DIRECTORS’ REPORT
The Directors of Apollo Minerals Limited present their report on the Consolidated Entity consisting of Apollo Minerals
Limited (“Company” or “Apollo Minerals”) and the entities it controlled at the end of, or during, the year ended 30
June 2016 (“Consolidated Entity” or “Group”).
DIRECTORS
The names and details of the Company's directors in office at any time during the financial year or since the end of
the financial year are:
Current Directors
Mr Ian Middlemas
Mr Richard Shemesian
Mr Mark Pearce
Chairman (appointed 8 July 2016)
Non-Executive Director (former Chairman to 8 July 2016)
Non-Executive Director (appointed 8 July 2016)
Former Directors
Mr Anthony Ho
Mr Eric Finlayson
Mr Guy Robertson
Non-Executive Director (resigned 8 March 2016)
Non-Executive Director (resigned 8 July 2016)
Non-Executive Director (appointed 8 March 2016 and resigned 8 July 2016)
Unless otherwise stated, Directors held their office from 1 July 2015 until the date of this report.
CURRENT DIRECTORS AND OFFICERS
Mr Ian Middlemas B.Com, CA
Chairman
Mr Middlemas is a Chartered Accountant, a member of the Financial Services Institute of Australasia and holds a
Bachelor of Commerce degree. He worked for a large international Chartered Accounting firm before joining the
Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive
corporate and management experience, and is currently a director with a number of publicly listed companies in the
resources sector.
Mr Middlemas was appointed a Director of the Company on 8 July 2016. During the three year period to the end
of the financial year, Mr Middlemas has held directorships in Cradle Resources Limited (May 2016 – present),
Paringa Resources Limited (October 2013 – present), Berkeley Energia Limited (April 2012 – present), Prairie
Mining Limited (August 2011 – present), Syntonic Limited (April 2010 – present), Salt Lake Potash Limited (January
2010 – present), Equatorial Resources Limited (November 2009 – present), WCP Resources Limited (September
2009 – present), Sovereign Metals Limited (July 2006 – present), Odyssey Energy Limited (September 2005 –
present), Papillon Resources Limited (May 2011 – October 2014), Sierra Mining Limited (January 2006 – June
2014) and Decimal Software Limited (July 2013 – April 2014).
Mr Richard Shemesian B.Com, LLB (Hons), FINSIA
Non-Executive Director
Mr Shemesian is an international mining executive, who has been involved in the financing, construction,
development and sale of three mining projects. He is a qualified lawyer, holds a current practising certificate and
has completed post-graduate studies in business and finance.
He specialises in resource finance, law and corporate finance. Mr Shemesian has been a director of, and held
senior executive positions with, a number of ASX listed mining companies and worked as an executive at Macquarie
Bank's Corporate Advisory Division.
Mr Shemesian was appointed a Director of the Company on 27 September 2010.
Apollo Minerals Limited ANNUAL REPORT 2016
1
OPERATING AND FINANCIAL REVIEW
Operations
Highlights during and subsequent to the year-end included:
Apollo Minerals has completed a recapitalisation raising a total of $5.2 million (before costs), placing the
Company in a strong financial position to continue exploration on its existing projects and to pursue new
business opportunities.
At the Fraser Range Project, the Company completed a high powered moving loop electromagnetic (MLEM)
survey at the Plato prospect, where previous drilling had intersected nickel-bearing sulphides. One priority
conductive target in the bedrock has been identified for follow-up, including potential drill testing.
A maiden drilling campaign was completed at the Kango North Iron Project following finalisation of an earn-in
joint venture with a diversified Middle Eastern group to sole fund exploration. The JV partner can earn up to a
50.1% interest in the Project through the contribution of ~$4m (US$3m) in exploration and development.
A number of new business opportunities have been assessed and the Company is continuing to actively pursue
new opportunities in the resources sector, both domestically and overseas.
Orpheus JV Project – Fraser Range
The Company has a 70% interest in the nickel, copper and gold prospective Orpheus JV Project in the Fraser
Range province in south eastern Western Australia (Figure 1).
The Project area consists of four tenements covering over 600km² in the most prospective part of the world class
Fraser Range exploration district, host to Independence Group’s (ASX: IGO) major Nova nickel and copper deposit.
Apollo Minerals is required to sole fund all activities on the Project until completion of a Bankable Feasibility Study.
The Fraser Range province is highly prospective for nickel, copper and gold, and has attracted significant
exploration since the discovery of the Nova deposit in 2012. The Project is strategically located along strike and
mid-way between the Nova deposit to the northeast and Independence Group’s Crux nickel prospect to the
southwest.
Following a review of the Fraser Range datasets, several target areas were identified for follow-up exploration,
commencing with a high powered EM survey. The high priority Plato and Oceanus Prospects were selected as the
initial targets using the EM surveys over approximately 60 line km over an approximately 20km2 area.
Plato Prospect
At Plato, a high powered MLEM survey focused on a 12km2 magnetic low where previous reverse circulation (RC)
and diamond drilling had intersected primary nickel sulphides including 3m at 0.4% Ni. The magnetic low is
interpreted to be a mafic-ultramafic intrusive body.
MLEM data was compiled and modelled using latest inversion and 3D modelling techniques. One priority bedrock
conductive target has been identified for follow-up, including drill testing. Anomalous surface soil geochemistry and
adjacent drill holes intersecting nickel sulphides support an interpretation that the conductor may be related to nickel
sulphide mineralisation.
Apollo Minerals has been successful in obtaining a grant of up to $150,000 under the WA Government Exploration
Incentive Scheme (EIS) Co-funded Drilling program for drilling at Plato. Under the EIS guidelines the funding covers
direct drilling costs which Apollo Minerals is required to match.
Apollo Minerals Limited ANNUAL REPORT 2016
3
DIRECTORS' REPORT
(Continued)
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Figure 1: Tenement Plan – Orpheus JV Project, Fraser Range province
Current Activities
Initial field work was undertaken on the northern tenement (E28/2403) in August 2016, and the Company is also
currently undertaking a comprehensive review of all available data in order to plan the next phase of exploration for
nickel, copper and gold within the Orpheus JV Project area in the Fraser Range province.
Titan Base-Precious Metals Project
The Titan Base and Precious Metals project area is situated in the Gawler Craton of South Australia and included
100% held tenements (Commonwealth Hill Project) and contiguous farm-in joint ventures on the Mars Aurora Tank
and Eaglehawk JV Projects.
The Company has undertaken a comprehensive review of the Titan Project and is discussing the divestment of
various projects. Apollo Minerals has formally notified the joint venture partner of its intention to withdraw from the
Eaglehawk JV, and subsequent to the end of the year, the Company reached an agreement to dispose of its interest
in the Mars Aurora Tank JV to its joint venture partner for $50,000.
4
Kango North Iron Project
The Kango North Iron project covers 400km2 in Gabon, on the west coast of Central Africa. The Project is located
110km by road from the country’s capital Libreville and is positioned close to well-maintained roads, the national
electricity grid, shipping ports and open access railway.
During the year, Apollo Minerals finalised an earn-in joint venture with a diversified Middle Eastern group to sole
fund exploration at the Project. The JV partner can earn up to a 50.1% interest in the Project through the contribution
of ~$4m (US$3m) in exploration and development. Apollo Minerals will be free carried at no cost during exploration
until the JV partner earns a 50.1% interest or ceases funding prior to completing the earn-in. In the first stage of the
JV, the funding partner earned a 30% interest through their commitment to sole fund the ongoing 2015 work
programme totalling ~$1m (US$750k), including a maiden diamond drilling programme.
During the year, a ground based magnetic survey was completed that defined a number of drill targets at the P1
and P2 prospect areas. A maiden diamond core programme comprising 9 holes for a total of 551m was
subsequently completed. Mineralised intercepts were reported at P2, including a best intersection of 45.8m at 39.2%
Fe. Davis Tube Recovery (DTR) test work was conducted on 28 samples, with reported results demonstrating a
high mass recovery averaging 49% to produce a high grade Fe concentrate averaging 67% Fe.
A follow-up ground based magnetic survey has recently been completed over the P2 (infill) and P3-P4-P6 prospects,
along with a field geological mapping program, in order to obtain additional information prior to planning the next
phase of exploration.
Corporate
In May 2016, the Company announced that it would restructure the Board and undertake a comprehensive
recapitalisation process. Following Shareholder approval in June 2016, the Company has completed a 1 for 4 share
consolidation, a placement of 42 million shares at $0.05 each raising $2.1 million (before costs), followed by a 1 for
1 non-renounceable entitlements issue at $0.05 each raising $3.1 million (before costs).
Upon completion of the placement in July 2016, Mr Ian Middlemas was appointed Chairman of the Company and
Mr Mark Pearce was appointed a Non-Executive Director. Mr Eric Finlayson and Mr Guy Roberston resigned as
Non-Executive Directors. Mr Robertson also resigned as Company Secretary, and was replaced by Mr Clint
McGhie.
Subsequent to the capital raisings, Apollo Minerals has cash on hand of approximately $5.14 million which places
the Company in a strong financial position to continue exploration on the highly prospective Orpheus JV Project in
the Fraser Range province and to pursue new business opportunities in the resources sector both domestically and
overseas.
Results of Operations
The net loss of the Group attributable to members of the Company for the year ended 30 June 2016 was $8,616,780
(2015: $1,191,701).
This loss is primarily attributable to the write down of Exploration and evaluation expenditure of $7,418,036 (2015:
$47,500) following an assessment of recoverability at year end. In addition, share based payments expenses of
$357,581 (2015: $464,927) have been recognised during the period
Apollo Minerals Limited ANNUAL REPORT 2016
5
DIRECTORS' REPORT
(Continued)
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Financial Position
At 30 June 2016, the Group had cash reserves of $175,362. Subsequent to year end, the Company has completed
a placement and entitlements issue raising a total of $5.2 million before costs. As at the date of this report, the
Company has cash reserves of approximately $5.1 million, and is in a strong financial position to continue
exploration on its existing projects and to pursue new business opportunies in the resources sector.
At 30 June 2016, the Group had net assets of $933,144 (2015: $8,955,856), a decrease of $8,022,712 compared
with the previous year. This is consistent with and largely attributable to the net loss of the Group for the year ended
30 June 2016 of $8.6 million (2015: $1.2 million), and in particular, the write down of Exploration and evaluation
expenditure of $7,418,036 (2015: $47,500).
Business Strategies and Prospects for Future Financial Years
The objective of the Group is to create long-term shareholder value through the discovery, development and
acquisition of technically and economically viable mineral deposits.
To date, the Group has not commenced production of any minerals, nor has it identified a Mineral Resource in
accordance with the JORC Code. To achieve its objective, the Group currently has the following business strategies
and prospects over the medium term:
Assessing plans for further exploration work across the Company’s tenements;
Conduct further field work to follow up targets identified at the Fraser Range Project; and
Continue to actively assess new domestic and overseas business opportunities in the mineral resources
sector to complement the Company’s current projects.
All of these activities are inherently risky and the Board is unable to provide certainty of the expected results of
these activities, or that any or all of these likely developments will be achieved. The material business risks faced
by the Group that could have an effect on the Group’s future prospects, and how the Group manages these risks,
include:
The Company’s exploration properties may never be brought into production – the exploration for,
and development of, mineral deposits involves a high degree of risk. Few properties which are explored are
ultimately developed into producing mines. To mitigate this risk, the Company will undertake systematic and
staged exploration and testing programs on its mineral properties and, subject to the results of these
exploration programs, the Company will then progressively undertake a number of technical and economic
studies with respect to its projects prior to making a decision to mine. However there can be no guarantee
that the studies will confirm the technical and economic viability of the Company’s mineral properties or that
the properties will be successfully brought into production;
The Company may not successfully acquire new projects – the Company continues to actively pursue
and assess other new business opportunities in the resources sector. These new business opportunities
may take the form of direct project acquisitions, joint ventures, farm-ins, acquisition of tenements/permits, or
direct equity participation. The Company’s success in its acquisition activities depends on its ability to identify
suitable projects, acquire them on acceptable terms, and integrate the projects successfully, which the
Company’s Board is experienced in doing. However, there can be no guarantee that any proposed
acquisition will be completed or be successful. If a proposed acquisition is completed the usual risks
associated with a new projects and/or business activities will remain;
The Company’s activities will require further capital – the exploration and any development of the
Company’s exploration properties will require substantial additional financing. Failure to obtain sufficient
financing may result in delaying, or the indefinite postponement of, exploration and any development of the
Company’s properties or even a loss of property interest. There can be no assurance that additional capital
or other types of financing will be available if needed or that, if available, the terms of such financing will be
favourable to the Company;
6
The Company may be adversely affected by fluctuations in commodity prices – the price of
commodities fluctuate widely and are affected by numerous factors beyond the control of the Company.
Future production, if any, from the Company’s mineral properties will be dependent upon the price of
commodities being adequate to make these properties economic. The Company currently does not engage
in any hedging or derivative transactions to manage commodity price risk. As the Company’s operations
change, this policy will be reviewed periodically going forward; and
Global financial conditions may adversely affect the Company’s growth and profitability – many
industries, including the mineral resource industry, are impacted by these market conditions. Some of the
key impacts of the current financial market turmoil include contraction in credit markets resulting in a
widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and
precious metal markets, and a lack of market liquidity. Due to the current nature of the Company’s activities,
a slowdown in the financial markets or other economic conditions may adversely affect the Company’s
growth and ability to finance its activities. If these increased levels of volatility and market turmoil continue,
the Company’s activities could be adversely impacted and the trading price of the Company’s shares could
be adversely affected.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group's operations are subject to various environmental laws and regulations under the relevant government's
legislation. Full compliance with these laws and regulations is regarded as a minimum standard for all operations
to achieve.
Instances of environmental non-compliance by an operation are identified either by external compliance audits or
inspections by relevant government authorities.
There have been no known breaches of environmental laws and regulations by the Group during the financial year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
(i)
On 14 August 2015, the Company advised that it had finalised an earn-in joint venture with a diversified
middle eastern group to sole fund exploration at the Kango North Iron Project in Gabon. Under the terms of
the joint venture, the Partner may earn up to 50.1% interest by funding US$3M in exploration and
development.
(ii)
On 14 August 2015, the Company issued 250,000 Shares to an employee in lieu of salary amounting at a
deemed issue price of $0.04 each.
(iii) On 7 December 2015, the Company issued 1,510,000 Shares and 6,000,000 Options exercisable at $0.08
each on or before 30 November 2020 (1,500,000 Options excercisable at $0.32 each following 1 for 4
consolidation effective 17 June 2016). The Shares and Options were issued to Directors (following
shareholder approval), employees and suppliers in lieu of cash payments.
(iv) On 16 February 2016, the Company issued 1,910,578 Shares at a deemed issue price of $0.031 each and
on 23 March 2016, the Company issued 4,285,714 Shares at a deemed issue price of $0.028 each, for a
total of $180,000 in partial consideration for the acquisition of a 17.5% interest in Apollo African Holdings
Limited. Consideration for the acquisition also included a cash payment of $70,000.
(v)
On 11 May 2016, the Company announced plans to restructure the Board and to recapitalise the Company,
including a 1 for 4 consolidation, share placement and non-renounceable entitlements issue. Following
Shareholder approval on 15 June 2016, the Company completed the 1 for 4 consolidation effective 17 June
2016.
(vi) On 30 June 2016, the Company issued 864,000 Shares at a deemed issue price of $0.05 to Directors in lieu
of cash payment of Director fees.
Apollo Minerals Limited ANNUAL REPORT 2016
7
DIRECTORS' REPORT
(Continued)
REMUNERATION REPORT (AUDITED)
This Remuneration Report, which forms part of the Directors’ Report, sets out information about the remuneration
of Key Management Personnel (“KMP”) of the Group.
Details of Key Management Personnel
The KMP of the Group during or since the end of the financial year were as follows:
Directors
Mr Ian Middlemas
Mr Richard Shemesian
Mr Mark Pearce
Mr Anthony Ho
Mr Eric Finlayson
Mr Guy Robertson
Other KMP
Mr Clint McGhie
Mr Derek Pang
Chairman (appointed 8 July 2016)
Non-Executive Director (former Chairman to 8 July 2016)
Non-Executive Director (appointed 8 July 2016)
Non-Executive Director (resigned 8 March 2016)
Non-Executive Director (resigned 8 July 2016)
Non-Executive Director (appointed 8 March 2016 and resigned 8 July 2016) and
Company Secretary (resigned 8 July 2016)
Company Secretary (appointed 8 July 2016)
General Manager Exploration (resigned 29 February 2016)
Unless otherwise disclosed, the KMP held their position from 1 July 2015 until the date of this report.
Remuneration Policy
The Group’s remuneration policy for its KMP has been developed by the Board taking into account the size of the
Group, the size of the management team for the Group, the nature and stage of development of the Group’s current
operations, and market conditions and comparable salary levels for companies of a similar size and operating in
similar sectors.
In addition to considering the above general factors, the Board has also placed emphasis on the following specific
issues in determining the remuneration policy for KMP:
the Group is currently focused on undertaking exploration and appraisal activities on existing projects, and
identifying and acquiring suitable new resource projects;
risks associated with small market capitalisation resource companies whilst exploring and developing
projects; and
other than profit which may be generated from asset sales, the Company does not expect to be undertaking
profitable operations until sometime after the commencement of commercial production on any of its
projects.
Executive Remuneration
The Group’s remuneration policy is to provide a fixed remuneration component and a performance based
component (short term incentive and long term incentive). The Board believes that this remuneration policy is
appropriate given the considerations discussed in the section above and is appropriate in aligning executives’
objectives with shareholder and business objectives.
Fixed Remuneration
Fixed remuneration consists of base salaries, as well as employer contributions to superannuation funds and other
non-cash benefits. Fixed remuneration is reviewed annually by the Board. The process consists of a review of
company and individual performance, relevant comparative remuneration externally and internally and, where
appropriate, external advice on policies and practices.
10
Performance Based Remuneration – Short Term Incentive
Executives may be entitled to an annual cash bonus upon achieving various key performance indicators (“KPI’s”),
as set by the Board. Having regard to the current size, nature and opportunities of the Company, the Board has
determined that these KPI’s will include measures such as successful completion of exploration activities (e.g.
completion of exploration programs within budgeted timeframes and costs), development activities (e.g. completion
of scoping and/or feasibility studies), corporate activities (e.g. recruitment of key personnel) and business
development activities (e.g. project acquisitions and capital raisings). Prior to the end of each financial year, the
Board assesses performance against these criteria.
Given recent market conditions and the status of the Company’s operations, the Board has determined not to pay
any cash bonuses in respect to the 2016 financial year (2015: Nil).
Performance Based Remuneration – Long Term Incentive
The Board has previously chosen to issue Incentive Options (where appropriate) to some executives as a key
component of the incentive portion of their remuneration, in order to attract and retain the services of the executives
and to provide an incentive linked to the performance of the Company. The Board considers that each executive’s
experience in the resources industry will greatly assist the Company in progressing its projects to the next stage of
development and the identification of new projects.
The Board may grant Incentive Options to executives with exercise prices at and/or above market share price (at
the time of agreement). As such, Incentive Options granted to executives will generally only be of benefit if the
executives perform to the level whereby the value of the Company increases sufficiently to warrant exercising the
Incentive Options granted. Other than service-based vesting conditions, there are no additional performance criteria
on the Incentive Options granted to executives, as given the speculative nature of the Company’s activities and the
small management team responsible for its running, it is considered the performance of the executives and the
performance and value of the Company are closely related. The Company prohibits executives entering into
arrangements to limit their exposure to Incentive Options granted as part of their remuneration package.
Non-Executive Director Remuneration
The Board’s policy is to remunerate Non-Executive Directors at market rates for comparable companies for time,
commitment and responsibilities. Given the current size, nature and risks of the Company, Incentive Options have
also been used to attract and retain Non-Executive Directors. The Board determines payments to the Non-Executive
Directors and reviews their remuneration annually, based on market practice, duties and accountability.
Independent external advice is sought when required.
The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by
shareholders at a General Meeting. Director’s fees paid to Non-Executive Directors accrue on a daily basis. Fees
for Non-Executive Directors are not linked to the performance of the Group. However, to align Directors’ interests
with shareholder interests, the Directors are encouraged to hold shares in the Company and Non-Executive
Directors may in limited circumstances receive Incentive Options in order to secure their services.
Fees for the Chairman are presently set at $36,000 (2015 and 2016: $60,000) per annum. Fees for Non-Executive
Directors’ are presently set at $20,000 per annum plus superannuation (2015 and 2016: $36,000 - $70,000 inclusive
of superannuation). These fees cover main board activities only.
Non-Executive Directors may receive additional remuneration for other services provided to the Company, including
but not limited to, membership of committees.
Apollo Minerals Limited ANNUAL REPORT 2016
11
DIRECTORS' REPORT
(Continued)
REMUNERATION REPORT (AUDITED) (Continued)
Employment Contracts with Directors and Key Management Personnel
Current Directors
Mr Ian Middlemas, Non-Executive Chairman, has a letter of appointment confirming the terms and conditions of his
appointment as a non-executive director of the Company dated 8 July 2016. In accordance with the terms of this
letter of appointment, Mr Middlemas receives a fee of $36,000 per annum plus superannuation.
Mr Mark Pearce, Non-Executive Director, has a letter of appointment confirming the terms and conditions of his
appointment as a non-executive director of the Company dated 8 July 2016. In accordance with the terms of this
letter of appointment, Mr Pearce receives a fee of $20,000 per annum plus superannuation.
Mr Richard Shemesian, Non-Executive Director, has a letter of appointment confirming the terms and conditions of
his appointment as a non-executive director of the Company dated 17 October 2014 and amended 8 July 2016. In
accordance with the terms of the letters of appointment, Mr Shemesian received a fee of $60,000 per annum
inclusive of superannuation for the period 1 May 2014 to 7 July 2016, and $20,000 per annum plus superannuation
with effect from 8 July 2016.
Mining Management Consultants, Mr Richard Shemesian’s consulting company was paid $113,191 during the year,
including $60,000 (2015: $60,000) in Directors Fees included in Mr Shemesian’s remuneration, and $53,191 (2015:
$57,500) in relation to the provision of secretarial and support services and provision of office equipment.
Former Directors
Mr Eric Finlayson had a letter of appointment dated 17 October 2014 confirming the terms and conditions of his
appointment as a non-executive director of the Company. In accordance with the terms of this letter of appointment,
Mr Finlayson was entitled to receive fees of $40,000 per annum inclusive of superannuation for the period from 1
May 2014 to 8 July 2016.
Mr Guy Roberston had a letter of appointment dated 8 March 2016 confirming the terms and conditions of his
appointment as a non-executive director of the Company. In accordance with the terms of this letter of appointment,
Mr Robertson was entitled to receive fees of $36,000 per annum inclusive of superannuation for the period from 8
March 2016 to 8 July 2016.
Mr Robertson also provided services as the Company Secretary and Chief Financial Officer from 12 November
2009 under a services agreement with Integrated CFO Solutions Pty Ltd. Under the agreement, Mr Robertson
provided accounting, company secretarial and CFO support services to the Company for a monthly retainer of
$6,888, of which $5,000 relates to the provision of company secretarial and CFO support services and is included
in Mr Robertson’s remuneration.
Mr Anthony Ho had a letter of appointment dated 17 October 2014 confirming the terms and conditions of his
appointment as a non-executive director of the Company, amended with effect from 1 January 2015. In accordance
with the terms of this letter of appointment, Mr Ho was entitled to receive fees of $70,000 per annum inclusive of
superannuation for the period from 1 May 2014 to 31 December 2014, and $40,000 per annum inclusive of
superannuation for the period from 1 January 2015 to 8 March 2016.
Former Executive
Mr Derek Pang had an Executive Service Agreement dated 1 July 2015 outlining the terms and conditions of his
appointment as General Manager Exploration of the Company. Mr Pang was entitled to receive a salary of $175,000
per annum inclusive of superannuation and including $25,000 per annum payable in shares. Either party could
terminate the agreement with 2 months written notice.
16
Loans from Key Management Personnel
No loans were provided to or received from Key Management Personnel during the year ended 30 June 2016 (2015:
Nil).
Other Transactions
Apollo Group Pty Ltd (‘Apollo Group’), a Company of which Mr Mark Pearce is a director and beneficial shareholder,
provides corporate, administration and company secretarial services and serviced office facilities to the Company
under a services agreement effective from 1 July 2016. Either party can terminate the services agreement at any
time for any reason by giving one months’ written notice. Apollo Group currently receives a monthly retainer of
A$15,000 (exclusive of GST) for the provision of these services. The monthly retainer is reviewed every six to twelve
months and is based on Apollo Group’s budgeted cost of providing the services to the Company (and other
companies utilising same or similar services from Apollo) for the next six to twelve month period, with minimal or no
mark-up. From time to time, Apollo Group may also receive additional fees (as agreed with the Company) in respect
of services provided by Apollo Group to the Company that are not included in the agreed services covered by the
monthly retainer.
End of Remuneration Report
Apollo Minerals Limited ANNUAL REPORT 2016
17
DIRECTORS' REPORT
(Continued)
NON-AUDIT SERVICES
The Directors are satisfied that the provision of non-audit services during the year is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the
services disclosed below did not compromise the external auditor’s independence for the following reasons:
all non-audit services are reviewed and approved by the Directors prior to commencement to ensure they
do not adversely affect the integrity and objectivity of the auditor; and
the nature of the services provided does not compromise the general principles relating to auditor
independence in accordance with ARES 110: Code of Ethic for Professional Accountants set by the
Accounting Professional and Ethical Standards Board.
The following fees were paid to Hall Chadwick for non-audit services provided during the year ended 30 June 2016:
Taxation services
$1,650
AUDITOR'S INDEPENDENCE DECLARATION
The lead auditor's independence declaration for the year ended 30 June 2016 has been received and can be found
on page 19 of the Directors' Report.
Signed in accordance with a resolution of the directors.
MARK PEARCE
Director
23 September 2016
Competent Person Statement
The information in this report that relates to Exploration Results, is extracted from reports entitled ‘Significant Drill
Target Identified for Nickel at Fraser Range’ dated 26 April 2016 and ‘Quarterly Activities Report’ dated 5 July 2016.
These reports are available to view on www.apollominerals.com.au. The information in the original ASX
Announcement that related to Exploration Results was based on, and fairly represents, information compiled by Mr
Michael Kammermann, a Competent Person who is a member of the Australasian Institute of Geoscientists (AIG).
Mr Kammermann is a former employee of Apollo Minerals Limited. Mr Kammermann has sufficient experience that
is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken,
to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves'. The Company confirms that it is not aware of any new
information or data that materially affects the information included in the original market announcement. The
Company confirms that the form and context in which the Competent Person’s findings are presented have not
been materially modified from the original market announcement.
18
AUDITOR'S INDEPENDENCE DECLARATION
Apollo Minerals Limited ANNUAL REPORT 2016
19
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
(Continued)
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c)
Principles of Consolidation (Continued)
Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income
and are presented within equity in the consolidated statement of financial position, separately from the equity of the
owners of the parent.
Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if that results in a
deficit balance.
A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted for as an
equity transaction.
(d) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of 2 months or less, and bank overdrafts. Bank overdrafts are shown within
short-term borrowings in current liabilities on the statement of financial position.
(e)
Trade and Other Receivables
Trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectable
debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts
are written-off as incurred.
Receivables from related parties are recognised and carried at the nominal amount due and are interest free.
(f)
Investments and Other Financial Assets
(i)
Classification
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as
either financial assets at fair value though profit or loss, loans and receivables, held-to-maturity investments, or
available-for-sale investments, as appropriate. When financial assets are recognised initially they are measured at
fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction
costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and
appropriate, re-evaluates this designation at each financial year-end.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised
as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They arise when the Group provides money, goods or services directly to a debtor with no
intention of selling the receivable. They are included in current assets, except for those with maturities greater than
twelve months after the reporting date which are classified as non-current assets. Loans and receivables are
included in receivables in the statement of financial position.
26
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-
maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held
for an undefined period are not included in this classification. Investments that are indeed to be held-to-maturity,
such as bonds, are subsequently measured at amortised cost. This cost is computed as the amount initially
recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest
method of any difference between the initially recognised amount and the maturity amount. This calculation includes
all fees and points paid or received between parties to the contract that are an integral part of the effective interest
rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and
losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the
amortisation process.
Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are
either designated in this category or not classified in any of the other categories. They are included in non-current
assets unless management intends to dispose of the investment within twelve months of the reporting date.
(ii)
Recognition and derecognition
Purchases and sales of investments are recognised on trade-date – the date on which the Group commits to
purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial
assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
(iii)
Subsequent measurement
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried
at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the
effective interest rate method. Realised and unrealised gains and losses arising from changes in the fair value of
the 'financial assets at fair value through profit or loss' category are included in the statement of comprehensive
income in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-
monetary securities classified as available-for-sale are recognised in equity in the investments available for sale
reserve. When securities classified as available-for-sale are sold or impaired, the accumulated fair value
adjustments previously reported in equity are included in the statement of comprehensive income as gains and
losses on disposal of investment securities.
(iv)
Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of
financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged
decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If
any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously
recognised in profit and loss – is transferred from equity to the statement of comprehensive income. Impairment
losses recognised in the statement of comprehensive income on equity instruments classified as held for sale are
not reversed through the statement of comprehensive income.
(g)
Interests in Joint Ventures
The Group's share of the assets, liabilities, revenue and expenses of joint venture operations are included in the
appropriate items of the consolidated financial statements. Details of the Group's interests in joint ventures are
shown at Note 18.
Apollo Minerals Limited ANNUAL REPORT 2016
27
(m) Revenue Recognition
Revenues are recognised at the fair value of the consideration received net of the amount of goods and services
tax (GST) payable to the taxation authority. Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and can be reliably measured.
Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.
(n)
Income Tax
The income tax expense for the period is the tax payable on the current period's taxable income based on the
notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively
enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised
in relation to these temporary differences if they arose on goodwill or in a transaction, other than a business
combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against tax liabilities and the deferred tax liabilities relate to the same taxable entity and the same taxation
authority.
(o) Employee Entitlements
A provision is made for the Group's liability for employee benefits arising from services rendered by employees to
balance date. Employee benefits that are expected to be settled within 12 months have been measured at the
amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later
than 12 months have been measured at the present value of the estimated future cash outflows to be made for
those benefits.
Apollo Minerals Limited ANNUAL REPORT 2016
29
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
(Continued)
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(p) Earnings per Share
Basic earnings per share (“EPS”) is calculated by dividing the net profit/loss attributable to members of the Company
for the reporting period, after excluding any costs of servicing equity, by the weighted average number of ordinary
shares of the Company, adjusted for any bonus issue or share consolidation.
Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs
associated with dilutive potential Ordinary Shares and the effect on revenues and expenses of conversion to
Ordinary Shares associated with dilutive potential Ordinary Shares, by the weighted average number of Ordinary
Shares and dilutive Ordinary Shares adjusted for any bonus issue or share consolidation.
(q) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of
the cost of acquisition of the asset or as part of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
(r)
Use and Revision of Accounting Estimates
The preparation of the financial report requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if
the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements are
described Note 1(y).
(s) Operating Segments
An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses relating to transactions with other components of
the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to
make decisions about resources to be allocated to the segment and assess its performance and for which discrete
financial information is available. The chief operating decision maker has been identified as the Board of Directors,
taken as a whole. This includes start up operations which are yet to earn revenues. Management will also consider
other factors in determining operating segments such as the existence of a line manager and the level of segment
information presented to the board of directors.
Operating segments have been identified based on the information provided to the Board of Directors.
The group aggregates two or more operating segments when they have similar economic characteristics, and the
segments are similar in each of the following respects:
Nature of the products and services,
Nature of the production processes,
Type or class of customer for the products and services,
Methods used to distribute the products or provide the services, and if applicable
Nature of the regulatory environment.
30
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However,
an operating segment that does not meet the quantitative criteria is still reported separately where information about
the segment would be useful to users of the financial statements.
Information about other business activities and operating segments that are below the quantitative criteria are
combined and disclosed in a separate category for “all other segments”.
(s)
Impairment of Assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of
the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to sell and
its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated
to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to
which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount,
the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing
the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
An assessment is also made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount
is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates
used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case
the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at a revalued
amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation
charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
(t)
Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used
for financial assets held by the Group is the current bid price; the appropriate quoted market price for financial
liabilities is the current ask price.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate
their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Group for similar financial
instruments.
(u)
Issued Capital
Ordinary Shares are classified as equity. Issued and paid up capital is recognised at the fair value of the
consideration received by the Company.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Apollo Minerals Limited ANNUAL REPORT 2016
31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
(Continued)
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(v) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the Group, on or before the end of the year but not distributed at balance date.
(w) Share-Based Payments
Equity-settled share-based payments are provided to officers, employees, consultants and other advisors. These
share-based payments are measured at the fair value of the equity instrument at the grant date. Fair value is
determined using the Black Scholes option pricing model. Further details on how the fair value of equity-settled
share based payments has been determined can be found in Note 16.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on
the Company's estimate of equity instruments that will eventually vest. At each reporting date, the Company revises
its estimate of the number of equity instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment
to the share based payments reserve.
Equity-settled share-based payments may also be provided as consideration for the acquisition of assets. Where
ordinary shares are issued, the transaction is recorded at fair value based on the quoted price of the ordinary shares
at the date of issue. The acquisition is then recorded as an asset or expensed in accordance with accounting
standards.
(x)
Significant judgements and key assumptions
The directors evaluate estimates and judgements incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and within the group.
(i)
Key judgements
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be
recoverable or where the activities have not reached a stage which permits a reasonable assessment of the
existence of reserves (Note 1(j)). In accordance with this policy and with the impairment policy at Note 1(t), the
Company has written down the carrying value of exploration and evaluation expenditure during the year. There are
also certain areas of interest from which no reserves have been extracted, but the directors are of the continued
belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded.
Such capitalised expenditure is carried at reporting date at $917,786 (2015: $7,717,611).
The Group recognises share based payments in accordance with the policy at Note 1(x) and Note 16.
(y) Going Concern
The financial report for the year ended 30 June 2016 has been prepared on the going concern basis which assumes
the continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the
ordinary course of business.
For the year ended 30 June 2016, the Consolidated Entity has incurred a net loss of $8,616,780 (2015: $1,191,701),
of which $7,418,036 related to the write off of capitalised exploration expenditure, and had net cash outflows from
operating and investing activities of $632,946 (2015: $3,044,552). As at 30 June 2016, the Consolidated Entity had
cash assets of $175,362 (30 June 2015: $808,308) and net current assets of $15,358 (30 June 2015: $1,238,245).
The Company has raised $5,219,104 (before costs) since 1 July 2016, and accordingly the Company and the
Consolidated Entity are well funded to meet their obligations as and when they fall due, and consider that it is
appropriate to prepare the financial statements on a going concern basis.
32
(c) Rights Attaching to Ordinary Shares
The rights attaching to fully paid ordinary shares (“Ordinary Shares”) arise from a combination of the Company's
Constitution, statute and general law.
Ordinary Shares issued following the exercise of Options in accordance with Note 9(c) will rank equally in all
respects with the Company's existing Ordinary Shares.
Copies of the Company's Constitution are available for inspection during business hours at the Company's
registered office. The clauses of the Constitution contain the internal rules of the Company and define matters such
as the rights, duties and powers of its shareholders and directors, including provisions to the following effect (when
read in conjunction with the Corporations Act 2001 or Listing Rules).
(i)
Shares
The issue of shares in the capital of the Company and options over unissued shares by the Company is
under the control of the directors, subject to the Corporations Act 2001, ASX Listing Rules and any rights
attached to any special class of shares.
(ii)
Meetings of Members
Directors may call a meeting of members whenever they think fit. Members may call a meeting as provided
by the Corporations Act 2001. The Constitution contains provisions prescribing the content requirements of
notices of meetings of members and all members are entitled to a notice of meeting. A meeting may be held
in two or more places linked together by audio-visual communication devices. A quorum for a meeting of
members is 2 shareholders.
(iii)
Voting
Subject to any rights or restrictions at the time being attached to any shares or class of shares of the
Company, each member of the Company is entitled to receive notice of, attend and vote at a general
meeting. Resolutions of members will be decided by a show of hands unless a poll is demanded. On a
show of hands each eligible voter present has one vote. However, where a person present at a general
meeting represents personally or by proxy, attorney or representative more than one member, on a show of
hands the person is entitled to one vote only despite the number of members the person represents. On a
poll each eligible member has one vote for each fully paid share held and a fraction of a vote for each partly
paid share determined by the amount paid up on that share.
(iv)
Changes to the Constitution
The Company's Constitution can only be amended by a special resolution passed by at least three quarters
of the members present and voting at a general meeting of the Company. At least 28 days' written notice
specifying the intention to propose the resolution as a special resolution must be given.
(v)
Listing Rules
Provided the Company remains admitted to the Official List, then despite anything in its Constitution, no act
may be done that is prohibited by the Listing Rules, and authority is given for acts required to be done by
the Listing Rules. The Company's Constitution will be deemed to comply with the Listing Rules as amended
from time to time.
Apollo Minerals Limited ANNUAL REPORT 2016
37
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Apollo Minerals Limited:
1.
In the opinion of the directors:
(a)
the attached financial statements, notes and the additional disclosures included in the directors' report
designated as audited, are in accordance with the Corporations Act 2001, including:
(i)
section 296 (compliance with accounting standards and Corporations Regulations 2001); and
(ii)
section 297 (gives a true and fair view of the financial position as at 30 June 2016 and of the
performance for the year ended on that date of the Group); and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
2.
3.
The attached financial statements and notes thereto are in compliance with International Financial Reporting
Standards, as stated in Note 1(b) to the financial statements.
The Directors have been given a declaration required by section 295A of the Corporations Act 2001 for the
financial year ended 30 June 2016.
On behalf of the Board
MARK PEARCE
Director
23 September 2016
54
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF APOLLO MINERALS LIMITED
Apollo Minerals Limited ANNUAL REPORT 2016
55
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF APOLLO MINERALS LIMITED
(Continued)
56
CORPORATE GOVERNANCE STATEMENT
Apollo Minerals Limited (“Apollo Minerals” or “Company”) and the entities it controls believe corporate governance
is a critical pillar on which business objectives and, in turn, shareholder value must be built.
The Board of Apollo Minerals has adopted a suite of charters and key corporate governance documents which
articulate the policies and procedures followed by the Company.
the Company’s website,
These documents are available
www.apollominerals.com.au. These documents are reviewed annually to address any changes in governance
practices and the law.
the Corporate Governance section of
in
The Company’s Corporate Governance Statement 2016, which explains how Apollo Minerals complies with the
ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations – 3rd Edition’ in
relation to the year ended 30 June 2016, is available in the Corporate Governance section of the Company’s
website, www.apollominerals.com.au and will be lodged with ASX together with an Appendix 4G at the same time
that this Annual Report is lodged with ASX.
In addition to the ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations
– 3rd Edition’ the Board has taken into account a number of important factors in determining its corporate
governance policies and procedures, including the:
relatively simple operations of the Company, which currently only undertakes mineral exploration and
development activities;
cost verses benefit of additional corporate governance requirements or processes;
size of the Board;
Board’s experience in the resources sector;
organisational reporting structure and number of reporting functions, operational divisions and employees;
relatively simple financial affairs with limited complexity and quantum;
relatively small market capitalisation and economic value of the entity; and
direct shareholder feedback.
Apollo Minerals Limited ANNUAL REPORT 2016
57