Anglo Australian Resources NL
Annual Report 2017

Plain-text annual report

Anglo Australian Resources NL ABN 24 009 159 077 Annual Report for the year ended 30 June 2017 1 CORPORATE DIRECTORY ABN 24 009 159 077 Directors John Jones (Executive Chairman) Graeme Smith (Non-Executive Director) Peter Stern (Non-Executive Director) Company Secretary Graeme Smith Registered Office Ground Floor 63 Hay Street Subiaco WA 6008 Principal Place of Business Ground Floor 63 Hay Street Subiaco WA 6008 Telephone: +61 8 9382 8822 Facsimile: +61 8 6380 1904 Share Register Security Transfer Registrars Pty Ltd Suite 913, Exchange Tower 530 Little Collins Street Melbourne VIC 3000 1300 992 916 registrar@securitytransfer.com.au Auditors Greenwich & Co Audit Pty Ltd 35 Outram Street WEST PERTH WA 6005 Internet Address www.anglo.com.au Stock Exchange Listing Anglo Australian Resources NL shares are listed on the Australian Securities Exchange (ASX code: AAR). CONTENTS Chairman’s Report Review of Operations Directors' Report Auditor’s Independence Declaration Corporate Governance Statement Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors' Declaration Independent Audit Report ASX Additional Information 3 4 20 27 28 37 38 39 40 41 56 57 61 CHAIRMAN’S REPORT Dear Shareholders, This is my sixth Chairman’s Report since being re-appointed Chairman in 2011. In the period since, sentiment towards the resources industry overall and Anglo Australian specifically has steadily improved, leading me to state in my 2016 Chairman’s Report that, as far as our company was concerned, “…I sensed cause for guarded optimism”. Against this background, I am pleased to suggest that I believe there is cause for shareholders of Anglo Australian to now be genuinely excited. In August 2016, at our 100%-owned Feysville Gold Project, located as it is just 14 km to the south of and along strike from the Super Pit, a 70+ million-ounce gold mine, a ground magnetic survey lead to us identifying the prominent ten (or so) km long “Ethereal Shear Zone”. Three aircore drilling campaigns during calendar 2017 primarily focussed on the southern end of the Shear subsequently lead to us identifying the +1.6 km long “Think Big” prospect. This, together with other prospects identified so far at Feysville including Rogan Josh, Dalray, Ethereal and Kamperman, provides us with a host of attractive targets warranting further investigation in what we consider is an exploration project of world class. As I write, we have recently completed a reverse-circulation drilling campaign at Feysville encompassing 25 holes with the focus on Think Big. Results are awaited. Later this year, it is our intention to target deep mineralisation at Feysville by way of diamond drilling with funding assistance to the amount of $100,000 provided by the Department of Mines and Petroleum, Western Australia under an exploration incentive scheme. In our 100%-owned Koongie Park Project in northern Western Australia, encompassing both gold and base metals targets, we also have what we believe to be a very exciting opportunity. As far as gold targets are concerned, we note that our nearest neighbour at Koongie Park, the ASX-listed Pantoro Limited (market capitalisation of approximately $185 million), is building an excellent record of discovery as it pursues targets along the very same geological structures that intersect our much more substantial ground position. Moreover, with the price of both copper and zinc having increased significantly during the year, there is caused to believe that our base metals resources at Koongie Park are such as to be capable of monetisation, one way or the another, in the near term. During the year, an aggregate of approximately $730,000 was raised through the issue of new shares to sophisticated investors. Shares were also issued during the year as payment (or part payment) for drilling and other services, and shares and options were issued in satisfaction of all Director’s fees. A further capital raising since the end of the financial year of approximately $800,000 sees the company with the most funds at its disposal since my re-appointment as Chairman and leaves us well-funded to undertake considerable exploration activities moving forward. I take this opportunity to sincerely thank shareholders for their loyal support, noting that a number of shareholders have been with us for many years. I also thank my fellow directors and all our consultants for their wonderful efforts. Like me, they believe we are potentially building Anglo Australian to be something special. Yours sincerely John Jones Executive Chairman Anglo Australian Resources NL 3 REVIEW OF OPERATIONS Anglo Australian Resources NL has five key resources interests in gold and base metals, primarily copper and zinc, all in Western Australia. PROJECT EXPLORATION STATUS LOCATION PROSPECTIVITY Feysville Gold Koongie Park Gold and Mineral Resources exist numerous new targets identified and drilling is underway Many kilometers of under explored shear zones but mapping, soils and drilling are planned Highly strategic, 14 kilometers south of the Super Pit Extremely high Highly strategic Very high Mandilla Gold East Mandilla Gold Resource and underexplored Non-strategic but close by the Wattle Gold Mine Modest Koongie Park Base Metals Indicated Mineral Resources and underexplored Leonora Base Metals Significantly underexplored Highly numerous existing strategic, VMS with targets Very high Strategic, along strike from the Jaguar and Bentley Mines. Modest 3 REVIEW OF OPERATIONS FEYSVILLE GOLD PROJECT Anglo Australian - 100% interest, including options over tenements The Feysville Project is in Australia’s premier gold belt, just 14km south of the giant Golden Mile deposit (70Moz) at Kalgoorlie. The belt extends for some 100km along a NNW strike, and takes in major gold deposits at New Celebration (3Moz), some 10km south of Feysville, and the large St Ives field (+15Moz) 30-60km to the south. Numerous other economic gold deposits have also been discovered. 4 REVIEW OF OPERATIONS Gold deposits are contained within a major structural corridor centred on the Boulder Lefroy fault, which controls regional uplift and folding of a lower sequence of mafic-ultramafic rocks (purple and green) surrounded by an upper sequence of volcano-sediments (blue and yellow). Feysville contains the lower mafic-ultramafic sequence of rocks in the core of the project area, with the Boulder Lefroy fault interpreted to pass along the western flank of the project. Another major structure parallel to the Boulder Lefroy fault passes through the eastern side of the project for some 10km, and hosts Feysville’s Rogan Josh and Dalray prospects. In late 2016, a ground magnetic survey identified a new shear zone of more than 7km in length, referred to as the Ethereal Shear Zone, which hosts a number of targets of interest. During the course of 2017, the company conducted three aircore drilling campaigns at Feysville with the primary focus being targets along the Ethereal Shear Zone. Towards the southern end of the zone, the company has identified a coherent +1.6 km long anomalous +100 ppb gold trend at the new “Think Big” prospect (refer yellow outline in map below). The trend encompasses a higher grade +1 g/t Au core that runs for approximately 200 metres along strike, with maximum results of up to 3.57 g/t Au (red outline). A geologic map of the Think Big prospect is set out below. 5 REVIEW OF OPERATIONS A reverse circulation drilling program to evaluate bedrock mineralisation at Think Big and other targets was undertaken during the third quarter of 2017 with results expected shortly. A photograph of drilling in the “swamp” at Think Big is set out below. 6 REVIEW OF OPERATIONS A summary of key prospects identified at Feysville thus far is set out in the following table: PROSPECT COMMENT Think Big Rogan Josh Kamperman Dalray Ethereal • • Identified June 2017 through aircore drilling Situated on Ethereal Shear Zone • 1.6 km in length defined by 100 ppb gold contour • Core of 800 m strike length and 100 to 200 m width defined by 200 ppb contour • First reverse circulation drilling recently completed with results pending • An at-surface target with a current size range of 300,000 to 350,000 tonnes @ 2.0 to 2.5 grams per tonne gold • Open at depth and along strike • Further reverse circulation drilling is planned • Best intercept 13 metres at 8.31 g/t Au from 24 metres to bottom of hole • First reverse circulation drilling recently completed with results pending • Best intercept 6 metres at 9.08 g/t Au • Situated on Ethereal Shear Zone • Best intercept 10 metres at 9.1 g/t Au and 6 metres at 9.76 g/t Au 7 REVIEW OF OPERATIONS KOONGIE PARK GOLD AND BASE METALS PROJECT Anglo Australian - 100% interest Anglo Australian holds a portfolio of tenements prospective for gold and base metals approximately 20km to the south west of Halls Creek in the Eastern Kimberley region of Western Australia. The company has a substantial tenement position: 8 REVIEW OF OPERATIONS Koongie Park Gold Various tenements held by Anglo Australian are adjacent to the Nicholsons Gold Project owned by the ASX-listed Pantoro Limited (refer blue tenement outline in map above), which is currently producing gold at a rate in the order of 40,000 ounces per annum, though the company has plans to increase production to 80,000 ounces or more through further expansion. Located as they are close to the Pantoro operation, Anglo Australian’s leases are strategically located. Ore is currently sourced from the Nicolsons Mine, where a recent resource of 720,000 tonnes at 7.41 g/t containing 172,000 ounces of gold was reported. The NNE-SSW trending Nicolsons Shear Zone on which the Nicolsons Mine is situated also hosts other gold deposits held by Pantoro including Rowdies, Wagtail North and Wagtail South. The Nicolsons Gold Project illustrates that mineralization is structurally controlled within a 400-metre-wide NNE trending strike-slip shear zone adjacent to the northwest margin of the Lodestone Monzogranite. Host rocks comprise folded and metamorphosed turbiditic greywackes, felsic volcaniclastics, mafic volcanic and laminated siltstone and mudstone of the Koongie Park Formation. Mineralisation is strongly associated with discontinuous quartz veining and iron-silica-potassium alteration. The company’s ground position includes approximately 14km of the Nicolsons Shear Zone to the north of ground held by Pantoro, which is yet to be drill tested. Anglo Australian has identified a parallel shear zone to the east of the Nicolsons Shear Zone, known as the Nicolsons East Shear Zone. Approximately 30km of Nicolsons East Shear Zone is within the company’s ground position. 9 REVIEW OF OPERATIONS Limited ground work has already identified a number of highly attractive targets, including the Nicolsons East Prospect which outcrops over approximately a two-kilometre length and where a rock chip assay of 15.67 g/t Au has previously been recorded. Koongie Park Base Metals Anglo Australian’s tenements at Koongie Park encompass more than 40kms of the Koongie Park Formation, which is prospective for VMS-style base metal deposits. Some 245 RC and diamond drill holes encompassing 50,0417m have been drilled on the project by Anglo Australian. This effort focused on resource, metallurgical and Geotech drilling at two of the prospects, Sandiego and Onedin, with mineralisation seeming to have accumulated in fold hinges. A cross section through Sandiego is set out as follows: 10 REVIEW OF OPERATIONS A summary of resources at Sandiego is set out in the following table: Sandiego Deposit – Indicated and Inferred Mineral Resources Supergene Copper: 370,000 tonnes @ 4.0 % Cu, 2.7% Zn, 48g/t Ag and 0.29g/t Au Copper Zone: 1,140,000 tonnes @ 2.8% Cu, 1.5% Zn, 12g/t Ag and 0.43g/t Au Zinc Zone: 1,220,000 tonnes @ 0.2 % Cu, 7.0% Zn, 26g/t Ag and 0.13g/t Au Total Metal: (ASX Release 13.06.13) 50,000 tonnes copper, 115,000 tonnes zinc, 2 million ounces of silver & 26,000 ounces of gold. A cross section through Onedin is set out as follows: 11 REVIEW OF OPERATIONS A summary of resources at Onedin is set out in the following table: Onedin Deposit – Indicated and Inferred Mineral Resources Zinc Zone: 1,980,000 tonnes @ 6.25% Zn, 0.47% Cu, 32g/t Ag and 0.3g/t Au Copper Zone: 2,500,000 tonnes @ 1.1% Cu, 0.8% Zn, 21g/t Ag and 0.3g/t Au Total Metal: 36,000 tonnes copper & 140,000 tonnes zinc metal (ASX Release 13.06.13) The Sandiego and Onedin mineralized zones represent fold hinges Distribution of metal in rock strongly suggests that the metal has been remobilized (which explains the Sandiego and Onedin accumulations) Within the Koongie Park project area, airborne magnetics has identified a number of other potential hinge structures that are yet to be drill-tested. 12 REVIEW OF OPERATIONS MANDILLA GOLD PROJECT Anglo Australian - 100% interest Anglo Australian’s Mandilla Gold Project is located approximately 70km south of Kalgoorlie and 20km south east of Kambalda. Anglo Australian’s tenement holdings comprise two mining leases and an exploration lease. 13 REVIEW OF OPERATIONS Geology in the project area consists of a sequence of mafic and ultramafic rocks in contact with felsic volcaniclastic and sedimentary rocks of the Mandilla Formation. The sedimentary sequence is intruded by the Emu Rocks Granite. The western contact of the granite is faulted by an interpreted southern extension of a splay fault of the Zuleika Shear Zone, which hosts +1 million ounce deposits at Raleigh and Mt Marion. Over the period 2006 to 2007, Anglo Australian achieved production of approximately 23,000 ounces of gold from an open-cut palaeochannel. At Mandilla East, the Company has identified a bed-rock gold Inferred Resource of 357,000 tonnes at 3.3 g/t Au for approximately 38,000 contained ounces (ASX 13/06/13). Along strike and down dip from Mandilla East, a number of gold intersections in rotary air blast (RAB) and aircore (AC) drill holes previously completed by Anglo Australian contain anomalous gold zones, the most notable being 2 metres at 6.21 g/t Au. Three drill target areas south east from Mandilla East Gold resource require further evaluation. All these targets lie on or proximal to parallel North-West trending regional structures near or on the contact between felsic volcaniclastic sedimentary rocks and demagnetised granitoid rocks. At West Mandilla, a target area is defined by a 700-metre-long soil anomaly defined by a > 20ppb gold contour. Within the >20 ppb gold contour there are four discrete bullseye soil highs defined by a >50 ppb contour. A traverse of RC holes, drilled across the central part of the soil anomaly, did not target the peak soil values and intersected only low-grade gold mineralisation with a best value of 2 metres at 1.45 g/t Au from 63 metres depth downhole. The zone, open to the northwest and southeast, lies within the northwest-southeast striking regional fault corridor. During the year a reconnaissance aircore drilling program undertaken to cover strike projection of Mandilla East mineralization and bedrock gold mineralization delineated in air core and RC drilling to the south east. 28 holes were drilled for 1,525 meters. Results are currently being interpreted. LEONORA BASE METALS PROJECT Anglo Australian - 100% interest Anglo Australian’s Leonora Project comprises many Exploration Licenses located approximately 12 km to the North of the township of Leonora. The Project covering 12 kms of strike strategically located only 32 kms to the south of, and along strike from, Independence Group Limited’s Teutonic Bore – Jaguar – Bentley mineralized VMS corridor. These deposits, discovered by drill testing bedrock electromagnetic conductors, occur near the boundary between mafic and felsic units. Anglo Australian’s project would appear to host these felsic volcanic and sediments broadly analogous to the geology at Jaguar and Bentley. 14 REVIEW OF OPERATIONS Based on interpretation of previous aircore drilling and aeromagnetic data, Anglo Australian considers 7km of this zone is highly prospective for VMS-style mineralisation. As bedrock in the zone is mostly covered by younger transported sediments, the company has identified Moving Loop Electromagnetic (MLEM) survey as its primary exploration tool to search for VMS deposits that are generally highly conductive and amenable to location by such geophysical methods. A MLEM survey completed in May 2011 at the Leonora Project targeting potential massive copper-zinc mineralisation discovered a strong 800m long bedrock conductor. Sample spoils from previous aircore drilling indicated that the conductor was located within favourable stratigraphy proximal to the contact between felsic and mafic volcanic rocks. Preliminary interpretation of the MLEM anomaly by the company’s geophysical consultants suggested the source of the conductor (potentially massive or disseminated sulphide) commenced at the base of weathering approximately 100m below surface and dipped steeply south west. The conductor presented an exciting and compelling drill target. 15 REVIEW OF OPERATIONS Two diamond core holes were completed in October 2012 as extensions to the pre-collar holes completed in May. Both diamond core holes intersected a sequence of mafic and felsic volcanic and volcaniclastic rocks with minor non-volcanic units. Trace to minor amounts of disseminated sulphides consisting of chalcopyrite, pyrrhotite and pyrite were observed in the core and a narrow zones of stringer chalcopyrite and pyrrhotite were intersected within a foliated mafic intrusive in hole LRCD001. Anomalous copper and zinc values supported by weakly anomalous values in antimony and tin were recorded in several of the intervals selected for assaying. The best intersection comprised a 0.65 metre interval at 2.08% copper from 233.25 metres in hole LRCD001. Narrow zones of black shale containing variable amounts of pyrite and pyrrhotite and minor amounts of chalcopyrite intersected in both holes most likely explain the source of the MLEM conductor. A downhole EM survey was subsequently undertaken on each hole to define and confirm the conductive zone. Analysis suggests a strong off hole conductor possibly related to massive sulphides has been detected in both holes. Two diamond core drill holes targeted off-hole conductors detected by downhole electromagnetic (DHEM) surveys in two holes drilled in October 2012. The program was completed under the WA Government co-funded Exploration Incentive Scheme (EIS) in July 2014. 16 REVIEW OF OPERATIONS The holes were located in the vicinity of the previous holes, but targeted the south plunging, west dipping DHEM conductors offset from those holes. As with the previous holes trace to minor amounts of sulphide mineralisation in the form of pyrrhotite, chalcopyrite and sphalertite were intersected with the best results being 1 metre at 0.3045% Cu from 367.5 metres in hole LDRC003 and 1 metre at 0.2337% Zn from 227.65 metres in hole LRCD004. Drill logs and assays have yet to be reviewed with respect to the geophysical target. Although assay results are low the extent of disseminated mineralisation (328.75metres to 436.03 metres in hole LDRC003 and 221.31 metres to 283.00 metres in hole LDRC004) is encouraging. These widths of disseminated and stringer sulphides suggest that the volcano-sedimentary pile within the tenement area is fertile and capable of hosting a massive sulphide deposit. Drill logs and assays are being reviewed with respect to the geophysical target to determine optimise targeting for further drilling. 17 REVIEW OF OPERATIONS Compliance Statement Information in this Report relating to geological data has been compiled by David Otterman who is an independent consultant from DW Otterman Exploration Consultant. David Otterman, who is a consultant to Anglo Australian Resources NL: • Has relevant experience in relation to the mineralisation being reported on as to qualify as a Competent Person as defined by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2004 Edition); • Is a Fellow of the Australasian Institute of Mining and Metallurgy (CP Geo) and is a Member of the Australian Institute of Geoscientists and has had more than thirty years experience in the field of activity reported herein; and • Has consented in writing to the inclusion of this data. Mineral resource information in relation to the Mandilla Project has been compiled by Andrew Bewsher an independent consultant from BM Geological Services, based on work by Peter Komyshan (formerly General Manager Exploration for Anglo Australian Resources NL) and BMGS geologists. Andrew Bewsher is a member of the Australian Institute of Geoscientists and has more than five years relevant experience in relation to the mineralisation being reported on as to qualify as a Competent Persons as defined by the Australasian Code for Reporting Identified Mineral Resources and Ore Reserves. Mineral Resources for the Sandiego Deposit, Koongie Park Project have been estimated by David Slater, BAppSc, DipEd, MAusIMM, Specialist Consultant - Resources and Invar Kirchner, BSc(Hons), MAusIMM – Manager Resources with Coffey Mining Pty Ltd. Perth, WA. Both consultants have more than five years relevant experience in relation to the mineralisation being reported on to qualify as a Competent Person as defined by the Australasian Code for Reporting Identified Mineral Resources and Ore Reserves. Mineral Resources for the Onedin Deposit, Koongie Park Project have been estimated under the overall supervision and direction of Gerry Fahey, MAusIMM and MAIG, of CSA Global. Participants included Peter Komyshan (geological interpretation) and David Williams, MAusIMM (Mineral Resource estimate). Mr Komyshan, Mr Williams and Mr Fahey are Competent Persons as defined by the Australasian Code for the Reporting of Exploration Results, Mineral Resources or Ore Reserves (JORC Code 2004 Edition). 18 REVIEW OF OPERATIONS SCHEDULE OF MINING TENEMENTS Project Tenement Company Interest Title Registered to Western Australia Koongie Park Feysville Mandilla Leonora M80/276, 277 E80/4389,4766, 4957, 4960 P80/1802-10 P80/1831-1837 P26/3942 – 3951 P26/4051- 4052 P26/4074 – 4077 M15/96 M15/633 E15/1404 E37/1047 P37/8355 E37/1287 100% Anglo Australian Resources NL 100% Anglo Australian Resources NL 100% gold rights only 100% gold rights only 100% Apollo Phoneix Resources Pty Ltd Anglo Australian Resources NL Anglo Australian Resources NL 100% Anglo Australian Resources NL 19 DIRECTORS’ REPORT The Directors present their report together with the financial report of Anglo Australian Resources NL ("the Company") for the year ended 30 June 2017 and the auditors' report thereon. 1. DIRECTORS The Directors of the Company at any time during or since the end of the financial year are: Name, qualifications, experience, special responsibilities and other directorships and independence status John Jones Executive Chairman Mr Jones is a well-known and respected mining identity who has been associated with a number of successful mining corporations in his 43 years of business. Mr Jones has been a director of the Company since February 1990, is a Kalgoorlie pastoralist and businessman formerly associated with North Kalgurli Mines NL and was a founding director of Jones Mining Limited. Mr Jones is a Non-Executive Director of Troy Resources Limited, Image Resources NL and Tanga Resources Limited. Interest in shares and options Shares – 22,352,177 Options - 16,200,000 - $0.02 exp 30/11/19 Options – 23,200,000 - $0.02 exp 30/11/20 Options – 4,980,000 - $0.025 exp 30/11/20 Options – 3,550,000 - $0.08 exp 30/11/20 Peter Stern Non-Executive Director Mr Stern is a graduate of Monash University with a Bachelor of Science (geology major). Mr Stern’s career has been in corporate advisory, spending six years with Macquarie Bank and three years with both UBS and Deutsche Bank. In 2000, Mr Stern established Metropolis Pty Ltd, a corporate advisory firm specializing in M&A and capital raisings. Mr Stern is a Fellow of the Australian Institute of Company Directors. Mr Stern is Non-Executive Chairman of Troy Resources Limited and Non-Executive Director of Entek Energy Limited. Interest in shares and options Shares – 4,706,252 Options - 6,100,000 - $0.02 exp 30/11/19 Options – 7,000,000 - $0.02 exp 30/11/20 Options – 2,000,000 - $0.025 exp 30/11/20 Options – 1,700,000 - $0.08 exp 30/11/20 Graeme Smith Non-Executive Director Mr Smith is a finance professional with over 25 years’ experience in accounting and company administration. He graduated from Macquarie University with a Bachelor of Economics degree and has since received a Master of Business Administration and a Master of Commercial Law. He is a Fellow of the Australian Society of Certified Practicing Accountants, the Institute of Chartered Secretaries and Administrators and the Governance Institute of Australia. Mr Smith was previously a director of Surefire Resources NL. Interest in shares and options Shares – 2,582,999 Options – 2,500,000 - $0.02 exp 30/11/19 Options – 7,000,000 - $0.02 exp 30/11/20 Options – 2,000,000 - $0.025 exp 30/11/20 Options –1,700,000 - $0.08 exp 30/11/20 2. COMPANY SECRETARY - Graeme Smith 20 DIRECTORS’ REPORT 3. DIRECTORS’ MEETINGS The number of directors’ meetings held and number of meetings attended by each of the directors of the Company during the financial year were: Director John Jones Peter Stern Graeme Smith Director Meetings Number Held 7 7 7 Number Attended 7 7 7 Audit Committee 1 1 1 4. REMUNERATION REPORT - AUDITED 4.1 Principles of compensation For the purpose of this report Key Management Personnel (“KMP”) are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly. Based on this definition, the officers listed under Key Management Personnel below will be included in the report. The report will also provide an explanation of the Company’s remuneration policy and structure, details of remuneration paid to Key Management, (including directors), an analysis of the relationship between company performance and executive remuneration payments, and the key terms of executive employment contracts. 2017 Key Management Personnel: John Jones Peter Stern Graeme Smith Fixed Remuneration Executive Chairman Non-Executive Director Non-Executive Director Fixed remuneration – Fixed remuneration consists of base remuneration and statutory superannuation entitlements. Remuneration levels are set by the Board based on individual performance and the performance of the Company. Performance Linked Remuneration Due to the nature of the Company’s operations, i.e., mineral exploration, Directors and Executive remuneration does not include performance-based incentives. Options The Board annually assesses the granting of any options to employees and executive directors based on performance and according to the prevailing industry and market practices. No options were granted during the year. Non-executive Directors Total remuneration for all non-executive directors during the year was $185,000 which included options valued at $25,000. To date, directors’ fees have not been paid in cash by the Company. The maximum shareholder approved remuneration is $200,000 per annum. Directors’ fees cover all Board activities. 21 DIRECTORS’ REPORT Relationship between Company performance and remuneration The objective of the Company’s remuneration structure is to reward and incentivize the directors and executives to ensure alignment with the interests of shareholders. The remuneration structure also seeks to reward directors and executives for their contribution in a manner that is appropriate for a company at this stage of its development. As outlined elsewhere in this Report, the remuneration structure incorporates fixed component and options. The key drivers of value for the Company: the acquisition and progression of exploration properties to the point of commercial development or realization. The only relevant financial measure at this point in the Company’s development is share price for which history is presented below: Closing share price at 30 June 2017 0.04 2016 0.012 2015 0.01 2014 0.01 2013 *0.03 2012 *0.06 * Share prices have been adjusted to reflect the cumulative dilution of the share capital consolidation completed during December 2013. Voting and Comments Made at the Company’s 2016 Annual General Meeting The Company received approximately 99.9% of “yes” votes on its remuneration report for the 2016 financial year. The Company did not receive any specific feedback at the AGM on its remuneration practices. 4.2 Key management personnel remuneration The following table discloses the remuneration of the key management personnel of Anglo Australian Resources NL. Short-Term Salary & Fees – Accrued (A) $ 90,000 35,000 35,000 160,000 Salary & Fees - Non-Cash (Options) (B) $ 15,000 5,000 5,000 25,000 Post Employment Other Share Based Payments Total Superannuation $ - - - - $ - - - - $ 105,000 40,000 40,000 185,000 2017 Directors J L C Jones P A Stern G I Smith Total (A) Accrued fees represent director’s fees accrued from 1 July 2016 to 30 June 2017. (B) As at 30 June 2016, directors were owed $80,000 in relation to remuneration. On 30 November 2016, 10.5 million options were granted to directors in lieu of outstanding directors fees. The options were ascribed a value of $105,000 using the Black-Scholes model (Section 4.4 below). Of this amount, $80,000 relates to remuneration incurred in the period ending 30 June 2016 and $25,000 relates to the year to 30 June 2017. (C) Nil amounts of the above remuneration is performance based. 22 DIRECTORS’ REPORT Salary & Fees Non-Cash Benefits (Options) (D) Superannuation Other Share Based Payments 2016 $ $ Directors J L C Jones P A Stern G I Smith (include secretarial fees) Total 50,000 15,000 15,000 35,840 10,900 10,900 80,000 57,640 $ - - - - $ - - - - $ 85,840 25,900 25,900 137,640 (D) The 24.8 million options issued were ascribed a value of $202,665 using the Black Scholes Model. Of this amount, $65,062 related to key management personal remuneration incurred in the year to 30 June 2016. The balance of the fair value settled amounts accrued in prior periods. 4.3 Service agreements There are currently no service agreements in place with the directors. 4.4 Analysis of options over equity instruments granted as compensation during the year ended 30 June Yr to 30 June 2017 Grant Date & Vesting Date Number Granted (i) Expiry Date Exercise Price (cents) Value per option at grant date (cents) Exercised Number % of Remuneration Directors J L C Jones P Stern G I Smith (i) 25/08/2016 25/08/2016 25/08/2016 6,500,000 30/11/2020 2,000,000 30/11/2020 2,000,000 30/11/2020 2.5 2.5 2.5 1.00 1.00 1.00 Nil Nil Nil 14% 13% 13% As outlined above these options have been valued at $105,000. $80,000 of this value has been offset against amounts owing to directors as at 30 June 2016. The inputs to the Black Scholes model were: Share volatility of 149%; risk free rate of 1.62%; exercise date of 30.11.2020; share price at grant date of 1.2 cents; exercise price of 2.5 cents. Grant Date & Vesting Date Number Granted Expiry Date Exercise Price (cents) Value per option at grant date (cents) Exercised Number % of Remuneration Year to 30 June 2016 Directors J L C Jones 30/11/2015 23,200,000 30/11/2020 P Stern G I Smith 30/11/2015 7,000,000 30/11/2020 30/11/2015 7,000,000 30/11/2020 2.0 2.0 2.0 0.37 0.37 0.37 Nil Nil Nil 41% 42% 42% 23 DIRECTORS’ REPORT 4.5 Equity instruments held by key management personnel Share holdings The movement during the reporting period in the number of ordinary shares in Anglo Australian Resources NL held directly, indirectly or beneficially by each key management person, and including their related parties is as follows: Fully paid ordinary shares issued in Anglo Australian Resources NL Balance at 1 July 2016 Granted as Remuneration No. No. Received on Exercise of Options No. Net Other Change No. Balance at 30 June 2017 No. Directors J L C Jones 17,204,344 P A Stern G I Smith 1,856,585 866,666 Option holdings - - - - - - 3,333,333 20,537,677 1,966,667 3,823,252 833,333 1,699,999 The movement during the reporting period in the number of options over ordinary shares in the Company held, directly, indirectly or beneficially, by each key management personnel, including their related parties, is as follows (all option numbers adjusted to reflect post-consolidation balances): Balance at beginning of the year No. Granted as compensation (A) No. Lapsed Other Changes Balance at end of the year Vested and exercisable No. No. No. No. J L C Jones 39,400,000 6,500,000 P A Stern G I Smith 13,100,000 2,000,000 9,500,000 2,000,000 - - - (1,000,000) 44,900,000 44,900,000 - - 15,100,000 15,100,000 11,500,000 11,500,000 (A) As at 30 June 2016, directors were owed $80,000 in relation to remuneration. On 30 November 2016, 10.5 million options were granted to directors in lieu of outstanding directors fees. The options were ascribed a value of $105,000 using the Black-Scholes model (Section 4.4 above). Of this amount, $80,000 relates to remuneration incurred in the period ending 30 June 2016 and $25,000 relates to the year to 30 June 2017. 4.6 Other key management personnel transactions with Directors and Director-related entities A number of key management persons, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities. A number of these entities transacted with the Company or its subsidiaries in the reporting period. 24 DIRECTORS’ REPORT The following fees were incurred on normal commercial terms and conditions to the following Director related entities: Related Parties Transactions Transactions Value Amount owing by the Company 30 June 2017 30 June 2016 30 June 2017 30 June 2016 $ $ $ $ (21,914) 303 1,976 23,890 (81,664) (29,067) - 81,664 (18,314) 256 - - 2,164 823 20,478 567 32,658 8,799 54,254 21,596 36,468 36,468 - - J L C Jones – Westbury Management Services Pty Ltd J L C Jones P A Stern G I Smith G I Smith – Wembley Corporate Tanga Resources Limited End of audited Remuneration Report 5. PRINCIPAL ACTIVITIES Storage / Admin Services expenses Loan to the company net of (repayments) Loan, (repayments) & interest Loan to the company Company Secretarial / CFO fees Rent, Outgoing Carpark & The principal activities of the Company during the financial year consisted of the continued exploration of gold and base metals projects in Western Australia and Northern Territory. There has been no change these activities during the financial year. 6. OPERATING AND FINANCIAL REVIEW Overview of the Company During the current year, the Company conducted exploration and tenement reviews. There was no revenue for this year however the Company continued with the business activities of exploration and evaluation of gold and base metals projects. Shareholder Returns The net loss of the Company for the financial year, after provision for income tax was $517,148 (2016 net loss: $393,790). Review of Principal Businesses A review of the operations for the financial year, together with prospects which form part of this report are set out above. 7. EVENTS SUBSEQUENT TO REPORTING DATE There have been no events subsequent to the reporting date, other than those mentioned elsewhere in this report. 8. LIKELY DEVELOPMENTS The Company intends to continue its exploration and evaluation programs on existing tenements and to acquire further suitable tenements for exploration. 25 DIRECTORS’ REPORT 9. SHARE OPTIONS Unissued Shares under Options Unissued ordinary shares of Anglo Australian Resources NL under option at the date of this report are as follows: Expiry date 30 November 2019 30 November 2020 30 November 2020 30 November 2020 30 November 2020 Exercise price (cents) 2 2 2.5 4.0 8.0 Number of options 32,300,000 37,200,000 10,500,000 3,000,000 8,950,000 Total number of options outstanding at the date of this report 91,950,000 No option holder has any right under the options to participate in any other share issue of the Company or any other entity. 10. INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS Indemnification The Company has agreed to indemnify the following current directors of the Company, J L C Jones, G I Smith and P A Stern against all liabilities to another person (other than the Company or related body corporate) that may arise from their position as officers of the Company, except where the liability arises out of conduct involving lack of good faith. The agreement stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses. The Company has not entered into an agreement with their current auditors, Greenwich & Co Audit Pty Ltd, indemnifying them against any claims by third parties arising from their report on the annual financial report. 11. NON-AUDIT SERVICES Details of amounts payable to the Auditor for non-audit services and audit services paid during the year are set out in Note 19. 12. LEAD AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration is set out on page 27 and forms part of the directors’ report for the financial year ended 30 June 2017. Signed in accordance with a resolution of the Directors. John Jones Executive Chairman Anglo Australian Resources NL Dated at Perth this 30th day of September 2017. 26 CORPORATE GOVERNANCE STATEMENT CORPORATE GOVERNANCE STATEMENT The Board of Directors of Anglo Australian Resources NL is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of Anglo Australian Resources NL on behalf of the shareholders by whom they are elected and to whom they are accountable. Anglo Australian Resources NL’s corporate governance practices were in place throughout the year ended 30 June 2017 and were compliant with the ASX Governing Council’s best practice recommendations, unless otherwise stated. Information on Corporate Governance www.anglo.com.au/investors. is available on the Company’s website at In fulfilling its obligations and responsibilities to its various stakeholders, the Board of directors of the Company advocates the adoption of and adherence to a framework of rules, relationships, systems and processes within and by which authority is exercised and controlled within the corporation – this is what is meant in this manual when reference is made to corporate governance. This manual outlines the Company’s principal corporate governance procedures. The Board supports a system of corporate governance to ensure that the management of the Company is conducted in a manner which is directed at achieving the Company’s objectives in a proper and ethical manner. Except to the extent indicated herein, the Company has resolved that for so long as it is admitted to the official lists of the ASX it shall abide by the ASX Recommendations. Due to the exigencies and vagaries of commercial life and changing circumstances, there will, no doubt, be occasions when, especially because of the size of the Company and the composition of its Board, that it can be expected to depart from the policies and charters which it has adopted. These policies have been adopted on the basis that, in the circumstances of the Company, they reflect what is considered to reflect a reasonable aspiration. It is not expected that these guidelines will be slavishly adhered to. Their object is to focus attention upon the issues they address and provoke thought about and awareness of those issues and the pitfalls that one could otherwise fall into inadvertently. The important thing is to develop a culture conducive only to good and appropriate conduct and practices. Honesty and integrity must be the overriding and guiding principle in all things- substance must prevail over form and lip service. Adhering to the following policies is a condition of each contract of employment or service. The Board encourages all key management personnel, other employees, contractors and other stakeholders to monitor compliance with this Corporate Governance manual and periodically, by liaising with the Board, management and staff; especially in relation to observable departures from the intent of hereof and with and any ideas or suggestions for improvement. 28 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT 1.1 1.2 1.3 1.4 1.5 A listed entity should disclose: (a) (b) the respective roles and responsibilities of its board and management; and those matters expressly reserved to the board and those delegated to management. A listed entity should: (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. Information about the respective roles and responsibilities of our Board and management (including those matters expressly reserved to the Board and those delegated to management) is found under the Board Charter. The appointment of directors is undertaken under by the whole Board The Board recognises the benefits arising from diversity and aims to promote an environment conducive to the appointment of well qualified Board candidates so that there is appropriate diversity to maximise the achievement of corporate goals. As required under the ASX Listing Rules and the Corporations Act, election or re-election of directors is a resolution put to members at each Annual General Meeting. The notice of meeting contains all material information relevant to a decision on whether or not to elect or re-elect a director. A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. The Company does not have any senior executives and it does not have agreements with each director. The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. The company secretary reports directly to the Board through the Chairman and is accessible to all directors. The function performed by the company secretary is noted in the letter of appointment of the company secretary A listed entity should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either: (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or (2) if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under that Act. The Company has a Diversity policy which can be found on its website under the Corporate Governance section. The Company’s Diversity policy does not include requirements for the board to set measurable objectives for achieving gender diversity and given the size and nature of the Company at this stage, the Board considers this course of action reasonable. The Company recognises that a diverse and talented workforce is a competitive advantage and that the Company’s success is the result of the quality and skills of our people. Our policy is to recruit and manage based on qualification for the position and performance, regardless of gender, age, nationality, race, religious beliefs, cultural background, sexuality or physical ability. It is essential that the Company employs the appropriate person for each job and that each person strives for a high level of performance. The Company has not set measurable objectives for achieving gender diversity during the reporting period of 2016 – 2017. There are no women on the Board. 29 CORPORATE GOVERNANCE STATEMENT 1.6 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. 1.7 A listed entity should: (a) have and disclose a process for periodically evaluating the performance of its senior executives; and (b) disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. Process for Evaluating Board Performance is detailed in the Board Charter. Information on Performance Evaluations is included in the remuneration report section of the Annual Report. The Company does not have any executives and therefore does not have a process for evaluating the performance of senior executives. Given the size and nature of the Company, the board considers this to be reasonable in the circumstances. However, the board will re-evaluate senior executive performance evaluation measures should the Company’s circumstances change. 30 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE 2.1 The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. The Board does not have a Nomination Committee. The Board considers it has an appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. Board succession issues are discussed by the whole Board when required. The Board has identified that the appropriate mix of skills and diversity required of its members on the Board to operate effectively and efficiently is achieved by directors having substantial skills and experience in operational management, exploration and geology, corporate law, finance, listed resource companies, equity markets. The Board Skills matrix for the current Board is as follows: operational management exploration and geology corporate law accounting & finance listed resource companies equity markets John Jones   - -   Peter Stern       Graeme Smith  -     31 CORPORATE GOVERNANCE STATEMENT 2.3 2.4 2.5 2.6 A listed entity should disclose: (a) the names of the directors considered by the board to be independent directors; if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and the length of service of each director. (b) (c) The Company considers that Peter Stern and Graeme Smith are independent directors. John Jones is a substantial shareholder of the Company and therefore non- independent. Although Graeme Smith provides services, as the Principal of Wembley Corporate Services, as Company Secretary, the board considers that this does not interfere, or might reasonably be seen to interfere, with his capacity to bring an independent judgement to bear on issues before the board and to act in the best interests of the entity and its security holders generally. John Jones has been a director since 9 Feb 1990. Peter Stern has been a director since 28 Nov 2011. Graeme Smith has been a director since 18 Mar 2014. A majority of the board of a listed entity should be independent directors. The majority of the board are not independent directors. The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. The Chairman is not an independent director. The Board believes the Chairman is the most suitable director to undertake this role. The Company does not have a CEO. A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. The Company will provide induction material for any new directors and, depending on specific requirements, will provide appropriate professional development opportunities for directors. PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY 3.1 A listed entity should: (a) have a code of conduct for its directors, senior executives and employees; and (b) disclose that code or a summary of it. Code of Conduct sets out the principles and standards which the Board, management and employees of the Company are encouraged to strive to abide by when dealing with each other, shareholders and the broad community 32 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 4 – SAFEGUARD INTEGRITY IN CORPORATE REPORTING 4.1 The board of a listed entity should: (a) have an audit committee which: (1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. 4.2 4.3 The Company’s Audit committee comprises all directors and is Chaired by Peter Stern. The Audit Committee charter is disclosed on the Company’s website under the Corporate Governance link Qualifications and experience of members of the Audit Committee are found under the directors’ profile in both the Annual report and on the Company’s website at Directors and Management Details of meetings of the audit committee are to be found in the Annual report of the company. The Company does not have a CEO but the Audit committee receives from its CFO (Graeme Smith), declarations in relation to full year and half year statutory financial reports during the reporting period in accordance with section 295A of the Corporations Act. The audit engagement partner attends the AGM and is available to answer shareholder questions from shareholders relevant to the audit. 33 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE 5.1 A listed entity should: (a) have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) disclose that policy or a summary of it. PRINCIPLE 6 – RESPECT THE RIGHTS OF SECURITY HOLDERS 6.1 A listed entity should provide information about itself and its governance to investors via its website. 6.2 6.3 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. 6.4 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. The Company’s continuous Disclosure Policy can be found under the Corporate Governance section of the Company’s website The Company’s website provides information on the Company including its background, objectives, projects and contact details. The Corporate Governance page provides access to key policies, procedures and charters of the Company, such as the Board and Committee charters, securities trading policy, diversity policy and the latest Corporate Governance Statement. ASX announcements, Company reports and presentations are uploaded to the website following release to the ASX and editorial content is updated on a regular basis. A Shareholder Communication Policy can be found on the Company’s website The Company encourages shareholders to attend all general meetings of the Company and sets the time and place of each meeting to promote maximum attendance by Shareholders. The Company encourages Shareholders to submit questions in advance of a general meeting, and for the responses to these questions to addressed through disclosure relating to that meeting. The Company’s Shareholder Communication Policy is disclosed on the Company’s website. is the Company’s desire It that shareholders receive communications electronically in the interests of the environment and constraining costs. In an endeavor to drive this objective the Company has a policy of providing hard materials at least cost (which will generally involve a black & white presentation even where the electronic version is full colour). 34 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 7 – RECOGNISE AND MANAGE RISK 7.1 The board of a listed entity should: (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. The board or a committee of the board should: (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) disclose, in relation to each reporting period, whether such a review has taken place. A listed entity should disclose: (a) (b) if it has an internal audit function, how the function is structured and what role it performs; or if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. 7.2 7.3 7.4 The Board has not established a Risk committee however it does have a Risk Policy which can be found on the company’s website. Risk management is specifically discussed at the Company’s board meetings during the year. The Company reviews its risk management framework annually and this information is disclosed in the Annual Report. The size and operations of the company do not warrant an internal audit committee. The Company’s external auditor advises the Company at each end of year and half year whether there are any issues with internal control and improvements which could be undertaken to improve them. The Company is subject to, and responsible for, existing environmental liabilities associated with its tenements. The Company will continually monitor its ongoing environmental obligations and risks, and implement rehabilitation and corrective actions as appropriate to remain compliant. These risks may be impacted by change in Government policy. The Company does not believe it has any significant exposure to economic and social sustainability risks. 35 CORPORATE GOVERNANCE STATEMENT PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY 8.1 The board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. A listed entity which has an equity-based remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it. 8.2 8.3 The Company does not have a Remuneration committee as the Company does not have any staff. The whole board considers the level and composition of remuneration for directors with reference to remuneration levels set by its peers in the mining industry. Non-executive directors are paid amounts equivalent to the remuneration received by other non-executive directors working in similarly sized exploration companies. The Company does not have any staff and no need for a policy on remuneration of executives. The Company does not have an equity based remuneration scheme. 36 ANGLO AUSTRALIAN RESOURCES N.L. A.C.N. 009 159 077 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the Year Ended 30 June 2017 Note 2017 $ 2016 $ Interest income Consultancy expenses Exploration expenditure written off Impairment expense Directors’ fees Depreciation and amortisation expenses Rental expense Share based payments Interest expenses Other expenses Loss before tax Income tax expense Loss for the year Total comprehensive loss for the year attributable to equity holders of the Company Loss per share: Basic and diluted loss per share 9 15 8 15 16 15,431 - (1,296) (18,103) (185,000) - (99,674) (43,000) (1,942) (183,564) (517,148) 11 - - - (137,640) (2,515) (100,687) - - (152,959) (393,790) - - (517,148) (393,790) (517,148) (393,790) 17(i) (0.22 cents) (0.23 cents) The above Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the accompanying notes. 37 ANGLO AUSTRALIAN RESOURCES N.L. A.C.N. 009 159 077 STATEMENT OF FINANCIAL POSITION As at 30 June 2017 Assets Cash and cash equivalents Other receivables Total Current Assets Other receivables Property, plant & equipment Exploration and evaluation assets Total Non-Current Assets Total Assets Liabilities Trade and other payables Borrowings Total Current Liabilities Rehabilitation provision Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Note 18(i) 7 7 8 9 10 11 12 2017 $ 178,786 27,660 206,446 38,000 - 2,230,612 2,268,612 2,475,058 521,577 2,987 524,564 65,220 65,220 589,784 2016 $ 279,415 8,609 288,024 38,000 - 1,672,004 1,710,004 1,998,028 419,499 102,708 522,207 65,220 65,220 587,427 1,885,274 1,410,601 13 14(a) 14(b) 30,057,224 717,770 (28,889,720) 29,213,403 569,770 (28,372,572) Total equity attributable to the equity holders of the Company 1,885,274 1,410,601 The above Statement of Financial Position is to be read in conjunction with the accompanying notes. 38 ANGLO AUSTRALIAN RESOURCES N.L. A.C.N. 009 159 077 STATEMENT OF CHANGES IN EQUITY For the Year Ended 30 June 2017 Opening Balance at 1 July 2015 Total comprehensive loss for the period Loss for the period Total comprehensive loss for the period Transactions with owners, recorded directly in equity Issue of ordinary shares Options issued to directors Closing balance at 30 June 2016 Opening Balance at 1 July 2016 Total comprehensive loss for the period Loss for the period Total comprehensive loss for the period Transactions with owners, recorded directly in equity Issue of ordinary shares Options issued Closing balance at 30 June 2017 Issued Capital $ 28,668,168 Share based Payments Reserve $ 432,130 Accumulated losses Total Equity $ $ (27,978,782) 1,121,516 - - - - (393,790) (393,790) (393,790) (393,790) 545,235 - 29,213,403 - 137,640 569,770 - - (28,372,572) 545,235 137,640 1,410,601 29,213,403 569,770 (28,372,572) 1,410,601 - - - - (517,148) (517,148) (517,148) (517,148) 843,821 - 30,057,224 - 148,000 717,770 - - (28,889,720) 843,821 148,000 1,885,274 The Statement of Changes in Equity is to be read in conjunction with the accompanying notes. 39 ANGLO AUSTRALIAN RESOURCES N.L. A.C.N. 009 159 077 STATEMENT OF CASH FLOWS For the Year Ended 30 June 2017 Note 2017 $ 2016 $ Cash Flows from Operating Activities Cash payments to suppliers and employees Other revenue Net cash used in operating activities 18(ii) (230,565) - (230,565) 1,033 (555,485) - - (554,452) 30,000 (71,664) 726,052 684,388 (100,629) 279,415 (238,148) - (238,148) 11 (202,922) - - (202,911) 361,615 (415,682) 533,240 479,173 38,114 241,301 Cash Flows from Investing Activities Interest received Exploration and evaluation expenditure incurred Proceeds from sale of property, plant & equipment Payments for property, plant & equipment Net cash used in investing activities Cash Flows from Financing Activities Proceeds from borrowings Repayment of borrowings Proceeds from issue of shares (net of costs) Net cash from financing activities Net (decrease) / increase in cash and cash equivalent Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 18(i) 178,786 279,415 The above Statement of Cash Flows is to be read in conjunction with the accompanying notes. 40 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements A.C.N. 009 159 077 1. REPORTING ENTITY Anglo Australian Resources NL (the “Company”) is a for profit company domiciled in Australia. The address of the Company’s registered office is Ground Floor, 63 Hay Street, Subiaco, Western Australia. The Company is involved in the exploration of mineral tenements. 2. BASIS OF PREPARATION (a) Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The financial report also complies with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (IASB). The financial reports were approved by the Board of Directors on 30 September 2017. (b) New and amended standards adopted by the Company The Company has adopted all the new and revised Standards and Interpretations issued by the AASB that are relevant to their operations and effective for the current annual reporting period. The adoption of all the new and revised Standards and Interpretations has not resulted in any changes to the Company’s accounting policies and has no effect on the amounts reported for the current or prior years. (c) Basis of measurement The financial reports have been prepared on the historical cost basis, except for share based payments measured at fair value. (d) Functional and presentation currency These financial reports are presented in Australian dollars, which is the Company’s functional currency. (e) Use of estimates and judgements The preparation of financial reports in conformity with AASBs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions in accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In preparing this financial report, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty are as follows. (i) Measurement of Share Based Payments From time to time, the Company grants options to key management people in lieu of services received. Options granted are measured using a Black Scholes model that incorporates various estimates and assumptions, including estimated future share price volatility. (ii) Impairment of exploration and evaluation assets The ultimate recoupment of the value of exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale, of the underlying mineral exploration properties. The Company undertakes at least on an annual basis, a comprehensive review for indicators of impairment of these assets. Where impairment indictors are noted, there is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts. The key area of estimation and judgement that is considered in this is the Company’s market capitalisation compared to its net assets 41 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 2. BASIS OF PREPARATION (continued) (e) Use of estimates and judgements(continued) (iii) Going concern A.C.N. 009 159 077 A key assumption underlying the preparation of the financial statements is that the Company will continue as a going concern. A Company is a going concern when it is considered to be able to pay its debts as and when they are due, and to continue in operation without any intention or necessity to liquidate or otherwise wind up its operations. A significant amount of judgment has been required in assessing whether the entity is a going concern as set out in Note 3. (iv) Provision for environmental rehabilitation Included in liabilities at the end of each reporting period is an amount that represents an estimate of the cost to rehabilitate the land upon which the Company has carried out its exploration for mineral resources. Provisions are measured at the present value of management's best estimate of the costs required to settle the obligation at the end of the reporting period. Actual costs incurred in future periods to settle these obligations could differ materially from these estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates, and discount rates could affect the carrying amount of this provision. 3. GOING CONCERN The financial report has been prepared on the going concern basis that contemplates the continuity of normal business activities and the realisation and extinguishment of liabilities in the ordinary course of business. For the year ended 30 June 2017 the Company incurred a loss of $517,148 (2016: $393,790). The Company had net cash outflows from operations of $230,565 (2016: $238,148), and net cash outflows from investing activities of $554,452 (2016: $202,911). The Company will require further funding in order to meet day-to-day obligations as they fall due and to progress its exploration and evaluation projects as budgeted. The Company has a history of successful capital raisings to fund exploration. The Board of Directors is aware, of the Company’s working capital requirements and the need to access additional funding. The ability of the Company to continue as a going concern is dependent on the Company securing further working capital by the issue of additional equity. The Board of Directors have reviewed the business outlook and is of the opinion that the use of the going concern basis of accounting is appropriate as they believe the Company will achieve the matters set out above. Should the Company be unsuccessful in raising equity as required, there would be material uncertainty which may cast significant doubt as to whether the Company will continue as a going concern and therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. 4. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (a) Property, Plant and Equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and amortisation (see below), and impairment losses (see accounting policy (e)). Cost includes expenditures that are directly attributable to the acquisition of the asset. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. 42 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements A.C.N. 009 159 077 4. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Property, Plant and Equipment (continued) (ii) Subsequent costs The Company recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the entity and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other costs are recognised in the statement of profit or loss and other comprehensive income as an expense as incurred. (iii) Depreciation With the exception of mine property, depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Depreciation rates and methods and any residual values are reviewed annually for appropriateness. When changes are made, adjustments are reflected prospectively in current and future periods only. Depreciation is charged to the statement of comprehensive income. (b) Exploration and Evaluation Expenditure Exploration and evaluation costs, including the costs of acquiring licences and directors and, where appropriate, management’s time are capitalised as exploration and evaluation assets on an area of interest basis. The entity subcontracts equipment on an as required basis and as a result all exploration and evaluation costs incurred are of an intangible nature. Costs incurred before the Company has obtained the legal rights to explore an area are recognised as an expense in the income statement. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either: the expenditures are expected to be recouped through successful development and exploitation (i) of the area of interest; or (ii) activities in interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, or (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment accounting policy (e)). For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit is never larger than the area of interest. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment. (c) Cash and cash equivalent Cash and cash equivalents comprise cash balances, short term bills and call deposits. (d) Other receivables Other receivables are subsequently measured at their amortised cost less impairment losses (see accounting policy (e)) 43 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements A.C.N. 009 159 077 4. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (e) Impairment (i) Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss. (ii) Non-financial assets The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash- generating unit”). Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. The recoverable amount of deferred exploration and evaluation cost is primarily considered by directors with reference to the market of capitalisation of the company. In respect of assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (f) Share Capital Transaction costs Qualifying transaction costs of an equity transaction, which are incremental and directly attributable to the issue of ordinary shares, are accounted for as a deduction from equity, net of any related income tax benefit. (g) Employee Benefits The Company does not have any employees and does not therefore provide any employee benefits such as Wages, Salaries, Annual Leave Sick Leave or Long Service Leave. (h) Provisions A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. 44 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements A.C.N. 009 159 077 4. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) (i) Trade and Other Payables Trade and other payables are measured at their amortised cost. Trade payables are non-interest bearing and are normally settled on 60-day terms. (j) Finance income Finance income comprises interest income on funds invested. Interest income is recognised as it accrues, using the effective interest method. (k) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). 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 are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (l) Earnings per Share The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. (m) Determination and presentation of operating segments For management purposes and for the purposes of reporting to the Board (the Company’s chief decision makers), the Company is organised into one operating segment, which involves exploration throughout Australia. The Company’s principal activities are interrelated, and the Company has no revenue from operations (n) Borrowings Borrowings are measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the borrowings are derecognised. (o) New standards and Interpretations not yet adopted At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective. The Company does not anticipate that there will be a material effect on the financial statements from the adoption of these standards. Standard/Interpretation AASB 9 ‘Financial Instruments’, and the relevant amending standards Effective for annual reporting periods beginning on or after Expected to be initially applied in the financial year ending 1 January 2018 30 June 2019 AAASB 15 ‘Revenue from contracts with customers’ 1 January 2017 30 June 2018 45 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 5. DETERMINATION OF FAIR VALUES A.C.N. 009 159 077 A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non- financial assets and liabilities. Fair values have been determined for measurement and /or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. Other receivables The fair value of other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. 6. FINANCIAL RISK MANAGEMENT Overview The Company have exposure to the following risks from their use of financial instruments: • • • liquidity risk market risk interest rate risk This note presents information about the Company’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout this financial report. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the company through regular reviews of the risks. Cash The Company limits its exposure to credit risk by only investing in deposit instruments of major Australian banking institutions. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows. Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, commodity prices and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Interest rate risk The Company is exposed to interest rate risk on cash balances. The Company adopts a policy of placing all of its cash not required for immediate cash flow in its operations in a high interest-bearing cash management accounts exposed to variable interest rates. Capital Management Management controls the capital of the Company in order to ensure that it can fund its operations and continue as a going concern in conjunction with the continual assessment as to the underlying market value of its exploration and development projects. The Company has no external debt other than disclosed in the financial statements and there are no externally imposed capital requirements. Management effectively manages the Company’s capital by assessing its financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include share issues. There have been no changes in the strategy adopted by management since the prior year. 46 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 7. OTHER RECEIVABLES Current Other receivables Non - Current Security deposit – leased premises 8. PROPERTY, PLANT & EQUIPMENT Office furniture & fittings, PP&E – at cost Accumulated depreciation Total property, plant & equipment 9. EXPLORATION AND EVALUATION ASSETS Deferred exploration and evaluation assets Balance at 1 July 2016 Expenditure during the year Amounts impaired during the year Revaluation of rehabilitation provision Balance at 30 June 2017 Comprised of: Feysville project Koongie Park project Leonora project Mandilla project Impairment relates to: Feysville project Koongie Park project Leonora project Mandilla project A.C.N. 009 159 077 2017 $ 2016 $ 27,660 27,660 38,000 38,000 2017 $ 11,392 (11,392) - - 2017 $ 1,672,004 576,711 (18,103) - 2,230,612 628,196 1,214,317 126,064 262,035 2,230,612 - (3,580) (14,523) - (18,103) 8,609 8,609 38,000 38,000 2016 $ 11,392 (11,392) - - 2016 $ 1,451,001 231,187 - (10,184) 1,672,004 240,880 1,135,442 122,704 172,978 1,672,004 - - - - - The ultimate recoupment of exploration and evaluation assets is dependent upon successful development and commercial exploitation, or alternatively sale of the respective areas. The Company’s exploration properties may be subjected to claim(s) under native title, or contain sacred sites, or sites of significance to Aboriginal people. As a result, exploration properties or areas within the tenements may be subject to exploration restrictions, mining restrictions and/or claims for compensation. At this time, it is not possible to determine whether such claims exist or the quantum of such claims, if any. 47 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 10. TRADE AND OTHER PAYABLES Current Trade payables Accrued director fees Other payables and accruals 11. BORROWINGS Current Loans A.C.N. 009 159 077 2017 $ 282,500 160,000 79,077 521,577 2016 $ 329,499 80,000 10,000 419,499 2,987 2,987 102,708 102,708 Loan – J Jones A loan of $81,664 from director Mr John Jones was repaid during the year. Loan – P Stern A loan of $20,000 was paid during the year. Interest of $2,164 owing to director Mr Peter stern remains at balance date. Loan – G Smith Interest of $823 owing to director Mr Graeme Smith remains at balance date. 12. REHABILITATION PROVISION A provision has been made to cover costs of rehabilitating the Company’s areas of interest. It is not expected that this will be required in the next 12 months. Balance at 1 July Re-estimation of provisions Provisions used during the year Balance at 30 June 13. ISSUED CAPITAL Issued and Paid Up Capital 258,339,441 ordinary shares fully paid (2016 – 209,311,348 ordinary shares fully paid) 2017 $ 65,220 - - 65,220 2016 $ 75,404 (10,184) - 65,220 2017 $ 30,057,224 2016 $ 29,213,403 48 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 13. ISSUED CAPITAL(continued) A.C.N. 009 159 077 Share movements during the year Issue Price ($) 2017 Number of Shares 2017 $ 2016 Number of Shares 2016 $ At beginning of year 209,311,348 29,213,403 160,575,087 28,668,168 Placement – July 2016 - Cash Issue – August 2016 - in lieu of amounts owed to directors Issue – January 2017 – in lieu of services received Placement – March 2017 – Cash Issue – May 2017 – in lieu of drilling services received Issue – June 2017 – in lieu of drilling services received Placement – October 2015(1) Placement – June 2015 Cost of capital 0.012 0.016 - 0.02 0.02 0.04 0.02 0.01 0.012 0.012 9,845,010 118,140 5,833,333 70,000 1,154,750 30,750,000 21,970 615,000 645,000 25,800 - - - - - - - - - - 800,000 - - - 16,000 - - (23,089) - 19,800,000 28,936,261 - - 198,000 347,235 - At the end of the year 258,339,441 30,057,224 209,311,348 29,213,403 The Company does not have authorised capital or par value in respect of its issued shares. (1) Shares issued in October 2015 includes 1,091,250 million shares issued for services rendered. 14. RESERVES AND ACCUMULATED LOSSES (a) Reserves Share-based payments reserve Balance at beginning of financial year Share based payments – options (Note 15) Option issued to Directors (Note 15) Balance at end of financial year (b) Accumulated losses Balance at beginning of financial year Net loss for the year Balance at end of financial year 2017 $ 569,770 43,000 105,000 717,770 2016 $ 432,130 - 137,640 569,770 (28,372,572) (517,148) (28,889,720) (27,978,782) (393,790) (28,372,572) (c) Nature and purpose of reserves The share-based payments reserve is used to recognise the fair value of options issued. 49 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 15. SHARE BASED PAYMENTS A.C.N. 009 159 077 As at 30 June 2016, directors were owed $80,000 in relation to remuneration (Note 10). On 25 August 2016, 10.5 million unlisted options were granted to directors in lieu of outstanding directors fees. The options were ascribed a value of $105,000 using a Black-Scholes model. Of this amount, $25,000 relates to remuneration incurred in the year to 30 June 2017. The balance of the fair value ($80,000) settles amounts accrued to 30 June 2016. The inputs to the Black-Scholes valuation were as follows: Measurement date 25 August 2016 Share price at measurement date Exercise price Volatility Expiry date Risk free rate $0.012 $0.025 149% 30 November 2020 1.62% In December 2016, the company issued 3 million options in consideration for services received. The options have been valued by a Black-Scholes model, under the following assumptions: Measurement date 1 December 2016 Share price at measurement date Exercise price Volatility Expiry date Risk free rate $0.014 $0.04 147% 30 November 2020 1.52% Unlisted Options Options over ordinary shares of the Company have been issued for nil cash consideration. The options cannot be transferred and will not be quoted on the ASX. Therefore, no voting rights are attached to the options unless converted into ordinary shares. All options are granted at the discretion of the directors. The terms and conditions of the grants are as follows: Grant Date & Vesting Date Granted Number Expiry Date Exercise Price (cents) Value per option at grant date (cents) Exercised Number 01/12/2014 24,800,000 30/11/2019 22/06/2015 7,500,000 30/11/2019 30/11/2015 37,200,000 30/11/2020 25/08/2016 10,500,000 08/12/2016 3,000,000 30/11/2020 30/11/2020 2 2 2 2.5 4 0.81 0.73 0.37 1 1.43 Nil Nil Nil Nil Nil The number and weighted average exercise prices of share options are as follows: Weighted average exercise price 2017 Number of options 2017 Weighted average exercise price 2016 Number of options 2016 Outstanding at 1 July Lapsed during period Exercised during period Granted during the period Outstanding at 30 June Exercisable at 30 June $0.02 - - $0.028 $0.021 $0.021 69,500,000 - - 13,500,000 83,000,000 83,000,000 $0.02 $0.14 - $0.02 $0.02 $0.02 35,900,000 (3,600,000) - 37,200,000 69,500,000 69,500,000 The value of options is recognised as expenses immediately on grant date. 50 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 16. TAXATION Current tax expense Deferred tax expense a) Numerical reconciliation between tax expense and pre-tax accounting loss Loss before tax Income tax using the corporate tax rate of 28.5% (2016: 30%) Current year losses for which no deferred tax asset was recognised Income tax expense b) Unrecognised Deferred Tax Assets A.C.N. 009 159 077 2017 $ 2016 $ - - - - (517,148) (393,790) (147,387) (112,230) 147,387 - 112,230 - The Company had estimated tax losses of $21,173,187 (2016: $20,954,872) at 30 June 2017. The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the company can use the benefits. The potential future income tax benefit will only be obtained if: - - - the relevant Company derives future assessable income of a nature and amount sufficient to enable the benefit to be realised; the relevant Company complies with the conditions for deductibility imposed by the law; and no changes in tax legislation adversely affect the relevant Company in realising the benefit. 17. (i) LOSS PER SHARE Basic loss per share Net loss attributable to ordinary shareholders (517,148) (393,790) As the Company has made a loss for the year ended 30 June 2017, all options on issue are considered antidilutive and have not been included in the calculation of diluted earnings per share. 2017 $ 2016 $ Weighted average number of ordinary shares Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share 2017 No. of shares 2016 No. of shares 238,556,499 174,585,525 Basic loss per share recognised (0.22 cents) (0.23 cents) 51 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 18. NOTES TO THE STATEMENT OF CASH FLOWS (i) Reconciliation of Cash and Cash Equivalents A.C.N. 009 159 077 For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank and short-term deposits. Cash and cash equivalents as at the end of the financial year, as shown in the Statement of Cash Flows is reconciled to the related items in the balance sheet as follows: Cash on hand Cash at bank (ii) Reconciliation of cash flows from operating activities Loss for the period after income tax Adjustments for: Depreciation Impairment Share based payments expense Interest received Change in other receivables Change in operating trade and other payables 2017 $ - 178,786 178,786 2016 $ 300 279,115 279,415 (517,148) (393,790) - 18,103 242,500 - (19,051) 45,031 2,515 - 144,135 (11) 5,843 3,160 Net cash used in operating activities (230,565) (238,148) Non-cash investing and financing activities during the year are listed at Note 13. 19. AUDITOR’S REMUNERATION Auditor’s services Audit and review of financial reports 20. COMMITMENTS Mineral Tenement Leases 2017 $ 2016 $ 26,000 21,000 The Company has minimum expenditure obligations in pursuance of the terms and conditions of tenement licences in the forthcoming year of approximately $660,944(2016: $551,740). The aforementioned expenditure obligations can be subject to variation to a lesser amount as a result of: reduction in tenement areas; relinquishment of tenements; and/or farm out of project areas to third party joint venture partners who assume responsibility for the expenditure obligations. These obligations are expected to be fulfilled in the normal course of operations of the Company. If the current status of the tenements is maintained, then for one year or later and not more than five years the total obligations are approximately $1,945,268 (2016: $2,758,700) and for later than five years the total obligations are Nil (2016: $Nil). 52 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 20. COMMITMENTS (continued) Operating Leases Non-cancellable operating lease rentals are payable as follows: Less than one year Between one and five years More than five years A.C.N. 009 159 077 2017 $ 137,620 84,752 222,372 2016 $ 140,312 350,760 - 491,072 The Company leases business office premises under a non-cancellable operating lease, expiring in the 2020 financial year. 21. FINANCIAL INSTRUMENTS Credit risk The carrying amount of the Company’s financial assets represents the maximum credit exposure. The Company’s maximum exposure to credit risk at the balance sheet date was: Other Receivables Cash and cash equivalents Note 7 18(i) Carrying amount 2017 $ 65,660 178,786 244,446 2016 $ 46,609 279,415 326,024 None of the company’s other receivables are past due (2014: nil). Liquidity Risk The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements: 30 June 2017 Non-derivative financial liabilities Carrying amount Contractual cash flows 6 mths or less Trade and other payables 521,577 521,577 521,577 30 June 2016 Non-derivative financial liabilities Carrying amount Contractual cash flows 6 mths or less Trade and other payables 419,499 419,499 419,499 Currency risk The Company is not exposed to foreign currency risk. Interest rate risk At the reporting date, the interest rate profile of the Company’s interest bearing financial assets was: Weighted average interest rate Floating interest rate 2017 Financial Assets Cash and cash equivalents Other receivables 2016 Financial Assets Cash and cash equivalents Other receivables 1.0% 3.35% 2.0% 3.35% $ 178,786 - 178,786 279,415 - 279,415 Fixed interest rate more than a year $ Total $ - 65,660 65,660 - 46,609 46,609 178,786 65,660 244,446 279,415 46,609 326,024 53 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 21. FINANCIAL INSTRUMENTS (continued ) A.C.N. 009 159 077 Ref to Note 11 for information of interest rates relating to borrowings. Trade and other payables are not interest bearing. Fair values The fair values of financial assets and liabilities of the Company at the balance date approximate the carrying amounts in the financial statements. Fair value sensitivity analysis for fixed rate instruments A change in interest rates of 1% at the reporting date would not materially affect profit or loss. Cash flow sensitivity analysis for variable rate instruments Interest for the year was $15,431 of which $14,397 and was non-cash, therefore a sensitivity analysis on a 1% change in interest rates would not materially affect the loss for the year. Fair values versus carrying amounts The fair values of financial assets and liabilities are the same as the carrying value. 22. RELATED PARTIES The following were key management personnel of the Company at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period: John Load Cecil Jones – Executive Chairman Peter Stern - Non-executive director Graeme Smith – Non-executive director / Company Secretary / CFO Key management personnel compensation Short-term benefits Post-employment benefits Share-based payments 2017 $ 185,000 - - 185,000 2016 $ 137,640 - - 137,640 Information regarding individual directors and executives’ compensation is required by the Corporations Regulations 2M.3.03 and 2M.6.04 to be provided in the Remuneration Report section of the Directors’ Report on pages 21 to 25 Apart from the details disclosed in this note, no director has entered into a material contract with the Company since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year end. Related Parties Transaction Transactions value Company Amount owing by the 30 June 2017 30 June 2016 30 June 2017 30 June 2017 $ $ $ $ J L C Jones – Westbury Management Services Pty Ltd Storage / Admin Service expenses (21,914) 303 1,976 23,890 J L C Jones P A Stern G I Smith Loan to the company net of (repayments) (81,664) (29,067) - 81,664 Loan, (repayments) & interest (18,314) Loan to the company 256 - - 2,164 20,478 823 567 G I Smith – Wembley Corporate Services Pty Ltd Company Secretarial / CFO fees 32,658 8,799 54,254 21,596 Tanga Resources Limited Rent, Carpark & Outgoing 36,468 36,468 - - 54 ANGLO AUSTRALIAN RESOURCES N.L. Notes to the Financial Statements 23. SUBSEQUENT EVENTS A.C.N. 009 159 077 No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the of the Company in future financial years other than the following: • On 6 July 2017, the Company issued 900,500 shares at a deemed price of $0.04 per share for drilling services. • On 17 July 2017, the Company issued 590,500 shares at a deemed price of $0.04 per share for legal services. • On 31 July 2017, the Company issued 125,000 shares at a deemed price of $0.04 per share for other services. • On 29 August 2017, the Company issued 20,248,231 shares, comprising: o 16,045,335 shares at $0.048 for cash, to fund further exploration work and for working capital; o 622,396 shares at a deemed price of $0.048 in consideration for provision of services; and o 3,580,500 shares pursuant to shareholder approval at general meeting of the company on 21 August 2017. • On 30 August 2017, 6,950,000 options were issued pursuant to shareholder approval at a general meeting of the company on 21 August 2017. 55 DIRECTORS’ DECLARATION 1. In the opinion of the directors of Anglo Australian Resources NL a) The financial statements and notes, and the Remuneration Report in the Directors’ Report, set out on pages 20 to 55 are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position of the Company and of its performance, as represented by the results of its operations and its cash flows, for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; b) c) 2. the directors draw attention to Note 2(a) to the financial statements, which includes a statement of compliance with International Financial Reporting Standards; as set out in Note 3, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Company Secretary (who performs the Chief Financial Officer’s function) for the financial year ended 30 June 2017. Signed in accordance with a resolution of directors: John Jones Executive Chairman Anglo Australian Resources NL Dated at Perth this 30th day of September 2017 56 ASX Additional Information Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 26 September 2017. (a) Issued Capital The issued capital of the Company at 26 September 2016; 280,203,672 ordinary fully paid shares. (b) Distribution of equity securities Analysis of numbers of equity security holders by size of holding: Ordinary shares Number of holders Number of shares 1 1,001 5,001 10,001 100,001 - 1,000 - 5,000 - 10,000 - 100,000 and over The number of shareholders holding less than a marketable parcel of shares are: 485 654 303 666 285 2393 1,298 (c) Twenty largest shareholders The names of the twenty largest holders of quoted ordinary shares are: 259,347 1,835,026 2,534,650 25,251,851 250,322,798 280,203,672 16,276,747 Porter Street Investments Pty Ltd Wise Plan Pty Ltd Braham Investments Pty Ltd HSBC Custody Nom Aust Ltd Fast Lane Aust Pty Ltd Sunden Pty Ltd Fontana Sabina C Thwaites Pty Ltd Corona Land Holdings Pty Ltd S Loader Pty Ltd Dixtru Pty Ltd Beaumont Michael John Graham Investments Pty Ltd Rec WA Pty Ltd D & P Buckley Pty Ltd Jones Rhett Lopez George Orbit Drilling Pty Ltd 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Wembley Corporate Services Pty Ltd 20 Raad Graham Listed ordinary shares Number of shares 20,169,616 19,000,000 16,565,255 11,590,129 7,000,000 6,166,667 6,000,000 4,743,532 4,500,000 3,684,910 3,427,214 3,405,180 3,144,078 3,000,000 2,922,229 2,644,687 2,600,000 2,469,000 2,382,999 2,150,000 127,565,496 Percentage of ordinary shares 7.20% 6.78% 5.91% 4.14% 2.50% 2.20% 2.14% 1.69% 1.61% 1.32% 1.22% 1.22% 1.12% 1.07% 1.04% 0.94% 0.93% 0.88% 0.85% 0.77% 45.53 (d) Substantial shareholders Porter Street Investments Pty Ltd - 7.2%, Wise Plan Pty Ltd – 6.78%, Braham Investments Pty Ltd – 5.91% (e) Voting rights All ordinary shares (whether fully paid or not) carry one vote per share without restriction. (f) Unquoted Securities At 19 September 2017, the Company has a total 91,950,000 unlisted options as follows: Number of Holders Exercise Price Number of Options 32,300,000 37,200,000 10,500,000 3,000,000 8,950,000 91,950,000 6 3 3 3 6 21 $0.02 $0.02 $0.025 $0.04 $0.08 Expiry Date 30 November 2019 30 November 2020 30 November 2020 30 November 2020 30 November 2020 61 

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