt(i)
Notes: (i) Resigned 31 March 2017.
–
30,000,000
–
–
–
2016
Granted
–
Exercised
4,250,000
Acquired
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Lapsed /
Cancelled
(15,750,000)
–
–
(30,000,000)
–
–
Balance
at
Cessation
Balance at
30 June
2017
–
–
–
–
–
–
Balance at
1 July
2015
–
Balance
at
Cessation
Balance at
30 June
2016
20,000,000
–
–
–
Grante
d
–
Exercised
–
Acquired
20,000,000
Lapsed /
Cancelled
–
Name of
Director/KMP
Justin Richard
H. Shanker
Madan(i)
Atmavireshwar
Sthapak(ii)
Ian Williams(iii)
James Phipps
Vikas Jain(iv)
Ian Gregory
Victor Ho(v)
Elizabeth Hunt(vi)
Notes: (i) Appointed 31 July 2015 and resigned 31 March 2016; (ii) Appointed 22 September 2015 (iii) Resigned 31 July 2015 (iv) Appointed 6 April 2016 (v) Resigned 31 August 2015
–
–
30,000,000
–
–
–
–
30,000,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30,000,000
–
–
–
(vi) Appointed 31 August 2015.
Employment Contracts
(a)
Managing Director/CEO – Justin Richard
Justin Richard has been the Company’s Legal & Commercial Manager since August 2011 and also Alara’s Country Manager in Saudi Arabia (since
November 2012) and Oman (since December 2013). He was appointed as Managing Director on 16 June 2015. The terms of his employment
contract were carried over from his previous agreement contract with no increase in salary or allowance, the material terms of which are as follows:
One year term with annual base salary of A$282,150 (subject to adjustments for exchange rate variations* for salaries paid in Saudi
Arabian Riyals and Omani Rials);
Expatriate allowances (including housing, school and travel) totalling approximately A$175,000 per annum (subject to adjustments for
exchange rate variations*);
Provision of medical insurance cover;
Standard annual leave (20 days) and personal/sick leave (10 days paid) entitlements plus any additional entitlements prescribed under
Saudi Arabian Labour Law;
60 days long service leave after 6 years of service and 5 days long service leave in respect of each year of service thereafter;
Compulsory statutory ‘end of service’ payments due under Saudi Arabian Labour and Omani Law;
One month’s notice of termination within first six months, subject to repatriation provisions which total approximately three months
remuneration; and
As announced on 31 March 201614 and as approved by shareholders at the 2016 AGM, it was resolved that the Company will grant the
following options as a long term incentive subject to the following milestones being achieved:
o
o
o
Milestones 2, 3 and 4 were not reached in time and no options were granted during the year.
Tranche 1 – 7,000,000 $0.04 options expiring 31 October 2016 upon attainment of Milestone 2;
Tranche 2 – 7,000,000 $0.04 options expiring 31 December 2016 upon attainment of Milestone 3; and
Tranche 3 – 10,000,000 $0.10 options expiring 31 December 2016 upon attainment of Milestone 4.
*Exchange rate variations based on rates prevailing at the time the expatriate assignments commenced.
14 Refer Alara’s 31 March 2016 ASX Announcement: Board Changes and Employee Options
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 14
Alara Resources Limited ABN: 27 122 892 719282017 Annual Report
(b)
Technical Director – Atmavireshwar Sthapak
Atmavireshwar Sthapak was appointed Non-Executive Director on 22 September 2015 and subsequently appointed as Executive Director on 3
February 2016. The material terms of his contract are as follows15:
An annual base salary of OMR 43,200 per annum;
Use of a company car;
Provision of medical insurance cover;
Allowances totalling approximately OMR 7,695 per annum;
Compulsory statutory ‘end of service’ payments due under Oman Labour Law;
Standard annual leave (20 days) and personal/sick leave (10 days paid) entitlements plus any additional entitlements prescribed under
Oman Labour Law;
Separate bonus totalling up to OMR 28,000 paid in 2016;
Either party may terminate this agreement by providing one months’ notice; and
As announced on 31 March 201616 and as approved by shareholders at the 2016 AGM, it was resolved that the Company will grant the
following options as a long term incentive subject to the following milestones being achieved:
o
o
o
Milestones 2, 3 and 4 were not reached in time and no options were granted during the year.
Tranche 1 – 7,000,000 $0.04 options expiring 31 October 2016 upon attainment of Milestone 2;
Tranche 2 – 7,000,000 $0.04 options expiring 31 December 2016 upon attainment of Milestone 3; and
Tranche 3 – 10,000,000 $0.10 options expiring 31 December 2016 upon attainment of Milestone 4.
(c)
Other Executives
Details of the material terms of formal employment/consultancy agreements (as the case may be) between the Company and other Key
Management Personnel during the period are as follows:
Key Management
Personnel and
Position(s) Held
Elizabeth Hunt
Company Secretary
Relevant Date(s)
Base Salary/Fees per annum
Other Terms
31 August 2015
(commencement date)
31 March 2017
(resignation date)
$132,000 per annum (including accounting services)
payable to Mining Corporate Pty Ltd, of which
Elizabeth Hunt is the managing director.
Notice period 1 month.
Other Benefits Provided to Key Management Personnel
No Key Management Personnel has during or since the end of the financial year, received or become entitled to receive a benefit, other than a
remuneration benefit as disclosed above, by reason of a contract made by the Company or a related entity with the Director or with a firm of which
he is a member, or with a Company in which he has a substantial interest. There were no loans to directors or executives during the reporting
period.
Employee Share Option Plan
The Company has an Employee Share Option Plan (the ESOP) which was most recently approved by shareholders at the 2014 Annual General
Meeting held on 19 November 2014. The ESOP was developed to assist in the recruitment, reward, retention and motivation of employees
(excluding Directors) of Alara. Under the ESOP, the Board will nominate personnel to participate and will offer options to subscribe for shares to
those personnel. A summary of the terms of ESOP is set out in Annexure A to Alara’s Notice of Annual General Meeting and Explanatory
Statement dated 2 October 2014. No securities were issued to KMP under the ESOP during the financial year (2016: Nil).
Director Loan Agreement
There were no loan agreements with the Directors during the year.
On 9 September 2015 Justin Richard entered into a loan agreement with the Consolidated Entity providing a $250,000 loan facility to the
Consolidated Entity. $60,000 was drawn down by the Consolidated Entity during the relevant period and was settled upon the rights issue
announced 12 November 2015. 20,000,000 shares were issued to Justin Richard at the issue price of $0.01, raising $200,000 in capital and
extinguishing the $60,000 loan payable with no interest charged. The loan was fully repaid during the year.
Securities Trading Policy
The Company has a Securities Trading Policy, a copy of which is available for viewing and downloading from the Company’s website.
Voting and Comments on the Remuneration Report at the 2016 Annual General Meeting
At the Company’s most recent (2016) Annual General Meeting (AGM), a resolution to adopt the 2016 Remuneration Report was put to a vote and
passed unanimously on a show of hands with the proxies received also indicating majority (89.7%) support in favour of adopting the Remuneration
Report.17 No comments were made on the Remuneration Report at the AGM.
15 Refer Alara’s 3 February 2016 ASX Announcement: Appointment of Executive Director
16 Refer Alara’s 31 March 2016 ASX Announcement: Board Changes and Employee Options
17 Refer Alara’s 23 November 2016 ASX Announcement: Results of Meeting
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 15
Alara Resources Limited ABN: 27 122 892 719292017 Annual Report Engagement of Remuneration Consultants
The Company has not engaged any remuneration consultants to provide remuneration recommendations in relation to Key Management Personnel
during the year. The Board has established a policy for engaging external Key Management Personnel remuneration consultants which includes,
inter alia, that the Remuneration and Nomination Committee be responsible for approving all engagements of and executing contracts to engage
remuneration consultants and for receiving remuneration recommendations from remuneration consultants regarding Key Management Personnel.
This concludes the audited Remuneration Report.
Directors’ and Officers’ Insurance
The Company insures Directors and Officers against liability they may incur in respect of any wrongful acts or omissions made by them in such
capacity (to the extent permitted by the Corporations Act 2001) (D&O Policy). Details of the amount of the premium paid in respect of the
insurance policies are not disclosed as such disclosure is prohibited under the terms of the contract.
Directors’ Deeds
In addition to the rights of indemnity provided under the Company’s Constitution (to the extent permitted by the Corporations Act), the Company
has also entered into a deed with each of the Directors (Officer) to regulate certain matters between the Company and each Officer, both during the
time the Officer holds office and after the Officer ceases to be an officer of the Company, including the following matters:
The Company’s obligation to indemnify an Officer for liabilities or legal costs incurred as an officer of the Company (to the extent permitted
by the Corporations Act).
Subject to the terms of the deed and the Corporations Act, the Company may advance monies to the Officer to meet any costs or
expenses of the Officer incurred in circumstances relating to the indemnities provided under the deed and prior to the outcome of any legal
proceedings brought against the Officer.
Legal Proceedings on Behalf of Consolidated Entity (Derivative Actions)
Except for the legal proceedings in Saudi Arabia as noted above, no person has applied for leave of a court to bring proceedings on behalf of the
Consolidated Entity or intervene in any proceedings to which the Consolidated Entity is a party for the purpose of taking responsibility on behalf of
the Consolidated Entity for all or any part of such proceedings and the Consolidated Entity was not a party to any such proceedings during and
since the financial year.
Auditor
Details of the amounts paid or payable to the Company’s auditors (Bentleys Audit & Corporate (WA) Pty Ltd for 30 June 2017 and Moore Stephens
Chartered Accountants for the Oman entity audits) for audit and non-audit services (paid to a related party of Bentleys Audit and Corporate (WA)
Pty Ltd) provided during the financial year are set out below (refer to Note 5):
Audit and Review Fees
$
Fees for Other Non-Audit Services
$
38,181
–
Total
$
38,181
The Board is satisfied that the provision of non-audit services by the auditors during the year is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Board is satisfied that the nature of the non-audit services disclosed above
did not compromise the general principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and
APES 110 Code of Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or decision
making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.
Bentleys Audit & Corporate (WA) Pty Ltd continue in office in accordance with section 327B of the Corporations Act 2001.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 forms part of this Directors Report
and is set out on page 17. This relates to the Audit Report, where the Auditors state that they have issued an Independence Declaration.
Events Subsequent to Reporting Date
The Directors are not aware of any matters or circumstances at the date of this Directors’ Report, other than those referred to in this Directors’
Report or the financial statements or notes thereto, that have significantly affected or may significantly affect the operations, the results of
operations or the state of affairs of the Company and Consolidated Entity in subsequent financial years.
Signed for and on behalf of the Directors in accordance with a resolution of the Board:
Justin Richard
Managing Director
19 September 2017
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 16
Alara Resources Limited ABN: 27 122 892 719302017 Annual Report ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 17
Alara Resources Limited ABN: 27 122 892 719312017 Annual Report
Revenue
Provision for impairment of exploration expenditure
Personnel
Occupancy costs
Finance expenses
Corporate expenses
Extinguishment of financial liability
Administration expenses
LOSS BEFORE INCOME TAX
Income tax benefit
PROFIT/(LOSS) FOR THE YEAR
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Total other comprehensive income/(loss)
Note
3
11
12,14
2017
$
37,753
2016
$
199,708
–
(33,906,473)
(379,902)
(51,355)
(3,043)
(61,985)
236,413
(238,655)
(460,774)
55,840
(404,934)
(211,170)
(35,198)
(3,949)
(173)
1,713,737
(170,625)
(32,414,143)
301,306
(32,112,837)
(178,669)
(178,669)
364,946
364,946
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
(583,603)
(31,747,891)
Profit/(loss) attributable to:
Owners of Alara Resources Limited
Non-controlling interest
Total comprehensive income/(loss) for the year attributable to:
Owners of Alara Resources Limited
Non-controlling interest
(258,526)
(146,408)
(404,934)
(437,195)
(146,408)
(583,603)
(30,595,089)
(1,517,748)
(32,112,837)
(30,230,143)
(1,517,748)
(31,747,891)
Earnings/Loss per share:
Basic earnings/(loss) per share cents
Diluted earnings/(loss) per share cents
6
6
(0.04)
(0.04)
(7.42)
(7.42)
The accompanying notes form part of this consolidated financial statement.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 18
Alara Resources Limited ABN: 27 122 892 719322017 Annual Report
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Property, plant and equipment
Exploration and evaluation
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Financial liabilities
Provisions
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Parent interest
Non-controlling interest
TOTAL EQUITY
The accompanying notes form part of this consolidated financial statement.
Note
7
8
9
10
11
12
13
14
13
15
16
2017
$
1,885,556
72,299
9,728
1,967,583
54,126
7,996,698
8,050,824
2016
$
1,365,691
318,260
7,979
1,691,930
64,503
7,327,012
7,391,515
10,018,407
9,083,445
115,368
75,450
190,818
215,939
25,226
241,165
439,903
130,296
570,199
–
47,786
47,786
431,983
617,985
9,586,424
8,465,460
65,169,992
208,726
(53,568,320)
11,810,398
(2,223,974)
9,586,424
63,485,425
367,395
(53,309,794)
10,543,026
(2,077,566)
8,465,460
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 19
Alara Resources Limited ABN: 27 122 892 719332017 Annual Report
Issued Capital
Note
Options
Reserve
$
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
Non-Controlling
Interest
$
$
Total
$
Balance as at 1 July 2015
61,018,659
358,980
2,449
(23,073,685)
(559,818)
37,746,585
Foreign currency translation
reserve
Net income and expense
recognised directly in
equity
Loss for the year
Total comprehensive loss for
the year
Transactions with owners in their
capacity as owners:
Share placement
Share placement costs
Options lapsed during
the year
15
15
16
–
–
–
–
2,580,075
(113,309)
–
–
–
–
–
–
–
(358,980)
Balance as at 30 June 2016
63,485,425
Balance as at 1 July 2016
63,485,425
Foreign currency translation
reserve
Net income and expense
recognised directly in
equity
Loss for the year
Total comprehensive loss for
the year
–
–
–
–
Transactions with owners in their
capacity as owners:
Share placement
Share placement costs
Options issued during
the year
15
15
16
1,830,052
(145,485)
–
Balance as at 30 June 2017
65,169,992
–
–
–
–
–
–
–
–
20,000
20,000
The accompanying notes form part of this consolidated financial statement.
364,946
364,946
–
–
–
–
364,946
364,946
–
(30,595,089)
(1,517,748)
(32,112,837)
364,946
(30,595,089)
(1,517,748)
(31,747,891)
–
–
–
–
–
358,980
–
–
–
2,580,075
(113,309)
–
367,395
(53,309,794)
(2,077,566)
8,465,460
367,395
(53,309,794)
(2,077,566)
8,465,460
(178,669)
(178,669)
–
–
–
–
(178,669)
(178,669)
–
(178,669)
(258,526)
(258,526)
(146,408)
(146,408)
(404,934)
(583,603)
–
–
–
–
–
–
–
–
–
1,830,052
(145,485)
20,000
188,726
(53,568,320)
(2,223,974)
9,586,424
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 20
Alara Resources Limited ABN: 27 122 892 719342017 Annual Report
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Income tax refunded/(paid)
NET CASHFLOWS USED IN OPERATING ACTIVITIES
7b
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
Payments for exploration and evaluation activities
NET CASHFLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuing ordinary shares
Proceeds from exercise of options
Costs of issuing ordinary shares
Proceeds from borrowings
NET CASHFLOWS PROVIDED BY INVESTING ACTIVITIES
2017
$
(895,640)
37,753
–
301,183
(556,704)
(1,079)
(811,641)
(812,720)
1,445,821
384,230
(145,485)
215,939
1,900,505
2016
$
(323,911)
31,041
(35)
–
(292,905)
(28,777)
(1,602,790)
(1,631,567)
2,480,089
–
(113,309)
–
2,366,780
NET INCREASE IN CASH AND CASH EQUIVALENTS HELD
531,081
442,308
Cash and cash equivalents at beginning of the financial year
Effect of exchange rate changes on cash
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
7
1,365,691
(11,216)
1,885,556
937,192
(13,809)
1,365,691
The accompanying notes form part of this consolidated financial statement.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 21
Alara Resources Limited ABN: 27 122 892 719352017 Annual Report
1.
SUMMARY OF ACCOUNTING POLICIES
Statement of Significant Accounting Policies
The principal accounting policies adopted in the preparation of these financial statements are set out below.
The financial report includes the financial statements for the Consolidated Entity consisting of Alara Resources Limited and its controlled and jointly
controlled entities. Alara Resources Limited is a company limited by shares, incorporated in Western Australia, Australia and whose shares are
publicly traded on the Australian Securities Exchange (ASX).
Basis of preparation
1.1.
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, Australian Accounting
Interpretation, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Alara Resources
Limited is a for-profit entity for the purposes of preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of the Consolidated Entity, Alara Resources Limited, also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Reporting Basis and Conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current
assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Going Concern Assumption
The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and realisation of
assets and settlement of liabilities in the ordinary course of business.
During the year the Consolidated Entity incurred an operating loss before tax of $460,774 (2016: $32,414,143), and has a working capital position
of $1,776,765 (2016: $1,121,731). The receipt of a research and development rebate of $55,840 was received after the year end. The ability of the
Consolidated Entity to continue as a going concern is dependent upon it maintaining sufficient funds for its operations and commitments. The
Directors continue to be focused on meeting the Consolidated Entity’s business objectives and are mindful of the funding requirements to meet
these objectives. To enable the Consolidated Entity to advance its Projects into production, it would be required to raise funds from debt or equity
sources. Should the Consolidated Entity not be able to obtain this funding it has the ability to defer these plans and meet its contractual
commitments and manage cash flow in line with its available funds. The Directors consider the basis of going concern to be appropriate given the
current cash and working capital position of the Consolidated Entity relative to its fixed and discretionary commitments.
As part of the joint venture (JV) arrangement the Group entered into an unsecured loan agreement with Al Hadeetha Investments LLC on 16 April
2017 for a maximum of USD 2 million to assist in the working capital funding requirements. The interest rate will be calculated and accrued monthly
at a rate of LIBOR plus two percent per annum. The loan agreement will be in effect for the duration of the JV arrangement. During the year a total
of OMR 63,706 (equivalent of A$215,939) was received. On 9 July 2017, the Company requested a further drawdown of OMR 35,718 (A$121,070).
The Directors are confident that the Consolidated Entity can continue as a going concern and as such are of the opinion that the financial report
has been appropriately prepared on a going concern basis.
Principles of Consolidation
1.2.
The consolidated financial statements incorporate the assets and liabilities of the subsidiaries of Alara Resources Limited as at 30 June 2017 and
the results of its subsidiaries for the year then ended. Alara Resources Limited and its subsidiaries are referred to in this financial report as the
Consolidated Entity. All transactions and balances between Consolidated Entity companies are eliminated on consolidation, including unrealised
gains and losses on transactions between Consolidated Entity companies. Where unrealised losses on intra-group asset sales are reversed on
consolidation, the underlying asset is also tested for impairment from a Consolidated Entity perspective. Amounts reported in the financial
statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Consolidated
Entity. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date
of acquisition, or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a
subsidiary’s profit or loss and net assets that is not held by the Consolidated Entity. The Consolidated Entity attributes total comprehensive income
or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 22
Alara Resources Limited ABN: 27 122 892 719362017 Annual Report
1.3.
Foreign Currency Translation and Balances
Functional and presentation currency
The functional currency of each entity within the Consolidated Entity is measured using the currency of the primary economic environment in which
that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and
presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign
currency monetary items are translated at the year-end exchange rate. Exchange differences arising on the translation of monetary items are
recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the
translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the
exchange difference is recognised in profit or loss.
Consolidated entity
The financial results and position of foreign operations whose functional currency is different from the Consolidated Entity’s presentation currency
are translated as follows:
(a) assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
(b) income and expenses are translated at average exchange rates for the period; and
(c) retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the Consolidated Entity’s foreign currency translation
reserve in the statement of financial position. These differences are recognised in profit or loss in the period in which the operation is disposed.
Joint Arrangements
1.4.
Joint arrangements exist when two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control, in the event the
Company does not share control the financials are consolidated (or deconsolidated in the event of loss of control) (refer to 1.2 for further
information). The Consolidated Entity’s joint arrangements are currently of one type:
Joint operations
Joint operations are joint arrangements in which the parties with joint control have rights to the assets and obligations for the liabilities relating to
the arrangement. The activities of a joint operation are primarily designed for the provision of output to the parties to the arrangement, indicating
that:
all liabilities are satisfied by the joint participants through their purchases of that output. This indicates that, in substance, the joint participants
the parties have the rights to substantially all the economic benefits of the assets of the arrangement; and
have an obligation for the liabilities of the arrangement.
Leases
1.5.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Consolidated Entity as lessee are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on a
straight-line basis over the period of the lease.
Comparative Figures
1.6.
Certain comparative figures have been adjusted to conform to changes in presentation for the current financial year.
Critical Accounting Judgements and Estimates
1.7.
The preparation of the Consolidated Financial Statements requires Directors to make judgements and estimates and form assumptions that affect
how certain assets, liabilities, revenue, expenses and equity are reported. At each reporting period, the Directors evaluate their judgements and
estimates based on historical experience and on other various factors they believe to be reasonable under the circumstances, the results of which
form the basis of the carrying values of assets and liabilities (that are not readily apparent from other sources, such as independent valuations).
Actual results may differ from these estimates under different assumptions and conditions.
Exploration and evaluation expenditure
The Consolidated Entity’s accounting policy for exploration, evaluation and development expenditure being capitalised include the Daris Project
where these costs are expected to be recoverable through the successful development of the area or where activities in the area have not yet
reached a stage that permits reasonable assessment of the existence or otherwise of economically recoverable reserves. In the case of the Al
Hadeetha project, a maiden reserve announcement was issued in December 2016. This policy requires management to make certain estimates to
future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and
assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made
that recovery of the expenditure is not possible, the relevant capitalised amount will be written off to the statement of profit or loss and other
comprehensive income.
ALARA RESOURCES LIMITED
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Alara Resources Limited ABN: 27 122 892 719372017 Annual Report
Share-based payments transactions
The Consolidated Entity measures the cost of equity-settled transactions with Directors and employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined using a Black-Scholes options valuation model, taking into account
the terms and conditions upon which the instruments were granted. The related assumptions are detailed in Note 17. The accounting estimates
have no impact on the carrying amounts of assets and liabilities but will impact expenses and equity.
New, Revised or Amending Accounting Standards and Interpretations Adopted
1.8.
The Consolidated Entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. The adoption of these Accounting Standards and
Interpretations did not have any significant impact on the financial performance or position of the Consolidated Entity during the financial year.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
New Accounting Standards and Interpretations Not Yet Mandatory or Early Adopted
1.9.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early
adopted by the Consolidated Entity for the annual reporting period ended 30 June 2017. The Consolidated Entity’s assessment of the impact of
these new or amended Accounting Standards and Interpretations, most relevant to the Consolidated Entity, are set out below.
AASB 9 Financial Institutions
The Standard will be applicable retrospectively and includes revised requirements for the classification and measurement of financial instruments,
revised recognition and derecognition requirements for financial instruments and simplified requirements for hedge accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications
to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses
on investments in equity instruments that are not held for trading in other comprehensive income. Based on preliminary analysis the directors
anticipate that the adoption of AASB 9 is unlikely to have a material impact on the Group’s financial instruments.
AASB 15 Revenue from Contracts with Customers
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Apart
from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-
monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective,
AASB 15 provides the following five-step process:
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period presented per AASB
108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical expedients in AASB 15 ); or recognise the
cumulative effect of retrospective application to incomplete contracts on the date of initial application. There are also enhanced disclosure
requirements regarding revenue.
Given the nature of the Group there is not expected to be a material impact on adoption of this standard.
AASB 16 Leases
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related
Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or
finance leases.
The main changes introduced by the new Standard are as follows:
recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating
to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in
principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using the index or rate at
the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for all components
as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or
recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application.
The group is currently continuing to assess the impact of these changes.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 24
Alara Resources Limited ABN: 27 122 892 719382017 Annual Report
2.
PARENT ENTITY INFORMATION
The following information provided relates to the Company, Alara Resources Limited, as at 30 June 2017.
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Options Reserve
Accumulated losses
Total equity
Profit/(loss) for the year
Other comprehensive income for the year
Total comprehensive income /(loss) for the year
3.
LOSS FOR THE YEAR
The operating loss before income tax includes the following items of revenue and expense:
Revenue
Interest
2017
$
1,690,036
7,995,422
9,685,458
73,808
25,226
99,034
9,586,424
65,169,992
20,000
(55,603,568)
9,586,424
(583,603)
–
(583,603)
2016
$
1,397,117
6,888,540
8,285,657
132,017
47,786
179,803
8,465,460
63,485,425
–
(55,019,965)
8,465,460
(31,388,911)
–
(31,388,911)
2017
$
37,753
37,753
2016
$
199,708
199,708
ACCOUNTING POLICY NOTE
Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Consolidated Entity and the revenue can be
reliably measured. All revenue is stated net of the amount of goods and services tax (“GST”) except where the amount of GST incurred is not
recoverable from the Australian Tax Office. The following specific recognition criteria must also be met before revenue is recognised:
Interest Revenue – Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial
assets.
Other Revenues – Other revenues are recognised on a receipts basis.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 25
Alara Resources Limited ABN: 27 122 892 719392017 Annual Report
4.
INCOME TAX EXPENSE
(a) Income tax expense
Current tax benefit
Deferred tax expense
Total income tax benefit per statement of profit or loss and other comprehensive income
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss before income tax
Tax at the Australian tax rate of 27.5% (2016: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
2017
$
(55,840)
–
(55,840)
2016
$
(301,306)
–
(301,306)
(460,774)
(32,414,143)
(126,713)
(9,724,243)
Other non-assessable income
Non-deductible expenses
(Refund) of Research & Development Claim
Tax losses not brought to account
Income tax benefit
(c) Deferred tax assets
Tax losses
Other
Potential tax benefit at 30%
Set-off deferred tax liabilities
Net deferred tax assets
(d) Deferred tax liabilities
Exploration and evaluation expenditure
Set-off deferred tax assets
Potential tax liability at 30%
(e) Deferred tax assets not recognised
Deferred tax assets have not been recognised in relation to the following matters:
Tax losses
Capital losses
(1,048)
123,457
(55,840)
4,304
(55,840)
6,020
392,310
398,330
(398,330)
–
(398,330)
(398,330)
398,330
–
856,569
450,990
1,307,559
(1,214)
9,743,361
(301,306)
(17,904)
(301,306)
431,547
2,996
434,543
(434,543)
–
(434,543)
(434,543)
434,543
–
923,922
491,989
1,415,911
The benefit of the deferred tax assets not recognised will only be obtained if:
(i) The Consolidated Entity derives future income that is assessable for Australian income tax purposes and is of a type and an amount sufficient
to enable the benefit of them to be realised;
(ii) The Consolidated Entity continues to comply with the conditions for deductibility imposed by tax legislation in Australia; and
(iii) There are no changes in tax law which will adversely affect the Consolidated Entity in realising the benefit of them.
The Consolidated Entity has elected to consolidate for taxation purposes and has entered into a tax sharing and funding agreement in respect of
such arrangements.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 26
Alara Resources Limited ABN: 27 122 892 719402017 Annual Report
4.
INCOME TAX EXPENSE (continued)
ACCOUNTING POLICY NOTE
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 notional income tax rate
for each taxing jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of
assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses (if applicable). Deferred tax assets and
liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based
on those tax rates which are enacted or substantively enacted for each taxing jurisdiction. The relevant tax rates are applied to the cumulative
amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary
differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit
or taxable profit or loss. 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. The amount of deferred tax assets benefits brought to
account or which may be realised in the future, is based on the assumption that no adverse change will occur in income taxation legislation and the
anticipation that the Consolidated Entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the
conditions of deductibility imposed by the law. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying
amount and tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable future. 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 taxation 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 balances attributable to amounts recognised directly in other
comprehensive income or equity are also recognised directly in other comprehensive income or equity.
Tax consolidation legislation
The Consolidated Entity implemented the tax consolidation legislation. The head entity, Alara Resources Limited, and the controlled entities in the
tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in
the tax consolidated group continues to be a stand-alone taxpayer in its own right. In addition to its own current and deferred tax amounts, the
Company also recognises the current tax liabilities (or assets) and the deferred tax assets (as appropriate) arising from unused tax losses and
unused tax credits assumed from controlled entities in the tax consolidated group. Assets or liabilities arising under tax funding agreements within
the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Consolidated Entity. Any differences
between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or
distribution from) wholly-owned tax consolidated entities.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the
Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the
expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the cash flow
statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
5.
AUDITOR’S REMUNERATION
During the year the following fees were paid or payable for services provided by the auditors to the Consolidated Entity, their related practices and
non-audit related firms:
Bentleys Audit and Corporate (WA) Pty Ltd – Auditors of the Consolidated Entity
(Audit and review of financial reports)
Grant Thornton Audit Pty Ltd – Auditors of the Consolidated Entity
(Audit and review of financial reports)
Grant Thornton Australia Limited – related practice of Grant Thornton Audit Pty Ltd
(Taxation services)
Moore Stephens Chartered Accountants – Auditors of Oman controlled entities
(Audit and review of financial reports)
2017
$
32,000
–
–
6,181
38,181
2016
$
22,000
29,875
27,625
5,217
84,717
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 27
Alara Resources Limited ABN: 27 122 892 719412017 Annual Report
6.
EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share cents
Diluted earnings/(loss) per share cents
Profit/(loss) $ used to calculate earnings/(loss) per share
2017
$
(0.04)
(0.04)
(258,526)
2016
$
(7.42)
(7.42)
(30,595,090)
Weighted average number of ordinary shares during the period used in calculation of
basic earnings/(loss) per share
Weighted average number of ordinary shares during the period used in calculation of
diluted earnings/(loss) per share
584,929,630
412,463,414
584,929,630
412,463,414
Under AASB 133 "Earnings per share", potential ordinary shares such as options will only be treated as dilutive when their conversion to ordinary
shares would increase loss per share from continuing operations.
ACCOUNTING POLICY NOTE
Basic Earnings per share is determined by dividing the operating result after income tax by the weighted average number of ordinary shares on
issue during the financial period. Diluted Earnings per share adjusts the figures used in the determination of basic earnings per share by taking into
account amounts unpaid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options
outstanding during the financial period.
7.
CASH AND CASH EQUIVALENTS
Cash in hand
Cash at bank
Term deposits
2017
$
4,047
551,193
1,330,316
1,885,556
2016
$
7,245
742,619
615,827
1,365,691
The Consolidated Entity has granted numerous term deposit security bonds to the value of $93,468 (2016: $107,044) which has not been called up
as at the reporting date. The Parent Entity also has a bank guarantee for the sublease of the former office to the value of $64,943 (2016: $ 64,943).
The effective interest rate on short-term bank deposits was 2.41% (2016: 2.77%) with an average maturity of 76 days.
(a) Risk exposure
The Consolidated Entity’s exposure to interest rate and foreign exchange risk is discussed in Note 19. The maximum exposure to credit risk at the
end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.
ACCOUNTING POLICY NOTE
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments and bank overdrafts.
Bank overdrafts (if any) are shown within short-term borrowings in current liabilities on the statement of financial position.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 28
Alara Resources Limited ABN: 27 122 892 719422017 Annual Report
7.
CASH AND CASH EQUIVALENTS (continued)
(b) Reconciliation of Net Profit/(Loss) after Tax to Net Cash Flow
From Operations
Profit/(Loss) after income tax
Provision for impairment of exploration expenditure
Loan extinguishment
Foreign exchange movement
Depreciation
Equity settled share-based payments
Write off/down fixed assets
(Increase)/Decrease in Assets:
Trade and other receivables
Other current assets
Increase/(Decrease) in Liabilities:
Trade and other payables
Provisions
Net cashflows from/(used in) operating activities
(c) Non-cash financing and investing activities
Share based payments (Refer to Note 17)
8.
TRADE AND OTHER RECEIVABLES
Current
Amounts receivable from:
Sundry debtors
Goods and services tax recoverable
2017
$
(404,934)
–
(236,413)
(100,092)
15,562
256,413
–
245,961
(1,749)
(254,045)
(77,407)
(556,704)
2016
$
(32,112,837)
33,906,473
(1,713,737)
(254,544)
18,037
–
29,424
(62,298)
65,148
(220,887)
52,316
(292,905)
(20,000)
(100,000)
2017
$
63,785
8,514
72,299
2016
$
310,821
7,439
318,260
(a) Risk exposure
Information about the Consolidated Entity's exposure to credit risk, foreign exchange risk and interest rate risk is in Note 19.
(b) Impaired receivables
None of the above receivables are impaired or past due.
ACCOUNTING POLICY NOTE
Trade and other receivables are recorded at amounts due less any provision for doubtful debts. An estimate for doubtful debts is made when
collection of the full amount is no longer probable. Bad debts are written off when considered non-recoverable.
9.
OTHER CURRENT ASSETS
Prepayments
2017
$
9,728
9,728
2016
$
7,979
7,979
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 29
Alara Resources Limited ABN: 27 122 892 719432017 Annual Report
10.
PROPERTY, PLANT AND EQUIPMENT
Year ended 30 June 2016
Carrying amount at beginning
Additions
Write-offs
Depreciation expense
Exchange Difference
Closing amount at reporting date
Year ended 30 June 2016
Cost or fair value
Accumulated depreciation
Net carrying amount
Year ended 30 June 2017
Carrying amount at beginning
Additions
Write-offs
Depreciation expense
Exchange Difference
Closing amount at reporting date
Year ended 30 June 2017
Cost or fair value
Accumulated depreciation
Net carrying amount
Motor
Vehicles
$
Office
Equipment
$
Plant and
Equipment
$
–
28,777
–
(1,692)
–
27,085
28,777
(1,692)
27,085
27,085
–
–
(3,865)
(1,715)
21,505
26,932
(5,427)
21,505
49,071
–
(10,294)
(14,454)
9,309
33,632
164,925
(131,293)
33,632
33,632
1,079
–
(10,448)
5,908
30,171
189,253
(159,082)
30,171
19,862
–
(19,130)
(1,891)
4,945
3,786
12,898
(9,112)
3,786
3,786
–
–
(1,249)
(87)
2,450
21,056
(18,606)
2,450
Total
$
68,933
28,777
(29,424)
(18,037)
14,254
64,503
206,600
(142,097)
64,503
64,503
1,079
–
(15,562)
4,106
54,126
237,241
(183,115)
54,126
ACCOUNTING POLICY NOTE
All plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that
is directly attributable to the acquisition of the items. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is
not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that
will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present value in
determining recoverable amount. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Consolidated Entity and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. The
depreciable amount of all fixed assets is depreciated on a diminishing value basis over the asset's useful life to the Consolidated Entity
commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Office Equipment
Motor Vehicles
Plant and Equipment
Depreciation Rate
15 – 37.5%
33.3%
15 – 33.3%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. 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 the statement of profit or loss and other
comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to
retained earnings.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 30
Alara Resources Limited ABN: 27 122 892 719442017 Annual Report
11.
EXPLORATION AND EVALUATION
Opening balance
- Exploration and evaluation expenditure
- Exchange differences
- Impairment of exploration and evaluation expenditure
Closing balance
2017
$
7,327,012
613,007
56,679
–
7,996,698
2016
$
38,566,735
660,647
2,006,103
(33,906,473)
7,327,012
On 21 October 2010, Alara Saudi Operations Pty Limited, a wholly owned subsidiary of the Company, entered into a shareholders’ agreement with
mineral licences holder, United Arabian Mining LLC (Manajem). Pursuant to the shareholders’ agreement a joint venture entity, Khnaiguiyah Mining
Company LLC (KMC) (in which the Consolidated Entity has a 50% shareholding interest) was established and Manajem are required to transfer
legal title to the mining licence and exploration licences over the Khnaiguiyah Project to KMC. The Consolidated Entity has obtained independent
advice confirming that valid and legally enforceable rights existed for KMC to commercially exploit the Khnaiguiyah Project. The financial
statements of previous Annual Reports were prepared on this basis with the asset carried at $33,190,221 as at 30 June 2015. Following
cancellation of the Khnaiguiyah Mining Licence, a provision for impairment of the carrying value of exploration and evaluation attributable to the
Khnaiguiyah Project was made. It is expected this provision for impairment will be reversed once Alara can demonstrate its exploration and
evaluation expenses (relating to the Khnaiguiyah Project and the accompanying Feasibility Study) will be recovered via its agreement with Bayan
Mining Company LLC or otherwise (see accounting policy note on mineral exploration and evaluation expenditure below).
Alara Oman Operations Pty Limited (a wholly owned Australian subsidiary) gained a 70% shareholding interest in a jointly controlled company, Al
Hadeetha Resource LLC (Oman), on 23 November 2011. The principal activity of the company is exploration, evaluation and development of
mineral licences in Oman.
Alara Oman Operations Pty Limited (a wholly owned Australian subsidiary) gained a 50% shareholding interest in a jointly controlled company,
Daris Resources LLC (Oman), on 1 December 2010. The principal activity of this company is exploration, evaluation and development of mineral
licences in Oman. The Consolidated Entity has a valid and legally enforceable contractual right to commercially exploit the Daris Project held by
Daris Resources LLC (in which the Consolidated Entity has a 50% shareholding interest) and does not hold the legal title to the mineral exploration
licence (which is held by the other 50% shareholder of Daris Resources LLC). The financial statements have been prepared on this basis (refer
Note 22 for further disclosures). Should these legal rights not be enforceable, the carrying value of Exploration and Evaluation Expenditure
attributable to the Daris Project would be impaired.
Assets previously classified as other non-current assets have been reclassified to exploration and evaluation expenditure. The Consolidated Entity
has granted numerous security bonds to the value of $93,468 (2016: $107,380) which have not been called up as at reporting date.
ACCOUNTING POLICY NOTE
Mineral Exploration and Evaluation Expenditure
Exploration, evaluation and development expenditure incurred is accumulated (i.e. capitalised) in respect of each identifiable area of interest. These
costs are only carried forward where they are expected to be recoverable through the successful development of the area or where activities in the
area and includes areas that have not yet reached a stage that permits reasonable assessment of the existence or otherwise of economically
recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to
abandon the area is made. Exploration and evaluation expenditure is written-off when it fails to meet at least one of the conditions outlined above or
an area of interest is abandoned. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the
carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the
carrying amount exceeds the recoverable amount, the impairment loss will be measured in accordance with the Consolidated Entity’s impairment
policy (Note 1.7). This policy requires management to make certain estimates to future events and circumstances, in particular whether an
economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes
available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is not possible, the
relevant capitalised amount will be written off to the statement of profit or loss and other comprehensive income.
Impairment of Non-Financial Assets
At each reporting date, the Consolidated Entity reviews the carrying values of its tangible and intangible assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s
fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable
amount is expensed to the profit or loss. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 31
Alara Resources Limited ABN: 27 122 892 719452017 Annual Report
12.
TRADE AND OTHER PAYABLES
Current
Trade payables
Other payables
2017
$
65,383
49,985
115,368
2016
$
393,435
46,468
439,903
Due to the short-term nature of the trade and other payables, their carrying value is assumed to approximate their fair value.
The liabilities of the Khnaiguiyah Mining Company LLC (‘KMC’) of $236,413 were extinguished from the financial statements after the Consolidated
Entity ceased to control KMC. As disclosed in note 11, the KMC assets were fully provided for in 2016.
(a) Risk exposure
Details of the Consolidated Entity's exposure to risks arising from current payables are set out in Note 19.
ACCOUNTING POLICY NOTE
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of recognition.
13.
PROVISIONS
Current
Employee benefits – annual leave
Income tax
Non-Current
Employee benefits – long service leave
2017
$
75,450
–
25,226
100,676
2016
$
21,586
108,710
47,786
178,082
Amounts not expected to be settled within the next 12 months
The entire annual leave obligation is presented as current as the Consolidated Entity does not have an unconditional right to defer settlement. The
non-current provision for long service leave is a provision towards the future entitlements of employees who will have completed the required period
of long service and that is not expected to be taken or paid within the next 12 months.
ACCOUNTING POLICY NOTE
Employee Benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual 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 is recognised in other payables and
accruals together with other employee benefit obligations.
(ii) 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
employee renders the related service is recognised in the provision for employee benefits and 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 expected 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. The obligations are presented as current liabilities in the balance sheet if the
entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual
settlement is expected to occur.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 32
Alara Resources Limited ABN: 27 122 892 719462017 Annual Report
14.
FINANCIAL LIABILITIES
Non-Current
Loan with unrelated third party (i)
Financial liabilities
Exchange differences
Extinguishment of financial liability (ii)
2017
$
215,939
–
–
–
215,939
2016
$
–
1,509,585
204,152
(1,713,737)
–
(i)
Pursuant to the Shareholders’ Agreement with Al Hadeetha Investments LLC (AHI), Al Hadeetha Resources LLC (AHR) (a controlled
entity of Alara Resources Limited) executed a Loan Agreement of up to USD 2 million with AHI on 16 April 2017. As at 30 June 2017, the
loan balance was OMR63,706 (A$215,939). Under the Loan Agreement, interest accrues at a rate of LIBOR plus 2%. The loan is
repayable (alongside the loan of OMR1,853,822 (A$6,241,586) from Alara Resources Limited and its controlled entities, which has been
eliminated on consolidation of these financial statements) from profits of AHR prior to any dividends being issued to the shareholders of
AHR, or in the event that AHI ceases to be a shareholder of AHR. AHI and/or Alara Resources Limited may elect to convert all or part of
the loan into equity in AHR.
On 9 July 2017, the Company requested a drawdown from AHI of OMR 35,718 (A$121,070).
(ii)
The financial liability with United Arabian Mining Company LLC (Manajem) was extinguished pursuant to the terms of the shareholders
agreement whereby repayment can only be made from profits of the joint venture and shall be discharged pro rata for funds contributed by
Alara. The Company has impaired its interest in the Khnaiguiyah project upon cancellation of the Khnaiguiyah mining licence.
15.
ISSUED CAPITAL
Fully paid ordinary shares
2016
Balance as at 1 July 2015
- Share movement during the 2016 financial year
- Share issue costs during the 2016 financial year
Balance as at 30 June 2016
2017
Balance as at 1 July 2016
- Share movement during the 2017 financial year
- Share issue costs during the 2017 financial year
Balance as at 30 June 2017
2017
№
597,517,589
2016
№
506,015,000
2017
$
65,169,992
2016
$
63,485,425
№
248,007,500
258,007,500
–
506,015,000
№
506,015,000
91,502,589
–
597,517,589
$
61,018,659
2,580,075
(113,309)
63,485,425
$
63,485,425
1,830,052
(145,485)
65,169,992
Each fully paid ordinary share carries one vote per share and the right to participate in dividends. Ordinary shares have no par value and the
Company does not have a limit on the amount of its capital.
Capital risk management
The Consolidated Entity's objective when managing its capital is to safeguard its ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders and to maintain a capital structure balancing the interests of all shareholders.
The Board will consider capital management initiatives as is appropriate and in the best interests of the Consolidated Entity and shareholders from
time to time. The Consolidated Entity had no external borrowings as at 30 June 2017. The Consolidated Entity's non-cash investments can be
realised to meet accounts payable arising in the normal course of business.
Accounting Policy Note
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, or for the acquisition of a
business, are included in the cost of the acquisition as part of the purchase consideration.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 33
Alara Resources Limited ABN: 27 122 892 719472017 Annual Report
16.
RESERVES
Foreign currency translation reserve
Options reserve
2017
$
188,726
20,000
208,726
2016
$
367,395
–
367,395
Foreign currency translation reserve
Exchange differences arising on translation of a foreign controlled entity's financial results and position are taken to the foreign currency translation
reserve. The reserve is de-recognised when the investment is disposed of.
Options reserve
The number of unlisted options outstanding over unissued ordinary shares at the reporting date is as follows:
Employees’ Options
Unlisted options exercisable at $0.04; expiring 9 March 2020
Grant date
9 Mar 2017
Number of
options
3,000,000
3,000,000
2017
$
20,000
20,000
2016
$
–
–
The Option Reserve records the consideration (net of expenses) received by the Company on the issue of listed options and the fair value of
unlisted Employees' options that were issued for nil consideration.
17.
SHARE BASED PAYMENTS
A total of 3,000,000 unlisted options expiring 9 March 2020 were issued to consultants during the year.
Grant date
Expiry date
Exercise
price
Opening
balance
Granted
Exercised
Lapsed
Closing
balance
Vested and
exercisable
Fair value
$
Movement during the year
As at 30 June 2017
Employees
9 Mar 2017
9 Mar 2020
$0.04
Weighted average exercise price
Weighted average exercise price
–
–
3,000,000
3,000,000
$0.04
$0.04
–
–
–
–
–
–
3,000,000
3,000,000
3,000,000
3,000,000
$0.04
$0.04
20,000
20,000
Other than options exercised by Mr Richard (which were not share based payments), there were no shares issued as a result of the exercise of any
options during the year (2016: nil).
The fair value of these options are expensed, from their date of grant, over their vesting period; fair values are determined as at date of grant using
the Black-Scholes options valuation model that takes into account the exercise price, the term of the option, the underlying share price as at date of
grant, the expected price volatility of the underlying shares and the risk-free interest rate for the term of the option. The Company is required to
expense the fair value of options granted, on the basis that the fair value cost at date of grant is apportioned over the vesting period applicable to
each option. The model inputs for assessing the fair value of options granted during the period are as follows:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
Options are granted for no consideration and vest as detailed in the table below;
Exercise price is as detailed in the table above;
Grant or issue date is as detailed in the table above;
Expiry date is as detailed in the table above;
Share price is based on the last bid price on ASX as at date of grant, as detailed in the table below;
Expected price volatility of the Company’s shares has been assessed independently as described in the table below;
Expected dividend yield is nil; and
Risk-free interest rate is based on the 3/5 year Commonwealth bond yield, as detailed in the table below.
Date of issue Description of unlisted options
Vesting criteria
Share price at
grant date
Risk free
rate
Price
volatility
9 Mar 2017
$0.04 (9 Mar 2020) Options
Vested at the date of the issue of the options
$0.022
2.08%
100%
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 34
Alara Resources Limited ABN: 27 122 892 719482017 Annual Report
17.
SHARE BASED PAYMENTS (continued)
As announced on 31 March 2016 and approved by shareholders at the 2016 AGM, it was resolved that the Company will grant the following
options as a long term incentive subject to the following milestones being achieved:
Tranche 1: 21,000,000 $0.04 options expiring 3 years from grant date upon attainment of Milestone 2 before 31 October 2016;
Tranche 2: 21,000,000 $0.04 options expiring 3 years from grant date upon attainment of Milestone 3 before 31 December 2016; and
Tranche 3: 30,000,000 $0.10 options expiring 3 years from grant date upon attainment of Milestone 4 before 31 December 2016.
Milestones 2, 3 and 4 were not reached before the due date and no options were granted during the year.
ACCOUNTING POLICY NOTE
Director/Employee Options
The fair value of options granted by the Company to directors and employees is recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured as at grant date and is expensed in full as at their date of issue where they are 100% vested on grant
and otherwise over their vesting period (where applicable). The fair value at grant date is determined using the Black-Scholes valuation model that
takes into account the exercise price, the term of the option, the vesting criteria, the unlisted nature of the option, the share price at grant date and
the expected price volatility of the underlying shares in the Company, and the risk-free interest rate for the term of the option. Upon the exercise of
options, the balance of the reserve relating to those options is transferred to share capital.
18.
SEGMENT INFORMATION
The Board has considered the activities/operations and geographical perspective within the operating results and have determined that the
Consolidated Entity operates in the resource exploration, evaluation and development sector within geographic segments - Australia, Saudi Arabia
and Oman.
2017
Total segment revenues
Total segment loss before tax
Total segment assets
Total segment liabilities
2016
Total segment revenues
Total segment loss before tax
Total segment assets
Total segment liabilities
Australia
$
37,491
(378,106)
2,208,115
(99,034)
199,262
(16,480,443)
2,839,835
(413,675)
Oman
$
262
(293,175)
7,810,292
(332,949)
446
(5,573,028)
6,243,610
(95,599)
Saudi Arabia
$
–
210,507
–
–
–
(10,360,672)
–
(108,711)
Total
$
37,753
(460,774)
10,018,407
(431,983)
199,708
(32,414,143)
9,083,445
(617,985)
(a) Reconciliation of segment information
(i) Total Segment Assets
Total Assets as per Statement of Financial Position
(ii) Total Segment Revenues
Total Revenue as per Statement of Profit or Loss
and Other Comprehensive Income
(iii) Total Segment profit/(loss) before tax
Total Consolidated Entity profit/(loss) before tax
2017
$
2016
$
10,018,407
9,083,445
37,753
199,708
(460,774)
(32,414,143)
ACCOUNTING POLICY NOTE
Operating Segments
The Consolidated Entity has applied AASB 8: Operating Segments which requires that segment information be presented on the same basis as
that used for internal reporting purposes. An operating segment is a component of the Consolidated Entity that engages in business activities from
which it may earn revenues and incur expenses. An operating segment's operating results are reviewed regularly by the management to make
decisions on allocation of resources to the relevant segments and assess performance. Unallocated items comprise mainly share investments,
corporate and office expenses.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 35
Alara Resources Limited ABN: 27 122 892 719492017 Annual Report
19.
FINANCIAL RISK MANAGEMENT
The Consolidated Entity's financial instruments mainly consist of deposits with banks, accounts receivable and payable, and investments in a listed
security. The principal activity of the Consolidated Entity is resource exploration, evaluation and development. The main risks arising from the
Consolidated Entity's financial instruments are market (which includes price, interest rate and foreign exchange risks), credit and liquidity risks. Risk
management is carried out by the Board of Directors. The Board evaluates, monitors and manages the Consolidated Entity's financial risk in close
co-operation with its operating units. The financial receivables and payables of the Consolidated Entity in the table below are due or payable within
30 days. The financial investments are held for trading and are realised at the discretion of the Board.
The Consolidated Entity holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities at amortised cost
Trade and other payables
Total segment revenue
Net Financial Assets
(a) Market Risk
2017
$
1,885,556
72,299
1,957,855
(115,368)
(215,939)
(331,307)
2016
$
1,365,691
318,260
1,683,951
(439,903)
–
(439,903)
1,626,548
1,244,048
(i) Price risk
The Consolidated Entity is exposed to equity securities price risk. This arises from investments held by the Consolidated Entity and classified in
the statement of financial position at fair value through profit or loss. The Consolidated Entity is not directly exposed to commodity price risk.
The value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific
to the individual instrument or its issuer or factors affecting all instruments in the market. The Consolidated Entity does not manage this risk
through entering into derivative contracts, futures, options or swaps. Market risk is minimised through ensuring that investment activities are
undertaken in accordance with Board established mandate limits and investment strategies.
(ii) Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Consolidated
Entity's exposure to market risk for changes in interest rates relate primarily to investments held in interest bearing instruments and its loan
from third parties. The average interest rate applicable to funds held on deposit during the year was 2.41% (2016: 2.77%).
Cash at bank
Term deposits
Loan from third parties
2017
$
551,193
1,330,316
(215,939)
1,665,570
2016
$
742,619
615,827
–
1,358,446
The Consolidated Entity has borrowings subject to interest rate risk. The possible impact on profit or loss or total equity on this exposure is
displayed below:
Loan with unrelated third party
Change in profit
Increase by 1%
Decrease by 1%
Change in equity
Increase by 1%
Decrease by 1%
2017
$
(2,159)
2,159
(2,159)
2,159
2016
$
–
–
–
–
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 36
Alara Resources Limited ABN: 27 122 892 719502017 Annual Report
19.
FINANCIAL RISK MANAGEMENT (continued)
Revenue
Change in profit
Increase by 3%
Decrease by 3%
Change in equity
Increase by 3%
Decrease by 3%
2017
$
56,567
(56,567)
56,567
(56,567)
2016
$
40,971
(40,971)
40,971
(40,971)
(iii) Foreign exchange risk
The Consolidated Entity is exposed to foreign currency risk in cash held in Omani Riyals (OMR) by the Consolidated Entity's foreign controlled
entity, foreign resource project investment commitments and exploration and evaluation expenditure on foreign exploration and evaluation. The
primary currency giving rise to this risk is Omani Riyals (OMR). The Consolidated Entity has not entered into any forward exchange contracts
as at reporting date and is currently fully exposed to foreign exchange risk. The Consolidated Entity's exposure to foreign currency risk at
reporting date was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Non-current financial liabilities
2017
OMR
78,855
261
(13,447)
(64,144)
1,525
2016
OMR
80,426
32
(21,632)
–
58,826
The Consolidated Entity's exposure to foreign exchange risk is mitigated by having comparable asset and liability balances in US dollars.
Therefore a sensitivity analysis has not been performed. The Consolidated Entity enters into forward exchange contracts with its Australian
bank from time to time to hedge against foreign exchange risk.
(b) Credit risk
Credit risk refers to the risk that a counterparty under a financial instrument will default (in whole or in part) on its contractual obligations resulting in
financial loss to the Consolidated Entity. Concentrations of credit risk are minimised primarily by undertaking appropriate due diligence on potential
investments, carrying out all market transactions through approved brokers, settling non-market transactions with the involvement of suitably
qualified legal and accounting personnel (both internal and external), and obtaining sufficient collateral or other security (where appropriate) as a
means of mitigating the risk of financial loss from defaults. This financial year there was no necessity to obtain collateral. The credit quality of the
financial assets are neither past due nor impaired and can be assessed by reference to external credit ratings (if available with Standard & Poor's)
or to historical information about counterparty default rates. The maximum exposure to credit risk at reporting date is the carrying amount of the
financial assets as summarised below:
Cash and cash equivalents
AA-
No external credit rating available
Trade and other receivables (due within 30 days)
No external credit rating available
2017
$
1,881,509
4,047
1,885,556
2016
$
1,358,446
7,245
1,365,691
72,299
318,260
The Consolidated Entity measures credit risk on a fair value basis. The carrying amount of financial assets recorded in the financial statements, net
of any provision for losses, represents the Consolidated Entity’s maximum exposure to credit risk. All receivables noted above are due within 30
days. None of the above receivables are past due.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 37
Alara Resources Limited ABN: 27 122 892 719512017 Annual Report
19.
FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk
Liquidity risk is the risk that the Consolidated Entity will encounter difficulty in meeting obligations associated with financial liabilities. There is
sufficient cash and cash equivalents and the non-cash investments can be realised to meet accounts payable arising in the normal course of
business. The financial liabilities maturity obligation is disclosed below:
2017
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Non-current financial liabilities
Net inflow/(outflow)
2016
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net inflow/(outflow)
Less than
6 months
$
1,885,556
72,299
1,957,855
(115,368)
–
(115,368)
1,842,487
1,365,691
318,260
1,683,951
(439,903)
1,244,048
6-12
months
$
–
–
–
–
–
–
–
–
–
–
–
–
1-5
years
$
–
–
–
–
(215,939)
(215,939)
(215,939)
–
–
–
–
–
Total
$
1,885,556
72,299
1,957,855
(115,368)
(215,939)
(331,307)
1,626,548
1,365,691
318,260
1,683,951
(439,903)
1,244,048
(d) Fair Value of Financial Assets and Liabilities
The carrying amount of financial instruments recorded in the financial statements represents their fair value determined in accordance with the
accounting policies disclosed in Note 1. The aggregate fair value and carrying amount of financial assets at reporting date are set out in Note 9 and
Note 10. The financial liabilities at reporting date are set out in Note 14.
(e) Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The
Consolidated Entity’s financial assets and liabilities approximate their fair values.
ACCOUNTING POLICY NOTE
Financial Instruments
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial
assets, this is equivalent to the date that the entity commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit
or loss’, in which case transaction costs are expensed to profit or loss immediately. Subsequent to initial recognition, these instruments are
measured as set out below:
Financial assets at fair value through profit or loss - A financial asset is classified in this category if acquired principally for the purpose of
selling in the short term or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of
Financial Instruments. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the profit
or loss in the period in which they arise.
Loans and receivables - Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market and are stated at amortised cost using the effective interest rate method.
Financial liabilities - Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and
amortisation.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all
unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. At each reporting date,
the Consolidated Entity assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are
recognised in the profit or loss. The Consolidated Entity’s investment portfolio (comprising listed and unlisted securities) is accounted for as
“financial assets at fair value through profit or loss”.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 38
Alara Resources Limited ABN: 27 122 892 719522017 Annual Report
19.
FINANCIAL RISK MANAGEMENT (continued)
Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair
value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based
on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Consolidated Entity is the current bid
price; the appropriate quoted market price for financial liabilities is the current ask price. The fair value of financial instruments that are not traded in
an active market (for example over-the-counter derivatives) is determined using valuation techniques, including but not limited to recent arm’s
length transactions, reference to similar instruments and option pricing models. The Consolidated Entity may use a variety of methods and makes
assumptions that are based on market conditions existing at each reporting date. Other techniques, such as estimated discounted cash flows, are
used to determine fair value for other financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value
of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is
available to the Consolidated Entity for similar financial instruments. The Consolidated Entity’s investment portfolio (comprising listed and unlisted
securities) is accounted for as a “financial assets at fair value through profit or loss” and is carried at fair value based on the quoted last bid prices
at reporting date.
20.
COMMITMENTS
(a) Lease Commitments
Non-cancellable operating lease commitments:
Within 1 year
1-5 years
After 5 years
Total
The Group leases office space under a non-cancellable operating lease. On
renewal, the terms of the lease are renegotiated. The Group does not have an
option to purchase the leased asset at the expiry of the lease period. During the
year the Group has signed a sub-lease for the office space hence mitigating the
outstanding lease commitments remaining on the lease.
2017
$
23,750
460
–
24,210
2016
$
39,211
12,460
–
51,671
21.
CONTROLLED ENTITIES
Investment in Controlled Entities
Alara Resources Limited (AUQ)
Alara Peru Opertaions Pty Ltd (APO)
Alara Saudi Operations Pty Ltd (ASO)
Saudi Investments Pty Limited (SIV)
(formerly Alara Saudi Marjan Operations Pty Limited)
Alara Oman Operations Pty Limited (AOO)
Alara Kingdom Operations Pty Limited (AKO)
Alara Saudi Holdings Pty Limited (ASH)
Alara Resources LLC
Al Hadeetha Resources LLC
(formerly Pilatus Resources Oman LLC)
Alara Resource Ghana Limited
Alara Peru S.A.C
Controlled
entity
Parent
AUQ
AUQ
Principal Activity
Exploration
Inactive
Management
Country of
Incorporation
Australia
Australia
Australia
Date of
Incorporation
6-Dec-06
9-Mar-07
4-Aug-10
AUQ
AUQ
AUQ
AUQ
AOO
AOO
AUQ
APO
Development
Management
Management
Inactive
Exploration
Exploration
Inactive
Inactive
Australia
Australia
Australia
Australia
Oman
Oman
Ghana
Peru
14-Feb-11
28-Jun-10
5-Sep-11
5-Jun-13
2-Oct-10
6-Feb-07
8-Dec-09
1-Mar-07
Jun-17
100%
100%
100%
100%
100%
100%
100%
70%
70%
100%
100%
Jun-16
100%
100%
100%
100%
100%
100%
100%
70%
70%
100%
100%
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 39
Alara Resources Limited ABN: 27 122 892 719532017 Annual Report
22.
JOINTLY CONTROLED ENTITIES
Investment in Jointly Controlled Entities
Daris Resources LLC
Controlled
entity
AOO
Principal Activity
Exploration
Country of
Incorporation
Oman
Date of
Incorporation
1-Dec-10
Jun-17
50%
Jun-16
50%
23.
RELATED PARTY TRANSACTIONS
(a) Controlled and Jointly Controlled Entities
Details of the interest in controlled entities and jointly controlled entities are set out in Notes 21 and 22.
(b) Transactions with other related parties
The following transactions occurred with related parties during the year ending 30 June 2017:
(i) Controlled and Jointly Controlled Entities
Details of the interest in controlled entities and jointly controlled entities are set out in Notes 21 and 22.
(ii) Director loan agreement
There was no outstanding directors’ loan during the year.
On 9 September 2015 Justin Richard entered into a loan agreement with the Consolidated Entity providing a $250,000 loan facility to the
Consolidated Entity. $60,000 was drawn down by the Consolidated Entity during the relevant period and was settled upon the rights issue
announced 12 November 2015. 20,000,000 shares were issued to Justin Richard at the issue price of $0.01, raising $200,000 in capital and
extinguishing the $60,000 loan payable with no interest charged. The loan was fully repaid during the year.
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Key Management of the Consolidated Entity are each Director and Company Executive being a company secretary or senior managers with
authority and responsibility for planning, directing and controlling the major activities of the Company or Consolidated entity. Details of key
management personnel individual remuneration are disclosed in the remuneration report section of the directors’ report.
Key Management Personnel remuneration includes the following expenses:
Short term employee benefits:
Remuneration including bonuses and allowances
Social security costs
Total short term employee benefits
Long service leave
Total other long-term benefits
Post-employment benefits:
Defined benefit pension plans
Defined contribution pension plans
Total post-employment benefits
Termination benefits
Share-based payments
Total remuneration
2017
$
999,217
–
999,217
–
–
–
–
–
17,663
–
2016
$
1,084,592
–
1,084,592
–
–
–
2,177
2,177
18,750
–
1,016,880
1,105,519
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 40
Alara Resources Limited ABN: 27 122 892 719542017 Annual Report
24.
CONTINGENT ASSETS AND LIABILITIES
Contingent assets and liabilities exist in relation to certain exploration and evaluation of the Consolidated Entity subject to the continued
development and advancement of the same, as described below.
(a)
(b)
(c)
(d)
(e)
Shareholders’ Agreement (SHA) – Khnaiguiyah Mining Company – Khnaiguiyah Zinc-Copper Project (Saudi Arabia) – On 21 October
2010, Alara Saudi Operations Pty Limited, a wholly owned subsidiary of the Company, entered into a shareholders’ agreement with mineral
licences holder, United Arabian Mining (“Manajem” in Arabic) Company (Manajem) pursuant to which Alara would pay a total of US$7.5 million to
Manajem in stages subject to completion of project milestones and the parties forming a new joint venture company, Khnaiguiyah Mining Company
LLC (KMC), which will hold the Khnaiguiyah Zinc-Copper Project mineral licences. KMC was incorporated in Saudi Arabia on 10 January 2010.
Alara has paid Manajem a total of US$3.654 million (including advance payments of US$3.388 million in respect of the tranches payable under the
Shareholders Agreement in connection with the transfer of the Khnaiguiyah Mining Licence to KMC.
In November 2014, Alara served notice on Manajem suspending Alara’s obligations under the SHA and reserving Alara’s rights to file claims
against Manajem (in addition to the counter-claims referred to in (c) below) pursuant to Manajem’s breaches under the SHA and updated JV
Agreement (referred to in (b) below).
Updated Joint Venture Agreement – Khnaiguiyah Mining Company – Khnaiguiyah Zinc-Copper Project (Saudi Arabia) – In March 2014,
Alara Saudi Operations Pty Limited, a wholly owned subsidiary of the Company, entered into a series of agreements with Manajem to update the
joint venture between the parties. This included amendments to the Shareholders’ Agreement referred to in (a) above and provided for Alara to
acquire an additional 10% of the joint venture entity, KMC, thus increasing its equity to 60% (from 50%) and have control of KMC and the Project.
Under these updated joint venture agreements Alara would pay a total of US$6,664,120 to Manajem (principally) in stages conditional on
attainment defined milestones (with such amount to be added to Alara’s loan to KMC, repayable from KMC net profits) and issue 60 million shares
to Manajem subject to Alara shareholder approval. The parties also agreed to settle and/or waive all historical claims in relation to the KMC joint
venture and or the Khnaiguiyah Project. As at the date of this report, no payment has been effected as Manajem has, inter alia, not yet complied
with its initial obligation under the same to notify the Deputy Ministry of Mineral Resources (DMMR) to recommence the process to effect the
transfer of the ML to KMC.
‘Financial Claim’ – Khnaiguiyah Zinc-Copper Project (Saudi Arabia) – In November 2014, former Khnaiguiyah Project joint venture partner,
Manajem, filed a ‘claim’ against Alara Saudi Operations Pty Limited before the Board of Grievance in Riyadh, Kingdom of Saudi Arabia. Manajem
alleges broad unspecified breaches of the SHA and Saudi law by Alara. Alara, based on the advice of external legal counsel maintain that
Manajem’s claims are unsubstantiated and has lodged a counter-claim against Manajem based on a number of specific breaches of the SHA by
Manajem (including via acting through Manajem company executives) pursuant to Manajem’s obligations under the SHA and in relation to a
number of operational matters involving the JV Company, KMC. Alara will defend Manajem’s claim and pursue its counter-claims against Manajem
before the Board of Grievance in accordance with due process. There next court date is scheduled for October 2017.
Shareholders’ Agreement – Daris Resources LLC – Daris Copper-Gold Project (Oman) – On 28 August 2010, Alara Oman Operations Pty
Limited, a wholly owned subsidiary of the Company, entered into a shareholders’ agreement with Daris Copper Project concession holder, Al
Tamman Trading Establishment LLC (ATTE) pursuant to which Alara will invest up to a total of US$7 million into a new joint venture company
(“Daris Resources LLC” (DarisCo)) to gain up to a 70% shareholding. DarisCo was incorporated in Oman on 1 December 2010 (Alara 50%:ATTE
50%). To the extent that further funding is required, Alara is entitled to advance up to US$4 million to DarisCo as a loan (on commercial terms and
repayable as a priority before distribution of dividends) - convertible into equity in DarisCo to take Alara’s interest to 70%. DarisCo has exclusive
rights (to be further formalised under a management agreement with ATTE) to manage, operate and commercially exploit the concession. DarisCo
is governed by a 6 member board of directors with 3 nominees (including the Chairman) from Alara and 3 nominees from ATTE.
Shareholders’ Agreement – Alara Resources LLC (Oman) – On 8 August 2010, Alara Oman Operations Pty Limited, a wholly owned subsidiary
of the Company, entered into a shareholders’ agreement with Sur United International Co. LLC (SUR) pursuant to which a new joint venture
company (“Alara Resources LLC” (AlaraCo)) will be established to identify, secure and commercially exploit other exploration and evaluation in
Oman introduced to AlaraCo by SUR. AlaraCo was incorporated in Oman in 2 October 2010. Alara contributed 100% of the initial capital of
150,000 Omani Rials (RO) (equivalent to ~A$425,000 at that time) for its 70% shareholding interest in AlaraCo with SUR holding the balance of
30%. Alara is entitled to advance funds to AlaraCo as a loan (on commercial terms and repayable as a priority before distribution of dividends).
SUR is entitled to receive a priority payment out of net profits equivalent to 2% NSR (Net Smelter Return) – which amount is deducted from the
dividend entitlement of SUR. There is a mechanism for the dilution of SUR’s profit interest (ie. 30%) if SUR fails to meet capital calls after a
‘Decision to Mine’ has been made by Alara in respect of a proposed ‘Mine’ (supported by the results of any feasibility study confirming the
commercial viability of the exploitation of a ‘Mine’). If SUR's entitlement to dividends is diluted below 10% as above, SUR has an option to assign
its dividend rights to Alara in return for a 2% NSR payment from AlaraCo, subject to AlaraCo making a net profit. The shareholders agreement is
subject to conditions precedent including, amongst other matters, the execution of an ancillary loan agreement (which is currently pending
execution by the parties) and an exploration licence being granted to AlaraCo – AlaraCo has lodged several applications for exploration licences
over open areas prospective for base and precious metals introduced by SUR (which are currently pending grant by the Oman Government).
AlaraCo is governed by a 5 member board of directors with 3 nominees (including the Chairman) from Alara and 2 nominees from SUR.
(f)
Introduction Fees – Net Smelter Return Royalty and Bonus Obligation – Oman Projects – A 5.0% Net Smelter Return (NSR) royalty is due
and payable to the individual who introduced the prospects the subject of exploration licence applications by Alara Resources LLC or Al Hadeetha
Resources LLC. An OMR25,000 cash bonus is also due and payable to the same individual upon commencement of production from the Daris
Copper-Gold Project (Oman).
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 41
Alara Resources Limited ABN: 27 122 892 719552017 Annual Report
24.
(g)
(h)
(i)
(j)
CONTINGENT ASSETS AND LIABILITIES (continued)
Shareholders Agreement – Al Hadeetha Copper-Gold Project (Oman) – On 23 November 2011, Alara Oman Operations Pty Limited (a wholly
owned subsidiary of the Company) entered into a shareholders agreement with the concession holder, Al Hadeetha Resources LLC (‘Al
Hadeetha’) and the then shareholders of Al Hadeetha. An Amendment Agreement between Alara and Al Hadeetha Investments LLC dated 3
August 2013 acknowledges Alara now holds a 70% shareholding in Al Hadeetha and Al Hadeetha Investments LLC (‘AHI’) holds 30%. Post
completion of a definitive feasibility study, the Al Hadeetha Board may issue shareholders with payment notices requiring them to contribute equity
funding in proportion to their shareholding. If AHI decline to make the required capital contribution to develop the Project’s first mine, then Alara
may elect to pay Al Hadeetha the amount which AHI were required to contribute under their payment notice and (subject to Omani law) Alara may
increase its economic interest in Al Hadeetha to 75%. This payment shall be treated as a loan and Alara shall be entitled to 60% of all dividends in
favour of AHI until such time that 25% of the total amount required under the payment notices is repaid to Alara. If a Al Hadeetha shareholder’s
interest falls below 10%, that party shall (subject to Omani law) assign its dividend and voting rights to the other shareholder(s) in exchange for a
2% net smelter return on production payable by Al Hadeetha. Al Hadeetha is governed by a 3 member board of directors with 2 nominees
appointed by Alara (including the Chairman) and 1 nominees appointed by the Al Hadeetha Investments LLC (30% shareholder).
Directors' Deeds – The Company has entered into deeds of indemnity with each of its Directors indemnifying them against liability incurred in
discharging their duties as directors/officers of the Consolidated Entity. As at the reporting date, no claims have been made under any such
indemnities and accordingly, it is not possible to quantify the potential financial obligation of the Consolidated Entity under these indemnities.
Bayan Mining LLC JV Agreement – On 16 July 2015 Saudi Investments Pty Ltd (a wholly owned subsidiary of the Company) entered into a JV
agreement with Bayan Mining LLC. 40,000,000 shares are to be issued upon satisfaction of all of the conditions precedent, which includes the
granting of the Khnaiguiyah mining licence to Bayan or the JV.
Off-take agreement – Al Hadeetha Copper Gold Project – On 15 March 2017 Alara Oman Operations Pty Ltd (a wholly owned
subsidiary of the Company) entered into an off-take agreement for the supply of copper concentrate from the Al Hadeetha Project to
Statdrome Pte Ltd. Under the agreement, annual concentrate production of approximately 35,000 wmt will be shipped at regular intervals
from the Sohar port. There also exists the possibility of supplying the material to the Omani smelter in case it restarts. However, the project
financial model allows for sea freight and other charges associated with the sale of concentrate from the port at Sohar. The agreement
also includes a pre-payment of US$6 million to assist in funding project construction costs and mine start up, and will be drawn down in
instalments during the project construction phase, starting once the mining licence is issued.
25.
SUBSEQUENT EVENTS
The Directors are not aware of any matters or circumstances at the date of this Directors’ Report, other than those referred to in this Directors’ Report or the
financial statements or notes thereto, that have significantly affected or may significantly affect the operations, the results of operations or the state of affairs
of the Company and Consolidated Entity in subsequent financial years.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 42
Alara Resources Limited ABN: 27 122 892 719562017 Annual Report The Directors of the Company declare that:
1.
2.
3.
4.
5.
The Financial Statements, comprising the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated
Statement of Financial Position, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows and
accompanying notes as set out on pages 22 to 42, are in accordance with the Corporations Act 2001 and:
(a)
(b)
Comply with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
Give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2017 and of its performance for the year
ended on that date;
In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable;
The Remuneration Report disclosures set out (within the Directors’ Report) on pages 10 to 15 (as the audited Remuneration Report)
comply with section 300A of the Corporations Act 2001;
The Company has included in the notes to the Financial Statements an explicit and unreserved statement of compliance with the
International Financial Reporting Standards.
The Directors have received the declarations required to be made to the Directors by the Managing Director (the person who performs the
chief executive officer function) and Chief Financial Officer in accordance with section 295A of the Corporations Act 2001 for the financial
year ended 30 June 2017.
This declaration is made in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001.
Justin Richard
Managing Director
19 September 2017
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 43
Alara Resources Limited ABN: 27 122 892 719572017 Annual Report ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 44
Alara Resources Limited ABN: 27 122 892 719582017 Annual Report
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 45
Alara Resources Limited ABN: 27 122 892 719592017 Annual Report ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 46
Alara Resources Limited ABN: 27 122 892 719602017 Annual Report
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 47
Alara Resources Limited ABN: 27 122 892 719612017 Annual Report ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 48
Alara Resources Limited ABN: 27 122 892 719622017 Annual Report SAUDI ARABIA
Khnaiguiyah Zinc-Copper Project
The Khnaiguiyah Zinc-Copper Project18 is located approximately 170km south-west of the capital city Riyadh and 35km north-west of Al-
Quwayiyah, which is a regional centre located around the Riyadh to Jeddah Expressway.
The Khnaiguiyah Project previously comprised one mining licence, 2 exploration licences and 5 exploration licence applications, totalling
approximately 380km2 held or applied for by United Arabian Mining Company (“Manajem”). The two exploration licences expired and are
considered by Alara to be non-core to the Khnaiguiyah Project. The mining licence that was issued in December 2010, was cancelled in or about
December 2015, and is currently the subject of a legal appeal by Manajem.
As at the date of this report, a final appeal decision had not made, nor had the mining licence been reissued.
Project
Licence
Owner
Status
Tenement
Grant/ Application
Date
Area
Location/ Property
Name
Country
Khnaiguiyah Zinc-Copper
Project
TBC
Cancelled – appeal
decision pending
Mining Lease No 2.
Qaaf
2010
5.462km2
~170km west of
Riyadh
Saudi
Arabia
18 Refer to 18 April 2013 ASX Announcement: Maiden JORC Ore Reserves – Khnaiguiyah Zinc-Copper Project
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 49
Alara Resources Limited ABN: 27 122 892 719632017 Annual Report OMAN
Daris and Al Hadeetha Copper-Gold Projects
Alara has joint venture interests in five copper-gold deposits located within four Exploration Licences in Oman extending over 692km2. These
deposits are also covered by 5 Mining Licence applications pending grant, totalling ~9km2.
The Daris Copper-Gold Project19 is located ~170km northwest of Muscat (the capital of Oman). The Washihi/Mullaq20 prospects are located
~100km south-southeast of Daris. Both projects/prospects are located on or very close to high quality bitumen roads.
Al Hadeetha Copper-Gold Project
The current status of all licences/applications for this project is presented in the table below.
Licence
Name
Licence Owner
Alara JV
Interest
Exploration Licence
Area
Date of Grant
Date of
Expiry
Status
Area
Mining Licence within EL
Date of
Application
Status
Washihi
Al Hadeetha
Resources LLC
Mullaq
Al Hadeetha
Resources LLC
Al Ajal
Al Hadeetha
Resources LLC
70%
39km2
Jan 2008
Nov 2016
Active*
2.1km2
Dec 2012
Pending
70%
41km2
Oct 2009
Nov 2016
Active*
1km2
Jan 2013
Pending
70%
25km2
Jan 2008
Nov 2016
Active*
1.5km2
Jan 2013
Pending
*Pursuant to Ministerial decree (38/2013) which declares that the exploration licence ends when its duration ends, unless the licensee has submitted an application
for a mining licence, in which case the duration for the exploration licence extends until the date that a determination is made on the mining application.
Table 1: Washihi JORC Mineral Resources
Cu %
Cut off
0.20
0.25
0.30
0.40
0.50
Indicated Resource
Inferred Resource
Tonnes
(Million)
Copper (Cu)
%
Gold (Au)
g/t
Tonnes
(Million)
Copper (Cu)
%
Gold (Au)
g/t
12.40
12.39
12.37
12.16
11.39
0.89
0.89
0.89
0.90
0.93
0.22
0.22
0.22
0.22
0.23
3.74
3.71
3.68
3.54
2.98
0.78
0.79
0.79
0.81
0.88
0.23
0.23
0.23
0.24
0.25
19 Refer Alara’s 30 August 2010 ASX Announcement: Project Acquisition - Daris Copper Project in Oman
20 Refer Alara’s 8 December 2011 ASX Announcement: Project Acquisition - Al Ajal-Washihi-Mullaq Copper-Gold Project in Oman
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 50
Alara Resources Limited ABN: 27 122 892 719642017 Annual Report Table 2: Gossan Hill Mineralisation - Gold21
Cut off
Au g/t
Inferred Resource
Kilo Tonnes
(kt)
Gold (Au)
g/t
Ounces
k/Oz
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
439.00
420.31
405.58
346.93
307.60
274.40
257.40
220.48
197.79
147.82
0.41
0.42
0.43
0.48
0.51
0.54
0.55
0.58
0.60
0.64
5.74
5.69
5.63
5.31
5.03
4.73
4.55
4.09
3.79
3.02
Notes
1. Mineral Resources are not Mineral Reserves. There is no certainty that all or any part of the
Mineral Resources estimated will be converted into Mineral Reserves.
2. Mineral Resources reported in accordance with the JORC 2012.
3. Resource for Cu-Au is stated @ 0.25 % Cu cut-off grade; the mineral resource for gold in
the Gossan hill (outside main ore body) has been stated @ .25 g/t Au.
4. Mineral resource tonnages have been rounded to reflect the accuracy of the estimate.
5.
1 ounce of Au = 31.1035 grams.
Table 3: Summary of Washihi Copper Gold Mineral Resources @ 0.25% Cu Cut-off22
Resource
classification
Tonnes
Mt
Copper (Cu)
%
Gold (Au)
g/t
Indicated
Inferred
Grand total
12.4
3.71
16.1
0.89
0.79
0.87
0.22
0.23
0.22
Indicated Resources were converted to a Probable Ore Reserve after the application of modifying factors, including pit optimization, mine design
and an economic evaluation23.
The Ore Reserve estimate (based on a 0.3% Cu cut-off), and in pit mineral inventory are shown in Tables 4 and 5 below.
Table 4: Washihi Ore Reserve
Classification
Probable
Tonnes
Mt
9.7
Ore reserve
Copper (Cu)
%
Gold (Au)
g/t
0.88
0.22
Table 5: Washihi Mining Inventory
Classification
Ore reserve
Inferred resource
Total
Tonnes
Mt
Copper (Cu)
%
Gold (Au)
g/t
9.7
0.35
10.05
0.88
0.65
0.87
0.22
0.22
0.22
21 Refer Alara’s 19 September 2016 ASX Announcement
22
23
Refer Alara’s 15 December 2016 ASX Announcement: Maiden JORC Ore Reserves – Al Hadeetha Copper-Gold Project
Detail of the modifying factors supporting the Ore Reserve are contained in Appendix 1 (JORC Code, 2012 Edition - Table 1) of the 15 December announcement.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 51
Alara Resources Limited ABN: 27 122 892 719652017 Annual Report
Daris Copper-Gold Project
The current status of all licences/applications for this project is presented in the table below.
Block
Name
Licence Owner Alara JV Interest
Exploration Licence
Mining Licences within EL
Area
Date of
Grant
Date of
Expiry
Status
Area
Date of
Application
Status
Block 7
Al Tamman
Trading and Est.
LLC
50%
587km2
Nov 2009
Feb 2016
Active*
Daris East
3.2km2
Daris 3A-5
1.3km2
Dec 2012
Pending
*Pursuant to Ministerial decree (38/2013) which declares that the exploration licence ends when its duration ends, unless the licensee has submitted an application
for a mining licence, in which case the duration for the exploration licence extends until the date that a determination is made on the mining application.
Table 6: Daris-East JORC Mineral Resources
Ore type
Cut-off
grade
Cu%
Sulphides
Oxides
0.5
0.5
Measured
Indicated
Tonnes
Cu%
Gold
(Au)
g/t
Tonnes
Cu%
Gold
(Au)
g/t
Measured and
Indicated
Tonnes
Cu%
Inferred
Tonnes
Cu%
Gold
(Au)
g/t
Gold
(Au)
g/t
129,155
2.48
0.23
110,870
2.24
0.51
240,024
2.37
0.43
30,566
2.25
0.55
96,526
0.77
0.03
86,839
0.66
0.14
183,365
0.72
0.08
1,712
0.61
0.97
The information in these JORC Resource tables was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the
JORC Code 2012 on the basis that the information has not materially changed since it was last reported.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 52
Alara Resources Limited ABN: 27 122 892 719662017 Annual Report JORC Competent Persons Statements
The information in this announcement that relates to the feasibility study of the Al Hadeetha Copper-Gold project is based on information compiled by Mr Shanker
Madan, who is a Member of the Australasian Institute of Mining and Metallurgy, and consultant to Alara Resources. Mr Madan has sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking to qualify as a Competent Person as defined in the
JORC Code, 2012 edition. Mr Madan consents to the inclusion in the announcement of the matters based on his information in the form and context in which it
appears.
The information in this announcement that relates to Ore Reserve of the Al Hadeetha Project was compiled by Mr Harry Warries, who is a Fellow of the Australasian
Institute of Mining and Metallurgy, and a consultant to Alara Resources. Mr Warries has sufficient experience which is relevant to the style of mineralisation and type
of deposit under consideration, and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ In assessing the appropriateness of the Ore Reserve estimate, Mr Warries has relied on
various reports, from both internal and external sources, in either draft or final version, which form part of or contribute to the Al Hadeetha Project Feasibility Study.
These reports are understood to be compiled by persons considered by Alara to be competent in the field on which they have reported. Mr Warries consents to the
inclusion in the report of the information in the form and context in which it appears.
The information in this announcement that relates to JORC Resources of the Daris Copper Gold Project and the Al Hadeetha Copper-Gold Project (Oman) are based
on, and fairly represents, information and supporting documentation prepared by Mr Ravi Sharma, who is a Chartered Member of The Australasian Institute of Mining
and Metallurgy, Registered Member of The Society for Mining, Metallurgy and Exploration. Mr Sharma was a principal consultant to Alara Resources and has
sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking to qualify as a
Competent Person as defined in the JORC Code, 2012 edition. Mr Sharma approves and consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
Forward Looking Statements
This report contains “forward-looking statements” and “forward-looking information”, including statements and forecasts which include without limitation, expectations
regarding future performance, costs, production levels or rates, mineral reserves and resources, the financial position of Alara, industry growth and other trend
projections. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “is expecting”, “budget”,
“scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes”, or variations (including negative variations) of such words and phrases, or state that certain
actions, events or results “may”, “could”, “would”, “might”, or “will” be taken, occur or be achieved. Such information is based on assumptions and judgements of
management regarding future events and results. The purpose of forward-looking information is to provide the audience with information about management’s
expectations and plans. Readers are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of Alara and/or its subsidiaries to be materially different from any future results, performance or achievements
expressed or implied by the forward-looking information. Such factors include, among others, changes in market conditions, future prices of gold and silver, the actual
results of current production, development and/or exploration activities, changes in project parameters as plans continue to be refined, variations in grade or recovery
rates, plant and/or equipment failure and the possibility of cost overruns.
Forward-looking information and statements are based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its
experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and
reasonable in the circumstances at the date such statements are made, but which may prove to be incorrect. Alara believes that the assumptions and expectations
reflected in such forward-looking statements and information are reasonable. Readers are cautioned that the foregoing list is not exhaustive of all factors and
assumptions which may have been used. Alara does not undertake to update any forward-looking information or statements, except in accordance with applicable
securities laws.
ALARA RESOURCES LIMITED
2017 FULL YEAR REPORT | 53
Alara Resources Limited ABN: 27 122 892 719672017 Annual Report
Securities Information
as at 9 October 2017
Issued Securities
Fully paid ordinary shares
Total
At a general meeting of shareholders:
Quoted on ASX
597,517,589
597,517,589
(a) on a show of hands, each person who is a member or sole proxy has one vote; and
(b) on a poll, each shareholder is entitled to one vote for each fully paid share.
Unlisted
-
-
Total
597,517,589
597,517,589
Summary of Directors’ and Employees’ Unlisted Options
Description of Unlisted Options
Date of Issue
$0.04 (9 Mar 2020) Options
9 March 2017
Exercise Price Expiry Date
$0.04 9 March 2020
Vesting Criteria8 № of Options
3,000,000
None
Distribution of Listed Ordinary Fully Paid Shares
Spread of Holdings
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Holders
893
295
142
368
292
1,990
Number of Units
303,663
697,690
1,182,992
14,747,444
580,585,800
597,517,589
% of Total Issued Capital
0.051%
0.117%
0.198%
2.468%
97.166%
100%
Unmarketable Parcel
Minimum $500.00 parcel at $0.016 per unit
Minimum parcel size
31,249
Holders
1,507
Units
5,580,144
Top 20 Listed Ordinary Fully Paid Shareholders
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
* Substantial shareholders
Shareholder
Ms Meng Meng*
Mr Vikas Jain*
Mr Justin Richard* & Mrs Debbie Ann Richard
Metals Corners Holding Co*
Citicorp Nominees Pty Limited
Mr Mul Chand Malu
Mr Vikas Malu
Inkese Pty Ltd / Mr Jay Hughes & Mrs Linda Hughes
Mr Piyush Jain
Whitechurch Developments Pty Ltd
HSBC Custody Nominees (Australia) Limited
My Tyrone James Giese
Mr Warren William Brown & Mrs Marilyn Helena Brown
Flannery Foundation Pty Ltd / Mr Brian Joseph Flannery & Mrs Peggy Ann Flannery
Mr Peter Kelvin Rodwell
BNP Paribas Nominees Pty Ltd
Baron Nominees Pty Ltd
Ferguson Superannuation Pty Ltd
Mrs Liliana Teofilova
Thorpe Road Nominees Pty Ltd
On-Market Buy Back
There is no current on-market buy back.
8 Options which have vested may be exercised at any time thereafter, up to their expiry date.
Shares Held
38,521,027
34,285,230
30,757,037
30,500,000
29,007,631
28,571,025
28,571,025
27,060,532
22,856,820
20,575,550
17,602,933
15,742,199
10,628,572
10,085,464
9,142,858
8,108,873
6,860,397
6,500,000
5,778,200
5,622,858
386,778,231
Issued Capital
6.447%
5.738%
5.147%
5.104%
4.855%
4.782%
4.782%
4.529%
3.825%
3.444%
2.946%
2.635%
1.779%
1.688%
1.530%
1.357%
1.148%
1.088%
0.967%
0.941%
64.732%
Alara Resources Limited ABN: 27 122 892 719682017 Annual Report
Corporate Directory
ASX Code:
ABN:
AUQ
27 122 892 719
Registered Office and Business Address
Level 11, London House
216 St Georges Terrace
Perth, Western Australia 6000
PO Box 1227
West Perth WA 6872
Telephone:
E-mail:
Website:
+61 8 9322 3383
info@alararesources.com
www.alararesources.com
Auditors
Bentleys Audit & Corporate (WA) Pty Ltd
Level 3, London House
216 St Georges Terrace
Perth, Western Australia 6000
Telephone:
Facsimile:
Website:
+61 8 9226 4500
+61 8 9226 4300
www.bentleys.com.au
Australian Securities Exchange
ASX Limited
Level 40, Central Park
152-158 St Georges Terrace
Perth, Western Australia 6000
Directors
James Phipps
Justin Richard
Atmavireshwar Sthapak
Vikas Jain
Ian Gregory
Company Secretary
Ian Gregory
Non-Executive Chairman
Managing Director
Executive Director
Non-Executive Director
Alternate Director
Share Registry
Advanced Share Registry Services
110 Stirling Highway
Nedlands, Western Australia 6009
Telephone:
Facsimile:
+61 8 9389 8033
+61 8 9262 3723
Level 6, 225 Clarence Street
Sydney, New South Wales 2000
Telephone:
E-mail:
Website:
+61 2 8096 3502
admin@advancedshare.com.au
www.advancedshare.com.au
Corporate Governance Statement
Alara’s Corporate Governance Statement is available on the Company’s website: www.alararesources.com.
Investors wishing to receive e-mail alerts of all Company ASX Announcements can register their interest here:
http://www.alararesources.com/irm/UserEdit.aspx?masterpage=7&title=Email%20Alerts&RID=317
or by e-mailing info@alararesources.com.
By the way, Alara was the father of the Napatan royal dynasty. As King of Kush, he was
responsible for unifying the upper kingdom and establishing Napata as the capital, with
base and precious metals becoming an important part of the city’s flourishing economy.
Alara Resources Limited ABN: 27 122 892 719692017 Annual Report