Altura Mining Limited Annual Report 2018

Plain-text annual report

Annual Report 2018 CORPORATE DIRECTORY DIRECTORS James Brown – Managing Director Paul Mantell – Executive Director Allan Buckler – Non-Executive Director Dan O’Neill – Non-Executive Director Beng Teik Kuan – Non-Executive Director Zhao Tong – Non-Executive Director COMPANY SECRETARY Damon Cox REGISTERED OFFICE Level 2, 23 Barrack Street Perth WA 6000 Telephone: +61 8 9488 5100 Facsimile: +61 8 9488 5199 Email: cosec@alturamining.com Website: www.alturamining.com AUDITORS PKF Hacketts Audit Level 6, 10 Eagle Street Brisbane QLD 4000 SHARE REGISTRY Link Market Services Limited Level 12, QV1 Building 250 St George’s Terrace Perth WA 6000 AUSTRALIAN SECURITIES EXCHANGE Code: AJM Contents 1 2 A Letter from the Managing Director 5 Review of Operations 13 Directors’ Report 23 Auditors’ Independence Declaration 25 Financial Statements 26 Consolidated Statement of Profit and Loss 27 Consolidated Statement of Other Comprehensive Income 28 Consolidated Balance Sheet 29 Consolidated Statement of Changes in Equity 30 31 Consolidated Statement of Cash Flows Notes to the Financial Statements 76 Directors' Declaration 77 Independent Auditor’s Report to the Members 83 Additional ASX Information 86 Mineral Resources and Ore Reserves Statement ANNUAL REPORT 2018 ALTURA2 DEAR SHAREHOLDER, I AM EXTREMELY PROUD TO BE PRESENTING YOU WITH THE 2018 ANNUAL REPORT FOR ALTURA MINING LIMITED. The past year has been transformational for your Company as we made the move from project developer to lithium miner. We are now an integral part of the supply chain for the lithium ion battery revolution that is changing the way we view energy storage. It is humbling to think that a little piece of the Altura Lithium Project could one day end up in the battery for your mobile phone, laptop, electric vehicle or the storage batteries attached to your rooftop solar system. On 5 September 2018, Altura welcomed the Hon Bill Johnston MLA, Western Australia’s Minister for Mines and Petroleum, State and Local Government representatives, traditional land owners, Altura employees, contractors, suppliers, financers and investors at the official opening of the Altura Lithium Project. Guests were given a guided tour of the project, before Minister Johnston officially opened the mine. Achieving production and sales of lithium concentrate in just over 18 months from breaking ground is a remarkable achievement for any mining project. Your Company deliberately set an aggressive timetable and our team of employees and contractors stepped up to that challenge. Moving quickly was critical for us to be in a strong position to benefit from the rapidly growing lithium market. As at the date of this report, the Project was continuing its production ramp-up and I am confident we will be able to reach nameplate capacity in coming months. Our spodumene concentrate has proven itself as a quality product with the plant consistently delivering at or above the required technical specifications. ALTURA ANNUAL REPORT 20183 Our focus remains firmly on the Stage 1 ramp-up. Reaching nameplate capacity and ensuring the efficient running of the plant will be the key to delivering shareholder value. During the year we also completed a Definitive Feasibility Study on a Stage 2 expansion that would double production capacity to approximately 440,000 tonnes. The results of this study were extremely positive and showed a robust return could be delivered through further investment in production. In due course, your Board will make a decision on pursuing the Stage 2 expansion. In the meantime we continue with our regional exploration programs that have continued to cement Pilgangoora as a world-class orebody. In particular, the positive results from the Southern Ridge area contributed to an increase in the Resource and Reserves at the Project. We continue to be buoyed by the long-term outlook for lithium as the electric revolution gathers pace. All commodities experience fluctuations and occasional volatility in pricing and lithium is no different. Given that, we try to remain focussed on the long-term demand outlook, which we see as positive, and ensuring that our production costs remain globally competitive. We continue to field enquiries from potential offtake partners, with particularly strong demand for our high-grade lithium coming from north Asia. The continued hard work by the Altura team and the growth in the company was recognised during the past 12 months when the Company was added to the S&P/ ASX 300 index. The success that Altura has experienced and will continue to experience could not have occurred without the loyal support of our shareholder base. There have been several challenges during the past year, and we appreciate the support shareholders have given us. The Board and management continue to focus on growing the business and delivering positive shareholder value. I would like to thank my fellow Board members, the management and entire Altura team both in Perth and on site, for their tremendous efforts. There is a lot to look forward to over the next 12 months as we continue on this exciting journey. James Brown Managing Director ANNUAL REPORT 2018 ALTURA4 ALTURA ANNUAL REPORT 20185 Review of Operations ANNUAL REPORT 2018 ALTURA6 Altura Lithium Project ALTURA MINING LIMITED IS PLEASED TO PROVIDE ITS ANNUAL REVIEW OF OPERATIONS FOR THE 2018 FINANCIAL YEAR. Altura owns and operates its world-class Altura Lithium Project (“Project”) located at Pilgangoora in the Pilbara region of Western Australia. Production and shipment of quality spodumene concentrate has recently commenced from the Project, which boasts a nameplate production capacity of 220,000 tonnes per annum (tpa). batteries for electric vehicles and static storage uses. The development of the Project from the breaking of ground, to production and shipment in just 18 months is a remarkable achievement by the Company, and will allow the delivery of positive shareholder returns over the coming years. With the commencement of production, Altura is now a key player in the global lithium market, and is leveraging the increasing demand for raw materials for the manufacturing of lithium ion PROJECT LOCATION The Altura Lithium Project is located approximately 90 km south of Port Hedland (see map below), with road access to the site via the Great Northern Highway and then Shire roads and station tracks. Altura’s two mining lease tenements are M45/1230 and M45/1231, and cover a total area of 394 hectares. N PORT HEDLAND d a Ro rr a a Great N o r t h e r n H ig hway g n i p p i P P P o r t E45/5136 H e d l a n d – W Port Hedland ALTURA LITHIUM PROJECT Kalgoorlie Perth N o r t h West Coastal Highway 90km E45/5137 Marble B ar Road E45/5280 E45/2277 itte n o o m R o ad 20km E45/2287 E45/2287 ALTURA LITHIUM PROJECT E45/3488 L45/409 New Camp Wodgina Airport Wodgina Mine M45/1260 M45/1230 E45/2363/1 E45/5348 E45/5347 E45/4894 M45/1231 L45/448 E45/2363-1 ALTURA ANNUAL REPORT 2018 Altura Lithium Project continued 7 PROJECT OVERVIEW Mining at the Altura Lithium Project commenced in May 2017 using open pit methods, with the deposit being characterised by shallow and thick mineralisation. Since early exploration and mining work, the project has developed mining, processing, logistics and support infrastructure to mine and process an average 1.54 million tonnes per annum (Mtpa) of lithium ore to produce approximately 220,000 tonnes of lithium spodumene concentrate annually. The deposit has a low Life of Mine (LOM) strip ratio of 2.9:1 providing Altura with an extremely low operational mining cost. PROJECT DEVELOPMENT Over the past 12 months the Company has been focused on the construction and commissioning of both the mine and process plant, in preparation for commencement of Stage 1 production at the Altura Lithium Project. procurement, delivery and construction of numerous major components including: • Run-of-Mine (ROM) pad • Tailings Storage Facility (TSF) • Power Station • Crushing and Screening plant • High Pressure Grind Rolls (HPGR) and Ball Mill • Dense Media Separation (DMS) modules • Flotation Circuit • Mine Operations Centre (MOC) • Water bores and pipelines • Raw Water Dam and Water Treatment Plant (Reverse Osmosis) • Metallurgy Laboratory • Product Storage Shed in Port Hedland (built and owned by Qube). Mining operations were also established, and these comprised: The following key milestones were completed in the past 12 months: • Mobilisation of the mining, drill and blast fleet • First crushing of ore in May 2018 • First production of lithium • Development of the mining pit, consisting of 3 main areas concentrate in late July 2018 • Loading and haulage of • First haulage from the mine site to the Qube storage facility in Port Hedland in August 2018 • Formal opening of the Altura spodumene ore to ROM pad and ROM stockpiles • Removal of waste rock to the waste rock dump Lithium Project on 5 September 2018 • Construction of workshop and mining contractor facilities. haulage of product from the mine to the Qube storage shed in Port Hedland commencing a fortnight later on 8 August 2018. Stockpiles at the Qube facility then steadily increased in advance of the first shipment of lithium concentrate from Port Hedland. The first cargo of approximately 5,000 dry metric tonnes departed the port of Port Hedland on 9 October 2018 on the vessel “MV Clipper Tenacious” bound for China, and was purchased by offtake partner, Lionergy Limited. FORMAL OPENING OF THE MINE Altura was pleased to welcome the Hon Bill Johnston MLA, Minister for Mines and Petroleum to the Altura Lithium Project at Pilgangoora on 5 September 2018, as the Minister officially opened the mine. The event was attended by State and Local Government representatives, traditional land owners, Altura employees, contractors, suppliers, financiers and investors. Altura acknowledges the contributions of all of these parties in bringing the Project into production. OFFTAKE AGREEMENTS Altura has in place two binding offtake agreements (BOA) for a minimum total of 200,000 tonnes of 6% grade spodumene concentrate per year, representing more than 90% of current planned Stage 1 annual production. The key terms of the BOA’s are: • First shipment of lithium concentrate to Altura’s offtake partner Lionergy in early October 2018. The construction phase of the Project has involved the design, PRODUCTION AND FIRST SHIPMENT Production of coarse concentrate at the Altura Lithium Project began on 25 July 2018 with the first • Minimum of 100,000 dry metric tonnes (dmt) per annum of 6% grade spodumene concentrate ANNUAL REPORT 2018 ALTURA• LOM revenue of A$4.377B and LOM EBITDA of A$2.473B over the estimated 13-year mine life • Capital estimate of A$118 million (exclusive of Stage 1 capital costs) • Payback period of 2.3 years Importantly, the Company already has all major statutory approvals in place which significantly de- risks the execution of the Stage 2 project. Altura’s board has endorsed the findings of the Stage 2 DFS, but will review the Stage 1 operations and ramp-up to nameplate production before making a final investment decision on Stage 2. For further information on the Stage 2 DFS, please refer to the ASX Release on 30 April 2018. 8 Altura Lithium Project continued • Term of BOA of 5 years minimum • Minimum price of US$550 dmt (FOB) and a maximum price of US$950 dmt (FOB) for the first three years of the BOA (based on Li2O content per dmt on 6% Li2O) • Annual pricing to be agreed via consideration of current market pricing information, including but not limited to indices for spodumene (if available); prices published or announced by other companies and movement in lithium carbonate prices, subject to the floor and ceiling price for first three years. Altura continues to engage with other potential offtake partners and is still seeing strong demand from North Asia. KEY SUPPLY CONTRACTS Altura has several key supply contracts in place for its operations. MINING NRW Holdings Limited has a five- year contract to perform mining, drilling and blasting services, which also included the construction of mining infrastructure prior to mining commencing. NRW mines the deposit by conventional bulk mining methods utilising hydraulic excavators, dump trucks and drill and blasting. Ore is trucked directly from the blasted faces to the ROM stockpile and fed to the primary crusher using front-end loaders. TRANSPORT AND LOGISTICS The scope of the work under the contract involves loading the product at the mine site and transporting the product in side tipping road trains to Port Hedland. Qube has also constructed a dedicated storage shed in Wedgefield, Port Hedland, and transports the product to the port and ship loading using the patented Rotabox™ system. POWER GENERATION Kalgoorlie Power Systems (KPS), a wholly owned subsidiary of Pacific Energy Limited, has been contracted to provide an 11MW diesel fuelled power station for a five-year period. The power station comprises dual fuel diesel/gas generators that will allow opportunities for cleaner and more cost-efficient gas to be utilised in the future should a suitable source become available. STAGE 2 DEFINITIVE FEASIBILITY STUDY Altura released a Stage 2 Definitive Feasibility Study (DFS) in April 2018 with the results showing that a duplication of the Stage 1 operations and processing plant would significantly add to the project’s overall value. The key outcomes of the DFS were: • Combined Stage 1 and 2 Project Net Present Value (NPV) of $834 million over a 13-year mine life based on an ore reserve estimate of 34.2 million tonnes Qube Holdings Pty Ltd is the logistics and transport supplier for the Project. • Life of Mine (LOM) cash cost of A$324 per tonne of spodumene concentrate ALTURA ANNUAL REPORT 2018Altura Lithium Project continued STAGE 2 DFS – KEY RESULTS* Description Average Annual Ore Feed to Plant (LOM) Total Ore Mined Annual Spodumene Concentrate Production (6% Li2O) Life of Mine (LOM) Total Spodumene Concentrate Produced LOM Strip Ratio Spodumene Concentrate Average Market Price1 Capital Cost Estimate2 Total Revenue Project EBITDA3 Total Cash Cost FOB/tonne product4 Net Present Value (NPV)5 Internal Rate of Return (IRR) Discount Rate Project payback period Exchange Rate 9 Units Mtpa Mt tonnes years Mt waste:ore US$/wmt A$M A$M A$M A$ A$M % % years AUD:USD Results 3.08 34.21 440,000 13 4.75 3:1 690 118 4,377 2,473 324 834.6 62.6 10 2.3 0.7500 1. Price based on FOB forecast equivalent – refer to Market and Pricing section 2. Excluding sustaining capital 3. EBITDA is listed on a real basis 4. Total Cash Cost FOB/tonne product are defined as all cash costs to free on board, excluding royalties, interest, tax and depreciation 5. Net Present Value (NPV) is post-tax nominal basis, at a 10% discount rate *The Company confirms that all the material assumptions underpinning the Stage 2 DFS continue to apply and have not materially changed. ANNUAL REPORT 2018 ALTURA10 Altura Lithium Project continued UPGRADED ORE RESERVE AND MINERAL RESOURCE ESTIMATES During the year Altura released two increased revisions to its Ore Reserve and Mineral Resource estimates. Under the latest revision released in May 2018, the Altura lithium deposit has: • An Ore Reserve estimate of 41.1 million tonnes at 1.05% Li2O (with 432,000 tonnes of contained Li2O); and • A Mineral Resource estimate of 50.5 million tonnes at 1.01% (with 512,000 tonnes of contained Li2O). The most recent estimate was calculated after the completion of a drill program in the Southern Ridge Deposit area conducted in the March quarter 2018. The increased estimate, which was not part of the Stage 2 DFS inputs, has added a minimum of 2 years to the project. The Ore Reserve and Mineral Resource estimation work was undertaken by geological and mine engineering services consultants, Cube Consulting Pty Ltd. ORE RESERVE ESTIMATE – MAY 2018 JORC category Proved Probable Total Cut-off Li2O % Ore (million tonnes) 0.43% 0.43% 0.43% 8.3 32.8 41.1 Li2O (%) 1.14 1.03 1.05 MINERAL RESOURCE ESTIMATE – MAY 2018 JORC category Measured Indicated Sub-total Inferred Total Cut-off Li2O % Ore (million tonnes) 0.40% 0.40% 0.40% 0.40% 0.40% 8.7 38.0 46.7 3.8 50.5 Li2O (%) 1.12 1.00 1.02 0.92 1.01 Fe2O3 (%) 2.13 1.90 1.95 Fe2O3 (%) 2.14 1.93 1.97 1.80 1.96 Contained Li2O (tonnes) 94,000 338,000 432,000 Contained Li2O (tonnes) 97,000 380,000 477,000 35,000 512,000 For further information on both the Ore Reserve and Mineral Resource estimates, please refer to the ASX announcement on 28 May 2018. COMMUNITY ENGAGEMENT Over the past 18 months Altura has employed around 1,000 personnel and has contributed to improving public roads and infrastructure in and around Port Hedland. The Company has worked alongside local organisations and their various sponsorship requirements and engaged with various indigenous communities to provide employment and business opportunities. Altura looks forward to continuing its work with local and indigenous communities. ALTURA ANNUAL REPORT 201811 • The Tabalong coal project in South Kalimantan in which Altura holds a 70% interest in three Mining Permits (“SPK”, “SCC” and “SP”) and a 56% interest in two Mining Licences (“KM” and “MBM”). In June 2018 Altura divested its one-third interest in the Delta coal mine and associated infrastructure. There was no cash consideration in the transaction, and Altura holds no future rights relating to the Delta coal mine. Corporate developments Key corporate developments during the year included: PROJECT FUNDING LOAN NOTE FACILITY Altura announced in July 2017 that it had secured a US$110 million loan note facility to enable the completion of the construction and commissioning of the mine and process plant for the Stage 1 operations. The key details of the facility are: • Senior secured loan notes issued raising a total of US$110 million • Leading US and Swiss based investment management groups provided the loan note facility package • Funding comprised two tranches with Tranche 1 (approximately US$33 million) received in early August 2017 and Tranche 2 (US$77 million) received in late September 2017 In September 2018 the Company advised that it had entered into an Amendment Deed with its loan note holders to be provided with an additional US$15 million for the Altura Lithium Project. The terms of the Amendment Deed are in line with the existing US$110 million loan note facility. WARRANTS AND OPTIONS The terms of the debt facility also provided for the issue of warrants to the loan note holders participating in the US$110 million loan note facility. Unlisted options were also issued to Jett Capital Partners as part of their fee arrangements in the negotiating of the loan note facility. Both the warrants and options were approved by shareholders at the 2017 annual general meeting. To date, the exercising of these warrants and options has generated proceeds of A$9.8 million for the Company. SHARE PLACEMENT WITH INTERNATIONAL FUND MANAGERS A $26 million share placement to international institutional investors, led by Jett Capital Advisors and Bizzell Capital Partners Pty Ltd was successfully completed in October 2017. S&P/ASX 300 INDEX Effective from 19 March 2018, Altura was added to the list of companies that comprise the S&P/ ASX 300 Index. This follows the elevation in March 2017 into the ASX All Ordinaries Index (for the top 500 companies). This latest change places Altura in the top 300 companies listed on the ASX and reflected the company’s growing market capitalisation. INDONESIAN COAL ASSETS Altura has previously decided to divest the Indonesian coal assets, and has been pursuing several options including their possible sale or an asset integration with other similar operations. These coal assets comprise: • The Delta coal mine in East Kalimantan where Altura has a 331/3% interest; and ANNUAL REPORT 2018 ALTURA12 ALTURA ANNUAL REPORT 201813 Directors' Report ANNUAL REPORT 2018 ALTURA14 Directors' Report YOUR DIRECTORS HAVE PLEASURE IN PRESENTING THE ANNUAL FINANCIAL REPORT OF ALTURA MINING LIMITED ("ALTURA" OR "THE COMPANY") AND ITS CONTROLLED ENTITIES (“THE GROUP”) FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018. DIRECTORS The names of the directors in office at any time during or since the end of the financial year are: • Mr James Brown • Mr Paul Mantell • Mr Allan Buckler • Mr Dan O’Neill • Mr Beng Teik Kuan • Mr Zhao Tong COMPANY SECRETARY The name of the secretary in office during the financial year and up to the date of this report is as follows: • Mr Damon Cox PRINCIPAL ACTIVITIES The principal activity of the Group during the year was the construction of the mine and processing plant at Altura’s 100% owned Pilgangoora Lithium Project in the Pilbara region of Western Australia. OPERATING AND FINANCIAL REVIEW focused on the construction and commencement of operations of the Altura Lithium Project in the Pilbara region of Western Australia. OPERATING RESULTS The Group’s operating loss after providing for income tax and non-controlling interests for the year ended 30 June 2018 was $12,816,965 (2017: loss $6,165,006). The loss in 2018 related to the Group’s administrative and corporate costs and a net foreign exchange loss in the year. Exploration, commissioning, evaluation and development costs of the Pilgangoora Lithium Project were capitalised during both the 2018 and 2017 financial years. STRATEGY The Company’s objective is to create shareholder value through the development of profitable mining operations and other supplementary mining activities that deliver strong cash flows for the Group, and resultant regular dividends for shareholders. Altura is focused on achieving name plate production from its Altura lithium project, with first sales due to commence during Q3 of calendar 2018. The Company has also completed a Definitive Feasibility Study (DFS) for a Stage 2 expansion of the lithium project, which it plans to commence as soon as practical. The Company also holds coal assets in Indonesia which it is in the process of divesting as soon as reasonably possible. OVERVIEW PILGANGOORA LITHIUM Altura Mining Limited (“AJM”) is an ASX listed entity that is During the year Altura continued with its construction and commissioning of the mine and process plant for Stage 1 of the Pilgangoora Lithium Project. The major components of the construction phase included: • Run-of-Mine (ROM) pad • Tailings Storage Facility (TSF) • Power Station • Crushing and Screening plant • High Pressure Grind Rolls (HPGR) and Ball Mill • Dense Media Separation (DMS) module • Flotation Circuit • Mine Operations Centre • Water bores and pipelines • Raw Water Dam and Water Treatment Plant (Reverse Osmosis) • Metallurgy Laboratory • Product Storage Shed in Port Hedland (built and owned by Qube). Mining operations were also established, and these comprised: • Mobilisation of the mining, drill and blast fleet • Development of the mining pit, consisting of 3 main areas • Loading and haulage of spodumene ore to ROM pad and ROM stockpiles • Removal of waste rock to the waste rock dump • Construction of workshop and mining contractor facilities Altura has also completed its Stage 2 Definitive Feasibility Study (DFS) in April 2018 with the results ALTURA ANNUAL REPORT 2018Directors' Report continued 15 confirming the robust economics of the project. The key outcomes of the Stage 2 DFS included: • Duplication of the Stage 1 processing plant to produce 440,000 tpa of 6% Spodumene; • Post-tax NPV (1) of A$834 million, an IRR of 63% and a 2.3 year pay back; • Life of Mine (LOM) revenue set to be A$4.377 billion with LOM EBITDA (2) of A$2.473 billion over an estimated mine life of 13 years; • Estimated capital cost of $A119 million (exclusive of Stage 1 capital costs); • Stage 2 project significantly de-risked by having all major statutory approvals, key personnel and contractors in place to commence production; and • First product from expansion expected 18 months after Final Investment Decision. Subsequent to the release of the Stage 2 DFS, Altura announced in May 2018 an increased Ore Reserve of 41.1 million tonnes at 1.05% Li2O which adds a minimum of 2 years to the estimated mine life. With first production and shipments due in the second half of calendar 2018, Altura has entered into a number of important contracts with key suppliers: 1. A 5-year mining contract has been signed with NRW. The deposit will be mined by conventional bulk mining methods utilising hydraulic excavators, dump trucks and drill and blast coupled to a ROM stockpile. 2. The logistics and transport supplier is Qube Holdings Pty Ltd. The scope includes loading of the product at the mine stockyard, transporting the product in side tipping road trains to Port Hedland, construction and operation of a product storage shed at Port Hedland, and transport to the port and ship loading using the patented Rotabox™ system. 3. Kalgoorlie Power Systems has been contracted to provide an 11MW diesel fuelled power station for a 5-year period. The power station comprises dual fuel diesel and gas generators such that opportunities for cleaner and more cost-efficient gas may be utilised in the future should a suitable source be available. The Company has in place two Binding Offtake Agreements (BOAs) with China based groups Shaanxi J&R Optimum Energy Co Ltd and Lionergy Limited, in which the parties will each take a minimum of 100,000 tonnes of 6% Li2O grade spodumene concentrate annually for an initial 5-year period. Annual pricing will be agreed with reference to current market pricing information, including but not limited to prices published or announced by other companies in the market, movement in carbonate pricing and with reference to any indices that may become available in the future. For the first 3 years of the BOAs, there is a floor price of US$550 per tonne of 6% spodumene, and there is also a ceiling price of US$950 per tonne for the same period, the floor price being very important from the Company’s perspective to ensure that it can repay its loan on the project in the next three years. COAL ASSETS Delta Coal On 14 June 2018 Altura divested its one-third investment in the Delta coal mine and associated infrastructure. There was no cash consideration in the transaction. The Group holds no future rights relating to the Delta coal mine. Tabalong Coal The Tabalong Coal Project is a premium grade thermal coal deposit located in South Kalimantan, Indonesia. The project consists of five Mining Licences (IUPs), with all five IUPs granted for Operation Production. Altura holds 70% of three IUPs and 56% of the remaining two. The Company has previously stated its intention to divest its interests in Tabalong coal assets. It is pursuing a number of options for sale of the coal assets and information has been made available to a number of parties under confidentiality deed arrangements. Financial position The net assets of the consolidated group increased in 2018, with non- current assets significantly higher due to the construction phase of the Lithium Project. During the year funds were sourced from a funding facility of US$110 million and a $26 million placement. Risk Development of Altura’s lithium project is subject to the ability of the Company and its advisors to successfully complete commissioning and ramp up to full production capacity of the project in a timely manner. ANNUAL REPORT 2018 ALTURA16 Directors' Report continued The Company is also subject to movements in international commodity prices, and being an Australian based company, foreign exchange movements. DIVIDENDS There were no dividends paid or declared during the year ended 30 June 2018 (2017: Nil). SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no other significant changes in the nature of the Group’s principal activities during the financial year, other than as discussed in the financial report and elsewhere in this Directors Report. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR Subsequent to the end of the financial year, Altura entered into an amendment deed with existing Loan Note Holders for an additional US$15 million of debt funding as an extension to the existing debt facility (see ASX announcement of 11 September 2018). The terms of the facility are generally in line with the existing US$110 million senior secured loan note facility that was executed in July 2017 (see ASX announcement on 28 July 2017). Altura will use the additional funds as it ramps-up production to nameplate capacity at the Altura Lithium Project, continued exploration of the Company’s portfolio of tenements and ongoing work on the Stage 2 expansion. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES The Group will focus on completing the commissioning of the Pilgangoora Lithium Project and achieving full commercial operations as soon as possible. The Group intends to divest is interests in the Tabalong coal projects as soon as practical so it can focus on its lithium project. ENVIRONMENTAL PERFORMANCE The Group is committed to achieving a high standard of environmental performance and is subject to significant environmental regulation form both Commonwealth and State legislation in Australia to its mining, development and exploration activities. The Board of Directors is responsible for regular monitoring of environmental exposures and compliance with these environmental regulations. The Group complied with its environmental performance obligations during the year. INFORMATION ON DIRECTORS MR JAMES BROWN (MANAGING DIRECTOR) Qualifications Graduate Diploma in Mining from University of Ballarat. Experience Mr Brown is a mining engineer with over 35 years' experience in the mining industry in Australia and Indonesia, including the last 10 years in the chief executive role at Altura. His mining development and operations experience includes the New Acland and Jeebropilly mines in South East Queensland, the Adaro and Multi Harapan Utama operations in Indonesia and Blair Athol in the Bowen Basin in Central Queensland. Other current directorships in listed entities • Sayona Mining Limited Former directorships in last three years • None Special responsibilities • Chief Executive Officer Interests in shares and performance rights • 28,518,301 ordinary shares in Altura Mining Limited • 2,000,000 performance rights over shares in Altura Mining Limited MR PAUL MANTELL (EXECUTIVE DIRECTOR) Qualifications Bachelor of Commerce from the University of Queensland and a Fellow of CPA Australia. Experience Mr Mantell is an accountant with more than 35 years’ corporate experience in the mining and associated industries. He has been involved in all aspects of accounting and finance, financial reporting, taxation and administration, ALTURA ANNUAL REPORT 201817 Buckler was appointed a director in December 2008. Other current directorships in listed entities Directors' Report continued including the responsibilities of an ASX listed entity. He has previously arranged finance for mining and infrastructure projects both in Australia and Indonesia and has set up corporate, administrative and financial systems to support new and expanding mining operations. He was appointed a director in May 2009. Other current directorships in listed entities • Sayona Mining Limited Former directorships in last three years Other current directorships in listed entities • None • None Special responsibilities Former directorships in last three years • None Special responsibilities • Chief Financial Officer Interests in shares and performance rights • 33,503,084 ordinary shares in Altura Mining Limited • 1,000,000 performance rights over shares in Altura Mining Limited • Member of the Audit & Risk Committee (to 20 September 2017) • Member of the Remuneration & Nomination Committee Interests in shares • 194,839,756 ordinary shares in Altura Mining Limited MR DAN O’NEILL (INDEPENDENT NON-EXECUTIVE DIRECTOR) Qualifications Bachelor of Science in geology from the University of Western Australia. MR ALLAN BUCKLER (NON-EXECUTIVE DIRECTOR) Experience Qualifications Certificate in Mine Surveying and Mining, First Class Mine Managers Certificate and a Mine Surveyor Certificate issued by the Queensland Government’s Department of Mines Experience Mr Buckler has over 45 years’ experience in the mining industry and has taken lead roles in the establishment of several leading mining and port operations in both Australia and Indonesia. Mr Mr O’Neill was appointed a director in December 2008. He has held positions with a number of Australian and multinational exploration companies and has managed exploration programs in a diverse range of environments and locations including Botswana, North America, South East Asia, North Africa and Australasia. During his 35 years’ experience, he has held executive management positions with ASX listed companies and has worked on a range of commodities including diamonds, gold, base metals, coal, oil and gas. • Sayona Mining Limited Former directorships in last three years • None Special responsibilities • Chairman of the Remuneration & Nomination Committee • Member of the Audit & Risk Committee Interests in shares • 13,633,336 ordinary shares in Altura Mining Limited MR BENG TEIK KUAN (INDEPENDENT NON-EXECUTIVE DIRECTOR) Qualifications Bachelor of Engineering (University of Malaya) Experience Mr Kuan is an engineer with considerable experience in bulk handling and terminal operations, including responsibility for the development and management of the Pulau Laut Coal Terminal in South Kalimantan, Indonesia. He also has experience in Indonesia, Malaysia and Singapore with tin dredging operations, managing rubber, palm oil and cocoa processing factories, and managing palm oil bulk terminals. He was appointed a director in November 2007. Other current directorships in listed entities • None ANNUAL REPORT 2018 ALTURA18 Directors' Report continued Former directorships in last three years • None Special responsibilities Interests in shares • Nil COMPANY SECRETARY • Chairman of the Audit & Risk MR DAMON COX Committee • Member of the Remuneration & Nomination Committee Interests in shares • 21,000,000 ordinary shares in Altura Mining Limited MR ZHAO TONG (NON-EXECUTIVE DIRECTOR) Qualifications • Bachelor of Science (Peking University, China) Experience Mr Zhao Tong has over 25 years’ experience in the international trade of metals and minerals and has worked for China Shaanxi Metals and Minerals International Trade Co. Ltd. Mr Tong has been the Director of the Lithium Division of J&R Optimum since October 2016. He was appointed a Director in March 2017. Mr Cox is a Chartered Secretary, and a CPA. He has over 30 years’ experience in various roles including corporate governance, compliance, treasury and strategic policy advice. REMUNERATION REPORT (AUDITED) This report details the nature and amount of remuneration for directors and other key management personnel. REMUNERATION POLICY AND LINK TO PERFORMANCE The Company’s policy is to remunerate fairly and in line with companies of similar size, operations and in the same industry. Individual remuneration decisions are made by the Remuneration & Nomination Committee taking into account the following factors: Remuneration packages may contain the following key elements: a) Primary benefits - salary/fees, bonuses and non-monetary benefits including the provision of a motor vehicle; b) Post-employment benefits – including superannuation and prescribed retirement benefits; and c) Equity - performance rights granted under the Long-Term Incentive Plan as disclosed in Note 23 to the financial statements. None of the Company’s personnel remuneration packages are linked directly to the Company’s profitability or other measure of performance. The Company maintains a Long Term Incentive Plan under which employees may be granted performance rights and share options which vest subject to service conditions being met. Directors may also be allocated performance rights and/or options as an incentive. During the 2018 year, directors were issued with shares on the vesting of previously issued performance rights. • The responsibility of the role; • Experience of the employee; PERFORMANCE-BASED REMUNERATION Other current directorships in listed entities • Past performance and future expectations; and • None • Industry conditions and trends. Former directorships in last three years • None Special responsibilities • Member of the Audit & Risk Committee (from 20 September 2017) In order to retain and attract key management personnel of sufficient calibre to facilitate the efficient and effective management of the Company’s operations, the Remuneration & Nomination Committee may seek the advice of external advisors in connection with the structure of remuneration packages. The Company currently has performance based remuneration in place as disclosed in Note 23. GROUP PERFORMANCE, SHAREHOLDER WEALTH AND DIRECTOR AND EXECUTIVE REMUNERATION The Group has recorded the following earnings from continuing operations over the last five years: ALTURA ANNUAL REPORT 2018Directors' Report continued 19 2018 2017 2016 2015 2014 Revenues and sundry income 1,675,168 1,600,959 1,485,611 4,779,039 7,610,019 EBITDA1 NPBT2 NPAT3 (13,279,929) (6,417,320) (11,290,052) (15,861,975) (5,588,222) (13,120,803) (6,448,799) (30,839,474) (16,947,795) (6,530,675) (12,712,487) (5,914,752) (31,618,016) (17,268,152) (7,017,662) Dividends paid - - - - - plus allowances. Two months’ notice of termination by either party is required, with a separation allowance equivalent to six month’s gross salary to be paid if employment is terminated by the Company. Damon Cox, Company Secretary – the agreement is of no fixed term and allows for payment of an annual cash salary, reviewed each year, and superannuation. Provision of a motor vehicle is included. Two months’ notice of termination by either party is required, with a separation allowance equivalent to six month’s gross salary to be paid if employment is terminated by the Company. 1. Earnings before interest, tax, depreciation and amortisation 2. 3. Net profit before tax Net profit after tax & minority interest KEY MANAGEMENT PERSONNEL (KMP) REMUNERATION POLICY if employment is terminated by the Company. The Remuneration & Nomination Committee reviews the remuneration packages of all directors and key management personnel on an annual basis. Remuneration packages are reviewed and determined with due regard to relevant market conditions and individual’s experience and qualification and are benchmarked against comparable industry salaries. Payment of bonuses and share based compensation benefits is discretionary. EMPLOYMENT CONTRACTS OF KEY MANAGEMENT PERSONNEL Contracts of employment are given to key management personnel at time of employment. Details are as follows: James Brown, Managing Director – the agreement is of no fixed term and allows for payment of a monthly cash salary in US dollars, reviewed each year, plus allowances. Three months’ notice of termination by either party is required, with a separation allowance equivalent to one year’s salary and entitlements to be paid Paul Mantell, Executive Director – the agreement is of no fixed term and allows for payment of an annual cash salary, reviewed each year, and superannuation. Provision of a motor vehicle or equivalent allowance and other non-cash benefits is included. Three months’ notice of termination by either party is required, with a separation allowance equivalent to one year’s gross salary to be paid if employment was terminated by the Company. Chris Evans, Chief Operating Officer – the agreement is of no fixed term and allows for payment of an annual cash salary, reviewed each year, and superannuation. Three months’ notice of termination by either party is required, with a separation allowance equivalent to six month’s gross salary to be paid if employment was terminated by the Company. Noel Young, Group Financial Controller – the agreement is of no fixed term and allows for payment of an annual cash salary in US dollars, reviewed each year, ANNUAL REPORT 2018 ALTURA20 Directors' Report continued Cash salary and fees $ Name Short-term benefits Non- monetary benefits $ Cash bonus $ Post employment Share based payments Superannuation $ Performance rights $ Total $ Performance rights as a percentage of total % 2018 Non-executive directors A Buckler D O’Neill B Kuan Z Tong Sub total non- executive directors Executive directors J Brown P Mantell Other KMP C Evans N Young D Cox Total for KMP compensation Total compensation 2017 Non-executive directors A Buckler D O’Neill B Kuan Z Tong• Sub total non- executive directors Executive directors J Brown P Mantell Other KMP C Evans N Young D Cox Total for KMP compensation Total compensation 403,529 325,026 278,863 189,062 145,000 1,341,480 1,633,512 60,000 72,000 54,000 19,000 205,000 413,790 322,000 220,000 226,788 132,500 1,315,078 1,520,078 67,000 79,000 79,000 67,032 292,032 30,000 30,000 30,000 24,657 114,657 - - - - - - - - - - - 92,601 13,922 - 21,311 28,079 155,913 9,215 10,355 10,355 - 29,925 - 24,999 24,999 12,825 13,775 76,598 1,117 1,117 1,117 - 3,351 107,332 120,472 120,472 91,689 439,965 432,689 216,347 928,820 580,294 211,684 44,385 44,385 515,546 267,583 231,239 949,490 2,523,481 114,657 155,913 106,523 952,841 2,963,446 - - - - - - - - - 91,391 12,650 35,000 - - 35,000 - 75,229 23,353 202,623 5,700 6,840 24,840 - 37,380 - 28,025 24,225 - 12,587 64,837 3,885 3,885 3,885 - 11,655 69,585 82,725 82,725 19,000 254,035 38,852 19,425 544,033 382,100 3,213 7,770 7,770 282,438 309,787 176,210 77,030 1,694,568 35,000 202,623 102,217 88,685 1,948,603 *Mr Zhao Tong joined the Altura Board in March 2017 No termination payments or long service leave payments were made during the year (2017 Nil) 1.0% 0.9% 0.9% - 46.6% 37.3% 41.1% 16.6% 19.2% 5.6% 4.7% 4.7% - - 7.1% 5.1% 1.1% 2.5% 4.4% - - ALTURA ANNUAL REPORT 2018Directors' Report continued 21 The following shares were issued to directors and key management personnel on the vesting of performance rights during the year ended 30 June 2018: J Brown P Mantell A Buckler D O’Neill BT Kuan C Evans N Young D Cox Number issued 1,000,000 500,000 100,000 100,000 100,000 400,000 200,000 200,000 2,600,000 Issue date 18/12/17 18/12/17 18/12/17 18/12/17 18/12/17 18/12/17 18/12/17 18/12/17 Value per share at issue date $ 0.3613 0.3613 0.3613 0.3613 0.3613 0.3613 0.3613 0.3613 PERFORMANCE RIGHTS In 2014 the Company established a new Long-Term Incentive Plan (LTIP) to assist in the reward and retention of directors and employees. A total of 8,100,000 rights were granted in December 2014 to directors (with shareholder approval), key management personnel and other senior staff. A further 1,450,000 rights were granted to key management personnel and other senior staff in the year ended 30 June 2016, 1,350,000 in the year ended 30 June 2017 and another 7,850,000 were granted in the year ended 30 June 2018. The rights awarded during the year were granted for no consideration. No amount is payable on the vesting of the rights. The rights will vest and automatically convert to ordinary shares in the Company following the satisfaction of the service conditions. The following performance rights were on issue to directors and key management personnel as at 30 June 2018: J Brown P Mantell C Evans N Young D Cox Granted number Vesting 30 Nov 2018 2,000,000 1,000,000 1,000,000 200,000 200,000 4,400,000 2,000,000 1,000,000 1,000,000 200,000 200,000 4,400,000 MEETINGS OF DIRECTORS The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial year there were 5 Directors’ meetings, 3 Audit & Risk Committee meetings and 2 Remuneration & Nomination Committee meetings held. ANNUAL REPORT 2018 ALTURA 22 Directors' Report continued Directors' Meetings Audit & Risk Committee Remuneration & Nomination Committee Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend Number attended J Brown P Mantell A Buckler D O’Neill B Kuan Z Tong 5 5 5 5 5 5 5 5 5 4 5 5 - - 1 3 3 2 - - 1 2 3 2 - - 2 2 2 - - - 2 2 2 - INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has entered into Deeds of Indemnity with all of its directors in accordance with the Company’s Constitution. During the financial year the Company paid a premium to insure the directors, officers and managers of the Company and its controlled entities. The insurance contract requires that the amount of the premium paid is kept confidential. OPTIONS At the date of signing this report, 5,784,846 unissued ordinary shares of Altura Mining Limited under option were outstanding. WARRANTS Under the terms of the US$110 million debt facility announced on 28 July 2017, the lenders are to receive a total of 72,644,513 warrants. These were approved on 22 November 2017 at the Company’s annual general meeting and issued on 27 November 2017 at an exercise price of $0.1260 per warrant with an expiry date 4 August 2022. At the date of signing this report, 19,812,140 warrants outstanding. thousand dollars in accordance with the instrument. AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration for the year ended 30 June 2018 has been received and is included on page 23 of the annual report. Signed in accordance with a resolution of the Directors made pursuant to Section 298(2) of the Corporations Act 2001. On behalf of the Directors, James Brown Managing Director Perth, 11 September 2018 PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of the Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not party to any such proceedings during the year. NON-AUDIT SERVICES The Company’s auditor, PKF Hacketts Audit, did not provide any non-audit services to the Company during the year ended 30 June 2018. ROUNDING OF AMOUNTS The company is of a kind referred to ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the directors’ report and financial report. Amounts in the directors’ report and financial report have been rounded off to the nearest ALTURA ANNUAL REPORT 2018 23 AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF ALTURA MINING LIMITED I declare that, to the best of my knowledge and belief, during the year ended 30 June 2018, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. PKF HACKETTS AUDIT Liam Murphy Partner Brisbane, 11 September 2018 13 ANNUAL REPORT 2018 ALTURA 24 ALTURA ANNUAL REPORT 201825 Financial Statements ANNUAL REPORT 2018 ALTURA26 Altura Mining Limited and Controlled Entities Consolidated Statement of Profit and Loss for the year ended 30 June 2018 Consolidated Statement of Profit and Loss FOR THE YEAR ENDED 30 JUNE 2018 Continuing operations Revenue Cost of sales Operating profit / (loss) Other income Sundry income Expenses Administration costs Employee benefits expense Other expenses Foreign exchange gain / (loss) Impairment on equity accounted asset Share of net profit / (loss) of equity accounted investee, net of tax Profit / (loss) before income tax Income tax (expense) / benefit Profit / (loss) after income tax from continuing operations Discontinued operations Loss from discontinued operations after tax Net profit / (loss) for the year Profit / (loss) attributable to: Owners of Altura Mining Limited Non‐controlling interest Note 5(a) 5(c) 5(b) 5(f) 5(d) 5(e) 25 7(a) 3 2018 $’000 1,165 (772) 393 510 (3,780) (3,690) (188) (6,366) ‐ ‐ (13,121) 408 (12,713) (104) (12,817) (12,880) 63 (12,817) 2017 $’000 1,271 (1,069) 202 331 (3,030) (2,272) (167) (1,371) (18) (124) (6,449) 534 (5,915) (250) (6,165) (6,127) (38) (6,165) (Loss) per share from continuing and discontinued operations attributable to the ordinary equity holders of the Company: Basic and diluted (loss) per share from continuing and discontinuing operations Basic and diluted (loss) per share from continuing operations Basic and diluted (loss) per share from discontinued operations 6 6 6 (0.74) (0.73) (0.01) (0.45) (0.44) (0.01) The above Consolidated Statement of Profit and Loss should be read in conjunction with the accompanying Notes. 14 ALTURA ANNUAL REPORT 2018 27 Altura Mining Limited and Controlled Entities Consolidated Statement of Other Comprehensive Income for the year ended 30 June 2018 FOR THE YEAR ENDED 30 JUNE 2018 Consolidated Statement of Other Comprehensive Income Profit / (loss) for the year (12,817) (6,165) Note 2018 $’000 2017 $’000 Other comprehensive income / (loss) for the year Items that may be reclassified to profit and loss Changes in the fair value of available‐for‐sale financial assets Exchange differences on translation of foreign controlled entities 13 Other comprehensive income / (loss) for the year, net of tax Total comprehensive income / (loss) for the year Total comprehensive income / (loss) attributable to: Members of the parent entity Non‐controlling interest Total comprehensive income / (loss) attributable to members of the parent entity arises from: Continuing operations Discontinued operations 3,194 (1,751) 1,443 (11,374) (11,413) 39 (11,374) (10,948) (465) (11,413) (509) 1438 929 (5,236) (5,221) (15) (5,236) (5,295) 74 (5,221) The above Consolidated Statement of Other Comprehensive Income should be read in conjunction with the accompanying Notes. 15 ANNUAL REPORT 2018 ALTURA 28 Altura Mining Limited and Controlled Entities Consolidated Balance Sheet for the year ended 30 June 2018 Consolidated Balance Sheet AS AT 30 JUNE 2018 Current assets Cash and cash equivalents Trade and other receivables Held to maturity investments Inventories Current tax prepaid Other current assets Assets classified as held for sale Total current assets Non‐current assets Available‐for‐sale financial assets Property, plant and equipment Exploration and evaluation Mine development at cost Total non‐current assets Total assets Current liabilities Trade and other payables Borrowings Short term provisions Liabilities classified as held for sale Total current liabilities Non‐current liabilities Borrowings Provisions Total non‐current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Capital and reserves attributable to owners of Altura Mining Limited Non‐controlling interest Total equity Note 8 9 11 10 12 3c 13 14 15 16 17 18 19 3c 18 21 22 22 2018 $’000 28,761 2,242 52 1 295 384 9,271 41,006 4,018 694 1,595 221,562 227,869 268,875 22,713 ‐ 1,158 1,846 25,717 145,887 3,918 149,805 175,522 93,353 192,893 3,502 (103,340) 93,055 298 93,353 2017 $’000 13,271 3,336 52 1 272 333 8,820 26,085 824 850 1,226 59,353 62,253 88,338 9,198 15,677 842 1,753 27,470 ‐ 3,918 3,918 31,388 56,950 146,556 595 (90,460) 56,691 259 56,950 The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes. 16 ALTURA ANNUAL REPORT 2018 29 Altura Mining Limited and Controlled Entities Consolidated Statement of Changes in Equity for the year ended 30 June 2018 Consolidated Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2018 Contributed equity Accumulated losses Option & performance rights reserve Change in fair value ‐ market valuation Foreign currency translation reserve Non‐ controlling interests Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 Balance as at 30 June 2016 105,840 (84,333) 233 803 (1,276) 274 21,541 Total comprehensive income for the year ‐ (6,127) Transactions with owners in their capacity as owners: Issue of shares – employee bonus payment Issue of shares – loan repayment Contributions of equity, net of transaction costs Transfer from share based payment reserve to equity Employee share schemes – value of employee services Sub‐total 70 773 39,640 233 ‐ 40,716 ‐ ‐ ‐ ‐ ‐ ‐ Balance as at 30 June 2017 146,556 (90,460) ‐ ‐ ‐ ‐ (233) 162 (71) 162 (509) 1,415 (15) (5,236) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 70 773 39,640 ‐ 162 40,645 294 139 259 56,950 Balance as at 30 June 2017 146,556 (90,460) 162 294 139 259 56,950 Total comprehensive income for the year ‐ (12,880) Transactions with owners in their capacity as owners: Issue of shares ‐ employee bonus payment Contributions of equity, net of transaction costs Transfer from share based payment reserve to equity Employee share schemes – value of employee services Sub‐total 34 45,947 356 ‐ 46,337 ‐ ‐ ‐ ‐ ‐ Balance as at 30 June 2018 192,893 (103,340) ‐ ‐ ‐ (356) 1,796 1,440 1,602 3,194 (1,727) 39 (11,374) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 34 45,947 ‐ 1,796 ‐ 47,777 3,488 (1,588) 298 93,353 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes. 17 ANNUAL REPORT 2018 ALTURA 30 Consolidated Statement of Cash Flows for the year ended 30 June 2018 Altura Mining Limited and Controlled Entities Consolidated Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2018 Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Sundry income Interest received Income tax received Net cash (used in) / provided in operating activities 28(b) Cash flows from investing activities Expenditure on exploration and evaluation activities Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Net cash (used in) / provided by investing activities Cash flows from financing activities Proceeds from the issue of shares ‐ net of transaction costs Proceeds from borrowings Repayment of borrowings Net cash provided by / (used in) financing activities Net increase / (decrease) in cash and cash equivalents held Cash and cash equivalents at the beginning of year Effect of exchange rate changes on cash holdings in foreign currencies Cash and cash equivalents at the end of year Non cash investing and financing activities Share based payments Interest on loan facility capitalised Transaction fees ‐ borrowings 28(c) 28(c) 28(a) 23 2018 $’000 3,069 (9,345) 38 468 319 (5,451) (1,062) (126,026) 15 (127,073) 34,425 128,615 (15,053) 147,987 15,463 13,308 8 28,779 (34) (17,706) (23,982) 2017 $’000 1,473 (7,731) 62 319 320 (5,557) (8,566) (35,019) 4 (43,581) 40,309 ‐ ‐ 40,309 (8,829) 22,132 5 13,308 (70) ‐ ‐ The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes. 18 ALTURA ANNUAL REPORT 2018 31 Altura Mining Limited and Controlled Entities Notes to the Financial Statements Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2018 This financial report includes the consolidated financial statements and notes of Altura Mining Limited (the Company) and controlled entities (‘Consolidated Group’ or ‘Group’). Altura Mining Limited is a company limited by shares, incorporated and domiciled in Australia, whose shares are publicly traded on the Australian Securities Exchange. The separate financial statements of the parent entity, Altura Mining Limited, have not been presented within this financial report as permitted by amendments made to the Corporations Act 2001. The Group is a for‐profit entity for financial reporting purposes under Australian Accounting Standards. The financial statements were authorised for issue on 11 September 2018 by the directors of the Company. 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The following is a summary of the material accounting policies adopted by the Consolidated Group in the preparation of the financial report. The financial report has been prepared on an accruals basis. The accounting policies have been consistently applied, unless otherwise stated. i) Going concern principle of accounting Notwithstanding the Group’s reporting an operating loss after income tax of $12.8 million for the year and generating negative cash flows from operations of $5.45 million, the financial statements have been prepared on a going concern basis as the Company’s directors believe that the Group will be able to pay its debts as and when they fall due and payable. Given the above, the Group’s ability to continue as a going concern is dependent on achieving forecast production and sales, the sale of the net Tabalong assets classified as held for sale and the ongoing support of lenders and shareholders. Directors are confident that the fully funded Pilgangoora Lithium project will be successfully completed and commissioned into production for Q3 2018 and is forecast to generate considerable cash flow sufficient to address the operating losses and achieve positive cash flows from operations. This together with the ongoing support of lenders and shareholders will ensure the Group is a going concern and will be able to pay its debts as and when they fall due and payable. ii) New accounting standards for application in future periods Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below: AASB 9: Financial Instruments and associated Amending Standards (applicable for annual reporting periods beginning on or after 1 January 2018). The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) 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. 19 ANNUAL REPORT 2018 ALTURA 32 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) ii) New accounting standards for application in future periods (continued) 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. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non‐financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective The directors do not anticipate that the adoption of AASB 9 will have a material impact on the Group’s financial instruments, including hedging activity. AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018, as deferred by AASB 2015‐8: Amendments to Australian Accounting Standards – Effective Date of AASB 15). 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. AASB 16: Leases (applicable for annual reporting periods beginning on or after 1 January 2019). 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. 20 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 33 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) ii) New accounting standards for application in future periods (continued) The main changes introduced by the new Standard include:      recognition of a right‐to‐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‐to‐use asset in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; variable lease payments that depend on an index or a rate are included in the initial measurement of the lease liability using the index or rate at the commencement date; by applying a practical expedient, a lessee is permitted to elect not to separate non‐lease components and instead account for all components as a lease; and 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 recognize the cumulative effect of retrospective applications as an adjustment to opening equity on the date of initial application. The Group has operating lease commitments as disclosed in note 33 (c), which are likely to be impacted by the new standard. At this stage the Group is not able to estimate the impact of the new rules on the Groups financial statements. The Group will make a detailed assessment of the impact over the next 12 months. iii) Impact of standards issued but not yet applied by the Group The Group has not applied any accounting standards or amendments for the first time for the annual reporting period commencing 1 July 2017. iv) Historical cost convention Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non‐current assets, financial assets and financial liabilities. v) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas including a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 1n 21 ANNUAL REPORT 2018 ALTURA 34 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) b) Carrying value of exploration and evaluation expenditure The Group has capitalised exploration and evaluation expenditure of $1.595 million as at 30 June 2018 (2017: $1.226 million). This amount is after a transfer to mine development at cost of $932,000 during the year for drilling and analysis, feasibility study and employee remuneration costs for the lithium project stage 2 DFS and a reclassification of exploration expenditure to assets held for sale of $361,000. Exploration and evaluation expenditure is capitalised as an intangible asset until the Company has completed its assessment of the existence or otherwise of recoverable resources. The ultimate recovery of the carrying value of exploration expenditure is dependent upon the successful development and commercial exploitation or, alternatively, sale of the interest in the tenements. Until exploration and evaluation activities have reached a stage where the assessment is complete, including the forecasting of cash flows to assess the fair value of the expenditure, there is an uncertainty as to the carrying value of the expenditure. The Directors are of the opinion that the exploration expenditure is recoverable for the amount stated in the financial report. c) Principles of consolidation i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Altura Mining Limited (‘Company’ or ‘Parent Entity’) as at 30 June 2018 and the results of the subsidiaries for the year then ended. Altura Mining Limited and its subsidiaries together are referred to in this financial report as the Group or Consolidated Entity. The Group controls an entity when the Group is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of controlled entities is contained in Note 26 to the financial statements. All Australian controlled entities have a June financial year‐end and all other controlled entities have a December financial year end. All inter‐company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the Group. Where controlled entities have entered or left the Group during the year, their operating results have been included from the date control was obtained or until the date control ceased. Non‐controlling interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity interests held by persons outside the Group, are shown separately within the equity section of the Consolidated Balance Sheet and in the Consolidated Income Statement. Losses applicable to the non‐controlling interest in a consolidated subsidiary are allocated against the controlling interest except to the extent that the non‐controlling interest has a binding obligation and is able to make additional investment to cover the losses. If in future years the subsidiary reports profits, such profits are allocated to the controlling interest until the non‐controlling interest’s share of losses previously absorbed by the controlling interest have been recovered. The acquisition method of accounting is used to account for business combinations by the Group. 22 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 35 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) ii) Associates Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding between 20% and 50% of voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. The Group’s investments in associates includes goodwill identified on acquisition. The Group’s share of its associates post‐acquisition profit or losses is recognised in profit or loss, and its share of post‐acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post‐ acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised as a reduction in the carrying amount of the investment. iii) Changes in ownership interests The Group treats transactions with non‐controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non‐controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non‐controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to the owners of Altura Mining Limited. When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in a jointly controlled entity or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. d) Business combinations The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre‐existing equity interest in the subsidiary. Acquisition related costs are expensed as incurred with the exception of stamp duty. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non‐controlling interest in the acquiree either at fair value or at the non‐controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred and the amount of any non‐controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a gain on acquisition of subsidiaries. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. 23 ANNUAL REPORT 2018 ALTURA 36 Altura Mining Limited and Controlled Entities Notes to the Financial Statements (continued) Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) e) Income tax The charge for current income tax expense is based on the result for the year adjusted for any non‐assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates (and laws) that have been enacted, or substantially enacted by the end of the reporting period and are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences and unused tax losses can be utilised. The amount of 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 economic 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 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 Group has a legally enforceable right to offset and intends to settle on a net basis, or to realise the asset and settle the liability simultaneously. Altura Mining Limited and some of its wholly‐owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. Each entity in the group recognises its own current and deferred tax amounts, except for any deferred tax liabilities (or assets) resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity. The current tax liability of each group entity is then subsequently assumed by the parent entity. The group notified the Australian Tax Office that it had formed an income tax consolidated group to apply from 1 July 2005. The tax consolidated group has entered a tax sharing agreement under which the wholly‐owned entities fully compensate Altura Mining Limited for any current tax payable assumed and are compensated by Altura Mining Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Altura Mining Limited under the tax consolidated legislation. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. Assets or liabilities arising under tax funding agreements within the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the Group. Any difference 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. 24 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 37 Notes to the Financial Statements (continued) Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) f) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating decision maker. The Chief Operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments has been identified as the Board of Directors. g) Property, plant and equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Property Freehold land and buildings are measured on the cost basis. The carrying amount of land and buildings is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. Plant and equipment Plant and equipment are measured on the cost basis. 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 Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of the recoverable amount from these assets. Mine development Mine development assets include all mining related development expenditure that is not included under land, buildings and plant and equipment. These capitalised costs are amortised over the life of the mine on a unit of production basis following the commencement of commercial production. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward mine development costs in relation to that area of interest. Mine development is written down immediately to its recoverable amount if the carrying value is greater than its estimated recoverable amount (on a CGU basis). Depreciation The depreciable amount of all fixed assets excluding freehold land, is depreciated on a straight‐line basis over their useful lives to the Group commencing from the time the asset is held ready for use. Leased assets are depreciated over the asset’s useful life or over the shorter of the assets useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Plant and equipment Leased plant and equipment Mine development Depreciation Rate 20% ‐ 50% 12.5% units of production The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance 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 the carrying amount. These gains and losses are included in profit or loss. 25 ANNUAL REPORT 2018 ALTURA 38 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) h) Exploration and evaluation expenditure Exploration, evaluation and development expenditure incurred is accumulated in respect of each separately identifiable area of interest. These costs are only carried forward where the right of tenure for the area of interest is current and to the extent that they are expected to be recouped through the successful development and commercial exploitation of the area, or alternatively sale of the area, or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Exploration and evaluation expenditure assets acquired in a business combination are recognised at their fair value at the acquisition date. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, the exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining development. Accumulated costs in relation to an abandoned area are written off in full against the result in the year in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. i) Leases Leases of property, plant and equipment where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the Group, are classified as finance leases. Finance leases are capitalised at the lease inception date, by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight‐line basis over the shorter of their estimated useful lives or the lease terms if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses on a straight‐line basis over the period of the lease. Lease incentives under operating leases are recognised as a liability and amortised on a straight‐line basis over the life of the lease term. j) Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised immediately in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units, “CGUs”). For the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to CGUs that are expected to benefit from the synergies of the combination. Non‐financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period. 26 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 39 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) k) Investments and other financial assets The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held to maturity investment and available‐for‐sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and in the case of assets classified as held to maturity, re‐evaluates this designation at the end of each reporting period. i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets if they are expected to be settled within 12 months, otherwise they are classified as non‐ current. ii) Loans and receivables Loans and receivables are non‐derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting period which are classified as non‐current assets. Loans and receivables are included in current trade and other receivables and non‐current trade and other receivables (refer to Note 9). iii) Held‐to‐maturity investments Held to maturity investments are non‐derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held to maturity financial assets, the whole category would be tainted and reclassified as available for sale. Held to maturity financial assets are included in non‐current assets, except for those with maturities less than 12 months from the end of the reporting period, which are classified as current assets. iv) Available‐for‐sale financial assets Available‐for‐sale financial assets, comprising principally listed marketable equity securities, are non‐derivatives that are either designated in this category or not classified in any of the other categories. They are included in non‐ current assets unless management intends to dispose of the investment within 12 months of the end of the reporting period. Investments are designated as available‐for‐sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. v) Recognition and de‐recognition Purchases and sales of financial assets are recognised on trade date, the date on which the Group commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs except where the financial asset is classified as fair value through profit or loss in which case transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When securities classified as available‐for‐sale are sold, the accumulated fair value adjustments recognised in other comprehensive income and reclassified to profit or loss as gains and losses from investment securities. vi) Subsequent measurement Loans and receivables are carried at amortised cost using the effective interest method. Available‐for‐sale financial assets, financial assets at fair value through profit or loss and held to maturity investments are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue from continuing operations when the Group’s right to receive payments is established. 27 ANNUAL REPORT 2018 ALTURA 40 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Investment in shares in unlisted companies, which do not have a quoted market price and whose fair value cannot be reliably measured, are classified as available‐for‐sale and are measured at cost. Gains or losses are recognised in profit or loss when the investments are derecognised or impaired. vii) Impairment The Group assess at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity securities classified as available‐for‐sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available‐for‐ sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, is reclassified from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments classified as available‐for‐sale are not reversed through profit or loss. If there is evidence of impairment for any of the Group’s financial assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in profit or loss. l) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred. m) Employee benefits i) Wages and salaries, annual leave and sick leave Liabilities for employee benefits for wages, salaries, annual leave and accumulating sick leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees’ services provided to the reporting date and are calculated at undiscounted amounts based on wage and salary rates that the Group expects to pay as at reporting date including related on costs, such as superannuation, workers compensation, insurance and payroll tax and are included in trade and other payables. Non‐accumulating, non‐ monetary benefits such as housing and cars are expensed by the Group as the benefits are used by the employee. Employee benefits payable later than 12 months have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee salary and wage increases and the probability that the employee may satisfy any vesting requirements. Those cash flows are discounted using market yields with terms to maturity that match the expected timing of cash flows attributable to employee benefits. ii) Long service leave The Group’s net obligation in respect of long term service benefits is the amount of future benefit that employees have earned in return for their service to the reporting date. The obligation is calculated using expected future increases in wages and salary rates including related on costs and expected settlement dates and is discounted using an appropriate discount rate. The current liability for long service leave represents all unconditional obligations where employees have fulfilled the required criteria and also those where employees are entitled to a pro rata payment in certain circumstances and is included in the current provisions. The non‐current provision for long service leave includes the remaining long service leave obligations. 28 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 41 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) iii) Superannuation Contributions made by the Group to defined contribution superannuation funds are recognised as an expense in the period in which they are incurred. iv) Equity‐settled compensation The Group operates an employee share ownership plan. Share‐based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share‐based payments to non‐ employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black‐Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. n) Significant accounting estimates and judgements The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. The resulting accounting estimates, will, by definition, seldom equal the related actual results. Management has identified the following significant accounting policies for which significant judgements, estimates and assumptions are made. i) Significant accounting estimates and assumptions Critical accounting estimates and judgements Following is a summary of the key assumptions concerning the future, and other key sources of estimation and accounting judgements at reporting date that have not be disclosed elsewhere in these financial statements. a. Determination of coal resources and reserves The Company estimates its coal ore resources and reserves based on information compiled by Competent Persons defined in the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (December 2012), which is prepared by the Joint Ore Reserves Committee (“JORC”) of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia, known as the JORC Code. Reserves determined in this way are used in the calculation of depreciation, amortisation and impairment charges, the assessment of mine lives and for forecasting the timing of the payment of rehabilitation costs. The amount of reserves that may actually be mined in the future and the Company’s estimate of reserves from time to time in the future may vary from current reserve estimates. b. Exploration and evaluation expenditure The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether it is likely that future economic benefits are likely, which may be based on assumptions about future events or circumstances. Estimates and assumptions may change if new information becomes available. If after expenditure is capitalised information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the Consolidated Statement of Profit or Loss in the period when the new information becomes available. c. Impairment The Group assess impairment by evaluation of conditions and events specific to the Company that may be indicative of impairment triggers. Goodwill is assessed for impairment at each reporting period. Recoverable amounts of relevant assets are reassessed using the higher of fair value less costs to sell and value in use calculations which incorporate various key assumptions. 29 ANNUAL REPORT 2018 ALTURA 42 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) n) Significant accounting estimates and judgements (continued) d. Rehabilitation The calculation of the provisions for rehabilitation and the related mine development assets rely on estimates of the cost to rehabilitate an area which is currently disturbed based on legislative requirements and future costs. The costs are estimated on the basis of a mine closure plan. Cost estimates take into account expectations about future events including the mine lives, the time of rehabilitation expenditure, regulations, inflation and discount rates. When these expectations change in the future, the provision and where applicable, the mine development assets are recalculated in the period in which they change. e. Derivatives The fair value of financial instruments must be estimated for recognition and measurement purposes. The fair value of financial instruments traded in active markets such as 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 Group is the current bid price. The fair value of financial instruments that are not traded in an active market are determined using valuation techniques that use observable market data at the reporting date where it is available. f. Income taxes The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the provision for income taxes. There are transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on the Group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. g. Share‐based payment transactions From time to time the Company has issued options to directors and employees. The Company measures fair value of share‐based payments using the Black‐Scholes Pricing Model, using the assumptions detailed in Note 23. This formula takes into account the terms and conditions under which the instruments were granted. h. Mines under construction Expenditure is transferred from ’Exploration and evaluation assets’ to ’Mine Development’ which is a sub‐ category of ’Mine properties’ once the work completed to date supports the future development of the property and such development receives appropriate approvals. After transfer of the exploration and evaluation assets, all subsequent expenditure on the construction, installation or completion of infrastructure facilities is capitalised in ’Mine Development’. Development expenditure is net of proceeds from the sale of spodumene concentrate extracted during the development phase to the extent that it is considered integral to the development of the mine. Any costs incurred in testing the assets to determine if they are functioning as intended, are capitalised, net of any proceeds received from selling any product produced while testing. Where these proceeds exceed the cost of testing, any excess is recognised in the statement of profit or loss and other comprehensive income. After production starts, all assets included in ‘mine development’ are then transferred to ’producing mines’ which is also a sub‐category of ’mine properties’. 30 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities Notes to the Financial Statements (continued) FOR THE YEAR ENDED 30 JUNE 2018 Altura Mining Limited and Controlled Entities 43 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) n) Significant accounting estimates and judgements (continued) o) Non‐current assets (or disposal groups) held for sale and discontinued operations d. Rehabilitation e. Derivatives f. Income taxes The calculation of the provisions for rehabilitation and the related mine development assets rely on estimates of the cost to rehabilitate an area which is currently disturbed based on legislative requirements and future costs. The costs are estimated on the basis of a mine closure plan. Cost estimates take into account expectations about future events including the mine lives, the time of rehabilitation expenditure, regulations, inflation and discount rates. When these expectations change in the future, the provision and where applicable, the mine development assets are recalculated in the period in which they change. The fair value of financial instruments must be estimated for recognition and measurement purposes. The fair value of financial instruments traded in active markets such as 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 Group is the current bid price. The fair value of financial instruments that are not traded in an active market are determined using valuation techniques that use observable market data at the reporting date where it is available. The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the provision for income taxes. There are transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on the Group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. g. Share‐based payment transactions h. Mines under construction From time to time the Company has issued options to directors and employees. The Company measures fair value of share‐based payments using the Black‐Scholes Pricing Model, using the assumptions detailed in Note 23. This formula takes into account the terms and conditions under which the instruments were granted. Expenditure is transferred from ’Exploration and evaluation assets’ to ’Mine Development’ which is a sub‐ category of ’Mine properties’ once the work completed to date supports the future development of the property and such development receives appropriate approvals. After transfer of the exploration and evaluation assets, all subsequent expenditure on the construction, installation or completion of infrastructure facilities is capitalised in ’Mine Development’. Development expenditure is net of proceeds from the sale of spodumene concentrate extracted during the development phase to the extent that it is considered integral to the development of the mine. Any costs incurred in testing the assets to determine if they are functioning as intended, are capitalised, net of any proceeds received from selling any product produced while testing. Where these proceeds exceed the cost of testing, any excess is recognised in the statement of profit or loss and other comprehensive income. After production starts, all assets included in ‘mine development’ are then transferred to ’producing mines’ which is also a sub‐category of ’mine properties’. Non‐current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write‐down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non‐current asset (or disposal group) is recognised at the date of derecognition. Non‐current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non‐current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co‐ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss. p) Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. i) Rehabilitation costs Provision is made for the Group’s estimated liability arising under specific legislative requirements and the conditions of its exploration permits and mining leases for future costs expected to be incurred in restoring mining areas of interest. The estimated liability is based on the restoration work required using existing technology as a result of activities to date. The liability includes the cost of reclamation of the site, including infrastructure removal and land fill costs. An asset is created as part of the mine development asset, to the extent that the development relates to future production activities, which is offset by a current and non‐current provision for rehabilitation. q) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short‐term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, net of bank overdrafts. 30 31 ANNUAL REPORT 2018 ALTURA 44 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) r) Revenue Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. The Group recognises revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity. Revenue is recognised in the profit or loss as follows: i) Sale of goods Revenue from the sale of bulk commodities is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery, usually on a Free On Board (“FOB”) basis. ii) Royalty revenue Royalties are recognised as revenue when the right to receive payment is established. iii) Dividends Dividends are recognised as revenue when the right to receive payment is established. iv) Interest Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. v) Services Revenue from the rendering of a service is recognised upon the delivery of the service to the customer. s) 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 relevant taxation authorities. 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 balance sheet are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. t) Foreign operations The financial performance and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:   assets and liabilities are translated at exchange rates prevailing at balance sheet date; and income and expenses are translated at monthly average exchange rates for the period. Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve as a separate component of equity. These differences are recognised in the income statement upon disposal of the foreign operation. 32 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 45 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) u) Foreign currency transactions and balances The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which the entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. 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 period end exchange rate. Non‐monetary items measured at historical cost continue to be carried at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the income statement, 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 the income statement. v) Goodwill and intangibles Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary or associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is not amortised, it is tested for impairment at each reporting date or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units (“CGUs”) for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose. w) Financial liabilities and equity Non‐derivative financial liabilities (including trade and other payables and interest‐bearing liabilities excluding financial guarantees) are initially recognised at fair value, net of transaction costs incurred and subsequently measured at amortised cost using the effective interest rate method. Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. All non‐derivative financial liabilities are classified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Costs directly attributable to the issue of new shares or options are shown as a deduction from the equity proceeds, net of any income tax benefit. Costs directly attributable to the issue of new shares or options associated with the acquisition of a business are included as part of the purchase consideration. x) Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. 33 ANNUAL REPORT 2018 ALTURA 46 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) y) Inventories Consumable stores Inventories of consumable supplies and spare parts expected to be used in the supply of services are valued at cost. Bulk commodities Bulk commodity stockpiles are physically surveyed or estimated and valued at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and costs of selling final product. Cost is determined by the weighted average method and comprises direct purchase costs and an appropriate portion of fixed and variable overhead costs, including depreciation and amortisation, incurred in converting materials into finished goods. z) Fair value measurement When an asset or liability, financial or non‐financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non‐financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement. For recurring and non‐recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. aa) Deferred mining cost During the commercial production stage of open pit operations, production stripping costs comprises the accumulation of expenses incurred to enable access to the ore body (coal or iron ore) and includes direct removal costs and machinery and plant running costs. Production stripping costs are capitalised as part of an asset if it can be demonstrated that it is probable that future economic benefits will be realised, the costs can be reliably measured and the entity can identify the component of the ore body for which access has been improved. The asset is called “stripping activity asset”. The stripping asset is amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity. The units of production method shall be applied. Production stripping costs that do not satisfy the asset recognition criteria are expensed. 34 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 47 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 2. FINANCIAL RISK MANAGEMENT The Group’s principal financial instruments comprise receivables, payables, loans, finance leases, cash and short term deposits. These activities expose the Group to a variety of financial risks: market risk (which includes currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group manages these risks in accordance with the Group’s financial risk management policy. The Group uses different methods and assumptions to measure and manage different types of risks to which it is exposed at each balance date. The Board reviews and approves policies for managing each of the Group’s financial risk areas. The Group holds the following financial instruments: FINANCIAL ASSETS Cash and cash equivalents Trade and other receivables Held to maturity investments Available‐for‐sale investments FINANCIAL LIABILITIES Trade and other payables Borrowings a) Market risk 2018 $’000 28,761 2,242 52 4,018 35,073 22,713 145,887 168,600 2017 $’000 13,271 3,336 52 824 17,483 9,198 15,677 24,875 Market risk is the risk that changes in market prices such as foreign exchange rates, securities prices and coal prices will affect the Group’s income or the value of its holdings of financial investments. i) Foreign currency risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily in respect to the US dollar. Revenue is denominated in US dollars and a strengthening of the Australian dollar against the US dollar has an adverse impact on earnings and cash flow settlement. In particular, on commencement of sales from Altura Lithium, revenue from sales of spodumene will be received in US dollars. Liabilities for some loans are denominated in currencies other than the Australian dollar and a weakening of the Australian dollar against other currencies has an adverse impact on earnings and cash flow settlement. In particular, Altura Lithium’s loan for construction and commissioning of the mine is in US dollars (US$126 million), and therefore repayment of the loan will be made in US dollars. The Group’s overseas subsidiaries have a US dollar functional currency. This exposes the Group to foreign exchange fluctuations upon conversion to AUD. At 30 June 2018, the Group held funds in foreign currency amounting to US$382,000 (2017: US$366,000) The Group does not currently enter into any hedging arrangements. 35 ANNUAL REPORT 2018 ALTURA 48 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 2. FINANCIAL RISK MANAGEMENT (continued) Foreign currency risk sensitivity analysis At 30 June 2018, the effect on profit and equity as a result of changes in the value of the Australian dollar to the US dollar that management considers to be reasonably possible, with all other variables remaining constant is as follows: Change in profit — — Improvement in AUD to USD by 11% Decline in AUD to USD by 11% Change in equity — — Improvement in AUD to USD by 11% Decline in AUD to USD by 11% 2018 $’000 2017 $’000 704 (704) 704 (704) (403) 403 (403) 403 ii) Price risk The Group is exposed to coal price risk and equity securities price risk. The Group currently does not have any hedges in place against the movements in the spot price of coal. The Group's equity investments are publicly traded on the United States of America OTCBB and are not quoted on any market Index. The table below summarises the impact of increases/decreases in the value on the Group's equity investments as at balance date. The analysis is based on the assumption that the equity pricing had increased/decreased by 10% with all other variables held constant and all the Group's equity instruments moved according to the historical correlation with the index. Change in profit — — Increase in equity value by 10% Decrease in equity value by 10% Change in equity — — Increase in equity value by 10% Decrease in equity value by 10% 2018 $’000 ‐ ‐ 402 (402) 2017 $’000 ‐ ‐ 82 (82) iii) Interest rate risk At balance date the Group’s debt was fixed rate. For further details on interest rate risk refer to Note 18. Interest rate sensitivity analysis At 30 June 2018, the effect on profit and equity as a result of changes in the interest rate that management considers to be reasonably possible, with all other variables remaining constant would be as follows: Change in profit — — Increase in interest rate by 1% Decrease in interest rate by 1% Change in equity — — Increase in interest rate by 1% Decrease in interest rate by 1% 2018 $’000 (1,450) 1,450 (1,450) 1,450 2017 $’000 200 (200) (200) 200 Term deposits have been treated as a floating rate due to the short term nature of the deposits. 36 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities Notes to the Financial Statements (continued) FOR THE YEAR ENDED 30 JUNE 2018 2. FINANCIAL RISK MANAGEMENT (continued) Foreign currency risk sensitivity analysis At 30 June 2018, the effect on profit and equity as a result of changes in the value of the Australian dollar to the US dollar that management considers to be reasonably possible, with all other variables remaining constant is as follows: ii) Price risk The Group is exposed to coal price risk and equity securities price risk. The Group currently does not have any hedges in place against the movements in the spot price of coal. The Group's equity investments are publicly traded on the United States of America OTCBB and are not quoted on any market Index. The table below summarises the impact of increases/decreases in the value on the Group's equity investments as at balance date. The analysis is based on the assumption that the equity pricing had increased/decreased by 10% with all other variables held constant and all the Group's equity instruments moved according to the historical correlation with the index. iii) Interest rate risk At balance date the Group’s debt was fixed rate. For further details on interest rate risk refer to Note 18. At 30 June 2018, the effect on profit and equity as a result of changes in the interest rate that management considers to be reasonably possible, with all other variables remaining constant would be as follows: Change in profit Change in equity Improvement in AUD to USD by 11% Decline in AUD to USD by 11% Improvement in AUD to USD by 11% Decline in AUD to USD by 11% — — — — — — — — — — — — Change in profit Increase in equity value by 10% Decrease in equity value by 10% Change in equity Increase in equity value by 10% Decrease in equity value by 10% Interest rate sensitivity analysis Change in profit Increase in interest rate by 1% Decrease in interest rate by 1% Change in equity Increase in interest rate by 1% Decrease in interest rate by 1% 2018 $’000 2017 $’000 704 (704) 704 (704) (403) 403 (403) 403 2018 $’000 ‐ ‐ 402 (402) 2018 $’000 (1,450) 1,450 (1,450) 1,450 2017 $’000 ‐ ‐ 82 (82) 2017 $’000 200 (200) (200) 200 Term deposits have been treated as a floating rate due to the short term nature of the deposits. Altura Mining Limited and Controlled Entities 49 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 2. FINANCIAL RISK MANAGEMENT (continued) b) Credit risk Credit risk refers to the risk that a third party will default on its contractual obligations resulting in financial loss to the Consolidated Group. The Consolidated Group has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the Company's maximum exposure to credit risk. c) Liquidity risk Liquidity risk includes the risk that the Group will not be able to meet its financial obligations as they fall due. The Group will be impacted in the following ways: i) Will not have sufficient funds to settle transactions on the due date; ii) Will be forced to sell financial assets at a value which is less than what they are worth; or iii) May be unable to settle or recover a financial asset at all. The Group manages liquidity risk by monitoring forecast cash flows. d) Financial instrument composition and maturity analysis The tables below reflect the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity, as well as management’s expectations for the settlement period for all other financial instruments. As such the amounts may not reconcile to the balance sheet. Consolidated Group Financial assets: Cash & cash equivalents Trade and other receivables Available for sale investments Receivables non‐ current Total financial assets Financial liabilities: Trade & sundry payables Borrowings Total financial liabilities Weighted average effective interest rate 2017 2018 % % Floating interest rate Within 1 year Fixed interest rate maturing Over 5 years 1 to 5 years Non‐interest bearing Total 2018 $’000 2017 $’000 2018 $’000 2017 $’000 2018 $’000 2017 $’000 2018 $’000 2017 $’000 2018 $’000 2017 $’000 2018 $’000 2017 $’000 1.00 1.5 28,761 13,271 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 28,761 13,271 ‐ 14% ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 52 52 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 52 52 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 145,887 ‐ 145,887 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 28,761 13,271 2,242 3,336 2,242 3,336 4,018 824 4,018 824 ‐ ‐ ‐ ‐ ‐ 52 ‐ 52 6,260 4,160 35,073 17,483 22,713 9,189 22,713 9,198 ‐ 15,677 145,887 15,677 22,713 24,875 168,600 24,875 Term deposit 1.00 1.70 36 37 ANNUAL REPORT 2018 ALTURA 50 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 2. FINANCIAL RISK MANAGEMENT (continued) Trade and sundry payables are expected to be paid as follows: Less than 6 months More than 6 months e) Fair value measurements i) Fair value hierarchy 2018 $’000 22,713 ‐ 22,713 2017 $’000 9,198 ‐ 9,198 The Group uses various methods in estimating the fair value of financial instruments. AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level in accordance with the following fair value measurement hierarchy: a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3) c) The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at 30 June 2018 and 30 June 2017. 2018 Assets Listed investments Total assets 2017 Assets Listed investments Total assets ii) Valuation techniques Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 4,018 4,018 824 824 ‐ ‐ ‐ ‐ ‐ 4,018 ‐ 4,018 ‐ ‐ 824 824 The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets and liabilities held by the Group is the closing price. These instruments are included in level 1. Specific valuation techniques used to value financial instruments include:   The use of quoted market prices or dealer quotes for similar instruments; Other techniques, such as discounted cash flow analysis, are used to determine the fair value for the remaining financial instruments. 38 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 51 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 3. DISCONTINUED OPERATIONS a) Description During the reporting period the board has made several information packages available to various groups for the purpose of attracting offers for the sale of the Tabalong tenements in Kalimantan, Indonesia. The board considers that the presentation of the Tabalong Group as held for sale confirms its intent to dispose of these assets. Financial information relating to the discontinued operation for the period to the date of disposal is set out below. b) Financial performance and cash flow information of discontinued operations The financial performance and cash flow information presented are for the period ending June 2018. 2018 $’000 2017 $’000 Revenue Expenses Loss before income tax Loss after income tax of discontinued operation Loss on sale of joint ventures before income tax Loss from discontinued operations after income tax Net cash (outflow) from financing activities Net decrease in cash generated by the division c) Carrying amounts of assets and liabilities classified as held for sale The carrying amounts of assets and liabilities as at 30 June 2018 were: Cash Other receivables * Property, plant and equipment Exploration at cost Total assets of disposal group held for sale Other payables Borrowings ^ Total liabilities of disposal group held for sale ‐ (250) (250) (250) ‐ (250) (38) (38) ‐ (104) (104) (104) ‐ (104) (21) (21) 17 2,796 5 6,453 9,271 234 1,612 1,846 ^ These funds were advanced by the minority shareholder in the Tabalong coal project in accordance with the loan agreement. The facility has no defined repayment term. * These unsecured amounts are due from a minority party in the Tabalong coal project. Their recoverability is dependent on the commercial exploitation of certain mining tenements in the project. The timing of which is currently unknown, and as such the amounts have not been discounted. No losses are expected on these amounts. 39 ANNUAL REPORT 2018 ALTURA 52 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 4. SEGMENT INFORMATION The Group reports the following operating segments to the chief operating decision maker, being the Board of Directors of Altura Mining Limited, in assessing performance and determining the allocation of resources. Unless otherwise stated, all amounts reported to the Board are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group. The coal mining segment derives its revenue from coal sold to customers. As the Group's investment in coal is equity accounted, no revenue from this activity is included in this segment note. The lithium mining segment is currently under construction and upon completion it will derive its revenue from the sale of lithium to customers. The exploration services segment provides a range of drilling services to its customers, predominately mining and exploration companies. The mineral exploration segment revenue comprises royalties received and interest earned on funds raised to carry out the exploration activities. An internally determined service rate is set for all intersegment transactions. All such transactions are eliminated on consolidation of the Group’s financial statements. Coal mining $’000 Lithium mining $’000 Exploration services $’000 Mineral exploration $’000 Eliminations Total $’000 $’000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 771 457 94 1,322 ‐ 447 ‐ 447 ‐ ‐ (94) (94) 771 904 ‐ 1675 ‐ 1675 ‐ (524) (12,597) ‐ (13,121) ‐ 2018 Revenue External sales Other income Other segments Total segment revenue Unallocated revenue Total consolidated revenue Segment result Other segments Unallocated expenses net of unallocated revenue Profit / (loss) before income tax and finance costs Finance costs Income tax revenue/(expense) Profit / (loss) after income tax Profit / (loss) from discontinued operations Net profit / (loss) for the year Assets and liabilities Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities ‐ 236,968 1,442 21,195 ‐ 170,670 998 2,018 Other segment information Capital expenditure Exploration expenditure Depreciation and amortisation ‐ ‐ ‐ 162,075 ‐ ‐ ‐ ‐ 97 134 369 190 40 ‐ (13,121) ‐ 408 (12,713) (104) (12,817) ‐ ‐ ‐ ‐ ‐ 259,605 9,271 268,876 173,676 1,846 175,522 162,209 369 287 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 53 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 4. SEGMENT INFORMATION (continued) Coal mining $’000 Lithium mining $’000 Exploration services $’000 Mineral exploration $’000 Eliminations Total $’000 $’000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 768 9 178 955 ‐ 825 ‐ 825 ‐ ‐ (178) (178) 768 834 ‐ 1602 ‐ 1602 (142) ‐ (1,123) (5,184) ‐ (6,449) ‐ 2017 Revenue External sales Other income Other segments Total segment revenue Unallocated revenue Total consolidated revenue Segment result Other segments Unallocated expenses net of unallocated revenue Profit / (loss) before income tax and finance costs Finance costs Income tax revenue / (expense) Profit / (loss) after income tax Profit / (loss) from discontinued operations Net profit / (loss) for the year Assets and liabilities Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities ‐ 59,353 1,461 18,704 15,677 11,965 1,175 818 Other segment information Capital expenditure Exploration expenditure Depreciation and amortisation ‐ ‐ ‐ 47,529 ‐ ‐ 190 ‐ 240 470 855 95 41 ‐ (6,449) ‐ 534 (5,915) (250) (6,165) 79,518 8,820 88,338 29,635 1,753 31,388 48,189 855 335 ‐ ‐ ‐ ‐ ‐ ANNUAL REPORT 2018 ALTURA 54 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 4. SEGMENT INFORMATION (continued) Geographical segments The Group’s geographical segments are determined based on the location of the Group’s assets. Capital expenditure Exploration expenditure Depreciation and amortisation 162,209 229 188 ‐ 140 99 ‐ ‐ ‐ 2018 Revenue External sales Other income Other segments Total segment revenue Unallocated revenue Total revenue Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities 2017 Revenue External sales Other income Other segments Total segment revenue Unallocated revenue Total revenue Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Australia $’000 Indonesia $’000 Other $’000 Eliminations $’000 ‐ 447 ‐ 447 771 457 94 1,322 ‐ ‐ ‐ ‐ ‐ ‐ (94) (94) 256,489 2,899 217 25,239 148,293 144 Australia $’000 Indonesia $’000 Other $’000 Eliminations $’000 ‐ 825 ‐ 825 768 9 178 955 ‐ ‐ ‐ ‐ ‐ ‐ (178) (178) 77,790 1,478 250 12,694 16,852 89 Total $’000 771 904 ‐ 1,675 ‐ 1,675 259,605 9,271 268,876 173,676 1,846 175,522 162,209 369 287 Total $’000 768 834 ‐ 1,602 ‐ 1,602 79,518 8,820 88,338 29,635 1,753 31,388 48,189 855 335 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Capital expenditure Exploration expenditure Depreciation and amortisation 48,189 967 164 ‐ 158 171 ‐ ‐ ‐ The Group has a number of customers to whom it provides services. The Group supplies three external customers in the services segment who account for 35% (US$324,000), 11% (US$101,000) and 8% (US$72,000) of external revenue (2017: 60%). 42 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 55 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 5. PROFIT / (LOSS) FROM ORDINARY ACTIVITIES (a) Revenue Revenue from services Revenue from royalties Total sales revenues from ordinary activities (b) Other revenues Interest received from other corporations Profit on sale of assets Other revenue Total other revenues from ordinary activities Total revenue (c) Cost of sales Drilling costs Depreciation of plant & equipment Total cost of sales (d) Other expenses Depreciation of plant & equipment Other expenses Loss on sale of assets Total other expenses from ordinary activities (e) Foreign exchange gain / (loss) Net unrealised foreign exchange loss # Total foreign exchange gain / (loss) # The net unrealised foreign exchange loss relates to the revaluation of the US$110 funding facility and other US$ denominated funds held by the Group. (f) Employee benefits expense Employee share scheme expense Bonus paid by way of issue of shares to directors and staff Other employee benefits expense Total employee benefits expense 2018 $’000 772 393 1,165 447 48 15 510 2017 $’000 768 503 1,271 321 9 1 331 1,675 1,602 673 99 772 189 ‐ ‐ 189 6,366 6,366 1,796 34 1,860 3,690 827 242 1,069 93 8 66 167 1,371 1,371 162 70 2,040 2,272 43 ANNUAL REPORT 2018 ALTURA 56 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 6. EARNINGS / (LOSS) PER SHARE (a) Basic earnings / (loss) per share From continuing operations, attributable to the ordinary equity holders of the Company From discontinued operations Total basic earnings per share attributable to the ordinary equity holders of the Company (b) Diluted earnings / (loss) per share From continuing operations, attributable to the ordinary equity holders of the Company From discontinued operations Total basic earnings per share attributable to the ordinary equity holders of the Company (c) Weighted average number of ordinary shares used as the denominator in calculating the basic and diluted earnings per share. As at 30 June 2018, there were 8,200,000 management performance rights outstanding, these potential ordinary shares would reduce the loss per share from continuing ordinary operations on conversion, and hence these potential ordinary shares are not dilutive. (d) Earnings used in the calculation of basic earnings per share reconciles to net profit in the income statement as follows: Net profit / (loss) Less ‐ profit /(loss) from discontinued operations Earnings used in the calculation of basic EPS 2018 cents per share 2017 cents per share (0.73) (0.01) (0.74) (0.73) (0.01) (0.74) (0.44) (0.01) (0.45) (0.44) (0.01) (0.45) 2018 number 2017 number 1,743,518,956 1,358,286,271 2018 $’000 2017 $’000 (12,803) (77) (12,880) (5,958) (169) (6,127) 44 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 57 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 7. INCOME TAX EXPENSE (a) The components of tax expense comprise: Current Tax Current year Adjustments in respect of prior periods Deferred Tax Current year deferred tax Total income tax expense / (benefit) per income statement (b) Income tax expense / (benefit) is attributable to: Profit / (loss) from continuing operations Profit / (loss) from discontinued operations (c) The prima facie tax on profit / (loss) before income tax is reconciled to the income tax as follows: Profit / (loss) from continuing operations Profit / (loss) from discontinued operations Profit / (loss) before tax Income tax calculated at the Australian rate of 27.5% Increase in income tax due to: Non‐deductible expenses Share compensation costs Effect of current year tax losses not recognised Under / (over) provision in prior year Difference in overseas tax rates Income tax expense / (benefit) 2018 $’000 2017 $’000 ‐ (408) ‐ (408) (408) ‐ (408) (13,121) (104) (13,225) (3,637) 413 503 2,721 (408) ‐ (408) ‐ (534) ‐ (534) (534) ‐ (534) (6,449) (250) (6,699) (1,842) 1,083 64 666 (534) 29 (534) Deferred tax assets arising from tax losses are only recognised to the extent that there are equivalent deferred tax liabilities. The remaining tax losses have not been recognised as an asset because recovery of the losses is not regarded as probable: Tax losses not recognised ‐ revenue at 27.5% 12,016 9,503 (d) Tax consolidation system Legislation to allow groups, comprising a parent entity and its Australian resident wholly‐owned entities, to elect to consolidate and be treated as a single entity for income tax purposes was substantively enacted on 21 October 2002. Altura Mining Limited and certain of its wholly‐owned Australian subsidiaries are eligible to consolidate for tax purposes and have elected to form an income tax group under the Tax Consolidation Regime effective 1 July 2005. The implementation of the tax consolidation group was formally recognised by the ATO on 22 July 2005 with start date for income tax consolidation 1 July 2005 and Altura Mining Limited as the head entity of the group. Entities within the tax‐consolidated group have entered into a tax‐sharing agreement with the head entity. Under the terms of this agreement, Altura Mining Limited and each of the entities in the tax consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on standalone tax payer basis. Such amounts are reflected in amounts receivable from or payable to other entities in the tax consolidated group. 45 ANNUAL REPORT 2018 ALTURA 58 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 8. CASH AND CASH EQUIVALENTS Cash at bank and on hand 28,761 13,271 2018 $’000 2017 $’000 9. TRADE AND OTHER RECEIVABLES CURRENT Trade and other receivables Provision for doubtful debts 3,323 (1,081) 2,242 4,410 (1,074) 3,336 2018 Consolidated 2017 Consolidated 0‐30 days $000 1,732 2,825 31‐60 days $000 61 43 61‐90 days $000 54 38 90+ days $000 395 430 As at 30 June 2018, $510,000 (2017, $511,000) trade receivables were past due. 10. INVENTORIES Consumables and stores – at cost 11. HELD TO MATURITY INVESTMENTS Term deposits The term deposits are held to their maturity of less than one year and carry a weighted average fixed interest rate of 1.0% (2017: 1.5%). Due to their short term nature their carrying value is assumed to approximate their fair value. Information about the Group’s exposure to credit risk is disclosed in Note 2. 2018 $’000 1 1 52 52 Total $000 2,242 3,336 2017 $’000 1 1 52 52 46 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 59 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 12. OTHER CURRENT ASSETS Financial assets (security deposits) Prepayments 13. AVAILABLE‐FOR‐SALE FINANCIAL ASSETS Listed investments at fair value Carried forward from previous year Changes in fair value Total listed investments at fair value 2018 $’000 118 266 384 824 3,194 4,018 2017 $’000 128 205 333 1,333 (509) 824 In November 2012 the Group acquired a 14.7% interest in Lithium Corporation, Nevada USA by way of a non‐brokered private placement. Lithium Corporation is quoted on the US OTCBB (Over The Counter Bulletin Board). 14. PROPERTY, PLANT AND EQUIPMENT 2018 Gross carrying amount Balance at 30 June 2017 Additions Exchange difference Disposals Balance at 30 June 2018 Accumulated depreciation Balance at 30 June 2017 Depreciation expense Exchange difference Disposals Balance at 30 June 2018 Net book value as at 30 June 2018 Motor vehicles Office equipment Plant and equipment Exploration Total $’000 $’000 $’000 $’000 $’000 1,001 2 21 (90) 934 689 71 19 (90) 689 245 737 50 7 ‐ 794 605 65 11 ‐ 681 113 7,192 82 171 ‐ 7,445 6,953 90 173 ‐ 7,216 229 298 ‐ 1 ‐ 299 131 61 ‐ ‐ 192 107 9,228 134 200 (90) 9,472 8,378 287 203 (90) 8,778 694 47 ANNUAL REPORT 2018 ALTURA 60 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 14. PROPERTY, PLANT AND EQUIPMENT (continued) Motor vehicles Office equipment Plant and equipment Exploration Total $’000 $’000 $’000 $’000 $’000 2017 Gross carrying amount Balance at 30 June 2016 Additions Exchange difference Disposals Balance at 30 June 2017 Accumulated depreciation Balance at 30 June 2016 Depreciation expense Exchange difference Disposals Balance at 30 June 2017 Net book value as at 30 June 2017 713 339 (18) (33) 1,001 686 56 (21) (32) 689 312 616 132 (10) (1) 737 565 66 (25) (1) 605 132 7,342 ‐ (150) ‐ 7,192 6,894 190 (131) ‐ 6,953 239 15. EXPLORATION AND EVALUATION Exploration and evaluation expenditure at cost: Carried forward from previous year Transfer to mine development costs Incurred during the year Transferred to assets classified as held for sale Written off during the year Total exploration and evaluation expenditure The recovery of expenditure carried forward is dependent upon the discovery of commercially viable mineral and other natural resource deposits, their development and exploitation, or alternatively their sale. The Company's title to certain mining tenements is subject to Ministerial approval and may be subject to successful outcomes of native title issues. 108 190 ‐ ‐ 298 108 23 ‐ ‐ 131 167 8,779 661 (178) (34) 9,228 8,253 335 (177) (33) 8,378 850 2018 $’000 2017 $’000 1,226 (932) 1,662 (361) 1,595 ‐ 1,595 14,394 (15,459) 8,382 (6,092) 1,226 ‐ 1,226 48 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities Notes to the Financial Statements (continued) FOR THE YEAR ENDED 30 JUNE 2018 14. PROPERTY, PLANT AND EQUIPMENT (continued) Motor vehicles Office equipment Plant and equipment Exploration Total $’000 $’000 $’000 $’000 $’000 2017 Gross carrying amount Balance at 30 June 2016 Additions Disposals Exchange difference Balance at 30 June 2017 Accumulated depreciation Balance at 30 June 2016 Depreciation expense Exchange difference Disposals Balance at 30 June 2017 Net book value as at 30 June 2017 713 339 (18) (33) 1,001 686 56 (21) (32) 689 312 616 132 (10) (1) 737 565 66 (25) (1) 605 132 7,342 (150) ‐ ‐ 7,192 6,894 190 (131) ‐ 6,953 239 15. EXPLORATION AND EVALUATION Exploration and evaluation expenditure at cost: Carried forward from previous year Transfer to mine development costs Incurred during the year Transferred to assets classified as held for sale Written off during the year Total exploration and evaluation expenditure The recovery of expenditure carried forward is dependent upon the discovery of commercially viable mineral and other natural resource deposits, their development and exploitation, or alternatively their sale. The Company's title to certain mining tenements is subject to Ministerial approval and may be subject to successful outcomes of native title issues. 108 190 ‐ ‐ 298 108 23 ‐ ‐ 131 167 8,779 661 (178) (34) 9,228 8,253 335 (177) (33) 8,378 850 2018 $’000 2017 $’000 1,226 (932) 1,662 (361) 1,595 ‐ 1,595 14,394 (15,459) 8,382 (6,092) 1,226 ‐ 1,226 Altura Mining Limited and Controlled Entities 61 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 16. MINE DEVELOPMENT AT COST Mine development costs: Carried forward from previous year Transfer from exploration and evaluation Incurred during the year Total mine development costs 17. TRADE AND OTHER PAYABLES Trade payables and accruals 18. BORROWINGS Current borrowings Interest bearing Vendor loan # Total current borrowings Non‐current borrowings Interest bearing ^ Opening Balance Loan notes issued Interest capitalised Exchange rate differences Transaction costs Total non‐current borrowings 2018 $’000 2017 $’000 59,353 932 161,277 221,562 ‐ 15,459 43,894 59,353 22,713 22,713 9,198 9,198 ‐ ‐ 15,677 15,677 ‐ 141,075 17,706 11,088 (23,982) 145,887 ‐ ‐ ‐ ‐ ‐ ‐ # The vendor loan totalling $15.677 million was repaid in January 2018. ^ On 27 July 2017, loan notes were issued to lenders Magy LLC, Pala Investments Limited and CarVal Investors LLC (the facility). The interest rate is 14% p.a. for the first 18 months of the loan and 15% pa thereafter. The loan is for a 3‐year term expiring in August 2020. No repayments other than interest are due until the loan termination date. The loan is secured over all of Altura Lithium Operations (ALO) assets, shares in ALO, AJM bank accounts and certain AJM receivables. The Company has the option to capitalise Interest payments into the facility. Accrued interest $17.7 million has been capitalised to the end of the period. Under the terms of the facility, the Company is required to comply with the following financial covenants:   For periods ending on 30 September 2018, the Company shall ensure that the net debt to defined EBITDA ratio shall not exceed the ratio of 2:1. For quarterly reporting periods after the 30 September 2018 the net debt to defined EBITDA ratio shall not exceed the ratio of 1.5:1. No breaches have been reported. 48 49 ANNUAL REPORT 2018 ALTURA 62 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 19. SHORT TERM PROVISIONS Employee benefits Movements in provisions Short term employee benefits Opening balance Provision increase / (decrease) Expense incurred Balance at year end The aggregate employee entitlement liability recognised and included in the financial statements is as follows: Provision for employee entitlements: Current Total 20. CURRENT TAXATION & DEFERRED TAX LIABILITIES & ASSETS (a) Liabilities Current Income tax paid / payable Non‐Current Deferred tax liability comprises: Unrealised foreign exchange gain Tax allowances relating to exploration Property, plant & equipment Other (b) Assets Non‐Current Deferred assets comprise: Provisions Revenue losses Revenue losses not recognised Property, plant and equipment Unrealised foreign exchange loss Other 50 2018 $’000 2017 $’000 1,158 1,158 842 563 (247) 1,158 842 842 847 200 (205) 842 1,158 1,158 842 842 ‐ ‐ ‐ 4,918 6,961 9 11,888 1,399 22,204 (11,014) ‐ 124 (825) 11,888 1,586 4,560 ‐ 6 6,152 254 15,154 (9,503) 6 ‐ 241 6,152 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities Notes to the Financial Statements (continued) FOR THE YEAR ENDED 30 JUNE 2018 Altura Mining Limited and Controlled Entities 63 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 21. REHABILITATION PROVISION Non‐current provision Rehabilitation and demobilisation Movements in provisions Rehabilitation and demobilisation Opening balance Provision increase/(decrease) Expense incurred Balance at year end 2018 $’000 2017 $’000 3,918 3,918 3,918 ‐ ‐ 3,918 3,918 3,918 ‐ 3,918 ‐ 3,918 The aggregate employee entitlement liability recognised and included in the financial Directors have reviewed the rehabilitation provision and are confident that inputs into the current calculation can be relied upon. Refer to Note 1n (a) and Note 1p (i) for accounting policies in relation to the rehabilitation provision. 1,158 1,158 842 842 22. CONTRIBUTED EQUITY Issued capital 1,819,866,474 (2017: 1,541,678,000) ordinary shares issued and fully paid 192,893 146,556 Fully paid ordinary shares Balance at the beginning of the financial year Issue of shares to directors and staff # Issue of shares on vesting of performance rights ## Share purchase plan Shares issued in lieu of loan note fees Share placement Exercise of Listed Options Exercise of Warrants and Unlisted Options Share issue costs 2018 Number 1,541,678,000 150,000 3,800,000 ‐ 72,644,513 136,973,685 ‐ 64,620,276 ‐ $’000 146,556 34 356 ‐ 11,521 26,025 ‐ 9,799 (1,398) 2017 Number 1,222,459,902 450,000 3,600,000 3,869,000 ‐ 306,000,000 5,299,098 ‐ ‐ $’000 105,840 70 233 773 ‐ 41,616 105 ‐ (2,081) Balance at the end of the financial year 1,819,866,474 192,893 1,541,678,000 146,556 ‐ ‐ ‐ On 31 July 2017, the Company completed its loan funding facility. As part of this funding facility, 72.6 million shares were issued at an issue price of 15.86 cents per share. On 12 October 2017, the Company completed a placement of shares in which 136.97 million shares were issued at an issue price of 19.0 cents per share. During the period warrants and options that were issued as part of the funding facility were exercised. The Company completed the following issue shares. o On 30 November 2017, 122.5 million shares were issued at an issue price of 19.0 cents per share, 1 million shares were issued at an issue price of 26.5 cents per share and 19.812 million shares were issued at an issue price of 12.6 cents per share 19. SHORT TERM PROVISIONS Employee benefits Movements in provisions Short term employee benefits Opening balance Provision increase / (decrease) Expense incurred Balance at year end statements is as follows: Provision for employee entitlements: Current Total 20. CURRENT TAXATION & DEFERRED TAX LIABILITIES & ASSETS (a) Liabilities Current Income tax paid / payable Non‐Current Deferred tax liability comprises: Unrealised foreign exchange gain Tax allowances relating to exploration Property, plant & equipment Other (b) Assets Non‐Current Deferred assets comprise: Provisions Revenue losses Revenue losses not recognised Property, plant and equipment Unrealised foreign exchange loss Other 2018 $’000 2017 $’000 1,158 1,158 842 563 (247) 1,158 842 842 847 200 (205) 842 ‐ ‐ 4,918 6,961 9 11,888 1,399 22,204 (11,014) ‐ 124 (825) 11,888 ‐ 1,586 4,560 ‐ 6 6,152 254 15,154 (9,503) 6 ‐ 241 6,152 o On 12 December 2017, 2 million shares were issued at an issue price of 26.6 cents per share and 33.02 o o million shares were issued at an issue price of 12.6 cents per share 21 December 2017, 2.6 million shares were issued at an issue price of 26.67 cents per share 15 January 2018, 2.75 million shares were issued at an issue price of 26.65 cents per share and 3.44 million shares were issued at an issue price of 26.65 cents per share 50 51 # No shares were issued to directors and other key management personnel in 2018 (2017 nil). ## 2,600,000 shares were issued to directors and other key management personnel in 2018 (2017 2,600,000). Fully paid ordinary shares carry one vote per share and carry the rights to dividends. Ordinary shares have no par value. ANNUAL REPORT 2018 ALTURA 64 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 22. CONTRIBUTED EQUITY (continued) Reserves Movements in option and performance rights reserve Opening balance Share based payment expense following the issue of performance rights Performance rights exercised and transferred to accumulated losses Balance at year end 2018 $’000 162 1,796 (356) 1,602 2017 $’000 233 162 (233) 162 The option and performance rights reserve records items recognised as expenses on the valuation of share options and performance rights. The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary. The change in fair value reserve records valuation differences arising on the market valuation of available for sale financial assets. Refer to note 13 for reconciliation of movements in the year. Capital management The Board's policy is to maintain a strong capital base in order to maintain investor, creditor and market confidence and to sustain future development of the business. There were no changes to the consolidated entity's approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. The Board effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels and by share issues. 52 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 65 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 23. SHARE BASED PAYMENTS a) Performance Rights In 2014 the Company approved a Long‐Term Incentive Plan (LTIP) under which employees and directors of the Group may be issued on a discretionary basis with performance rights over ordinary shares of Altura Mining Limited. The purpose of this plan is to:    assist in the reward, retention and motivation of employees and directors; align the interests of employees and directors more closely with the interests of Shareholders by providing an opportunity for employees and directors to receive an equity interest in the form of Awards; and provide employees and directors with the opportunity to share in any future growth in value of the Company. The Performance Rights lapse when employment ceases with Altura Mining Limited. The Performance Rights have been granted for no consideration, and no amount is payable on the vesting or exercising of the Performance Rights. All rights subject to the LTIP carry no rights to dividends and no voting rights, until converted into ordinary shares. The Company had the following Performance Rights granted under the LTIP as at 30 June 2018: Number 500,000 7,500,000 200,000 Issue date Vesting date 30 March 2017 First shipment of ore 18 December 2017 30 November 2018 21 February 2018 30 November 2018 b) Bonus shares During the year 150,000 shares were issued to staff for no consideration. During the year, the Company had the following share based payments expenses: Performance rights (Note 23b) Bonus shares 2018 $’000 1,796 34 1,830 2017 $’000 162 70 232 53 ANNUAL REPORT 2018 ALTURA 66 Altura Mining Limited and Controlled Entities Notes to the Financial Statements (continued) Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 24. KEY MANAGEMENT PERSONNEL COMPENSATION a) Names and positions held of key management personnel in office at any time during the financial year are: Directors James Brown Paul Mantell Allan Buckler Dan O’Neill BT Kuan Zhao Tong Managing Director Executive Director Non‐Executive Director Non‐Executive Director Non‐Executive Director Non‐Executive Director Key Management Personnel Chris Evans Noel Young Damon Cox Chief Operating Officer Group Financial Controller Company Secretary b) Key management personnel remuneration Short‐term employee benefits Long‐term employee benefits Post‐employment benefits Termination benefits Share based payments 2018 $ 1,904,082 ‐ 106,523 ‐ 952,841 2,963,446 2017 $ 1,757,701 ‐ 102,217 ‐ 88,685 1,948,603 54 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities Notes to the Financial Statements (continued) FOR THE YEAR ENDED 30 JUNE 2018 67 Notes to the Financial Statements continued 24. KEY MANAGEMENT PERSONNEL COMPENSATION (continued) c) Performance Rights Number of performance rights held by key management personnel The number of performance rights in the Company held during the financial year by each director of Altura Mining Limited and other key management personnel of the Group, including their personally related parties, are set out below. 2018 J Brown P Mantell A Buckler D O’Neill B Kuan Z Tong C Evans N Young D Cox 2017 J Brown P Mantell A Buckler D O’Neill B Kuan Z Tong C Evans N Young D Cox Balance at the start of the year Granted as compensation Shares issued/ rights lapsed Balance at the end of the year Vesting 30 Nov 2018 1,000,000 2,000,000 (1,000,000) 2,000,000 2,000,000 500,000 100,000 100,000 100,000 ‐ 400,000 200,000 200,000 Balance at the start of the year 2,000,000 1,000,000 200,000 200,000 200,000 ‐ 800,000 400,000 400,000 1,000,000 (500,000) 1,000,000 1,000,000 ‐ ‐ ‐ ‐ (100,000) (100,000) (100,000) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 1,000,000 (400,000) 1,000,000 1,000,000 200,000 200,000 (200,000) (200,000) 200,000 200,000 200,000 200,000 Granted as compensation Shares issued/ rights lapsed Balance at the end of the year Vesting 30 Nov 2017 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ (1,000,000) 1,000,000 1,000,000 (500,000) (100,000) (100,000) (100,000) 500,000 500,000 100,000 100,000 100,000 100,000 100,000 100,000 ‐ ‐ ‐ (400,000) (200,000) (200,000) 400,000 400,000 200,000 200,000 200,000 200,000 Details of performance rights awarded as compensation and shares issued on the vesting of the rights, together with terms and conditions of the rights, can be found in the Directors’ Report and under Note 23(b). 55 ANNUAL REPORT 2018 ALTURA 68 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 24. KEY MANAGEMENT PERSONNEL COMPENSATION (continued) d) Share holdings Number of shares held by key management personnel The number of shares in the Company held during the financial year by each director of Altura Mining Limited and other key management personnel (KMP) of the Group, including their personally related parties, are set out below. Balance at start of the year Purchased / (sold) Vesting of performance rights Other changes Balance at the end of the year 2018 J Brown P Mantell A Buckler D O’Neill B Kuan Z Tong C Evans N Young D Cox 2017 J Brown P Mantell A Buckler D O’Neill B Kuan C Evans N Young D Cox 27,518,301 33,003,084 177,293,692 14,433,336 20,900,000 ‐ 1,400,000 17,374,411 1,475,000 26,518,301 32,503,084 177,193,692 14,333,336 20,800,000 1,041,000 17,174,411 1,275,000 ‐ ‐ 17,446,064 (900,000) ‐ ‐ (800,000) ‐ ‐ ‐ ‐ ‐ ‐ ‐ (41,000) ‐ ‐ 1,000,000 500,000 100,000 100,000 100,000 ‐ 400,000 200,000 200,000 1,000,000 500,000 100,000 100,000 100,000 400,000 200,000 200,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 28,518,301 33,503,084 194,839,756 13,633,336 21,000,000 ‐ 1,000,000 17,574,411 1,675,000 27,518,301 33,003,084 177,293,692 14,433,336 20,900,000 1,400,000 17,374,411 1,475,000 25. INVESTMENTS IN OTHER ENTITIES a) Joint operations Altura Mining Limited holds no interests in any joint operations or ventures. b) Interests are held in the following associated companies: Name Principal activities Country of incorporation Ownership interest Carrying amount of investment Unlisted: Evora Mining Inc.* Merida Mining Pte. Ltd.* Coal Mining Holding and Investment British Virgin Islands Singapore 2018 % 0% 0% 2017 % 33⅓ 33⅓ 2018 $’000 2017 $’000 ‐ ‐ ‐ ‐ ‐ ‐ * Evora Mining Inc. is the ultimate controlling entity of PT Binamitra Sumberata, the owner and operator of the Delta coal mining tenements. The Group divested its 33⅓% investment in Evora Mining Inc. and Merida on 14th June 2018. The impact to profit and loss was a gain on sale of $1. 56 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities Notes to the Financial Statements (continued) FOR THE YEAR ENDED 30 JUNE 2018 Altura Mining Limited and Controlled Entities 69 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 24. KEY MANAGEMENT PERSONNEL COMPENSATION (continued) 26. INTERESTS IN SUBSIDIARIES The consolidated financial statements incorporate the assets, liabilities and results of the following wholly‐owned subsidiaries in accordance with the accounting policy described in Note 1: Name of entity Altura Lithium Operations Pty Ltd Altura Drilling Pty Ltd Altura Minerals Pty Ltd Minvest Australia Pty Ltd Minvest International Corporation Altura Asia Pte Ltd Altura Mining Philippines Inc. * PT Asiadrill Bara Utama PT Altura Indonesia PT Minvest Mitra Pembangunan PT Cakrawala Jasa Pratama PT Minvest Jasatama Teknik PT Cybertek Global Utama Country of incorporation Ownership interest Australia Australia Australia Australia Mauritius Singapore Philippines Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia 2018 % 100 100 100 100 100 100 40 100 100 100 100 100 100 2017 % 100 100 100 100 100 100 40 100 100 100 100 100 100 * Altura Mining Limited through its wholly owned subsidiary, Altura Asia Pte Ltd holds 40% direct equity in Altura Mining Philippines Inc. This entity is considered a subsidiary as the Group has full economic and management rights. The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries with non‐ controlling interests in accordance with the accounting policy described in Note 1: Country of incorporation Principal activities Parent ownership interest Non‐controlling interest Name of entity PT Velseis Indonesia * PT Jasa Tambang Pratama # PT Cahaya Permata Khatulistiwa # PT Suryaraya Permata Cemerlang # PT Suryaraya Cahaya Khatulistiwa # PT Suryaraya Cahaya Cemerlang # PT Suryaraya Permata Khatulistiwa # PT Suryaraya Pusaka # PT Kodio Multicom PT Marangkayu Bara Makarti Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Mining services Mining and exploration Mining and exploration Mining and exploration Mining and exploration Mining and exploration Mining and exploration Mining and exploration Mining and exploration Mining and exploration 2018 % 50 70 70 70 70 70 70 70 56 56 2017 % 50 70 70 70 70 70 70 70 56 56 2018 % 50 30 30 30 30 30 30 30 44 44 2017 % 50 30 30 30 30 30 30 30 44 44 Altura Mining Limited, Altura Lithium Operations Pty Ltd and Altura Minerals Pty Ltd are included within the tax consolidation group. # Altura Mining Limited through its wholly owned subsidiary, Altura Asia Pte Ltd holds 70% direct equity in these seven entities. * Altura Mining Limited through its wholly owned subsidiary, Minvest International Corporation holds 50% direct equity in PT Velseis Indonesia. This entity is considered a subsidiary as the Group has full management rights. 56 57 d) Share holdings Number of shares held by key management personnel The number of shares in the Company held during the financial year by each director of Altura Mining Limited and other key management personnel (KMP) of the Group, including their personally related parties, are set out below. Balance at start Purchased / Vesting of Other changes of the year (sold) performance Balance at the end of the year 2018 J Brown P Mantell A Buckler D O’Neill B Kuan Z Tong C Evans N Young D Cox 2017 J Brown P Mantell A Buckler D O’Neill B Kuan C Evans N Young D Cox 27,518,301 33,003,084 177,293,692 14,433,336 20,900,000 ‐ 1,400,000 17,374,411 1,475,000 26,518,301 32,503,084 177,193,692 14,333,336 20,800,000 1,041,000 17,174,411 1,275,000 17,446,064 (900,000) (800,000) (41,000) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ rights 1,000,000 500,000 100,000 100,000 100,000 ‐ 400,000 200,000 200,000 1,000,000 500,000 100,000 100,000 100,000 400,000 200,000 200,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 28,518,301 33,503,084 194,839,756 13,633,336 21,000,000 ‐ 1,000,000 17,574,411 1,675,000 27,518,301 33,003,084 177,293,692 14,433,336 20,900,000 1,400,000 17,374,411 1,475,000 25. INVESTMENTS IN OTHER ENTITIES a) Joint operations Altura Mining Limited holds no interests in any joint operations or ventures. b) Interests are held in the following associated companies: Name Principal activities Country of incorporation Ownership interest Carrying amount of investment Unlisted: Evora Mining Inc.* Coal Mining British Virgin Islands Merida Mining Pte. Ltd.* Holding and Investment Singapore 2018 % 0% 0% 2017 % 33⅓ 33⅓ 2018 $’000 2017 $’000 ‐ ‐ ‐ ‐ ‐ ‐ * Evora Mining Inc. is the ultimate controlling entity of PT Binamitra Sumberata, the owner and operator of the Delta coal mining tenements. The Group divested its 33⅓% investment in Evora Mining Inc. and Merida on 14th June 2018. The impact to profit and loss was a gain on sale of $1. ANNUAL REPORT 2018 ALTURA 70 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 26. INTERESTS IN SUBSIDIARIES (continued) Summarised financial information Summarised financial information of the subsidiaries with non‐controlling interests that are material to the consolidated entity are set out below: PT Velseis Indonesia $’000 PT Suryaraya Pusaka $’000 PT Kodio Multicom $’000 PT Marangkayu Bara Makarti $’000 2018 Summarised statement of financial position Current assets Non‐current assets Total assets Current liabilities Non‐current liabilities Total liabilities Net assets Summarised statement of profit or loss and other comprehensive income Revenue Expenses Profit / (loss) before income tax expense Income tax expense / (benefit) Profit / (loss) after income tax expense Other comprehensive income Total comprehensive income Statement of cash flows Net cash from operating activities Net cash used in investing activities Net cash used in financing activities Net increase / (decrease) in cash and cash equivalents Other financial information Profit attributable to non‐controlling interests Accumulated non‐controlling interest at the end of reporting period 613 300 913 216 74 290 623 710 530 180 ‐ 180 23 203 (4) ‐ ‐ (4) 101 285 171 1,599 1,770 ‐ 1,197 1,197 573 ‐ (1) 1 ‐ 1 (4) (3) 1 ‐ ‐ 1 (1) (1) 1,008 867 1.875 1 828 829 1,046 ‐ (12) 12 ‐ 12 (12) ‐ ‐ ‐ ‐ ‐ ‐ 19 1,007 1,700 2,707 5 1,627 1,632 1,075 ‐ (20) 20 ‐ 20 (11) 9 ‐ ‐ ‐ ‐ 4 32 58 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 71 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 26. INTERESTS IN SUBSIDIARIES (continued) PT Velseis Indonesia $’000 PT Suryaraya Pusaka $’000 PT Kodio Multicom $’000 PT Marangkayu Bara Makarti $’000 447 244 691 201 73 274 417 483 396 87 ‐ 87 (11) 76 20 ‐ ‐ 20 38 184 170 1,530 1,700 ‐ 1,151 1,151 549 ‐ 1 (1) ‐ (1) 3 2 7 ‐ ‐ 7 1 (1) 969 833 1,802 1 807 808 994 ‐ 24 (24) ‐ (24) 10 (14) ‐ ‐ ‐ ‐ (6) 19 968 1,633 2,601 5 1,583 1,588 1,013 ‐ 20 (20) ‐ (20) 10 (10) ‐ ‐ ‐ ‐ (4) 28 2017 Summarised statement of financial position Current assets Non‐current assets Total assets Current liabilities Non‐current liabilities Total liabilities Net assets Summarised statement of profit or loss and other comprehensive income Revenue Expenses Profit / (loss) before income tax expense Income tax expense / (benefit) Profit / (loss) after income tax expense Other comprehensive income Total comprehensive income Statement of cash flows Net cash from operating activities Net cash used in investing activities Net cash used in financing activities Net increase / (decrease) in cash and cash equivalents Other financial information Profit attributable to non‐controlling interests Accumulated non‐controlling interest at the end of reporting period 27. RELATED PARTIES Transactions within the wholly‐owned group The wholly‐owned group includes the ultimate parent entity in the wholly‐owned group, and wholly‐owned controlled entities. The ultimate parent entity in the wholly‐owned group is Altura Mining Limited. During the year the parent entity provided financial assistance to its wholly owned and controlled entities by way of intercompany loans. The loans are unsecured, interest free and have no fixed term of repayment. Sales and purchases between related parties within the Group have been eliminated upon consolidation. There were no further sales or purchases from wholly‐owned related parties during the financial year. 59 ANNUAL REPORT 2018 ALTURA 72 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 28. NOTES TO STATEMENT OF CASH FLOWS a) For the purpose of the statement of cash flows, cash includes cash on hand and in banks, and investments in money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the statements of cash flows is reconciled to the related items in the balance sheet as follows: Cash at bank and on hand (Note 8) Cash in assets classified as held for sale Cash per statement of cash flows Reconciliation to Statement of Cash Flows For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at 30 June: Cash at bank and on hand Short‐term deposits Cash at bank and on hand 2018 $’000 28,761 18 28,779 2017 $’000 13,271 37 13,308 28,779 ‐ 27,779 13,308 ‐ 13,308 b) Reconciliation of operating profit / (loss) after income tax to net cash used in operating activities Operating loss after income tax (12,817) (6,165) Adjustments for non‐cash income and expense items: Option and share pricing Bonus paid by way of issue of shares to directors and staff Impairment ‐ equity Depreciation of property, plant and equipment Share of (profit) / loss of associates and joint venture partnership Foreign currency exchange rate movement (Increase) / decrease in current tax prepaid Increase / (decrease) in deferred tax balances Changes in assets and liabilities: (Increase) / decrease in receivables (Decrease) / increase in other creditors and accruals (Increase) / decrease in deposits and prepayments Increase / (decrease) in current provisions Net cash used in operating activities c) Net debt reconciliation Net debt Cash and cash equivalents Borrowings – repayable within one year Borrowings – repayable after one year Net Debt Cash and liquid investments Gross debt ‐ fixed interest rate Gross debt ‐ variable interest rate Net debt 60 1,796 34 ‐ 287 ‐ 2,815 126 ‐ 1,094 948 (51) 316 (5,451) 28,779 ‐ (145,887) (117,108) 28,779 (145,887) ‐ (117,108) 162 70 18 335 124 (5,166) 24 ‐ (2,210) 7,128 128 (5) (5,557) 13,308 (15,677) ‐ (2,369) 13,308 (15,677) ‐ (2,369) ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 73 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 28. NOTES TO STATEMENT OF CASH FLOWS (continued) Cash and cash equivalents Borrowings due within 1 year Borrowings due after 1 year Total Net debt as at 30 June 2017 Cash flows Foreign exchange adjustments Other non‐cash movements Net debt as at 30 June 2018 13,308 15,463 8 ‐ 28,779 (15,677) ‐ (2,369) 15,053 (128,615) (98,099) 40 584 ‐ (11,088) (11,040) (6,184) (5,600) (145,887) (117,108) d) Acquisition of entities The Group did not acquire any interest in entities during the year. 61 ANNUAL REPORT 2018 ALTURA 74 Altura Mining Limited and Controlled Entities Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 29. PARENT ENTITY DISCLOSURE (a) Summary of financial information The individual financial statements for the parent entity show the following aggregate amounts: Altura Mining Limited and Controlled Entities Notes to the Financial Statements (continued) FOR THE YEAR ENDED 30 JUNE 2018 2018 $’000 Parent 2017 $’000 Parent 32. CONTINGENT LIABILITIES statements are as follows: Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the financial Balance sheet Current assets Total assets Current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained profits / (accumulated losses) Total shareholder equity Loss for the year Total comprehensive loss for the year (b) Contingent liabilities Contingent liabilities are disclosed in Note 32. (c) Contractual commitments No later than one year Later than one year and not later than five years Later than five years 30. AUDITORS’ REMUNERATION Amount paid or payable for the audit or review of the financial report 31. SUBSEQUENT EVENTS 14,999 113,063 447 447 112,616 192,893 1,602 (81,879) 112,616 13,304 101,008 723 723 100,285 146,556 162 (46,433) 100,285 (35,597) (7,065) (35,597) (7,065) 93 58 ‐ 151 2018 $’000 121 121 89 148 ‐ 237 2017 $’000 109 109 Subsequent to the end of the financial year, Altura entered into an amendment deed with existing Loan Note Holders for an additional US$15 million of debt funding as an extension to the existing debt facility (see ASX announcement of 11 September 2018). The terms of the facility are generally in line with the existing US$110 million senior secured loan note facility that was executed in July 2017 (see ASX announcement on 28 July 2017). Altura will use the additional funds as it ramps‐up production to nameplate capacity at the Altura Lithium Project, continued exploration of the Company’s portfolio of tenements and ongoing work on the Stage 2 expansion. The commitment in respect of these leases is: No later than one year Later than one year and not later than five years Later than five years 62 63 The bankers of the Group and parent entity have issued undertakings and guarantees to the DME (Northern Territory Department of Mines and Energy) and various other entities. A subsidiary of the Group has entered into a conditional loan agreement No losses are anticipated in respect of any of the above contingent liabilities. 33. COMMITMENTS 2018 $’000 53 2017 $’000 53 In order to maintain an interest in the mining and exploration tenements in which the Group is involved, the Group is committed to meeting the conditions under which the tenements were granted and the obligations of any joint venture agreements. The timing and amount of exploration expenditure commitments and obligations of the Group are subject to the minimum expenditure commitments required by the relevant State Departments of Minerals and Energy, and may vary significantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest. One of the Group's subsidiaries has contracted to provide up to a US$4 million facility to a minority party in the Tabalong coal project. The provision of the facility is contingent on project milestones being achieved. The facility will be repaid in accordance with the loan agreement between the parties. The likelihood of this proceeding is highly probable. a) Exploration work b) Asset acquisitions The Company has certain obligations to perform minimum exploration work and expend minimum amounts on its wholly owned mining tenements. Obligations for the next 12 months are expected to amount to $388,600 (2017: $294,308). No estimate has been given of expenditure commitments beyond 12 months for its wholly owned tenements as this is dependent on the Directors’ ongoing assessment of operations and, in certain instances, native title negotiations. The Group has the following commitments for asset acquisitions at 30 June 2018. Capital expenditures contracted for at the balance sheet date but not recognised in the financial statements Mine development at cost c) Operating leases The Group has entered into operating leases for office premises at Barrack Street in Perth, Western Australia and at Jakarta and Balikpapan in Indonesia. The Group also has operating leases in relation to certain office equipment. 2018 $’000 5,577 5,577 2018 $’000 254 58 ‐ 312 2017 $’000 13,903 13,903 2017 $’000 391 266 ‐ 657 ALTURA ANNUAL REPORT 2018 Altura Mining Limited and Controlled Entities 75 Notes to the Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements (continued) 32. CONTINGENT LIABILITIES Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the financial statements are as follows: The bankers of the Group and parent entity have issued undertakings and guarantees to the DME (Northern Territory Department of Mines and Energy) and various other entities. A subsidiary of the Group has entered into a conditional loan agreement No losses are anticipated in respect of any of the above contingent liabilities. 33. COMMITMENTS 2018 $’000 53 2017 $’000 53 In order to maintain an interest in the mining and exploration tenements in which the Group is involved, the Group is committed to meeting the conditions under which the tenements were granted and the obligations of any joint venture agreements. The timing and amount of exploration expenditure commitments and obligations of the Group are subject to the minimum expenditure commitments required by the relevant State Departments of Minerals and Energy, and may vary significantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest. One of the Group's subsidiaries has contracted to provide up to a US$4 million facility to a minority party in the Tabalong coal project. The provision of the facility is contingent on project milestones being achieved. The facility will be repaid in accordance with the loan agreement between the parties. The likelihood of this proceeding is highly probable. a) Exploration work The Company has certain obligations to perform minimum exploration work and expend minimum amounts on its wholly owned mining tenements. Obligations for the next 12 months are expected to amount to $388,600 (2017: $294,308). No estimate has been given of expenditure commitments beyond 12 months for its wholly owned tenements as this is dependent on the Directors’ ongoing assessment of operations and, in certain instances, native title negotiations. b) Asset acquisitions The Group has the following commitments for asset acquisitions at 30 June 2018. Capital expenditures contracted for at the balance sheet date but not recognised in the financial statements Mine development at cost c) Operating leases 2018 $’000 5,577 5,577 2017 $’000 13,903 13,903 The Group has entered into operating leases for office premises at Barrack Street in Perth, Western Australia and at Jakarta and Balikpapan in Indonesia. The Group also has operating leases in relation to certain office equipment. The commitment in respect of these leases is: No later than one year Later than one year and not later than five years Later than five years 63 2018 $’000 254 58 ‐ 312 2017 $’000 391 266 ‐ 657 ANNUAL REPORT 2018 ALTURA 76 Directors' Declaration Altura Mining Limited and Controlled Entities Directors’ Declaration In the Directors’ opinion: (a) The financial statements and notes set out on pages 14 to 63 are in accordance with the Corporations Act 2001 and: a. b. comply with Accounting Standards 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 its performance for the financial year ended on that date; (b) the financial statements and notes also comply with International Financial Reporting Standards as set out in Note 1; (c) there are reasonable grounds to believe that the Company will be able to pay its debt as and when they become due and payable. The Directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer required under section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the directors. __________________________ James Brown Managing Director Perth, 11 September 2018 64 ALTURA ANNUAL REPORT 2018 77 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ALTURA MINING LIMITED Report on the Financial Report Opinion We have audited the accompanying financial report of Altura Mining Limited (the company), which comprises the consolidated balance sheet as at 30 June 2018, the consolidated statement of profit and loss, the consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the company and the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. In our opinion, the financial report of Altura Mining Limited is in accordance with the Corporations Act 2001, including: i) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its performance for the year ended on that date; and ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those standards are further described in the Auditor’s Responsibility section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the consolidated entity in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters was addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For the matters below, our description of how our audit addressed these matters is provided in that context. 65 ANNUAL REPORT 2018 ALTURA 78 1. Mine Development Assets – Recognition and Measurement Why significant How our audit addressed the key audit matter As at 30 June 2018 mine development expenditure relating to the Pilgangoora Lithium Project of $221.562 million has been capitalised and is disclosed in Note 16. The consolidated entity’s accounting policy in respect of mine development assets is detailed in Note 1. The mine development assets – recognition and measurement is a key audit matter due to:   the significance of the balance (being 82.4% of total assets); and the level of judgement applied in determining the treatment of mine development expenditure in accordance with AASB 116 Property, Plant and Equipment. In particular, judgement exists around:  whether the conditions for capitalisation are satisfied; and  whether facts and circumstances indicate that the mine development assets should be tested for impairment. The evaluation of the recoverable amount of the asset requires significant judgement in determining the key assumptions supporting the expected future cash flows of the Pilgangoora Lithium Project. In assessing this key audit matter, we involved senior audit team members who understand the industry. Our audit procedures included, amongst others: that to confirm obtaining a project management report and holding discussions with the directors and the mine management development project remains on budget with time and resources; obtaining a schedule of costs capitalised and testing on a sample basis, expenditure on the mine site, including construction, installation and / or completion of infrastructure facilities capitalised during the year; performing a physical inspection of the mine site, including mine site tour and physical observation of mine site construction assets capitalised. This inspection and observation was conducted by all senior members of the engagement team; interviews with staff on mine, including the authorised mining licensee; ensuring costs capitalised during the year comply with the recognition and measurement criteria of AASB 116 for qualifying assets; and assessing whether any facts or circumstances existed to suggest impairment testing was required.       66 ALTURA ANNUAL REPORT 2018 79 2. Borrowings – Loan Note Facility – Recognition and Measurement Why significant How our audit addressed the key audit matter As at 30 June 2018 the consolidated entity held a loan note facility of $145.887 million (2017: $- million) as described in Note 18. The consolidated entity’s accounting policy in respect of the loan note facility is detailed in Note 1. In assessing this key audit matter, we involved senior audit team members who understand such financial instruments. We also obtained external advice where appropriate. Our audit procedures included, amongst others: obtaining and reviewing loan agreements, subscription deeds and warrant deeds relating to the loan note facility; obtaining a schedule of costs capitalised and testing on a sample basis, costs capitalised during the year. This included an assessment of the costs capitalised to ensure they meet the appropriate criteria of the standards; obtaining application of relevant accounting standards; reviewing management’s position papers and in accounting policies regarding accordance accounting relevant standards; and reviewing management’s forecasted plans for repayment the consolidated entity’s ability to repay the facility by the maturity date. technical advice concerning assessment treatment with and the of Borrowings - loan note facility – recognition and measurement is a key audit matter due to:   the significance of the balance (being 83.1% of total liabilities); and the level of complexity and judgement applied in determining the correct treatment in accordance with AASB 132 Financial Instruments: Presentation, AASB 9 Financial Instruments and AASB 123 Borrowing Costs. In particular, complexity and judgement exists around:  whether the loan note is classified as a financial liability, rather than an equity instrument;  which particular transactions costs, if any, are able to be capitalised;  which interest costs, if any, are able to be capitalised;  which foreign currency costs, if any, are able to be capitalised; and  management’s plan and the consolidated entity’s capacity concerning the repayment of the borrowing facility.      67 ANNUAL REPORT 2018 ALTURA 80 3. Funding and Liquidity Why significant How our audit addressed the key audit matter As detailed in note 1(a)(i), the consolidated entity recorded an operating loss after tax of $12.82m (2017: loss of $6.16m) and cash outflows from operations of $5.45m (2017: outflows of $5.56m). At year-end the consolidated entity had $28.76m (2017: $13.27m) of cash available for future expenditure. these the date The consolidated entity has prepared a forecast which demonstrates that there will be sufficient funding to operate for a period that is not less than twelve months beyond financial statements are approved. The forecast takes into account the available cash on hand at year-end, combined with the forecast cash inflows from operations (successful production and sale of product), cash outflows flows from investing (completion of the mine development asset) and cash inflows from financing (continued support from financiers / shareholders). Given the judgement involved and audit effort involved in reviewing the forecast cash flows from operations, we have included the going concern assumption as a key audit matter. In assessing this key audit matter, we have evaluated management’s plans for future actions in relation to its going concern assessment, whether the outcome of these plans is likely to improve the situation and whether management’s plans are feasible in the circumstances. This included evaluating the consolidated entity’s latest cash flow forecast for a period that is not less than 12 months beyond the date of the financial statements are approved. We have considered whether there are indicators that the consolidated entity may face a liquidity shortfall and assessed the resulting implications by:  Understanding and challenging the reasonableness of key assumptions used by the consolidated entity in their cash flow forecast for a period that is not less than 12 months beyond the date of these financial statements are approved;  Performing sensitivity analysis to determine the robustness of the cash flow forecast and the impact of changing key assumptions; and  Assessing the adequacy of the disclosures made by management in the consolidated financial statements. Other Information Other information is financial and non-financial information in the annual report of the consolidated entity which is provided in addition to the Financial Report and the Auditor’s Report. The directors are responsible for Other Information in the annual report. We have obtained all the other information prior to the date of this Auditor’s Report, which includes the letter from the Managing Director, Directors’ Report, Corporate Governance Statement and Shareholder Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, the auditor does not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information in the Financial Report and based on the work we have performed on the Other Information that we obtained prior the date of this Auditor’s Report we have nothing to report. Directors’ Responsibilities for the Financial Report The Directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that 68 ALTURA ANNUAL REPORT 2018 81 gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report complies with International Financial Reporting Standards. In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using a going concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individual or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the consolidated entity to cease to continue as a going concern. We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the consolidated entity to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 69 ANNUAL REPORT 2018 ALTURA 82 The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2018. Opinion In our opinion, the Remuneration Report of Altura Mining Limited for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. PKF HACKETTS AUDIT LIAM MURPHY PARTNER 11 SEPTEMBER 2018 BRISBANE, AUSTRALIA 70 ALTURA ANNUAL REPORT 2018 83 Interest Additional ASX Information SCHEDULE OF MINERAL PROPERTIES Tenement Number E 45/2277 E 45/2287 E 45/2363 E 45/3488 E 45/4894 E 45/5136 E 45/5137 E 45/5280 E 45/5347 E 45/5348 P 45/2758 M 45/1230 M 45/1231 M 45/1260 L 45/400 L 45/401 L 45/404 L 45/409 L 45/416 L 45/448 EL 26626 ELA 26627 EL 26628 EL 29828 PT Suryaraya Permata Khatulistiwa PT Suryaraya Cahaya Cemerlang PT Suryaraya Pusaka PT Kodio Multicom PT Marangkayu Bara Makarti COC 182 (Area 3) - Catanduanes COC 200 (Area 4) - Rapu-Rapu COC 202 (Area 17) - Surigao del Sur 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 10% 10% 10% 10% 70% 70% 70% 56% 56% 100% 100% 100% Location Pilbara, Western Australia Tanami, Northern Territory Tabalong, South Kalimantan Catanduanes, Philippines Albay Region, Philippines Bislig Region, Philippines Key to tenement type: E, EL: Exploration Licence G: General Purpose Lease L: Miscellaneous Licence M, ML: Mining Lease P: Prospecting Licence ANNUAL REPORT 2018 ALTURA84 ASX Additional Information continued ISSUED CAPITAL The issued capital of the company as at 30 September 2018 consists of 1,819,866,474 fully paid ordinary shares. DISTRIBUTION OF SHAREHOLDERS AS AT 30 SEPTEMBER 2018 FULLY PAID ORDINARY SHARES Number of holders: 12,957 Holders of less than a marketable parcel: 1,682 NUMBER OF HOLDERS IN THE FOLLOWING DISTRIBUTION CATEGORIES: Fully paid ordinary shares 0–1,000 1,001–5,000 5,001–10,000 10,001–100,000 100,001 and over Total 20 LARGEST SHAREHOLDERS – FULLY PAID SHARES The names of the 20 largest shareholders as at 30 September 2018 are as follows: 370 3,588 2,169 5,495 1,335 12,957 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total Holder name Furui Holdings Limited MT Smith Shazo Holdings Pty Ltd HSBC Custody Nominees (Australia) Limited Farjoy Pty Ltd Citicorp Nominees Pty Ltd JP Morgan Nominees Australia Limited PK & MA Mantell AC Buckler Lionergy Limited JS & ML Brown CS Third Nominees Pty Ltd BT Kuan E.M. Enterprises (Qld) Pty Ltd Sand King Pty Ltd NT Young BNP Paribas Nominees Pty Ltd N Young Investments Pty Ltd Merrill Lynch (Australia) Nominees Pty Ltd I Preece Units % of issued shares 16.81% 10.15% 8.92% 3.56% 3.40% 2.62% 2.59% 1.83% 1.79% 1.41% 1.34% 1.26% 1.15% 0.70% 0.69% 0.53% 0.51% 0.44% 0.39% 0.38% 60.47% 306,000,000 184,710,545 162,353,691 64,830,608 61,830,856 47,748,877 47,158,369 33,363,083 32,486,065 25,591,358 24,428,914 23,004,230 21,000,000 12,700,000 12,473,324 9,600,000 9,235,259 7,974,411 7,066,072 6,844,442 1,100,400,104 ALTURA ANNUAL REPORT 2018ASX Additional Information continued 85 SUBSTANTIAL SHAREHOLDERS The names of substantial shareholders and the number of equity securities as disclosed in their most recent substantial shareholder notices received by the Company are: Holder name Shaanxi J&R Optimum Energy Co., Ltd (Furui Holdings Limited) AC Buckler (Shazo Holdings Pty Ltd) MT Smith (Hartco Nominees Pty Ltd) VOTING RIGHTS ON ORDINARY SHARES Shares 306,000,000 177,293,692 167,264,481 On a show of hands, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder has one vote. On a poll, every person present who is a Shareholder or a proxy, attorney or Representative of a Shareholder has one vote for each fully paid share held. ON MARKET BUY BACK There is no current on market buy back of Altura shares. PERFORMANCE RIGHTS The total number of performance rights on issue as at 30 September 2018 was 8,200,000. As at this date there were 28 holders of these unquoted securities, which have been issued under an employee incentive scheme. There are no voting rights attaching to the performance rights. UNLISTED OPTIONS The total number of unlisted options on issue as at 30 September 2018 was 5,784,846. This is the balance of the options issued to Jett Capital Advisors following shareholder approval at the 2017 AGM. The options remaining are Tranche 1 options exercisable at $0.2340 each and expire on 25 September 2019. All the Tranche 2 options have been exercised. There are no voting rights attaching to the unlisted options. UNLISTED WARRANTS The total number of unlisted warrants on issue as at 30 September 2018 was 19,812,140. The warrants were issued to the debt facility loan note holders following shareholder approval at the 2017 AGM. To date, two of the three loan note holders have exercised all their warrants. The warrants are exercisable at $0.1260 each and expire on 4 August 2022. There are no voting rights attaching to the unlisted warrants. ANNUAL REPORT 2018 ALTURA86 Mineral Resources and Ore Reserves Statement PILGANGOORA LITHIUM DEPOSIT WESTERN AUSTRALIA Mineral Resource Estimate The previous Mineral Resource estimate in the 2017 annual report was released to the ASX on 24 October 2017. The current estimate was announced on 28 May 2018. Both the current and previous Mineral Resource estimates were prepared by Cube Consulting Pty Ltd. The differences between the current and previous resource estimates are the result of the completion of a drilling program conducted in the Southern Ridge Deposit area during the March quarter and a minor change in the cut-off grade. Mineral Resource Estimate Comparison JORC resource category Measured Indicated Sub-total Inferred Total Current estimate (0.40% Li2O cut-off grade) Li2O (tonnes) Tonnes (Mt) Li2O (%) Previous estimate (0.43% Li2O cut-off grade) Li2O (tonnes) Tonnes (Mt) Li2O (%) 8.7 38.0 46.7 3.8 50.5 1.12 1.00 1.02 0.92 1.01 97,000 380,000 477,000 35,000 512,000 8.5 35.5 44.0 3.5 47.5 1.12 0.97 1.00 0.84 0.99 96,000 345,000 441,000 29,000 470,000 Ore Reserve Estimate The previous Ore Reserve estimate in the 2017 annual report was released to the ASX on 24 October 2017. The current estimate was announced on 28 May 2018. Both the current and previous Ore Reserve estimates were prepared by Cube Consulting Pty Ltd. The differences between the current and previous reserve estimates are the result of the completion of a drilling program conducted in the Southern Ridge Deposit area during the March quarter resulting in an updated open pit optimisation and pit design. Ore Reserve Estimate Comparision JORC resource category Proved Probable Total Current estimate (0.43% Li2O cut-off grade) Li2O (tonnes) Tonnes (Mt) Li2O (%) Previous estimate (0.43% Li2O cut-off grade) Li2O (tonnes) Tonnes (Mt) Li2O (%) 8.3 32.8 41.1 1.14 1.03 1.05 94,000 338,000 432,000 8.1 26.1 34.2 1.14 1.01 1.04 92,000 265,000 357,000 ALTURA ANNUAL REPORT 2018Mineral Resources and Ore Reserves Statement continued ANNUAL REPORT 2018 ALTURA 87 SUMMARY OF GOVERNANCE ARRANGEMENTS AND INTERNAL CONTROLS Altura has ensured that the Mineral Resource and Ore Reserve Estimates are subject to good governance arrangements and internal controls. The Mineral Resource and Ore Reserve estimates reported have been generated by independent consultants who are experienced in modelling and estimation methods. The consultants have undertaken reviews of the quality and the suitability of the data and information used to generate the estimations. Altura carries out regular reviews of its own internal practices and those of external contractors who are engaged in a range of specialist areas by the Company. A Mineral Resource and Ore Reserve Steering Committee (MRORSC) was established post the end of the financial year. The MRORSC includes representatives from operations, exploration and management and is responsible for the governance and oversight of the resource estimation, mine planning and reporting of Mineral Resources and Ore Reserves (MROR). The Mineral Resource and Ore Reserve estimates for Pilgangoora have been compiled and reported in accordance with the “Australian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves” (the JORC Code) 2012 Edition. COMPETENT PERSONS STATEMENTS The information in this statement is based on, and fairly represents, information and supporting documentation prepared by the competent persons listed below. The MROR statements included in this Annual Report were reviewed by a suitably qualified Competent Persons prior to their inclusion. PILGANGOORA LITHIUM The information in this report that relates to the Mineral Resource for the Pilgangoora lithium deposit is based on information compiled by Mr Stephen Barber. Mr Barber is a Member of the Australasian Institute of Mining and Metallurgy. Mr Barber is the Exploration Manager at Altura Mining Limited and has sufficient experience that is relevant to the style of mineralisation under consideration and to the activity of mineral resource estimation to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Barber consents to the inclusion in the report of the matters based on this information in the form and context in which it appears. The information in this report that relates to the Ore Reserve for the Pilgangoora lithium deposit is based on information compiled by Mr Quinton de Klerk. Mr de Klerk is a Fellow of the Australasian Institute for Mining and Metallurgy. Mr de Klerk is a Director and Principal Consultant of Cube Consulting Pty Ltd and has sufficient experience that is relevant to the activity of ore reserve estimation to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr de Klerk consents to the inclusion in the report of the matters based on this information in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information included in the ASX announcement on 28 May 2018. Further, all material assumptions and technical parameters underpinning the mineral resource and ore reserve estimates in that announcement continue to apply and have not materially changed. 88 Notes ALTURA ANNUAL REPORT 2018ALTURAMINING.COM

Continue reading text version or see original annual report in PDF format above