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2023 ReportAURIS MINERALS LIMITED ANNUAL REPORT 30 JUNE 2018 ABN 77 085 806 284 DIRECTORS Neville Bassett Brian Thomas Craig Hall Robert Martin Non-Executive Chair Non-Executive Director Non-Executive Director Non-Executive Director CHIEF OPERATING OFFICER Mike Hendriks COMPANY SECRETARY Mark Clements AUSTRALIAN BUSINESS NUMBER 77 085 806 284 REGISTERED AND PRINCIPAL OFFICE Level 1, 18 Richardson Street West Perth, Western Australia 6005 PO Box 298 West Perth, Western Australia 6872 Telephone: (+61-8) 6109 4333 Email: general@aurisminerals.com.au Website: www.aurisminerals.com.au SHARE REGISTRY Security Transfer Australia Pty Ltd Alexandrea House 770 Canning Highway Applecross, Western Australia 6153 Telephone (+61-8) 9315 2333 Facsimile: (+61-8) 9315 2233 Email: registrar@securitytransfer.com.au Website: www.securitytransfer.com.au AUDITORS Greenwich & Co Audit Pty Ltd Level 2, 35 Outram Street West Perth, Western Australia 6005 SOLICITORS Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street Perth, Western Australia 6000 AUSTRALIAN SECURITIES EXCHANGE Level 40, Central Park 152-158 St Georges Terrace Perth, Western Australia 6000 ASX CODES Ordinary Shares: AUR Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 1 | P a g e CONTENTS Chair’s Letter Directors’ Report Schedule of Mining Tenements Corporate Governance Statement Additional Shareholder Information Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cashflows Notes to the Consolidated Financial Reports Directors’ Declaration Independent Auditor’s Review Report 3 4 30 32 41 43 44 45 46 47 48 74 75 Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 2 | P a g e CHAIR’S LETTER Dear Shareholder, I am pleased to be presenting to you in my inaugural year as Chair, the Auris Minerals Annual Report for the financial year ended 30 June 2018 (“FY 2018”). The 12 months in focus marked another chapter in the evolution of Auris, and was bookended by the realignment of the Company’s corporate and operational objectives which culminated in the restructuring of our Board and management team. As I am sure our shareholders will be aware, following a General Meeting held on Friday 20th April 2018, I was appointed to the Board as a Non-Executive Director along with Mr Brian Thomas and later appointed as Non- Executive Chairman. On 1 August 2018, Mr Craig Hall was appointed as a Non-Executive Director to represent the interests of Investmet Limited, replacing Ms Bronwyn Barnes. Shortly after the conclusion of FY 2018, Mr Mike Hendriks was appointed on a strategic consultancy arrangement to oversee the daily operations of the business. I am delighted with the initiatives and corporate insight Mike has provided since joining our management team and I look forward to his ongoing contributions towards driving Auris forward. I acknowledge and understand that the Company’s recent history has been dotted by changes to management and Board personnel, however with the swift implementation of this recent realignment, I am pleased to advise that the foundations are now firmly set for Auris to deliver on our exploration objectives for our shareholders. Shifting our focus away from the Boardroom, as you will note from recent ASX filings, a key focus over recent months has been on refining the exploration strategy across our ~1,380km² copper-gold portfolio in the Bryah Basin of Western Australia. From a technical perspective, we continue to be encouraged by the positive results received from our ongoing target generation activities, which have provided a very robust foundation from which our follow-up drilling programs can be built. Auris’ ‘on-ground’ focus for FY 2019: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) narrow our focus towards ramping up exploration across our Bryah Basin tenement holdings; significantly improve our regional geological control of the Western Bryah Basin – starting with the near- term release of detailed geological interpretations and updated project maps; stronger commitment to systematically drilling our highest priority targets – starting with the respective Cashman and Forrest Projects; build upon our relationship with Sandfire Resources NL (ASX: SFR) as we look to progress exploration work across the highly prospective Morck Well East and Doolgunna Projects; and assess new strategic opportunities as they arise to expand our asset base. I am very confident that our portfolio has considerable underlying potential, you only need to look at some of the world-class mining operations that reside in the same neighbourhood as Auris, and so the challenge is now firmly centred on delivering on this potential. Finally, I would like to take this opportunity to thank all of our shareholders for their ongoing support over the past 12 months. You can be assured that your Board is working hard to repay your commitment, having entered this current financial year with great optimism. Yours sincerely, NEVILLE BASSETT Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 3 | P a g e DIRECTORS’ REPORT The directors present their report together with the financial report of Auris Minerals Limited (the Company or Auris), for the year ended 30 June 2018 and the auditor’s report thereon. 1. Directors The directors of the Company at any time during or since the end of the financial year are: Name Period of Directorship Mr Neville Bassett – Non-Executive Chair Appointed 20 April 2018 Mr Robert Martin – Non-Executive Director Appointed 2 November 2016 Mr Brian Thomas – Non-Executive Director Appointed 20 April 2018 Mr Craig Hall – Non-Executive Director Appointed 1 August 2018 Ms Bronwyn Barnes – Non-Executive Director Appointed 25 November 2016, held position of Non- Executive Chair to 20 April 2018, Removed 1 August 2018 Dr Susan Vearncombe – Non-Executive Director Appointed 11 August 2017, Removed 20 April 2018 Mrs Debbie Fullarton – Executive Director Appointed 1 September 2016, Resigned 11 August 2017 The qualifications, experience, interest in shares and options, and other directorships of the directors in office at the date of this report and during the financial year are: Current Directors Neville Bassett Non-Executive Chair Experience and expertise Mr Bassett is a Chartered Accountant specialising in corporate, financial and management advisory services. He has been involved with numerous public company listings and capital raisings. His involvement in the corporate arena has also taken in mergers and acquisitions and includes significant knowledge and exposure to the Australian financial markets. He has a wealth of experience in matters pertaining to the Corporations Act, ASX listing requirements, corporate taxation and finance. Mr Bassett is a Fellow of Chartered Accountants Australia and New Zealand. He was a Director/Councillor of the Royal Flying Doctor Service in Western Australia for 26 years, serving 8 years as Chairman before his retirement in 2017. He served 6 years as Western Operations representative on the National Board of the Australian Council of the Royal Flying Doctor Service of Australia. Mr Bassett was awarded a Member of the Order of Australia (AM) in the 2015 Australia Day Honours. Interest in Shares and Options 1,100,000 ordinary shares in Auris Minerals Limited. Listed company directorships in last three years Currently a Non-Executive Director of Pointerra Limited (ASX: 3DP) and Metalsearch Ltd (ASX: MSE). Previously a Non-Executive Director of Quantify Technology Holdings Ltd, Longford Resources Ltd, Meteoric Resources NL and Vector Resources Ltd. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 4 | P a g e DIRECTORS’ REPORT Robert Martin Non-Executive Director Experience and expertise Mr Martin is a major shareholder in the Company and has extensive experience in ASX listed companies. Mr Martin is also a director and the largest private shareholder (22.8%) of Bulletin Resources Limited (ASX: BNR). Mr Martin played a key role in the BNR joint venture with Pantoro (ASX: PNR) to establish the highly successful Halls Creek gold mine. Interest in Shares and Options 31,151,486 ordinary shares in Auris Minerals Limited and 2,000,000 Listed company directorships in last three years performance rights expiring 22 November 2020. Non-Executive Director of Bulletin Resources Limited (ASX: BNR) Brian Thomas Non-Executive Director Experience and expertise Mr Thomas is the principal of a corporate advisory practice working with small to mid-market capitalisation companies in corporate finance, mergers & acquisitions and investor relations. He has held both Executive and Non- Executive Director roles with numerous ASX listed and unlisted companies after an extensive career in the financial services sector in corporate stockbroking, investment banking, funds management and banking. He has more than 30 years of mining and exploration industry experience in a broad range of commodities from precious and base metals, bulk and industrial minerals, diamonds plus oil and gas. Mr Thomas graduated from the University of Adelaide with a BSc in Geology and Mineral Economics, the University of Western Australia Business School with an MBA and the Securities Institute of Australia (now FinSIA) with a Certificate in Applied Finance and Investment. Interest in Shares and Options None Listed company directorships in last three years Mr Thomas is currently a Non-Executive Director of Cougar Metals NL (ASX: CGM) and was formerly a Non-Executive Director of Tempo Australia Ltd (ASX: TPP). He was a Non-Executive Director of Orinoco Gold Limited before becoming the, now former, Non-Executive Chairman. He was also previously the Non-Executive Chairman for GO Energy Group Limited and Ensurance Ltd. Craig Hall Non-Executive Director Experience and expertise Mr Craig Hall is an experienced geologist with over 30 years of minerals industry experience in exploration, development and production roles in a range of commodities, principally precious and base metals. He has held a variety of senior positions with mid-tier and junior sector resource companies within Australia and overseas. He has previously consulted to the minerals industry providing high quality exploration outcomes, on-site mining support, expert reporting, project valuations and strategic advice to companies through an association with a well-respected Western Australian resource consultancy. Until 6 August 2018, Mr Hall served as a Non-Executive Director of Eclipse Metals Ltd (ASX: EPM) an Australian exploration company focused on exploring the Northern Territory and Queensland for uranium and manganese mineralisation. Interest in Shares and Options None Listed company directorships in last three years Mr Hall was a Non-Executive Director of Eclipse Metals Ltd. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 5 | P a g e DIRECTORS’ REPORT Former Directors Bronwyn Barnes Non-Executive Director – Removed 1 August 2018 Experience and expertise Ms Barnes is a mining industry executive and consultant with over 23 years’ experience that includes, investor relations, stakeholder relations (including Government relations), heritage and native title, corporate development and strategic planning. Most recently she was Executive Chair of Windward Resources Ltd where she oversaw the successful on market takeover of Windward by Independence Group NL and before this spent 4 years as deputy CEO of AMC Bauxite Ltd and 2 years as Managing Director of Graynic Metals Pty Ltd. Ms Barnes has held positions both in the minerals and energy sectors of the mining industry including, WMC, BHPB Nickel West, Anaconda Nickel, Methanex Australia and Philips Petroleum Australia. Interest in Shares and Options 1,004,349 ordinary shares in Auris Minerals Limited. Listed company directorships in last three years Ms Barnes is the Non-Executive Chair of Indiana Resources Limited (ASX: IDA), MOD Resources Ltd (ASX: MOD) and was formerly the Executive Chair of Windward Resources Ltd and Non-Executive Director of JC International Ltd. Susan Vearncombe Non-Executive Director – Removed 20 April 2018 Experience and expertise Dr Vearncombe is a geologist with over 25 years’ experience in the exploration and mining sectors. Susan has a very strong technical background that spans projects across Australasia, North and South America, Asia, Africa and Europe. She also has a broad range of boardroom and managerial experience that includes public listing, capital raisings, project acquisitions and initiatives, geology audits, operational practices for best outcomes and establishment of offshore subsidiaries. Dr Vearncombe was a former MD of Silver Swan Group, Non-Executive Director of Straits Resources and General Manager-Geology for Mercator Gold. Currently, in conjunction with a Sydney-based Fund, Susan identifies mining and exploration opportunities in the Iberian Peninsula, carries out negotiations, due diligence, acquisition and placement into appropriate vehicles. Interest in Shares and Options None Listed company directorships in last three years None Debbie Fullarton Executive Director – Resigned 11 August 2017 Experience and expertise Mrs Fullarton is a Chartered Accountant with over 25 years' experience in the resources industry. She served as the Company’s Chief Financial Officer from 2012 until her resignation in August 2017. She has provided corporate, financial management, administration and secretarial services for a number of listed and unlisted companies with a specific focus on exploration. Mrs Fullarton formerly held the position of Financial Manager for De Beers Australia Exploration Limited and has also consulted to Gold Road Resources Limited, Base Resources Limited and North Australian Diamonds Limited. Mrs Fullarton currently holds director roles in a number of unlisted companies and is a member of the Institute of Chartered Accountants Australia and a member of the Governance Institute of Australia. 6 | P a g e Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 DIRECTORS’ REPORT Interest in Shares and Options 1,950,833 ordinary shares in Auris Minerals Limited and options to acquire a further 400,000 ordinary shares. Listed company directorships in last three years None 2. Company Secretary Mr Mark Clements holds the position of Company Secretary, being appointed on 2 July 2012. Mr Clements gained a Bachelor of Commerce degree from the University of Western Australia. He is a Fellow of the Institute of Chartered Accountants and a member of the Australian Institute of Company Directors and an affiliated member of the Institute of Chartered Secretaries in Australia. Mr Clements currently holds the position of Company Secretary for a number of publically listed companies and has experience in corporate finance, accounting and administration, capital raisings and ASX compliance and regulatory requirements. 3. Directors’ Meetings Formal meetings of the directors of the Company during the financial year are tabled as follows: Director Neville Bassett Brian Thomas Bronwyn Barnes Susan Vearncombe Robert Martin Debbie Fullarton Meetings eligible to attend Meetings attended 2 2 6 4 6 - 2 2 4 4 6 - 4. Principal Activities and Review of Operations Review of Financial Condition The Group recorded a loss of $1,317,036 for the year ended 30 June 2018 (2017: loss of $884,710). The loss includes an impairment adjustment for exploration and evaluation expenditure of $364,813 (2017: $254,115). As at 30 June 2018, the Group had net working capital of $3,971,818 (2017: $2,567,845). The Group’s net asset position was $20,914,119 (2017: $17,651,481). Exploration Highlights Auris is primarily exploring for high-grade copper-gold deposits in the highly prospective Bryah Basin region of Western Australia. Significant activities during the 2018 financial year included the following: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Phase 2 RC drilling at Wodger (1,251m); Follow-up diamond drilling at Wodger (2 holes, 1,170m) and Forrest (1 hole, 580m) Prospects; First sulphides intercepted at Wodger Prospect (in WDRC005); DHEM surveys of three holes at Wodger and one hole at Forrest – new conductor defined from WRDD003; Reprocessed ground-based MLEM survey at Forrest – new conductor defined. Gravity surveys completed on four tenements (three on Horseshoe Project and one on Forrest Project) – completes gravity coverage of the entire tenement portfolio in the Bryah Basin; Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 7 | P a g e DIRECTORS’ REPORT (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Regional (1:100,000 scale) and detailed (1:25,000 scale) geological interpretations of all available historical data, including magnetics, radiometrics, gravity, EM, geochemistry, published maps, etc., commissioned – 75% completed, with some significant outcomes (e.g.,. recognition of previously unmapped prospective stratigraphy); VTEM survey over areas of interest on the Cashman, Forrest and Horseshoe Project areas (total 1,802 line km) – multiple anomalies/targets defined, which require follow-up and/or drill testing; Revised geological interpretation of the Wodger and Forrest Prospects – nearing completion, further drilling planned; Farm-out of the Doolgunna and Morck Well East tenements (4 in total) to Sandfire Resources NL; VTEM survey over the Morck Well JV area – several robust anomalies defined; Massive sulphide identified in 3 aircore holes at the far northeast of the Morck Well JV – followed up by RC and diamond core holes, DHEM and ground-based MLEM; Follow-up aircore drilling at Feather Cap Prospect, Morck Well West Project; Regional soil sampling programme initiated over the prospective Karalundi Formation on Cashman Project (nearing completion); Establishment of a new Exploration Database, with Expedio data management consultants; Compilation of a Technical Library of historical reports, with catalogue. In addition to the above, a comprehensive review and assessment of the entire exploration portfolio has been undertaken, the Projects have been ranked and prioritised, and a new exploration strategy has been developed. Exploration Portfolio Auris has consolidated a 1,380km² copper-gold exploration portfolio in the Bryah Basin divided into five well- defined project areas – Forrest, Cashman, Horseshoe, Morck Well and Doolgunna. In February 2018, Auris entered into a farm-in JV agreement with Sandfire Resources NL with respect to the Morck Well East and Doolgunna Projects (which cover 442km²). In addition, the Company owns three Mining Leases, one Exploration License and one Prospecting License in the Chunderloo area, just over 15km southwest of Meekatharra. The projects are currently ranked as follows: 1. 2. 3. 4. 5. 6. Cashman Forrest Morck Well East Doolgunna Horseshoe Well Chunderloo Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 8 | P a g e DIRECTORS’ REPORT Figure 1: Auris Exploration Tenement Portfolio in the Bryah Basin (Sandfire, Northern Star & Omni JVs indicated) Notes: 1. 2. 3. 4. 5. The Forrest Project tenements (Figure 1) have the following outside interests: (cid:1) (cid:1) Westgold Resources Ltd (ASX:WGX) own the gold rights over the Auris interest Auris 80%; Fe Ltd 20% ((Fe Ltd (ASX:FEL) interest is free carried until a Decision to Mine) Doolgunna Project tenement E52/2438 – Subject to Farm-in Agreement with Sandfire Resources NL (ASX:SFR) (Figure 1) The Morck Well East JV Project tenements E52/1613, E51/1033, E52/1672 (Figures 1) (Auris 80%; Fe Ltd 20%) (cid:1) Subject to Farm-in Agreement with Sandfire Resources NL (ASX:SFR) The Cashman Project tenements E51/1391, E51/1837-38, E52/2509 (Figure 1) have the following outside interests: (cid:1) Auris 51%; Northern Star 49% (ASX:NST) with Auris earning 70% The Horseshoe Project tenements E52/3248, E52/3291, E52/2509 (Figure 1) have the following outside interests: (cid:1) Auris 85%; OMNI Projects Pty Ltd 15% (OMNI interest is free carried until a Decision to Mine) Exploration Strategy Auris’ exploration strategy is summarised as follows: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Focus attention on unlocking the value of the current tenement package in the Bryah Basin; Assess new strategic project opportunities as they arise; Target multiple Cu-Au deposits – including but not limited to only VMS model deposits; Develop the best regional geological control possible (to provide context), by means of published maps, airborne geophysics (magnetics, radiometrics & EM), ground gravity and field mapping; Commitment to drill exploration targets as soon as possible after definition; Adhere to the highest technical standards in all activities. Review of Operations Drilling at Wodger and Forrest The first phase of RC drilling was completed on the Wodger Prospect in July 2017 (total 999m), to test the anomalous copper and gold intersected in previous aircore drilling. The following significant intercepts were reported (ASX announcement, dated 21 August 2017), along a strike length of approximately 150m. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 9 | P a g e DIRECTORS’ REPORT (cid:1) (cid:1) (cid:1) (cid:1) WDRC002 14m @ 1.48% Cu, from 118m, including 5m @ 3.61% Cu, from 123m 9m @ 2.01g/t Au, from 123m, including 3m @ 5.19g/t Au; WDRC003 61m @ 0.49% Cu, from 122m, including 5m @ 0.98% Cu from 128m 3m @ 1.07% Cu from 156m 4m @ 1.31% Cu from 171m 9m @ 0.94g/t Au, from 171m WDRC004 27m @ 0.37% Cu, from 96m, including 1m @ 3.89% Cu, from 96m; WDRC005 50m @ 1.55% Cu, from 175m, including 31m @ 2.39% Cu, from 187m, including 17m @ 3.41% Cu, from 200m A second phase of RC drilling, in September 2017 (total 1,251m), yielded more encouraging results (ASX announcement, dated 17 October 2017): (cid:1) (cid:1) (cid:1) (cid:1) WDRC006 78m @ 0.35% Cu, including 15m @ 1.17% Cu, from 138m; WDRC007 6m @ 1.14% Cu, from 235m; WDRC008 28m @ 0.75% Cu, from 155m; WDRC010 66m @ 0.59% Cu, from 290m, including 3m @ 2.20% Cu, from 307m 11m @ 1.22% Cu, from 317m 5m @ 2.38% Cu, from 346m Two diamond core holes (WRDD003 & 004, for 560m & 610m, respectively) were drilled at Wodger in the reporting period, to follow up the two drilled in the first half of 2017. The deepest hole was partly paid for with a $200,000 Exploration Incentive government grant (ASX announcement, dated 05 September 2017). A broad anomalous intercept was reported from WRDD003 (ASX announcement, dated 10 November 2017): (cid:1) WRDD003 71.0m @ 0.21% Cu, from 365m, including 5.5m @ 0.49% Cu, from 396m 2.5m @ 2.53% Cu, from 419m 5.0m @ 0.5% Cu, from 431m 2.5m @ 0.32g/t Au, from 419m 0.5m @ 0.55g/t Au, from 434m Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 10 | P a g e DIRECTORS’ REPORT Two zones of anomalous copper were reported from WRDD004 (ASX announcement, dated 24 January 2018), with thinner zones of higher-grade copper and gold included, as follows: (cid:1) WRDD004 6.8m @ 0.35% Cu, from 272m, including 10.8m @ 0.34g/t Au 72.0m @ 0.21% Cu, from 344m, including 16.7m @ 0.44% Cu 6.8m @ 0.37g/t Au 3.0m @ 0.40g/t Au Figure 2: Cross section through WRDD004, Wodger Prospect Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 11 | P a g e DIRECTORS’ REPORT Figure 3: Long section, Wodger Prospect, to show intercepts of WRDD003 & WRDD004. Three down-hole electromagnetic (DHEM) surveys were completed at Wodger. Only one off-hole conductor was identified, from WRDD003, and this was tested by WRDD004. The EM response is now interpreted to have been due to conductive regolith in a zone of preferential weathering. One diamond core hole (FGDD007, for 580m) was drilled at the Forrest Prospect at the end of 2017, to test a remodelled ground EM anomaly, which was thought to be coincident with a blind anticline (analogous to the interpretation for Wodger). Two thin zones of anomalous copper were reported from FGDD007 (ASX announcement, dated 24 January 2018): (cid:1) FGDD007 2.0m @ 0.10% Cu, from 474m 2.0m @ 0.11% Cu, from 335m A DHEM survey in FGDD007 had to be abandoned before completion, but no conductor was recognised in the part of the hole that was surveyed (350-580m). The weak ground EM anomaly at Forrest is not properly explained but, given that the DHEM response in FGDD007 is similar to others at Wodger, it is possible that deep weathering and/or conductive cover may be the cause. Both Wodger diamond core holes were originally interpreted to have drilled across the Wodger Anticline, starting in Ravelstone Formation sediments, through Narracoota Formation volcanics, and ending back in Ravelstone Formation. However, consistent up-hole younging directions at Wodger suggest that the stratigraphy at the prospect is not folded, as previously thought. The lower/north-eastern Narracoota Formation contact is interpreted to be structural in nature, which is consistent with the quartz-carbonate veining associated with the broad, anomalous intercepts of copper and gold. Copper sulphides, including bornite, minor chalcopyrite and chalcocite. The mineralised structure may be a back-thrust. Another possibility is that the sediments that occur beneath the Narracoota Formation at Wodger are Karalundi Formation (ASX announcement, dated 17 July 2018). Further work (including more drilling) will probably be required to resolve the interpretation. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 12 | P a g e DIRECTORS’ REPORT Figure 4: Cross section of FGDD007, Forrest Prospect All diamond core and RC chips from the Wodger and Forrest Prospects have been re-logged as part of a comprehensive geological review, and two structural experts have been engaged to provide input. A new geological model will inform where additional drilling might be necessary to advance both prospects. Gravity Surveys at Horseshoe and Forrest Gravity surveys were completed on all three tenements on the Horseshoe Project and on E52/1659 on the Forrest Project. This completes the ground gravity coverage of the entire tenement portfolio in the Bryah Basin. These data sets were important sources of information for the regional and detailed geological interpretations (see below). Regional and Detailed Geological Interpretations A regional (1:100,000 scale) geological interpretation of the entire western Bryah Basin was compiled to provide context for all future exploration in the district (ASX announcement, dated 30 January 2018). The data sets used for this exercise included the following: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Airborne magnetic and radiometric surveys; Ground gravity surveys; Airborne and ground EM data (including the most recently acquired VTEM data); Surface geochemical sampling data; Government magnetic and radiometric data; Government-sponsored EM – a SPECTREM survey flown specifically to map the Bryah Basin; Government mapping (of geology and regolith) and geochemical sampling – by the Geological Survey of Western Australia (at 1:100,000 scale); Landsat TM imagery; ASTER imagery. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 13 | P a g e DIRECTORS’ REPORT Interestingly, the prospective Karalundi Formation (which hosts the DeGrussa Cu-Au deposit) is interpreted to be thicker and more continuous in the southern Cashman area than has previously been mapped (by the Geological Survey), and much more structural detail has been revealed in the area immediately south of the Peak Hill Mining District (ASX announcement, dated 17 July 2018). Both of these new insights are significant for future exploration plans. 620,000 mE 640,000 mE 660,000 mE 680,000 mE N m 0 0 0 , 0 6 1 , 7 N m 0 0 0 , 0 4 1 , 7 N m 0 0 0 , 0 2 1 7 , LEGEND Auris tenement outline Structures Unit Dip Direction Unit Trend Unit contact Dyke units Unit Contact; Major and often sheared Unit Contact; Minor Unit Contact; Major uncertain BIF Contact Mafic Dyke Reverse Mafic Dyke Normal Mafic Dyke Normal Mafic Dyke Reverse Felsic Dyke Interpreted shears Interpreted faults Sense of Direction Shear with sense of normal dip slip and commonly inverted during compression Shear; Minor Shear; Minor with dip slip motion Brittle Fault; Minor Brittle Fault; Minor uncertain Brittle Fault; Major Brittle Fault; Major uncertain Anomalous gravity response Gravity High Zone Gravity Low Zone Interpreted Geology Mt Leake Formation: quartz arenite Millidie Creek Formation: sandstone, shale, BIF granular iron -formation Robinson Range Formation: shale, siltstone and BIF granular iron Wilthorpe Formation: conglomerate, sandstone and siltstone Labouchere Formation: sandstone, siltstone with some BIF , chert and conglomerate Horseshoe Formation: sandstone and BIF granular iron Ravelstone Formation: lithic -feldspathic sandstone, siltstone and chert turbiditic Narracoota: turbidites and volcanics Narracoota: schist after basalt and dolerite Narracoota: mafics, basalt, pyroxenite and dolerite Narracoota: hyaloclastite Narracoota: breccia agglomerate Karalundi Formation: sandstone, shale and conglomerate Mooloogool Supergroup: mixed Doolgunna Formation, sandstones, conglomerate, siltstone and chert with sedimentary deposits of possible Thaduna, Maraloou and Killara Formations Johnson Cairn Formation: siltstone, shale and some sandstone Juderina Formation: sandstone, siltstone, shale and conglomerate Finlayson Member (Juderina Formation): quartz arenite Peak Hill Schist: meta-Yerrida Group Yilgarn Craton Granite Gneiss, includes some greenstone and amphibolite Yilgarn Ultramafic, greenstone Black Shale Banded Iron Formation 0 10 kilometres Scale 1:100,000 Datum : GDA 94 Projection : MGA 50 Regional Setting 7 , 1 6 0 , 0 0 0 m N 7 , 1 4 0 , 0 0 0 m N 7 , , 1 2 0 0 0 0 m N Preliminary 1:100,000 map scale bedrock geology and structure interpretation Date : 05/07/2018 620,000 mE 640,000 mE 660,000 mE 680,000 mE Plot Name : C_A0_100k_prelim_interp Figure 5: Regional geological interpretation (1:100,000 scale) of the SW Bryah Basin (including Cashman and Morck Well West Project Areas). Location of Feather Cap Prospect. The same data sets have been used to produce a more detailed (1:25,000 scale) geological interpretation over the Forrest Project area of interest, between the Forrest and Big Billy Prospects, along the so-called “prospective trend”. In this area, the prospective Narracoota Formation is interpreted to be more pervasive than has been previously mapped (ASX announcement, dated 5 September 2018). Furthermore, the Narracoota is interpreted to be folded and kinked along strike, which may be significant as a control on the location of copper and gold mineralisation. A detailed map is currently being prepared for the southern Cashman area of interest. VTEM Exploration Activities - Cashman, Forrest and Horseshoe Projects An airborne Versatile Time-Domain EM (VTEM) survey was completed over key areas of the Cashman, Forrest and Horseshoe Projects (ASX announcement, dated 20 February 2018). The VTEM™Max system is one of the best airborne EM systems flying worldwide, for mineral exploration, and is specifically designed for detecting discrete conductors, such as massive sulphide deposits. However, it is also useful for mapping conductive cover and, as such, is a useful tool for mapping areas that may not be suitable for surface geochemical sampling. In total, 1,802 line km were surveyed with VTEM, on 200m line intervals, with a sensor height at an altitude of 35m. After data processing and interpretation, and integration with other data, a total of 65 discrete VTEM targets were identified (ASX announcement, dated 27 July 2018). Four are considered Priority-1 targets, 23 are Priority- 2 targets, and 38 are Priority-3 targets. 39 targets were identified on the Cashman Project, eighteen are on the Forrest Project, and the remaining eight are at Horseshoe West. Three Priority-1 targets were identified at Cashman and one is at Forrest. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 14 | P a g e DIRECTORS’ REPORT Most importantly, eleven targets were coincident with the prospective Karalundi Formation, which is host to the De Grussa Cu-Au deposit, and 33 are coincident with the volcanic Narracoota Formation, which hosts the Horseshoe Lights Cu-Au deposit. Figure 6: VTEM targets, Forrest (A) and Cashman (B) Projects Soil Sampling at Cashman A new geochemical sampling programme, involving the collection of more than 3,500 soil samples, on a 200 x 100m grid (ASX announcement, dated 17 July 2018) was planned and started during the reporting period. The area being sampled covers the full extent of the prospective Karalundi Formation on the southern Cashman area of interest (indicated as the Prospective Area in Fig. 6B). This area includes the Orient Prospect, where surface samples have assayed at up to 12.8% Cu and 41.7g/t Au. The sampling will cover most of the new VTEM targets at Cashman, including all of the Priority-1 targets. Aircore Drilling at Feather Cap An aircore drilling programme of 40 holes (2,281m) was completed on the Feather Cap Prospect, located south of the Peak Hill Mining District (Fig. 5, with assays pending). Feather Cap had been interpreted (from ground gravity data) to be a north-northwest trending structural gold target, but it is now recognised to correlate with the top of the volcanic Narracoota Formation, along a northwest-trending synclinal fold axis. This stratigraphic setting is considered to be prospective for Horseshoe Lights-type Cu/Au mineralisation. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 15 | P a g e DIRECTORS’ REPORT Morck Well JV (Managed by Sandfire Resources NL – to earn a 70% interest) At the end of February 2018, Auris entered into a Farm-in Agreement (“the Agreement”) with Sandfire Resources NL in relation to the Morck Well East and Doolgunna Projects (ASX announcement, dated 27 February 2018). Sandfire has the right to earn a 70% interest in either project upon completion of a Feasibility Study on a discovery of not less than 50,000t of contained copper (or metal equivalent). Within two weeks of the Company entering the Agreement, an airborne EM survey (using the VTEM™Max system) was undertaken across the Morck Well East JV area (ASX announcement, dated 27 March 2018) and was completed in April 2018. Two clusters of VTEM anomalies were interpreted, but follow-up moving loop EM (MLEM) surveys have indicated that the anomalies are most likely due to paleo-drainages within the regolith. In May 2018, Sandfire began an aircore drilling program on the Morck Well East JV Project. Soon after, narrow zones of sulphide and supergene copper mineralisation were reported from three contiguous holes (ASX announcement, dated 20 July 2018). The three intercepts assayed as follows: (cid:1) (cid:1) (cid:1) MWAC0109 11m @ 3.5% Cu, from 73m, including 3m @ 9.5% Cu, from 81m MWAC0111 6m @ 1.3% Cu, from 112m, including 1m @ 4.5% Cu, from 113m MWAC0112 9m @ 2.3% Cu, from 146m, including 3m @ 5.7% Cu, from 149m Subsequent follow-up by RC and diamond core drilling, and a DHEM survey, have demonstrated that the mineralisation has limited down-dip continuity and strike extent, although the diamond core also clearly confirms the favourable nature of the geological sequence, in terms of prospectivity. The aircore drilling programme is ongoing and a total of 506 holes were completed across the JV project area in Q2 2018 (35,350m). Post-period end, Sandfire confirmed that a MLEM survey had begun and that this would extend across the full prospective sequence over the entire Morck Well JV Project area. In addition, further RC drill holes are being planned to further investigate the strike extent southwest of the aircore hits. Chunderloo Project Review As the main exploration focus this year was on the Bryah Basin, work on Chunderloo was restricted to comprehensive review of previous work, historical data collected on this Project and an airbourne magnetic survey conducted over the project area in August 2017. Future Work Plans Work plans are currently focused on target generation/confirmation in the Bryah Basin, via the geochemical soil sampling programme at Cashman, field checking and follow-up MLEM surveys of the top priority VTEM targets, and completion of the new regional and detailed geological interpretations. Targets will be drill-tested as soon as possible. In addition, a geological review of the Wodger and Forrest Prospects is nearing completion and it is likely that further drilling will be required to advance those prospects. Further target generative work will include more geochemical soil sampling in areas where there is minimal transported cover and/or the regolith is not too deep. Systematic aircore drilling may be necessary in some problematic areas, but these will be targeted to save on costs. Appropriate ground geophysical surveys will be conducted, as required to complement the geochemical targeting. Corporate On 27 February 2018 the Company announced it had entered a Farm-in Agreement with Sandfire Resources NL (“Sandfire”) in relation to the Morck Well East and Doolgunna Projects. The transaction with Sandfire allows the Company to focus on copper-gold exploration on its key Forrest, Cashmans and Horseshoe projects in the Bryah Basin. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 16 | P a g e DIRECTORS’ REPORT On 20 April 2018, shareholders voted in favour of a Board restructure and Mr Neville Bassett and Mr Brian Thomas joined the Board as Non-Executive Directors. Mr Bassett replaced Ms Bronwyn Barnes as Chair of the Company (ASX announcement dated 26 April 2018). On 2 August 2018, the Company announced the appointment of Mr Craig Hall as Non-Executive Director of the Board. Mr Hall has been nominated to represent the interests of Investmet Limited as a replacement to Ms Barnes. Mr Craig Hall is an experienced geologist with over 30 years of minerals industry experience in exploration, development and production roles in a range of commodities, principally precious and base metals. He has held a variety of senior positions with mid-tier and junior sector resource companies within Australia and overseas. He has previously consulted to the minerals industry providing high quality exploration outcomes, on-site mining support, expert reporting, project valuations and strategic advice to companies through an association with a well-respected Western Australian resource consultancy. Until 6 August 2018, Mr Hall served as a Non- Executive Director of Eclipse Metals Ltd (ASX: EPM) an Australian exploration company focused on exploring the Northern Territory and Queensland for uranium and manganese mineralisation. On 6 July 2018, the Company announced that Mr Wade Evans had ceased employment as the Company’s CEO. The Company also announced the appointment of highly experienced finance executive, Mr Mike Hendriks, on an initial 3-month consultancy arrangement to oversee day-to-day management of the Company. Mr Hendriks is a Chartered Accountant and has gained extensive experience in the financial services sector in various roles in the banking and stockbroking industries. He also has extensive experience as a company director and secretary holding various executive and non-executive directorships of listed and unlisted companies in both the industrial and resource sectors. During the year, the following securities were issued by the Company: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) 21,000,000 ordinary fully paid shares at an issue price of $0.08 each, by way of placement, to raise $1,680,000; 25,488,478 ordinary fully paid shares on the exercise of the same number of options at an exercise price of $0.08 each raising $2,039,078. The exercise of options included the issue of 15,625,000 ordinary fully paid shares that were subject to an underwriting agreement; 73,727 ordinary fully paid shares on the exercise of the same number of options at an exercise price of $0.12 each raising $8,847; 7,000,000 ordinary fully paid shares as consideration for the acquisition of Doolgunna tenement E52/2438; 40,314 ordinary fully paid shares at an issue price of $0.0593 each in satisfaction for interest owing on convertible notes; and 16,000,000 performance rights expiring 20 November 2020 issued in two equal tranches, each with market based performance milestones. 8,000,000 vesting upon achieving a market capitalisation of $48 million for a period of 30 consecutive days and 8,000,000 vesting upon achieving a market capitalisation of $60 million for a period of 30 consecutive days. On 20 September 2017, 39,912,980 listed options exercisable at $0.12 each expired unexercised. On 20 June 2018, 49,702,731 listed options exercisable at $0.12 each expired unexercised. On 20 April 2018, pursuant to the terms of issue, 2,000,000 performance rights automatically lapsed. Subsequent to year end, pursuant to the terms of issue, 8,000,000 performance rights have automatically lapsed. On 2 July 2018, the Company allotted 896,000 fully paid ordinary shares to a noteholder following the conversion of two Convertible Notes approved by shareholders at the general meeting held 17 July 2015. On 20 September 2018, 6,000,000 unlisted options exercisable at $0.12 expired. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 17 | P a g e DIRECTORS’ REPORT 5. Significant Changes in the State of Affairs In the opinion of the directors there were no significant changes in the state of affairs of the Group that occurred during the financial year, other than those described in this report under ‘Principal activities and review of operations’. 6. Environmental Regulations The Group’s exploration activities are subject to various environmental regulations. The Board is responsible for the regular monitoring of environmental exposures and compliance with environmental regulations. The Group is committed to achieving a high standard of environmental performance and conducts its activities in a professional and environmentally conscious manner and in accordance with applicable laws and permit requirements. The Board believes that the Group has adequate systems in place for the management of its environmental requirements and is not aware of any breach of those environmental requirements as they apply to the Group. The directors have considered the enacted National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduces 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 will have no effect on the Company for the current financial year. The directors will reassess this position as and when the need arises. 7. Dividends The directors have not recommended the declaration of a dividend. No dividends were paid or declared during the current or prior period. 8. Events Subsequent to Reporting Date Except for the events noted below, no other material events have occurred subsequent to the reporting date. (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) On 2 July 2018, 800,000 fully paid ordinary shares were issued following conversion of 2 Convertible Notes and 96,000 fully paid ordinary shares were issued relating to the accrued interest on these Convertible notes. On 6 July 2018, Wade Evans resigned as Chief Executive Officer and Mr Mike Hendriks was appointed on an initial 3 month consultancy to oversee day-to-day management. On 20 July 2018, the follow-up drilling in the Morck Well Joint Venture was completed and the MLEM surveying was underway. On 27 July 2018, the VTEM survey identifies multiple targets in the Bryah Basin. On 1 August 2018, Mr Craig Hall was appointed Non-Executive Director and is the nominated representative for the interests of Investmet Limited. On 5 September 2018, a new geological interpretation of the Forrest Project was completed. On 14 September 2018, an Aircore drilling programme at the Wodger Prospect commenced. On 20 September 2018, 6,000,000 unexercised $0.12 options expired. 9. Likely Developments Comments on expected results of certain operations of the Group are included in this financial report under section 4, principal activities and review of operations. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 18 | P a g e DIRECTORS’ REPORT 10. Share Options Unissued shares under option At the date of this report unissued ordinary shares of the Company under option are: Expiry date Exercise Price No. of options 3-Oct-18 8-Oct-19 $0.60 $1.30 1,480,000 Unlisted 2,500,000 Unlisted 3,980,000 The options do not entitle the holder to participate in any share issue of the Company or any other body corporate. Other shares issued since the end of the financial year Issue date Share price No. of shares Nature 2 July 2018 $0.05 896,000 Conversion of convertible notes and accrued interest 11. Convertible Notes The following convertible notes have been converted during or since the end of the financial year: Face Value No. of Notes Total Value Conversion Rate $20,000 2 $40,000 $0.05 The following convertible notes remain on issue at the end of the financial year: Face Value No. of Notes Total Value Conversion Rate $20,000 2 $40,000 $0.05 The conversion rate has been restated on a post-consolidation basis. As the convertible notes expire on 1 July 2018, the notes were converted on 2 July 2018 and earnt interest at a rate of 12% per annum. 12. Remuneration Report - Audited Principles of compensation Remuneration is referred to as compensation throughout this report. Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Group. Key management personnel comprise the directors of the Group. Compensation levels for key management personnel of the Group are competitively set to attract and retain appropriately qualified and experienced directors and executives. The Board obtains independent advice on the appropriateness of compensation packages of the Group given trends in comparative companies both locally and internationally and the objectives of the Group’s compensation strategy. The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. Compensation packages include a mix of fixed compensation, equity-based compensation, performance-based compensation as well as employer contributions to superannuation funds. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 19 | P a g e DIRECTORS’ REPORT Shares and options may only be issued to directors subject to approval by shareholders in general meeting. Fixed compensation Fixed compensation consists of base compensation as well as employer contributions to superannuation funds. Compensation levels are reviewed annually by the Board through a process that considers individual and overall performance of the Group. In addition, from time to time external consultants provide analysis and advice to ensure the directors’ and senior executives’ compensation is competitive in the market place. The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2018. Performance linked compensation (Short-term incentive bonus) In considering the Group’s strategic objectives the Board may integrate certain performance linked short-term incentives (STIs) into key management personnel compensation packages. Performance linked compensation primarily include STIs and are considered by the Board as and when projects are delivered and are entirely at the Board’s discretion. The measures chosen are designed to align the individual’s reward to the achievement of the Group’s strategies and goals and to reward key management personnel for meeting or exceeding their personal objectives. No bonuses were paid during the financial year. Equity based compensation (Long-term incentive bonus) The Board provides equity-based long-term incentives (LTIs) to promote continuity of employment and to provide additional incentive to key management personnel to increase shareholder wealth. LTIs are provided as options and rights over ordinary shares of the Company and are provided to key management personnel based on their level of seniority and position within the Group. Options and rights may only be issued to directors subject to approval by shareholders in general meeting. Key Management Personnel Incentives Short-term and long-term incentive structure and consequences of performance on shareholder wealth have been considered. However given the Group’s principal activity during the course of the financial year consisted of exploration and evaluation, the Board has given more significance to service criteria instead of market related criteria in setting the Group’s incentive schemes. Accordingly, at this stage the Board does not consider the Company’s earnings or earning measures to be an appropriate key performance indicator. The issue of options or rights as part of the remuneration package of directors is an established practice for listed exploration companies and has the benefit of conserving cash whilst appropriately rewarding the directors. In considering the relationship between the Group’s remuneration policy and the consequences for the Company’s shareholder wealth, changes in share price are analysed. The Group’s respective earnings and share price for the period 1 July 2013 to 30 June 2018 are as follows: 30 Jun 14 30 Jun 15 30 Jun 16 30 Jun 17 30 Jun 18 Net loss (7,866,050) (20,162,654) (6,260,965) (884,710) (1,317,036) Closing ASX share price $0.20 $0.017 $0.013 $0.057 $0.068 Note the closing prices for the period 30 June 2014 to 30 June 2016 are based on pre-consolidation figures. In the opinion of the Board, these earnings, as listed above, are largely irrelevant for assessing the Group’s respective performance during the exploration and evaluation phases. Service contracts i) Non-Executive Chair Director and consulting services are provided by Mr Bassett via an associated company on normal commercial terms and conditions. The Non-Executive Chair rate was set at $45,000 per annum with effect from 1 February 2017, previously $60,000 per annum. Additional fees are paid to Mr Bassett for any additional duties performed outside his role as Non-Executive Chair at a rate of $1,500 per day. 20 | P a g e Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 DIRECTORS’ REPORT ii) Executive Director Services were provided by Mrs Fullarton (cid:1) (cid:1) (cid:1) (cid:1) Remuneration - $225,000 per annum, (excluding superannuation) Superannuation - $21,375 Termination notice required - 3 months Termination benefit: $56,250 iii) Non-Executive Directors Non-Executive Directors are currently paid at a rate of $30,000 per annum (previously $50,000 per annum) on a continuous service arrangement requiring at least one month’s notice for termination. Total compensation for all Non-Executive Directors are set based on advice, from time to time, from external advisors with reference to fees paid to other Non-Executive Directors of comparable companies. The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2018. Non-Executive Directors’ fees are presently limited to $250,000 per annum, excluding director services charged under management or consulting contracts. Directors’ fees cover all main Board activities. The Board has no established retirement or redundancy schemes in relation to Non-Executive Directors. iv) Changes in Directors and Executives subsequent to year end Wade Evans resigned from the position of Chief Executive Officer on 6 July 2018. Bronwyn Barnes was removed as a Non-Executive Director on 1 August 2018 as a result of the general meeting held on 20 April 2018, in which Bronwyn remained as a director of Auris Minerals Ltd until which time Investmet found a replacement to represent their interests. Mr Craig Hall was appointed Non-Executive Director on 1 August 2018 as the nominated representative for Investmet Limited. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 21 | P a g e DIRECTORS’ REPORT Key Management Personnel remuneration Details of the nature and amount of each major element of remuneration are as follows: Key Management Personnel (KMP) Short term salary and fees Super- annuation benefits Termination benefits Equity settled share based payments (i) Total Proportion of remuneration performance related Value of options as proportion of remuneration $ $ $ $ $ % % Non-Executive Chair N Bassett (ii) M Kennedy(iii) 2018 2017 2018 2017 8,875 - - 13,334 Chief Executive Officer - - - - W Evans (iv) D Morgan (v) 2018 2017 2018 2017 Chief Operating Officer 211,718 20,113 - - - - - - - - - - - - - - - 8,875 - - 13,334 264,000 495,831 - - - - 50,621 3,563 56,250 - 110,434 M Hendriks (vi) 2018 2017 - - - - - - - - - - Executive Director D Fullarton (vii) 2018 2017 Non-Executive Directors C Hall (viii) B Thomas (ix) B Barnes (x) S Vearncombe (xi) R Martin (xii) N Anderson (xiii) S Heggen (xiv) Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 20,985 8,392 86,336 - 115,713 165,000 25,000 - - - - 5,700 217 - 48,869 46,473 20,617 - 30,000 25,000 - - - - - - - - - 27,669 2,629 - - 22,070 2,097 - - - - - - - - - - - - - - - 41,338 231,338 - - - - - - 5,917 - 88,000 136,869 41,338 87,811 - - 20,617 - 88,000 118,000 20,670 45,670 - - - - - 30,298 - 24,167 346,764 28,722 86,336 440,000 901,822 350,167 33,289 56,250 103,346 543,052 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 53 - - - - - - 18 - - - - 64 47 - - 75 45 - - - - 49 19 (i) (ii) The fair value of the equity settled share based payments are detailed in Note 19 of the Notes to the Financial Statements. Neville Bassett was appointed Non-Executive Chair on 20 April 2018. (iii) Miles Kennedy resigned as Non-Executive Chair on 30 August 2016. (iv) Wade Evans was appointed CEO on 17 July 2017; Resigned 6 July 2018. (v) David Morgan resigned as CEO on 1 September 2016. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 22 | P a g e DIRECTORS’ REPORT (vi) Mike Hendriks was appointed as COO on 6 July 2018 on an initial 3-month consultancy arrangement. (vii) Debbie Fullarton resigned as Executive Director on 11 August 2017. (viii) Craig Hall was appointed as Non-Executive Director on 1 August 2018 as the Investmet representative. (ix) Brian Thomas was appointed as Non-Executive Director on 20 April 2018. (x) Bronwyn Barnes was appointed Non-Executive Chair on 25 November 2016 and ceased as Chair on 20 April 2018 and remained as a Non-Executive Director; Removed 1 August 2018. (xi) Susan Vearncombe was appointed Non-Executive Director on 14 August 2017; Removed 20 April 2018. (xii) Robert Martin was appointed 2 November 2016. (xiii) Nannette Anderson resigned 3 February 2017. (xiv) Simon Heggen resigned 25 November 2016. Equity instruments Options holdings Options refer to options over ordinary shares of Auris and are exercisable on a one-for-one basis. Details of options over ordinary shares in Auris that were granted and vested as compensation to each key management person are as follows: Balance at 1 Jul 17 or date of appointment Granted as remuneration Issue date No. Value Exercised Lapsed Other changes (i) Balance at 30 June 18 or date of resignation Non-Executive Chair N Bassett Chief Executive Officer W Evans Chief Executive Officer M Hendriks Executive Director - - - D Fullarton 2,890,168 Non-Executive Directors C Hall B Thomas R Martin B Barnes - - 4,945,632 2,182,610 S Vearncombe - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,890,168 - - (1,972,816) (2,139,483) 166,667 1,000,000 (91,305) (91,305) - - - - 2,000,000 - (i) Recognising Rob Martin’s relevant interest in SDB Drilling Pty Ltd as announced on 9 April 2018. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 23 | P a g e DIRECTORS’ REPORT Balance at 30 Jun 18 Vested Exercisable Un-exercisable Total Unvested Non-Executive Chair N Bassett Chief Executive Officer W Evans Chief Operating Officer M Hendriks Executive Director D Fullarton Non-Executive Directors C Hall B Thomas R Martin B Barnes S Vearncombe - - - - - - - - - - - - 1,000,000 2,000,000 - 1,000,000 2,000,000 - - - - - - - - - - - - - - - 1,000,000 2,000,000 - - - - - - - - - No terms of equity-settled share-based payment transactions (including options and rights granted as compensation to a key management person) have been altered or modified by the issuing entity during the reporting period or the prior period. During the reporting period, no shares were issued on exercise of options previously granted as compensation and no options were forfeited by key management persons during the reporting period. Rights holdings Rights refer to performance rights held over ordinary shares of the Company and are exercisable on a one-for- one basis when vesting conditions are met. Details of the grant of performance rights to key management personnel are set out in the table below. Tranche Balance at 1 Jul 17 or date of appointment Granted as remuneration Issue date No. Value Exercised Lapsed Other changes (i) Balance at 30 Jun 18 or date of resignation Non-Executive Chair N Bassett Chief Executive Officer W Evans Chief Operating Officer M Hendriks Executive Director D Fullarton Non-Executive Directors C Hall B Thomas R Martin B Barnes S Vearncombe - 1 2 - - - - 1 2 1 2 1 2 - - - - - - - - - - - - - - - - 22/11/2017 3,000,000 141,000 22/11/2017 3,000,000 123,000 - - - - - - - - - - - - 22/11/2017 1,000,000 47,000 22/11/2017 1,000,000 41,000 22/11/2017 1,000,000 47,000 22/11/2017 1,000,000 41,000 22/11/2017 1,000,000 47,000 22/11/2017 1,000,000 41,000 (i) Performance rights cancelled on removal of key management personnel. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (1,000,000) (1,000,000) - 3,000,000 3,000,000 - - - - 1,000,000 1,000,000 1,000,000 1,000,000 - - 24 | P a g e DIRECTORS’ REPORT Share holdings No shares were granted to key management personnel during the reporting period as compensation in 2017 or 2018. The movement during the reporting period in the number of ordinary shares in Auris Minerals Limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows: Balance at 1 Jul 17 or date of appointment 1,100,000 - - 1,950,833 - - 19,728,140 913,044 - Non-Executive Chair N Bassett Chief Executive Officer W Evans Chief Operating Officer M Hendriks Executive Director D Fullarton Non-Executive Directors C Hall B Thomas R Martin B Barnes S Vearncombe Granted as remuneration Exercise of options Other changes (i) - - - - - - - - - - - - - - - - - - - - 1,972,816 91,305 - - 8,950,530 - - Balance at 30 Jun 18 or date of resignation 1,100,000 - - 1,950,833 - - 30,651,486 1,004,349 - (i) Net movement of establishment and cessation with associated entities and announcement of relevant interest in SDB Drilling Pty Ltd and Bulletin Resources Ltd. Other Equity-related KMP Transactions There have been no other transactions involving equity instruments apart from those described in the tables above relating to options, rights, and shareholdings. Other Transactions with KMP and / or their Related Parties There were no other transactions conducted with the Group and KMP or their related parties, apart from those disclosed above relating to equity, compensation and loans, that were conducted other than in accordance with normal employee, customer or supplier relationships on terms no more favourable than those reasonably expected under arm’s length dealings with unrelated persons. END OF AUDITED SECTION 13. Proceeding 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 party to any such proceedings during the year. 14. Diversity The Board is committed to having an appropriate blend of diversity on the Board and in all areas of the Group’s business. The Board has established a policy (‘Diversity Policy’ or ‘policy’) regarding gender, age, ethnic and cultural diversity. Details of the policy are available on the Company’s website. Diversity Policy The Company and all its related bodies corporate are committed to workplace diversity. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 25 | P a g e DIRECTORS’ REPORT The Company recognises the benefits arising from employee and Board diversity, including a broader pool of high quality employees, improving employee retention, accessing different perspectives and ideas and benefiting from all available talent. Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. To the extent practicable, the Company will address the recommendations and guidance provided in the ASX Corporate Governance Council's Principles and Recommendations. The Diversity Policy does not form part of an employee's contract of employment with the Company, nor gives rise to contractual obligations. However, to the extent that the Diversity Policy requires an employee to do or refrain from doing something and at all times subject to legal obligations, the Diversity Policy forms a direction of the Company with which an employee is expected to comply. The key objectives of the Diversity Policy are to achieve: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) a diverse and skilled workforce, leading to continuous improvement in service delivery and achievement of corporate goals; a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff; improved employment and career development opportunities for women; a work environment that values and utilises the contributions of employees with diverse backgrounds, experiences and perspectives through improved awareness of the benefits of workforce diversity and successful management of diversity; and awareness in all staff of their rights and responsibilities with regards to fairness, equity and respect for all aspects of diversity. The Diversity Policy does not impose on the Company, its directors, officers, agents or employee any obligation to engage in, or justification for engaging in, any conduct which is illegal or contrary to any anti-discrimination or equal employment opportunity legislation or laws in any State or Territory of Australia or of any foreign jurisdiction. Diversity Reporting The Group’s gender diversity as at the end of the reporting period is as follows: Board representation Group representation 30 June 2018 30 June 2017 Female Male Female Male No. 1 2 % 25 29 No. 3 5 % 75 71 No. 2 2 % 67 40 No. 1 3 % 33 60 The Company’s proposed diversity objective for the 2018 financial year are to continue to assess and proactively monitor gender diversity at all levels of the Company’s business and the implementation and effectiveness of the Company’s diversity initiatives and programs. 15. Indemnification and Insurance of Officers and Auditors Indemnification The Group indemnifies each of its directors and company secretary. The Group indemnifies each director or officer to the maximum extent permitted by the Corporations Act 2001 from liability to third parties, except where the liability arises out of conduct involving lack of good faith, and in defending legal and administrative proceedings and applications for such proceedings. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 26 | P a g e DIRECTORS’ REPORT The Group must use its best endeavours to insure a director or officer against any liability, which does not arise out of a conduct constituting a wilful breach of duty or a contravention of the Corporations Act 2001. The Group must also use its best endeavour to insure a director or officer against liability for costs and expenses incurred in defending proceedings whether civil or criminal. The Group has not entered into any agreement with its current auditors indemnifying them against any claims by third parties arising from their report on the financial report. The directors of the Company are not aware of any proceedings or claim brought against Auris Minerals Ltd or its controlled entities as at the date of this report. Insurance The Group holds cover in respect of directors’ and officers’ liability and legal expenses’ insurance, for current and former directors and officers of the Group. The premium paid during the year was $9,424. 16. Non-audit Services During the year Greenwich & Co, the Company’s auditor, did not perform any services other than their audit services. In the event that non-audit services are provided by Greenwich & Co, the Board has established certain procedures to ensure that the provision of non-audit services are compatible with, and do not compromise, the auditor independence requirements of the Corporations Act 2001. These procedures include: (cid:1) (cid:1) non-audit services will be subject to the corporate governance procedures adopted by the Group and will be reviewed by the Group to ensure they do not impact the integrity and objectivity of the auditor; and ensuring non-audit services do not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards. Details of the amounts paid to the auditor of the Company and their related practices for audit services provided during the year are set out below. Audit and review of financial reports 2018 $ 29,000 29,000 2017 $ 28,000 28,000 Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 27 | P a g e DIRECTORS’ REPORT 18. Competent Person’s Statement Competent Person’s Statement Information in this report that relates to exploration results is based on and fairly represents information and supporting documentation prepared and compiled by Nick Franey MSc (Mineral Exploration) who is a Member of the Australasian Institute of Geoscientists. The information in this report that relates to previously released exploration was first disclosed under the JORC Code 2004. It has not been updated to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported and is based on and fairly represents information and supporting documentation prepared and compiled by Nick Franey MSc (Mineral Exploration) who is a Member of the Australasian Institute of Geoscientists. Mr Franey is General Manager Geology for Auris Minerals Limited. Mr Franey has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves. Mr Franey consents to the inclusion in the report of the matters based on this information in the form and context in which it appears. No New Information Except where explicitly stated, this report contains references to prior exploration results and Mineral Resource estimates, all of which have been cross referenced to previous market reports made by the Company. The Company confirms that it is not aware of any new information or data that materially affects the information included in the relevant market announcements and, in the case of estimates of Mineral Resources that all material assumptions and technical parameters underpinning the results and/or estimates in the relevant market report continue to apply and have not materially changed. Forward-Looking Statements This report has been prepared by Auris Minerals Limited. This document contains background information about Auris Minerals Limited and its related entities current at the date of this report. This is in summary form and does not purport to be all inclusive or complete. Recipients should conduct their own investigations and perform their own analysis in order to satisfy themselves as to the accuracy and completeness of the information, statements and opinions contained in this report. This report is for information purposes only. Neither this document nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction. This report may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction. Recipients should inform themselves of the restrictions that apply in their own jurisdiction. A failure to do so may result in a violation of securities laws in such jurisdiction. This document does not constitute investment advice and has been prepared without taking into account the recipient’s investment objectives, financial circumstances or particular needs and the opinions and recommendations in this representation are not intended to represent recommendations of particular investments to particular investments to particular persons. Recipients should seek professional advice when deciding if an investment is appropriate. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments. No responsibility for any errors or omissions from this document arising out of negligence or otherwise is accepted. This document does include forward-looking statements. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Auris Minerals Limited. Actual values, results, outcomes or events may be materially different to those expressed or implied in this report. Given these uncertainties, recipients are cautioned not to place reliance on forward-looking statements. Any forward-looking statements in this report speak only at the date of issue of this report. Subject to any continuing obligations under applicable law and ASX Listing Rules, Auris Minerals Limited does not undertake any obligation to update or revise any information or any of the forward-looking statements in this document or any changes in events, conditions or circumstances on which any such forward-looking statement is based. 28 | P a g e Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 DIRECTORS’ REPORT 19. Lead Auditor’s Independence Declaration The lead auditor’s independence declaration is set out on page 43 and forms part of the directors’ report for the financial year ended 30 June 2018. This report is made with a resolution of the directors. NEVILLE BASSETT NON-EXECUTIVE CHAIR Dated at West Perth this 26th day of September 2018 Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 29 | P a g e SCHEDULE OF MINING TENEMENTS Schedule of Mining Tenements as at 30 June 2018 Tenement number Registered holder Doolgunna Project Date granted Area graticular Blocks(bk) / Hectares (ha) Area (Sq km) Notes E52/2438 Auris Minerals Limited 11/02/2010 7bk 21.68 1, 8 Morck Well Project E51/1033 Auris Exploration Pty Ltd 80% Jackson Minerals Pty Ltd 20% 22/09/2005 E51/1883 Auris Exploration Pty Ltd Application E52/1613 E52/1672 Auris Exploration Pty Ltd 80% Jackson Minerals Pty Ltd 20% Auris Exploration Pty Ltd 80% Jackson Minerals Pty Ltd 20% E52/1910 Auris Exploration Pty Ltd E52/2472 Auris Exploration Pty Ltd E52/3275 Auris Exploration Pty Ltd E52/3327 Auris Exploration Pty Ltd E52/3350 Auris Exploration Pty Ltd E52/3351 Auris Exploration Pty Ltd P52/1497 Auris Exploration Pty Ltd P52/1503 Auris Exploration Pty Ltd P52/1504 Auris Exploration Pty Ltd Cashmans Project E51/1053 Auris Exploration Pty Ltd E51/1120 Auris Exploration Pty Ltd E51/1391 Auris Exploration Pty Ltd 51% Northern Star Resources Ltd 49% 29/03/2006 22/09/2005 10/08/2006 19/11/2009 1/06/2016 15/10/2015 2/03/2016 2/03/2016 6/03/2015 6/03/2015 6/03/2015 22/09/2005 10/08/2006 11/11/2010 E51/1641 Auris Exploration Pty Ltd 5/02/2015 Auris Exploration Pty Ltd 51% Northern Star Resources Ltd 49% 19/01/2018 53bk 4bk 30bk 35bk 41bk 2bk 2bk 2bk 3bk 2bk 155.90ha 172.86ha 191.81ha 35bk 40bk 21bk 20bk 3bk 161.84 2, 3, 8 12.3 8 92.77 2, 3, 8 108.02 2, 3, 8 124.21 4 6.1 6.1 6.1 9.2 6.1 1.56 1.73 1.92 105.26 122.46 64.82 61.86 9.2 5 5 5 5 E51/1837 E51/1838 E52/2509 Auris Exploration Pty Ltd 51% Northern Star Resources Ltd 49% 19/01/2018 11bk 33.62 Auris Exploration Pty Ltd 51% Northern Star Resources Ltd 49% 16/06/2011 E52/3500 Auris Exploration Pty Ltd 5/10/2017 6bk 1bk 18.56 3.1 Forrest Project E52/1659 E52/1671 Auris Exploration Pty Ltd 80% Jackson Minerals Pty Ltd 20% Auris Exploration Pty Ltd 80% Jackson Minerals Pty Ltd 20% 27/01/2004 13bk 34.09 2, 6 23/11/2004 61bk 185.26 2, 6 P52/1493 Auris Exploration Pty Ltd 6/03/2015 191.66ha P52/1494 Auris Exploration Pty Ltd 80% Jackson Minerals Pty Ltd 20% 6/03/2015 179.33ha 1.92 1.79 6 2 Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 30 | P a g e SCHEDULE OF MINING TENEMENTS P52/1495 P52/1496 Auris Exploration Pty Ltd 80% Jackson Minerals Pty Ltd 20% Auris Exploration Pty Ltd 80% Jackson Minerals Pty Ltd 20% Horseshoe West Project E52/3248 E52/3291 Auris Exploration Pty Ltd 85% Omni Projects Pty Ltd 15% Auris Exploration Pty Ltd 85% Omni Projects Pty Ltd 15% 6/03/2015 181.09ha 6/03/2015 183.70ha 1.81 1.83 31/03/2015 11bk 33.62 2/03/2016 13bk 34bk 39.73 103.92 2 2 7 7 E52/3166 Auris Exploration Pty Ltd 18/12/2014 Chunderloo Project M51/79 Auris Exploration Pty Ltd 26/06/1986 240.05 ha M51/638 Auris Exploration Pty Ltd 25/10/2012 222.00 ha M51/639 Auris Exploration Pty Ltd 25/10/2012 928.00 ha E51/1830 Auris Exploration Pty Ltd 22/11/2017 1bk P51/3013 Auris Exploration Pty Ltd 22/11/2017 182.116 ha 2.43 2.24 9.38 3.1 1.82 Notes: Auris Exploration Pty Ltd (AE) is a wholly owned subsidiary of Auris Minerals Limited. 1. Ascidian Prospecting Pty Ltd hold a 1% gross revenue royalty from the sale of all minerals 2. Peak Hill Sale Agreement: AE 80%, Jackson Minerals Pty Ltd 20% & free carried to a decision to mine. 3. PepinNini Robinson Range Pty Ltd (PRR) hold a 0.8% gross revenue royalty from the sale or disposal of iron ore. 4. PRR hold a 1.0% gross revenue royalty from the sale or disposal of iron ore. 5. Earning 70% JV interest. 6. Westgold Resources Limited owns gold mineral rights over the AE interest. 7. AE 85% beneficial interest, Omni Projects Pty Ltd 15% beneficial interest. 8. Sandfire Resources NL - Earn-in Agreement with rights to earn 70% interest. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 31 | P a g e CORPORATE GOVERNANCE STATEMENT In fulfilling its obligations and responsibilities to its various stakeholders, the Board of Auris Minerals Limited (Auris) is a strong advocate of corporate governance. The Board has adopted corporate governance policies and practices consistent with the ASX Corporate Governance Council’s “Corporate Governance Principles and Recommendations” (Recommendations) where considered appropriate for a company of Auris’s size and complexity. The 3rd edition of the ASX Corporate Governance Principles and Recommendations was introduced on 27 March 2014 and took effect for a listed entity’s first full financial year ending on or after 1 July 2014. Accordingly this Corporate Governance Statement has been prepared on the basis of disclosure under the 3rd edition of these principles. Details of the Company’s compliance with these principles are summarised in the Appendix 4G announced to ASX in conjunction with the Annual Report. This statement describes how Auris has addressed the Council’s guidelines and eight corporate governance principles and where the Company’s corporate governance practices depart from a recommendation, the Company discloses the reason for adoption of its own practices on an “if not, why not” basis. Given the size and stage of development of the Company and the cost of strict compliance with all the recommendations, the Board has adopted a range of modified procedures and practices which it considers appropriate to enable it to meet the principles of good corporate governance. At the end of this statement is a checklist setting out the recommendations with which the Company does or does not comply. The information in this statement is current as at 26 September 2018. following governance-related documents can be The www.aurisminerals.com.au, under the section marked “Corporate Governance Statement”. found on the Company’s website at Charters (cid:1) Board Policies and Procedures (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Code of Conduct Policy and Procedure for Selection and (Re)Appointment of Directors Policy on Assessing the Independence of Directors Securities Trading Policy Risk Management Policy Procedure for the Selection, Appointment and Rotation of External Auditor Policy on Continuous Disclosure Shareholder Communication Policy Diversity Policy Principle 1 – Lay solid foundations for management and oversight Role and Responsibilities of the Board and Management The main function of the Board is to lead and oversee the management and strategic direction of the Company. The Board regularly measures the performance of Management in implementation of the strategy through regular Board meetings. Auris has adopted a formal board charter delineating the roles, responsibilities, practices and expectations of the Board collectively, the individual directors and Management. The Board of Auris ensures that each member understands its roles and responsibilities and ensures regular meetings so as to retain full and effective control of the Company. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 32 | P a g e CORPORATE GOVERNANCE STATEMENT Role of the Board The Board responsibilities are as follows: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Setting the strategic aims of Auris and overseeing Management’s performance within that framework; Making sure that the necessary resources (financial and human) are available to the Company and Management to meet its objectives; Overseeing and measuring Management’s performance of the Company’s strategic plan; Selecting and appointing a Chief Executive Officer (or equivalent) with the appropriate skills to help the Company in the pursuit of its objectives; Controlling and approving financial reporting, capital structures and material contracts; Ensuring that a sound system of risk management and internal controls is in place; Setting the Company’s values and standards; Undertaking a formal and rigorous review of the Corporate Governance policies to ensure adherence to the ASX Corporate Governance Council principles; Ensuring that the Company’s obligations to shareholders are understood and met; Ensuring the health, safety and well-being of employees in conjunction with Management, developing, overseeing and reviewing the effectiveness of the Company’s occupational health and safety systems to assure the well-being of all employees; Ensuring an adequate system is in place for the proper delegation of duties for the effective day to day running of the Company without the Board losing sight of the direction that the Company is taking; Establishing a diversity policy and setting objectives for achieving diversity. Delegation to Management Other than matters specifically reserved for the Board, responsibility for the operation and administration of the Company has been delegated to the Chief Executive Officer (or equivalent). This responsibility is subject to an approved delegation of authority which is reviewed regularly and at least annually. Internal control processes are designed to allow management to operate within the parameters approved by the Board and the Chief Executive Officer (or equivalent) cannot commit the Company to additional activities or obligations in excess of these delegated authorities without specific approval of the Board. Election of Directors The Board is responsible for overseeing the selection process of new directors, and will undertake appropriate checks before appointing a new director, or putting forward a candidate for election as a director. All relevant information is to be provided in the Notice of Meeting seeking the election or re-election of a director including: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) biographical details including qualifications and experience; other directorships and material interests; term of office; statement by the board on independence of the director; statement by the board as to whether it supports the election or re-election; and any other material information. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 33 | P a g e CORPORATE GOVERNANCE STATEMENT Terms of appointment Non-Executive Directors To facilitate a clear understanding of roles and responsibilities all non-executive directors have signed letters of appointment. This letter of appointment includes acknowledgement of: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) director responsibilities under the Corporations Act, Listing Rules, the Company’s Constitution and other applicable laws; corporate governance processes and Company policies; board and board committee meeting obligations; conflicts and confidentiality procedures; securities trading and required disclosures; access to independent advice and employees; confidentiality obligations; directors fees; expenses reimbursement; directors and officers insurance arrangements; other directorships and time commitments; and board performance review. Chief Executive Officer (or equivalent) The Chief Operating Officer has a contract services agreement for an initial term of 3 months and thereafter extended on a monthly basis by mutual consent. Role of Company Secretary The Company Secretary is accountable to the Board for: (cid:1) (cid:1) (cid:1) (cid:1) advising the Board and committees on corporate governance matters; the completion and distribution of board and committee papers; completion of board and committee minutes; and the facilitation of director induction processes and ongoing professional development of directors. All directors have access to the Company Secretary who has a direct reporting line to the Chair. Diversity The Board values diversity in all aspects of its business and is committed to creating a working environment that recognises and utilizes the contribution of its employees. The purpose of this is to provide diversity and equality relating to all employment matters. The Company’s policy is to recruit and manage on the basis of ability and qualification for the position and performance, irrespective of gender, age, marital status, sexuality, nationality, race/cultural background, religious or political opinions, family responsibilities or disability. The company opposes all forms of unlawful and unfair discrimination. During the reporting period to 30 June 2018 the Board was represented by three females and for the majority of the period, the Board comprised three directors, two of whom were female and one was male. As at 30 June 2018, the Board comprised of three directors, one of whom was female and the Board currently comprises four directors, all of whom are male. The Board has determined that the composition of the current Board represents the best mix of Directors that have an appropriate range of qualifications and expertise, can understand and competently deal with current and emerging business issues and can effectively review and challenge the performance of management. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 34 | P a g e CORPORATE GOVERNANCE STATEMENT The Company has disclosed measurable diversity objectives for the current period in the Remuneration Report included in the Annual Report for the year ended 30 June 2018. The Company is continuing to assess and proactively monitor gender diversity at all levels of Auris’s business and recognizes that it operates in a very competitive labour market where positions are sometimes difficult to fill. However, every candidate suitably qualified for a position has an equal opportunity of appointment regardless of gender, age, ethnicity or cultural background. The Company currently has 1 full-time employee who is male and 1 casual employee who is female. Performance review Board and board committees A review of the Board’s performance and effectiveness is conducted annually and the performance of individual directors is undertaken regularly. The Board has the discretion for these reviews to be conducted either independently or on a self-assessment basis. The review focuses on: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) strategic alignment and engagement; board composition and structure; processes and practices; culture and dynamics; relationship with management; and personal effectiveness. A formal review of the Board’s performance and effectiveness in respect of the year ended 30 June 2018 did not occur. Chairman and senior executives Performance evaluation of the Non-Executive Chairman, senior executives and employees is undertaken annually through a performance appraisal process which involves reviewing and assessment of performance against agreed corporate and individual key performance indicators and deliverables. For further information refer to the Remuneration Report included in the Annual Report for the year ended 30 June 2018. Retirement and rotation of directors Retirement and rotation of directors are governed by the Corporations Act 2001 and the Constitution of the Company. Each year, one third of directors must retire and may offer themselves for re-election. Any casual vacancy filled will be subject to shareholder vote at the next Annual General Meeting of the Company. It is intended that Mr Hall will stand for re-election at the Company’s 2018 Annual General Meeting as this is the first annual general meeting since his appointment and Mr Martin will stand for re-election by rotation. Independent Professional Advice Each director of the Company or a controlled entity has the right to seek independent professional advice at the expense of the Company or the controlled entity. However prior approval of the Chairman is required which will not be unreasonably withheld. Access to employees Directors have the right of access to any employee. Any employee shall report any breach of corporate governance principles or Company policies to the Non-Executive Chairman who shall remedy the breach. If the breach is not rectified to the satisfaction of the employee, they shall have the right to report any breach to an independent director without further reference to senior executives of the Company. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 35 | P a g e CORPORATE GOVERNANCE STATEMENT Directors’ and officers’ liability insurance Directors’ and officers’ liability insurance is maintained by the Company for the Directors and senior executives at the Company’s expense. Board meetings The frequency of board meetings and the extent of reporting from management at board meetings are as follows: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) a minimum of four scheduled meetings are to be held per year; other meetings will be held as required; meetings can be held where practicable by electronic means; information provided to the Board includes all material information related to the operations of the Company including exploration, development and production operations, budgets, forecasts, cash flows, funding requirements, investment and divestment proposals, business development activities, investor relations, financial accounts, taxation, external audits, internal controls, risk assessments, people and health, safety and environmental reports and statistics; once established, the Chairman of the appropriate board committee will report to the next subsequent board meeting the outcomes of that meeting and the minutes of those committee meetings are also tabled. The number of directors’ meetings (including meetings of committees of directors where applicable) and the number of meetings attended by each of the directors of the Company during the financial year are set out in the Directors’ Report included in the Annual Report for the year ended 30 June 2018. Principle 2 - Structure the Board to add value Composition of the Board The names of the directors of the Company and their qualifications are set out in the section headed “Information on Director’s in the Directors’ Report of the financial report for the year ended 30 June 2018. The composition of the Board has been structured so as to provide Auris with an adequate mix of directors with industry knowledge, technical, commercial and financial skills together with integrity and judgment considered necessary to represent shareholders and fulfil the business objectives of the Company. The ASX Corporate Governance Council guidelines recommend that the Board should constitute of a majority of independent directors and that the Chairperson should be independent. For the majority of the reporting period the Board consisted of three directors of whom one was considered independent, being Dr Susan Vearncombe (Non-Executive Director – appointed 11 August 2017 and resigned on 20 April 2018). Ms Bronwyn Barnes (Non-Executive Chair – appointed 25 November 2016 and removed 1 August 2018) did not meet the criteria for an independent director as the nominee for Investmet Limited, a substantial shareholder of the Company and Mr Robert Martin (Non-Executive Director - appointed 2 November 2016) did not meet the criteria for an independent director as a substantial shareholder of the Company. The Board currently consists of Mr Neville Bassett (Independent Non-Executive Chair – appointed 20 April 2018), Mr Robert Martin (Non-Executive Director), Mr Brian Thomas (Independent Non-Executive Director appointed 20 April 2018) and Mr Craig Hall (Non-Executive Director – appointed 1 August 2018 as nominee for Investmet Limited, a substantial shareholder of the Company). The Company does not have a majority of independent directors and the Board considers the current balance of skills and expertise is appropriate for the Company. The detailed skills matrix of the Board for a company of Auris’s size and complexity is not considered necessary. The principal business of the Company at present is as an explorer of its Bryah Basin tenement package, which is prospective for copper and copper-gold discoveries, therefore requiring a skillset of geological and geophysical expertise, executive management, financial and commercial skills. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 36 | P a g e CORPORATE GOVERNANCE STATEMENT The Board comprises directors who each have extensive technical, financial and commercial expertise. The Board will address the skills matrix commensurate with the growth and development of the Company’s activities to ensure those skill sets are complemented by additional industry expertise in the sector pursued as required. Nomination of other Board Members Membership of the Board of Directors is reviewed on an on-going basis by the Chairperson of the Board to determine if additional core strengths are required to be added to the Board in light of the nature of the Company’s businesses and its objectives. The Board does not have a separate Nomination Committee and does not believe it is necessary in a Company of Auris’s size. Director induction and ongoing professional development The Company does not have a formal induction program for Directors but does provide Directors with information pack detailing policies, corporate governance and various other corporate requirements of being a director of an ASX Listed company. Due to the size and nature of the business, Directors are expected to already possess a level of both industry and commercial expertise before being considered for a directorship of the Company. Directors are provided with the opportunity to access employees of the business and any information as they require about the business including being given access to regular news articles and publications where considered relevant. Principle 3 - Promote ethical and responsible decision-making Code of Conduct Directors, officers, employees and consultants to the Company are required to observe high standards of behaviour and business ethics in conducting business on behalf of the Company and they are required to maintain a reputation of integrity on the part of both the Company and themselves. The Company does not contract with or otherwise engage any person or party where it considers integrity may be compromised. Conflicts of Interest Directors are required to disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist between the interests of the director or the interests of any other party in so far as it affects the activities of the Company and to act in accordance with the Corporations Act if conflict cannot be removed or if it persists. That involves taking no part in the decision making process or discussions where that conflict does arise. Trading in Company Securities Directors are required to make disclosure of any share trading. The Company policy in relation to share trading is that officers are prohibited to trade whilst in possession of unpublished price sensitive information concerning the Company or within a period of the release of results i.e. the blackout period. That is information which a reasonable person would expect to have a material effect on the price or value of the Company’s shares. An officer must receive authority to acquire or sell shares with the directors or the Company Secretary prior to doing so to ensure that there is no price sensitive information of which that officer might not be aware. The undertaking of any trading in shares must be notified to the ASX. Principle 4 - Safeguard integrity in financial reporting Auris has a financial reporting process which includes half year and full-year results which are signed off by the Board before they are released to the market. The Board does not have a separate Audit Committee and does not believe it is necessary in a Company of Auris’s size. Instead, the three Board members, who each have extensive commercial and financial expertise, manage the financial oversight as well as advise on the modification and maintenance of the Company's financial reporting, internal control structure, external audit functions, and appropriate ethical standards for the management of the Company. In discharging its oversight role, the Board is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and the authority to engage independent counsel and other advisers as it determines necessary to carry out its duties. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 37 | P a g e CORPORATE GOVERNANCE STATEMENT The Chief Executive Officer (or equivalent) reports in writing on the propriety of compliance on internal controls and reporting systems and ensures that they are working efficiently and effectively in all material respects. The Company has established procedures for the selection, appointment and rotation of its external auditor. The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises, as recommended by the Board. Candidates for the position of external auditor must demonstrate complete independence from the Company through the engagement period. The Board may otherwise select an external auditor based on criteria relevant to the Company’s business and circumstances. The performance of the external auditor is reviewed on an annual basis by the Board. The Company’s external auditor attends each Annual General meeting and is available to answer questions from shareholders relevant to the conduct of the external audit, the preparation and content of the Auditor’s Report, the accounting policies adopted by the Company and the independence of the auditor. Principle 5 - Make timely and balanced disclosure Auris has adopted a formal policy dealing with its disclosure responsibilities. The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the ASX as well as communicating with the ASX. In accordance with the ASX Listing Rules the Company immediately notifies the ASX of information: (cid:1) (cid:1) concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company’s securities; and that would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of the Company’s securities. The policy also addresses the Company’s obligations to prevent the creation of a false market in its securities. Auris ensures that all information necessary for investors to make an informed decision is available on its website. The Non-Executive Chairman has ultimate authority and responsibility for approving market disclosure which, in practice, is exercised in consultation with the Board and Company Secretary. In addition, the Board will also consider whether there are any matters requiring continuous disclosure in respect of each and every item of business that it considers. Principle 6 - Respect the rights of shareholders The Board’s fundamental responsibility to shareholders is to work towards meeting the Company’s objectives so as to add value for them. The Board maintains an investor relation program which will inform shareholders of all major developments affecting the Company by: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) preparing half yearly and yearly financial reports; preparing quarterly cash flow reports and reports as to activities; making announcement in accordance with the listing rules and the continuous disclosure obligations; posting all of the above on the Company’s website; annually, and more regularly if required, holding a general meeting of shareholders and forwarding to them the annual report, if requested, together with notice of meeting and proxy form; and voluntarily releasing other information which it believes is in the interest of shareholders. The Annual General Meeting enables shareholders to discuss the annual report and participate in the meetings either by attendance or by written communication. The Company provides all shareholders with a Notice of Meeting so they can be fully informed and be able to vote on all resolutions at the Annual General Meeting. Shareholders are able to discuss any matter with the directors and/or the auditor of the Company who is also invited to attend the Annual General Meeting. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 38 | P a g e CORPORATE GOVERNANCE STATEMENT Shareholders have the option to receive all Company and share registry communications electronically, and may also communicate with the Company by emailing the Company via its website. All shareholders have the ability to request copies of ASX releases, all of which are published and available on the Company’s website immediately after they are released to ASX. The Company regularly reviews its stakeholder communication policy and endeavours to maintain a program appropriate for a company of its size and complexity. Principle 7 - Recognise and Manage Risk The Board has adopted a Risk Management Policy, which sets out the Company’s risk profile. Under the policy, the Board is responsible for approving the Company’s policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control. Under the policy, the Board delegate’s day-to-day management of risk to the Chief Executive Officer or equivalent, who is responsible for identifying, assessing, monitoring and managing risks. The Chief Executive Officer or equivalent is also responsible for updating the Company’s material business risks to reflect any material changes, with the approval of the Board. In fulfilling the duties of risk management, the Chief Executive Officer or equivalent may have unrestricted access to Company employees, contractors and records and may obtain independent expert advice on any matter they believe appropriate, with the prior approval of the Board. The Board does not have a separate Risk Management Committee as the Board monitors and reviews the integrity of financial reporting and the Company’s internal financial control systems. Management assess the effectiveness of the internal financial control on an annual basis and table concerns and recommendations at Board meetings were required. In addition, the following risk management measures have been adopted by the Board to manage the Company’s material business risks: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Establishment of financial control procedures and authority limits for management; Approval of an annual budget; Adoption of a compliance procedure for the purpose of ensuring compliance with the Company’s continuous disclosure obligations; and Adoption of a corporate governance manual which contains other policies to assist the Company to establish and maintain its governance practices. Maintenance and review of a risk register to identify the Company’s material business risks and risk management strategies for these risks. The risk register is reviewed half yearly and updated as required. Management reports to the Board on material business risks at each Board meeting. The Board has required management to design, implement and maintain risk management and internal control systems to manage the material business risks of the Company. The Board also requires management to report to it confirming that those risks are being managed effectively. The Board has received a report from management as to the effectiveness of the Company’s management of its material business risks for the financial year ended 30 June 2018. The Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) have provided a declaration to the Board in accordance with section 295A of the Corporations Act and has assured the Board that such declaration is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial risks. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 39 | P a g e CORPORATE GOVERNANCE STATEMENT Internal Audit The Company does not have an internal audit function as the Board believes the business is neither the size nor complexity that requires such a function. The Board is currently responsible for monitoring the effectiveness of internal controls, risk management procedures and governance. Sustainability Risks The Company has a detailed risk matrix which it regularly reviews and which highlights critical risk factors the Company faces at any particular time. The principal risks highlighted are what would typically be expected for a small listed exploration company and include; (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Reliance on key executives Inability to access new exploration capital Unsuccessful exploration results Exposure to other operators, be it through Joint Venture agreements or actions of those operators in an operational sense Legislature changes in jurisdiction the Company operates in As the Company expands its activities either within existing projects or with the addition of new projects, it is expected that the sustainability risks will change accordingly. The Board reviews the overall sustainability of both the copper-gold exploration business and more specifically, the Company, in its normal course of business and therefore does not produce a separate sustainability report. Principle 8 - Remunerate fairly and responsibly The Company does not have a Remuneration Committee. Instead, the Board monitors and reviews the remuneration policy of the Company. The Board will engage an independent remuneration consultant to review the Company’s policy on remuneration as and when required. Details of the remuneration policy are contained in the Remuneration Report included in the Directors’ Report. The Company’s policy is to remunerate non-executive directors at a fixed fee for time, commitment and responsibilities. Remuneration for non-executive directors is not linked to individual performance. From time-to- time the Company may grant options to non-executive directors. The grant of options is designed to recognise and reward efforts as well as to provide non-executive directors with additional incentive to continue those efforts for the benefit of the Company. The maximum aggregate amount of fees (including superannuation payments) that can be paid to non-executive directors is subject to approval by the shareholders at general meeting. Pay and rewards for executive directors and senior executives consists of a base salary and performance incentives. Long term performance incentives may include options and / or performance rights granted at the discretion of the Remuneration Committee and subject to obtaining the relevant approvals. The grant of options and / or performance rights is designed to recognise and reward efforts as well as to provide additional incentive and may be subject to the successful completion of performance hurdles. Executives are offered a competitive level of base pay at market rates (for comparable companies) and are reviewed annually to ensure market competitiveness. The Company’s policy is not to allow transactions in associated products which limit the risk of participating in unvested elements of equity-based compensation plans. There are no termination or retirement benefits for non-executive directors (other than superannuation). Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 40 | P a g e ADDITIONAL SHAREHOLDER INFORMATION Shareholder Information The shareholder information set out below was applicable at 20 September 2018. A. Distribution of Equity Securities i) Analysis of numbers of shareholders by size of holding: Ordinary Shares (AUR) No. of shareholders Percentage of issued capital 125 103 176 676 327 1,407 0.01% 0.07% 0.35% 6.71% 92.86% 100% 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 Over 100,000 Total ii) 360 holdings of a less than marketable parcel at $0.05 per share. B. Equity Security Holders Twenty largest quoted equity security holders The names of the 20 largest holders of quoted equity securities are listed below: Investmet Ltd JP Morgan Nom Aust Ltd HSBC Custody Nom Aust Ltd Martin, R P & S P Investmet Ltd Citicorp Nom Pty Ltd Hades Corp WA Pty Ltd Motte & Bailey Pty Ltd All-States Finance Pty Ltd Guina Global Inv Pty Ltd Pershing Aust Nom Pty Ltd Perth Select Seafoods Pty Ltd Bayferry Pty Ltd BNP Paribas Nom Pty Ltd Onmell Pty Ltd Gleneagle Sec Nom Pty Ltd Botsis Holdings Pty Ltd Southern Cross Cap Pty Ltd Goldfire Enterprise Pty Ltd Riverview Corp Pty Ltd Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 No. of ordinary shares held 40,959,103 Percentage of issued shares 10.02% 35,894,827 27,038,665 22,147,280 18,954,491 14,195,531 14,175,000 12,693,419 12,247,830 5,200,000 5,100,000 5,000,000 4,800,000 4,631,148 3,551,912 3,533,395 3,500,000 3,500,000 3,217,392 3,215,083 8.78% 6.62% 5.42% 4.64% 3.47% 3.47% 3.11% 3.00% 1.27% 1.25% 1.22% 1.17% 1.13% 0.87% 0.86% 0.86% 0.86% 0.79% 0.79% 243,555,076 59.60% 41 | P a g e ADDITIONAL SHAREHOLDER INFORMATION Unquoted equity securities 1,480,000 unlisted $0.60 options held by seventeen (17) option holders, expiring 3 October 2018 2,500,000 unlisted $1.30 options held by eighteen (18) option holders, expiring 8 October 2019 6,000,000 performance rights held by two (2) holders, expiring 22 November 2020 C. Substantial Holders As at 26 September 2018, the Company had received substantial shareholder notices from the following shareholders: Shareholder No. of shares Percentage of issue Michael George Fotios Goldfire Enterprises Pty Ltd SG Hiscock & Company Limited 74,438,594 28,651,486 20,493,391 18.26% 7.03% 5.03% Note: i) The above details may not reconcile to the information in the Twenty Largest Security Holders list as revised substantial shareholder notices had not been received by the Company as at 26 September 2018. D. Voting Rights At a general meeting of shareholders: (a) On a show of hands, each person who is a member or sole proxy has one vote. (b) On a poll, each shareholder is entitled to one vote for each fully paid share. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 42 | P a g e CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018 Finance income Grant income Administrative expenses Finance costs Release from right of first refusal Share based payments expense Write off exploration assets Loss before income tax Income tax benefit (Loss) from continuing operations Note 3 3 3 19 10 4 30 Jun 2018 30 Jun 2017 $ 62,210 53,857 (1,154,494) (5,652) - (616,000) (364,813) $ 25,093 - (1,220,231) (11,920) (92,885) (142,566) (254,115) (2,024,892) (1,696,624) 707,856 811,914 (1,317,036) (884,710) Other comprehensive income for the period, net of tax - - Total comprehensive income for the period (1,317,036) (884,710) Loss per share Basic loss per share attributable to ordinary equity holders 5 (0.33) (0.30) The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 44 | P a g e CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 ASSETS Cash and cash equivalents Trade and other receivables Financial assets Total current assets Property, plant and equipment Exploration assets Total non-current assets TOTAL ASSETS LIABILITIES Trade and other payables Borrowings Provisions Total current liabilities Provisions Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY 30 Jun 2018 30 Jun 2017 Note $ $ 11 7 8 9 10 12 13 14 14 3,178,861 31,532 1,200,000 4,410,393 188,613 16,883,568 3,223,776 49,371 - 3,273,147 237,959 14,975,557 17,072,181 15,213,516 21,482,574 18,486,663 263,797 40,000 134,778 438,575 129,880 129,880 568,455 484,333 40,000 180,969 705,302 129,880 129,880 835,182 20,914,119 17,651,481 15 15 123,829,985 1,241,125 (104,156,991) 119,866,311 2,317,493 (104,532,323) 20,914,119 17,651,481 The consolidated statement of financial position is to be read in conjunction with the accompanying notes. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 45 | P a g e CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018 Issued capital Accumulated losses Share based payments reserve Total equity Note $ $ $ $ 113,847,669 (106,337,493) 4,864,807 12,374,983 - - (884,710) (884,710) - - (884,710) (884,710) 15 15 15 15 6,327,725 (309,083) - - - - - 2,689,880 - - 142,566 (2,689,880) 6,327,725 (309,083) 142,566 - Opening balance at 1 July 2016 Comprehensive income Loss for the period Total comprehensive income for the period Transactions with owners and other transfers Shares issued Share issue costs Share based payments Expiry of options Balance as at 30 June 2017 119,866,311 (104,532,323) 2,317,493 17,651,481 Opening balance at 1 July 2017 Comprehensive income Loss for the period Total comprehensive income for the period Transactions with owners and other transfers Shares issued Share issue costs Share based payments Expiry of options 119,866,311 (104,532,323) 2,317,493 17,651,481 - - (1,317,036) (1,317,036) - - (1,317,036) (1,317,036) 15 15 15 15 4,127,925 (164,251) - - - - - 1,692,368 - - 616,000 (1,692,368) 4,127,925 (164,251) 616,000 - Balance as at 30 June 2018 123,829,985 (104,156,991) 1,241,125 20,914,119 The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 46 | P a g e CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Research and development tax benefit Interest received Note 2018 $ 2017 $ 53,857 (1,153,138) 707,856 66,473 - (1,092,618) 811,914 20,830 Net cash outflow from operating activities 11(a) (324,952) (259,874) Cash flows from investing activities Payments for exploration and evaluation Proceeds on disposal of property, plant and equipment Payments for property, plant and equipment Net cash outflow from investing activities Cash flows from financing activities Proceeds from issue of shares (Return)/receipt of shareholder funds in trust Share issue costs Net cash inflow from financing activities 15 15 Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 11 (3,263,364) 153 (1,020) (4,063,438) 71,225 (81,721) (3,264,231) (4,073,934) 3,727,925 (19,406) (164,251) 3,544,268 (44,915) 3,223,776 3,178,861 5,657,155 43,614 (309,083) 5,391,686 1,057,878 2,165,898 3,223,776 The consolidated statement of cash flows is to be read in conjunction with the accompanying notes. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 47 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 1. Reporting entity Auris Minerals Limited (the Company or Auris Minerals) is a company domiciled in Australia. The address of the Company’s registered office and principal place of business is Level 1, 18 Richardson Street, West Perth WA 6005. The Company is primarily involved in the exploration of mineral tenements in Western Australia. The consolidated financial statements of the Company as at and for the year ended 30 June 2018 comprised the Company and its wholly owned subsidiaries (together referred to as the “Group”). Statement of compliance a) Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian interpretations) adopted by the Australian Accounting Standard Board (AASB) and the Corporations Act 2001. The financial report of the Group complies with the International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB). The financial statements were authorised for issue by the Board of Directors on 26th September 2018. b) Basis of measurement The financial statements have been prepared on the historical cost basis except for share based payments which are measured at fair value. The methods used to determine fair values are discussed further note 2 (m) under share based payment transaction. Going Concern This report has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The directors recognise that the ability of the Group to continue as a going concern and to pay its debts as and when they fall due is dependent on the ability of the Group to secure additional funding through either the issue of further shares and / or options. The directors have reviewed the business outlook and are of the opinion that the use of the going concern basis of accounting is appropriate as they believe the Group will achieve the matters set out above. As such, the directors believe that they will continue to be successful in securing additional funds as and when the need to raise working capital arises. Should the Group be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that may be necessary should the Group be unable to continue as a going concern. c) Functional and presentation currency These financial statements are presented in Australian dollars, which is the Group’s functional currency. d) Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. 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. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 48 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 2. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by the Group. Certain comparative amounts have been reclassified to conform to the current year’s presentation where required. a) Basis of consolidation Subsidiaries Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Company. In the Company’s financial statements, investments in subsidiaries are carried at cost. Minority interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit and loss and other comprehensive income and statement of financial position respectively. Transactions eliminated on consolidation Intra-group transactions, balances and any unrealised income and expenses arising from transactions, are eliminated in preparing the consolidated financial statements. b) Financial instruments Non-derivative financial assets The Group initially recognises receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through the statement of profit and loss and other comprehensive income) are recognised initially on the trade date at which the Group becomes party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group has the following non-derivative financial assets: cash and cash equivalents, trade and other receivables. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. The Group does not recognise funds held in trust, in relation to equity issues, as a component of cash and cash equivalents. Accounting for finance income and finance cost is discussed in Note 2(i). Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 49 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 2. Significant accounting policies (continued) Receivables Receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition receivables are measured at amortised cost using the effective interest method, less any impairment losses. Non-derivative financial liabilities Financial liabilities are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group has the following non-derivative financial liabilities: trade and other payables, borrowings and provisions. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition trade and other payables are measured at cost, which approximates fair value, borrowings are measured at amortised cost using the effective interest rate method, and provisions are measured as outlined in Note 2(h). c) Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. Dividends on ordinary shares are recognised as a liability in the period in which they are declared. d) Property, plant and equipment Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within “other income” in the statement of profit and loss and other comprehensive income. Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of an item if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other costs are recognised in the income statement as an expense incurred. Depreciation Depreciation is recognised in the income statement on a diminishing value basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives in the current and comparative periods are as follows: Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 50 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 2. Significant accounting policies (continued) Office equipment 20% Plant and equipment 40% Motor vehicles 20% Depreciation methods, useful lives and residual values are reviewed at each reporting date. e) Exploration expenditure Exploration activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Exploration expenditure incurred is accumulated in respect of each identifiable area of interest. Exploration expenditure is measured at cost. Exploration expenditure related to each identifiable area of interest are recognised as an exploration assets in the year in which they are incurred and carried forward to the extent that the following conditions are satisfied: (i) rights to tenure of the identifiable area of interest are current; and (ii) at least one of the following conditions is also met: (cid:1) (cid:1) the expenditure is expected to be recouped through the successful development of the identifiable are of interest, or alternatively, by its sale; or where activities in the identifiable area of interest have not at the reporting date reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and activities in, or in relation to, the area of interest. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Accumulated costs in relation to an abandoned area are written off in full in the statement of profit and loss and other comprehensive income in the year in which the decision to abandon the area is made. Exploration assets are reviewed at each reporting date for indicators of impairment and tested for impairment where such indicators exist. If the test indicates that the carrying value might not be recoverable the asset is written down to its recoverable amount. Any such impairment arising is recognised in the statement of profit and loss and other comprehensive income for the year. Where an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. f) Impairment Financial assets (including receivables) A financial asset not carried at fair value through the statement of profit and loss and other comprehensive income is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, and the disappearance of an active market for a security. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 51 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 2. Significant accounting policies (continued) The Group considers evidence of impairment for receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are collectively assessed in groups that show similar credit risk characteristics. 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 asset’s original interest rate. Losses are recognised in the statement of profit and loss and other comprehensive income and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the statement of profit and loss and other comprehensive income. Non-financial assets The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its fair value in use and its fair value less costs to sell. 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 the purposes of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). 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. The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss and other comprehensive income. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying amounts of other assets in the unit (group of units) on a pro rata basis. 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. g) Employee benefits Defined contribution superannuation funds A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the statement of profit and loss and other comprehensive income in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 52 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 2. Significant accounting policies (continued) 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 reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax. h) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Exploration activities give rise to obligations for site closure and rehabilitation. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology discounted to their present values. i) Revenue Services Revenue from services rendered is recognised in the statement of profit and loss and other comprehensive income in proportion to the stage of completion of the transaction at the reporting date. Finance income and finance costs Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in the statement of profit and loss and other comprehensive income, using the effective interest method. Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and impairment losses recognised on financial assets. j) Income tax Income tax expense comprises current and deferred tax. Current and deferred tax are recognised in the statement of profit and loss and other comprehensive income except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 53 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 2. Significant accounting policies (continued) Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. k) Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the Australian Taxation Office are classified as operating cash flows. l) Loss per share The Company presents basic and diluted loss per share for its ordinary shares. Basic loss per share is calculated by dividing the profit or loss attributable to the ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is only determined if the Company is in a profit position. Refer to note 5 for details. m) Accounting estimates and judgements Management discusses with the Board the development, selection and disclosure of the Group’s critical accounting policies and estimates and the application of these policies and estimates. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Taxation Balances disclosed in the financial statements and the notes related to taxation, are based on the best estimates of directors and take into account the financial performance and position of the Group as they pertain to current income tax legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current tax position represents the best estimate, pending assessment by the Australian Tax Office. Exploration assets The accounting policy for exploration expenditure results in expenditure being capitalised for an area of interest where it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 54 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 2. Significant accounting policies (continued) This policy requires management to make certain estimates as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that the recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to profit and loss. Share-based payment transactions The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of rights granted is measured using the single barrier share option pricing model, taking into account the terms and conditions set out within note 19. Estimated useful lives of assets Estimated useful lives of assets have been based on historical experience. The condition of the assets is assessed at least once per year and considered against the remaining life. Adjustments to useful lives are made when considered necessary. Provision for rehabilitation Included in liabilities at the end of each reporting period is an amount that represents an estimate of the cost to rehabilitate the land upon which the Group has carried out its exploration for mineral resources. Provisions are measured at the present value of management's best estimate of the costs required to settle the obligation at the end of the reporting period. Actual costs incurred in future periods to settle these obligations could differ materially from these estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates, and discount rates could affect the carrying amount of this provision. Impairment The Group assesses impairment at the end of each reporting period by evaluating conditions or events specific to the Group that may be indicative of impairment indicators. The decision as to the existence of impairment indicators requires judgement. n) New standards and interpretations not yet adopted There are a number of new Accounting standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group. They are available for early adoption at 30 June 2018, but have not been applied in preparing this financial report because the adoption would not materially impact this financial report. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 55 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 3. Revenue and expenses includes: Finance costs Costs in relation to convertible notes: Interest Foreign exchange loss Note 2018 $ 4,883 769 5,652 2017 $ 11,920 - 11,920 Release from right of first refusal Issue of 1,429,000 shares to Westgold Limited 11(b)(ii) - 92,885 Administrative expenses Disclosable Employee benefits expense Office lease payments Depreciation Legal services Company secretarial services Other 8 436,261 40,193 49,990 128,554 60,000 439,496 567,002 51,333 60,485 108,545 60,000 372,866 1,154,494 1,220,231 4. a) Income tax expense Numerical reconciliation between tax expense / (benefit) and pre-tax net loss Loss before tax Income tax benefit using the domestic corporation tax rate of 27.5% (2017: 27.5%) Increase / (decrease) in income tax due to: Non-deductible expenses Temporary differences and losses not recognised Adjustments in respect of previous current income tax Tax amortisation of capital raising costs Income tax benefit b) Tax consolidation 2018 2017 $ (2,024,892) $ (1,696,624) (556,845) (466,572) 169,786 484,473 (707,856) (97,414) 66,034 497,508 (811,914) (96,970) (707,856) (811,914) The company and its 100% owned controlled entities have formed a tax consolidated group. Members of the Consolidated Entity have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly owned controlled entities on a pro-rate basis. The agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At balance date, the possibility of default is remote. The head entity of the tax consolidated group is Auris Minerals Limited. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 56 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 4. c) Income tax expense (continued) Tax effect accounting by members of the tax consolidated group Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for the allocation of current taxes to members of the tax consolidated group. Deferred taxes are allocated to members of the tax consolidated group in accordance with a group allocation approach which is consistent with the principles of AASB 112 Income Taxes. The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the controlled entities intercompany accounts with the tax consolidated group head company, Auris Minerals Limited. In this regard the Company has utilised the benefit of tax losses from controlled entities of $1,818,520 (2017: $1,751,535) as of the balance date. The nature of the tax funding agreement is such that no tax consolidation contributions by or distributions to equity participants are required. d) Deferred tax (liabilities) / assets not recognised Exploration expenditure Receivables Plant and equipment Investments Environmental liability Provisions and sundry items Business related costs Capital losses Tax losses Deferred tax asset not recognised Net deferred tax liability 2018 2017 $ (4,431,402) - 12,431 29,493 35,717 42,899 200,897 243,664 26,492,262 (22,625,961) $ (4,118,278) (1,172) (16) 29,493 35,717 53,617 268,132 243,664 24,488,070 (20,999,227) - - The tax losses do not expire under current legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilise the benefits. 5. Loss per share Basic loss per share (cents) 2018 Cents 0.33 2017 Cents 0.30 The calculation of basic loss per share at 30 June 2018 is based on the loss attributable to ordinary shareholders of $1,317,036 (2017: $884,710) and a weighted average number of ordinary shares outstanding of 396,088,820 (2017: 291,625,860). The number ordinary shares has been restated on a post consolidation basis. As at 30 June 2018, the options detailed within note 19 are considered to be potential ordinary shares. However, as the Group is in a loss position, the potential ordinary shares are considered to be anti-dilutive in nature, as their exercise will not result in a diluted loss per share that shows an inferior view of earnings performance of the Group than is shown by basic loss per share. For this reason, the options have not been included in the determination of diluted loss per share and the diluted loss per share is disclosed to be the same as basic loss per share. 57 | P a g e Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 6. Auditors remuneration Audit services: Audit and review of financial reports 7. Trade and other receivables Receivable from Australian Taxation Office Other 2018 $ 29,000 29,000 2018 $ 22,960 8,572 31,532 2017 $ 28,000 28,000 2017 $ 36,811 12,560 49,371 The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables are disclosed in note 20. 8. Financial Assets Available-for-sale financial assets Balance at 1 July Acquisition of listed investments Balance at 30 June Note (i) 2018 2017 $ - 1,200,000 1,200,000 $ - - - (i) Available-for-sale financial assets consists of investments in ordinary shares and, therefore, have no fixed maturity date or coupon rate. On 7 March 2018, Sandfire Resources NL (ASX: SFR) issued 166,006 shares at $7.23 per share to Auris as a part of the Farm-In Agreement in relation to the Morck Well East and Doolgunna Projects. As at 30 June 2018, the SFR share price was $9.16 equating to a total value of $1,520,615. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 58 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 9. Property, plant and equipment A reconciliation of the carrying amounts for each class of property, plant and equipment is set out below. Carrying amount At cost Plant & equipment $ Office equipment $ Motor vehicles $ Total $ 75,304 204,205 409,789 689,298 Accumulated Depreciation (63,471) (115,752) (272,116) (451,339) Balance at 30 June 2017 11,833 88,453 137,673 237,959 At cost 75,304 203,998 409,789 689,091 Accumulated Depreciation (67,891) (132,937) (299,650) (500,478) Balance at 30 June 2018 7,413 71,061 110,139 188,613 Movement in carrying amount Balance at 1 July 2016 Additions Disposals Depreciation Balance at 30 June 2017 Balance at 1 July 2017 Additions Disposals Depreciation Balance at 30 June 2018 29,630 1,764 (11,635) (7,926) 11,833 11,833 - - (4,420) 7,413 109,946 11,916 (12,389) (21,020) 88,453 88,453 1,020 (376) (18,036) 71,061 152,758 68,145 (51,691) (31,539) 137,673 292,334 81,825 (75,715) (60,485) 237,959 137,673 237,959 - - (27,534) 110,139 1,020 (376) (49,990) 188,613 Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 59 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 10. Exploration expenditure Balance at 1 July 2016 Expenditure during the period Note Exploration $ 10,720,149 (i) 4,509,206 Adjustment to environmental liability Impairment of assets Balance at 30 June 2017 (iii) (v) Balance at 1 July 2017 Expenditure during the period 320 (254,115) 14,975,557 14,975,557 (ii) 3,472,824 Proceeds during the period Impairment of assets Balance at 30 June 2018 (iv) (v) (1,200,000) (364,813) 16,883,568 Evaluation $ Development $ Total $ - - - - - - - - - - - - - - - - - - - - 10,720,149 4,509,206 320 (254,115) 14,975,557 14,975,557 3,472,824 (1,200,000) (364,813) 16,883,568 (i) (ii) (iii) Expenditure included $13,650 in respect of the shares issued to Omni GeoX Pty Ltd pursuant to a joint venture agreement over exploration tenements; $200,000 in respect of shares issued to Ascidian Prospecting Pty Ltd pursuant to an asset sale agreement and $232,115 in respect of shares issued to Westgold Limited pursuant to an asset sale agreement (Note 11 (b) (ii)). Expenditure included $400,000 in respect of the shares issued to Ascidian Prospecting Pty Ltd pursuant to an asset sale agreement (Note 11 (b) (ii)). The estimated environmental liability is based on an annual assessment under the criteria adopted by the Mining Rehabilitation Fund as implemented by the Department of Mines and Petroleum. (iv) Shares issued by Sandfire Resources NL per Farm-In Agreement (Note 8). (v) The carrying value has been impaired based on a review undertaken by an external consultant to determine the recoverability of the current carrying value. The determination was based on examining the tenements held within each entity within the group on a project-by-project basis to assess whether: • • The expenditure and the associated activities have resulted in high priority exploration targets that will be the focus of funded exploration over the next 2 years; and An area of interest is considered likely to be recoverable by future exploitation or sale. The directors supported the recommendations and approved the associated amounts impaired. 11. Cash and cash equivalents Bank balances Cash and cash equivalents in the statement of cash flows 2018 2017 $ 3,178,861 $ 3,223,776 3,178,861 3,223,776 The exposure to interest rate risk and a sensitivity analysis for financial assets are discussed in note 20. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 60 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 11. Cash and cash equivalents (continued) a) Reconciliation of cash flows from operating activities Loss for the period after income tax Adjusted for: Depreciation expense Impairment of exploration assets Interest on convertible notes paid in shares Employee share-based payments Release from right of first refusal Loss on disposal of assets Note 2018 2017 $ (1,317,036) $ (884,710) 3 9 11(b) 3 49,990 364,813 4,800 616,000 - 222 60,485 254,115 11,920 142,566 92,885 4,385 Operating loss before changes in working capital and provisions (281,211) (318,354) Decrease / (increase) in trade and other receivables Decrease / (increase) in trade and other payables Decrease / (increase) in provisions Net cash outflow from operating activities b) Non cash financing and investing activities Issue of incentive options Issue of shares Issue of performance rights Shares received – farm-in consideration 832 (26,786) (17,787) (29,676) 133,502 (45,347) (324,952) (259,875) (i) (ii) (iii) (iv) - 400,000 616,000 (1,200,000) (184,000) 142,566 538,650 - - 681,216 (i) Issue of Incentive Options As approved by shareholders in general meeting held on 21 November 2013, the Company may issue unlisted options to employees to subscribe for ordinary fully paid shares in the Company at any time within five years of issue and at an exercise price approved by the directors. There are no voting or dividend rights attached to the options and options issued under the plan were issued for no consideration. Voting rights will be attached to the ordinary issued shares when the options have been exercised. Each option is convertible to one fully paid ordinary share. The following issues took place: (cid:1) (cid:1) (ii) (cid:1) On 5 April 2017, the Company issued 1,000,000 employee incentive options to an employee at an exercise price of $0.12 each and expiring on 20 September 2018. $39,220 was recognised as a share based payment in the income statement. On 27 March 2017, the Company issued 2,000,000 director options to Debbie Fullarton, 2,000,000 director options to Bronwyn Barnes and 1,000,000 director options to Robert Martin. These options were issued at an exercise price of $0.12 each and expiring on 20 September 2018. $103,346 was recognised as a share based payment in the income statement. Issue of Shares On 7 July 2017, 7,000,000 fully paid ordinary shares were issued to Ascidian Prospecting Pty Ltd pursuant to an asset sale agreement. $400,000 was capitalised to exploration assets as a result of the issue of shares. Refer to Note 10. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 61 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 11. Cash and cash equivalents (continued) (cid:1) (cid:1) (cid:1) On 5 April 2017, 5,000,000 fully paid ordinary shares were issued to Westgold Limited pursuant to an asset sale agreement over mining tenements and the release from the right of first refusal over exploration tenements. $232,115 was capitalised to exploration assets and $92,885 was expensed as a release of rights as a result of the issue of these shares. Refer to note 10. On 20 December 2016, 260,000 (1,300,000 pre-consolidation) fully paid ordinary shares were issued to Omni GeoX Pty Ltd pursuant to a joint venture agreement over exploration tenements. $13,650 was capitalised to exploration assets as a result of the issue of these shares. Refer to note 10. On 6 July 2016, 3,118,600 (15,593,000 pre-consolidation) fully paid ordinary shares were issued to Ascidian Prospecting Pty Ltd pursuant to an asset sale agreement. $200,000 was capitalised to exploration assets as a result of the issue of these shares. Refer to note 10. (iii) Issue of Performance Rights (cid:1) (cid:1) On 22 November 2017, the Company issued 2,000,000 director performance rights to Bronwyn Barnes, 2,000,000 director performance rights to Robert Martin, 2,000,000 director performance rights to Susan Vearncombe, 6,000,000 employee performance rights to Wade Evans and 4,000,000 employee performance rights to Nick Franey. $704,000 was recognised as a shared based payment in the income statement. On 26 April 2018, the Company cancelled 2,000,000 director performance rights held by outgoing director Susan Vearncombe. $88,000 was reversed from share based payment in the income statement. (iv) Shares Received – Farm-In Consideration (cid:1) On 7 March 2018, Auris received 166,006 Sandfire Resources shares at $7.23 per share as part of the Farm-In Agreement for the Morck Well East and Doolgunna Projects. 12. Trade and other payables Trade payables and other accruals Monies held in trust 2018 $ 239,589 24,208 263,797 2017 $ 440,719 43,614 484,333 Monies held in trust On 20 February 2017, being the applicable record date, the Company provided shareholders with a notice of intention to sell shares of less than a marketable parcel in accordance with the company constitution. Impacted shareholders were given the opportunity to return their Notice of Retention by 10 April 2017 if they did not want these shares to be sold on their behalf. The sale was concluded on 19 April 2017 and 1,350 shares holders collectively holding 1,509,225 shares received their proceeds from the sale ($0.07 per share sold). The monies currently held in trust represent unpresented cheques at the balance date. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 62 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 13. Borrowings Convertible notes Movement in borrowings Balance at 1 July Notes issued Notes converted Balance at 30 June Note 15 2018 $ 40,000 40,000 2018 $ 40,000 - - 40,000 2017 $ 40,000 40,000 2017 $ 160,000 - (120,000) 40,000 Convertible notes As at 30 June 2018 there are two remaining convertible notes having a face value of $20,000 each maturing on 1 July 2018. Interest, at a rate of 12% per annum, is payable six monthly in June and December in shares converted at a 30 day VWAP. The notes together with the accrued interest were converted into shares at an issue price of $0.05 per share on 2 July 2018. 14. Provisions Current provisions Employee leave benefits Provision for stamp duty 2018 $ 9,725 125,053 134,778 2017 $ 55,916 125,053 180,969 Provision has been made for additional stamp duty in respect the share purchase acquisition of Auris Exploration Pty Ltd for movable property, and an adjustment for the value of gold inventory. This had not previously been taken into account when the interim assessment was issued by the Office of State Revenue on 13 December 2013. Non-current provisions Note Environmental provision Movement in non-current provisions Balance at 1 July Provision adjustment Balance at 30 June 9 2018 $ 129,880 129,880 129,880 - 129,880 2017 $ 129,880 129,880 129,560 320 129,880 A provision has been made in respect of environmental rehabilitation on tenements based on the disturbance criteria as determined by Department of Mines and Petroleum. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 63 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 15. Issued capital and reserves Issued and fully paid ordinary shares Movement in ordinary shares On issue at 1 July Consolidation of shares 5:1 Issue of shares for cash Issue of shares on conversion of convertible notes Issue of share for interest on convertible notes Issue of shares to acquire exploration licences 2018 $ 2017 $ 123,829,985 119,866,311 Note 2018 2018 2017 2017 No. 354,223,138 - 46,562,202 $ 119,866,311 3,727,925 No. 1,286,553,365 - (1,029,242,197) 85,927,475 $ 113,847,669 - 5,515,649 13 - - - - 2,400,000 120,000 205,895 11,920 11(b)(ii) 7,000,000 400,000 6,949,600 445,765 Issue of shares in lieu of cash payment for expenses 11(b)(ii) Issue of listed options for cash consideration Share issue costs On issue at 30 June Listed options on issue - - - - - (164,251) 1,429,000 92,885 - - 141,506 (309,083) 407,785,340 123,829,985 354,223,138 119,866,311 $0.08 listed options, expiring 20 September 2017 $0.12 listed options, expiring 20 June 2018 On issue at 30 June Terms and conditions 2018 No. - - 2017 No. 49,776,458 49,776,458 - 99,552,916 The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets. Nature and purpose of share-based payments reserve The share-based payments reserve represents the fair value of equity instruments issued to employees as compensation and issued to external parties for the receipt of goods and services. This reserve will be reversed against issued capital when the underlying shares are converted and reversed against retained earnings when they are allowed to lapse. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 64 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 15. Issued capital and reserves (continued) Movement in share-based payment reserve Balance at 1 July Share based payments Expiry of options Balance at 30 June Movement in listed options Note 2018 2017 11(b)(iii) $ 2,317,493 616,000 (1,692,368) $ 4,864,807 142,566 (2,689,880) 1,241,125 2,317,493 Options expiring on or before Exercise price On issue at 1 Jul 17 20 Sep 2017 (AUROA) 20 Jun 2018 (AUROB) $0.08 49,776,458 $0.12 49,776,458 99,552,916 Issued Exercised Expired On issue at 30 Jun 18 - - - (9,863,478) (39,912,980) (73,727) (49,702,731) (9,937,205) (89,615,711) - - - Movement in unlisted options Options expiring on or before Exercise Price On issue at 1 Jul 17 Consolidation of options Issued Exercised Expired On issue at 30 Jun 18 15 Sep 2017 9 Nov 2017 31 Jan 2018 3 Oct 2018 8 Oct 2019 20 Sep 2018 20 Sep 2018 $1.25 $3.00 $0.15 $0.60 $1.30 $0.12 $0.12 600,000 300,000 600,000 1,480,000 2,500,000 5,000,000 1,000,000 11,480,000 - - - - - - - - - - - - - - - - - - - - - - - - (600,000) (300,000) (600,000) - - - - - - - 1,480,000 2,500,000 5,000,000 1,000,000 (1,500,000) 9,980,000 16. Controlled entities Auris Exploration Pty Ltd, incorporated in Australia (i), (ii) (i) (ii) Auris Exploration Pty Ltd was formerly known as Grosvenor Gold Pty Ltd. The parent entity acquired a 100% interest in Auris Exploration Pty Ltd on 8 March 2012. 17. Segment reporting 2018 % 100 2017 % 100 The Group operations are entirely associated with exploration and related development activities in Western Australia. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 65 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 18. Parent information Statement of Financial Position Assets Total current assets Total non-current assets Total assets Liabilities Total current liabilities Total non-current liabilities Total liabilities Equity Issued capital Reserves Accumulated losses Total equity Statement of Profit and Loss and Other Comprehensive Income Total loss Total comprehensive loss 19. Share based payments Recognised share-based payments 2018 $ 2017 $ 3,179,515 40,808,635 3,225,511 14,814,906 43,988,150 18,040,417 257,400 22,816,631 23,074,031 340,858 48,080 388,938 123,829,985 1,241,125 (104,156,991) 119,866,311 2,317,493 (104,532,325) 20,914,119 17,651,479 1,317,036 3,864,926 1,317,036 3,864,926 Details of share based payments recognised during the year are shown in the table below. Employee share based payments KMP share based payments Issue of shares Note 11(b)(ii) 2018 $ 176,000 440,000 616,000 400,000 1,016,000 2017 $ 39,220 103,346 142,566 538,650 681,216 Equity based compensation plans (Long-term incentive bonus) The Board has provided equity-based long-term incentives (LTIs) to promote continuity of employment and to provide additional incentive to key management personnel to increase shareholder wealth. LTIs are provided as options and rights over ordinary shares of the Company and are provided to key management personnel based on their level of seniority and position within the Group. Options and rights may only be issued to directors subject to approval by shareholders in general meeting. There are no voting or dividend rights attached to the options and rights. Options and rights issued under the plans were issued for no consideration. Voting rights will be attached to the ordinary issued shares when the options and rights have been exercised. Each option and right is convertible to one fully paid ordinary share. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 66 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 19. Share based payments (continued) Issue of incentives As approved by shareholders in general meeting the Company may issue unlisted options or rights to employees to subscribe for ordinary fully paid shares in the Company with an expiry date not later than five years from the date of issue and with an exercise price at the discretion of the directors. The following options and rights were issued to employees and directors included in equity settled share-based payments expenses under Administrative expenses in the statement of profit and loss and other comprehensive income. Issue of incentive options Issue of performance rights Equity settled share-based payment expense Options granted as share based payments There were no options issued during the reporting period. 2018 $ - 616,000 616,000 2017 $ 142,566 - 142,566 The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year: Outstanding at 1 July Granted during the year Expired during the year Outstanding at 30 June 2018 2017 No. 11,480,000 - (1,500,000) WAEP $0.57 $0.00 $1.16 No. 54,120,000 6,000,000 (48,640,000) WAEP $0.30 $0.12 $0.21 9,980,000 $0.49 11,480,000 $0.57 The options have been restated on a post-consolidation basis. The outstanding balance at 30 June 2018 is represented by: Expiry date Exercise Price No. of shares 20 September 2018 3 October 2018 8 October 2019 $0.12 $0.60 $1.30 6,000,000 1,480,000 2,500,000 9,980,000 The number and pricing of options have been restated on a post-consolidation basis. Weighted average remaining contractual life The weighted average remaining contractual life for share options outstanding as at 30 June 2018 is 0.43 years (2017: 1.35 years). Range of exercise price The range of exercise prices for options outstanding at the end of the year was $0.12 - $1.30 (2017: $0.08 - $3.00). As the range of exercise prices is wide, refer to the above table for further information in assessing the number and timing of additional shares that may be issued and the cash that may be received upon exercise of those options. Note the exercise prices have been restated on a post-consolidation basis. 67 | P a g e Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 19. Share based payments (continued) Weighted average fair value The weighted average fair value of options granted during the year was nil (2017: $0.10). Rights granted as share based payments On 22 November 2017, the Company issued 16,000,000 performance rights which were approved at the Company’s shareholder meeting. The performance rights were issued in two equal tranches, each with market based performance milestones. Each performance right will convert into 1 ordinary share of AUR upon achievement of the milestone by the milestone expiry date. On 20 April 2018, Susan Vearncombe was removed as Non-Executive Director in a general meeting, Dr Vearncombe was issued 2,000,000 performance rights on 22 November 2017. These rights were cancelled as a result of her removal as Non-Executive Director. Movement of rights during the reporting period is set out in the table below. Balance at 1 July Granted during the year Cancelled during the year Balance at 30 June Fair value of performance rights Tranche 1 Tranche 2 No. Fair Value No. Fair Value - 8,000,000 (1,000,000) 7,000,000 - 376,000 (47,000) 329,000 - 8,000,000 (1,000,000) 7,000,000 - 328,000 (41,000) 287,000 The following table sets out the assumptions made in determining the fair value of the performance rights granted during the period which were estimated at the date of grant using the single barrier share option pricing model. Tranche No. Grant date Volatility Risk-free rate Exercise price Expiry date Fair value per right Total fair value 1 2 8,000,000 22 Nov 2017 90% 1.91% 8,000,000 22 Nov 2017 90% 1.91% nil nil 22 Nov 2020 0.047 376,000 22 Nov 2020 0.041 328,000 Performance milestones: (1) Vest upon achieving a market capitalisation of $48 million for a period of 30 consecutive days. (2) Vest upon achieving a market capitalisation of $64 million for a period of 30 consecutive days. 20. Financial instruments Financial risk management This note presents information about the Group’s exposure to credit, liquidity and market risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. The Group’s principal financial instruments comprise receivables, payables, borrowings, cash and short-term deposits. All financial assets measured at fair value are considered to be Level 1 financial assets. That is, they have quoted prices in active markets for identical assets. Risk exposures and responses The Group manages its exposure to key financial risks in accordance with the Group’s financial risk management policy. The objective of the policy is to support the delivery of the Group’s financial targets while protecting future financial security. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 68 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 20. Financial instruments (continued) The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of the risks. The main risks arising from the Group’s financial instruments are interest rate risk and liquidity risk. The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rates via assessments of market forecasts for interest rates and monitoring liquidity risk through the development of future rolling cash flow forecasts. The Group does not use any form of derivatives as the Group’s operations and related financial instruments are not at a level of complexity to require the use of derivatives to hedge its exposures. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group’s potential concentration of credit risk consists mainly of cash deposits with banks and other receivables. The Group’s short term cash surpluses are placed with banks that have investment grade ratings. The maximum credit risk exposure relating to the financial assets is represented by the carrying value as at the balance sheet date. The Group considers the credit standing of counterparties when making deposits to manage the credit risk. Considering the nature of the Group’s ultimate customers and the relevant terms and conditions entered into with such customers, the Group believes that the credit risk is immaterial. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by maintaining adequate cash reserves either from funds raised in the market or via short term loans and by continuously monitoring forecast and actual cash flows. The following are the contractual and expected maturities of the Group’s non-derivative, non-cash financial assets and the Group’s expected maturities of financial liabilities: As at 30 June 2018 Financial assets Trade and other receivables Financial liabilities Trade and other payables Provisions Borrowings - current Net outflow Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 Within 6 months 6 to 12 months $ 31,532 31,532 263,797 134,778 40,000 438,575 (407,043) $ - - - - - - - >12 months Total $ - - - - - - - $ 31,532 31,532 263,797 134,778 40,000 438,575 (407,043) 69 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 20. Financial instruments (continued) As at 30 June 2017 Financial assets Trade and other receivables Financial liabilities Trade and other payables Provisions Borrowings - current 49,371 49,371 484,333 180,969 - 665,302 - - - - 40,000 40,000 Net outflow (615,931) (40,000) - - - - - - - 49,371 49,371 484,333 180,969 40,000 705,302 (655,931) Equity price risk Equity price risk is the risk that the value of the Group’s financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so as to maintain a strong capital base sufficient to maintain future exploration, evaluation and development of its mineral projects. In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to reduce debt. Due to the Group being principally involved in mineral exploration, the primary source of funding is equity raisings. The Company also encourages employees and directors to be shareholders through its various equity-based long-term incentives as detailed in Note 21. As at 30 June 2018, the Group had a net working capital of $3,971,818 (2017: $2,567,845), The Group’s net asset position was $20,914,119 (2017: $17,651,481). There were no changes in the Group’s approach to capital management during the year. Risk management policies and procedures are established with regular monitoring and reporting. The Group is not subject to externally imposed capital requirements. Fair value Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2 to the financial statements. The financial assets and liabilities included in the assets and liabilities of the Group approximate net fair value, determined in accordance with the accounting policies disclosed in Note 2 to the financial statements. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 70 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 20. Financial instruments (continued) Cash flow interest rate risk The Group is exposed to interest rate risk, primarily on its cash and cash equivalents. Cash flow interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest- bearing financial instruments. The Group does not use derivatives to mitigate these exposures. The interest rate on the short term loan is fixed. The interest rate profile of the Group’s interest-bearing financial instruments was: Fixed interest rate maturity Average interest rate % Variable interest rate A$ Less than 1 year 1 to 5 years More than 5 years Total A$ A$ A$ A$ 3.3 3,178,861 - 12.0 - 40,000 1.6 3,223,776 - 12.0 - 40,000 - - - - - - - - 3,178,861 40,000 3,223,776 40,000 At 30 June 2018 Financial assets Cash and cash equivalents Financial liabilities Borrowings - current At 30 June 2017 Financial assets Cash and cash equivalents Financial liabilities Borrowings - current Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have no material impact on the income statement. There would be no effect on the equity reserves other than those directly related to income statement. 21. Related parties Key management personnel compensation Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each member of the Group’s key management personnel (KMP) for the year ended 30 June 2018. The totals of remuneration paid to KMP of the Group during the year comprised: Short-term employee benefits Post-employment benefits Termination benefits Share-based payments 2018 $ 346,763 28,722 86,336 440,000 901,821 2017 $ 350,167 33,289 56,250 103,346 543,052 Other than the directors and Chief Executive Officer, no other person is concerned in, or takes part in, the management of the Group or has the authority and responsibility for planning, directing and controlling the activities of the Group. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 71 | P a g e NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 21. Related parties (continued) Short-term employee benefits These amounts include fees and benefits paid to the Non-Executive Directors as well as all fees, salary, paid leave, fringe benefits awarded to Executive Directors as well as the Chief Executive Officer. Post-employment benefits These represent the cost of superannuation contributions made during the year. Share-based payments These amounts represent expense related to the participation of directors in equity-settled benefit schemes as measured by the fair value of options or rights granted on the grant date. Further information in relations to key management personnel remuneration can be found in the directors’ report. Individual directors and executives compensation disclosures Information regarding individual directors' compensation and some equity instruments disclosures as required by Corporations Regulations 2M.3.03 is provided in the Remuneration Report section of the Directors’ Report. Apart from the details disclosed in this note, no director has entered into a material contract with the Group since the end of the previous financial year and there were no material contracts involving directors’ interests at year- end. Key management personnel and director transactions A number of key management persons, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities. A number of these entities transacted with the Company or its subsidiaries in the reporting period. The terms and conditions of the transactions with management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-director related entities on an arm’s length basis. The aggregate value of transactions and outstanding balances relating to key management personnel and their related entities over which they have control or significant influence were as follows: 22. Commitments Exploration expenditure commitments in respect of tenement holdings Payable not later than 12 months Payable between 12 months and 5 years 2018 $ 1,580,780 6,323,120 7,903,900 2017 $ 1,599,418 6,397,672 7,997,090 23. Events subsequent to reporting date Except for the events noted below, no other material events have occurred subsequent to the reporting date. (cid:1) (cid:1) (cid:1) On 3 July 2018, 800,000 fully paid ordinary shares were issued following conversion of 2 Convertible Notes and 96,000 fully paid ordinary shares were issued relating to the accrued interest on these Convertible notes. On 6 July 2018, Wade Evans resigned as Chief Executive Officer and Mr Mike Hendriks was appointed on an initial 3 month consultancy to oversee day-to-day management. On 20 July 2018, the follow-up drilling in the Morck Well Joint Venture was completed and the MLEM surveying was underway. 72 | P a g e Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 NOTES TO THE CONSOLIDATED FINANCIAL REPORTS FOR THE YEAR ENDED 30 JUNE 2018 23. Events subsequent to reporting date (continued) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) On 27 July 2018, the VTEM survey identifies multiple targets in the Bryah Basin. On 1 August 2018, Mr Craig Hall was appointed Non-Executive Director and is the nominated representative for the interests of Investmet Limited. On 5 September 2018, a new geological interpretation of the Forrest Project was completed. On 14 September 2018, an Aircore drilling programme at the Wodger Prospect commenced. On 20 September 2018, 6,000,000 unexercised $0.12 options expired. 24. Contingent liability As outlined at Note 14, the OSR is still undergoing a review process for additional stamp duty in respect to the share purchase acquisition of Auris Exploration Pty Ltd, and are yet to issue their final assessment. No further provision (in addition to that at Note 14) has been provided for any additional duty that may arise, as management believe they have adequately substantiated the remaining items in dispute. However, final determination of additional stamp duty to be paid is yet to be agreed with the OSR and therefore maybe more than outlined at Note 14, however as of today’s date it is impossible to predict with reasonable certainty the extent of any additional costs. Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 73 | P a g e DIRECTORS’ DECLARATION In the opinion of the directors of Auris Minerals Limited (a) the Consolidated Financial Statements and Notes, as set out on pages 44 to 73, and the Remuneration Report in the Directors’ Report, are in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its performance, for the financial year ended on that date; and complying with Australian Accounting Standards Interpretations) and the Corporations Regulations 2001; (including the Australian Accounting (b) (c) the financial report also complies with International Financial Reporting Standards as disclosed in note 1(a); there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief Executive Officer (equivalent) and Chief Financial Officer (equivalent) for the financial year ended 30 June 2018. Signed in accordance with a resolution of the directors. NEVILLE BASSETT NON-EXECUTIVE CHAIR Dated at West Perth this 26th day of September 2018 Auris Minerals Limited I 2018 ANNUAL REPORT ABN 77 085 806 284 74 | P a g e
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