Aura Biosciences
Annual Report 2016

Plain-text annual report

ACN: 115 927 681 ACN: 115 927 681 ANNUAL REPORT 30 JUNE 2016 ANNUAL REPORT 30 JUNE 2016 CORPORATE DIRECTORY DIRECTORS Peter Reeve - Executive Chairman Bob Beeson - Non-Executive Director Brett Fraser - Non-Executive Director Julian Perkins - Non-Executive Director NOMINATED ADVISOR AND AIM BROKER WH Ireland Limited 24 Martin Land London, England AUDITOR Bentleys London House Level 3, 216 St Georges Tce Perth, WA 6000 SOLICITORS Steinepreis Paganin Level 4, The Read Building 16 Milligan Street Perth, WA 6000 COMPANY SECRETARY John Madden REGISTERED OFFICE Aura Energy Level 1, 34-36 Punt Road Windsor VIC 3181 Telephone: +61 3 9516 6500 Facsimile: +61 3 9516 6565 Website: www.auraenergy.com.au SHARE REGISTRY Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St Georges Terrace Perth, WA 6000 Telephone: 1300 557 010 Facsimile: 08 9323 2033 Email: web.queries@computershare.com.au AURA ENERGY LIMITED: ANNUAL REPORT 2015/16AboUt Us / CoNtENts 1 ABOUT US Aura Energy is an Australian based development company that has major uranium projects in Europe and Africa also gold, lithium and soda ash in Africa Aura Energy Limited is a resource- development Company building high quality mineral projects for the future. Aura is very positive about its uranium projects and nuclear energy industry as 80 million people are added to the world’s population annually driving the world’s energy needs exponentially. Aura intends to be part of that solution by supplying uranium from its projects to the nuclear industry. Aura has an exceptionally strong technical and management team with unparalleled experience and exposure for a company of Aura’s size. This experience has lead Aura to broaden its mineral portfolio and secure excellent gold, soda ash and lithium projects in 2016. This balances Aura’s strategy and will provide a depth of projects to create cashflow from different commodities. Previously Aura has stated a strategy to get its projects into production quickly and with minimal dilution. Despite a challenging uranium market Aura has continued to progress this goal with a successful listing on the London Stock Exchange AIM market which has more than trebled Aura’s market value during September 2016. Additionally, Aura has pursued corporate alliances, closed the glaring valuation gap between Aura and its peers, commenced the push for offtake funding and maintained a strong imperative to progress its Tiris and Häggån projects. 2016 has seen Aura progress on a new journey to sustainable development and cashflow. We invite shareholders to stay with the company for the 2017 financial year and beyond, as Aura continues this new path. 27 Financial statements 67 Directors’ Declaration 68 70 73 Independent Auditor’s Report Additional Information Tenement Report CONTENTS About Us Our projects Highlights in 2016 Chairman’s Letter Operation’s Review 1 2 3 4 6 14 Directors’ report 26 Auditor’s Independence Declaration 2 OUR PROJECTS 100% OWNED URANIUM DEVELOPMENT PROJECTS IN MAURITANIA AND SWEDEN TIRIS MAURITANIA – POTENTIAL PRODUCTION & CASHFLOW • C1 Cash costs US$30/lb U3O8 • 49 Mlbs Indicated and Inferred Resource • US$45m capital cost • Early stage exploration HÄGGÅN SWEDEN –POTENTIAL SCALE/LONG TERM VALUE • C1 Cash costs US$13.50/lb U3O8 including credits • 803 Mlbs Inferred Resource • US$537m capital cost • Gold, Soda Ash, Lithium AURA ENERGY LIMITED: ANNUAL REPORT 2015/16HigHtLigHts iN 2015/16 3 HIGHLIGHTS IN 2016 Aura advanced the company in 2016 by broadening its portfolio, advancing its studies, establishing a new London market place and increasing its market value EXPANDED PORFOLIO IN GOLD LITHIUM SODA ASH LISTED ON AIM RAISED £2.85m (A$5.0M) MANAGEMENT HAS EXTENSIVE RESOURCES EXPERIENCE 583% INCREASE IN MARKET CAPITALISATION (OR VALUE) $5M to $29.2M ACTIVITY OVERVIEW MAURITANIA • Commenced Tiris project Feasability Study • Completed drilling and leach testwork SWEDEN • Conducted drilling on Haggan and Marby • Planned for community engagement program • Refined understanding of Tiris • Continued liasion with government project mineralisation • Secured excellent gold tenements south of the giant Tasiast Gold Mine • Secured Soda Ash and Lithium tenements • Continued interaction in local community 4 CHAIRMAN’S LETTER Aura is developing two attractive, 100% owned, uranium projects with resources totalling 852 million pounds U3o8 which the Aura board believes will position the company as a major uranium producer in the future. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16CHAirMAN's LEttEr 5 The new AIM listing and exceptionally well funded position provides Aura with a new platform from which to develop its projects and search for new opportunities. Aura’s focus remains the creation of shareholder value as we progress our projects to sustainable cashflow. Peter Reeve Executive Chairman Dated this Thursday, 29 September 2016 Aura Energy Limited (‘Aura’ or the ‘Company’) is developing two attractive, 100% owned, uranium projects with resources totalling 852 million pounds U3O8 which the Aura Board believes will position the company as a major uranium producer in the future. The Tiris project in Mauritania is in Feasibility Study and with its low capital cost has a potentially short development time frame. The second asset, the Häggån project, is a world class, strategic European uranium deposit located in Sweden. Aura maintained a focus during 2016 on getting the Tiris project Feasibility Study completed in order to achieve production and cashflow from the asset in the shortest timeframe. The continued weakness in both the uranium price and the junior mining sector made funding difficult and as such hampered Aura’s efforts to progress the Feasibility Study. To address this issue the Company took the strategic step to review a more relevant market to fund Aura’s projects and commenced a programme to list on the London Stock Exchange owned AIM market. Subsequent to year end, the Company successfully completed that listing with the following key outcomes: • Completion of equity raising of A$5 million (£2.85 million); • Establishment of a presence in a market knowledgeable of African and European projects; and • support from new cornerstone investors Aura continued to pursue development for both its uranium projects however as new exploration opportunities arose Aura took the opportunity to broadened its portfolio into other minerals and prospects aligned with the existing business. The first of these was two excellent gold tenements in Mauritania just south of the giant 21 million ounce Tasiast gold mine and the second a soda ash and lithium prospects near the Tiris project. Aura believes the new gold properties to be particularly prospective on a poorly explored belt and with substantial previous expenditure by previous owners Aura will be able to commence exploration with a distinct head start. Other explorers on this belt such as Algold Resources have recently had excellent results and Aura has high expectations it can match these outcomes. The soda ash and lithium prospects are also aligned with our business as soda ash is the key chemical required to leach the uranium ore in Tiris. If a soda ash source could be identified near to the project then the already low cost of Tiris production would fall even further. If a lithium credit was also capable of being additionally extracted then this would ensure lower costs again. The junior sector has been a difficult place to operate over the past few years and survival alone is a success. Aura can now say it has thrived in this environment and I would like to thank shareholders, both old and new, for their recent support as that support has allowed Aura to prosper and advance. I also like to thank our staff and board for their efforts in our recent success. 6 OPERATION’S REVIEW 2016 was a year of two halves with a slower than expected level of activity initially followed a very successful London AiM listing and financing which allowed planning to commence for a restart of the tiris project Feasibility study and a move into gold, soda ash and lithium. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16opErAtioN’s rEviEw 7 production rate of approximately 800,000 pound U3O8 over 15 years. Internal studies suggest there is protential for Aura to produce 3 million pounds U3O8 per annum. Aura initially commenced the Feasibility Study for its Tiris project in Mauritania in 2015 and continued activities during 2016. However the weak funding environment hampered Aura’s ability to progress the Feasibility Study which resulted in work programmes being slowed towards the end of 2015. Prior to this weak funding environment Aura was focused on validation work to tighten the grade/tonnage confidence limits. This assessment is ongoing and will require additional field testwork in 2017. Orebody models were constructed in order for new resource estimates to be quickly concluded when the validation work programme on the 2015 drilling programme is completed. There are a number of natural attributes of the Tiris project which derive from the very fine nature of the uranium mineral, carnotite. This allows a simple beneficiation step of washing and screening to achieve an upgrade of up to 700% to the leach feed U3O8 grade. This in turn leads to a project that has: • A very small physical footprint • No grinding – reduced construction and operating costs • Easily scalable – modular, assembly on-site The resulting capital and operating costs are US$45 million and US$30 per pound U3O8 which are both extremely competitive in this environment and compete well with the in-situ leach uranium projects which are also well known for low capital and operating costs. The key to low cash costs at the Tiris project is the: • Shallow mining at 1- 5 metres depth • Ore upgrades by 500 - 700% - from 335 ppm to circa 2,500 ppm U3O8 • Excellent leach recovery and resident rate - 94% in 4 hours The project financial outcomes from the Scoping Study were; • Pre-tax cashflow (15 years) : A$360 million using US$65 pounds U3O8 @ 90 cents AUD • IRR of 78% before tax and royalties Importantly, the Scoping Study financials only account for approximately 20% of the known resources, providing excellent upside in the project economics and presenting a strong case for further expansion. Initial modelling of expansion cases has been undertaken and indicate a potential for a very robust financial outcome. Two important aspects of work on the Tiris project to be undertaken are: • Modelling of expansion cases for Tiris project including a 3 million pounds U3O8 per annum • Exploration of Hippolyte South to provide a growth option for the Tiris project 2016 was a year of two halves with a slower than expected level of activity initially followed a very successful London AIM listing and financing which allowed planning to commence for a restart of the Tiris Feasibility Study. As the Tiris project work programmes slowed during the year under review, the AIM listing became the major focus of the Company. However more broadly Aura expanded its portfolio to include a package of very prospective gold tenements and also soda ash and lithium prospects. On balance 2015-16 was a frustrating year with weak commodity and equity markets but ended well leaving Aura in an excellent position for the coming few years. In the 2015 Report the Company commented that; Fundraising became central to the company during the year as the push to achieve project status is unrelenting and expensive. The need to find a reliable and sustainable source of funding to continue on this development path is very important to Aura and remained unfulfilled at year end. Significantly I am pleased to report that Aura’s efforts since the end of the financial year have resulted in the completion of a $5 million financing and the establishment of a new market place in the UK which clearly has a strong appreciation of African and European projects. The completion of this task is important in realising a sustainable funding path for all of Aura’s projects but in particular the near term Tiris project. TIRIS PROJECT – 100% MAURITANIA The Tiris project is an excellent near- term development project and Aura’s key opportunity to produce significant cash flow and returns for shareholders in the coming 2-3 years. The Tiris project has progressed to the Feasibility Study stage and this study envisages a project with an initial production profile up to 1 million pound U3O8 per annum with preliminary economics developed for the Scoping Study indicating an average life of mine Figure 1: Location of Tiris project Uranium Resources 8 Aura has highlighted the very fine nature of the uranium-bearing mineral, carnotite, is one of the key positive attributes of the Tiris project as it is the basis of the low cost beneficiation processes which are key to the attractive economics of the project. However, this fine-grained character, together with the high short-range grade variability inherent in deposits of this type, presents challenges in sampling and handling analogous to those in a nuggetty high grade gold deposit. The carnotite in calcrete deposits tends to occur as small lenses, nuggets and coatings in or on the calcrete. Their distribution varies from deposit to deposit. Calcrete uranium deposits are typically lens-like in section, and hundreds of square meters in plan view. Aura has seen significant grade variability in all its sampling programs, a common feature of deposits of this type. However, this inherent variability requires understanding and management in upgrading resources to Measured and Indicated status where tight grade tolerance is required. In general, variability reduces as sample size increases, and for that reason the 2015 drilling employed a larger diameter drill bit to that used in the earlier resource drilling programmes resulting in a 50% greater sample size. However, even with the larger sample size grade variability has still been relatively high. During 2015-16 Aura continued to conduct testwork and validation work aimed at defining optimal protocols for the recovery of adequately representative samples. This work will continue in 2016-17 and whilst it is time consuming and expensive, it is important it is undertaken now so that Aura can optimise its material handling and sampling protocols to ensure the best project outcomes during operation. In order to attain the high level of confidence required for the grade applied in Measured Resources estimates, which is generally considered to be around +/- 10%, and given the inherent high grade variability in calcrete deposits, further verification/validation programmes are under contemplation and planning.  These include: • Downhole gamma logging • Disequilibrium testwork • Trenching of the mineralisation • Detailed ground radiometric surveying Aura is continuing to progress the Feasibility Study for the Tiris project with a current date for completion by the end of 2017. TIRIS DEVELOPMENT STATEGY SIMPLE PATH TO CASHFLOW – ‘Perfect World Scenario’ TIRIS POTENTIAL PRODUCTION LATE 2018 TIRIS CONSTRUCTION START END 2017 TIRIS FEASIBILITY STUDY IN 12 MONTHS CONTINUE TO ASSESS NEW OPPORTUNITIES 2016 2017 2018 AURA ENERGY LIMITED: ANNUAL REPORT 2015/16opErAtioN’s rEviEw 9 HÄGGÅN PROJECT – 100% SWEDEN The Häggån project is one of the world’s largest undeveloped uranium deposits and is strategically located within Western Europe. With an Inferred Resource of 803 million pounds U3O8, the deposit is an important source of uranium for Europe and potentially Sweden, which is 50% nuclear dependent for electricity, and therefore provide energy self-sufficiency for many decades. Aura believes that whilst the Häggån project is a large and relatively expensive project undertaking it is also an extremely valuable project which, in due course, will be profitable long-life mine in one of the most stable countries in the world. During 2015-16 planning on the Häggån Project was undertaken to commence a programme of community engagement on the project including presentations on both the regional benefits of the project and the operating aspects of the project. TASIAST SOUTH GOLD PROSPECT Given Aura’s strong technical team it has maintained a readiness to purchasing further assets which it considers to be aligned with its existing business. As a result towards the end of the financial year Aura secured the rights to acquire 175 km2 of prospective gold tenements covering two under-explored mineralised greenstone belts in Mauritania. The areas lie along strike from Kinross’ giant 21 Moz Tasiast gold mine and also from Algold’s Tijirit gold project. The two areas are currently held under exploration permit applications and are expected to be granted in the near future. These highly prospective gold areas represent an excellent opportunity in lightly explored Archean greenstone belts and will leverage Aura’s extensive operating experience in this part of the world. The tenements are favourably located 200 km from Nouakchott, 60 km from the coast, and can be managed efficiently within the company’s existing management resources without distraction from Aura’s core uranium focus. The tenements cover portions of the Tasiast and Tijirit greenstone belts and have only been explored previously by one other company which was forced to suspend activities in the mineral industry downturn in 2012, despite having located zones of significant gold mineralisation. Members of Aura’s current technical team were involved in this previous work and are well acquainted with the area. Previous exploration for gold on these permit areas also located strongly anomalous nickel values in several areas, associated with ultramafic rocks. In parts of the tenements high nickel values are associated with anomalous copper highlighting potential for nickel-copper sulphide mineralisation, as occurs in the greenstone belts of Australia and Canada. At this stage there has been no follow-up work carried out on these nickel targets. Aura’s Tasiast South project area has the following attributes: • Tenements over two lightly explored greenstone belts covering 175 km2 • The 20 Moz Tasiast gold mine is nearby on the same greenstone belt and highlights the potential for major deposits in the region (See Fig 2) • $3 million has been expended by the previous explorer on airborne geophysics, reverse circulation and air-core drilling, and sampling • Broad zones of gold mineralisation have been identified with strong similarities to the Tasiast gold mine mineralisation and alteration • No testing deeper than 150m with most previous holes less than 100m • High grade drill intersections have been reported by others in the district from both past and current programme, including one programmes in progress with Algold Resources (a TSX-listed entity), which highlight the current interest and potential in these poorly tested belts Next steps envisaged at the Tasiast South project are: • Ground electrical geophysics to locate the strongest zones of disseminated sulphide development for drill targeting • Additional bedrock sampling by air-core or auger-drilling to better define the high nickel ultramafics and zones of copper/nickel for follow up drilling • Deep drill testing of targets defined 10 SODA ASH AND LITHIUM SABKHA Similar to its gold acquisition a Sabkha (salt pan) was identified during the Competent Persons Review of Aura Energy’s projects for the AIM listing by the Independent Expert, Wardell Armstrong International Limited (WAI). Tenements covering two large Sabkhas (salt pans) in the region of its Tiris project have been applied for with a view to exploring this formation for soda ash and other minerals. Soda ash is the leach agent proposed for the Tiris project and if the source is confirmed it would provide significant benefits to the Tiris project economics. Importantly Sabkha’s are also known sources of other minerals including lithium. The WAI review noted; “On the return trip from the Tiris East uranium project, the route crosses a very wet clay-rich “pan” or Sabkha. The surface and geological setting of the pan was strongly reminiscent of pans known to Mr Moseley in other parts of Africa that are being investigated for lithium and other valuable salts.” The Sabkhas which are 165 km from Hippolyte are large on a relative basis covering an area of over 85 km2. Sabkha is an Arabic name for a salt-flat that has come into general use in sedimentology. They are also known as “Salars” in South America and generically as salt pans or flats. The valuable salts can occur in the Sabkha environment either in clays at or near surface or in brine reservoirs deeper in the lake sediments. The location of the Sabkha between the Tiris project’s east and west tenements provides a favourable location should a source of soda ash (Na2CO3) be identified. The Tiris project 2014 Scoping Study identified the need for up to 16,000 tonnes of soda ash which, including transport, would account for approximately 25% of Tiris’ operating costs. Utilising a nearby source of soda ash has the potential to significantly reduce these costs. Additionally potential for revenue from other minerals such as lithium or back- loading soda ash to port for export would further reduce the Tiris project operating cost. Sabkha relative to the Aura Uranium Licences AURA ENERGY LIMITED: ANNUAL REPORT 2015/16opErAtioN’s rEviEw 11 CORPORATE AIM LISTING One of Aura’s key activities during the 2016 year was the pursuit of a London Stock Exchange AIM listing and fund raising. On Monday, 12th September Energy Limited listed on AIM with the stockcode: AURA. The listing has been an outstanding success with the share price trading at a premium since listing and large volumes being traded in both markets. With the increase in issued capital and the increase in the price Aura’s share market capitalisation has more than doubled as a result of this listing. The AIM listing and parallel Australian Placement resulted in the Company raising £2.85 million (AUD$5.0 million) before expenses by way of a placing of approximately 254 million new ordinary shares at £0.0114 (AUD$0.02) per share. Aura Energy has always believed that, given our European and African focus, dual listing on AIM was both an attractive option for Aura and a natural marketplace for the company. This decision has been vindicated. GPEC DEVELOPMENT MOU Aura previously advised that it had entered into a Development MoU with China Energy Engineering Group Guangdong Power Engineering Company Ltd (GPEC) on 4th February 2016 which outlined that GPEC would provide certain engineering, equipment supply services and possible finance for development of Tiris project in Mauritania. During the year Aura continued negotiations with GPEC and supplied them with a detailed engineering contract covering all aspects of the GPEC’s Engineering Procurement and Construction Management (EPCM) role. Since this was provided GPEC has undertaken active review and the engineering contract is in detailed evaluation with five separate departments within GPEC and is progressing through GPEC’s required internal processes. Aura continues to pursue several parallel strategies to ensure development of the Tiris project. The MoU with GPEC is an important aspect of this search as it not only provides a very cost effective development option for the high margin Tiris project but also provides Aura, and the Tiris project broad exposure to the extraordinary expansion of the Chinese nuclear industry. Aura’s Development MoU outlines for GPEC to provide the following main elements: • EPCM services for the Tiris project • Equipment financing for service of the Tiris project • Procurement services for the Tiris project’s major equipment • Procurement of required power infrastructure for the Tiris project • Seek finance parties for completion of the Production Finance Package • Introduction of further parties for the purpose of investment, project construction, processing, engineering studies and product marketing for the Tiris project • Facilitate direct investment by Chinese partners to assist with the development of the Tiris project • Endeavour to introduce parties to negotiate offtake agreements for the Tiris project GPEC is an engineering firm based in Guangdong China and operates within a group of companies under the parent company China Energy Engineering Group Company Ltd (CEEC). GPEC’s main activities are the engineering and construction management within the power industry having completed several nuclear, coal and LNG gas fired power stations as well as significant power related infrastructure projects. 12 URANIUM MARKET The World Nuclear Association has stated that China presently has 30 nuclear reactors in operation and another 24 under construction.  By 2020-21 China will generate 58 GWe from nuclear power and 150 GWe by 2030. The Chinese nuclear power development programme is not dependent on Chinese economic growth as the development programme is a focused government commitment to meet massive base load energy demand and to do so in an environmentally acceptable manner with reduction in air pollution being the public policy priority. This development agreement with CEEC/GPEC place Aura in the group of companies that can take advantage of this growth. As the chart below confirms the requirement for new uranium supply is significant over the coming years. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16opErAtioN’s rEviEw 13 Aura’s project cash cost versus U308 price US$/lb U₃O₈ 70 60 50 40 30 20 10 $30/lb 0 Tiris * Trade Tech Report June 2016 Aura Assumed SS Pricing U₃O₈ ~US$65/lb Contract U₃O₈ Price – US$42/lb* Spot U₃O₈ Price – US$26.10/lb* $13.5/lb Häggån Historical Spot (grey) and LT Contract (blue) sales for U3O8. Note the very low level of contract sales in 2013 and 2014 – A potential driver for U3O8 price recovery 14 DIRECTORS’ REPORT Your Directors present their report together with the financial statements of the Group, being the company and its controlled entities, for the financial year ended 30 June 2016. DIRECTORS The names of Directors in office at any time during or since the end of the year are: PETER REEVE Executive Chairman and Managing Director Peter Reeve has been involved in the Australian resources industry for approximately 25 years and, as a professional metallurgist, has held positions with Rio Tinto, Shell-Billiton, Newcrest Mining and Normet Consulting. For seven years Peter worked at JB Were as a Resource Specialist Fund Manager and a Resource Corporate Finance Director. He has been a management consultant in South Africa and was involved in an African iron ore start-up. Peter was Managing Director and Chief Executive Officer of Ivanhoe Australia, which he co-founded with Robert Friedland, and was a Director of both EXCO Resources and Emmerson Resources. Peter’s specialisation is the development of company strategy and the commercialisation of projects, and alignment with the global investment community and international resource corporations. DR. BOB BEESON Non-Executive Director Dr. Bob Beeson is a professional geologist with over 35 years’ experience in mineral exploration and development. He has held senior management positions with Billiton Australia, Acacia Resources, North Limited and New Hampton Goldfields and has extensive experience in leading and managing teams in many regions of the world. He was Managing Director of Aura Energy Ltd since its listing in 2006 and in 2015 vacated the position and is now Non-Executive Director. He is also a Non-Executive Director of Drake Resources Limited. Highlights of Dr. Beeson’s specific uranium exploration experience include: • Led major geochemical exploration programmes for sediment-hosted and magmatic uranium deposits throughout South Africa; • Specialist geochemist in a multi- national team in the Middle East; • Conducted major review and targeting programme of the Alligator Rivers Uranium field for Mobil Energy Minerals; • Led Aura’s team that has made greenfields uranium discoveries in Sweden, West Africa and Western Australia. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16DirECtors' rEport 15 BRETT FRASER Non-Executive Director JULIAN PERKINS Non-Executive Director Mr Fraser is a qualified accountant with more than 29 years’ experience in the mining, finance and securities industry Mr Fraser is an experienced company executive having served as a director and been involved in governance, negotiation, finance, development, forensic accounting and operation for a number of private and ASX listed companies. As the founder or officer of businesses in mining, securities trading, the beverage industry, media, leisure health and corporate finance Mr Fraser has extensive knowledge and skills in company operations. Mr Fraser is the Non-Executive Chairman of Blina Minerals, Non-Executive Chairman of Drake Resources Limited, former Chairman of Doray Minerals Ltd and the Securities Institute Education, WA chapter, and also a former director of Gage Roads Brewing Co and Brainytoys Limited. Mr Fraser holds a Bachelor of Business degree, is a Fellow of Certified Practising Accountants, is a Fellow of the Financial Services Institute of Australasia and has completed post graduate studies in finance and marketing. Mr Julian Perkins has over 40 years’ experience in the global minerals industry. He has held senior technical management positions in Australia for AngloGold Ashanti Ltd, Acacia Resources Ltd, Shell Australia, and prior to that for Billiton International Metals (part of the Shell Group) in the Netherlands. He has degrees in mining and metallurgical engineering, with operational experience in underground mining in South Africa and the metallurgical operations at Nchanga on the Zambian Copperbelt. He is a Graduate of the Australian Institute of Company Directors. Mr Perkins has extensive experience in research and development. He was head of the mineral processing department at the Arnhem metals research centre of Shell Research in the Netherlands for three years. In Australia he was Chairman of the Board of Parker Centre Ltd, which managed the A J Parker Cooperative Research Centre (CRC) for Hydrometallurgy from 2006 to 2012, having been a director prior to that. He has also been a director on the boards of the Cooperative Research Centre for Mining and the Australian Centre for Mining Environmental Research. He designed and managed the early metallurgical testwork and flowsheet design for both of Aura’s projects. He has been a non-executive director of Aura Energy Limited since 2011. Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. COMPANY SECRETARY The following person held the position of Company Secretary at the end of the financial year: JOHN MADDEN Company Secretary (from 31 March 2016 to 30 June 2016) John started his career with Rio Tinto Limited (formerly CRA Limited) and held a number of positions in accounting, planning, business analysis and taxation as well as the acquisitions group. Between 1996 and 2000, John was the Manager- Finance for Rio Tinto at the Grasberg copper-gold project in West Papua. On leaving Rio Tinto in 2000, John worked in Papua New Guinea for three years on the Hidden Valley/Wafi gold projects feasibility studies and for five years on the Tampakan copper-gold project in the Philippines where he was the General Manager- Commercial & Company Secretary for Indophil Resources NL. John has provided strategic and commercial advice as well as specialist financial modelling services to OK Tedi Mining Limited, Intrepid Mines Limited, the Australian Iron Ore Joint Venture and Mesa Minerals Limited from 2008 to 2011. John has extensive commercial and legal experience in Francophone Africa as he co-founded Indian Pacific Resources Limited, a Madagascar-based iron ore explorer and served as an executive officer from 2011 to 2015. SF ZILLWOOD Company Secretary (from 1 July 2015 to 31 March 2016) 16 NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES The principal activities of the Group during the financial year were the exploration and evaluation of its projects in Sweden and Mauritania. REVIEW OF OPERATIONS OPERATION REVIEW A detailed review of the Group’s exploration activities is set out in the section entitled Operations Review on page 6 in this annual report. CORPORATE GOVERNANCE STATEMENT Details of the Company’s corporate governance practices are included in the Corporate Governance Statement set out on the Company’s website at: www.auraenergy.com.au/governance.html DIVIDENDS PAID OR RECOMMENDED There were no dividends paid or recommended during the financial year ended 30 June 2016. OPERATING RESULTS The consolidated loss for the year amounted to $1,625,775 (2015: $2,493,900). The decrease in the consolidated loss is largely attributable no adjustment to the fair value of exploration projects in Mauritania and Sweden (see Note 11 Exploration and evaluation assets). The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. Details of the Groups assessment in this regard can be found in Note 1. Statement of significant accounting policies-Going concern. The auditor’s report contains an emphasis on matter in this regard. FINANCIAL POSITION The net assets of the Group have increased by $78,881 from 30 June 2015 to $13,840,706 at 30 June 2016. As at 30 June 2016, the Group’s cash and cash equivalent decreased from 30 June 2015 by $625,253 (including foreign exchange movements) to $317,758. The Group had a working capital deficit of $297,004 (2015: $500,426 working capital surplus). The deficit was negetively impacted by the accruing of advisors and consultants costs at balance date which was A$136,914. SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the state of affairs of the Group during the financial year. EVENTS SUBSEQUENT TO REPORTING DATE On the 12 and 16 of September 2016, the Company completed the listing of its shares on the AIM in London and raised $5 million (before costs) at a share price of 2 cents per share. LIKELY DEVELOPMENTS Likely developments, future prospects and business strategies of the operations of the Group and the expected results of those operations have not been included in this report as the Directors believe that the inclusion of such information would be likely to result in unreasonable prejudice to the Group. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16DirECtors' rEport 17 INFORMATION ON DIRECTORS Peter Reeve Qualifications Executive Chairman and Managing Director Bachelor of Applied Sciences. Experience Board member since 13 July 2015 with over 30 years’ experience positions with Rio Tinto, Billiton Australia and Newcrest Mining as well as experience as a Resource Fund Manager and Resources Corporate Finance Director at J B Were & Son. More recently Peter was Chief Executive Officer of Ivanhoe Australia Ltd. Interest in shares and options 9,718,304 ordinary shares in Aura Energy Limited and 35,000,000 options. Directorships held in other listed entities in last 3 years Nil Dr Robert Beeson Director (Non-executive) Qualifications Bachelor of Science with Honours; PhD; Member of the Australian Institute of Geoscientists Experience Board member since 31 March 2006. Geologist with over 35 years of global experience in uranium and other commodity management, exploration and development. Interest in shares and options 5,636,937 ordinary shares in Aura Energy Limited. Directorships held in other listed entities in last 3 years Managing Director of Drake Resources Limited from November 2004 until 31 January 2015. Non-executive director or Drake Resources Limited since 1 February 2015. No other directorships in the past three years. Brett Fraser Director (Non-executive) Qualifications Experience Fellow of Certified Practicing Accountants; Fellow of the Financial Services Institute of Australasia; Grad Dip Finance, Securities Institute of Australia; Bachelor of Business (Accounting); International Marketing Institute - AGSM Sydney. Board member since 24 August 2005. Interest in shares and options 3,957,600 ordinary shares in Aura Energy Limited. Directorships held in other listed entities in last 3 years Current Non-executive director and Chairman of Drake Resources Limited since March 2004, and Non- executive director and Chairman of Blina Diamonds NL since September 2008. Past director of Doray Minerals Limited from October 2009 until November 2011. No other directorships in the past three years. Julian Perkins Director (Non-executive) Qualifications Master of Science (Imperial College of Science & Technology) 1972; Associate of the Camborne School of Metalliferous Mining (Honours) 1967; Fellow of the Australasian Institute of Mining and Metallurgy; Graduate of the Australian Institute of Company Directors. Board member since 7 June 2011. Mr. Perkins has over 40 years’ experience in operations and management with major companies in the international minerals industry. He was Manager of Mining & Technology (Australia) for AngloGold Ashanti Ltd, until 2006. His career includes operating and management roles on the Zambian Copperbelt, leading the mineral processing at Shell Research in the Netherlands before returning to corporate management in Australia. He was Chairman of Parker Centre Ltd for Hydrometallurgy from 2006 to 2012 and previously a director of the CRC Mining and the Australian Centre for Mining Environmental Research. Experience Interest in shares and options 2,861,990 ordinary shares in Aura Energy Limited. Directorships held in other listed entities in last 3 years No other directorships held in other listed entities. 18 MEETINGS OF DIRECTORS During the financial year the board of directors held six meetings (including committees of directors) with the remainder of meetings conducted by way of written resolution. Attendances by each director during the year were as follows: COMMITTEE MEETINGS DIRECTORS’ MEETINGS REMUNERATION COMMITTEE AUDIT COMMITTEE NUMBER ELIGIBLE TO ATTEND NUMBER ATTENDED NUMBER ELIGIBLE TO ATTEND NUMBER ATTENDED NUMBER ELIGIBLE TO ATTEND NUMBER ATTENDED 6 6 6 6 6 5 6 6 - 1 1 1 - 1 1 1 - 2 2 2 - 2 2 2 PD Reeve Dr R Beeson BF Fraser JC Perkins ENVIRONMENTAL REGULATIONS In the normal course of business, there are no environmental regulations or requirements that the Company is subject to. The directors have considered the enacted National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduced a single national reporting framework for the reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current stage of development, the directors have determined that the NGER Act has no effect on the Company for the current, nor subsequent, financial year. The directors will reassess this position as and when the need arises. NON-AUDIT SERVICES During the year ended 30 June 2016, taxation consulting services were provided to the Company by a party related to the auditors, Bentleys. These services amounted to $22,085 (2015: $5,812). Details of remuneration paid to the auditor can be found within the financial statements at Note 4 Auditor’s remuneration. The directors are satisfied that the provision of non-audit services during the year by Bentleys (or by another person or firm on Bentley’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 (Cth). INDEMNIFYING OFFICERS OR AUDITOR During or since the end of the financial year the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows: • The Company has entered into agreements to indemnify all directors and provide access to documents, against any liability arising from a claim brought by a third party against the Company. The agreement provides for the Company to pay all damages and costs which may be awarded against the directors. • The Company has paid premiums to insure each of the directors against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director of the company, other than conduct involving a wilful breach of duty in relation to the Company. The amount of the premium was $9,092 (2015: $9,515). • No indemnity has been paid to auditors of the Group. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16DirECtors' rEport 19 OPTIONS At the date of this report, the unissued ordinary shares of Aura Energy Limited under option (listed and unlisted) are as follows: GRANT DATE DATE OF EXPIRY EXERCISE PRICE NUMBER UNDER OPTION 4 December 2012 4 December 2016 8 March 2014 8 March 2017 12 November 2014 12 November 2018 17 June 2015 10 June 2015 10 June 2015 10 June 2015 10 June 2015 10 June 2015 25 November 2015 23 December 2015 5 February 2016 10 May 2016 17 June 2017 9 June 2018 9 February 2019 9 February 2019 9 February 2020 9 February 2021 25 November 2017 23 December 2017 5 February 2018 9 May 2018 $0.200 $0.048 $0.070 $0.050 $0.100 $0.100 $0.150 $0.150 $0.150 $0.025 $0.025 $0.025 $0.025 200,000 2,600,000 12,500,000 27,226,166 8,750,000 6,250,000 2,500,000 8,750,000 8,750,000 62,111,801 8,163,265 19,979,593 22,943,877 190,724,702 No person entitled to exercise the option has or has any right by virtue of the option to participate in any share issue of any other body corporate. 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 proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not 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 2016 has been received and can be found in the annual report. REMUNERATION REPORT (AUDITED) REMUNERATION POLICY The remuneration policy of the Group has been designed to align director and management objectives with shareholder and business objectives by providing a fixed remuneration component, and offering specific long-term incentives based on key performance areas affecting the Group’s financial results. The board of directors believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best management and directors to run and manage the Group, as well as create goal congruence between directors, executives and shareholders. The policy of the board of directors for determining the nature and amount of remuneration for board members and senior executives of the Group is described in the following paragraphs. The remuneration policy of the Group sets the terms and conditions for executive directors and other senior executives. Due to the rapidly changing circumstances of the Group in recent years, the policy is reviewed annually by the board of directors with the purpose of maintaining alignment of the board and management with the Group’s strategic objectives. Management is also entitled to participate in employee share and option arrangements. All executives receive a base salary which takes into account such factors as length of service and experience, superannuation and share based incentive such as options. The board of directors reviews executive packages annually by reference to the performance of the Group, individual executives and relevant comparable remuneration data from similar listed companies and appropriate industry sectors. Independent expert advice is sought as required. 20 REMUNERATION REPORT (AUDITED) (CONT) The total amount of non-executive directors’ remuneration is proposed by the board of directors from time to time at the Annual General Meeting and is subject to formal approval by shareholders. Within this limit, the board of directors presently remunerates non-executive directors at around the average of those obtained from relevant comparable data from similar listed companies and appropriate industry sectors. A measure of longer-term incentive is provided by the allocation of options to non-executive directors. The board of directors determines remuneration to individual non-executive directors, working within the limit set by shareholders, and taking into account any special duties or accountability. Payments to non-executive directors are not linked to Company performance but in order to align their interest with those of shareholders, non-executive directors are encouraged to hold shares in Aura Energy Limited. Executives and non-executive directors have received a superannuation guarantee contribution as required by law, which increased to 9.5% on 1 July 2014, but do not receive any other retirement benefits. All remuneration paid to non-executive directors and executives is valued at the cost to the Company and is expensed. Options over ordinary shares granted to directors and employees are valued using the Black-Scholes methodology. Details of directors’ and executives’ interests in options as at 30 June 2016 are provided in the Remuneration Report of the financial statements. Following the last AGM, the Company paid outstanding directors’ fees by way of the issues of fully paid shares on an average VWAP basis. The Company proposes to put to shareholders at this year’s AGM a similar mechanism to extinguish outstanding obligations for directors fees. The Chairman became Executive Chairman and Managing Director of the Company with effect on 1 January 2015 and accordingly, is a fulltime employee. The Executive Chairman and Managing Director has agreed to settle 20% of his salary by way of fully paid ordinary shares in the Company. REMUNERATION DETAILS FOR THE YEAR ENDED 30 JUNE 2016 There were no cash bonuses paid during the year and there are no set performance criteria for achieving cash bonuses. The following table of benefits and payment details, in respect to the financial year, the components of remuneration for each member of the key management personnel of the Group: 2016 GROUP KEY MANAGEMENT PERSONNEL SHORT-TERM BENEFITS SALARY, FEES AND LEAVE PROFIT SHARE AND BONUSES NON- MONETARY $ $ $ OTHER $ POST- EMPLOYMENT BENEFITS SUPER- ANNUATION LONG-TERM BENEFITS EQUITY-SETTLED SHARE- BASED PAYMENTS TOTAL OTHER EQUITY OPTIONS COMPEN- SATION CONSISTING OF OPTIONS $ $ $ $ $ % PD Reeve(1) 321,400 Dr R Beeson(2) BF Fraser(2) JC Perkins(2) SF Zillwood(3) JM Madden(4) 40,000 43,800 40,000 - - 445,200 - - - - - - - - - - - - - - - - - - 53,299 39,149 92,448 28,600 3,800 - 3,800 - - 36,200 - - - - - - - 100,000 158,645 608,645 26.06% - - - - - - - - - - 43,800 43,800 43,800 53,299 39,149 - - - - - 100,000 158,645 832,493 19.06% (1) Mr Reeve was issued 3,725,500 fully paid ordinary shares (net of tax) in the Company pursuant to his contract of employment. (2) Emoluments for non-executive directors, Dr R Beeson and Messrs BF Fraser and JC Perkins, include 11 months of accrued entitlements for the financial year ended 30 June 2016 pursuant to Letters of Appointment. The non-executive directors agreed to defer emoluments until such time as the Company had secured significant long-term finance to advance its projects. The board of directors propose to put to shareholders at the 2016 Annual General Meeting a resolution for the non-executive directors to be allotted fully paid ordinary shares in the Company, net of tax, in lieu of cash entitlements to emoluments. The superannuation levy will be paid by way of cash settlement to the superannuation fund nominated by each non-executiv4e director. (3) Mr SF Zillwood is employed by Foster Resources Pty Ltd, a company controlled by Mr SF Zillwood, which provided company secretarial and accounting services to the Company for the period 1 July 2015 to 31 March 2016 pursuant to a consultancy contract, dated 30 December 2013. (4) Mr JM Madden was appointed company secretary and chief financial officer on 31 March 2016 following the decision by Mr SF Zillwood to retire and accordingly, terminate his contractual relationship with the Company. Mr Madden is retained as a contractor and his appointment to the position is subject to a month-by- month arrangement until such time as the Company secures long-term finance to advance its projects. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16DirECtors' rEport 21 REMUNERATION REPORT (AUDITED) (CONT) 2015 GROUP KEY MANAGEMENT PERSONNEL SHORT-TERM BENEFITS SALARY, FEES AND LEAVE PROFIT SHARE AND BONUSES NON- MONETARY $ $ $ OTHER $ POST- EMPLOYMENT BENEFITS SUPER- ANNUATION LONG-TERM BENEFITS EQUITY-SETTLED SHARE- BASED PAYMENTS TOTAL OTHER EQUITY OPTIONS COMPEN- SATION CONSISTING OF OPTIONS $ $ $ $ $ % PD Reeve (1)(2)(10) 330,167 Dr R Beeson(3)(4)(10) 182,650 BF Fraser(5)(6)(10) JC Perkins(7)(8)(10) SF Zillwood(9) 58,333 53,750 - 624,900 - - - - - - - - - - - - - - - - 102,816 102,816 26,833 17,369 5,542 5,106 - 54,850 - - - - - - 50,000 96,704 503,704 19.20% - - - - - - - - 200,019 63,875 58,856 102,819 - - - - 50,000 96,704 929,270 10.14% (1) Mr Reeve was issued 4,612,380 fully paid ordinary shares in lieu of director’s emolument. (2) Mr Reeve was appointed Executive Chairman and Managing Director on 1 January 2015 and as a result, the remuneration paid to Mr Reeve reflects his appointment to his dual role. (3) Mr Beeson was issued 2,566,315 fully paid ordinary shares in lieu of director’s emolument. (4) Mr Beeson retired as Managing Director of Aura Energy Limited on 31 December 2014. As at balance date, 30 June 2015, Mr Beeson is entitled to accrued annual leave and long service amounting to $122,122. At the date of this Remuneration Report the Company is in discussion with Mr Beeson over other matters relating to his contract of employment. (5) Mr Fraser was issued 729,290 fully paid ordinary shares in lieu of director’s emolument. (6) Wolfstar Group Pty Ltd, a company controlled by Mr Fraser, provided financial services to Aura Energy Limited during the financial year. These services were provided indirectly by Mr Fraser and have therefore not been included in remuneration. (7) Mr Perkins was issued 1,936,042 fully paid ordinary shares in lieu of director’s emolument. (8) RRI Trust, a company controlled by Mr Perkins, provided metallurgical consulting services to the Aura Energy Limited during the year. (9) The Company Secretary and CFO, Stan Zillwood is employed by Foster Resources Pty Ltd, a company controlled by Mr Zillwood, to provide services to the Group under a contract dated 30 December 2013. (10) Amounts disclosed for Equity settled share-based payments exclude share-based payments accrued in 2014 but settled in the 2015 financial year. (11) Other transactions with key management personnel are set out on page 25. SERVICE AGREEMENTS The Executive Chairman and Managing Director, Peter Reeve, is employed under a contract of employment, effective 1 January 2015. The employment deed stipulates a four weeks’ resignation period. The Company may terminate the employment contract without cause by providing four weeks’ written notice, or making payment in lieu of notice based on the individual’s annual salary component. If employment is terminated other than for serious misconduct, and the employee is not then otherwise in default of this contract and his employment, the Managing Director will, in connection with his retirement from the office, receive in addition to the required four weeks’ notice period, three months’ salary. An additional benefit may be paid in the amount of one month for every year of service. This is subject to the provisions of the Corporations Act 2001 (Cth), which may require shareholder approval. SHARE-BASED COMPENSATION a. Incentive Option Scheme Options are granted under the Aura Energy Limited Incentive Option Scheme. All staff who have been continuously employed by the Company for a period of at least one year are eligible to participate in the plan. Options are granted under the plan for no consideration. b. Director and Key Management Personnel Options On 9 June 2015, the Company granted the Executive Chairman and Managing Director the following options over ordinary shares: • 8,750,000 at an exercise price of $0.10 each. The options are exercisable on or before 9 June 2018. • 6,250,000 at an exercise price of $0.10 each. The options are exercisable on or before 9 February 2019. • 2,500,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 June 2019. • 8,750,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 June 2020. • 8,750,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 June 2021. As at the date of this report, all options over ordinary shares previously granted to non-executive directors have expired. 22 REMUNERATION REPORT (AUDITED) (CONT) c. Share-based Payments The terms and conditions relating to options granted as remuneration during the year to directors and key management personnel are as follows: 2016 GROUP KEY MANAGEMENT PERSON GRANT VALUE $ (NOTE 1) GRANT DATE REASON FOR GRANT VESTING DATE PD Reeve 10 Jun 2015 10 Jun 2015 10 Jun 2015 10 Jun 2015 66,436 57,884 19,445 87,364 Note 1 9 Jun 2016 Note 1 9 Feb 2016 Note 1 9 Feb 2016 Note 1 9 Feb 2017 10 Jun 2015 103,555 Note 1 9 Feb 2018 PERCENTAGE VESTED DURING YEAR % PERCENTAGE FORFEITED DURING YEAR % PERCENTAGE REMAINING AS UNVESTED % EXPIRY DATE RANGE OF POSSIBLE VALUES RELATING TO FUTURE PAYMENTS 100 100 100 - - - - - - - - 9 Jun 2018 - 9 Feb 2019 - 9 Feb 2019 100 9 Feb 2020 100 9 Feb 2021 - - - - - Note 1. The options have been granted to the Executive Chairman and Managing Director as part of his remuneration and for future performance. The vesting conditions of the options are as follows: • Tranche 1: vest at immediately, exercisable at 10 cents, expire 9 June 2018. • Tranche 2: vest at 8 months from issue, exercisable at 10 cents, expire 9 February 2019. • Tranche 3 vest at 8 months from issue, exercisable at 15 cents, expire 9 February 2019. • Tranche 4: vest at 20 months from issue, exercisable at 15 cents, expire 9 February 2020. • Tranche 5 vest at 32 months from issue, exercisable at 15 cents, expire 9 February 2021. Details of all Share-Based Payments in existence during the year can be found at Note 19 Share-Based Payments. 2015 GROUP KEY MANAGEMENT PERSON GRANT VALUE $ (NOTE 1) GRANT DATE REASON FOR GRANT VESTING DATE PERCENTAGE VESTED DURING YEAR % PERCENTAGE FORFEITED DURING YEAR % PERCENTAGE REMAINING AS UNVESTED % EXPIRY DATE RANGE OF POSSIBLE VALUES RELATING TO FUTURE PAYMENTS PD Reeve 10 Jun 2015 10 Jun 2015 10 Jun 2015 10 Jun 2015 66,436 57,884 19,445 87,364 Note 1 9 Feb 2016 Note 1 9 Feb 2016 Note 1 9 Feb 2017 Note 1 9 Jun 2016 100 10 Jun 2015 103,555 Note 1 9 Feb 2018 - - - - - - - - - - 9 Jun 2018 100 9 Feb 2019 100 9 Feb 2019 100 9 Feb 2020 100 9 Feb 2021 - - - - - Note 1. The options have been granted to the Executive Chairman and Managing Director as part of his remuneration and for future performance. The vesting conditions of the options are as follows: • Tranche 1: vest at immediately, exercisable at 10 cents, expire 9 June 2018. • Tranche 2: vest at 8 months from issue, exercisable at 10 cents, expire 9 February 2019. • Tranche 3 vest at 8 months from issue, exercisable at 15 cents, expire 9 February 2019. • Tranche 4: vest at 20 months from issue, exercisable at 15 cents, expire 9 February 2020. • Tranche 5 vest at 32 months from issue, exercisable at 15 cents, expire 9 February 2021. Details of all Share-Based Payments in existence during the year can be found at Note 19 Share-Based Payments. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16DirECtors' rEport 23 REMUNERATION REPORT (AUDITED) (CONT) d. Description of Options Issued as Remuneration Details of the options over ordinary shares granted as remuneration to those KMP listed in the previous tables are as follows: GRANT DATE ISSUER ENTITLEMENT ON EXERCISE 10 Jun 2015 10 Jun 2015 DATES EXERCISABLE From vesting date to 9 Jun 2018 (expiry) 9 Feb 2019 (expiry) 10 Jun 2015 Aura Energy Ltd 1:1 ordinary shares 9 Feb 2019 (expiry) 10 Jun 2015 10 Jun 2015 9 Feb 2020 (expiry) 9 Feb 2021 (expiry) EXERCISE PRICE $ VALUE PER OPTION AT GRANT DATE $ AMOUNT PAID/ PAYABLE BY RECIPIENT $ 0.10 0.10 0.15 0.15 0.15 0.0076 0.0093 0.0078 0.0100 0.0118 - - - - - - Options over ordinary shares values at grant date were determined using the Black-Scholes method. Details relating to service and performance criteria required for the vesting of options over ordinary shares have been provided in the within the financial statements at Note 19. Share-based payments. KEY MANAGEMENT PERSONNEL (KMP) EQUITY HOLDINGS a. Fully paid ordinary shares of Aura Energy Limited held by each KMP 2016 GROUP KEY MANAGEMENT PERSON BALANCE AT START OF YEAR NO. RECEIVED DURING THE YEAR AS COMPENSATION NO. RECEIVED DURING THE YEAR ON THE EXERCISE OF OPTIONS NO. OTHER CHANGES DURING THE YEAR (1) NO. BALANCE AT END OF YEAR NO. PD Reeve RF Beeson BF Fraser JC Perkins SF Zillwood JM Madden 5,442,804 5,636,937 3,957,600 2,861,990 - - 3,725,500 - - - - - 17,899,331 3,725,500 (1) During the financial year Mr PD Reeve purchased ordinary shares in the Company on the market. 2015 GROUP KEY MANAGEMENT PERSON BALANCE AT START OF YEAR NO. RECEIVED DURING THE YEAR AS COMPENSATION NO. RECEIVED DURING THE YEAR ON THE EXERCISE OF OPTIONS NO. PD Reeve Dr R Beeson BF Fraser JC Perkins SF Zillwood 664,830 2,730,216 2,676,310 740,758 - 4,611,766 2,566,315 729,290 1,936,042 - 6,812,114 9,843,413 - - - - - - - - - - - - - 550,000 - - - - - 9,718,304 5,636,937 3,957,600 2,861,990 - - 550,000 22,174,831 OTHER CHANGES DURING THE YEAR(1) NO. BALANCE AT END OF YEAR NO. 166,208 340,406 552,000 185,190 - 5,442,804 5,636,937 3,957,600 2,861,990 - 1,243,804 17,899,331 (1) Other changes during the year relate the participation of directors in equity raising initiatives as well as on-market purchases. 24 REMUNERATION REPORT (AUDITED) (CONT) b. Options of Aura Energy Limited held by each KMP 2016 GROUP KEY MANAGEMENT PERSON BALANCE AT START OF YEAR NO. GRANTED AS REMUNERATION DURING THE YEAR NO. EXERCISED DURING THE YEAR NO. OTHER CHANGES DURING THE YEAR NO. BALANCE AT END OF YEAR NO. VESTED AND EXERCISABLE NO. PD Reeve(1) Dr R Beeson(2) BF Fraser(3) JC Perkins(4) SF Zillwood JM Madden 2015 39,333,104 2,295,205 901,000 1,392,595 - - 43,921,904 - - - - - - - GROUP KEY MANAGEMENT PERSON BALANCE AT START OF YEAR NO. PD Reeve(1) Dr R Beeson(2) BF Fraser(3) JC Perkins(4) SF Zillwood 6,250,000 6,520,710 2,326,579 2,556,667 - GRANTED AS REMUNERATION DURING THE YEAR NO. 35,000,000 EXERCISED DURING THE YEAR NO. - - - - 17,653,956 35,000,000 - - - - - - - - - - - - - (2,333,104) 37,000,000 19,500,000 (170,205) (276,000) (142,595) - - 2,125,000 625,000 1,250,000 - - 2,125,000 625,000 1,250,000 - - (2,921,904) 41,000,000 23,500,000 OTHER CHANGES DURING THE YEAR NO. BALANCE AT END OF YEAR NO. VESTED AND EXERCISABLE NO. (1,916,896) 39,333,104 13,000,000 (4,225,505) (1,425,579) (1,164,072) - 2,295,205 901,000 1,392,595 - 2,295,205 901,000 1,392,595 - (8,732,052) 43,921,904 17,588,800 (1) Mr Reeve was issued 83,104 options over ordinary shares pursuant to the non-renounceable rights issue on 5 September 2014 and 2,000,000 options over ordinary shares previously granted to Mr Reeve expired during the financial year. (2) Mr Beeson was issued 274,495 options over ordinary shares pursuant to the non-renounceable rights issue on 5 September 2014 and 4,500,000 options over ordinary shares previously granted to Mr Beeson expired during the financial year. (3) Mr Fraser was issued 74,421 options over ordinary shares pursuant to the non-renounceable rights issue on 5 September 2014 and 1,500,000 options over ordinary shares previously granted to Mr Fraser expired during the financial year. (4) Mr Perkins was issued 85,928 options over ordinary shares pursuant to the non-renounceable rights issue on 5 September 2014 and 1,250,000 options over ordinary shares previously granted to Mr Perkins expired during the financial year. LOANS TO KEY MANAGEMENT PERSONNEL There are no loans made to directors of Aura Energy as at 30 June 2016 (2015: nil). AURA ENERGY LIMITED: ANNUAL REPORT 2015/16REMUNERATION REPORT (AUDITED) (CONT) OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL Wolfstar Group Pty Ltd Financial services provided by Wolfstar Group Drake Resources Limited Amounts due to Drake Resources for other services. Amounts due from Drake Resources for other services provided by Aura Energy Limited staff RRI Trust Mr Perkins provides metallurgical consulting services to the Group that is charged through the RRI Trust, being a trust associated with Mr Perkins Amounts owing to KMP Payable for unpaid fees PD Reeve Dr R Beeson BF Fraser JC Perkins SF Zillwod JM Madden DirECtors' rEport 25 2016 $ - - - - - 40,150 40,150 40,150 - 18,840 2015 $ 24,503 2,576 53,590 9,628 - - - - 28,527 - There have been no other transactions involving equity instruments other than those described in this Annual Report. This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001 (Cth). P D Reeve Executive Chairman and Managing Director Dated this Thursday, 29 September 2016 26 AUDITOR’S INDEPENDENCE DECLARATION AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 27 FINANCIAL STATEMENTS For tHE YEAr ENDED 30 JUNE 2016 28 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 Continuing operations Revenue Other income Project partnering and divestment Accounting and audit fees Business development Computers and communications Depreciation Employee benefits Finance Costs Impairment of exploration expenditure previously capitalised Insurance Consulting fees and corporate advisory Public relations Rent and utilities Share-based payments Share registry and listing fees Travel and accommodation Write-off of exploration assets AIM listing costs Other expenses Loss before income tax Income tax benefit Loss from continuing operations Other comprehensive income, net of income tax Items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Foreign currency movement Other comprehensive income for the year, net of tax NOTE 2 2 4 10 19 3 5 2016 $ 4,907 - 4,907 - 2015 $ 19,159 3,064 22,223 (3,757) (149,416) (126,869) - (44,193) (1,602) (711,929) (8,171) (6,000) (27,150) (4,676) (638,556) (60,564) - (1,045,240) (51,378) (223,149) (22,472) (39,847) (158,645) (79,385) (49,273) (51,461) (165,840) (22,529) (39,451) (182,309) (67,526) (33,168) (96,704) (63,522) (92,836) (12,026) - (15,769) (1,774,383) (2,493,900) 148,608 - (1,625,775) (2,493,900) 31,563 31,563 13,327 13,327 Total comprehensive income attributable to members of the parent entity (1,594,212) (2,480,573) Earnings per share: Basic loss per share (cents per share) ¢ ¢ 6 (0.41) (0.93) The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016 Current assets Cash and cash equivalents Trade and other receivables Financial assets Total current assets Non-current assets Plant and equipment Exploration and evaluation assets Total non-current assets Total assets Current liabilities Trade and other payables Short-term provisions Borrowings Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total Equity The consolidated statement of financial position is to be read in conjunction with the accompanying notes. FiNANCiAL stAtEMENts 29 NOTE 2016 $ 2015 $ 7 8 9 10 11 12 13 14 15 16 317,758 57,708 43,625 419,091 943,011 96,282 44,157 1,083,450 - 1,602 14,137,710 14,137,710 13,259,797 13,261,399 14,556,801 14,344,849 550,844 165,251 - 716,095 716,095 401,345 138,639 43,040 583,024 583,024 13,840,706 13,761,825 32,784,203 31,311,988 1,029,542 901,252 (19,973,039) (18,451,415) 13,840,706 13,761,825 30 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016 Balance at 1 July 2014 27,935,558 (16,474,803) 749,118 489,001 12,698,874 ISSUED CAPITAL $ ACCUMULATED LOSSES $ OPTIONS RESERVE $ FOREIGN EXCHANGE TRANSLATION RESERVE $ TOTAL $ Balance at 1 July 2015 31,311,988 (18,451,415) 398,924 502,328 13,761,825 Loss for the year attributable owners of the parent Other comprehensive income for the year attributable owners of the parent Total comprehensive income for the year attributable owners of the parent Transaction with owners, directly in equity Shares issued during the year Transaction costs Options expired during the year Options exercised during the year Options issued during the year Balance at 30 June 2015 - - - (2,493,900) - (2,493,900) 3,691,230 (314,800) - - - - - - - 517,288 (517,288) - - - 31,311,988 (18,451,415) Loss for the year attributable owners of the parent Other comprehensive income for the year attributable owners of the parent Total comprehensive income for the year attributable owners of the parent Transaction with owners, directly in equity - - - (1,625,775) - (1,625,775) Shares issued during the year Transaction costs Options expired during the year Options exercised during the year Options issued during the year Balance at 30 June 2016 1,579,816 (107,601) - - 104,151 (104,151) - 200,878 495,651 32,784,203 (19,973,039) The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes - 167,094 398,924 - - - - - - - - - - - - (2,493,900) 13,327 13,327 13,327 (2,480,573) - - - - - 3,691,230 (314,800) - - 167,094 502,328 13,761,825 - (1,625,775) 31,563 31,563 31,563 (1,594,212) - - - - - 1,579,816 (107,601) - - 200,878 533,891 13,840,706 AURA ENERGY LIMITED: ANNUAL REPORT 2015/16CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016 Cash flows from operating activities Receipts from customers Interest received Payments to suppliers and employees Payments for exploration expenditure Rebate received for Research and Development Net cash used in operating activities Cash flows from investing activities Purchase of plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Capital raising costs Net cash provided by financing activities Net increase/(decrease) in cash held Cash at 1 July Change in foreign currency held Cash at 30 June The statement of cash flows is to be read in conjunction with the accompanying notes. FiNANCiAL stAtEMENts 31 NOTE 2016 $ 4,907 2015 $ - 19,159 (892,505) (1,074,840) (1,190,561) (1,438,205) 148,608 - 18a (1,929,551) (2,493,886) - - (3,285) (3,285) 1,365,639 (59,324) 1,306,315 (623,236) 943,011 (2,017) 317,758 3,065,806 (186,723) 2,879,083 381,912 570,478 (9,379) 943,011 7 32 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Since the end of the financial year, the Company has completed its AIM listing as well as an Australian Placement and has raised A$5,002,677 in new equity (before costs).  The directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month period from the date of signing this financial report. iv. Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Judgements made by management in the application of Australian Accounting Standards that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in Note 1r Critical accounting estimates and judgments. v. Comparative figures Where required by Accounting Standards comparative figures have been adjusted to conform with changes in presentation for the current financial year. NOTE1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES These are the consolidated financial statements and notes of Aura Energy Limited and controlled entities (“Consolidated Group” or “Group”). Aura Energy Limited is a company limited by shares, domiciled and incorporated in Australia. The separate financial statements of the parent entity, Aura Energy Limited, have not been presented with this financial report as permitted by the Corporations Act 2001 (Cth). a. Basis of preparation i. Statement of compliance The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 (Cth). 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 to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of these financial statements are presented below. They have been consistently applied unless otherwise stated. The financial statements were authorised for issue on 30 September 2016 by the directors of the Company. ii. Financial position The financial statements have been prepared on an accruals basis and are based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. iii. Going concern The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Group incurred a loss for the year of $1,625,775 (2015: $2,493,900 and a net cash out-flow from operating activities of $1,929,551 (2015: $2,493,886) As at 30 June 2016, the Group had working capital deficit of $297,004 (2015: $500,426 working capital). The Company has no debt component in its working capital following the conversion by Australian Special Opportunity Fund of its convertible notes into fully paid ordinary shares (2015: $43,040 in convertible notes outstanding). AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 33 NOTE1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) b. Principles of consolidation A controlled entity is any entity over which Aura Energy Limited has the power to govern the financial and operating policies so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered. A list of controlled entities is contained in Note 17 Controlled entities in the financial statements. All inter-group balances and transactions between entities in the Consolidated Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. Where controlled entities have entered (left) the Consolidated Group during the year, their operating results have been included (excluded) from the date control was obtained (ceased). i. Business combinations Business combinations occur when 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 acquire and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions). 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 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 statement of profit or loss and comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. c. Exploration and development expenditure i. Recognition and measurement 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. ii. Subsequent measurement 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 will be 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 capitalise costs in relation to that area of interest. iii. Site restoration and rehabilitation Costs of site restoration will be provided over the life of the project, when such costs are incurred or the Group becomes liable pursuant to a development agreement with government agencies. In the exploration and evaluation phase, all drill holes are collared and any site disturbance is restored with the costs incorporated in the costs of exploration and evaluation. Site restoration costs will 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. d. Income tax 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 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 as unused tax losses. Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items recognised outside profit or loss. 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. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)34 NOTE1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) 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. Where the Group receives the Australian Government’s Research and Development Tax Incentive, The Group accounts for the refundable tax offset under AASB 112. Funds are received as a rebate through the parent company’s income tax return and disclosed as such in Note 5 Income tax. e. Plant and equipment i. Recognition and measurement Each class of plant and equipment is measured at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to their present values in determining recoverable amounts. Items of property, plant and equipment are measured at cost less accumulated depreciation (see below) and impairment losses (see Note 1m Impairment of non- financial assets and 1c Exploration and development expenditure). ii. Depreciation The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight line basis over their useful lives to the Consolidated Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciable assets are: Plant and equipment Computers Motor Vehicles 20.00% 33.00% 25.00% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. When re-valued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. f. Employee benefits For the period ending 30 June 2016 the Company has three employees. i. Defined contribution superannuation funds A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions onto a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution superannuation funds are recognised as an expense in the income statement as incurred. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. ii. Short-term benefits Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees’ services provided to the reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that the Company expects to pay at the reporting date including related on-costs, such as workers compensation insurance and payroll tax. Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and services, are expensed based on the net marginal cost to the Company as the benefits are taken by the employees. iii. Other long-term benefits Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 35 NOTE1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) g. Equity-settled compensation The Group operates an employee share ownership scheme. 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. h. Revenue and other income Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Management fees are recognised on portion of completion basis. Gain on disposal of tenements, and revenue from equipment chargebacks, are recognised on receipt of compensation. All revenue is stated net of the amount of value added taxes (see Note 1i Value-added taxes). i. Value-added taxes Value-added taxes (VAT) is the generic term for the broad-based consumption taxes that the Group is exposed to such as: Australia (GST); Sweden (MOMS); and in Mauritanian (VAT). Revenues, expenses, and assets are recognised net of the amount of VAT, except where the amount of VAT incurred is not recoverable from the relevant country’s taxation authority. In these circumstances the VAT is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of VAT. Cash flows are presented in the statement of cash flows on a gross basis, except for the VAT component of investing and financing activities, which are disclosed as operating cash flows. Commitments and contingencies are disclosed net of the amount of VAT recoverable from, or payable to, the taxation authority. j. Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the Group are classified as finance leases. Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the Group will obtain ownership of the asset or over the term of the lease. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. k. Financial instruments i. Initial recognition and measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. 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. ii. Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transactions costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below. iii. Classification and subsequent measurement (1) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-borrowings in current liabilities on the Statement of financial position. (2) Loans Loans 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. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised. Loans are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period. (3) Trade and other receivables Trade and other receivables are stated at amortised cost. Receivables are usually settled within 30 to 90 days. Collectability of trade and other debtors is reviewed on an ongoing basis. An impairment loss is recognised for debts which are known to be uncollectible. An impairment provision is raised for any doubtful amounts. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)36 NOTE1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) (4) Trade and other payables Trade payables and other payable are recognised when the Group becomes obligated to make future payments resulting from the purchase of goods and services which are unpaid and stated at their amortised cost. The amounts are unsecured and are generally settled on 30 day terms. (5) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. (6) Share capital Ordinary issued capital is recorded at the consideration received. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any related income tax benefit. Ordinary issued capital bears no special terms or conditions affecting income or capital entitlements of the shareholders. iv. Amortised cost Amortised cost is calculated as 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. v. Fair value 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. vi. Effective interest method 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) over 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 amount with a consequential recognition of an income or expense item in profit or loss. vii. Impairment A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in Groups that share similar credit risk characteristics. All impairment losses are recognised in the income statement. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in the income statement. viii. Derecognition Financial assets are derecognised where the contractual rights to cash flow expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. ix. Financial income and expenses Finance income comprises interest income on funds invested (including available-for-sale financial assets), gains on the disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Financial expenses comprise interest expense on borrowings calculated using the effective interest method, unwinding of discounts on provisions, changes in the fair value of financial assets at fair value through profit or loss and impairment losses recognised on financial assets. All borrowing costs are recognised in profit or loss using the effective interest method. Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in income in the period in which they are incurred. Foreign currency gains and losses are reported on a net basis. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 37 NOTE1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) l. Earnings per share i. Basic earnings per share Basic earnings (or loss) per share is determined by dividing the profit or loss attributable to equity holders of the parent company, excluding any costs of service equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. ii. Diluted earnings per share Diluted earnings (or loss) per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares which comprise share options granted as share-based payments. The Group does not report diluted earnings per share, as dilution is not applied to annual losses generated by the Group. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss had been recognised. n. Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will results and that outflow can be reliably measured. o. Foreign currency transactions and balances i. Functional and presentation currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. m. Impairment of non-financial assets ii. Transaction and balances The carrying amounts of the Company’s non-financial assets, other than deferred tax assets (Note 1d Income tax) and exploration and evaluation assets (Note 1c Exploration and development expenditure) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset Group that generates cash flows that largely are independent from other assets and Groups. Impairment losses are recognised in the income statement, unless the asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. The recoverable amount of an asset or cash-generating unit is the greater of its fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the profit or loss except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the gain or loss is directly recognised in other comprehensive income, otherwise the exchange difference is recognised in the profit or loss. iii. Group companies The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows: Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date. Income and expenses are translated at average exchange rates for the period. Retained earnings are translated at the exchange rates prevailing at the date of the transaction. Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the profit or loss in the period in which the operation is disposed. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)38 NOTE1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) p. Fair value estimation A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Information about the assumptions made in determining fair values of assets and liabilities is disclosed in the notes specific to that asset or liability. q. Fair value of assets and liabilities The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. i. Valuation techniques In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation techniques to measure the fair value of the asset or liability, the Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the following valuation approaches: (1) Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical or similar assets or liabilities. (2) Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single discounted present value. (3) Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity. Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable. ii. Fair value hierarchy AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows: (1) Level 1 Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. (2) Level 2 Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. (3) Level 3 Measurements based on unobservable inputs for the asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 39 NOTE1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) The Group would change the categorisation within the fair value hierarchy only in the following circumstances: a. b. if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa or if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa. When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (i.e. transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred. r. Critical accounting estimates and judgements The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. i. Key Judgements – Exploration and evaluation expenditure Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. These costs are carried forward in respect of an area that has not at reporting date reached a stage that permits reasonable assessment of the existence of economically recoverable reserves, refer to the accounting policy stated in Note 1c Exploration and development expenditure. The carrying value of capitalised expenditure at reporting date is $14,137,710 (2015: $13,259,797). During the financial year, the Group undertook assessment of its tenement assets, as a result of this assessment, the Group decided to impair some of its exploration assets. Refer to Note 11 Exploration and evaluation assets. ii. Key Judgements – Environmental issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the directors understanding thereof. At the current stage of the Company’s development and its current environmental impact, the directors believe such treatment is reasonable and appropriate. iii. Key Estimate – Taxation Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the best estimates of directors. These estimates take into account both the financial performance and position of the Company as they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents that directors’ best estimate, pending an assessment by tax authorities in relevant jurisdictions. Refer to Note 5 Income tax. iv. Key Estimate — Impairment The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value- in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates. v. Key Estimate – Share-based payments The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model, using the assumptions detailed in Note 19 Share-based payments. s. Application of new, revised and amending Accounting Standards and Interpretations adopted The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group during the financial year. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the group for the annual reporting period ended 30 June 2016. The Group’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the group, are as follows: i. AASB 9 Financial Instruments This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for- trading) in other comprehensive income (‘OCI’). For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity’s own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements will use an ‘expected credit loss’ (‘ECL’) model to recognise an NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)40 NOTE1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT) allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The Group will adopt this standard from 1 July 2018 but the impact of its adoption is yet to be assessed by the Group. ii. AASB 15 Revenue from Contracts and Customers This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity’s statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity’s performance and the customer’s payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The Group will adopt this standard from 1 July 2018 but the impact of its adoption is yet to be assessed by the Group. iii. AASB 16 Leases This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 ‘Leases’ and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a ‘right-of-use’ asset will be capitalised in the statement of financial position, measured as the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a ‘right-of-use’ asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Group will adopt this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the Group. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16NOTE 2. REVENUE AND OTHER INCOME Revenue Interest received from financial institutions Management fees Total Revenue Other income Interest received from financial institutions Total Other Income NOTE 3. LOSS BEFORE INCOME TAX The following significant expense items are relevant in explaining the financial performance: Superannuation expense NOTE 4. AUDITOR’S REMUNERATION Remuneration of the auditor of the Group for: Auditing or reviewing the financial reports Taxation services provided by a related practice of the auditor Other services FiNANCiAL stAtEMENts 41 2016 $ 4,907 - 4,907 - - 2015 $ 19,159 - 19,159 3,064 3,064 2016 $ 2015 $ 36,200 49,362 2016 $ 37,000 2,085 20,000 59,085 2015 $ 38,000 5,812 - 43,812 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT) 42 NOTE 5. INCOME TAX Income tax expense/(benefit) Current tax Deferred tax Tax rebate for research and development Deferred income tax expense included in income tax expense comprises: Increase/(decrease) in deferred tax assets (Increase)/decrease in deferred tax liabilities NOTES 5a 5b 2016 $ - - (148,608) (148,608) - - - 2015 $ - - - - - - - Reconciliation of income tax expense to prima facie tax payable The prima facie tax payable/(benefit) on loss from ordinary activities before income tax is reconciled to the income tax expense as follows: Prima facie tax on operating loss at 30% (2015: 30%) (487,733) (748,170) Add/(less) Tax effect of: Capital-raising costs deductible Impairment of exploration expenditure previously capitalised Share-based payments Write-off of exploration assets Other Deferred tax asset not brought to account Income tax expense/(benefit) attributable to operating loss Less rebates: Tax rebate for research and development Income tax expense/(benefit) The applicable weighted average effective tax rates attributable to operating profit are as follows Balance of franking account at year end (24,749) - 47,594 15,438 2,451 (72,468) 313,572 29,011 20,408 17,251 446,999 440,396 - (148,608) (148,608) % Nil $ Nil - - - % nil $ nil AURA ENERGY LIMITED: ANNUAL REPORT 2015/16 NOTE 5. INCOME TAX (CONT) Deferred tax assets Tax losses Provisions and accruals Other Set-off deferred tax liabilities Net deferred tax assets Less deferred tax assets not recognised Net tax assets Deferred tax liabilities Exploration expenditure Set-off deferred tax assets Net deferred tax liabilities Tax losses Unused tax losses for which no deferred tax asset has been recognised, that may be utilised to offset tax liabilities: Revenue losses Capital losses FiNANCiAL stAtEMENts 43 NOTE 2016 $ 2015 $ 5a 5b 3,895,970 3,330,219 41,173 15,019 57,543 100,245 3,951,970 3,488,007 - 3,951,970 (3,951,970) - 3,488,007 (3,488,007) - - - - - - - - - - 12,482,130 11,100,731 691,104 691,104 13,173,234 11,791,835 Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not been brought to account at 30 June 2016 because the directors do not believe it is appropriate to regard realisation of the deferred tax assets as probable at this point in time. These benefits will only be obtained if: i. The Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the loss and exploration expenditure to be realised. ii. The Group continues to comply with conditions for deductibility imposed by law. iii. No changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the loss and exploration expenditure. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)44 NOTE 6. EARNINGS PER SHARE a. Loss from continuing operations for the year NOTE 2016 $ 2015 $ (1,625,775) (2,493,900) 2016 NO. 2015 NO. b. Weighted average number of ordinary shares outstanding during the year used in calculation of basic EPS 398,625,406 266,928,484 c. Basic and diluted earnings per share (cents per share) 2016 ¢ (0.41) 2015 ¢ (0.93) i. The Group is in a loss making position and it is unlikely that the conversion to, calling of, or subscription for, ordinary share capital in respect of potential ordinary shares would lead to diluted earnings per share that shows an inferior view of the earnings per share. Therefore in the event the Company has dilutionary equity instruments on issue, the diluted loss per share for the year ended 30 June 2016 is the same as basic loss per share, whilst the Company remains loss making. ii. There are 177,249,702 (2015: 74,635,171) options over ordinary shares that have vested. NOTE 7. CASH AND CASH EQUIVALENTS Cash at bank Short-term bank deposits NOTE 7a 2016 $ 317,758 - 317,758 2015 $ 926,987 16,024 943,011 a. The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 24 Financial risk management. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16NOTE 8. TRADE AND OTHER RECEIVABLES Current Value-added tax receivable Trade debtors Other Less: Provision for impairment FiNANCiAL stAtEMENts 45 NOTE 8a 2016 $ 43,346 18,782 648 (5,068) 57,708 2015 $ 72,169 24,261 4,890 (5,038) 96,282 a. Value-added tax (VAT) is a generic term for the broad-based consumption taxes that the Group is exposed to such as: Australia (GST); Sweden (MOMS); and in Mauritanian (VAT). b. The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 24 Financial risk management. NOTE 9. FINANCIAL ASSETS Current Bonds and prepayments NOTE 10. PLANT AND EQUIPMENT Non-current Plant and equipment Accumulated depreciation Motor vehicles Accumulated depreciation Total plant and equipment Movements in carrying amounts Balance at the beginning of year Additions Depreciation expense Carrying amount at the end of year 2016 $ 43,625 43,625 2015 $ 44,157 44,157 2016 $ 2015 $ 160,102 (160,102) - - - - - 1,602 - (1,602) - 160,102 (158,500) 1,602 - - - 1,602 2,994 3,284 (4,676) 1,602 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)46 NOTE 11. EXPLORATION AND EVALUATION ASSETS Non-current Exploration expenditure capitalised: Exploration and evaluation phase at cost Add: Effect of exchange rate changes on exploration and evaluation assets Less: Exploration expenditure impairment Net carrying value a. The value of the Group interest in exploration expenditure is dependent upon: • The continuance of the Group’s rights to tenure of the areas of interest. • The results of future exploration. NOTE 11b 11a,b 2016 $ 2015 $ 14,099,992 37,718 - 14,137,710 14,347,295 (42,258) (1,045,240) 13,259,797 • The recoupment of costs through successful development and exploitation of the areas of interest, or alternatively, by their sale. The Group’s exploration properties may be subjected to claim(s) under Native Title (or jurisdictional equivalent), or contain sacred sites, or sites of significance to the indigenous people of Sweden and Mauritania. As a result, exploration properties or areas within the tenements may be subject to exploration restrictions, mining restrictions and/or claims for compensation. At this time, it is not possible to quantify whether such claims exist, or the quantum of such claims. b. The Group has not recorded any impairment to the carrying value of its Mauritanian and Swedish tenements for the financial year ended 30 June 2016. In the previous year, the Group recorded an impairment of $1,045,240. This impairment arose from the unsuccessful appeal of a decision made by the Swedish mining authorities not to grant an extension to one of the Group’s tenements. As a result, the Group recognised during the financial year, an impairment against the carrying value of the tenement for $243,086. In addition, the Group relinquished the Oued El Foule Nord and Saabia tenements in Mauritania as not being required for the Tiris project. As a result the Group recognised during the financial year, an impairment against the carrying value of the tenements of $802,154. NOTE 12. TRADE AND OTHER PAYABLES Current Unsecured Trade payables Accrued expenses Other taxes payable NOTE 12a 2016 $ 2015 $ 242,496 257,527 50,821 550,844 232,876 102,223 66,246 401,345 a. Trade payables are non-interest bearing and arise from the usual operating activities of the Group. Trade payables and other payables and accruals, except directors’ fees, are usually settled within the lower of terms of trade or 30 days. b. The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 24 Financial risk management. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16 NOTE 13. SHORT-TERM PROVISIONS Current Employee benefits Number of employees at year end NOTE 14. BORROWINGS Current Convertible notes FiNANCiAL stAtEMENts 47 2016 $ 165,251 165,251 2016 NO. 4 2016 $ - - 2015 $ 138,639 138,639 2015 NO. 4 2015 $ 43,040 43,040 a. Short-term borrowings comprise premium funding for insurance policies, repayable within 12 months. b. On 28 February 2014, Aura Energy Limited entered into a financing arrangement to provide up to $3,775,000 over 24 months. Under the agreement with The Australian Special Opportunity Fund, LP, managed by The Lind Partners, LLC, Aura Energy Limited received $325,000, in the form of a $250,000 convertible note and $75,000 as a prepayment for placement of ordinary shares in Aura Energy Limited. Lind will further invest in tranches of $75,000, in monthly share subscriptions, over the next two years. The convertible notes and shares will be issued at a 10% discount to a specified three day volume weighted share price. Further key terms of the agreement are as follows: • The $250,000 convertible note is secured by the issue of 2,200,000 shares. Aura Energy Limited has the ability to repurchase the Note at a premium to the issue price during the first 90 days of the agreement. • An issue of 2,946,378 shares as a commencement fees for the provision of the funding facility. The issue of 2,600,000 options with an exercise price of 4.8 cents and the three year expiration date. The convertible note liability is measured at its present value. During the financial ended 30 June 2015, Lind converted $200,000 of the $250,000 convertible note into 11,111,111 fully paid ordinary shares of the Company. On 11 February 2016, Lind converted $15,000 of its convertible notes into shares under the terms of the Share Placement approved by shareholders at the general meeting on 5 November 2015. Lind was issued 1,224,500 fully paid shares at 1.225 cents per share and 1,224,500 options over ordinary shares at an exercise price of 2.5 cents per option over ordinary share On 18 February 2016, Lind converted the remaining balance, $35,000, of the convertible notes into ordinary shares of the Company in accordance with the financing agreement executed on 28 February 2014. Under the terms of the financing agreement, Lind was entitled to 2,916,667 fully paid ordinary shares of the Company, net of 2,200,000 collateral shares previous issued to Lind in accordance with the financing agreement. The Company issued Lind 716,667 fully paid shares at 1.2 cents per share to extinguish its obligations under the financing agreement. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT) 48 NOTE 15. ISSUED CAPITAL The Company has issued share capital amounting to 457,048,412 (2015: 335,065,783 fully paid ordinary shares at no par value. a. Equity raised during the financial year At the beginning of the reporting period Shares issued during the year: 4,166,667 Shares issued on 9 July 2014 9,722,222 Shares issued on 24 July 2014 52,428,510 Shares issued on 9 September 2014 1,527,303 Shares10 October 2014 292 Shares issued on 13 October 2014 3,571,429 Shares issued on 20 October 2014 355,104 Shares issued on 5 December 2014 6,874,752 Shares issued on 19 December 2014 40,762,340 Shares issued on 22 April 2015 9,440,000 Shares issued on 12 June 2015 1,055,174 Shares issued on 12 June 2015 1,388,889 Shares issued on 12 June 2015 3,697,952 Shares issued on 29 June 2015 4,250,000 Shares issued on 29 June 2015 48,660,000 Shares issued on 29 September 2015 851,442 Shares issued on 15 October 2015 13,451,801 Shares issued on 25 November 2015 1,008,004 Shares issued on 9 December 2015 3,267,311 Shares issued on 14 December 2015 8,163,265 Shares issued on 15 December 2015 18,755,093 Shares issued on 12 February 2016 1,224,500 Shares issued on 12 February 2016 716,667 Shares issued on 18 February 2016 22,943,877 Shares issued on 10 May 2016 1,074,615 Shares issued on 10 May 2016 1,099,578 Shares issued on 10 May 2016 766,476 Shares issued on 10 May 2016 Transaction costs relating to share issues At reporting date NOTE 15a 15a.i 15a.ii 15a.iii 15a.iv 15a.v 15a.vi 15a.vii 15a.viii 15a.ix 15a.x 15a.xi 15a.xii 15a.xiii 15a.xiv 15a.xv 15a.xvi 15a.xvii 15a.xviii 15a.xix 15a.xx 15a.xxi 15a.xxii 15a.xxiii 15a.xxiv 15a.xxv 15a.xxvi 15a.xxvii 2016 $ 2015 $ 32,784,203 31,311,988 31,311,988 27,935,558 - - - - - - - - - - - - - - 596,085 18,253 164,785 18,253 60,000 100,000 229,750 15,000 35,000 281,062 30,000 18,253 13,375 75,000 175,000 1,572,855 60,250 18 75,000 11,358 204,244 1,019,059 236,000 30,000 25,000 101,196 106,250 - - - - - - - - - - - - - (107,601) 32,784,203 (314,800) 31,311,988 AURA ENERGY LIMITED: ANNUAL REPORT 2015/16 NOTE 15. ISSUED CAPITAL (CONT) At the beginning of the reporting period Ordinary shares issued during the financial year: 4,166,667 Shares issued on 9 July 2014 9,722,222 Shares issued on 24 July 2014 52,428,510 Shares issued on 9 September 2014 1,527,303 Shares issued on 10 October 2014 292 Shares issued on 13 October 2014 3,571,429 Shares issued on 20 October 2014 355,104 Shares issued on 5 December 2014 6,874,752 Shares issued on 19 December 2014 40,762,340 Shares issued on 22 April 2015 9,440,000 Shares issued on 12 June 2015 1,055,174 Shares issued on 12 June 2015 1,388,889 Shares issued on 12 June 2015 3,697,952 Shares issued on 29 June 2015 4,250,000 Shares issued on 29 June 2015 48,660,000 Shares issued on 29 September 2015 851,442 Shares issued on 15 October 2015 13,451,801 Shares issued on 25 November 2015 1,008,004 Shares issued on 9 December 2015 3,267,311 Shares issued on 14 December 2015 8,163,265 Shares issued on 15 December 2015 18,755,093 Shares issued on 12 February 2016 1,224,500 Shares issued on 12 February 2016 716,667 Shares issued on 18 February 2016 22,943,877 Shares issued on 10 May 2016 1,074,615 Shares issued on 10 May 2016 1,099,578 Shares issued on 10 May 2016 766,476 Shares issued on 10 May 2016 FiNANCiAL stAtEMENts 49 2016 NO. 2015 NO. 335,065,783 195,825,149 - - - - - - - - - - - - - - 48,660,000 851,442 13,451,801 1,008,004 3,267,311 8,163,265 18,755,093 1,224,500 716,667 22,943,877 1,074,615 1,099,578 766,476 4,166,667 9,722,222 52,428,510 1,527,303 292 3,571,429 355,104 6,874,752 40,762,340 9,440,000 1,055,174 1,388,889 3,697,952 4,250,000 - - - - - - - - - - - - - NOTE 15a.i 15a.ii 15a.iii 15a.iv 15a.v 15a.vi 15a.vii 15a.viii 15a.ix 15a.x 15a.xi 15a.xii 15a.xiii 15a.xiv 15a.xv 15a.xvi 15a.xvii 15a.xviii 15a.xix 15a.xx 15a.xxi 15a.xxii 15a.xxiii 15a.xxiv 15a.xxv 15a.xxvi 15a.xxvii At reporting date 457,048,412 335,065,783 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)50 NOTE 15. ISSUED CAPITAL (CONT) i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii. xiv. xv. xvi. Issued under financing agreement with ASOF. Issued on conversion by ASOF of $175,000 in convertible notes into fully paid ordinary shares. Issued pursuant to rights issue to shareholders. Issued to settle amounts due to consultants for services rendered. Issued on conversion of options over ordinary shares into fully paid ordinary shares. Issued under financing agreement with ASOF. Issued to settle amounts due to consultants for services rendered. Issued to directors in lieu of entitlement to cash emoluments. Issued pursuant to share placement. Issued pursuant to share purchase plan to shareholders. Issued to corporate advisor under capital raising agreement. Issued on conversion by ASOF of $25,000 in convertible notes into fully paid ordinary shares. Issued to directors in lieu of entitlement to cash emoluments. Issued pursuant to shortfall under share purchase plan. Issued pursuant to Share Placement (through WH Ireland Limited). Issued to Executive Chairman/Managing Director pursuant to Contract of Employment. xvii. Issued pursuant to Share Placement (through WH Ireland Limited). xviii. Issued to Executive Chairman/Managing Director pursuant to Contract of Employment. xix. xx. xxi. Issued pursuant to Engagement Letter between the Company and Hartley Limited. Issued pursuant to Share Placement to ASOF. Issued pursuant to Share Placement. xxii. Issued pursuant to conversion By ASOP of convertible notes into fully paid ordinary shares. xxiii. Issued pursuant to conversion by ASOP of convertible notes into fully paid ordinary shares. xxiv. Issued of shares to sophisticated and professional investors for working capital. xxv. Issued pursuant to Engagement Letter between Company and Hartley Limited. xxvi. Issued to Executive Chairman/Managing Director pursuant to Contract of Employment. xxvii. Issued to Executive Chairman/Managing Director pursuant to Contract of Employment. b. Options For information relating to the Aura Energy Limited employee options scheme, including details of options issued, issued and lapsed during the financial year, and the options outstanding at balance date, refer to Note 19 Share-based payments. The total number of options on issue is as follows: Listed options Unlisted options 2016 NO. 27,226,166 170,123,536 2015 NO. 27,226,166 86,159,005 197,349,702 113,385,171 AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 51 NOTE 15. ISSUED CAPITAL (CONT) c. Capital Management i. Capital management policy The directors’ objectives when managing capital are to ensure that the Group can fund its operations and continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current working capital position against the requirements of the Group to meet exploration programmes and corporate overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. ii. Current ratio The current ratio the Group at 30 June 2016 and 30 June 2015 was as follows: Current ratio iii. Working capital position The working capital position of the Group at 30 June 2016 and 30 June 2015 was as follows: NOTE Cash and cash equivalents Trade and other receivables Financial assets Trade and other payables Short-term borrowings Short-term provisions Working capital position / (deficit) NOTE 16. RESERVES Option reserve Foreign exchange reserve a. Option reserve NOTE 7 8 9 12 14 13 NOTE 16a 16b 2016 NO. 0.58 2016 NO. 317,758 57,708 43,625 (550,844) - (165,251) (297,004) 2016 $ 495,651 533,891 1,029,542 2015 NO. 1.86 2015 NO. 943,011 96,282 44,157 (401,345) (43,040) (138,639) 500,426 2015 $ 398,924 502,328 901,252 The option reserve records items recognised as expenses on the value of employee and consultant share options. b. Foreign exchange translation reserve The foreign exchange reserve records exchange differences arising on translation of foreign controlled subsidiary. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)52 NOTE 17. CONTROLLED ENTITIES CONTROLLED ENTITIES Aura Energy Sweden AB GCM Africa Uranium Limited COUNTRY OF INCORPORATION Sweden United Kingdom CLASS OF SHARES Ordinary Ordinary PERCENTAGE OWNED 2016 100% 100% 2015 100% 100% a. Investments in subsidiaries are accounted for at cost. NOTE 18. CASH FLOW INFORMATION a. Reconciliation of cash flow from operations to loss after income tax Loss after income tax Cash flows excluded from profit attributable to operating activities Non-cash flows in profit from ordinary activities: Share-based payments expense Payments to employees and corporate advisor by way of shares Net interest on convertible notes Depreciation Effects of foreign exchange on translation Impairment of exploration expenditure previously capitalised Reclassification of insurance funding 2016 $ 2016 $ (1,625,775) (2,493,900) 158,645 158,134 6,960 1,602 2,017 - - 96,704 305,441 57,304 4,676 9,379 1,045,240 (32,416) Capitalised exploration expenditure included in cash flows from operations (1,110,965) (1,438,205) Other Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries: (Increase)/decrease in receivables and prepayments Increase/(decrease) in trade and other payables Increase/(decrease) in provisions Cash flow from operations b. Credit standby facilities The Group has no credit standby facilities. c. Non-Cash Investing and Financing Activities The Group has no non-cash investing and financing activities. - 1,152 14,845 438,374 26,612 11,377 (93,196) 32,558 (1,929,551) (2,493,886) AURA ENERGY LIMITED: ANNUAL REPORT 2015/16NOTE 19. SHARE-BASED PAYMENTS FiNANCiAL stAtEMENts 53 2016 $ 2015 $ Share-based payment expense 158,645 96,704 a. The above share-based payment expense is comprised of the following arrangements in place at 30 June 2016: On 9 June 2015, the following options over ordinary shares were granted to the Executive Chairman and Managing Director of the Company in the following tranches: • 8,750,000 at an exercise price of $0.10 each. The options are exercisable on or before 9 June 2018. • 6,250,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 February 2019. • 2,500,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 June 2019. • 8,750,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 June 2020. • 8,750,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 June 2021. $158,645 was the deemed cost of the options over ordinary shares for the financial year. The options over ordinary shares hold no voting or dividend rights and are not transferable. At balance date, no options over ordinary shares have been exercised or forfeited and the 35,000,000 options over ordinary shares remain. b. The above share-based payment expense is comprised of the following arrangements in place at 30 June 2015: On 24 November 2013, the following options over ordinary shares were granted to directors of the Company: • 2,000,000 at an exercise price of $0.15 each. The options are exercisable on or before 13 January 2016. • 2,250,000 at an exercise price of $0.20 each. The options are exercisable on or before 13 January 2016. • 2,000,000 at an exercise price of $0.20 each. The options are exercisable on or before 13 July 2016. • 4,625,000 at an exercise price of $0.15 each. The options are exercisable on or before 13 January 2016. • 4,625,000 at an exercise price of $0.20 each. The options are exercisable on or before 13 July 2016. On 9 June 2015, the following options over ordinary shares were granted to the Executive Chairman and Managing Director of the Company in the following tranches: • 8,750,000 at an exercise price of $0.10 each. The options are exercisable on or before 9 June 2018. • 6,250,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 February 2019. • 2,500,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 June 2019. • 8,750,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 June 2020. • 8,750,000 at an exercise price of $0.15 each. The options are exercisable on or before 9 June 2021. The options over ordinary shares hold no voting or dividend rights and are not transferable. At balance date, 6,625,000 lapsed and the remaining 8,875,000 options have not been exercised or forfeited and remain. c. Share-based payments recognised directly in equity and in place at 30 June 2016: On 11 November 2014, the Company granted 12,500,000 options over ordinary shares to its corporate advisors pursuant to a capital raising agreement at an exercise price of $0.07 each. The options over ordinary shares are exercisable on or before 11 November 2018. $42,233 (2015: $70,389) was deemed transaction costs for the financial year under the capital raising agreement and has been recognized as such in the consolidated statement of changes in equity. d. Share-based payments recognised directly in equity and in place at 30 June 2015: On 8 March 2014, 2,600,000 options over ordinary shares were issued under an agreement with The Australian Special Opportunity Fund, LP, managed by The Lind Partners, LLC, to take up ordinary shares at an exercise price of $0.048 each. The options over ordinary shares expire 6 March 2017. $56,661 was deemed a transaction costs under the agreement and has been recognised as such in the consolidated statement of changes in equity. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)54 NOTE 19. SHARE-BASED PAYMENTS (CONT) a. Movement in share-based payment arrangements during the period A summary of the movements of all Company options issued as share-based payments is as follows: 2016 2015 NUMBER OF OPTIONS WEIGHTED AVERAGE EXERCISE PRICE NUMBER OF OPTIONS WEIGHTED AVERAGE EXERCISE PRICE Outstanding at the beginning of the year 59,745,000 Issued Exercised Expired Outstanding at year-end Exercisable at year-end - - (2,820,000) 56,925,000 36,825,000 $0.1940 $0.1132 - 26,745,000 47,500,000 - ($0.2505) (14,500,000) $0.1206 $0.1117 59,745,000 20,995,000 $0.1940 $0.1132 - ($0.2013) $0.1267 $0.1463 The weighted average remaining contractual life of options outstanding at year end is 2.5226 years (2015: 1.8874 years). The weighted average exercise price of outstanding shares at the end of the reporting period is $0.1206 (2015: $0.1267). b. Fair value of options grants during the period The Company did not grant any options over ordinary shares during the financial year ended 30 June 2016. In the previous financial year, the fair value of the options granted to employees is deemed to represent the value of the employee services received over the vesting period. The weighted average fair value of options over ordinary shares granted during the previous financial year was $0.1132. These values were calculated using the Black-Scholes option pricing model, applying the following inputs to options issued this year: Grant date: Grant date share price: Option exercise price: Number of options issued: Remaining life (years): Expected share price volatility: Risk-free interest rate: - - - - - - - $0.10 15,000,000 3.28 10 June 2015 $0.021 107% 2.0% $0.15 20,000,000 4.98 Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future movements. The life of the options is based on the historical exercise patterns, which may not eventuate in the future. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16NOTE 20. KEY MANAGEMENT PERSONNEL COMPENSATION a. Key management personnel (“KMP”) The names are positions of KMP are as follows: PD Reeve Executive Chairman and Managing Director Dr R Beeson Non-executive director BF Fraser JC Perkins SF Zillwood JM Madden b. KMP compensation Non-executive director Non-executive director Company Secretary (from 1 July 2015 to 31 March 2016) Company Secretary (from 31 March 2016 to 30 June 2016) The totals of remuneration paid to KMP during the year are as follows: Short-term employee benefits Post-employment benefits Share-based payments in equity Share-based payments in options Other long term benefits Termination benefits Payments to contractors for accounting and secretarial services Total FiNANCiAL stAtEMENts 55 2016 $ 445,200 36,200 100,000 158,645 - - 92,448 832,493 2015 $ 624,900 54,850 50,000 96,704 - - 102,816 929,270 Refer to the Remuneration Report contained in the Director’s Report for details of the remuneration paid to each member of the Group’s KMP for the year ended 30 June 2016. NOTE 21. RELATED PARTY TRANSACTIONS Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Other transactions with key management personnel are set out in the Remuneration Report, there are no other related party transactions. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT) 56 NOTE 22. COMMITMENTS a. Exploration expenditure commitments: Exploration tenement minimum expenditure requirements 335,996 101,482 2016 $ 2015 $ Payable: not later than 12 months between 12 months and 5 years greater than 5 years The Group has no contracted exploration expenditure, however the Group has accounted for core asset tenement renewals as expenditure the Group is committed to. b. Operating lease commitments: Operating leases contracted for or committed to but not capitalised in the financial statements Payable: not later than 12 months between 12 months and 5 years greater than 5 years 296,418 39,578 - 335,996 53,460 87,740 - 141,200 52,947 48,535 - 101,482 16,636 - - 16,636 The Group shares premises with a number of companies. Balances stated represent the maximum gross amount payable, prior to reimbursement from other parties. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 57 NOTE 23. OPERATING SEGMENTS a. Identification of reportable segments The Group operates predominantly in the mining industry. This comprises exploration and evaluation of uranium projects. Inter- segment transactions are priced at cost to the Consolidated Group. The Group has identified its operating segments based on the internal reports that are provided to the Board of Directors on a monthly basis. Management has identified the operating segments based on the two principal locations of its projects – Sweden and Mauritania. The Group also maintains a corporate function primarily responsible for overall management of the operating segments, raising capital and distributing funds to operating segments. Corporate expenses include administration and regulatory expenses arising from operating an ASX listed entity. Segment assets include the costs to acquire tenements and the capitalised exploration costs of those tenements Financial assets including cash and cash equivalents, and investments in financial assets, are reported in the Treasury segment. b. Basis of accounting for purposes of reporting by operating segments i. Accounting policies adopted Unless stated otherwise, all amounts reported to the board of directors, being the chief decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group. ii. Inter-segment transactions An internally determined transfer price is set for all inter-segment sales. This price is reset quarterly and is based on what would be realised in the event the sale was made to an external party at arm’s length. All such transactions are eliminated on consolidation of the Group’s financial statements. Corporate charges are allocated to reporting segments based on the segments’ overall proportion of revenue generation within the Group. The board of directors believes this is representative of likely consumption of head office expenditure that should be used in assessing segment performance and cost recoveries. Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are not adjusted to fair value based on market interest rates. This policy represents a departure from that applied to the statutory financial statements. iii. Segment assets Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location. iv. Segment liabilities Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain direct borrowings. v. Unallocated items The following items of revenue, expenses, assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment: • Non-exploration impairment of assets and other non-recurring items of revenue or expense • Income tax expense • Deferred tax assets and liabilities • Current tax liabilities • Other financial liabilities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)58 NOTE 23. OPERATING SEGMENTS (CONT) FOR THE YEAR TO 30 JUNE 2016 Segment revenue Segment results Amounts not included in segment results but reviewed by Board: Expenses not directly allocable to identifiable segments or areas of interest SWEDEN EXPLORATION $ MAURITANIA EXPLORATION $ - - - (51,461) CORPORATE $ 4,907 4,907 TOTAL $ 4,907 (46,554) Accounting and audit fees Computers and communications Depreciation Employee benefits expense Finance costs Impairment Insurance Consulting fees and corporate advisory Public relations Rent and utilities Share-based payment expenses Share registry and listing fees Travel and accommodation AIM listing costs Other expenses Tax rebate for research and development Loss after income tax AS AT 30 JUNE 2016 Segment assets Unallocated assets: Trade and other receivables Plant and equipment Other non-current assets Total assets Segment asset increases for the period: Capital expenditure-exploration Less: Write-off of exploration assets Segment liabilities Unallocated liabilities: Trade and other payables Short-term provisions Short-term borrowings Total liabilities (149,416) (44,193) (1,602) (711,929) (8,171) - (51,378) (223,149) (22,472) (39,847) (158,645) (79,385) (49,273) (165,840) (22,529) 148,608 (1,625,775) 6,484,992 7,647,916 366,185 14,459,093 173,898 704,014 - - 173,898 704,014 30,474 - - - - - 57,708 - - 14,556,801 877,912 - 877,912 30,474 520,370 165,251 - 716,095 AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 59 NOTE 23. OPERATING SEGMENTS (CONT) FOR THE YEAR TO 30 JUNE 2015 Segment revenue Segment results Amounts not included in segment results but reviewed by Board: Expenses not directly allocable to identifiable segments or areas of interest SWEDEN EXPLORATION $ MAURITANIA EXPLORATION $ CORPORATE $ TOTAL $ - - 22,223 22,223 (264,389) (802,155) 22,223 (1,044,321) Accounting and audit fees Business development Computers and communications Depreciation Employee benefits expense Finance costs Insurance Consulting fees and corporate advisory Public relations Rent and utilities Share-based payment expenses Share registry and listing fees Travel and accommodation Other expenses Loss after income tax AS AT 30 JUNE 2015 Segment assets Unallocated assets: Trade and other receivables Plant and equipment Other non-current assets Total assets Segment asset increases for the period: Capital expenditure-exploration Less: Write-off of exploration assets Segment liabilities Unallocated Liabilities: Trade and other payables Short term provisions Short-term borrowings Total liabilities (126,869) (6,000) (27,150) (4,676) (638,556) (60,564) (39,451) (182,309) (67,526) (33,168) (96,704) (63,522) (92,836) (10,248) (2,493,900) 6,311,094 6,943,902 991,969 14,246,965 252,046 1,326,688 (243,085) (802,155) 8,961 524,533 5,032 115,793 - - - - 96,282 1,602 - 14,344,849 1,578,734 (1,045,240) 533,494 120,825 280,520 138,639 43,040 583,024 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)60 NOTE 24. FINANCIAL RISK MANAGEMENT a. Financial risk management policies This note presents information about the Group’s exposure to each of the above risks, its objectives, policies and procedures for measuring and managing risk, and the management of capital. The Group’s financial instruments consist mainly of deposits with banks, short-term investments, and accounts payable and receivable. The Group does not speculate in the trading of derivative instruments. A summary of the Group’s financial assets and liabilities is shown below: FLOATING INTEREST RATE $ FIXED INTEREST RATE $ NON- INTEREST BEARING $ 2016 TOTAL $ FLOATING INTEREST RATE $ FIXED INTEREST RATE $ NON- INTEREST BEARING $ 2015 TOTAL $ Financial assets Cash and cash equivalents 317,758 Trade and other receivables Financial assets Total financial assets Financial liabilities Financial liabilities at amortised cost Trade and other payables Short-term borrowings Total financial liabilities - - 317,758 - - - Net financial assets 317,758 - - - - - - - - - 317,758 943,011 57,708 57,708 43,625 43,625 - - - - - 943,011 96,282 96,282 16,024 28,133 44,157 101,333 419,091 943,011 16,024 124,415 1,083,450 550,844 550,844 - - 550,844 550,844 - - - - 401,345 401,345 43,040 - 43,040 43,040 401,345 444,385 (449,511) (131,753) 943,011 (27,016) (276,930) 639,065 b. Specific financial risk exposures and management The main risk the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate, foreign currency risk and equity price risk. The board of directors has overall responsibility for the establishment and oversight of the risk management framework. The board of directors has adopted practices designed to identify significant areas of business risk and to effectively manage those risks in accordance with the risk profile. This includes assessing, monitoring and managing risks for the Group and setting appropriate risk limits and controls. The Group is not of a size nor is its affairs of such complexity to justify the establishment of a formal system for risk management and associated controls. Instead, the Board approves all expenditure, is intimately acquainted with all operations and discuss all relevant issues at the Board meetings. The operational and other compliance risk management have also been assessed and found to be operating efficiently and effectively. i. Credit risk Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group The Group does not have any material credit risk exposure to any single receivable or Group of receivables under financial instruments entered into by the Group. Credit risk exposures The maximum exposure to credit risk is that to its alliance partners and that is limited to the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. Credit risk related to balances with banks and other financial institutions is managed by the Group in accordance with approved Board policy. Such policy requires that surplus funds are only invested with financial institutions residing in Australia, where ever possible. Impairment losses Group’s financial assets that are past due total $nil (2015: $nil). There has been no allowance for impairment in respect of the financial assets of the Group during this year. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 61 NOTE 24. FINANCIAL RISK MANAGEMENT (CONT) ii. Liquidity risk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable securities are available to meet the current and future commitments of the Group. Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. The board of directors constantly monitor the state of equity markets in conjunction with the Group’s current and future funding requirements, with a view to initiating appropriate capital raisings as required. Any surplus funds are invested with major financial institutions. The financial liabilities of the Group are confined to trade and other payables as disclosed in the statement of financial position. All trade and other payables are non-interest bearing and due within 30 days of the reporting date. iii. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Board meets on a regular basis and considers the Group’s exposure currency and interest rate risk. (1) Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments. Interest rate risk is not material to the Group as no debt arrangements have been entered into, and movement in interest rates on the Group’s financial assets is not material. (2) Foreign exchange risk Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are other than the Australian dollars functional currency of the Group. With instruments being held by overseas operations, fluctuations in foreign currencies may impact on the Group’s financial results. The Group’s exposure to foreign exchange risk is minimal; however the Board continues to review this exposure regularly. (3) Price risk Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group is exposed to securities price risk on investments held for trading or for medium to longer terms. The investment in listed equities has been valued at the market price prevailing at balance date. Management of this investment’s price risk is by ongoing monitoring of the value with respect to any impairment. At balance date, the Group does not hold financial instruments that would give rise to price risk. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)62 NOTE 24. FINANCIAL RISK MANAGEMENT (CONT) iv. Sensitivity analyses (1) Interest rates The following table illustrates sensitivities to the Group’s exposures to changes in interest rates. The table indicates the impact on how profit and equity values reported at balance sheet date would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other variables. A change of 100 basis points in the interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. The analysis was performed on a change of 100 basis points for 2016. Year ended 30 June 2016 ± 100 basis points change in interest rates Year ended 30 June 2015 ± 100 basis points change in interest rates (2) Foreign exchange PROFIT $ EQUITY $ ±6,576 ±9,929 ±7,788 ±7,788 The Group main exposure to foreign currency risk is to Swedish Krona (SEK) for assets the Group holds through its Swedish subsidiary, Aura Energy Sweden AB. The following table illustrates sensitivities to the Group’s exposures to changes in the SEK rate. The table indicates the impact on how profit and equity values reported at balance sheet date would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is independent of other variables. Year ended 30 June 2016 ± 10% of Australian dollar strengthening/weakening against the SEK Year ended 30 June 2015 ± 10% of Australian dollar strengthening/weakening against the SEK v. Net fair values (1) Fair value estimation PROFIT $ EQUITY $ Nil Nil +65,849 -59,118 +75,050 -105,458 The fair values of financial assets and financial liabilities are presented in the table below and can be compared to their carrying values as presented in the statement of financial position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Cash and cash equivalents, trade and other receivables, and trade and other payables are short-term investments in nature whose carrying value is equivalent to fair value. The methods and assumptions used in determining the fair values of financial instruments are disclosed in the accounting policy notes specific to the asset or liability. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16FiNANCiAL stAtEMENts 63 NOTE 24. FINANCIAL RISK MANAGEMENT (CONT) vi. Financial liability and asset maturity analysis Financial liabilities due for payment Trade and other payables Short-term borrowings Total contractual outflows Financial assets Cash and cash equivalents Trade and other receivables Financial assets Total anticipated inflows Net (outflow)/inflow on financial instruments WITHIN 1 YEAR 2016 $ 2015 $ TOTAL 2016 $ 550,844 - 550,844 317,758 57,708 43,625 419,091 (131,753) 401,345 43,040 444,385 943,011 96,282 44,157 1,083,450 639,065 550,844 - 550,844 317,758 57,708 43,625 419,091 (131,753) 2015 $ 401,345 43,040 444,385 943,011 96,282 44,157 1,083,450 639,065 NOTE 25. EVENTS SUBSEQUENT TO REPORTING DATE On 12 September 2016 and 16 September 2016, the Company completed listing of its shares on the Alternative Investment Market in London and an Australian Placement which raised $5,002,677 (before costs). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)64 NOTE 26. PARENT ENTITY DISCLOSURES a. Financial position of Aura Energy Limited Current assets Cash and cash equivalents Trade and other receivables Financial assets Total current assets Non-current assets Plant and equipment Financial assets Other assets Total non-current assets Total assets Current liabilities Trade and other payables Short-term provisions Short-term borrowings Total current liabilities Total liabilities Net assets Equity Issued capital Option reserve Accumulated losses Total equity b. Financial assets NOTE 26b 2016 $ 299,974 24,227 43,625 367,826 - 8,317,554 5,871,421 14,188,975 14,556,801 520,370 165,264 - 685,634 685,634 2015 $ 910,881 57,242 44,157 1,012,280 1,602 8,158,529 5,167,407 13,327,538 14,339,818 396,314 138,639 43,040 577,993 577,993 13,871,167 13,761,825 32,784,203 599,802 31,311988 398,924 (19,512,838) (17,949,087) 13,871,167 13,761,825 Loans to subsidiaries Shares in controlled entities at cost Net carrying value 26b.i 6,410,654 1,906,900 8,317,554 6,251,629 1,906,900 8,158,529 i. Loans are provided by the parent entity to its controlled entities to fund their activities. The eventual recovery of loans and investments will be dependent upon the successful commercial application of these projects or their sale to third parties. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16NOTE 26. PARENT ENTITY DISCLOSURES (CONT) c. Financial performance of Aura Energy Limited Loss for the year Other comprehensive income Total comprehensive income FiNANCiAL stAtEMENts 65 2016 $ 2015 $ (1,433,556) (2,853,498) - - (1,433,556) (2,853,498) d. Guarantees entered into by Aura Energy Limited for the debts of its subsidiaries There are no guarantees entered into by Aura Energy Limited for the debts of its subsidiaries as at 30 June 2016 (2015: none). e. Contingent liabilities of Aura Energy Limited There are no contingent liabilities as at 30 June 2016, other than as detailed in Note 27 Contingent liabilities (2015: none). f. Commitments by Aura Energy Limited Exploration expenditure commitments: Exploration tenement minimum expenditure requirements 335,996 101,482 2016 $ 2015 $ Payable: not later than 12 months between 12 months and 5 years greater than 5 years The Group has no contracted exploration expenditure, however the Group has treatment core asset tenement renewals as expenditure the Group is committed to. Operating lease commitments: Operating leases contracted for or committed to but not capitalised in the financial statements Payable: not later than 12 months between 12 months and 5 years greater than 5 years 296,418 39,579 - 335,996 53,460 87,740 - 141,200 52,947 48,535 - 101,482 13,618 - - 13,618 The Group shares premises with a number of companies. Balances stated represent the maximum gross amount payable, prior to reimbursement from other parties. The amounts presented above are applicable for both Aura Energy Limited (the parent) and the Consolidated Group. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT)66 NOTE 27. CONTINGENT LIABILITIES On 15 October 2010, the Company and Global Coal Management plc entered into a Share Sale and Purchase Agreement which resulted in the Company acquiring all the shares on issue in GCM Africa Uranium, the entity which held the beneficial interest of GCM in the above- mentioned research permits in Mauritania. The Company paid GCM US$100,000 on execution of the Share Sale and Purchase Agreement; US$472,183 in cash plus 2,000,000 fully paid ordinary shares in the Company on completion (due diligence); and, US$500,000 on the first anniversary of completion. The Company also agreed to pay a contingent consideration: i. US$2,000,000 (in cash and shares as determine by the Company) on the delineation of 75 million pounds or more Initial Resource (not defined in the Letter Agreement) under the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves; and ii. US$400,000 in cash and 400,000 fully paid ordinary shares in the Company for each Subsequent Resource of 6,500,000 pounds up to a maximum of US$4,000,000 in cash and 4,000,000 in fully paid ordinary shares. The obligations to make the contingent consideration payments are held by the Company and the contingent consideration is only payable if the Initial Resource and Subsequent Resource are achieved within 10 years of the date of the Share Sale and Purchase Agreement. Accordingly, the obligation to pay the contingent consideration expires on 15 October 2020. There are no other contingent liabilities as at 30 June 2016. NOTE 28. COMPANY DETAILS The registered office and principal place of the Company is: Address: Level 1, 34-36 Punt Road, Windsor Victoria 3181 Telephone: +61 (0)3 9516 6500 Facsimile: +61 (0)3 9516 6565 Website: www.auraenergy.com.au E-mail: info@auraenergy.com.au AURA ENERGY LIMITED: ANNUAL REPORT 2015/16DirECtors' DECLArAtioN 67 DIRECTORS’ DECLARATION The directors of the Company declare that: 1. The financial statements and notes to the accounts are in accordance with the Corporations Act 2001 (Cth) and: (a) Comply with Accounting Standards. (b) Are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board, as stated in note 1 to the financial statements. (c) Give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended on that date of the Company and Consolidated Group. 2. The Chief Executive Officer and Chief Finance Officer have each declared that: (a) The financial records of the Company for the financial year have been properly maintained in accordance with s.286 of the Corporations Act 2001 (Cth). (b) The financial statements and notes for the financial year comply with the Accounting Standards. (c) The financial statements and notes for the financial year give a true and fair view. 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. This declaration is made in accordance with a resolution of the Board of Directors pursuant to s.295(5) and is signed for and on behalf of the directors by: Peter Reeve Chairman Dated this Thursday 29 September 2016 68 INDEPENDENT AUDITOR’S REPORT AURA ENERGY LIMITED: ANNUAL REPORT 2015/16DirECtors' DECLArAtioN 69 70 ADDITIONAL INFORMATION As of 27 SepTember 2016 The following additional information is required by the Australian Securities Exchange in respect of listed public companies. a. Distribution of Shareholders CATEGORY (SIZE OF HOLDING) 1 – 10,000 10,001 – 100,000 100,001 – 1,000,000 1,000,001 – 1,000,000,000 TOTAL b. Unmarketable Parcels Minimum $ 500.00 parcel at $ 0.0410 per unit c. Voting Rights TOTAL HOLDERS NUMBER ORDINARY % HELD OF ISSUED ORDINARY CAPITAL 109 196 152 695 14,226 625,625 1,258,983 28,298,892 0.00 0.09 0.18 3.98 1,574 711,319,938 100.00 MINIMUM PARCEL SIZE 12,196 HOLDERS UNITS 498 2,400,778 The voting rights attached to each class of equity security are as follows: • Ordinary shares: Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16ADDitioNAL iNForMAtioN 71 d. 20 Largest Shareholders — Ordinary Shares as at 27 September 2016. RANK NAME 1. FITEL NOMINEES LIMITED UNITS % OF UNITS 173,280,699 24.36 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 BNP PARIBAS NOMINEES PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED PRE-EMPTIVE TRADING PTY LTD HARGREAVES LANSDOWN (NOMINEES) LIMITED CITICORP NOMINEES PTY LIMITED SAMBOLD PTY LTD PASAGEAN PTY LIMITED ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD MR PETER DESMOND REEVE BARCLAYSHARE NOMINEES LIMITED GOLDMAN SACHS SECURITIES (NOMINEES) LIMITED J P MORGAN NOMINEES AUSTRALIA LIMITED ONE MANAGED INVESTMENT FUNDS LIMITED MERRIWEE PTY LTD MR MICHAEL BUSHELL MS MICHELLE ANNE PAINE YARANDI INVESTMENTS PTY LTD MRS LINDA YE + MR DAVID XIAO DONG YE "ONE MANAGED INVESTMENT FUNDS LIMITED 63,064,268 60,285,060 35,650,000 14,687,245 13,918,654 13,764,895 12,180,612 11,843,258 9,718,304 8,855,430 8,750,000 7,656,040 7,376,875 6,750,000 5,474,903 3,750,000 3,750,000 3,568,800 3,530,919 8.87 8.48 5.01 2.06 1.96 1.94 1.71 1.66 1.37 1.24 1.23 1.08 1.04 0.95 0.77 0.53 0.53 0.50 0.50 Top 20 shareholders Remaining shareholders Total shares on issue 467,855,962 243,463,976 65.77 34.23 711,319,938 100.00 72 SHAREHOLDING AS AT 24 SEPTEMBER 2016 (CONT) e. 20 Largest Option holders — as at 27 September 2016. RANK NAME UNITS % OF UNITS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. FIRST INVESTMENT PARTNERS PTY LTD M & K KORKIDAS PTY LTD YARANDI INVESTMENTS PTY LTD PASAGEAN PTY LIMITED BNP PARIBAS NOMINEES PTY LTD MR JONATHAN GREGORY QUINLIVAN ALCARDO INVESTMENTS LIMITED MRS KERRYN PATRICIA DELEN UBS NOMINEES PTY LTD MR HENDRIK JACOBUS DELEN + MRS KERRYN PATRICIA DELEN MR LUKE KUKULJ MR MARTIN MUSIC MR NEIL FRANCIS STUART MARTIN PLACE SECURITIES STAFF SUPERANNUATION FUND PTY LTD SPINNAKER INVESTMENT MANAGEMEN T PTY LTD MAGNA EQUITIES II LLC MR JOHN CHRISTOPHER BRIDGES + MS LEANNE BEVERLEY DONALD CRX INVESTMENTS PTY LIMITED MR ROBERT ANTHONY GENTILE + MRS MICHAELA MAREE GENTILE MR KONSTANTINOS KORKIDAS 5,300,000 2,150,000 1,800,000 1,600,000 1,500,000 1,495,012 1,249,999 1,236,170 1,055,000 888,830 500,000 500,000 500,000 487,500 450,000 400,000 300,000 300,000 300,000 300,000 19.47 7.90 6.61 5.88 5.51 5.49 4.59 4.54 3.87 3.26 1.84 1.84 1.84 1.79 1.65 1.47 1.10 1.10 1.10 1.10 Top 20 listed option holders Remaining listed option holders Total listed options 22,312,511 4,913,655 81.95 18.05 27,226,166 100.00 COMPANY SECRETARY The name of the Company Secretary is JM Madden. UNQUOTED SECURITIES Options over Unissued Shares PRINCIPAL REGISTERED OFFICE As disclosed in Note 28 Company Details of this Annual Report. A total of 163,498,536 (2015: 86,159,005) unlisted options are on issue of which 35,000,000 (2015: 44,645,000) options are issued to directors as at 27 September 2016. REGISTERS OF SECURITIES ARE HELD AT THE FOLLOWING ADDRESSES As disclosed in the Corporate Directory of this Annual Report. USE OF FUNDS The Company has used its funds in accordance with its initial business objectives. STOCK EXCHANGE LISTING Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian Securities Exchange Limited, as disclosed in the Corporate Directory of this Annual Report. AURA ENERGY LIMITED: ANNUAL REPORT 2015/16 TENEMENT REPORT COUNTRY Mauritania TENEMENT NUMBER NAME ORIGINAL DATE OF GRANT EXPIRY DATE SQ KMS HOLDER 561 563 564 961 1482 2002 2366 2479 Oum Ferkik 16-Apr-08 20-Nov-17 60 Aura Energy Limited Oued El Foule Est 16-Apr-08 24-Mar-18 Ain Sder 16-Apr-08 09-Jun-18 313 Aura Energy Limited 330 Aura Energy Limited Oued El Merre 09-Mar-10 (To be relinquished) 140 Aura Energy Limited Oum Ferkik Sud 30-May-11 (Application) 476 Aura Energy Limited Aguelet Agouyame Amare 08-May-13 (Application) 100 Aura Energy Limited 20-May-15 (Application) 34 Aura Energy Limited 21-Jun-16 (Application) 150 Aura Energy Limited Sweden 2007:243 Haggan nr 1 28-Aug-07 28-Aug-17 18.3 Aura Energy Sweden AB 2007:244 Marby nr 1 30-Aug-07 30-Aug-17 22.4 Aura Energy Sweden AB 2009:23 Koborgsmyren nr 1 23-Jan-09 23-Jan-19 5.4 Aura Energy Sweden AB 2016:7 2016:9 Skallbole nr 1 20-Jan-16 20-Jan-19 7.8 Aura Energy Sweden AB Mockelasen nr 1 21-Jan-16 21-Jan-19 17.6 Aura Energy Sweden AB EQUITY INTEREST 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% ACN: 115 927 681 ACN: 115 927 681 ANNUAL REPORT 30 JUNE 2016 ANNUAL REPORT 30 JUNE 2016 

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