Auroch Mineral
Annual Report 2016

Plain-text annual report

ACN 148 966 545 Annual Report for the Year Ended 30 June 2016 ABN Directors AUROCH MINERALS LIMITED CORPORATE DIRECTORY 91 148 966 545 Mr Glenn Whiddon (Executive Chairman) Mr Matthew Foy (Non-Executive Director) Mr Ryan Gaffney (Non-Executive Director) Company Secretary Mr Matthew Foy Registered office Website Share Registry Bankers Auditors Stock Exchange Solicitors Level 2, Office J 1139 Hay St WEST PERTH WA 6005 Telephone +61 8 9486 4699 Facsimile +61 8 9486 4799 www.aurochminerals.com Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153 Telephone +61 8 9315 2333 Facsimile +61 8 9315 2233 National Australia Bank 7 Sandridge Road Bunbury WA 6230 BDO Audit (WA) Pty Ltd 38 Station Street Subiaco, WA 6008 Australian Securities Exchange Limited ASX Code: AOU GTP Legal Level 1, 28 Ord Street West Perth WA 6005 1 AUROCH MINERALS LIMITED CONTENTS  Directors’ Report  Auditor’s Independence Declaration  Consolidated Statement of Profit or Loss and Other Comprehensive Income  Consolidated Statement of Financial Position  Consolidated Statement of Changes in Equity  Consolidated Statement of Cash Flows  Notes to the Consolidated Financial Statements  Directors’ Declaration  Independent Auditor’s Report  Additional information Page 3 20 21 23 24 25 26 57 58 60 2 AUROCH MINERALS LIMITED DIRECTORS’ REPORT Your Directors present their report on Auroch Minerals Limited (Auroch, Company or the Group) for the period 1 July 2015 to 30 June 2016. REVIEW OF OPERATIONS Sale of Manica Gold Project On 30 June 2015 the Company advised it had entered into a binding agreement to sell 100% of the Manica mining Concession 3990C to AIM-listed Xtract Resources Plc (Xtract or XTR) for total sale consideration of US$10 million in a combination of cash and equity in Xtract, plus the assumption of project related creditors of up to US$1.5 million (Agreement). The Agreement was conditional upon Auroch obtaining prior consent of the Government of Mozambique through the Ministry of Mineral Resources and Energy to the extent required under the Mozambique Mining Act and other applicable laws relating to the change of control of the Company’s subsidiary and communicating such change of control to the Mozambican mining authorities. Completion of the Agreement was also subject to Auroch obtaining shareholder approval under ASX Listing Rule 11.2 for the sale of the Manica Mining Concession and Xtract obtaining approval for the admission of the Consideration Shares to trading on AIM. On 2 March 2016 the Company advised that final approval had been received under the Mozambique Mining Act from the Mozambique Mining Act from the Mozambican mining authorities in addition to the earlier approvals from the Central Bank and the Ministry of Taxation, permitting the completion of the sale of 100% of the Manica Gold Project to Xtract (Completion). The final terms of the Agreement with Xtract are as follows: - Cash payment at Completion of ~A$4.2 million1 (US$3.0 million); and - Issue of 1,137,258,065 XTR Shares (currently valued at ~A$4.22 million2) (Completion Consideration). Consideration to be paid 3 months post Completion: - Deferred cash consideration of ~A$3.5million3 (US$2.5 million) payable as follows:   US$1.3 million cash; and the remaining US$1.2 million will be payable in cash or XTR Shares (at Auroch’s election), issued at a 20% discount to the 10-day VWAP prior to Auroch’s election. Xtract and the Company also agreed to extend the date for the fulfilment of all conditions regarding the Transaction from 29 February 2016 to 31 March 2016 to facilitate payment of the Completion Consideration and admission to trading on AIM of the XTR shares. Deed of Settlement with Xtract Resources Plc Subsequent to the Period on 20 July 2016 the Company advised it had entered into a deed of settlement with Xtract Resources Plc (Xtract) with respect to the US$2.5 million deferred consideration payable by Xtract to the Company (Settlement Deed). 1 Assumes 1 US Dollar equals 1.40 Australian Dollars 2 Assumes 1 British Pound equals 1.95 Australian Dollars and an Xtract share price of £0.0019 3 Assumes 1 US Dollar equals 1.40 Australian Dollars 3 AUROCH MINERALS LIMITED DIRECTORS’ REPORT Pursuant to the Sale Agreement (refer ASX Announcement 2 March 2016), three months following Completion Xtract was obliged to pay the Company Deferred Consideration totalling US$2.5 million comprising US$1.3 million cash and the remaining US$1.2 million payable in cash or XTR Shares at the Company’s election. The Company elected to receive the Deferred Consideration in cash. Settlement Deed Terms Subject to the Xtract’s compliance with the Settlement Deed, the Company has agreed to refrain from taking legal action against Xtract to enforce its obligation under the Sale Agreement to pay the Deferred Consideration on the following conditions: - - Xtract to make a first instalment payment of US$750,000 by 19 July 2016 (this has been paid); and Xtract to make a second and final payment of US$1,785,671 by 12 August 2016 (Second Instalment), which includes interest over the period 1 June 2016 to 19 July 2016, and interest on the Second Instalment over the period 20 July 2016 to 12 August 2016. On 26 August 2016 the Company advised that pursuant to the Settlement Deeds terms, the Company received the first instalment payment of US$750,000 and had also received $100,000 of the Second Instalment. On 26 May 2016 Xtract announced it had entered into a conditional sale and purchase agreement to sell the Manica Gold Project to Nexus Capital Limited (Nexus) and Mineral Technologies International Limited (MTI) for cash consideration of US$17,500,000. On 17 August 2016 Xtract advised that it was currently in discussions with Nexus and MTI in relation to re-structuring the sale of the Manica Gold Project to Nexus and MTI. The Company is in discussions with Xtract in relation to settlement of the remaining US$1,685,671 owed to it and envisages that following completion of the discussions between Xtract, Nexus and MTI, a resolution will be reached on the Second Instalment. Norseman Gold Projects, Western Australia Following completion of the sale of the Manica Gold Project, Auroch retains 100% of two prospecting licenses in Western Australia; the Beete Gold Project (P63/1646) and the Peninsula Gold Project (P63/1694) (Figure 1). In addition to focusing its efforts on these two tenements the Company will continue to assess potential future opportunities to add value to shareholders. 4 AUROCH MINERALS LIMITED DIRECTORS’ REPORT Figure 1: Location of the Peninsula and Beete Gold Projects Western Australia During the Period the Company provided an update on its Norseman Gold Projects, Western Australia. A complete review of existing data for P63/1646 (the Beete Gold Project) & P63/1694 (the Peninsula Gold Project) commenced in April 2016, including a reconnaissance site visit to both tenements and surrounding areas by CEO Dr Andrew Tunks. The Beete Gold Project (P63/1646) is located approximately 55 kilometres south of Norseman (Figure 2), with the Peninsula Gold Project (P63/1694) located approximately 27 kilometres north of Norseman (Figure 3). 5 AUROCH MINERALS LIMITED DIRECTORS’ REPORT P63/1646 - Beete Figure 2: P63/1646 - Beete Gold Project location map. The historic mine workings at the Beete Gold Project were visited and hand specimens collected. Gold mineralisation is hosted within a narrow quartz vein, and sometimes in the adjacent hanging and/or footwall shear. The vein conforms closely to the attitude of the host lithology (quartz rich arenites and quartz feldspar amphibole schists), however considerable local variations in dip can occur. The Beete Gold Project recorded production post-1974 was 2,816 tonnes of ore at an average grade of 24.8g/t Au [2,300 ounces]. There is sufficient encouragement from reconnaissance activities and an initial review of the data to suggest there is a possibility of discovering economic quantities of structural lode style mesothermal gold veins on the tenements. An initial proposal for further mapping and additional surface sampling has been designed to assess the potential of mineralisation at the Beete Gold Project extending within the tenement. 6 AUROCH MINERALS LIMITED DIRECTORS’ REPORT P63/1694 - Peninsula Figure 3: P63/1694 - Peninsula Gold Project location map. The mineralisation at the Peninsula Gold Project was observed to be associated with north-south trending quartz veins which dip at angles of 60-80 degrees to the east. A major quartz reef extends for the length of the tenement and was worked in the late 1800’s and intermittently throughout the 1900’s. Five historic shafts on this north-south trend were visited within the project area. At the north end of the tenement the main reef appears to have been faulted, and the geology is complicated by drag folding associated with faulting. Small scale open cut and underground mining previously occurred with a trial open pit mining operation yielding 424 tonnes of ore grading at 2.14 g/t Au, and a decline producing 495 tonnes of ore at 1.62 g/t Au. Mining was stopped due to issues with continuity. At the Peninsula Gold Project, a preliminary review of current data shows possible extensions of the known mineralisation both along strike and at depth. A targeted scout drilling program will be planned to test the potential extensions of mineralisation in a bid to expand its size within the tenement. A review of all existing data on the tenements was completed covering:- • Assembly of pertinent data from the Department of Mines and Petroleum (DMP) GIS data sets; • Assembly, processing and/or integration of the best available magnetic and gravity data with the aim of generating images that will facilitate definition of: alteration, faults, joint sets, and potential field associations of known gold occurrences in the region; 7 AUROCH MINERALS LIMITED DIRECTORS’ REPORT • Assembly and integration of geochemical data sets generated from the open-file exploration records of the region; and • Assembly and integration of any data generated from prior exploration drill holes, rock chip sampling, soil sampling, and other sampling in the region. Exploration programs at the Beete Gold Project (P63/1646) and Peninsula Gold Project (P63/1694) commenced in September 2016. The programs are designed to cover the entirety of both projects. In addition, surface sampling programs (infill and step-out) will be conducted with up to 100 mulloch, soil, and rock chip samples planned. CORPORATE CEO & Board Appointments During the Period the Company advised that Dr. Andrew Tunks had committed to a full-time role as Auroch CEO. Auroch Chairman Glenn Whiddon remarked “Andrew has been working with the Company for more than 12 months now and was involved in both the re-evaluation of the Manica Gold Project and its subsequent sale. We are excited to welcome Andrew into a more fulsome role where his passion for the industry and close links to Capital Markets and technical expertise will be of great value to the Company.” Dr Tunks holds a B.Sc (Hons) Monash and a Ph.D UTAS in geology and has over 25 years’ experience in the minerals industry. He previously held senior technical roles at North Limited, Paladin Resource, Ranger Minerals and Iamgold and was CEO of A-Cap Resources, Botswana Metals and Ausgold. Over the last few years Andrew has successfully built a bespoke geological consultancy providing highly targeted advice on technical mining issues. The Company also advised that Mr Ryan Gaffney had been appointed to the Board as Non-Executive Director. Mr Gaffney holds a BSBA in Finance and Economics from the Daniels College of Business, University of Denver, Colorado. Mr Gaffney, based in London, UK, currently runs an independent advisory and consulting business focused on Mergers and Acquisitions advisory and fundraising for small and medium-cap companies. He was previously a Managing Director with Canaccord Genuity in London, where he focused on providing natural resources clients with mergers and acquisitions, financing, and advisory services from 2002 to 2015. Following the appointment of Mr Gaffney, the Company advised that Mr Nicholas Ong had resigned as Director of the Company. The Company wishes to thank Mr Ong for his significant contribution to the Company over the past two years. Shareholder Approval The Company announced that all resolutions put to shareholders at the extraordinary general meeting held on 15 October 2015, including a resolution relating to the sale of the Manica Gold Project, had been approved by shareholders. Shareholder approval for the sale of the Manica Gold Project amounted to a key condition precedent to completion of the transaction with Xtract. In addition, the Company sought and obtained shareholder approval for, the issue of up to 1,139,956 convertible note securities (Convertible Notes). On 23 October 2015, Convertible Notes representing a face value of $250,000 were converted into 3,350,723 ordinary shares and 1,675,361 attaching options exercisable at $0.08 on or before 31 December 2018. The Company also issued 1,850,000 ordinary shares and 1,000,000 options exercisable at $0.10 on or before 23 October 2018 in settlement of outstanding creditors and deferred payments. 8 AUROCH MINERALS LIMITED DIRECTORS’ REPORT Partly Paid Share Consolidation & Option Entitlement Offer During the Period, the Company announced it had completed a reduction of its share capital by: - Extinguishing the uncalled amount of 19 cents per share on 21,800,000 partly paid shares; and - Consolidating those shares on a 20:1 basis into 1,090,000 fully paid ordinary shares. Following the consolidation and capital reduction and as at the date of this report the Company has 76,810,865 ordinary shares on issue. On 14 April 2016, the Company despatched an entitlement offer to issue the partly paid shareholders 19 new options with an exercise price of $0.20 on or before 23 October 2018 at a subscription price of $0.005 per new option for every 20 partly paid shares held prior to the capital reduction and consolidation. The Company received subscription applications totalling 13,844,650 new options pursuant to the Options Offer raising $69,223 before costs. On 23 June 2016 the Company issued an additional 6,550,000 new options pursuant to the shortfall offer. Settlement of Outstanding Loans The Company announced on 18 April 2016 that it had repaid all loans and convertible notes outstanding representing $496,723. The outstanding balances have been repaid via the settlement of 169,561,799 shares in Xtract. Sale of Xtract Resources Plc shares During the Period the Company realised the initial scrip consideration received from Xtract by disposing of 967,696,266 XTR shares at an average XTR share price of £0.001204 per share for total proceeds of £1,165,051 (A$2,250,507) to Auroch. After adjusting for the loans settled in XTR shares (refer announcement 18 April 2016) the Company booked a loss of A$1,230,413 following a decline in the XTR share price and announcement by XTR of the sale of the Manica Project to Nexus Capital Limited and Mineral Technologies International Limited. 9 AUROCH MINERALS LIMITED DIRECTORS’ REPORT Appendix 1 - Interest in Exploration Tenements Western Australia Tenement Tenement ID Status Interest Beete P63/1646 Granted Peninsula P63/1694 Granted 100% 100% Competent Persons Statement The information in this report that relates to Exploration Results is based on information compiled by Dr. Andrew Tunks and represents an accurate representation of the available data. Dr. Tunks (Member Australian Institute Geoscientists) is the CEO of the Company and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Tunks consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. DIRECTORS The names of Directors who held office during or since the end of the period: Mr Glenn Whiddon Mr Matthew Foy Mr Nicholas Ong (resigned 29 June 2016) Mr Ryan Gaffney (appointed 29 June 2016) All directors were in office for the entire duration unless otherwise stated. INFORMATION ON DIRECTORS Information on Directors as at the date of this report is as follows: Mr Glenn Whiddon Executive Chairman Glenn has an extensive background in equity capital markets, banking and corporate advisory with specific focus on natural resources, enabling project origination and financing. He has a significant contact network throughout the world which has led to the development of a number of projects. Glenn holds an economics degree and has extensive corporate and management experience. He has global banking experience with The Bank of New York in Australia, Europe and Russia. Mr Whiddon is currently a director of Azonto Petroleum Ltd, Fraser Range Metals Group Ltd and Statesman Resources Ltd. In the past 3 years Mr Whiddon has been a director of Zyl Ltd, Sirocco Energy Ltd and Rialto Energy Ltd. Equity interests: 9,634,627 ordinary shares, 1,818,147 options exercisable at $0.08 on or before 31 December 2018, 2,850,000 options exercisable at $0.20 on or before 23 October 2018. 10 AUROCH MINERALS LIMITED DIRECTORS’ REPORT Mr Ryan Gaffney (Appointed 29 June 2016) Non-Executive Director Ryan holds a BSBA in Finance and Economics from the Daniels College of Business, University of Denver, Colorado. Ryan, based in London, UK, currently runs an independent advisory and consulting business focused on Mergers and Acquisitions advisory and fundraising for small and medium-cap companies. He was previously a Managing Director with Canaccord Genuity in London, where he focused on providing natural resources clients with mergers and acquisitions, financing, and advisory services from 2002 to 2015. Ryan is not currently a director of any other listed company and has not held any directorships in the last three years. Equity interests in the Company: Nil. Mr Matthew Foy Non-Executive Director & Company Secretary Matthew is an active member of the WA State Governance Council of the Governance Institute of Australia (GIA) and spent four years at the ASX facilitating the listing and compliance of companies. Matthew is also currently Non-executive Director of Minerals Corporation Ltd. In the last 3 years, Matthew has been a Non-Executive Director of Segue Resources Ltd (resigned 1 September 2014), Omni Market Tide Limited (resigned 22 July 2015) and MSM Corporation Ltd (resigned 12 Januay 2016). Equity interests in the Company: 175,000 ordinary shares. Mr Nicholas Ong Non-Executive Director (resigned 29 June 2016) Nicholas was a Principal Adviser at the Australian Securities Exchange (ASX) in Perth and brings ten years’ experience in compliance and corporate governance to the Board. He has overseen the admission of over 100 companies on to the official list of the ASX. Nicholas is a member of the Governance Institute of Australia and is Managing Director of Minerva Corporate, a corporate advisory firm that specialises in providing transaction advisory, financial reporting and company secretarial services. Nicholas holds a Bachelor of Commerce and a Master of Business Administration from the University of Western Australia. DIRECTORS MEETING There were no formal Directors’ meetings held during the period. The Directors’ conducted formal business via circulating resolution. REMUNERATION REPORT (Audited) The Remuneration Report is set out under the following main headings:  Remuneration policy  Details of remuneration  Share-based compensation  Equity instrument disclosures relating to Key Management Personnel  Loans to Key Management Personnel  Other transactions with Key Management Personnel  Service agreements 11 AUROCH MINERALS LIMITED DIRECTORS’ REPORT The information provided in this remuneration report has been audited as required by section 308 (3C) of the Corporations Act 2001. This report details the nature and amount of remuneration for each Director of Auroch Minerals Limited and key management personnel of the group. Person who are considered key management personnel of the group during the Period are as follows: - Glenn Whiddon (Executive Chairman) - Nicholas Ong (Non-Executive Director, resigned 29 June 2016) - Matthew Foy (Non-Executive Director, Company Secretary) - Andrew Tunks (Chief Executive Officer, appointed 9 January 2015) - Ryan Gaffney (Non-Executive Director, appointed 29 June 2016) 1. Remuneration policy The remuneration policy of Auroch has been designed to align director and management objectives with shareholder and business objectives by providing a fixed remuneration component, and offering specific long-term incentives, based on key performance areas affecting the Group’s financial results. Key performance areas of the Group include cash flow, share price, exploration results and development of cash-generating business activities. The Board of Directors (the Board) of Auroch believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best management and directors to run and manage the Group, as well as create goal congruence between directors, executives and shareholders. Voting and comments made at the company’s 2015 Annual General Meeting At the 2015 Annual general Meeting the Company remuneration report was passed by the requisite majority of shareholders (100% by a show of hands). Remuneration Governance The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives of the Group is as follows: The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed and approved by the Board. All executives receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits and the ability to receive options and performance-based incentives. The remuneration committee, composed of the full Board, reviews executive packages annually by reference to the Group’s performance, executive performance, and comparable information from industry sectors and other listed companies in similar industries. Executives are also entitled to participate in the employee share and option arrangements. The employees of the Group receive a superannuation guarantee contribution required by the government, which is currently 9.5%, and do not receive any other retirement benefits. All remuneration paid to Directors and executives is valued at the cost to the Group and expensed. Options (if applicable) given to Directors and Key Management Personnel are valued using an appropriate option pricing methodology. The Board policy is to remunerate non-executive Directors at the lower end of market rates for comparable companies for time, commitment, and responsibilities. The remuneration committee determines payments to the non-executive Directors and reviews their remuneration annually based on market practice, duties, and accountability. Independent external advice is sought when required. Fees for non-executive Directors are not linked to the performance of the Group. However, to align Directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Group. 12 AUROCH MINERALS LIMITED DIRECTORS’ REPORT The maximum aggregate amount of fees that can be paid to non-executive Directors was approved by shareholders at a General Meeting held on 11 February 2011. The maximum amount of fees payable to non-executive directors is $250,000 per annum. The Board expects that the remuneration structure implemented will result in the company being able to attract and retain the best executives to run the Company. It will also provide executives with the necessary incentives to work to grow long-term shareholder value. The payment of bonuses, options and other incentive payments are reviewed by the Board as part of the review of executive remuneration. All bonuses, options and incentives must be linked to predetermined performance criteria. The Board can exercise its discretion in relation to approving incentives, bonuses and options. Any changes must be justified by reference to measurable performance criteria. During the Period no performance based incentives, options or bonuses were granted to any director or executive. As such, no pre-determined performance criteria have been outlined for the existing Board. During the year the company did not seek the advice of remuneration consultants. Company performance, shareholder wealth and director and executive remuneration. The following table shows gross revenue, profits/losses and share price of the Group at the end of the current and previous financial years since incorporation. There is no link between company performance and remuneration given the current nature of the Company’s operations. Revenue from continuing operations (interest only) Net profit/(loss) Share price 30 June 2016 $ 30 June 2015 $ 1,178 2,510,541 $0.13 81,791 (1,003,116) $0.12 30 June 2014 $ 29,154 (921,051) $0.05 30 June 2013 $ 110,819 (1,093,562) $0.09 The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. This will be achieved via offering performance incentives based on key performance indicators. 2. Details of remuneration 2016 Name Short-term benefits Cash Salary and Fees Post- employment benefits Super- annuation Share-based Payment Equity Option s Total % perf. based Glenn Whiddon Matthew Foy Nicholas Ong (i) Ryan Gaffney (ii) Other Andrew Tunks Total 171,800 - - - 114,785 286,585 (i) Nicholas Ong resigned 29 June 2016 (ii) Ryan Gaffney appointed 29 June 2016 - - - - - - - 16,450 - - 40,000 56,450 13 - - - - - - 171,800 16,450 - - 154,785 343,035 - - - - - - AUROCH MINERALS LIMITED DIRECTORS’ REPORT 2015 Name Short-term benefits Cash Salary and Fees Post- employment benefits Super- annuation Share-based Payment Equity Options Total % perf. based Glenn Whiddon Matthew Foy (i) Jan Nelson (ii) Nicholas Ong Other Francisco Matos Gordon Koll Jim Porter Andrew Tunks (iii) Total 148,160 - 41,113 - 108,215 115,180 92,396 30,000 535,064 - - - - - - - - - - - - - - - - - - - - - - - - 148,160 - 41,113 - 108,215 115,180 92,396 30,000 535,064 - - - - - - - - (i) Matthew Foy was appointed 3 December 2014 Jan Nelson resigned 28 November 2014 (ii) (iii) Andrew Tunks was appointed on 9 January 2015 3. Share-based compensation The Auroch Minerals Limited Employee Share Plan (the “Plan”) is used to reward Directors and employees for their performance and to align their remuneration with the creation of shareholder wealth. Approved by Shareholders 4 April 2013 the Plan is designed to provide long-term incentives to deliver long-term shareholder returns. Participation in the Plan is at the discretion of the Board and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. During the Period no shares were issued under the Plan. Shares There were no shares issued to Directors or employees by the Group under the Plan during the year (2015: Nil), refer to the above table for details of share based payments to Directors and employees not under the Plan. Options There were no options issued to Directors or employees by the Group (2015: Nil) under the Plan during the year. 4. Equity Instrument Disclosures Relating to Key Management Personnel (i) Options provided as remuneration and shares issued on any exercise of such options There were no options provided as remuneration and shares issued on any exercise of such options issued during the period. (ii) Option holdings At the end of the period, the Director’s option holdings are as follows: 14 2016 Fully Paid Shares Directors Glenn Whiddon Nicholas Ong (i) Matthew Foy Ryan Gaffney (ii) 2016 Fully Paid Shares Directors Glenn Whiddon Nicholas Ong (i) Matthew Foy Ryan Gaffney (ii) Employees Andrew Tunks Total (i) (ii) AUROCH MINERALS LIMITED DIRECTORS’ REPORT Balance at the start of the period Received during the period Other changes during the period Balance at the end of the period - - - - 2,850,000 57,000 - - - 2,907,000 1,818,147 (57,000) - - 4,668,147 - - - - 1,761,147 - 4,668,147 Employees Andrew Tunks Total (i) Mr Ong resigned as Director on 29 June 2016 (ii) Mr Gaffney appointed as Director on 29 June 2016 - - (iii) Share holdings Aggregate numbers of shares of the Group held directly, indirectly or beneficially by Directors or key management personnel of the Group at the date of this report: Balance at the start of the period Received during the period Other changes during the period Balance at the end of the period 5,508,333 80,000 - - - 5,588,333 - 3,000 175,000 - 500,000 678,000 4,126,294 (83,000) - - 9,634,627 - 175,000 - - 4,043,294 500,000 10,309,627 Mr Ong resigned as Director on 29 June 2016 Mr Gaffney appointed as Director on 29 June 2016 2016 Partly Paid Shares Directors Glenn Whiddon Matthew Foy Nicholas Ong Balance at the start of the period Received during the period Other changes during the period Balance at the end of the period 3,000,000 - 60,000 - - - (3,000,000) - (60,000) - - - 15 AUROCH MINERALS LIMITED DIRECTORS’ REPORT Employees Andrew Tunks Total (i) Mr Ong resigned as Director on 29 June 2016 (ii) Mr Gaffney appointed as Director on 29 June 2016 - 3,060,000 5. Loans to Key Management Personnel There were no loans to key management personnel during the year. 6. Other transactions with Key Management Personnel - - - (3,060,000) - - Mr Nicholas Ong is a director of Minerva Corporate Pty Ltd. During the period ended 30 June 2016 the Company was providing consultancy, company secretarial, accounting and administration and registered office services to Auroch Minerals Limited. In accordance with the services agreement the monthly charge for these services is $8,000 per month. Payments to Minerva Corporate Pty Ltd during the relevant period total $116,500 (2015: $99,000). The amounts owed to Minerva Corporate Pty Ltd as at 30 June 2016 was $9,000 (2015: $132,061). Loan received from Glenn Whiddon (Executive Director) during the period to fund the groups working capital commitments. The loan was repayable within 7 business days’ following written notice by the Lender to the Borrower. Interest was payable at 9.25% per annum on repayment date. Should interest not be paid then the interest rate increased to 12%. This loan was repaid by the group in the form of Xtract shares. During the period Mr Glenn Whiddon and his associated entities converted convertible loans totalling $300,000 into 3,636,294 ordinary shares and 1,818,147 options exercisable at $0.08 on or before 31 December 2018 pursuant to shareholder approval obtained on 15 October 2015. During the period Mr Matthew Foy was issued 175,000 ordinary shares in lieu of fees subject to shareholder approval obtained 15 October 2015. During the period Mr Andrew Tunks was issued 500,000 ordinary shares in lieu of fees. 7. Service Agreements Mr Andrew Tunks has a consultancy agreement with the Company whereby Mr Tunks provides services in his capacity as Chief Executive Officer. The consulting agreement commenced on 9 January 2015 and was amended on 29 June 2016 for an indefinite term at $250,000 per annum. The Company or Mr Tunks may terminate the agreement by giving one months’ notice, or by the Company making one months’ payment in lieu of notice. No other key management personnel have Service Agreements in place. End of Audited Remuneration Report OPERATING RESULTS The net loss after providing for income tax amounted to $2,701,923 (2015: $1,003,116). PRINCIPAL ACTIVITY The principal activity of the Group is mineral exploration and development. 16 AUROCH MINERALS LIMITED DIRECTORS’ REPORT DIVIDENDS There were no dividends paid or recommended during the financial year ended 30 June 2016 (2015: Nil). FINANCIAL POSITION The net assets of the Group at 30 June 2016 are $8,655,798 (2015: $4,123,489). ENVIRONMENTAL REGULATIONS In the normal course of business, there are no environmental regulations or requirements that the Group is subject to. Greenhouse gas and energy data reporting requirements The Company is not required to report under the Energy Efficiencies Opportunity Act 2006 or the National Greenhouse and Energy Efficient Reporting Act 2007 (the Acts). INDEMNIFYING OFFICERS OR AUDITOR In accordance with the constitution, except as may be prohibited by the Corporations Act 2001 every Officer of the Company shall be indemnified out of the property of the Company against any liability incurred by him in his capacity as Officer, auditor or agent of the Company or any related corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal. During the period the Group paid $10,250 in premiums for Directors and Officer Insurance. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purposes of taking responsibility on behalf of the Group for all or part of those proceedings. SIGNIFICANT CHANGES IN STATE OF AFFAIRS On 2 March 2016 the Company advised that final approval had been received under the Mozambique Mining Act from the Mozambique Mining Act from the Mozambican mining authorities in addition to the earlier approvals from the Central Bank and the Ministry of Taxation, permitting the completion of the sale of 100% of the Manica Gold Project to Xtract (Completion). Other than the above there has been no other significant changes in the state of affairs of the Group during the financial year. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS In the opinion of the Directors, disclosure of any further information on likely developments in operations and expected results would be prejudicial to the interests of the Group, the consolidated entity and shareholders. MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR On 4 July 2016 the Company advised that it had conducted final due diligence investigations on the Hombolo Lithium Project. Assay Results from due diligence sampling conducted in May across the Hombolo Ground package yielded disappointing results and showed no significant anomalism across the tenement package outside the historic open pit workings within the Primary Mining Licences. Subsequent to the Period on 20 July 2016 the Company advised it had entered into a deed of settlement with Xtract 17 AUROCH MINERALS LIMITED DIRECTORS’ REPORT Resources Plc with respect to the US$2.5 million deferred consideration payable by Xtract to the Company. Subject to the Xtract’s compliance with the Settlement Deed, the Company agreed to refrain from taking legal action against Xtract to enforce its obligation under the Sale Agreement to pay the Deferred Consideration on the following conditions: - Xtract to make a first instalment payment of US$750,000 by 19 July 2016 (this has been paid); and - Xtract to make a second and final payment of US$1,785,671.86 by 12 August 2016 (Second Instalment), which includes interest over the period 1 June 2016 to 19 July 2016, and interest on the Second Instalment over the period 20 July 2016 to 12 August 2016. On 26 August 2016 the Company advised that pursuant to the Settlement Deeds terms, the Company received the first instalment payment of US$750,000 and had also received $100,000 of the Second Instalment. The Company is in discussions with Xtract with regards to final settlement of the remaining US$1,685,671. NON AUDIT SERVICES During the financial period the following fees were paid or payable for services provided by the auditor: BDO Corporate Tax (WA) Pty Ltd, tax compliance 2016 $ 34,454 34,454 2015 $ 9,466 9,466 The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Group and/or the group are important. The board of directors has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:  all non-audit services have been reviewed by the board of directors to ensure they do not impact the impartiality and objectivity of the auditor  none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. 18 AUDITOR’S INDEPENDENCE DECLARATION AUROCH MINERALS LIMITED DIRECTORS’ REPORT A copy of the independence declaration by the lead auditor under section 307C of the Corporations Act 2001 is included on page 20 of this financial report. This report is signed in accordance with a resolution of the Board of Directors. Glenn Whiddon DIRECTOR Dated this 30th day of September 2016 19 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF AUROCH MINERALS LIMITED As lead auditor of Auroch Minerals Limited for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Auroch Minerals Limited and the entities it controlled during the period. Dean Just Director BDO Audit (WA) Pty Ltd Perth, 30 September 2016 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. AUROCH MINERALS LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 Revenue Less Expenses: Accounting fees Audit fees Borrowing Costs Consulting fees Corporate advisory Directors expense Employee Benefits Expense Share buy back Corporate and regulatory fees Interest Impairment expense Legal costs Share based payment expense Travel & accommodation Finance costs Foreign exchange loss Other expenses (Loss) before income tax Income tax expense (Loss) after income tax Note 3 2016 $ 2015 $ 43,893 81,791 (108,142) (41,265) (12,500) (422,834) (30,000) (18,887) (25,000) - (22,734) (80,261) (556,534) (157,222) (265,563) (75,520) (221,209) (482,780) (127,071) (2,603,629) (79,193) (37,380) - (217,702) (28,757) (48,000) - 42,630 (17,541) (140,375) (13,915) - - (77,946) (351,216) - (116,628) (1,004,232) 5 (847,355) (3,450,984) - (1,004,232) Profit from sale of discontinued operations Profit/(Loss) for the year 5,961,525 2,510,541 1,116 (1,003,116) 21 AUROCH MINERALS LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 Other comprehensive income Items that have been reclassified to the profit or loss Exchange differences on disposal of controlled entities Items that may be reclassified to the profit or loss Exchange difference on translation of foreign operations Other comprehensive income/(loss for the year net of tax Total comprehensive income/(loss) for the year attributable to the owners of Auroch Minerals Limited Basic profit/loss per share (cents per share) from continuing operations attributable to the ordinary equity holders of the company Diluted profit/loss per share (cents per share) attributable to the ordinary equity holders of the company Basic profit/loss per share (cents per share) attributable to the ordinary equity holders of the company Diluted profit/(loss) per share (cents per share) attributable to the ordinary equity holders of the company 6 6 6 6 191,382 - 191,382 - (828,689) (828,689) 2,701,923 (1,831,805) (5.27) (5.27) 4.12 2.62 (1.79) (1.79) (1.79) (1.79) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 22 AUROCH MINERALS LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016 Note 2016 $ 2015 $ ASSETS Current Assets Cash and cash equivalents Trade and other receivables Assets held for sale Total Current Assets Non-current Assets Mineral exploration and evaluation expenditure Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Borrowings Financial liabilities Total Current Liabilities Non-current Liabilities Financial liabilities Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY 7 8 9 10 11 11 5,223,618 3,392,763 - 8,616,381 86,667 20,086 7,947,290 8,054,043 171,507 171,506 206,866 206,866 8,787,888 8,260,909 132,090 - - 132,090 2,278,448 414,113 1,444,859 4,137,420 - - - - 132,090 4,137,420 8,655,798 4,123,489 12 13 14 9,518,702 389,175 (1,252,079) 7,961,958 (75,849) (3,762,620) 8,655,798 4,123,489 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 23 AUROCH MINERALS LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016 Contributed Equity Accumulated Losses Option Reserve $ $ $ $ Share Based Payments Reserve Foreign Currency Translation Reserve $ Total Equity $ Balance at 1 July 2015 Profit/Loss for year Exchange difference on foreign operations Total comprehensive loss for year Transactions with owners in their capacity as owners: Issue of shares Issue of options Share based payment reserve Share capital raising costs 7,961,958 - (3,762,620) 2,510,541 - - - 2,510,541 1,575,130 - - (18,386) - - - - Balance at 30 June 2016 9,518,702 (1,252,079) Balance at 1 July 2014 Loss for year Exchange difference on foreign operations Total comprehensive loss for year Transactions with owners in their capacity as owners: Issue of shares Share buy-back Share based payment reserve Share capital raising costs 14,699,457 - (2,759,504) (1,003,116) - - - (1,003,116) 771,862 (7,500,000) - (9,361) - - - - Balance at 30 June 2015 7,961,958 (3,762,620) - - - - 115,533 - - - (191,382) 4,123,489 - 2,510,541 191,382 191,382 191,382 2,701,923 - 194,828 - - 194,828 - - - - - - - - - - - 78,814 - 194,347 42,630 - - - - (42,630) 115,533 - - 1,575,130 - - 273,642 - (18,386) - - 8,655,798 637,307 12,619,890 - (1,003,116) (828,689) (828,689) (828,689) (1,831,805) - 771,862 - (7,542,630) 115,533 - (9,361) - 115,533 (191,382) 4,123,489 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 24 AUROCH MINERALS LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016 CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Other revenue Interest received Interest Paid Other Payments GST Net cash (outflow) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for acquisitions Payments for exploration expenditure Proceeds from sale of prospects Net cash (outflow) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Capital raising costs Net cash inflow from financing activities Net increase/decrease in cash and cash equivalents Foreign exchange movement on cash and cash equivalents Cash and cash equivalents at the beginning of the year Note 2016 $ 2015 $ 15 (1,382,359) - 1,146 (179,442) (55,796) (1,616,451) (218,413) - 900 - - (217,513) - (999,811) 7,306,573 6,306,762 (350,000) (890,224) - (1,240,224) 829,673 (21,505) 808,168 1,238,845 (26,011) 1,212,834 5,498,479 (361,528) 86,667 (244,903) - 331,570 NET CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 7 5,223,618 86,667 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 25 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In order to assist in the understanding of the accounts, the following summary explains the material accounting policies that have been adopted in the preparation of the accounts. (a) Basis of Preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001. The Company is a for-profit entity for the purpose of preparing these financial statements. Compliance with IFRS The financial statements of the company also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) Historical cost convention These financial statements have been prepared on an accruals basis and are based on historical costs and do not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. Early adoption of new standards The Group has elected not to early adopt any new standards issued not yet effective. Refer to note 1 (t) for an assessment of the impact of these standards to the Group. (b) Principles of Consolidation Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Auroch Minerals Limited as at 30 June 2016 and the results of all subsidiaries for the year then ended. Auroch Minerals Limited and its subsidiaries together are referred to in this financial report as the group or the consolidated entity. Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Joint arrangements Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Joint operations The group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. 26 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Joint ventures Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated statement of financial position. (c) Impairment of Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s values in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash- generating unit is considered impaired and is written down to its recoverable amount. In assessing 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. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at re-valued amount (in which case the impairment loss is treated as a revaluation decrease). As assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had the impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at the re-valued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (d) Share Based Payment Transactions Under AASB 2 Share Based Payments, the Group must recognise the fair value of shares and options granted to directors, employees and consultants as remuneration as an expense on a pro-rata basis over the vesting period in the Statement of Profit or Loss and Other Comprehensive Income with a corresponding adjustment to equity. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. No revision to original estimates is made in respect of options issued with market based conditions. The Group provides benefits to employees (including directors) of the Group in the form of share based payment transactions, whereby employees render services in exchange for shares or rights over shares (“equity-settled transactions”). The cost of these equity-settled transactions with employees (including directors) is measured by reference to fair value at the date they are granted. The fair value is determined using an appropriate option pricing model. In relation to the valuation of the share-based payments, these are valued using an appropriate option valuation method. Once a valuation is obtained management use an assessment as to the probability of meeting non-market based conditions. Market conditions are vested over the period in which management assess it will take for these conditions to be satisfied. 27 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 (e) Segment Reporting Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating decision maker (“CODM”), which has been identified by the Group as the Managing Director and other members of the Board of directors. (f) Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The carrying value less impairment provision of trade receivables and payables are assumed to approximately their fair value due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. (g) Income Tax and Other Taxes The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Group’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provision where appropriate on the basis of amounts expected to be paid to the tax authorities. Adjustments to current income tax are made to take into account any change in tax rates between the Company and its subsidiaries. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Auroch Minerals Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the financial statements. 28 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. (h) Exploration and Evaluation Expenditure The Group’s policy with respect to exploration and evaluation expenditure is to use the area of interest method. Under this method exploration and evaluation expenditure is carried forward on the following basis: i. ii. Each area of interest is considered separately when deciding whether, and to what extent, to carry forward or write off exploration and evaluation costs; and Exploration and evaluation expenditure related to an area of interest is carried forward provided that rights to tenure of the area of interest are current and that one of the following conditions is met:  such evaluation costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively, by its sale; or  exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in relation to the area are continuing. Exploration and evaluation costs accumulated in respect of each particular area of interest include only net direct expenditure. (i) Cash and Cash Equivalents For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand, cash in bank accounts, money market investments readily convertible to cash within two working days, and bank bills but net of outstanding bank overdrafts. (j) Investments and other financial assets The Group classifies its financial assets in the following categories: loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date. (i) Loans and receivables Loans and receivables are non-derivate financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the statement of financial position date which are classified as non-current assets. Loans and receivable are included in trade and other receivables in the statement of financial position. Recognition and de-recognition Investments are initially recognised at fair value plus transactions costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. Subsequent measurement Loans and receivables are carried at amortised cost using the effective interest method. Impairment The Group assesses at each reporting date whether there is objective evidence that a financial asset or Group of financial assets is impaired. 29 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 (k) Earnings Per Share (i) Basic Earnings Per Share Basic earnings per share is determined by dividing the operating loss attributable to the equity holder of the Company after income tax by the weighted average number of ordinary shares outstanding during the financial year. (ii) Diluted Earnings Per Share Diluted earnings per share adjusts the figures used in determination of basic earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share that will arise from the exercise of options outstanding during the year. (l) Revenue recognition Revenue is measured at fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. The following specific recognition criteria must also be met before revenue is recognised: Interest income is recognised as it accrues using the effective interest method. (m) Trade and Other Receivables Receivables are initially recognised at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Current receivables for GST are due for settlement within 30 days and other current receivables within 12 months. Cash on deposit is not due for settlement until rights of tenure are forfeited or performance obligations are met. (n) Trade and Other Payables Trade payables and other payables are carried at cost and represent liabilities for goods and services provided to the Group prior to the end of the financial period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and usually paid within 30 days of recognition. (o) Borrowings Cost Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use of sale. All other borrowing costs are recognised as expenses in the period in which they are incurred. (p) Goods and Service Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST except:  Where the GST incurred on the purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and  Receivable and payable are stated with the amount of GST included. The amount of GST recoverable from the taxation authority is included as part of the receivables in the Statement of financial position. The amount of GST payable to the taxation authority is included as part of the payables in the Statement of financial position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. (q) Contributed Equity Issued and paid up capital is recognised at the fair value of the consideration received by the Group. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. 30 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 (r) Foreign currency translation Functional and presentation currency Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the Group operates (‘the functional currency). The consolidated financial statements are presented in Australian dollars, which is the Group’s functional and presentation currency. Group companies The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:  assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that Statement of Financial Position.  income and expenses for each Statement of Profit or Loss and Other Comprehensive Income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and  all resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange difference is reclassified to profit or loss, as part of the gain or loss on sale where applicable. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate. Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency monetary assets and liabilities at the reporting date are translated at the exchange rate existing at reporting date. Exchange differences are recognised in profit or loss in the period in which they arise. No dividends were paid or proposed during the year. (s) Parent entity information The financial information for the parent entity, disclosed in note 27 has been prepared on the same basis as the consolidated financial statements, except as set out below. (i) Investments in subsidiaries, associates and joint venture entities Investments in subsidiaries are accounted for at cost in the financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss when its right to receive the dividend is established. (t) Standards and Interpretations in issue not yet adopted At the date of authorisation of the financial report, a number of Standards and Interpretations including those Standards and Interpretations issued by the IASB/IFRIC, where an Australian equivalent has not been made by the AASB, were in issue but not yet effective for which the Entity has considered it unlikely for there to be a material impact on the financial statements. 31 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 AASB reference Title and Affected Standard(s): Nature of Change Application Impact on Initial Application date: AASB 9 (issued Financial Amends the requirements for classification and Annual Adoption of AASB 9 is only December 2009 and Instruments measurement of financial assets. The available- reporting mandatory for the year amended December for-sale and held-to-maturity categories of periods ending 30 June 2018. 2010) financial assets in AASB 139 have been beginning on eliminated. Under AASB 9, there are three or after 1 The entity does not currently categories of financial assets:  Amortised cost January 20171 have any financial instruments.   Fair value through profit or loss Fair value through other comprehensive income. The following requirements have generally been carried forward unchanged from AASB 139 Financial Instruments: Recognition and Measurement into AASB 9:  Classification and measurement of financial liabilities; and  Derecognition requirements for financial assets and liabilities. However, AASB 9 requires that gains or losses on financial liabilities measured at fair value are recognised in profit or loss, except that the effects of changes in the liability’s credit risk are recognised in other comprehensive income. 1 The application date of AASB 9 has been deferred from annual periods beginning on or after 1 January 2015 to annual periods beginning on or after 1 January 2017 by AASB 2013-9 Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments. 32 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 AASB reference Title and Affected Standard(s): Nature of Change Application Impact on Initial Application date: AASB 15 Revenue from Revenue The standard provides a single standard for Annual The consolidated entity will Contracts with Customers revenue recognition. The core principle of the reporting adopt this standard from 1 standard is that an entity will recognise revenue periods July 2017 but the impact of to depict the transfer of promised goods or beginning on its adoption is yet to be services to customers in an amount that reflects or after 1 assessed by the consolidated the consideration to which the entity expects to January 2017 entity. be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. 33 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 AASB reference Title and Nature of Change Application Impact on Initial Affected Standard(s): date: Application Contracts with customers will be presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgments made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. AASB 2013-9 (issued Amendments Makes three amendments to AASB 9: Annual reporting The application date of AASB 9 December 2013) to Australian  Adding the new hedge accounting periods beginning has been deferred to 1 January Accounting requirements into AASB 9 on or after 1 2017. The entity has not yet Standards –  Deferring the effective date of AASB 9 January 2015 made an assessment of the Conceptual Framework, Materiality and Financial Instruments from 1 January 2015 to 1 January impact of these amendments. The entity does not currently have any hedging arrangements in place. 2017, and  Making available for early adoption the presentation of changes in ‘own credit’ in other comprehensive income (OCI) for financial liabilities under the fair value option without early applying the other AASB 9 requirements. Under the new hedge accounting requirements: • The 80-125% highly effective threshold has been removed 34 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 AASB reference Title and Nature of Change Application Impact on Initial Affected Standard(s): date: Application • Risk components of non-financial items can qualify for hedge accounting provided that the risk component is separately identifiable and reliably measurable • An aggregated position (i.e. combination of a derivative and a non-derivative) can qualify for hedge accounting provided that it is managed as one risk exposure • When entities designate the intrinsic value of options, the initial time value is deferred in OCI and subsequent changes in time value are recognised in OCI AASB 2015-1 Amendments The changes affect two standards as Effective for The entity has not yet made an to Australian follows: AASB 5 Non-current Assets Held periods beginning assessment of the impact of Accounting for Sale and Discontinued Operations. on or after 1 these amendments. Standards - The update clarifies that if assets/disposal January 2016 Annual groups are reclassified from being held Improvements for sale to being held for distribution to to Australian owner or vice versa, this is considered to Accounting be a continuation of the original plan for Standards disposal. It also clarifies that if assets 2012-2014 cease to be held for distribution to Cycle (issued owners, the usual AASB 5 requirements January 2015) for assets that cease to be held for sale will apply. The update also affects AASB 119: Employee benefits by clarifying that high quality corporate bonds or national government bonds used to determine the discount rate for long service leave and defined benefit liabilities must be denominated in the same currency as the 35 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 benefits that will be paid to the employee. AASB 16 Leases This standard and its consequential Effective for The entity has not yet made an amendments are applicable to annual periods beginning assessment of the impact of reporting periods beginning on or on or after 1 July these amendments. after 1 January 2019. This Standard 2019 sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. This information gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of an entity. 2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS In preparing these Financial Statements the Group has been required to make certain estimates and assumptions concerning future occurrences. There is an inherent risk that the resulting accounting estimates will not equate exactly with actual events and results. (a) Significant accounting judgements In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements. Capitalisation of exploration and evaluation expenditure The Group has capitalised exploration and evaluation expenditure on the basis either that this is expected to be recouped through future successful development (or alternatively sale) of the Areas of Interest concerned or on the basis that it is not yet possible to assess whether it will be recouped. Refer to note 9 for further details. Receivables The Group expects to recover amounts included as receivables at the date of this report. This includes amounts recognised as deferred consideration on the sale of the Manica asset. (b) Significant accounting estimates and assumptions The carrying amount of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: 36 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Impairment of capitalised exploration and evaluation expenditure The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using the Black Scholes model. Should the assumptions used in these calculations differ, the amounts recognised could significantly change. Details of estimates used can be found in Note 21. Estimated fair value of borrowings The initial fair value of the liability portion of converting notes is determined as the proceeds less value of borrowing costs and fees. The liability is subsequently recognised at fair value until extinguished on conversion or maturity of the notes, with the fair value at maturity estimated based on management’s view of the most likely conversion outcome. 3. REVENUE From continuing operations Gain on settlement of liability Interest received Total 4. EXPENSES Profit/Loss includes the following specific expenses: Consultants and advisory fees Advertising and Marketing Share registry costs Depreciation 5. TAXATION The components of tax expense comprise: Current tax Deferred tax 37 2016 $ 2015 $ - 1,178 1,178 80,891 900 81,791 2016 $ 2015 $ 452,834 1,768 10,335 - 217,702 1,462 6,367 1,157 2016 $ 2015 $ 847,355 - 847,355 - - - AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 5. TAXATION (continued) The prima facie tax payable/(benefit) on profit/(loss) from ordinary activities before income tax is reconciled to the income tax as follows: Profit/(Loss) before income tax Profit/(Loss) before income tax from discontinued operations Prima facie tax benefit on loss from continuing activities before income tax at 30% (2015: 30%) Add/(subtract) tax effect of: Expenditure not deductible Other Deferred tax assets relating to tax losses not recognised Adjustments relating to Mozambique capital gains tax Foreign tax rate differential Total income tax expense (2,603,629) 5,961,525 (989,201) - 1,007,369 (296,760) 652,715 167,476 (1,033,165) 52,960 847,355 37,391 - 259,369 - - - The franking account balance at year end was $nil. Deferred tax assets and liabilities not recognised relate to the following: Deferred tax assets Tax losses Other temporary differences Capital loss Exploration expenditure Net deferred tax assets 6. PROFIT/LOSS PER SHARE (a) Profit/(loss) per share Profit/(loss) attributable to the ordinary equity holders of the Group (b) Reconciliations of profit/loss used in calculated loss per share Basic and diluted profit/loss per share Diluted profit/loss per share (c) Weighted average number of shares used as a denominator Weighted average number of ordinary shares used as the denominator in calculating basic loss per share 7. CASH AND CASH EQUIVALENTS Deposits at call Cash at bank The Group’s exposure to interest rate risk is discussed in Note 17. 38 1,255,772 56,984 41,672 (50,851) 1,303,577 812,868 109,728 - (50,389) 872,207 2016 $ 2015 $ 2,701,923 (1,003,116) 4.12 2.62 (1.79) (1.79) 65,531,281 56,092,271 2016 $ 31,514 5,192,104 5,223,618 2015 $ 42,176 44,491 86,667 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 7. CASH AND CASH EQUIVALENTS (continued) Financial Guarantees The Group has provided no financial guarantees. 8. TRADE AND OTHER RECEIVABLES Deferred consideration on sale of Manica asset 1 Prepayments Other receivables Ageing of receivables past due or impaired 2016 $ 3,359,075 578 33,110 3,392,763 2015 $ - - 20,086 20,086 As at 30 June 2016 deferred consideration was past due. Refer to Note 22 for further details of deferred consideration receivable. The Group’s exposure to credit risk is discussed in Note 17. The deferred consideration receivable relates to the Groups disposal of the Manica gold project to Xtract Resources PLC. Subsequent to year end, the company entered into a revised settlement deed with Xtract regarding the timing of payment. Xtract paid the total of US$750,000 of the agreed first instalment and US$100,000 of the agreed value of US$1,785,671 of the second instalment. The remaining balance is outstanding. Xtract has announced it has entered into a conditional sale and purchase agreement to sell the Manica Gold Project to Nexus Capital Limited (Nexus) and Mineral Technologies International Limited (MTI) for cash consideration of US$17,500,000. Xtract have advised that it is currently in discussions with Nexus and MTI in relation to re-structuring the sale of the Manica Gold Project to Nexus and MTI. The Company is in discussions with Xtract in relation to settlement of the remaining US$1,685,671 owed to it and envisages that following completion of the discussions between Xtract, Nexus and MTI, a resolution will be reached on the Second Instalment. The directors are satisfied that the the remaining receivable is fully recoverable. 9. EXPLORATION AND EVALUATION EXPENDITURE Balance at beginning of the year Tenement acquisition costs cancelled Exploration expenditure incurred Exploration expenditure written off Movement due to foreign exchange translation Transfer to assets held for sale Balance at the end of the year 1US$2,500,000 at 1.34363 AUD:USD due on 1 June 2016 39 2016 $ 206,866 - 521,175 (556,534) - - 171,507 2015 $ 16,371,887 (8,650,000) 1,005,683 (13,915) (559,499) (7,947,290) 206,866 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 9. EXPLORATION AND EVALUATION EXPENDITURE (continued) The balance carried forward represents projects in the exploration and evaluation phase. Ultimate recoupment of exploration expenditure carried forward is dependent on successful development and commercial exploitation, or alternatively, sale of respective areas. 10. TRADE AND OTHER PAYABLES Trade payables Accruals 2016 $ 88,565 43,525 132,090 2015 $ 2,176,262 102,186 2,278,448 All current liabilities are expected to be settled within 12 months as they are generally due on 30-60 day terms. The Group’s exposure to credit risk is discussed in Note 17. 11. BORROWINGS Loans (held at amortised cost) Convertible Notes (held at fair value) Other financial liabilities The Group does not have any existing borrowings. 12. CONTRIBUTED EQUITY (a) Share Capital Fully paid Partly Paid Equity raising costs 2016 $ - - - - 2015 $ 100,000 314,113 1,444,859 1,858,972 2016 Shares 76,810,865 - - 76,810,865 2015 Shares 58,591,397 21,800,000 - 80,391,397 2016 $ 2015 $ 10,192,746 8,399,616 218,000 - (674,044) (655,658) 9,518,702 7,961,958 (b) Movements in ordinary shares (including equity raising costs) 2016 Date 01/07/15 03/07/15 Details Balance at 01 July Shares issued in lieu of corporate advisory services Number of shares 58,591,397 Issue price 2016 $ 7,743,958 102,564 $0.11 11,282 40 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 12. CONTRIBUTED EQUITY (continued) Issue of shares on conversion of debt and shares issued to employees and unrelated contractors in satisfacion of remuneration, fees and employee entitlement forgone Share issued upon conversion of Convertible Note Share issued upon conversion of Convertible Note Share issued to former employees and unrelated contractors Shares issued upon exercise of options Shares issued upon exercise of options Shares issued pursuant to share sale agreement to acquire project Shares issued in settlement of former employee entitlements Shares issued upon exercise of options Equity raising costs Balance at 30 June 23/10/15 23/10/15 18/03/16 18/03/16 29/04/16 23/05/16 25/05/16 14/06/16 30/06/16 (b) Movements in ordinary shares (including equity raising costs) 2015 Details Date 01/07/14 Balance at 01 July 21/07/14 Issue of Facility Fee Shares Shares issued in settlement of deferred employment entitlement 17/12/14 22/12/14 Share cancellation Share issued upon conversion of Convertible Note 23/01/15 16/06/15 Share issued upon conversion of Convertible Note including securities Equity raising costs 30/06/15 Balance at 30 June 41 1,850,000 $0.09 173,900 3,350,723 $0.08 250,000 8,702,461 $0.09 750,000 1,660,000 1,090,000 125,000 $0.11 $0.20 $0.15 182,600 218,000 18,750 950,000 $0.15 142,500 250,000 138,720 $0.14 $0.08 76,810,865 35,000 11,098 (18,386) 9,518,702 Number of shares 58,092,515 217,500 Issue price $0.10 2015 $ 14,481,457 21,750 1,015,766 (25,000,000) $0.02 $0.30 20,315 (7,500,000) 23,658,328 $0.03 701,230 607,288 $0.05 58,591,397 28,567 (9,361) 7,743,958 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 12. CONTRIBUTED EQUITY (continued) (c) Movements in partly paid shares Each partly paid share is issued at a price of 20 cents of which $0.01 is paid on issue with the balance of the issue price payable at the election of the holder at any time within 5 years of issue or the Directors may determine that the balance may become payable at future times in satisfaction of all or part of the unpaid issued price. The partly paid shares were consolidated on 4 April 2016 on a 20:1 basis into 1,090,001 ordinary shares. 2016 Details Date 01/07/15 Balance at 01 July 30/04/16 Consolidation of Partly Paid shares 30/06/16 Balance at 30 June 2015 Date Details 01/07/14 Balance at 01 July 30/06/15 Balance at 30 June (d) Ordinary shares Number of shares 21,800,000 (21,800,000) - Issue price - - Issue price Number of shares 21,800,000 21,800,000 2015 $ 218,000 (218,000) - 2014 $ 218,000 218,000 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (e) Capital risk management The Group’s objective when managing working capital is to safeguard the ability to continue as a going concern, so that it can continue to provide returns for the shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the return of capital to shareholders, issue new shares or sell assets to reduce debt. The Group defines capital as cash and cash equivalents plus equity. The Board of Directors monitors capital on an ad-hoc basis. No formal targets are in place for return on capital, or gearing ratios, as the Group has not derived any income from their mineral exploration and currently has no debt facilities in place. 13. RESERVES (a) Reserves Share-based payments reserve Foreign currency translation reserve 2016 $ 2015 $ 389,175 - 389,175 115,533 (191,382) (75,849) 42 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 13. RESERVES (continued) Share-based payments reserve Balance 1 July Share buy back Share based payments Balance 30 June Option reserve Balance 1 July Options issued Balance 30 June Foreign currency translation reserve Balance 1 July Foreign currency translation difference on consolidation Reclassification of exchange differences on disposal of controlled entities to Profit or Loss Balance 30 June Nature and purpose of reserves (i) Share-based payments reserve The share based payments reserve is used to recognise:   The fair value of options issued to employees and consultants but not exercised The fair value of shares issues to employees (ii) Foreign currency translation reserve 2016 $ 115,533 - 78,814 194,347 2016 $ - 194,828 194,828 2015 $ 42,630 (42,630) 115,533 115,533 2015 $ - - - 2016 $ 2015 $ (191,382) 637,307 (828,689) 191,382 - - (191,382) Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive income and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of. (iii) Option reserve The Share Option Reserve contains amounts received on the issue of options over unissued capital of the company. 14. ACCUMULATED LOSSES Accumulated losses at the beginning of the period Net profit/loss attributable to members of the Group Accumulated losses at the end of the financial year 43 2016 $ (3,762,620) 2,510,541 (1,252,079) 2015 $ (2,759,504) (1,003,116) (3,762,620) AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 15. RECONCILATION OF LOSS AFTER INCOME TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES Profit/Loss for the year Gain on disposal of non-current asset Depreciation and amortisation Finance and interest expense Non-cash employee benefits expense – share-based payments Impairment of capitalised expenditure Foreign exchange loss Other (employee benefits) (Increase)/Decrease in trade debtors and other receivables Increase in trade creditors and other payables Net cash outflow from operating activities 2016 $ 2,510,541 (5,961,525) - 130,205 265,563 556,534 482,780 - 2,589,426 (2,189,975) (1,616,451) 2015 $ (1,003,116) (80,891) 1,157 495,614 (42,630) 13,915 101,206 (1,693) 298,925 (217,513) Non-cash investing and financing activities - - 16. REMUNERATION OF AUDITORS Amounts received or due and receivable by the auditors for: Audit services: BDO Audit (WA) Pty Ltd Audit and review of financial reports under the Corporations Act 2001 Non audit services 2016 $ 49,425 34,454 83,879 2015 $ 37,380 9,466 46,846 17. FINANCIAL RISK MANAGEMENT Overview The Group has exposure to the following risks from their use of financial instruments: a) credit risk b) liquidity risk c) market risk This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. 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. (a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and for the Group arises principally from cash and cash equivalents and receivables. 44 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 17. FINANCIAL RISK MANAGEMENT (continued) All cash balances are held with recognised institutions limiting the exposure to credit risk. There are no formal credit approval processes in place. Exposure to credit risk The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Cash and cash equivalents Receivables 2016 $ 5,223,618 3,392,185 8,615,803 2015 $ 86,667 - 86,667 The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about default rates. Financial assets that are neither past due and not impaired are as follows: Cash and cash equivalents AA S&P rating 5,223,617 5,223,617 86,667 86,667 As disclosed in note 8, the company has a receivable due from Xtract Resources PLC that is past due as at 30 June 2016. Subsequent to year end, revised payment terms have been agreed. The company is currently in discussions with Xtract regarding the recovery of the balance as disclosed in note 8. The directors are satisfied that based on the credit quality of the counterparty, the full balance will be received. (b) 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. The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows. The Group anticipates a need to raise additional capital in the next 12 months to meet forecasted operational activities. The decision on how the Group will raise future capital will depend on market conditions existing at that time. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The Group has no access to credit standby facilities or arrangements for further funding or borrowings in place. The financial liabilities the Group had at reporting date were trade payables incurred in the normal course of the business. These were non interest bearing and were due within the normal 30-60 days terms of creditor payments. Maturities of financial liabilities The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. 45 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 17. FINANCIAL RISK MANAGEMENT (continued) Less than 6 months $ 6-12 months $ 1-2 years $ 2-5 years $ Over 5 years $ Total contractual cash flows $ Carrying amount (assets)/ liabilities $ As at 30 June 2016 Trade and other payables 132,090 - - - - 132,090 132,090 Less than 6 months $ 6-12 months $ 1-2 years $ 2-5 years $ Over 5 years $ Total contractual cash flows $ Carrying amount (assets)/ liabilities $ As at 30 June 2015 Trade and other payables Loans Convertible Notes (c) Market Risk 2,278,448 - 100,000 1,444,859 314,113 - - - - - - - - - - 2,278,448 2,278,448 1,544,859 1,544,859 314,113 314,113 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. (i) Currency risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. The Group did not have any formal policies in place regarding currency risk during the year as it was not considered significant. This will be monitored as appropriate going forward and introduced as necessary. The groups exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollar, was as follows: Cash and cash equivalents Deferred consideration Trade and other receivables Trade and other payables 2016 USD $ 2,154,705 2,500,000 - 7,040 2015 USD $ 7,507 - - 623,533 46 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 17. FINANCIAL RISK MANAGEMENT (continued) Cash and cash equivalents Sensitivity analysis Cash and cash equivalents Trade and other payables (ii) Cashflow and interest rate risk 2016 GBP $ 1,165,020 2015 GBP $ - 2016 Foreign exchange risk + 1% - 1% 21,547 70 (21,547) (70) 2015 Foreign exchange risk + 1% - 6,235 -1% - (6,235) 21,617 (21,617) 6,235 (6,235) The Group’s only interest rate risk arises from cash and cash equivalents held. Term deposits and current accounts held with variable interest rates expose the Group to cash flow interest rate risk. The Group does not consider this risk to be material and has therefore not undertaken any further analysis of risk exposure for 2016. (d) Fair values The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The Fair value of financial instruments that are not traded in an active market (for example investments in unlisted subsidiaries) is determined using valuation techniques. The carrying value less impairment of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The carrying amounts are estimated to approximate fair values of financial assets and financial liabilities a as follows: Financial Assets Cash and cash equivalents Trade and other receivables Total Financial Assets Financial Liabilities Trade and other payables Borrowings Financial liabilities Total Financial Liabilities 2016 $ 2015 $ 5,223,618 3,392,185 8,615,803 86,667 20,086 106,753 132,090 - - 132,090 2,278,448 1,858,972 - 4,137,420 The methods and assumptions used to estimate the fair value of financial instruments are outlined below: 47 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 17. FINANCIAL RISK MANAGEMENT (continued) Cash/financial liabilities and loans The carrying amount is fair value due to the liquid nature of these assets. Receivables/payables Due to the short term nature of these financial rights and obligations, their carrying amounts are estimated to represent their fair values. The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. Due to their short term nature, the carrying amount of the current receivables and current payables is assumed to approximate their fair value. Refer to note 18 for further details. 18. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS The carrying values of financial assets and liabilities of the Group approximate their fair values. Fair values of financial assets and liabilities have been determined for measurement and / or disclosure purposes. Fair value hierarchy The Group classifies assets and liabilities carried at fair value using a fair value hierarchy that reflects the significance of the inputs used in determining that value. The following table analyses financial instruments carried at fair value by the valuation method. The different levels in the hierarchy have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Due to their short term nature, the carrying values of all of the Group’s financial assets and liabilities is assumed to be their fair value. That is, there are no financial assets or financial liabilities measured using the fair value hierarchy. 19. SEGMENT INFORMATION Management has determined that the Group has two reportable segments, being mineral exploration in Mozambique and Western Australia, which is based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. As the Group is focused on mineral exploration, the Board monitors the Group based on actual versus budgeted exploration expenditure incurred by area of interest. This internal reporting framework is the most relevant to assist the Board with making decisions regarding the Group and its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date. Segment information relating to the reportable segment being mineral exploration in Mozambique and Western Australia is outlined below. 48 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 19. SEGMENT INFORMATION (continued) 2016 Revenue from external sources Reportable segment profit / (loss) Reportable segment assets Reportable segment liabilities Reconciliation of reportable segment profit or loss Reportable segment profit /(loss) Other income Unallocated: Other income Depreciation expense Director benefits Share buy-back Employee benefits Other expenses Profit before tax 2015 Revenue from external sources Reportable segment profit / (loss) Reportable segment assets Reportable segment liabilities Reconciliation of reportable segment profit or loss Reportable segment profit /(loss) Other income Unallocated: Depreciation expense Director benefits Share buy-back Employee benefits Other expenses Loss before tax Mozambique $ - 5,114,170 - - Western Australia $ - - 169,502 - - - Mozambique $ - - 7,986,196 (1,420,842) Western Australia $ - - 167,960 - Total $ - 5,114,170 169,502 - 5,114,170 - 43,893 - (18,887) - (25,000) (2,603,635) 2,510,541 Total $ - - 8,154,156 (1,420,842) - 81,791 (1,157) (48,000) 42,630 - (1,078,380) (1,003,116) 49 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 19. SEGMENT INFORMATION (continued) Other Segment Information Total segment revenue Interest revenue Total revenue from continuing operations Segment assets are reconciled to total assets as follows: Segment assets Unallocated: Cash and cash equivalents Trade and other receivables Mineral exploration and evaluation Total assets as per the statement of financial position Segment liabilities are reconciled to total liabilities as follows: Segment Liabilities Unallocated: Trade and other payables Borrowings Total liabilities as per the statement of financial position 20. SHARE BASED PAYMENT TRANSACTIONS Share Based Payments (a) Options 2016 $ 42,715 1,178 43,893 2015 $ 80,891 900 81,791 169,505 8,154,156 5,223,618 3,392,763 2,001 8,787,887 86,667 20,086 - 8,260,909 - 1,420,842 132,090 - 132,090 857,606 1,858,972 4,137,420 There have been no options issued to current directors and executives as part of their remuneration. On 23 October 2015 1,000,000 unlisted options were issued during the year to a third paty contractor as compensation for extended payment terms. The options have an exercise price of 10 cents each and expire on 23 October 2018. On 17 March 2016 300,000 options were issued during the year to a third paty contractor as settlement of fees outstanding. The options have an exercise price of 10 cents each and expire on 17 March 2018. The unlisted option reserve records items recognised on valuation of director, employee and contractor share options as well as share options issued during the course of a business combination. Information relating to the details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set out in note 13. The assessed fair values of the options were determined using a Black-Scholes option pricing model, taking into account the exercise price, term of option, the share price at grant date and expected price volatility of the underlying share, expected dividend yield and the risk-free interest rate for the term of the option. 50 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 20. SHARE BASED PAYMENT TRANSACTIONS (continued) The inputs to the model used were: 23 October 2015 Dividend Yield Expected volatility (%) Risk-free interest rate (%) Expected life of options (years) Option exercise price ($) Share price at grant date ($) Value of option ($) 17 March 2016 Dividend Yield Expected volatility (%) Risk-free interest rate (%) Expected life of options (years) Option exercise price ($) Share price at grant date ($) Value of option ($) - 100 2.0 3.0 0.10 0.094 0.0576 - 100 2.0 3.0 0.10 0.11 0.070 The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. Employee Share Plan The Auroch Minerals Limited Employee Share Plan is used to reward Directors and employees for their performance and to align their remuneration with the creation of shareholder wealth. There are no performance requirements to be met before exercise can take place. The Plan is designed to provide long-term incentives to deliver long-term shareholder returns. Participation in the Plan is at the discretion of the Board and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. 21. DIVIDENDS (continued) Share based payments transactions are recognised at fair value in accordance with AASB 2. The adoption of AASB 2 is equity-neutral for equity-settled transactions. Numbers of Employee Shares were issued this year is nil (2015: nil). There were no dividends paid or declared by the Group during the year (2015: Nil). 51 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 22. EVENTS OCCURRING AFTER REPORTING DATE On 4 July 2016 the Company advised that it had conducted final due diligence investigations on the Hombolo Lithium Project. Assay Results from due diligence sampling conducted in May across the Hombolo Ground package yielded disappointing results and showed no significant anomalism across the tenement package outside the historic open pit workings within the Primary Mining Licences. Subsequent to the Period on 20 July 2016 the Company advised it had entered into a deed of settlement with Xtract Resources Plc (Xtract) with respect to the US$2.5 million deferred consideration payable by Xtract to the Company (Settlement Deed). Subject to the Xtract’s compliance with the Settlement Deed, the Company agreed to refrain from taking legal action against Xtract to enforce its obligation under the Sale Agreement to pay the Deferred Consideration on the following conditions: - Xtract to make a first instalment payment of US$750,000 by 19 July 2016 (this has been paid); and - Xtract to make a second and final payment of US$1,785,671.86 by 12 August 2016 (Second Instalment), which includes interest over the period 1 June 2016 to 19 July 2016, and interest on the Second Instalment over the period 20 July 2016 to 12 August 2016. On 26 August 2016 the Company advised that pursuant to the Settlement Deeds terms, the Company received the first instalment payment of US$750,000 and had also received $100,000 of the Second Instalment. The Company is in discussions with Xtract with regards to final settlement of the remaining US$1,685,671.86. 23. CONTINGENCIES Contingent Liabilities The Group had no other material contingent assets or liabilities at 30 June 2016. Commitments The Group had no material commitments at 30 June 2016. 24. SUBSIDIARIES The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries: Name of entity Country of Incorporation Class of shares Note Australia Mozambique Auroch Minerals Mozambique Pty Ltd1 Explorator Limitada2 Mistral Resource Development Corporation Limited3 Auroch Minerals SA Proprietary Limited4 1 Holding company for Mistral Development Corporation Ltd. 2 Holder of the Manica Mining Concession 3990C. 3 Holding company for 98% of Explorator Limitada. 4 Dormant subsidiary. British Virgin Isles South Africa Ordinary Ordinary Ordinary Ordinary 52 28 28 Equity holding 2016 Equity holding 2015 100% - - 100% 100% 100% 100% 100% AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 25. RELATED PARTY TRANSACTIONS (a) Parent entities The parent entity within the Group is Auroch Minerals Limited. The ultimate parent entity and ultimate controlling party is Auroch Minerals Limited (incorporated in Australia) which at 30 June 2016 owns 100% of the issued ordinary shares of the above subsidiaries. (b) Subsidiaries Interests in subsidiaries are set out in note 24. (c) Key management personnel (i) Key Management Personnel Compensation Short-term employee benefits Post-employment benefits Share-based payments 2016 $ 326,585 - 16,450 343,035 2015 $ 535,064 - - 535,064 (ii) Other transactions with Key Management Personnel Mr Nicholas Ong is a director of Minerva Corporate Pty Ltd. During the period ended 30 June 2016 the Company was providing consultancy, company secretarial, accounting and administration and registered office services to Auroch Minerals Limited. In accordance with the services agreement the monthly charge for these services is $8,000 per month. Payments to Minerva Corporate Pty Ltd during the relevant period total $116,500 (2015: $99,000). The amounts owed to Minerva Corporate Pty Ltd as at 30 June 2016 was $9,000 (2015: $132,061). Loan received from Glenn Whiddon (Executive Director) during the period to fund the groups working capital commitments. The loan was repayable within 7 business days’ following written notice by the Lender to the Borrower. Interest was payable at 9.25% per annum on repayment date. Should interest not be paid then the interest rate increased to 12%. This loan was repaid by the group in the form of Xtract shares. During the period Mr Glenn Whiddon and his associated entities converted convertible loans totalling $300,000 into 3,636,294 ordinary shares and 1,818,147 options exercisable at $0.08 on or before 31 December 2018 pursuant to shareholder approval obtained on 15 October 2015. During the period Mr Matthew Foy was issued 175,000 ordinary shares in lieu of fees subject to shareholder approval obtained 15 October 2015. During the period Mr Andrew Tunks was issued 500,000 ordinary shares in lieu of fees. (d) Outstanding balances arising from sales/purchases of goods and services There is an outstanding balance arising from services provided by Minerva Corporate Pty Ltd of $9,000. Mr Nicholas Ong was a director of Auroch Minerals Limited and a director of Minerva Corporate Pty Ltd during the period. 53 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 26. PARENT ENTITY INFORMATION The following details information related to the parent entity, Auroch Minerals Limited, at 30 June 2016. The information presented here has been prepared using consistent accounting policies as presented in Note 1. ASSETS Current Assets Non-Current Assets TOTAL ASSETS Current Liabilities Non-Current Liabilities TOTAL LIABILITIES Contributed equity Reserves Accumulated losses TOTAL EQUITY Loss for the year Other Comprehensive loss for the year TOTAL COMPREHENSIVE LOSS FOR THE YEAR 2016 $ 3,474,168 171,507 3,647,675 132,090 - 132,090 2015 $ 96,380 8,397,946 8,494,326 4,137,420 - 4,137,420 9,518,702 253,937 (6,257,054) 3,515,585 7,961,958 115,533 (3,720,585) 4,356,906 (2,545,959) - (2,545,959) (1,004,232) - (1,004,232) At reporting date the parent entity has nil guarantees and contingent liabilities (2015: Nil). 27. DISCONTINUED OPERATIONS Sale of Manica Gold Project On 30 June 2015 the Company advised it had entered into a binding agreement to sell 100% of the Manica mining Concession 3990C to AIM-listed Xtract Resources Plc (Xtract or XTR) for total sale consideration of US$10 million in a combination of cash and equity in Xtract, plus the assumption of project related creditors of up to US$1.5 million (Agreement). The Agreement was conditional upon Auroch obtaining prior consent of the Government of Mozambique through the Ministry of Mineral Resources and Energy to the extent required under the Mozambique Mining Act and other applicable laws relating to the change of control of the Company’s subsidiary and communicating such change of control to the Mozambican mining authorities. Completion of the Agreement was also subject to Auroch obtaining shareholder approval under ASX Listing Rule 11.2 for the sale of the Manica Mining Concession and Xtract obtaining approval for the admission of the Consideration Shares to trading on AIM. On 2 March 2016 the Company advised that final approval had been received under the Mozambique Mining Act from the Mozambique Mining Act from the Mozambican mining authorities in addition to the earlier approvals from the Central Bank and the Ministry of Taxation, permitting the completion of the sale of 100% of the Manica Gold Project to Xtract (Completion). 54 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 27. DISCONTINUED OPERATIONS (continued) The final terms of the Agreement with Xtract are as follows: - Cash payment at Completion of ~A$4.2 million1 (US$3.0 million); and - Issue of 1,137,258,065 XTR Shares (currently valued at ~A$4.22 million2) (Completion Consideration). Consideration to be paid 3 months post Completion: - Deferred cash consideration of ~A$3.5million3 (US$2.5 million) payable as follows:   US$1.3 million cash; and the remaining US$1.2 million will be payable in cash or XTR Shares (at Auroch’s election), issued at a 20% discount to the 10-day VWAP prior to Auroch’s election. 2016 $ 2015 $ Results of discontinued operations Revenue Cost of sales Other expenses Results from operating activities Income tax (expense)/benefit Results from operating activities after tax Gain on sale of subsidiary assets (i) Profit on sale of discontinued operations (i) Gain on sale of subsidiary assets Assets and liabilities disposed of Cash and cash equivalents Exploration asset Trade and other payables Foreign exchange reserve Sale consideration Cash Deferred consideration Xtract Plc shares (net proceeds) Gain on sale of subsidiary assets 1 Assumes 1 US Dollar equals 1.40 Australian Dollars 2 Assumes 1 British Pound equals 1.95 Australian Dollars and an Xtract share price of £0.0019 3 Assumes 1 US Dollar equals 1.40 Australian Dollars 55 - - (5,345) (5,345) - (5,345) 5,966,870 5,961,525 - - 1,116 1,116 - 1,116 - 1,116 2016 $ 163,900 5,828,628 (132,459) 394,773 6,254,842 5,968,720 3,359,075 2,893,917 12,221,712 5,966,870 AUROCH MINERALS LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 27. DISCONTINUED OPERATIONS (continued) Cashflows gained from/(used in) discontinued operations Net cash gained from investing activities Net cash flow for the year 2016 $ 2015 $ 4,480,717 4,480,717 - - 56 AUROCH MINERALS LIMITED DIRECTORS’ DECLARATION AUROCH MINERALS LIMITED ACN 119 267 391 DECLARATION BY DIRECTORS The directors of the Group declare that: 1. The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 and: a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and b) give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended on that date of the consolidated Group. 2. In the directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. 3. The remuneration disclosures included in the directors’ report (as part of the audited Remuneration Report), for the year ended 30 June 2016, comply with section 300A of the Corporations Act 2001. 4. The Group has included in the notes to the financial statements and explicit an unreserved statement of compliance with International Financial Reporting Standards. 5. The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A. This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by: Glenn Whiddon Chairman Perth, Western Australia 30 September 2016 57 Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia INDEPENDENT AUDITOR’S REPORT To the members of Auroch Minerals Limited Report on the Financial Report We have audited the accompanying financial report of Auroch Minerals Limited, which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Auroch Minerals Limited, would be in the same terms if given to the directors as at the time of this auditor’s report. Opinion In our opinion: (a) the financial report of Auroch Minerals Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Report on the Remuneration Report We have audited the Remuneration Report included in pages 11 to 16 of the directors’ report for the year ended 30 June 2016. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of Auroch Minerals Limited for the year ended 30 June 2016 complies with section 300A of the Corporations Act 2001. BDO Audit (WA) Pty Ltd Dean Just Director Perth, 30 September 2016 AUROCH MINERALS LIMITED ADDITIONAL INFORMATION The following additional information is required by the ASX in respect of listed public companies. Information as at 14 September 2016 (a) Distribution of Shareholders Category (size of holding) 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 – 100,000 100,001 and above Total Number Ordinary 9 29 63 366 102 569 (b) The number of shareholdings held in less than marketable parcels is 30. (c) Voting Rights The voting rights attached to each class of equity security are as follows: Ordinary Shares Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands. (d) 20 Largest Shareholders — Ordinary Shares as at 14 September 2016. Rank Holder Name Designation Securities % 1 MED BRAVO SA 2 6466 INV PL 3 HSBC CUSTODY NOM AUST LTD 4 MIMO STRATEGIES PL 5 NORTON MATTHEW J + R F 6 CELTIC CAP PL 7 WHIDDON GLENN ROSS 8 9 SMITH PETER S + D P 10 BROWN BRICKS PL 11 KOBIA HLDGS PL 12 RAINMAKER HLDGS WA PL 13 GREGORACH PL 14 TYCHE INV PL IBT HLDGS PL 12,707,432 5,048,333 3,494,177 2,961,318 2,938,121 2,000,000 1,534,976 1,500,000 1,308,333 1,277,227 1,150,000 1,140,000 1,000,000 1,000,000 MIMO A/C NORTON FAM SUPER A CELTIC CAP A/C IBT HLDGS FAM A/C MONTARA S/F A/C HM A/C MACRI INV A/C 60 16.54% 6.57% 4.55% 3.86% 3.83% 2.60% 2.00% 1.95% 1.70% 1.66% 1.50% 1.48% 1.30% 1.30% 15 REID BRENDAN HENRY + M M 16 KABUNGA HLDGS PL 17 ENDEAVOUR FINCL LTD CAYMA 18 TURNILL JUSTIN PAUL 19 BLU BONE PL JDK NOM PL 20 AUROCH MINERALS LIMITED ADDITIONAL INFORMATION REID FAM S/F A/C KABUNGA FAM A/C KENNY CAP A/C 1,000,000 950,000 750,000 600,000 574,610 574,610 Top 20 Total 43,509,137 Total Remaining Balance 33,301,728 Grand Total 76,810,865 1.30% 1.24% 0.98% 0.78% 0.75% 0.75% 56.64% 43.36% 100.00% (e) Subtantial Shareholders (i.e. shareholders who hold 5% or more of the issued capital): Name Number of Shares Held Percentage Med Bravo SA 12,707,432 Glenn Ross Whiddon 6,673,309 16.54% 8.69% (f) The name of the Company Secretary is Mr Matthew Foy. (g) The address of the principal registered office is Office J, Level 2, 1139 Hay St West Perth WA 6005 Telephone (08) 9486 4036. (h) Registers of securities are held at Security Transfer Registrars Ltd, 770 Canning Highway, Applecross WA 6153. (i) Stock Exchange Listing Quotation has been granted for all the ordinary shares of the Company on the Australian Securities Exchange Ltd. (j) Unquoted Securities Number 300,000 1,000,000 20,394,650 5,295,402 Terms Options exercisable at $0.10 on or before 17 March 2018 Options exercisable at $0.10 on or before 23 October 2018 Options exercisable at $0.20 on or before 23 October 2018 Options exercisable at $0.08 on or before 31 December 2018 (k) Securities Subject to Escrow Nil. (l) Unquoted Equity Securities Holders with Greater than 20% of an Individual Class Options exercisable at $0.10 on or before 17 March 2018 Percentage Held 100% Name S3 Consortium Pty Ltd Number of Securities held 300,000 61 AUROCH MINERALS LIMITED ADDITIONAL INFORMATION Options exercisable at $0.10 on or before 23 October 2018 Percentage Held 100% Name Titan Drilling International Limited Number of Securities held 1,000,000 Options exercisable at $0.08 on or before 31 December 2018 Percentage Held 22% Name Celtic Capital Pty Ltd 22% MIMO Strategies Pty Ltd Number of Securities held 1,149,220 1,180,659 (m) Corporate Governance Statement The Company’s Corporate Governance Statement is available on the Company’s website at: http://www.aurochminerals.com/about-us/corporate-governance/ 62 

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