Artemis Resources
Annual Report 2018

Plain-text annual report

Artemis Resources Limited and its controlled entities Annual financial report for the year ended 30 June 2018 Artemis Resources Limited ABN: 80 107 051 749 Telephone: +61 8 6319 0000 | Email: info@artemisresources.com.au Suite 1 11 Ventnor Avenue, WEST PERTH 6005 | https://artemisresources.com.au CONTENTS PAGE Chairman’s Letter Review of Operations Annual Mineral Resources Statement Tenement Schedule Corporate Governance Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditors Report Additional Information for Listed Companies Corporate Directory 3 4 18 21 22 23 31 32 33 34 35 36 59 60 64 67 Annual Report for 2018 Page 2 CHAIRMAN’S LETTER Dear Artemis shareholders, The Radio Hill treatment plant has now become a key asset of the Company moving forward, as the past year has seen very significant exploration success on many of our West Pilbara projects. Our tenement package now covers nearly 2,400 km2 and Radio Hill will be instrumental in moving Artemis from an exploration company to a production focused company. The refurbishment and expansion programme of the Radio Hill sulphide processing plant has made considerable progress during the year with the Group finally receiving approvals to install and commission a new tertiary crusher and gold circuit alongside the refurbished crushing and grinding units. The plant now has an approved Stage 1 throughput capacity of 500,000 tpa of gold ore. Our major challenge this year has been prioritising our many resources covering a diverse spectrum of metals (from cobalt, gold, copper, nickel and zinc), and trying to identify which of our many projects has the most economically robust potential. Our star exploration performer has undoubtedly been the discovery of Carlow Castle, which in the board’s view, is a major new cobalt rich resource for Australia and has the potential of becoming a real company maker for Artemis. The Carlow Castle Project delivered its maiden JORC mineral resource estimate in January 2018, and has produced excellent cobalt, gold and copper exploration drilling results since. We are working on finalising an updated JORC resource over the coming months and we are also making plans to significantly up our exploration efforts here before the calendar year is out. The view by key analysts is that the demand for Cobalt, a key metal in lithium-ion batteries used to power electric vehicles (EV’s) is expected to surge in the next few years. In the 50-50 joint venture for conglomerate and/or paleoplacer style mineralisation with Novo Resources Corp (Novo), early bulk sampling results have shown very promising gold grades from Purdy’s Reward and an approved Joint venture exploration budget of $5.4m, commencing 1 July 2018, should hopefully see further success on this exciting project. Artemis sold its 4 million Novo shares to Kirkland Lake Limited (ASX:KLA) for AUD $20.3 million in May 2018, providing the Company with the cash to further develop its project portfolio and resulting in a cash balance at year end of approximately $27 million. Our strategy of developing our own gold resources is advancing, with exploration work determining that conglomerate gold potential extends from Purdy’s Reward, through Novo’s Comet Well into the Group’s Comet Well West tenements. A further 14 km strike length of conglomerate gold mineralisation has been identified on Artemis’s 100% owned Mt OscarWits Project. Further drilling was undertaken at our Weerianna Gold Project (which has a JORC (2012) compliant Inferred Mineral Resource of 1Mt at 2.2 g/t Au for total contained metal of 70,000 ounces of Au) and a new JORC resource is targeted here shortly. We have also seen excellent drilling results from our Whundo Copper/Zinc Mine and at the Radio Hill Nickel/Copper/Cobalt Mine, and new JORC resources should be reported on these assets shortly. Both projects are in close proximity to the Radio Hill processing plant. The Board and management team were strengthened during the year with the appointment of H.H Sheikh Maktoum Hasher al Maktoum as a non-executive director and Wayne Bramwell, an experienced mining executive, as CEO. I would like to thank our shareholders for their ongoing support and the expanding Artemis team for their ongoing commitment. We look forward with confidence to the year ahead. Yours sincerely David Lenigas Executive Chairman 28 September 2018 Annual Report for 2018 Page 3 REVIEW OF OPERATIONS Artemis Resources Limited (“Artemis” or “Company”) is pleased to outline the Company’s progress for the financial year ending 30 June 2018. There are additional comments included on the Company’s activities from year end to the date of this Annual Report. The Group now has prospective base, battery and precious metals assets in the Pilbara region of Western Australia over an area of ~ 2,400 km² (Figure 1). Artemis owns 100% of the 500,000 tpa Radio Hill processing plant and infrastructure, located approximately 35 km south of the city of Karratha. The Company is evaluating 2004 and 2012 JORC Code compliant resources of gold, nickel, copper- cobalt, PGE's and zinc, all situated within a 40 km radius of the Radio Hill plant. The following is a summary of the significant level of activity undertaken over the reporting period. Figure 1: Artemis’s Projects in the Karratha Area and Proximity to Radio Hill Process Plant Annual Report for 2018 Page 4 CARLOW CASTLE In January 2018 the Company announced the first JORC Code (2012) compliant resource estimates for the 100% owned Carlow Castle Project, which includes (Figure 2) Quod Est, Carlow Castle South and Carlow Castle South-East (Cobalt/Gold/Copper) Prospects, located about 20 km southeast of Karratha in the Western Pilbara Region of Western Australia are outlined below. Carlow Castle is located only 30 km north-east of Artemis’ Radio Hill processing plant, via gazetted roads. Figure 2: Quod Est and Carlow South areas and geology. A total Indicated and Inferred resource (Table 1) of the Carlow Castle Project, within the lode wireframes of Quod Est, Carlow Castle South and Carlow Castle South-East, which are based on 0.5 metal content lower cut- off of 4,500,000 tonnes at 0.9 g/t Au 0.07% Co, 0.4% Cu & 1.3 g/t Ag, containing 130,000 ounces of gold, 18,000 tonnes of Cu, 3,150 tonnes Cobalt and 188,000 ounces of Silver, was estimated by Mr Phil Jones from Al Maynard & Associates (“AM&A”). Table 1: Global Resource estimate for Carlow Castle Project, which includes Quod Est1, Carlow Castle South and Carlow Castle South-East Lode (Phil Jones, 2018; AM&A). 1 ASX release dated 19 January 2018 “First of the Cobalt/Copper/Gold JORC Resources at Carlow Castle- amended “ Annual Report for 2018 Page 5 DescriptionCategoryMillion TonnesAu (g/t)Co (%)Cu (%)Ag (g/t)Carlow Castle SouthInferred3.20.90.060.41.3Carlow Castle South-East LodeInferred0.71.20.060.41.8Quod EstIndicated0.31.20.210.51.4Quod EstInferred0.20.60.070.31.0TOTALIndicated0.31.20.210.51.4TOTALInferred4.20.90.060.41.3TOTAL Indicated +Inferred4.50.90.070.41.3 The Company commenced a further drilling programme in July 2018 targeted at infill drilling to significantly increase resource definition in the Carlow Castle South deposit area. This programme generated some very high grade cobalt intercepts with attended high copper and gold assays (6.5m @ 23.44g/t Au, 2.32% Co and 10.35% Cu from 47m in hole 18CCAD009)2. The first quarter in 2018/2019 will continue to focus on extension and infill drilling at Carlow Castle to build on the significant exploration results achieved across the base and battery metal portfolio at this project CONGLOMERATE GOLD ARTEMIS-NOVO CONGLOMERATE GOLD JOINT VENTURE The TSX Venture Exchange accepted the Definitive Agreements between Novo Resources Corp. (“Novo”) and Artemis in August 2017 following which Novo issued Artemis with 4,000,000 common shares in Novo. The Agreement allowed Novo to farm-in to 50% of gold (and other minerals necessarily mined with gold) in conglomerate and/or paleoplacer style mineralization in Artemis’ tenements within 100km of the City of Karratha, including at Purdy’s Reward (“the Gold Rights”). The Gold Rights do not include Artemis existing JORC compliant Resources and Reserves, gold which is not within conglomerate and/or paleoplacer style mineralization, and minerals other than gold. Artemis’ Mt Oscar tenement is also excluded from the Definitive Agreements. Novo released an update on results from Purdy’s reward on 14 February 2018 with the bulk sampling results, as received from Novo, showing very high grade gold results. Gold results from the basement dolerite unit grading up to 4.1 g/t were encouraging3. Further work undertaken by Novo resulted in an improved understanding of the extreme nuggety effect at the Purdy’s Reward, which together with increasing the bulk sampling size and a new reliable and consistent processing path now available through SGS Minerals will allow the JV to more accurately define the extent of the gold mineralisation in these conglomerates and the surrounding rocks. Artemis, paid $2 million to the end of June 2018 towards the overall JV exploration programme and subsequent to year end the JV partners agreed to a $5.4 million exploration and work programme budget for the year beginning 1 July 2018. In the first four months of the new year the JV will focus on bulk sampling, diamond drilling and costeaning activities, primarily at Purdy’s Reward. Large bulk samples will be collected and treated to provide necessary gold grade data for a mineralisation report, an important step toward converting the current exploration license to a mining lease. In addition, environmental and heritage studies will be undertaken in conjunction with similar work at Novo’s nearby Comet Well joint venture in order to move the collective area towards trial mining. COMET WELL WEST CONGLOMERATE GOLD Artemis exploration work has now determined that conglomerate gold extends from Artemis’ Purdy’s Reward Conglomerate Gold Project westwards through Novo’s Comet Well and in to Artemis’ Comet Well West tenements (Figure 3). Artemis has identified ~67km of conglomerate and Mt Roe Basalt contact immediately west of Novo’s Comet Well. The Company has recovered 6kg (193 oz) of gold nuggets from 47K Patch and has also identified fine gold with the gold nuggets recovered from this tenement. 2 See ASX announcement dated 25 July 2018 3 See ASX Announcement dated 15 February 2018 Annual Report for 2018 Page 6 A Programme of Works (POW) was submitted to commence extensive exploration on Artemis’ Comet Well West conglomerate gold targets. Figure 3: Conglomerate contact at Purdy’s Reward through to Comet Well West and down to Munni Munni MOUNT OSCARWITS Mt OscarWits (Figure 1) is an approved Exploration Licence covering 117.8km2, and is located about 35km south-east of Karratha and 16km north-east of Purdy’s Reward conglomerate hosted gold project. Gold nuggets have been recovered by metal detecting at the Fairmont Prospect from the Mt OscarWits conglomerate trend. During the year Artemis completed geological mapping, rock chip and stream sediment sampling at Mt OscarWits which identified extensive sequences of principally quartz and chert clast conglomerates with anomalous gold mineralisation confirmed over a 14km strike length. The discovery of these watermelon seed nuggets adds to the further prospectivity of Mt OscarWits conglomerate gold potential. WEERIANNA – GOLD The Weerianna Gold Project is located about 35 km north-east of Artemis’ Radio Hill Plant site. Pit optimisations undertaken during the year on the Weerianna Gold Project’s Mineral Resource were positive. The optimisation was done to potentially prioritise initial plant feed in to Artemis’ Radio Hill Processing Plant for the first few months after its re-commissioning. Annual Report for 2018 Page 7 Weerianna is on a granted Mining Lease and has a current Inferred Mineral Resource classified and reported in compliance with the JORC Code (2012) of 1 Mt at 2.2 g/t Au for total contained metal of 70,000 ounces of Au4. The current resource outcrops at surface and remains open at depth and along strike. 21 Reverse Circulation (RC) drill holes for 1,758 metres were drilled at Weerianna in April 2018 to infill drill the deposit and test for extensions of the mineralisation along strike and down dip. Artemis is working on submitting a Mining Proposal and a Project Management Plan to the WA Department of Mines Regulations, Industry and Safety (DMIRS) to seek approval to mine Weerianna. SILICA HILLS: Exploration at Silica Hills (see Figure 1) has been ongoing over the past year and this work has increased our confidence in the project. Exploration work exposed a quartz vein system style gold deposit within a silicified intrusive environment. The geology of the project is characterised by a poorly exposed quartz vein system within Archean felsic and mafic rocks, along a shear system. It is becoming more evident as work extends to the east, that the coarse nugget gold and quartz veins continue. The work over the past year has helped develop a strategy to further advance Silica Hills and Programme of Works have been approved and the work is continuing. Figure 4: Examples of gold bars poured from Silica Hills nuggets and quartz/gold specimens. 4 Artemis Resources Limited ASX announcement dated 26 June 2014 – Acquisition of Gold Deposit to Kickstart West Pilbara Gold and Base Metals Exploration Weerianna Annual Report for 2018 Page 8 Figure 5: Map of the Silica Hills area showing distribution of nugget recovery areas and location of known quartz veins and stockwork, and proposed test pits. WHUNDO COPPER PROJECT Drilling during the year confirmed the presence of significant widths of high grade copper, cobalt and zinc zones at the Whundo Copper Mine, which is located only 15 km from the Radio Hill Plant. Assay data from these holes is being incorporated into a new JORC compliant resource estimate prior to the Radio Hill Plant being recommissioned. Significant intercepts included5: o ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ 10m at 0.39% Cobalt from 87m (AWRC025) (including 1m at 1.75% Cobalt from 88m) 6m at 6.55% Zinc from 42m (AWRC022) 13m at 3.18% Copper and 3.95% Zinc from 48m (AWRC021) 8m at 1.38% Copper from 77m (AWRC025) 17m at 0.99% Copper from 97 metres in (AWRC025) 5m at 4.24% Zinc from 18m (AWRC027) 12m at 4.46% Zinc from 34m (AWRC027) 12m at 7.17% Zinc from 46m (AWRC027) 13m at 1.98% Copper from 50m (AWRC052) 5 Artemis Resources Limited ASX announcement dated 11 April 2018 – High grade cobalt, copper and zinc drilled at Whundo. Annual Report for 2018 Page 9 Figure 6: Interpreted Cross Section Showing historical Copper & Zinc Intersections and the results of Artemis drilling. RUTH WELL PROJECT During the year Artemis conducted its first Reverse Circulation (RC) drilling at Ruth Well Nickel Copper Cobalt Project with grades up to 11.15% Ni intersected. An Initial 38 RC holes totalling 2,838m drilling programme was completed with significant results including6: ▪ ▪ ▪ o o o o 13 metres @ 2.14% Ni, 1.19% Cu, 0.07% Co, 0.6 g/t Au, 0.6g/t Pd from 55m (EWRC003) Incl 2m @ 8.74% Ni, 3.12% Cu, 0.26% Co, 1.58g/t Pd from 57m Incl 1m @ 11.15% Ni from 57 metres 21 metres @ 1.11%Ni, 0.88% Cu, 0.05% Co from 30m (EWRC002) Incl 1m @ 2.54% Ni, 0.66% Cu, 0.07% Co, 3.73g/t Au & 2.82g/t Pd from 30 metres 11 metres @ 0.85% Ni, 0.55% Cu, 0.05% Co from40m (EWRC003) Incl 1m @ 1.81% Ni, 0.64% Cu, 0.08% Co from 55 metres Nickel has now been identified over a potential 3.5km of strike on and east-west trend with further drilling to take place once Programme of Works (POW) are approved by DMIRS. The Ruth Well Project (Figure 1) is located 12km north of the Radio Hill Operations. 6 Artemis Resources Limited ASX announcement dated 4 May 2018 – 11.5% nickel drilled at Ruth Well – amended. Annual Report for 2018 Page 10 Figure 7: Ruth Well interpretative Cross Section 486020mE RADIO HILL NICKEL PROJECT In April 2018 Artemis completed an 80 hole Reverse Circulation (RC) drilling programme at Radio Hill (totalling 7,052 m), designed to delineate the unmined shallow nickel/copper/cobalt mineralisation at of the Radio Hill deposit located 400m from the Radio Hill plant crushing circuit. The best intercepts include7: ▪ Incl. 3m @ 3.37% Ni, 2.05% Cu, 0.14% Co from 27m Incl. 2m @2.53% Ni, 1.35% Cu, 0.11% Co from 32m Incl. 5m @2.46% Ni, 2.26% Cu, 0.10% Co from 37m 15m @ 2.05% Ni, 1.94% Cu, 0.09% Co from 27m (ARH066) o o o 7m @ 1.9% Ni, 1.07% Cu, 0.08% Co from 18m (ARH015) 8m @ 1.14% Ni, 0.96% Cu, 0.06% Co from 75m (ARH007) 3m @ 1.35% Ni, 1.27% Cu, 0.07% Co from 88m (ARH046) 3m @ 1.24% Ni, 2.42% Cu, 0.07% Co from 123m (ARH019) 2m @2.93% Ni, 2.90% Cu, 0.12% Co from 19m (ARH020) 25m @ 0.71% Ni, 0.89% Cu, 0.03% Co from 50m (ARH004) 19m @ 0.57% Ni, 0.99% Cu, 0.02% Co from 26 m (ARH062). ▪ ▪ ▪ ▪ ▪ ▪ ▪ Following these excellent Ni/Cu/Co grades the focus is now on calculating the new near surface mineral resource estimates and producing optimised open pit shells. 7 Artemis Resources Limited ASX announcement dated 30 April 2018 – High grade nickel at Radio Hill. Annual Report for 2018 Page 11 Figure 8: Location of the RC drilling programme at Radio Hill mine site. RADIO HILL PROCESSING PLANT The Radio Hill mine (Ni, Cu, Co) and processing plant and infrastructure was purchased by Artemis in April 2017 with the aim of providing Artemis with regional processing capability, that can be used to process a range of ores from the Company’s own projects in the West Pilbara region, including: • • • • • • Carlow Castle - cobalt, copper and gold Whundo – copper, cobalt, zinc Radio Hill - copper, nickel, cobalt; Munni Munni – PGE, nickel and gold; Silica Hills, Weerianna- gold; and Other conglomerate gold deposits within close proximity to the plant. The Radio Hill complex offers several key advantages for getting into production earlier and more cost effectively than would otherwise be possible: • • • • • The site is permitted for operations; There is a permitted tailings storage facility on site; Existing infrastructure for mains power supply has been well maintained; Strong water supply from an existing bore field with proved capacity and quality; and Radio Hill is only 35km from Karratha so there is no need to establish expensive camps and associated infrastructure for the work force. During the year Artemis appointed Process 26 Engineers and Constructors (www.process26.com) to refurbish the existing Radio Hill crushing and grinding circuit, and once approved, to upgrade the facility by the addition of additional crushing equipment and the installation of a new gravity gold extraction circuit. In August 2018 the Company received approvals allowing it to install and commission a new tertiary crusher, gold circuit and our newly refurbished crushing and grinding units. Under the new amendment to Environmental Licence L7922/1989/5 the Licence holder (Fox Radio Hill Pty Ltd – a wholly owned subsidiary of Artemis) now has an approved Stage 1 throughput capacity of 500,000 tpa. Stage 1 activities include the installation and operation of a modular gravity gold processing unit and associated crushing and milling equipment. The new infrastructure to be installed includes: Annual Report for 2018 Page 12 ▪ ▪ ▪ ▪ A HP200 cone crusher (tertiary crusher); A gravity gold recovery circuit capable of treating up to 500,000 tpa of gold ore; A gold room with the capability to refine and produce gold dorè; and Product sampling and dewatering facilities. This Stage 1 infrastructure will be operated with the existing multistage crushing and grinding plant which are approved under Environmental Licence L7922/1989/5. Under the current approvals the Company can operate a geotube facility as a temporary solution to contain gravity circuit rejects for potential future retreatment. Geotubes are an interim but high cost option available to the Company that will be further assessed depending upon the timing of tailings storage facility (TSF) TSF3 approvals. Concurrently, Artemis will advance submissions needed for Stage 2 base metal operations at Radio Hill including a new, 4Mt tailings storage facility (TSF4). Figure 9: Gold circuit equipment on site at Radio Hill awaiting installation Figure 10: Refurbished crushing circuit and fine ore bin Annual Report for 2018 Page 13 Figure 11: Radio Hill Plant at dusk. MUNNI MUNNI Artemis has now met its $750,000 expenditure to earn a 70% interest from Platina Resources in the Munni Munni Project (See Figure 1). Munni Munni was originally targeted for platinum group elements. Artemis assessed the potential for mining the PGE resource and identified opportunities to both costean and drill shallow holes, looking to increase the potential of open pitable resources. The results of this work are being evaluated and will form the basis for a possible re-estimation of the resource to JORC 2012. In reviewing all data to date, including a VTEM survey flown by Platina in 2010, Artemis has identified potential gold opportunities, both structurally hosted and as hydrothermal and/or detrital style. A series of geophysical surveys have been undertaken looking at sedimentary units that sit above and to the side of the Munni Munni Mafic Igneous Complex. These sediments were never focused on in the pursuit of platinum group elements and Reverse Circulation drilling was used as precollars before diamond drilling was completed. Artemis geologists have reviewed several drill logs and drill holes to better define possible conglomerate or paleoplacer gold. Only in diamond drill core has the ability to review lithology been possible. A SAM (Sub Audio Magnetics - a proprietary technique of GAP Geophysics) was successfully used by Artemis at several of our projects including Carlow Castle where the technique has clearly defined mineralised structures. A SAM survey has recently been completed over a small part of Munni Munni and final interpreted results will be reported when they become available. The survey is looking for potential structures within sediments that surround the Munni Munni Igneous Complex. A ZTEM survey by Geotech Airborne has also recently been completed. Data is being processed and will then be interpreted. Results will be reported when they become available. Annual Report for 2018 Page 14 600 KM2 of STRATEGIC EXPLORATION GROUND NEAR TELFER During the year Artemis applied for a 600km2 tenement (E45/5276) within the highly prospective Proterozoic Paterson orogen, located approximately 40km east of the Telfer Au – Cu mine in the Pilbara region of Western Australia, in the Paterson Ranges. Early stage exploration drilling reported by Greatland Gold plc (a London listed company) on 25 June and 4 July 2018 from their nearby Haverion Project, included: ▪ HAD001 - 121m at 2.93g/t gold (Au) and 0.23% copper (Cu) from 497m to 618m. ▪ HAD003 - 21m at 3.78g/t gold and 0.44% copper from 418m, including 1m at 29.12g/t gold and 0.4% copper from 428.5m. The geological structures that host the Haverion discovery run due north into Artemis’s new Armada Prospect. Figure 12: Prospective structural and mineralisation prospectivity for the Armada Prospect. SUPER DEEP DRILLING – WEST PILBARA ASD-1 (see Figure 1 and Figure 13) was planned for a vertical depth of +3,300m and designed to test the many rock sequences in the Pilbara Basin from surface and deep into the basement’s geology. These deeper rock sequences were interpreted or inferred to exist, based on very sparse data. This surface and shallow data does not explain observed surface mineralisation of diamonds, cobalt, zinc, lead and gold. What Artemis defined (with the hole being terminated at 1,348.5 metres) is valuable as it shows the basement (hard rock geology) is undulating and at this location dips to the north from ASD-1. The sediments (now rock) have filled in the topography that existed, which would have been hills and valleys. This means there are fertile sites and areas where mafic gold rich conglomerates can form, like between ASD-1 and Munni Munni (Figure 1). Annual Report for 2018 Page 15 ASD-2 (See Figure 1) was undertaken to further understand the geology and the nature of the contacts between sedimentary rocks and felsic intrusions or basement geology. ASD-2 was terminated at 790.5 metres. The programme was undertaken with the support of the Exploration Incentive Scheme (EIS) a programme of co funding drilling run by the West Australian government through the Department of Mines Industry Regulation and Safety (DMIRS) and CSIRO who will log and analyse the core. Results will be made available as these come to hand. Figure 13: Schematic Interpretative Long-Section. North-South orientation of section with Munni Munni and Purdy’s Reward to the north (right side of image) CORPORATE Board Appointment During the year the Company appointed Sheikh Maktoum Hasher Maktoum al Maktoum as a Non-Executive Director of the Company. A brief outline of H.H. Sheikh Maktoum Hasher al Maktoum’s background is included in the Directors Report. CEO Appointment Mr Wayne Bramwell was appointed Chief Executive Officer on 19 June 2018. Mr Bramwell is an experienced metallurgist and mining executive with over 26 years of international and Australian project development expertise across the base metals, precious metals and bulk commodity sectors. He has extensive experience dealing with international financial institutions and brings to the Company his negotiating skills with international off-take partners and trading houses, having previously negotiated two project level strategic joint ventures with Japan’s Toyota Tsusho Corporation and Nittetsu Mining Co. Ltd. Mr Bramwell holds a Bachelor of Science (Mineral Science - Extractive Metallurgy), Graduate Diploma of Business, Master of Science (Mineral Economics) and is a Graduate of the Australian Institute of Company Directors (GAICD). Annual Report for 2018 Page 16 Acquisitions: During the year the Company acquired a 100% interest in Elysian Resources Pty Limited and Hardrock Resources Pty Limited for 33 million Artemis shares and $1.5 million in cash. The acquisition added approximately 300 km² across 13 tenements in the West Pilbara through a joint venture in which it now has a 70% interest. In addition, the Company has exercised its option to earn-in up to an 80% interest in two of Macarthur Minerals Limited (“Macarthur”) (TSX-V: MMS) tenements located 42km west-southwest of Marble Bar in the East Pilbara. Artemis Resources is specifically interested in the conglomerate gold potential of these two large tenements covering a total of 265km2. Under the terms of the binding term sheet, Artemis has paid the amount of A$170,000 to Macarthur to exercise its option to earn up to an 80% interest in Exploration Licence Application E45/4779 and Exploration Licence E45/4732. Capital Raising: During the year the Company raised $16.5 million through the issue of 20 million shares at 7.5 cents, 23.7 million shares at 12.66 cents and 105 million shares at 20 cents. Investors included Sprott Capital Partners Canada, Global Investment Strategy UK Ltd and a number of other institutional and professional investors from the USA, Netherlands and Australia. A further $3,075,488 was received on the exercise of options. As outlined above and in the ASX announcement of 11 December 2017 the company received approximately $6 million in convertible note funding which will be used to refurbish the Radio Hill Plant. Sale of Novo Resources Corp. shares During the quarter Artemis sold its 4 million Novo shares to Canadian mining company, Kirkland Lake Gold Ltd (ASX: KLA, TSE: KL) (“Kirkland Lake Gold”), for net proceeds of A$20.3 million, being the Australian dollar (AUD) equivalent of Canadian dollars (CAD) $5.00 per Novo share (using an exchange rate of 1 CAD = 1.04 AUD). The share sale transaction was arranged on an unsolicited basis. As a condition to completion, Novo released Artemis from the contractual 12 month hold period for these shares, which was originally due to expire in August this year. The transaction was closed at the end of May 2018. Edward Mead Director 28 September 2018 Annual Report for 2018 Page 17 Annual Mineral Resources Statement As at 30 June 2018 Gold: Mineral Resources8 Project Area Resource Category Cut off Grade (Au g/t) Tonnes Au (g/t) Ag (g/t) Cu (%) Co (%) Contained Au (oz) Contained Ag (oz) Contained Cu (t) Contained Co (t) Mt Clementi Ashburton Inferred 0.5 1,132,000 1.80 17.00 65,511 618,710 Weeriannaii Carlow Castle Sthiii Quod Estiii Total West Pilbara West Pilbara West Pilbara Inferred 1 1,005,000 2.20 71,085 Inferred 0.05% Co 2,200,000 1.3 1.6 0.5 0.09 89,600 113,042 11,220 1,990 Indicated 0.05% Co 200,000 1.8 1.6 0.70 0.35 11,500 10,031 1,400 700 4,537,000 1.6 5.1 0.3 0.1 237,696 741,784 12,620 2,690 Antimony (M08/191-193): Mineral Resources9 Project Area Resource Category Eastern Hillsiv Ashburton Indicated Inferred Cutoff Grade (Sb %) 1.0 1.0 Tonnes (t) Sb (%) 810,000 2 500,000 1.3 Pb (%) 3.1 1.5 Ag Au Contained Contained (g/t) (g/t) Sb (t) Pb (t) 26 16 0.41 0.2 15,900 25,200 6,500 7,500 Total 1,310,000 1.7 2.5 24 0.34 22,400 32,700 NICKEL-COPPER (M47/161): Mineral Resources10 Project Mineralisation Resource Category Tonnes Ni % Cu % Contained Ni (t) Contained Cu (t) Radio Hillv Primary Sulphide Indicated 1,980,000 0.61 1.04 12,078 Primary Sulphide Inferred 2,040,000 0.42 0.73 8,568 Total 4,020,000 0.51 0.88 20,646 20,592 14,892 35,484 COPPER-ZINC (M47/7): Mineral Resources11 Project West Whundovi Mineralisation Primary Sulphide Resource Category Measured Primary Sulphide Indicated Oxide12 Whundovii Primary Sulphide Measured & Inferred Measured Primary Sulphide Indicated Primary Sulphide Inferred Tonnes Cu % Zn % 386,000 259,000 1.2 1.1 1.9 1.7 73,600 1.78 0.21 304,000 598,000 140,000 1.3 1.0 0.8 0.1 0.6 0.2 4,632 2,849 1,310 3,952 5,980 1,120 Contained Cu (t) Contained Zn (t) 7,334 4,403 155 304 3,588 280 15,909 Total 1,760,600 1.13 0.90 19,843 i As per Artemis Resources Limited ASX Annual Report to Shareholders 2016 ii As per Artemis Resources Limited ASX Annual Report to Shareholders 2016 iii As per Artemis Resources Limited ASX Release to Shareholders January 22nd & 31st 2018 iv As per Fox Resources Limited ASX Annual Report to Shareholders 2014 v As per Fox Resources Limited ASX Annual Report to Shareholders 2006 Annual Report for 2018 Page 18 ZINC (M47/7): Mineral Resources13 Project Mineralisation Resource Category Tonnes Zn % Cu % Contained Zn (t) Contained Cu (t) Whundoviii Primary Sulphide Measured Primary Sulphide Indicated Primary Sulphide Inferred Ayshiaix Primary Sulphide Measured 94,000 249,000 78,000 150,000 0.6 1.2 1.1 2.4 Primary Sulphide Indicated 344,000 3.3 Primary Sulphide Inferred 273,000 1.3 - - - 0.5 0.5 0.3 564 2988 858 3600 11352 3549 Total 1,188,000 1.93 22,911 Including 767,000 0.43 - - - 750 1720 819 3,289 MT OSCAR MAGNETITE (E47/1217): Mineral Resource14 Domain Resource Category Tonnage (Mt) Head Fe (%) Mag Anomaly 1X Indicated Inferred Mag Anomaly 2x Indicated Inferred Total Note: Totals may not add up due to rounding 43 32 40 11 126 33.6 33.3 33.9 36.1 33.8 Mass Recovery (%) 32.8 10.4 20.0 33.7 23.1 Conc Fe (%) Conc SiO2 (%) Conc Al2O3 Conc P (%) Conc LOI (%) 58.6 60.3 62.9 60.3 60.5 14.2 12.7 9.9 13.3 12.4 0.80 0.73 0.40 0.56 0.036 0.036 0.022 0.037 0.63 0.032 -0.34 -0.95 -1.16 -1.31 -0.84 In accordance with Listing Rule 5.23.2, Artemis confirms that it is not aware of any new information or data that materially affects the information included in the Annual Mineral Resources Statement above, and that in the case of mineral resources that all material assumptions and technical parameters underpinning the estimates in the Annual Mineral Resources Statement continue to apply and have not materially changed. Material Changes and Resource Statement Comparison The Company during this year has continued to review and report its mineral resources at least annually and provide an Annual Mineral Resources Statement. The date of reporting is 30 June each year, to coincide with the Company’s end of financial year balance date. If there are any material changes to its mineral resources over the course of the year, the Company is required to promptly report these changes. In completing the annual review for the year ended 30 June 2018, the historical resource factors for Projects were reviewed and found to be relevant and current. Governance Arrangements and Internal Controls Artemis has ensured that the mineral resources quoted are subject to good governance arrangements and internal controls. The mineral resources reported have been generated by independent external consultants who are experienced in best practices in modelling and estimation methods. The consultants have also undertaken reviews of the quality and suitability of the underlying information used to generate the resource estimation. In addition, Artemis’ management carries out regular reviews of internal processes and external contractors that have been engaged by the Company. The Carlow Castle, Mt Oscar, Eastern Hills and Weerianna mineral resources were compiled in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code) 2012 Edition. The Mt Clement-Paulsens, Whundo, West Whundo, Ayshia and Radio Hill mineral resources were compiled in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC Code) 2004 Edition. vi As per Fox Resources Limited ASX Annual Report to Shareholders 2014 vii As per Fox Resources Limited ASX Annual Report to Shareholders 2014 Annual Report for 2018 Page 19 Competent Person Statements The information in this statement that relates to Exploration Results and Exploration Targets is based on information compiled or reviewed by Allan Younger, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Younger is a consultant to the Company. Mr Younger has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Younger consents to the inclusion in this statement of the matters based on his information in the form and context in which it appears. i 2011 estimate (Apex Geoscience Ltd). Estimated according to JORC Code (2004). ii 2013 estimate (Geostat Services Pty Ltd) Cut-off grade 0.5 g/t Au. Estimated according to JORC Code (2012). iii 2018 estimate (Mr Philip A Jones) Cut-off grade 0.5 % Co. Estimated according to JORC Code (2012). iv 2013 estimate (CoxsRocks Pty Ltd) Cut-off grade 1.0% Sb. Estimated according to JORC Code (2012). v 2009 estimate (Snowden) Cut-off grade 0.5% Ni in Ni dominant material, and 0.5% Cu in the Cu dominant hanging wall. Estimated according to JORC Code (2004). vi 2006 estimate (RSG Global) Cut-off grade 0.5% Cu or 0.5% Zn. The Measured resource has been depleted from the RSG estimate by 20,000t based on company mining records. Estimated according to JORC Code (2004). vii 2007 estimate (Coffey Mining) Cut-off grade 0.4% Cu or 0.4% Zn. Estimated according to JORC Code (2004). viii 2006 estimate (RSG Global) Cut-off grade 0.4% Zn. Estimated according to JORC Code (2004). ix 2009 estimate (Golder Associates) Inferred Mineral Resource at Fe cut-off grade of 20%. Estimated according to JORC Code (2004). x 2014 estimate (ROM Resources) estimated according to JORC Code (2012). Annual Report for 2018 Page 20 TENEMENT SCHEDULE – All tenements are in Western Australia E47/3942 (a) P47/1112 P47/1126 P47/1127 P47/1134 M47/1527 P47/1519 / M47/1568(a) P47/1619 P47/1621 P47/1622 P47/1819 P47/18327 P47/1833 (a)7 P47/1881 (a)7 P47/1897 (a) L47/781 (a) L47/782 (a) L47/820 (a) M47/177² M47/223³ M47/288² East Pilbara E45/47795 E45/47325 E45/5276 Munni Munni6 M47/123 M47/124 M47/125 M47/126 Mt Clement M08/191¹ M08/192¹ M08/193¹ Fox Radio Hill Pty Ltd L47/93 L47/163 M47/7 M47/9 M47/161 M47/337 Shear Zone Mining Pty Ltd M47/934 M47/2324 Mt OscarWits E47/1217 E47/1745 E47/1746 E47/1797 E47/2716 E47/3160 E47/3322 E47/33407 E47/33417 E47/33617 E47/3373 (a) E47/33907 E47/34437 E47/34877 E47/35347 E47/3535 (a)7 E47/3545 (a) E47/3546 E47/3547 E47/35647 E47/3612 E47/3707 E47/3708 E47/3709 E47/3719 (a) E47/3720 E47/3721 E47/3722 E47/3723 All tenements are 100% owned unless otherwise indicated (a) Tenement applications. ¹ 80% Artemis - Gold joint venture with Northern Star Resources (20%). ² 70% Artemis. 3 80% Artemis. 4 34% Artemis. 5 Option to acquire up to 80% by Artemis, remainder is held by Macarthur Minerals Limited. 6 0% Artemis. Heads of Agreement to earn 70% and form joint venture with Platina Resources. 7 70% Artemis – Karratha Gold Joint Venture Annual Report for 2018 Page 21 CORPORATE GOVERNANCE STATEMENT Artemis, through its Board and executives, recognises the need to establish and maintain corporate governance policies and practices that reflect the requirements of the market regulators and participants, and the expectations of members and others who deal with Artemis. These policies and practices remain under constant review as the corporate governance environment and good practices evolve. ASX Corporate Governance Principles and Recommendations The third edition of ASX Corporate Governance Council Principles and Recommendations (the “Principles”) sets out recommended corporate governance practices for entities listed on the ASX. The Company has issued a Corporate Governance Statement which discloses the Company’s corporate governance practices and the extent to which the Company has followed the recommendations set out in the Principles. The Corporate Governance Statement was approved by the Board on 27 September 2018 and is available on the Company’s website: https://artemisresources.com.au/company/corporate-governance Page 22 DIRECTORS’ REPORT DIRECTORS’ REPORT Your Directors present their report on Artemis Resources Limited (Artemis or the Company) for the financial year ended 30 June 2018. DIRECTORS The names of Directors in office at any time during or since the end of the period are: Current Directors MR DAVID LENIGAS Executive Chairman Mr Lenigas is an experienced mining engineer with significant global resources and corporate experience, having served as executive chairman, chairman, and non- executive director of many public listed companies in London, Canada, Johannesburg, and Australia. Mr Lenigas has a Bachelor of Applied Science (Mining Engineering) (Distinction) from Curtin University’s Kalgoorlie School of Mines and holds a Western Australian First Class Mine Manager’s Certificate of Competency. Mr Lenigas was appointed a Director on 3 November 2016. Mr Lenigas is the Non- Executive Chairman of Clancy Exploration Limited and the Non-Executive Chairman of Southern Hemisphere Mining Limited. H.H. SHEIKH MAKTOUM HASHER AL MAKTOUM Non-Executive Director H.H. Sheikh Maktoum Hasher al Maktoum is a member of Dubai’s ruling family. He is the President of Al Fajer Group and Chairman of Dubai International Holdings, Chairman of Manannan Hydro Limited and is a Non-Executive board member of the Commercial Bank of Dubai. MR EDWARD MEAD Executive Director H.H. Sheikh Maktoum Hasher al Maktoum has a BSc. Business Administration and Finance from Suffolk University in Boston, USA and was awarded CEO of the Year by CEO Middle East in 2009 and was awarded Young Global Leader by the World Economic Forum in 2007. H.H. Sheikh Maktoum Hasher al Maktoum was appointed a Director on 26 October 2017. Mr Mead is a geologist with 20 years’ experience in gold and base metals exploration, mine development and mine production. Mr Mead has also worked in the oil and gas industry on offshore drilling platforms. Other commodities that he has significant experience with are iron ore, magnetite, coal, manganese, lithium, potash and uranium. He has a Bachelor of Science (Geology) from Canterbury University in New Zealand and is a member of the Australian Institute of Mining and Metallurgy. He has worked for the Geological Survey of Western Australia, Portman Mining Limited, Western Mining Corporation (BHPB), Sons of Gwalia, Fox Resources Ltd, Comdek Ltd and Baker Hughes Inteq and a number of other companies through his own consultancy. Mr Mead was appointed a Director on 31 December 2014. MR ALEX DUNCAN-KEMP Executive Director Mr Duncan-Kemp is an experienced mining engineer with over 20 years’ experience in gold, iron ore and base metal mine development and mining operations. Mr Duncan- Kemp has also worked on public infrastructure projects in construction of roads and construction earthworks. Mr Duncan-Kemp has worked in the Pilbara and Kimberley on iron ore, both haematitic and magnetite ores, the Yilgarn Eastern and North-eastern Goldfields on gold, the Eastern Goldfields on nickel, Northwest Queensland on phosphate and the Murchison on Page 23 DIRECTORS’ REPORT gold and copper operations. He has also worked at a large civil and mining contractor in both operations and project tendering areas. Mr Duncan-Kemp has a Bachelor of Applied Science (Mining Engineering) from Curtin University’s Kalgoorlie School of Mines and is the holder of a Western Australian First Class Mine Managers’ Certificate of Competency and is a Member of the Australian Institute of Mining and Metallurgy. Mr Duncan-Kemp was appointed a Director on 3 January 2017. Directors have been in office since the start of the financial period to the date of this report, unless otherwise stated. Secretary MR GUY ROBERTSON B Com (Hons.) CA Guy Robertson was appointed Company Secretary on 12 November 2009. Mr Robertson has over 25 years’ experience as a Director, CFO and Company Secretary of both public (ASX- listed) and private companies in both Australia and Hong Kong. He has had significant experience in due diligence, acquisitions, IPOs and corporate management. Mr Robertson has a Bachelor of Commerce (Hons) and is a Chartered Accountant. He is a director of Hastings Technology Metals Ltd and Metal Bank Limited and was previously a director of Bellevue Gold Limited. SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the state of affairs of the Company during the year. PRINCIPAL ACTIVITIES The principal activity of the Company during the financial year was mineral exploration, the re-commissioning of the Fox Radio Hill Plant and direct and indirect investments in the mining industry. There have been no significant changes in the nature of the Company’s principal activities during the financial year. SIGNIFICANT AFTER BALANCE DATE EVENTS Other than as outlined above there are currently no matters or circumstances that have arisen since the end of the financial period that have significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. LIKELY FUTURE DEVELOPMENTS AND EXPECTED RESULTS The primary objective of Artemis is to explore its current tenements in Australia and the Company continues to look to invest in mineral resources projects which have the potential to become mines. PERFORMANCE IN RELATION TO ENVIRONMENTAL REGULATION The consolidated entity will comply with its obligations in relation to environmental regulation on its projects when it undertakes exploration. The Directors are not aware of any breaches of any environmental regulations during the period covered by this Report. OPERATING RESULTS AND FINANCIAL REVIEW The profit/(loss) of the consolidated entity after providing for income tax amounted to $12,073,913 (2017: loss of $2,178,504). The result is substantially attributable to the receipt and subsequent sale of 4 million Novo shares at CAD 5 each or A$20,318,979, before costs. The Group’s operating income increased to $19,145,095 (2017: $633,492) with $18,546,823 attributable to the sale of Novo shares above, net of an amount of $1,559,575 applied as a recovery of exploration costs, and sales of gold and copper ore. Page 24 DIRECTORS’ REPORT The Group’s expenses increased to $7,071,182 (2017: $2,811,996). The increase was attributable to share based payments to directors of $2,148,171 of which $1,525,000 was a sign on fee for H.H Sheikh Maktoum Hasher Al Maktoum, with other overhead expenses increasing commensurately with the level of activity. The carrying value of exploration and development costs increased to $40,474,892 (2017: $8,992,705) reflecting a significant increase in exploration on the Company’s gold and cobalt prospects and also the acquisition of Elysian Resources Pty Limited and Hard Rock Resources Pty Limited for a consideration of $10,220,000 (in cash and shares). Net assets increased to $58,610,558 (2017: $5,924,113) reflecting the increase in share capital during the year from placements $25,500,000 (before costs), from exercise of options $3,075,489, and from issue of shares on acquisitions $8,720,000, and the result for the year, including the Novo shares fee and profit on subsequent sale, being $16,606,896 and $3,499,502 respectively. DIVIDENDS PAID OR RECOMMENDED The Directors do not recommend the payment of a dividend and no dividend has been paid or declared to the date of this Report. MEETINGS OF DIRECTORS The number of Directors' meetings (including committees) held during the financial period, the eligibility of each Director to attend and the number of meetings attended by each director are: Director David Lenigas Edward Mead Alex Duncan-Kemp H.H. Sheikh Maktoum Directors’ Meetings Meetings Attended Number Eligible to Attend Audit Committee Meetings Number Eligible to Attend Meetings Attended 4 4 4 1 4 4 4 3 2 2 - - 2 2 - - In addition to the Directors’ meetings outlined above there were 6 circular resolutions. REMUNERATION REPORT (AUDITED) Remuneration Policy The Board’s policy for determining the nature and amount of remuneration for Board members and officers is as follows: • The remuneration policy, which sets the terms and conditions (where appropriate) for the executive directors and other senior staff members, was developed by the Chairman and Company Secretary and approved by the Board; • In determining competitive remuneration rates, the Board may seek independent advice on local and international trends among comparative companies and industries generally. The Board examines terms and conditions for employee incentive schemes, benefit plans and share plans. Independent advice may be obtained to confirm that executive remuneration is in line with market practice and is reasonable in the context of Australian executive reward practices. No remuneration consultants were retained by the Group during the year; Page 25 DIRECTORS’ REPORT • • • The Company is a mineral exploration company, and therefore speculative in terms of performance. Consistent with attracting and retaining talented executives, directors and senior executives, such personnel are paid market rates associated with individuals in similar positions within the same industry. Options and performance incentives may be issued particularly as the Company moves from commercialisation to a producing entity and key performance indicators such as profit and production can be used as measurements for assessing executive performance; Given the early stage of the Company’s Projects it is not meaningful to track executive compensation to financial results and shareholder wealth. It is also not possible to set meaningful specific objective performance criteria for directors as this stage; All remuneration paid to directors and officers is valued at the cost to the Company and expensed. Where appropriate, shares given to directors, executives and officers are valued as the difference between the market price of those shares and the amount paid by the director or executive. Options are valued using the Black-Scholes methodology; and The Board policy is to remunerate non-executive directors and officers at market rates for comparable companies for time, commitment and responsibilities. The Chairman, in consultation with independent advisors, determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders in a General Meeting, and is currently $150,000 per annum, as approved by shareholders. Fees for non-executive directors and officers are not linked to the performance of the Company. However, to align directors’ interests with shareholder interests, the directors and officers are encouraged to hold shares in the Company. Directors' and Executive Officers’ Remuneration (a) Details of Directors and Key Management Personnel (i) Current Directors David Lenigas – Executive Chairman (appointed 3 November 2016) Edward Mead – Executive Director (appointed 31 December 2014) Alex Duncan-Kemp – Executive Director (appointed 3 January 2017) H.H. Sheikh Maktoum Hasher Al Maktoum (appointed 26 October 2017) (ii) Former Directors George Frangeskides - Chairman (appointed 17 January 2011, resigned 28 September 2011, reappointed 15 August 2012, resigned 3 April 2017) Campbell Baird – Non-Executive Director (appointed 17 August 2015, resigned 23 June 2017) Page 26 DIRECTORS’ REPORT (iii) Company Secretary Guy Robertson (iv) Key Management Personnel Wayne Bramwell – Chief Executive Officer (appointed 19 June 2018) Edward Mead – General Manager Exploration Alex Duncan-Kemp – General Manager Operations Directors’ remuneration and other terms of employment are reviewed annually by the Board having regard to performance against goals set at the start of the year, relative comparative information and independent expert advice. Except as detailed in Notes (a) – (d) to the Remuneration Report, no Director has received or become entitled to receive, during or since the financial period, a benefit because of a contract made by the Company or a related body corporate with a Director, a firm of which a Director is a member or an entity in which a Director has a substantial financial interest. This statement excludes a benefit included in the aggregate amount of emoluments received or due and receivable by Directors and shown in Notes (a) – (d) to the Remuneration Report, prepared in accordance with the Corporations Regulations 2001, or the fixed salary of a full time employee of the Company. (b) Remuneration of Directors and Key Management Personnel The Board of Directors are responsible for determining and reviewing compensation arrangements. The Board will assess the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. Remuneration of the Key Management Personnel of the Company and consolidated entity is set out below. 2018 Base Salary and Fees Share Based Payments Post Employment Super Contributions Total Base Salary and Fees Share based Payments 452,717 70,000 1,100,000 - - - - 1,605,000 - 295,149 125,550 325,176 112,318 D. Lenigas 210,000 242,717 Sheikh Maktoum 80,000 1,525,000 220,700 250,727 7,308 74,449 74,449 6,393 A. Duncan-Kemp E.Mead W. Bramwell¹ C. Baird G. Frangeskides 694 14,395 - - - - - - - - - 12,000 47,414 ¹Commenced 19 June 2018 768,735 1,923,008 694 2,692,437 367,282 1,100,000 (c) Remuneration link to performance – options and performance rights 2017 Post Employment Super Contributions - - - - - - - - - - - - - - Total 1,170,000 125,550 112,318 - 12,000 47,414 1,467,282 Unissued ordinary shares of Artemis Resources Limited under option at the date of this report are as follows: Date option granted Expiry date Issue price of Shares Number under option 30 November 2017 31 January 2018 6 February 2018 19 June 2018 19 June 2018 30 June 2020 31 January 2021 6 February 2019 19 June 2021 19 June 2021 44 cents 45.38 cents 25 cents 27.39 cents 40 cents 6,000,000 5,439,858 11,250,000 10,000,000 5,000,000 Page 27 DIRECTORS’ REPORT Included in the options above were options granted as remuneration to Key Management Personnel during the period as follows: Name Date of grant Expiry date Opening balance start of year at Granted as remuneration Closing balance at end of year Grant date value Duncan- D. Lenigas E. Mead A. Kemp W. Bramwell W. Bramwell 30 November 2017 30 November 2017 30 November 2017 30 June 2020 30 June 2020 30 June 2020 19 June 2018 19 June 2018 19 June 2021 19 June 2021 - - - - - 3,000,000 1,500,000 1,500,000 3,000,000 1,500,000 1,500,000 $381,526 $190,763 $190,763 10,000,000 5,000,000 10,000,000 5,000,000 $453,681 $189,152 All options are fully vested and exercisable, with the grant value being expensed over the period to the date of expiry. No options were issued during or outstanding at the end of the previous financial year in respect of Key Management Personnel. The following performance rights were issued during the year to Key Management Personnel: Name D. Lenigas E. Mead A. Kemp Duncan- Date granted 13 September 2017 13 September 2017 13 September 2017 Number issued 9,000,000 2,000,000 2,000,000 Value per Share 8.6 cents 8.6 cents 8.6 cents Performance period ended 30 June 2019 30 June 2019 30 June 2019 Closing balance at end of year 9,000,000 2,000,000 2,000,000 Grant date value $619,200 $137,600 $137,600 Shareholders at a General Meeting on 8 September 2017 approved the grant of 15,000,000 performance rights to Directors and employees. The performance rights were valued by 22 Corporate Advisory Pty Limited, at 8.6 cents a share being the share price on grant date discounted for lack of marketability. Vesting occurs at the end of the performance period ended 30 June 2019, if the following performance conditions are met: Market-based performance conditions: • • • 33.3% of the performance rights will vest when share price exceeds 15 cents; and 33.3% of the performance rights will vest when share price exceeds 20 cents; and 33.3% of the performance rights will vest when share price exceeds 25 cents. Non-market based performance conditions: The vesting of the performance rights is also subject to non-market conditions including capital raising, occupational health and safety outcomes and corporate governance hurdles. An expense of $469,091 was recognised for the year ended 30 June 2018 in relation to these performance rights. No performance rights were issued or were outstanding at the end of the previous financial year relating to Key Management Personnel. (d) Share and option holdings All equity dealings with Directors have been entered into with terms and conditions no more favourable than those that the entity would have adopted if dealing at arm’s length. Page 28 DIRECTORS’ REPORT Executive directors $60,000 directors fees plus consulting fees at $1,000 per day Ongoing (e) Contractual arrangements with executive Key Management Personnel Component Fixed remuneration Chairman $300,000 CEO $380,000 Contract duration Notice by the individual/company Termination of employment (without cause) Termination of employment (with cause) or by individual Ongoing Ongoing 3 months in first year 6 months after first year 3 months One to 3 months On termination of employment without cause unexercised options are at the discretion of the Board. Vesting of performance rights is at the discretion of the board, who may also shorten the performance period. On termination for cause unexercised options will lapse. On termination by employee unexercised options are at the discretion of the Board. On termination for cause performance rights not vested will lapse. (f) Non-executive director arrangements The non-executive director has a letter of appointment providing for non-executive director fees of $120,000 per annum. The non-executive director was awarded a sign on fee of 5,000,000 shares on appointment. Shares held by Directors and Key Management Personnel Received as Remuneration Net change Other Balance at end of year Period from 1 July 2017 to 30 June 2018 Balance at beginning of year 25,000,000 - - 2,000,000 - D. Lenigas H.H Sheikh Maktoum A. Duncan-Kemp E. Mead W. Bramwell - 5,000,000 - - - 27,000,000 5,000,000 Period from 1 July 2016 to 30 June 2017 Balance at beginning of year Received as Remuneration Net change Other² D. Lenigas A. Duncan-Kemp E. Mead¹ C. Baird¹ - - - - 25,000,000 - 2,000,000 875,000 (875,000) G. Frangeskides¹ 50,000 1,500,000 (1,550,000) - - - - - - - - - 25,000,000 5,000,000 - 2,000,000 - 32,000,000 Balance at end of year 25,000,000 - 2,000,000 - - 27,000,000 ¹Shares received as remuneration relate to an amount charged in and owing at the end of the previous year. ²Amount removed on resignation of director (2,425,000) 29,375,000 50,000 Page 29 DIRECTORS’ REPORT OPTIONS There has been no issue of ordinary shares as a result of the exercise of options by directors and senior management during or since the end of the financial year. Directors’ holdings of shares and share options have been disclosed in the Remuneration Report. INDEMNIFYING OFFICERS In accordance with the Constitution, except as may be prohibited by the Corporations Act 2001, every officer or agent of the Company shall be indemnified out of the property of the Company against any liability incurred by him or her in his or her capacity as officer or agent of the Company or any related corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal. During the financial year the Company paid insurance premiums of $11,522 in respect of a contract insuring the directors and officers of the consolidated entity against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The insurance premiums relate to: • Costs and expenses incurred by the relevant officers in defending legal proceedings, whether civil or criminal and whatever their outcome; and • Other liabilities that may arise from their position, with the exception of conduct involving wilful breach of duty or improper use of information to gain a personal advantage. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceeding to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration for the year ended 30 June 2018 has been received and can be found on page 31 of the financial report. NON-AUDIT SERVICES The Board, in accordance with advice from the audit committee, is 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 audit committee 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: Taxation services 2018 $11,192 2017 $2,000 This Report is made in accordance with a resolution of the Directors. Edward Mead Director 28 September 2018 Page 30 ARTEMIS RESOURCES LIMITED ABN 80 107 051 749 AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF ARTEMIS RESOURCES LIMITED I declare that, to the best of my knowledge and belief, during the year ended 30 June 2018 there have been no contraventions of: (i) the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Hall Chadwick Level 40, 2 Park Street Sydney NSW 2000 Drew Townsend Partner Date: 28 September 2018 SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED JUNE 2018 Continuing Operations Revenue Other income Cost of sales Administration expenses Personnel costs Professional fees and consultancy costs Occupancy costs Compliance and regulatory expenses Payments to directors Exploration expenditure written off Travel Share based payments Marketing costs Project write off Provision for stamp duty on acquisition Provision for diminution in value investments Legal Fees Borrowing costs Consolidated 30 June 2018 $ 18,984,232 160,863 Note 2(a) 2(b) (174,484) (314,150) (189,658) (193,785) (165,143) (298,857) (658,587) (202,445) (574,615) (2,339,999) (92,436) - (520,000) (316,087) (388,056) (642,880) Consolidated 30 June 2017 $ 628,857 4,635 (161,858) (244,011) - (183,964) (20,882) (124,688) (163,699) - (145,970) (1,272,000) (111,856) (100,000) - - (46,755) (236,313) PROFIT/(LOSS) BEFORE INCOME TAX FOR THE YEAR Income tax expense PROFIT/(LOSS) AFTER INCOME TAX FOR THE YEAR 3 12,073,913 - (2,178,504) - 12,073,913 (2,178,504) PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO: Members of the parent entity TOTAL PROFIT/(LOSS) FOR THE YEAR OTHER COMPREHENSIVE INCOME/(LOSS) Items that will not be reclassified to profit or loss: Net change in fair value of available for sale investments Income tax relating to components of other comprehensive income TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO Owners of the parent - 12,073,913 12,073,913 (2,178,504) (2,178,504) - - - - 12,073,913 (2,178,504) 12,073,913 12,073,913 (2,178,504) (2,178,504) Earnings per share – continuing operations Basic profit/(loss) per share (cents) Diluted profit/(loss) per share (cents) 21 21 2.22 2.02 (0.95) (0.95) The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the attached notes Page 32 CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2018 Note 4 5 6 7 8 9 10 11 12 13 Consolidated 30 June 2018 $ Consolidated 30 June 2017 $ 27,048,303 1,846,132 430,730 29,325,165 180,250 40,474,892 40,655,142 329,196 616,612 103,904 1,049,712 8,000 8,992,705 9,000,705 69,980,307 10,050,417 7,446,797 8,928 3,914,024 11,369,749 1,860,339 - 2,325,965 4,126,304 11,369,749 4,126,304 58,610,558 5,924,113 79,127,087 724,999 (21,241,528) 58,610,558 58,610,558 39,067,554 172,000 (33,315,441) 5,924,113 5,924,113 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other financial assets Total current assets NON-CURRENT ASSETS Plant and equipment Exploration, evaluation and development expenditure Total non-current assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Employee benefits obligations Borrowings Total current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Share Capital Reserves Accumulated losses Parent interests TOTAL EQUITY The consolidated statement of financial position is to be read in conjunction with the attached notes. Page 33 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018 Attributable to equity holders of parent Share Capital Reserves $ 39,067,554 - - 41,053,281 (1,255,748) 172,000 - 90,000 79,127,087 $ 172,000 - - - - (172,000) 814,999 (90,000) 724,999 Accumulated Losses $ (33,315,441) 12,073,913 12,073,913 - - - - - (21,241,528) Total Equity $ 5,924,113 12,073,913 12,073,913 41,053,281 (1,255,748) - 814,999 - 58,610,558 Attributable to equity holders of parent CONSOLIDATED - 2018 Balance 1 July 2017 Profit for the year Total comprehensive income for the year Issue of shares Cost of share issue Exercise of options Transfer to share based payments Transfer from share based payments Balance as at 30 June 2018 CONSOLIDATED - 2017 $ $ Share Capital Reserves Balance 1 July 2016 Loss for the year Total comprehensive income for the year Issue of shares Cost of share issue Share based payments Balance as at 30 June 2017 32,374,443 - - 6,757,934 (64,823) - 39,067,554 Accumulated Losses $ Total Equity $ - - (31,136,937) (2,178,504) 1,237,506 (1,406,504) - - - 172,000 172,000 (2,178,504) - - - (33,315,441) (1,406,504) 6,757,934 (64,823) 172,000 5,924,113 The consolidated statement of changes in equity is to be read in conjunction with the attached notes. Page 34 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 Consolidated 30 June 2018 Note $ Consolidated 30 June 2017 $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from operations Payments to suppliers and employees Interest received Borrowing costs paid NET CASH USED IN OPERATING ACTIVITIES 24 CASH FLOWS FROM INVESTING ACTIVITIES Payments for exploration, evaluation and development Payments for project acquisition Payments for plant and equipment Proceeds from sale of investments NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Cost of issue of shares Loan (repayment)/proceeds Proceeds from convertible note Repayment of convertible note NET CASH PROVIDED BY FINANCING ACTIVITIES Increase in cash held Cash at the beginning of the year Effect of exchange rate on cash and cash equivalent CASH AT THE END OF THE YEAR 4 415,535 (3,171,454) 160,863 (841,976) (3,437,032) (18,987,830) (1,500,000) (182,656) 19,516,977 (1,153,509) 28,372,983 (1,255,748) (60,000) 5,945,003 (1,918,894) 31,083,344 26,492,803 329,196 226,304 27,048,303 175,153 (938,779) 4,635 (236,313) (995,304) (2,574,869) (1,118,343) (410,000) 162,236 (3,940,976) 2,566,185 (64,823) 120,000 2,625,965 - 5,247,327 311,047 18,149 - 329,196 The consolidated statement of cash flows is to be read in conjunction with the attached notes to the financial statements Page 35 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Notes to the Financial Statements for the year ended 30 June 2018 These consolidated financial statements and notes represent those of Artemis Resources Limited and Controlled Entities (the “Consolidated Group” or “Group”). The separate financial statements of the parent entity, Artemis Resources Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. The financial statements were authorised for issue on 28 September 2018 by the Directors of the Company. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PREPARATION The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board, International Financial Reporting Standards as issued by the International Accounting Standards Board and the Corporations Act 2001. The Group is a for profit entity for financial reporting purposes under Australian Accounting Standards. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated. The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The financial statements are presented in Australian dollars which is the Company’s functional and presentation currency. a. Principles of Consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Artemis Resources Limited at the end of the reporting period. A controlled entity is any entity over which Artemis Resources Limited has the ability and right to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Where controlled entities have entered or left the Group during the year, the financial performance of those entities is included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 14 to the financial statements. In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated group have been eliminated in full on consolidation. Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported separately within the equity section of the consolidated statement of financial position and consolidated statement of comprehensive income. The non-controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date. Business Combinations Business combinations occur where an acquirer obtains control over one or more businesses. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions). Page 36 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the business combination are expensed to the consolidated statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. b. Going concern The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. As disclosed in the financial statements, the consolidated entity made a profit of $12,073,913, had net cash outflows from operating activities of $3,437,032 and investing activities of $1,153,509 for the year ended 30 June 2018, and had a working capital surplus as at 30 June 2018 of $17,955,416. Notwithstanding positive results for the year the Group is not yet producing and therefore there is some uncertainty that the Company and consolidated entity will continue as a going concern and realise its assets and discharge its liabilities in the ordinary course of business. The Directors believe that it is reasonably foreseeable that the company and consolidated entity will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following factors: • • • The consolidated entity has cash at bank at balance date of $27,048,303 and net assets of $58,610,558 as at 30 June 2018; The ability of the consolidated entity to scale back certain parts of their activities that are non- essential so as to conserve cash; and The consolidated entity retains the ability, if required, to wholly or in part dispose of interests in mineral exploration and development assets. Accordingly, the Directors believe that the company and consolidated entity will be able to continue as going concerns and that it is appropriate to adopt the going concern basis in the preparation of the financial report. The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the company and consolidated entity do not continue as going concerns. c. New accounting standards for application in future periods Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below: Page 37 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1 January 2018). The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments and simplified requirements for hedge accounting. The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective. The directors anticipate that the adoption of AASB 9 will not have a significant impact on the Group’s financial statements. AASB 15 Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018). AASB 15 Replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations: o o o o establishes a new revenue recognition model changes the basis for deciding whether revenue is to be recognised over time or at a point in time provides new and more detailed guidance on specific topics (e.g. multiple element arrangements, variable pricing, rights of return, warranties and licensing) expands and improves disclosures about revenue The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity’s preliminary assessment, the likely impact on the first time adoption of the Standard for the year ending 30 June 2019 includes: • Change in timing of income recognition depending on performance consideration in the Group’s contracts; and Change in income measurement for possible variable consideration in the Group’s contracts. • AASB 16 Leases (applicable to annual reporting periods beginning on or after 1 January 2018). AASB 16: • • • • • Replaces AASB 117 Leases and some lease-related Interpretations requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low value asset leases provides new guidance on the application of the definition of lease and on sale and lease back accounting largely retains the existing lessor accounting requirements in AASB 117 requires new and different disclosures about leases When this Standard is first adopted for the year ending 30 June 2020, there will be no material impact on the transactions and balances recognised in the financial statements. d. Income taxes The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at Page 38 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. e. Exploration and evaluation costs Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. Page 39 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 f. Leases A distinction is made between finance leases which transfer from the lessor to the lessee substantially all the risks and rewards incident to ownership of the leased asset and operating leases under which the lessor retains substantially all the risks and rewards. Where an asset is acquired by means of a finance lease, the fair value of the leased property or the present value of minimum lease payments, if lower, is established as an asset at the beginning of the lease term. A corresponding liability is also established and each lease payment is apportioned between the finance charge and the reduction of the outstanding liability. Operating lease rental expense is recognised as an expense on a straight line basis over the lease term, or on a systematic basis more representative of the time pattern of the user's benefit. g. Financial Instruments Recognition and initial measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately. Classification and subsequent measurement Financial instruments are subsequently measured at fair value, amortised cost using the effective interest rate method, or cost. Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method. Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss. The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of Accounting Standards specifically applicable to financial instruments. ( (i) Financial assets at fair value through profit or loss i Financial assets are classified at “fair value through profit or loss” when they are held for trading for the ) purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a Group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss. Page 40 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are included in current assets, where they are expected to mature within 12 months after the end of the reporting period. (iii) Held-to-maturity investments Held-to-maturity investments are included in non-current assets where they are expected to mature within 12 months after the end of the reporting period. All other investments are classified as current assets. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value with changes in such fair value (i.e. gains or losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. Available-for-sale financial assets are included in non-current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as current assets. (v) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Impairment At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in profit or loss. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point. h. Impairment of assets At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the consolidated statement of comprehensive income. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. In the case of available-for- sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. i. Plant and equipment Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment are measured on the cost basis. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Page 41 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a diminishing value basis over the asset’s useful life to the company commencing from the time the asset is held ready for use. Depreciation is calculated on a diminishing-value basis over the estimated useful life of the assets as follows: Plant and equipment – ranging from 2 to 20 years An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. j. 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 3 months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the consolidated statement of financial position. k. Revenue recognition Interest revenue is recognised using the effective interest method. It includes the amortisation of any discount or premium. l. Borrowing costs Borrowing costs are recognised as an expense in the period in which they are incurred except borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period to get ready for its intended use or sale. In this case the borrowing costs are capitalised as part of the cost of such a qualifying asset. The amount of borrowing costs relating to funds borrowed generally and used for the acquisition of qualifying assets has been determined by applying a capitalisation rate to the expenditures on those assets. The capitalisation rate comprises the weighted average of borrowing costs incurred during the period. m. Equity settled compensation Share-based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-Scholes pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. n. Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the consolidated statement of financial position are shown inclusive of GST. Cash flows are presented in the consolidated 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. Page 42 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 o. Comparative figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. p. 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. q. Key judgements The Group capitalises expenditure relating to exploration and evaluation, and development, 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. While there are certain areas of interest from which no reserves have been extracted, 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 $40,474,892. 2. REVENUE AND OTHER INCOME a) Revenue Other income¹ Less applied as recovery of exploration costs Add profit on sale of Novo shares net of costs Sales of gold, silver and copper ore Profit on sale of other investments Unrealised foreign exchange gain Consolidated 2018 $ Consolidated 2017 $ 16,606,896 (1,559,575) 15,047,321 3,499,502 18,546,823 221,041 44,162 172,206 18,984,232 165,974 - - - 165,974 462,883 - - 628,857 ¹In 2018 this amount is the non-cash fee received from Novo Resources Corp. for entering into the conglomerate gold joint venture. b) Other Income Interest received 160,863 4,635 Page 43 3. INCOME TAXES Reconciliation between income tax expense and prima facie tax on accounting loss: NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Profit/(loss) before tax Tax at 27.5% (2017: 27.5%) Tax effect of non-deductible expenses Exploration expenditure Tax losses and timing differences not brought to account Previously unrecognised tax losses and timing differences now recouped to reduce tax expense Income tax expense Consolidated 2018 $ Consolidated 2017 $ 12,073,913 3,320,326 735,462 (3,045,162) (2,178,504) (599,089) 427,600 (1,101,474) - 1,272,963 (1,010,626) - - - Applicable tax rate The applicable tax rate is 27.5%, the small business national corporate tax rate in Australia. Analysis of deferred tax assets No deferred tax assets have been recognised as yet, other than to offset deferred tax liabilities, as it is currently not probable that future taxable profit will be available to realise the asset. Potential deferred tax assets on carry forward losses amount to $4,814,858 (2017-$5,925,343). 4. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash on hand and account balances with banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents included in the consolidated statement of cash flows comprise the following amounts: Cash and cash equivalents 5. TRADE AND OTHER RECEIVABLES Current Trade receivables GST receivable Other Consolidated 2018 $ 27,048,303 Consolidated 2017 $ 329,196 Consolidated 2018 $ Consolidated 2017 $ 133,838 1,337,115 375,179 1,846,132 316,870 294,482 5,260 616,612 The value of trade and other receivables considered by the Directors to be past due or impaired is nil (2017: Nil). Page 44 6. OTHER FINANCIAL ASSE TS Current Available-for-sale financial assets Listed equity securities – at fair value 7. PLANT AND EQUIPMENT Cost Opening balance, 1 July 2016 Additions Closing balance, 30 June 2017 Opening balance, 1 July 2017 Additions Closing balance, 30 June 2018 Depreciation Opening balance, 1 July 2016 Depreciation Closing balance, 30 June 2017 Opening balance, 1 July 2017 Depreciation Closing balance, 30 June 2018 Written Down Value 30 June 2017 Written down value 30 June 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Consolidated 2018 $ Consolidated 2017 $ 430,730 103,904 Plant and Equipment Software - - - - 94,840 94,840 - - - - (3,841) (3,841) - 90,999 - - - - 90,883 90,883 - - - - (7,632) (7,632) - 83,251 Motor vehicles - 10.000 10,000 10,000 - 10,000 - (2,000) (2,000) (2,000) (2,000) (4,000) 8,000 6,000 Total - 10,000 10,000 10,000 185,723 195,723 - (2,000) (2,000) (2,000) (13,473) (15,473) 8,000 180,250 8. EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE Opening balance, 1 July 2016 Acquisition of tenements and project interests Expenditure capitalised in current period Cost of product sold written off Closing balance, 30 June 2017 Opening balance, 1 July 2017 Acquisition of tenements and project interests Expenditure capitalised in current period Exploration expenditure written off Cost of product sold written off Closing balance, 30 June 2018 Total 1,631,509 3,435,731 4,087,053 (161,588) 8,992,705 8,992,705 10,220,000 21,436,671 (202,445) (174,214) 40,474,892 Page 45 9. TRADE AND OTHER PAYABLES Trade and other accounts payable (unsecured) 10. EMPLOYEE BENEFITS OBLIGATIONS Provision for annual leave Opening balance Provision for the year Closing balance 11. BORROWINGS Convertible note Opening balance borrowings Convertible note Less guarantee held by noteholder Less conversion to equity Less cash repayment Foreign exchange gain Other borrowings Short term loan Repayment short term loan Closing balance borrowings Current liabilities Convertible note Short term loan Total current liabilities NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Consolidated 2018 $ Consolidated 2017 $ 7,446,797 1,860,339 Consolidated 2018 $ - 8,928 8,928 Consolidated 2017 $ - - - Consolidated 2018 $ Consolidated 2017 $ 2,265,965 5,945,303 - 8,211,268 (2,232,791) (1,918,894) (145,559) 3,914,024 60,000 (60,000) - 3,914,024 - 2,625,965 (360,000) 2,265,965 - - - 2,265,965 60,000 - 60,000 2,325,965 3,914,024 - 3,914,024 2,265,965 60,000 2,325,965 The convertible note is for an amount of US$4,500,000 (A$5,945,303). The convertible note can be converted at the noteholder’s election at the lower of 35.75 cents per share or 93% of the 10 day weighted volume average price prior to the date of conversion. The borrower has an option to repay the loan in cash in the event the share price is less than 36.4 cents per share at a premium of 15%. The convertible note is unsecured and expires on 8 June 2019. Advisors to the noteholder received 5,439,858 options on 31 January 2018. The options are exercisable at 45.38 cents on or before 31 January 2021. The note outstanding as at 30 June 2017 was repaid in full, with US$200,000 being repaid in cash on 17 July 2017 and US$1,800,000 being converted with the issue of 19,959,802 shares (4,000,000 shares were issued as a guarantee on 15 May 2017 and the balance were issued on 31 July, 2 August, 16 August and 11 September 2017). Page 46 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Borrowings (continued) An amount of US$964,284 was repaid against the convertible note outstanding as at 30 June 2018, on 2 July 2018, 1 August 2018 and 4 September 2018. The short-term loan of $60,000 was repaid on 15 February 2018. 12. SHARE CAPITAL 633,293,770 (2017: 323,733,940 – pre consolidation) fully paid ordinary shares 2018 Shares 2017 Shares 2018 $ 2017 $ 633,293,770 323,733,940 79,127,027 39,067,554 Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. Reconciliation of movements in share capital during the year: Reconciliation of movement during the period: Opening balance Shares issued in placement Shares issued on exercise of options Shares issued as consideration for acquisition Shares issued as consideration for acquisition Shares issued on settlement of convertible note Shares issued to director as sign on fee Cost of raising capital Closing balance Shares 323,733,940 148,696,682 104,192,990 25,000,000 8,000,000 18,670,158 5,000,000 - 633,293,770 $ 39,067,554 25,500,000 3,337,429 7,000,000 1,720,000 2,232,792 1,525,000 (1,255,748) 79,127,027 Capital management When managing capital, management's objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. Management is constantly adjusting the capital structure to take advantage of favourable costs of capital or high returns on assets. As the market is constantly changing, management may issue new shares or sell assets to reduce debt. There have been no changes in the strategy adopted by management to control the capital of the group since the prior year. This strategy is to maintain share capital as dictated by operational requirements and market conditions. Page 47 13. RESERVES Share based payment reserve Reconciliation of movements during the year: NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Consolidated 2018 $ 724,999 Consolidated 2017 $ 172,000 Share based payments reserve Total options 2018 Options 2017 Options 2018 $ 2017 $ 37,689,858 101,002,903 255,909 172,000 Movement in option reserve during the year Opening balance Exercise of options at 2 cents each Exercise of options at 15 cents each Lapse of 2 cent options Issue of options at average price of 12.5 cents Exercise of options at average price 12.5 cents Issue of director options - series 1 Issue of free options attached to share issue - series 2 Issue of advisor options – series 3 Issue of CEO options – series 4 Issue of CEO options – series 5 Closing balance Number 101,002,903 (96,292,990) (4,400,000) (309,913) 4,000,000 (4,000,000) 6,000,000 11,250,000 5,439,858 10,000,000 5,000,000 37,689,858 $ 172,000 - (172,000) - 90,000 (90,000) 172,302 - 77,212 4,512 1,883 255,909 Share based payments reserve Total performance rights 15,000,000 - 469,090 - 2018 Performance rights 2017 2018 $ 2017 $ Movement in performance rights during the year Opening balance Issued to directors Issued to employees Closing balance Number - 13,000,000 2,000,000 15,000,000 $ - 406,545 62,545 469,090 The following options are outstanding as at 30 June 2018 Series 1. 6,000,000 unlisted options granted 30 November 2017 exercisable at 44 cents per share before 30 June 2020 Series 2. 11,250,000 unlisted options granted 6 February 2018 exercisable at 25 cents per share before 6 February 2019 Series 3. 5,439,858 unlisted options granted 31 January 2018 exercisable at 45.38 cents before 31 January 2021 Series 4. 10,000,000 unlisted options granted 19 June 2018 exercisable at 27.39 cents per share before 19 June 2021 Series 5. 5,000,000 unlisted options granted 19 June 2018 exercisable at 40 cents per share before 19 June 2021 Page 48 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 The fair value of the equity-settled unlisted share options granted is estimated as at the date of grant using the Black and Scholes model taking into account the terms and conditions upon which the options were granted. Expected volatility (%) Risk-free interest free (%) Expected life of option (years) Exercise price ($) Grant date share price Series 1² 142% 1.8% 2.58 years 44 cents 31.5 cents Series 2¹ N/A Series 3 100% 2.0% 3 years 45.38 cents 21.5 cents Series 4² 90% 2.09% 3 years 27.39 cents 19 cents Series 5² 90% 2.09% 3 years 40 cents 19 cents ¹Free attaching options to capital raise on 6 February 2018 on the basis of one option for every four new shares issued. ²Options were valued by 22 Corporate Advisory Pty Ltd Valuation of performance rights Shareholders at a General Meeting on 8 September 2017 approved the grant of 15,000,000 performance rights to Directors and employees. The performance rights were valued by 22 Corporate Advisory Pty Limited, at 8.6 cents a share being the share price on grant date discounted for lack of marketability. Vesting occurs at the end of the performance period ended 30 June 2019, if the following performance conditions are met: Market-based performance conditions: • • • 33.3% of the performance rights will vest when share price exceeds 15 cents; and 33.3% of the performance rights will vest when share price exceeds 20 cents; and 33.3% of the performance rights will vest when share price exceeds 25 cents. Non-market based performance conditions: The vesting of the performance rights is also subject to non-market conditions including capital raising, occupational health and safety outcomes and corporate governance hurdles. An expense of $469,091 was recognised for the period ended 30 June 2018 in relation to these performance rights. 14. SUBSIDIARIES Parent Entity: Artemis Resources Limited Subsidiaries: Fox Radio Hill Pty Limited Karratha Metals Limited KML No 2 Pty Limited Armada Mining Pty Limited Shearzone Mining Pty Limited Western Metals Pty Limited Elysian Resources Pty Limited Hardrock Resources Pty Limited SMA Mining Pty Limited Artemis Graphite Pty Ltd Artemis Management Services Pty Ltd Anco Holdings Limited Country of Incorporation Ownership % 2018 Ownership % 2017 Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Hong Kong - 100 100 100 100 100 80 100 100 5 100 100 - - 100 100 100 100 100 80 - - 5 100 - 49 Consolidated The parent entity within the group is Artemis Resources Limited which is the ultimate parent entity in Australia. Page 49 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 15. BUSINESS COMBINATION On 8 December 2017 Artemis finalised the acquisition of Elysian Resources Pty Limited and Hardrock Resources Pty Limited for 33 million ordinary shares and a cash payment of $1,500,000. Details of the purchase consideration and net assets are as follows: Purchase consideration: Tranche 1 – 8 December 2017 33,000,000 shares (25,000,000 at a deemed price of 28 cents per share and 8,000,000 at a deemed price of 21.5 cents per share) Cash $ 8,720,000 1,500,000 10,220,000 The assets and liabilities recognised as a result of the acquisition are as follows: Capitalised exploration 10,220,000 Exploration costs on tenements acquired subsequent to acquisition amounted to $701,806. In the event that the acquisition was consummated on 1 July 2017, exploration on acquired tenements would have been a further $102,470. There were no revenues or expenses charged to profit and loss by the acquired company during the year. The values identified in relation to the acquisition of the above businesses are provisional as at 30 June 2018. For a further understanding of the provisional basis, refer to the business combination accounting policy which states that business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed at acquisition date. The measurement period ends on either the earlier of (i) 12 months from the date of acquisition or (ii) when the acquirer receives all the information possible to determine the value. 16. FINANCIAL INSTRUMENTS The Board of Directors takes responsibility for managing financial risk exposures of the Group. The Board monitors the Group’s financial risk management policies and exposures and approves financial transactions. It also reviews the effectiveness of internal controls relating to commodity price risk, counterparty credit risk, currency risk, liquidity risk and interest rate risk. The Board meets monthly at which these matters are reviewed. The Board’s overall risk management strategy seeks to assist the Consolidated Group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its review includes the use of hedging derivative instruments, credit risk policies and future cash flow requirements. The Company’s principal financial instruments comprise cash, short term deposits and securities in Australian listed companies. The main purpose of the financial instruments is to earn the maximum amount of interest at a low risk to the company. The Company also has other financial instruments such as trade debtors and creditors which arise directly from its operations. For the period under review, it has been the Company’s policy not to trade in financial instruments. The Company holds financial instruments in the form of shares in Australian listed companies with the aim of trading these shares to generate a profit. The main risks arising from the Company’s financial instruments are interest rate risk and credit risk and market risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below: Page 50 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Interest Rate Risk (a) The Company’s exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rate for each class of financial assets and financial liabilities. The Company does not have short or long term debt, and therefore this risk is minimal. At balance sheet date, the Company had the following financial assets and liabilities exposed to interest rate risk that are not designated as cash flow hedges: Financial Assets Cash and cash equivalents Consolidated 2018 $ Consolidated 2017 $ 27,048,303 329,196 (b) Credit Risk Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the Company’s maximum exposure to credit risk. Foreign exchange risk (c) The Company had the following United States dollar denominated assets and liabilities at year end. Consolidated 2018 US$ Consolidated 2017 US$ Cash Cash and cash equivalents Borrowing Convertible note liability ¹The convertible note holder held 4,000,000 shares as collateral against this liability in the prior year 1,866,360 2,892,855 - 2,000,000¹ Net impact of strengthening/(weakening) of Australian dollar on US $ assets/liabilities outlined above 2018 2017 Foreign exchange risk -5% Foreign exchange risk +5% Profit $ Equity $ Profit $ (77,158) (77,158) 77,158 Equity $ 77,158 (144,450) (144,450) 144,450 144,450 Equity securities price risk (d) Equity securities price risk arises from investments in listed equity securities. The Group is exposed to equity price risk arising from its equity investments. Equity investments are held for trading purposes. The Group does not actively trade these investments and no hedging or derivative transactions have been used to manage equity price risk. Page 51 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Sensitivity analysis (e) The following tables summarise the sensitivity of the Group’s financial assets and liabilities to interest rate risk. Had the relevant variables, as illustrated in the tables, moved, with all other variables held constant, post tax profit and equity would have been affected as shown. The analysis has been performed on the same basis for 2018 and 2017. In the current year the Company holds a number of investments in ASX listed companies. Consolidated 30 June 2018 Financial Assets Cash and cash equivalents Trade and other receivables Other financial assets Financial Liabilities Trade and other payables Borrowings Total increase / (decrease) Footnote 1 2 3 4 5 Carrying Amount $ Interest Rate Risk -1% Interest Rate Risk +1% Profit $ Equity $ Profit $ Equity $ 27,048,303 (270,483) (270,483) 270,483 270,483 1,846,132 430,730 7,446,797 3,914,024 - - - - - - - - - - - - - - - - (270,483) (270,483) 270,483 270,483 Consolidated 30 June 2017 Financial Assets Cash and cash equivalents Trade and other receivables Other financial assets Financial Liabilities Trade and other payables Borrowings Total increase / (decrease) Footnote 1 2 3 4 5 Carrying Amount $ Interest Rate Risk -1% Interest Rate Risk +1% Profit $ Equity $ Profit $ Equity $ 329,196 616,612 103,904 1,860,339 2,325,955 (3,292) (3,292) 3,292 3,292 - - - - - - - - - - - - (600) (600) (3,892) (3,892) 600 3,892 600 3,892 1. Cash and cash equivalents are denominated in AUD and US$ and include deposits at call at floating and short-term fixed interest rates. At 30 June 2018, $2,892,855 was denominated in US $ (30 June 2017 -$Nil). 2. Trade and other receivables are denominated in AUD and are not interest bearing. 3. Other financial assets are equity securities listed on the ASX (2017 – on the London AIM) and are denominated in Australian Dollars (2017-Pounds Sterling). 4. Trade and other payables at balance date are denominated mainly in AUD and are not interest bearing. 5. The convertible note has no interest coupon. Loan of $60,000 in 2017 bears an interest rate of 10% per annum. Liquidity risk (f) The consolidated entity’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans, convertible notes and finance leases. Cash flows from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management’s expectations that banking facilities will roll forward. The tables below reflect an undiscounted contractual maturity analysis for financial liabilities. Page 52 Consolidated Group Within 1 year 2018 $ 2017 $ 1 to 5 years 2017 $ 2018 $ Over 5 years 2018 $ 2017 $ Total 2018 $ 2017 $ NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Financial liabilities - due for payment: Trade and other payables Borrowings Total contractual outflows Cash and cash equivalents Trade and other receivables Financial assets Total anticipated inflows Net inflow/(outflow) on financial instruments 7,446,797 1,800,339 3,914,024 2,325,965 11,360,821 4,126,304 27,048,303 329,196 1,846,132 430,730 616,612 103,904 29,325,165 1,049,712 17,964,344 (3,076,592) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7,446,797 1,800,339 3,914,024 2,325,965 11,360,821 4,126,304 27,048,303 329,196 1,846,132 430,730 616,612 103,904 29,325,165 1,049,712 - 17,964,344 (3,076,592) Management and the Board monitor the Group’s liquidity reserve on the basis of expected cash flow. The information that is prepared by senior management and reviewed by the Board includes: Annual cash flow budgets; (i) (ii) Monthly rolling cash flow forecasts. Net fair values (g) The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net fair values, determined in accordance with the accounting policies disclosed in Note 1. 17. COMMITMENTS FOR EXPENDITURE The Consolidated Group currently has commitments for expenditure at 30 June 2018 on its Australian exploration tenements as follows: Not later than 12 months Between 12 months and 5 years Greater than 5 years Consolidated Group 2018 $ Consolidated Group 2017 $ 2,644,580 6,212,995 4,622,701 13,540,276 1,829,114 6,471,414 4,695,294 12,995,822 The Company evaluates its tenements and exploration programme on an annual basis and may elect not to renew tenement licences if it deems appropriate. Page 53 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 18. CONTINGENT LIABILITIES AND CONTINGENT ASSETS The Company has no contingent assets or liabilities. 19. RELATED PARTY DISCLOSURES (a) Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the Group’s Key Management Personnel for the year ended 30 June 2018. Key Management Personnel for the year ended 30 June 2018 comprised the Directors, the Chief Executive Officer, General Manager Exploration and the General Manager Operations. (b) The total remuneration paid to Key Management Personnel of the Company and the Group during the year are as follows: Short term employee benefits Share based payments Superannuation Consolidated Group 2018 $ 768,735 1,916,615 694 2,686,044 2017 $ 367,282 1,100,000 - 1,467,282 The Company contracts with third parties for the provision of all administrative and support services and geological consulting support services. Remuneration options: granted and vested during the financial period ending 30 June 2018 (c) Details of share based payments during the year comprising 15,000,000 performance rights and 6,000,000 Options to directors and 15,000,000 options to the Chief Executive Officer are contained in Note 23 to the financial statements. Share and option holdings (d) All equity dealings with directors have been entered into with terms and conditions no more favourable than those that the entity would have adopted if dealing at arm’s length. (e) Related party transactions Consolidated Group 2018 $ Consolidated Group 2017 $ Expenses ADK Mining Services Pty Ltd Aetos Consulting Limited² Doraleda Pty Limited ³ 125,550 47,414 112,318 285,282 ¹ Directors fees and consulting fees paid to ADK Mining Services Pty Ltd, a company in which Mr Alex Duncan-Kemp has an 220,700 - 250,727 471,427 interest. ² Consulting fees paid to Aetos Consulting Limited, a company in which Mr Frangeskides has an interest. ³ Directors fees and consulting fees paid to Doraleda Pty Limited, a company in which Mr Mead has an interest. Page 54 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 20. SEGMENT INFORMATION The consolidated entity operates in Australia in mineral and mining exploration. As at 30 June 2018 the Company is solely focused on exploration in the West Pilbara for gold, cobalt, base metals, platinum and platinum group elements. Consolidated 2018 $ 2017 $ Segment Revenue External segment revenue Segment expenses from - continuing operating activities Profit/(loss) before income tax Income tax benefit Profit/(loss) after income tax Assets Segment Assets Total assets Liabilities Segment Liabilities Total Liabilities An analysis of segment assets is as follows: Assets Exploration assets West Pilbara Mt Clement-Paulsens Total exploration assets Development assets Fox Radio Hill processing plant Unallocated assets Cash, receivables, investments and plant and equipment TOTAL ASSETS 21. EARNINGS PER SHARE 19,145,095 633,492 (7,071,182) 12,073,913 (2,666,026) (2,178,504) - 12,073,913 - (2,178,504) 69,980,307 69,980,307 10,050,417 10,050,417 11,369,749 11,369,749 4,126,304 4,126,304 28,608,305 147,442 28,755,747 11,719,145 7,792,894 46,196 7,839,090 - 29,505,415 69,980,307 2,211,327 10,050,417 Reconciliation of earnings per share Basic earnings per share Diluted earnings per share Profit/(Loss) used in the calculation of the basic earnings per share Weighted average number of ordinary shares: Used in calculating basic earnings per ordinary share Dilutive potential ordinary shares Used in calculating diluted earnings per share Consolidated 2018 Cents 2017 Cents 2.22 2.02 (0.95) (0.95) 12,073,913 (2,178,504) No of shares No of shares 544,638,771 52,688,858 597,327,629 229,366,200 - 229,366,200 Page 55 22. AUDITOR’S REMUNERATION Auditor of parent entity Audit fees – Hall Chadwick Other services Total NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Consolidated 2018 $ 36,528 11,192 47,720 2017 $ 28,500 2,000 30,500 For the year ended 30 June 2018 the auditor appointed is Hall Chadwick. 23. SHARE BASED PAYMENTS Goods or services received or acquired in a share-based payment transaction are recognised as an increase in equity if the goods or services were received in an equity-settled share-based payment transaction or as a liability if the goods and services were acquired in a cash settled share-based payment transaction. For equity-settled share-based transactions, goods or services received are measured directly at the fair value of the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made the value of the goods or services is determined indirectly by reference to the fair value of the equity instrument granted. Transactions with employees and others providing similar services are measured by reference to the fair value at grant date of the equity instrument granted. Options issued to Key Management Personnel during the year are outlined in the remuneration report. The following table illustrates the number (No.) and weighted average exercise prices of and movements in unlisted share options issued during the year in respect of share based payments: Outstanding at the beginning of the year 4,400,000 15 cents No. 2018 Weighted average exercise price No. 2017 - Weighted average exercise price - Granted during the year 26,439,848 37.24 cents 4,400,000 15 cents Exercised during the year (4,400,000) 15 cents Expired/cancelled during the year - - Outstanding at the end of the year 26,439,858 37.24 cents Exercisable at the end of the year 26,439,858 37.24 cents - - 4,400,000 4,400,000 - - 15 cents 15 cents Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as follows: Sign on fee for directors, issued as shares 1,525,000 1,100,000 Consolidated Group Consolidated Group 2018 $ 2017 $ Performance rights directors Performance rights employees Share options directors Share options employee Total key management personnel 406,546 62,545 172,302 6,393 - - - - 2,172,786 1,100,000 Page 56 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Other information The Company issued 5,439,858 options to advisors in the year to 30 June 2018. The options are exercisable at 45.38 cents per share with an expiry date of 31 January 2021. The options were valued at $555,930 using the Black and Scholes method using the following variables: a) share price at date of issue 21.5 cents, government bond rate to maturity 2% and share price volatility of 100%. The cost is being amortised over the period to expiry with $77,212 expensed in the year ended 30 June 2018. 24. RECONCILIATION OF NET CASH USED IN OPERATING ACTIVITIES TO LOSS AFTER INCOME TAX Profit/(loss) after income tax Depreciation Exploration and project expenditure written off Share based payments Project written off Provision for diminution on value of investments Unrealised foreign exchange gain Non-cash fee received on entering Novo Resources Corp. JV Loss/(profit) on sale of investments Changes in assets and liabilities during the financial period: Increase in receivables Increase in trade and other payables Net cash outflow from operating activities Consolidated 2018 $ Consolidated 2017 $ 12,073,913 10,406 202,445 2,339,999 - 316,087 (172,206) (15,037,990) (3,552,995) (2,178,504) 2,000 182,910 1,272,000 100,000 - - - 4,539 (288,406) 671,715 (3,437,032) (515,017) 136,766 995,304 Non cash financing and investing activities During the year the Company acquired Hardrock Resources Pty Limited and Elysian Resources Pty Limited for a consideration which included 25,000,000 Artemis Shares at a deemed price of 28 cents per share and 8,000,000 shares at a deemed price of 21.5 cents per share. Page 57 25. PARENT ENTITY DISCLO SURES (a) Financial position Total Current Assets Total Non-current assets Total Assets Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Share Capital Reserves Accumulated losses TOTAL EQUITY (b) Reserves Share based payment reserve (c) Financial performance Profit/(Loss) for the year Other comprehensive income Total comprehensive income (d) Commitments Exploration commitments Not later than 12 months Between 12 months and 5 years NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 2018 $ 28,471,293 36,635,439 65,106,732 6,496,174 6,496,174 2017 $ 1,051,044 8,818,201 9,869,245 3,945,132 3,945,132 58,610,558 5,924,113 79,127,087 724,999 (21,241,528) 58,610,558 39,067,554 172,000 (33,315,441) 5,924,113 724,999 172,000 12,073,913 - 12,073,913 (2,191,740) - (2,191,740) 81,900 68,250 150,250 81,900 150,250 232,150 26. SIGNIFICANT AFTER BALANCE DATE EVENTS Subsequent to year end the Company repaid US$964,284 of the convertible note. Other than as outlined above there are no matters or circumstances that have arisen since the end of the financial period that have significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. Page 58 ARTEMIS RESOURCES LIMITED DIRECTORS’ DECLARATION Directors’ Declaration The Directors of the Company declare that: 1. the financial statements and notes, as set out on pages 32 to 58, are in accordance with the Corporations Act 2001 and: a. comply with Accounting Standards which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and b. give a true and fair view of the financial position as at 30 June 2018 and of the performance for the period ended on that date of the Company and Consolidated Group; 2. 3. in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and the Directors have been given the declarations required by s295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer. This declaration is made in accordance with a resolution of the Board of Directors. Edward Mead Director 28 September 2018 Page 59 ARTEMIS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 80 107 051 749 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS ARTEMIS RESOURCES LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Artemis Resources Limited and Controlled Entities (the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion: a. the accompanying financial report of Artemis Resources Limited and Controlled Entities is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 1 in the financial report, which indicates that the Group had net operating cash outflows of $3,437,032 during the year ended 30 June 2018. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au ARTEMIS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 80 107 051 749 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS ARTEMIS RESOURCES LIMITED Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the year ended 30 June 2018. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How Our Audit Addressed the Key Audit Matter Accounting treatment of exploration expenditure in accordance with AASB 6 ‘Exploration for and Evaluation of Mineral Resources’ Refer to Note 8 “Exploration, Evaluation and Development” Artemis Resources Limited’s accounting treatment of exploration expenditure is to capitalise such costs in accordance with AASB 6 "Exploration for and Evaluation of Mineral Resources". We considered this to be a key audit matter due to its materiality to the financial report. Our procedures included amongst others: • Selecting material capitalised exploration expenditure to verify such expenditure had met the capitalisation criteria as prescribed in AASB 6. • Obtaining and reviewing tenement titles to verify existence and ensure the group is still exploiting the areas of interest. • Conducting a review of any impairment indicators to assess the carrying value of capitalised exploration expenditure • Confirming the company is still in the development phase for the relevant areas Accounting for Share Based Payments in accordance with AASB 2 “Group and Treasury Share Transactions” Refer to Note 23 “Share based payments” Artemis Resources Limited issued a number of share based payments during the year. These are share-based classified by the Group as an equity settled share base payment transaction. transactions payment The accounting for share-based payments was a key audit matter because the expense recognised incorporates a judgmental option value. The group valued the options, using the Black Scholes model, where inputs such as volatility, dividend yield and risk- free rate require judgment. We considered this to be a key audit matter due to its materiality to the financial report. Our procedures included amongst others: • Reviewing the share price of the share-based payment and compared this to the fair value of the share price on the relevant date • Compared the terms and conditions for a sample of the options issued during the financial year included in the expense calculations as agreed by the board • Assessed the reasonableness of the fair value calculation through reviewing the calculation using the Black Scholes Model • Obtaining the group expert’s options valuation report and assessed the reasonableness of selected inputs used in the valuation of the share options using available supporting data. • Reviewing the share and options register to assess completeness and to ensure correct recognition and measurement in accordance with AASB 2 ARTEMIS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 80 107 051 749 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS ARTEMIS RESOURCES LIMITED Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: – – – – Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. ARTEMIS RESOURCES LIMITED AND CONTROLLED ENTITIES ABN 80 107 051 749 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS ARTEMIS RESOURCES LIMITED – – Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the remuneration report included in pages 9 to 15 of the directors’ report for the year ended 30 June 2018. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards Auditor’s Opinion In our opinion, the remuneration report of Artemis Resources Limited, for the year ended 30 June 2018, complies with s 300A of the Corporations Act 2001. Hall Chadwick Level 40, 2 Park Street Sydney, NSW 2000 DREW TOWNSEND Partner Dated: 28 September 2018 ADDITIONAL INFORMATION FOR LISTED COMPANIES AS AT 15 SEPTEMBER 2018 The following additional information is required by the Australian Securities Exchange pursuant to Listing Rule 4.10. a. Distribution of Shareholders Spread of Holdings NIL holding 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 Over 100,000 TOTAL ON REGISTER Holders 0 185 1.020 784 1.969 481 4,439 Securities 0 57,423 3,207,706 6,388,201 74,789,218 548,851,222 633,293,770 % of Issued Capital 0.00% 0.01% 0.51% 1.01% 11.81% 86.67% 100.00% b. The number of shareholders who hold less than a marketable parcel is 617. c. Substantial shareholders The names of the substantial shareholders in the Company, the number of equity securities to which each substantial shareholder and substantial holder’s associates have a relevant interest, as disclosed in substantial holding notices given to the Company are: Exchange Minerals FZE Veni Vidi Vici Limited No of shares 50,643,300 36,387,584 % 8.00% 5.75% Page 64 ADDITIONAL INFORMATION FOR LISTED COMPANIES AS AT 15 SEPTEMBER 2018 d. Twenty largest holders ordinary shares Page 65 Rank Holder Name Designation Securities % *1HSBC CUSTODY NOM AUST LTD56,526,9748.93%*2PERSHING AUST NOM PLINDIAN OCEAN A/C47,614,7117.52%*3CITICORP NOM PL41,594,0906.57%4VENI VIDI VICI LTD36,387,5845.75%5J P MORGAN NOM AUST LTD31,209,3274.93%6NATIONAL NOM LTD25,042,5943.95%7BNP PARIBAS NOM PLIB AU NOMS RETAILC20,625,8373.26%8SORRENTO RES PL16,375,0002.59%9SORRENTO RES PLACN 622 635 483 PL16,375,0002.59%*10AKTIENGESELLSCHAFT D B12,500,0001.97%*11MERRILL LYNCH AUST NOM PL10,860,9281.71%12FZE CASS9,885,0001.56%13MAHARAJAPURAM V S9,500,0001.50%14BNP PARIBAS NOMS PLDRP9,416,5201.49%15HUGHES JAY EVAN DALEINKESE FAM A/C7,500,0001.18%16INKESE PL6,000,0000.95%17MAKTOUM SHEIKH M H M J A5,000,0000.79%*18D & K CORPS INV PL5,000,0000.79%19VENKATARAMAN SRIDHAR4,805,9660.76%20HSBC CUSTODY NOM AUST LTD4,798,5920.76%TOP 20 TOTAL377,018,12359.55%*Denotes merged holders.Note: All holders are included in the report.ARTEMIS RESOURCES LTDTop 20 ListingDate - 16/09/2018 Time - 17.23.44ADDITIONAL INFORMATION FOR LISTED COMPANIES AS AT 15 SEPTEMBER 2018 OTHER DETAILS 1. Address and telephone details of entity’s registered and administrative office The address and telephone details of the registered and administrative office in Australia are: Level 1, 11 Ventnor Avenue West Perth WA 6005 Telephone: +(612) 6319 0000 2. Address and telephone details of the office at which the register of securities is kept The address and telephone of the office at which a register of securities is kept: Security Transfer Registrars Pty Limited 770 Canning Highway Applecross, Western Australia 6153 3. 4. 5. Stock exchange on which the Company’s securities are quoted The Company’s listed equity securities are quoted on the Australian Securities Exchange. Review of Operations A review of operations is contained in the Review of Operations report. On market buy-back There is currently no on-market buy-back. Page 66 CORPORATE DIRECTORY ARTEMIS RESOURCES LIMITED ABN 80 107 051 749 BOARD OF DIRECTORS David Lenigas (Executive Chairman) Sheikh Maktoum Hasher Al Maktoum (Non-executive Director) Edward Mead (Executive Director) Alex Duncan-Kemp (Executive Director) CHIEF EXECUTIVE OFFICER Wayne Bramwell COMPANY SECRETARY Guy Robertson REGISTERED OFFICE Level 1, 11 Ventnor Avenue West Perth WA 6005 Ph: (08) 6319 0000 SHARE REGISTRY Security Transfer Registrars Pty Limited 770 Canning Highway APPLECROSS WA 6153 Ph: (08) 9315-2333 Fax: (08) 9315-2233 www.securitytransfer.com.au AUDITORS Hall Chadwick WEBSITE https://artemisresources.com.au Page 67 

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