PEAKO LIMITED ABN 79 131 843 868 Corporate Directory Directors Geoffrey Albers Raewyn Clark Darryl Clark Company Secretary Robert Wright Non-Executive Chairman Executive Director Non-Executive Director Registered Office Level 21, 500 Collins Street Melbourne Vic 3000 Website: www.peako.com.au Email: info@peako.com.au Ph: (03) 8610 4702 Fax: (03) 8610 4799 Auditor Grant Thornton Audit Pty Ltd Collins Square, Tower 5 727 Collins Street Melbourne, Victoria 3008 Australia Share Registry Automic Pty Ltd Level 3 50 Holt Street Surry Hills, NSW 2010, Australia Telephone: 1300 288 664 (within Australia) Telephone: +61 (2) 9698 5414 (outside Australia) Website: www.automic.com.au Securities Exchange Listing ASX Limited Level 4, North Tower, Rialto 525 Collins Street Melbourne Victoria 3000 Website: www.asx.com.au ASX Codes: PKO – Ordinary Shares PKOOA - Options expiring 30 April 2020 Incorporated in Western Australia 25 June 2008 TABLE OF CONTENTS 2 3 5 9 12 16 17 Corporate Directory Chairman’s Letter Operations Report Directors’ Report Remuneration 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 20 21 Notes to the Financial Statements 42 Directors’ Declaration 43 Independent Auditor’s Report to the Members Additional Shareholder Information (unaudited) 18 46 19 2 PEAKO LIMITED ABN 79 131 843 868 Chairman’s Letter Dear Shareholders During 2018/19 we strengthened our exploration activities at our East Kimberley Copper- Gold Project in Western Australia, taking up new acreage and, as a result, building a large ground-holding in a contiguous area where systematic exploration has lagged behind that of most of Australia’s Proterozoic provinces. Historic exploration in the East Kimberley has been sparse and sporadic, primarily guided by surface gossans and geochemical anomalies. Past exploration in our tenement areas has been inhibited by superficial cover, deep weathering and structural complexity. Prior use of geophysical methods, including VTEM survey, had been ineffective at identifying mineralisation, including even that identified by drilling. We determined that modern geophysical methods offered renewed potential for our areas. As a result, Peako conducted an IP survey program during the year consisting of both Gradient Array IP (GAIP) and Dipole-Dipole IP (DDIP) at the Eastman and Landrigan prospects, both which had been identified by prior explorers based on outcropping mineralisation. The IP surveys successfully detected the known mineralisation at each prospect and, significantly, indicated the presence of multiple targets along strike of known mineralisation that were completely untested by historic drilling. With this encouragement, we designed a drilling program to test geophysical targets identified by the IP survey, as well as geochemical anomalies. Supported by an Exploration Incentive Scheme drilling grant from the Western Australian government, we undertook 2,398m of RC drilling at both prospects, which completed earlier this month. Assays results are expected to be received progressively over the coming weeks and we look forward to providing an update and results in due course. While awaiting the assay results and interpretations from our Eastman and Landrigan prospects, we are continuing to build our exploration pipeline, refining a dataset of historic exploration activities, gossans and anomalous areas across our tenements to identify numerous targets. As well as prospectivity for copper/gold mineralization, sections of our Eastman tenement are interpreted to be attractive for targets for nickel, cobalt and PGEs. We note the interest of major companies in the nickel/copper potential of tenements to the west 3 PEAKO LIMITED ABN 79 131 843 868 of our ground. We see substantial scope for long-term exploration of our East Kimberley acreage. As the Eastman tenement is presently the central focus of our East Kimberley Copper-Gold project, we are delighted to have been able to secure a Stage 2 farm-in option by which we may to elect to earn a further 25% interest in the Eastman tenement, so as to increase our total interest in the Eastman tenement to 85%. In March, we welcomed Dr Darryl Clark to the board as an independent non-executive director, bringing technical exploration expertise at the highest levels, as well as experience in strategy and exploration portfolio development. Mr Peter Armitage resigned from the board at this time and is thanked for his service. I thank shareholders for their support of the Company over the past year and particularly for the support of our recent capital raising. Just after the close of the year we made a non- renounceable rights offer to shareholders resulting in the issue of 38,489,359 new shares at $0.02 each with attaching options with a short expiry date (exercisable at $0.025 on or before 30 April 2020). A total of $756,945 was raised (before costs) with funds directed towards our East Kimberley exploration activities including the recent drilling program. I have been sufficiently encouraged by the Company’s outlook to have recently exercised 11,300,000 options held by myself and my family companies, providing further working capital of $282,500 for Peako. I thank my co-directors for their services to the Company over the past year. EG Albers – Chairman Peako Limited 18 October 2019 4 PEAKO LIMITED ABN 79 131 843 868 Operations Report Minerals Exploration East Kimberley Project Peako’s East Kimberley exploration strategy focusses on VHMS (volcanic hosted massive sulphide) deposits in order to leverage from the potential for rapid discovery-development timelines and high returns offered by this deposit style. Peako has built a large ground-holding in the East Kimberley, an area where systematic exploration has lagged behind that of most of Australia’s Proterozoic provinces. Peako’s East Kimberley tenement package is considered prospective for VHMS deposits and is underexplored. The tenements are largely located on Louisa Downs Station, 120 km to the southwest of Halls Creek. Access to the tenements is via the Great Northern Highway and station tracks Figure 1 Peako's East Kimberley Tenement Package Peako’s East Kimberley tenements have historically been sparsely and sporadically explored for a wide range of mineralisation styles and commodities over a large area. Historical exploration was primarily guided by surface gossans and geochemical anomalies, with only the more significant geochemical anomalies tested by limited shallow drilling. Prior use of geophysical methods including VTEM survey, were ineffective at identifying mineralisation, including even that identified by drilling. 5 PEAKO LIMITED ABN 79 131 843 868 The Eastman project tenement (E80/4990) is the central focus of Peako’s East Kimberley VHMS focussed copper-gold exploration strategy. Since entering a Farm-in and Joint Venture agreement with Sandrib Pty Ltd in November 2017, Peako has successfully progressed exploration in the Eastman tenement, resulting in the identification of geophysical targets which are presently being drilled. Having determined that modern geophysical methods offered new potential, Peako conducted an Induced Polarisation (IP) survey program in late 2018 consisting of both Gradient Array IP (GAIP) and Dipole-Dipole IP (DDIP) at the Eastman and Landrigan VHMS prospects, identified by prior explorers based on outcropping mineralisation: Eastman : 12m @ 3.2% Cu, 5.7% Zn, 1.86% Pb, 26.5 g/t Ag & 0.41g/t Au Landrigan : 9.6m @ 2.7% Cu, 1.5% Zn, 0.3% Pb, 12.6 g/t Ag and 1.5 g/t Au The IP surveys successfully detected the known mineralisation at each prospect, thus validating the IP method, and significantly, identified blind geophysical targets at each prospect along strike of known mineralisation (see Figure 2 and Figure 3). Figure 2 Eastman Prospect Geophysical Targets 6 PEAKO LIMITED ABN 79 131 843 868 Interpreted fault zone A B New target offset by interpreted structure Open 9.6m @ 2.7% Cu, 1.5% Zn, 0.3% Pb, 12.6 g/t Ag and 1.5 g/t Au B A Potential north dipping sulphide sources Landrigan DDIP cross-section chargeability anomaly zone Open DDIP chargeability inversion model cross section anomaly zone (see inset) GAIP chargeability anomaly coincident with EYD020 Response indicates northerly dipping source not tested by prior drilling (oriented to N) Landrigan GAIP survey with anomalies and existing drilling Figure 3 Landrigan Prospect Geophysical Targets A drilling program has been designed to test these geophysical targets at each of the Eastman and Landrigan prospects and is supported by a $150,000 Environment Incentive Scheme drilling grant from the Western Australian government. Having established the effectiveness of modern IP techniques at detecting mineralisation in this geological setting, Peako plans to use IP methods to develop its VHMS exploration pipeline. Peako has compiled a dataset of historic exploration across its two existing East Kimberley tenements and identified numerous targets. 7 PEAKO LIMITED ABN 79 131 843 868 Paterson Province Project investigation at Peako is seeking to identify base metal target zones for it’s Broadhurst Project tenement, located in the Rudall River area of the Paterson Province of Western Australia (Figure 4). long standing Peako also has three licences applications located close to its Broadhurst Project tenement. for exploration Historically, the Broadhurst Project has mainly been explored for uranium mineralisation in the eastern part of the project area, with little exploration carried out for base metal mineralisation. to historical According geological mapping, the bedrock geology of the project area is entirely made up of carbonaceous shales and siltstones of the quartz Formation, Broadhurst sandstones the and underlying Coolbro Sandstone Formation. siltstones and of Figure 4 Broadhurst Project tenement location The location of Broadhurst Formation shales are shown in regional GSWA bedrock geology maps to extend along strike to the north west of Sunday Creek, where the shale units host the Metals X Nifty Cu deposit, as well as several Cu and other base metal prospects (mainly Pb-Zn) held by Encounter Resources and others (Figure 5). Figure 5 Broadhurst Formation (blue) with Peako tenement and a tenement application outlines (green) and key mineral prospects and mines 8 PEAKO LIMITED ABN 79 131 843 868 Other Exploration Project During the year Peako also undertook exploration activities in relation to the Runton Project (E45/3736) and the Durack Ranges Project (E80/5080) prior to withdrawing from its arrangements in relation to these projects. Directors’ Report Your directors present their annual financial report on the consolidated entity (referred to hereafter as the “Group”) consisting of Peako Limited (the “Company” or “parent entity”) and the entities it controlled at the end of, or during, the financial year ended 30 June 2019. In order to comply with the Corporations Act 2001, the directors report is as follows: Directors The following persons were directors of the Company during the financial year and up to the date of this report: Geoffrey Albers Non-Executive Chairman Raewyn Clark Executive Director Dr Darryl Clark Non-Executive Director Information on Directors E. Geoffrey Albers LLB, FAICD Mr Albers was appointed to the board of Peako Limited on 4 February 2013. Mr Albers has over 35 years’ experience as a director and administrator in corporate law, resource exploration and resource sector investment. Mr Albers has interests in a number of companies active in the petroleum industry in Australia and Malaysia. Mr Albers is a director of the ASX listed companies Octanex Limited and Enegex Limited. His companies are active resource sector investors. Raewyn Clark, B.Bus(dist), CA, MAICD, AGIA, ACIS Ms Clark has more than twenty years experience focussed primarily on the upstream oil and gas sector. Her experience includes business development, financial modelling and analysis, capital raising and mergers and acquisitions, as well as managing joint venture partners, government, regulator and investor relations. Ms Clark was appointed to the Board on 4 December 2014. Mrs Clark is also a Director of the ASX listed companies Octanex Limited and Enegex Limited. Dr Darryl Clark BSc (Hons), PhD and FAusIMM Dr Clark is an exploration geologist whose career has taken him throughout Australia, Central Asia and South East Asia for over 26 years. His responsibilities over the last 16 years have involved him in a diverse range of technological, political and cultural environments with unique challenges. During previous corporate roles with both Vale and BHP Billiton, and in consulting roles including SRK, he has been responsible for business development strategies, designing multi-commodity exploration programs and the co-ordination of exploration teams to deliver discovery events. Dr Clark was appointed to the Board on 20 March 2019. Dr Clark is also a director of the ASX listed company Xanadu Mines Ltd. 9 PEAKO LIMITED ABN 79 131 843 868 Peter Armitage FCA FAICD Appointed 18 August 2015 – resigned 20 March 2019. B Bus, CPA Information on Company Secretary Robert Wright Mr Wright was appointed as Company Secretary of Peako on 2 May 2017. Mr Wright is a senior financial professional with over 30 years commercial experience in the resource, energy and manufacturing industries gained at various companies and locations, including 14 years at BHP. As well as carrying out his secretarial duties for Peako, he is the company’s Chief Financial Officer and the Company Secretary and CFO of the ASX listed companies Octanex Limited and Enegex Limited. Mr Wright is a member of CPA Australia. Ordinary shares During the year, the Company raised $105,197 before costs, via exercise of options and issue of shares. The number of shares on issue at 30 June 2019 was 76,978,545 fully paid ordinary shares (2018: 72,020,678). On the 16 August 2019 the company completed a pro-rata non renounceable rights issue. A total of 38,489,359 new shares and 38,489,359 free attaching new options were subscribed for, raising gross proceeds of $756,945. Options During the year 1,207,867 options (exerciseable at $0.025 (2.5 cents) on or before 30 June 2019) were exercised. The balance of 19,793,674 expired at 30 June 2019. As at 30 June 2019 there were nil listed options (2018: 21,001,541 listed options). On the 16 August 2019 the company completed a pro-rata non renounceable rights issue. A total of 38,489,359 free attaching new listed options exercisable at $0.025 at any time up to 30 April 2020 were granted. At 30 June 2019 6,000,000 unlisted options were on issue (30 June 2018: 5,000,000 unlisted options). During the year, but prior to him becoming a director, 1,000,000 unlisted options were from a granted to Darryl Clark. Dividends No dividend has been paid or declared since the start of the financial year and the directors do not recommend the payment of a dividend in respect of the financial year. Principal activities The principal activities of the Group during the financial year continue to be direct and indirect equity investments made with the objective of advancing the exploration for and development of natural resources. Review of operations A detailed review of the Group's activities and operations is set out on pages 4-7 of this Report. Significant changes in the state of affairs There have been no significant changes in the state of affairs of the Group to the date of this Report, other than those changes detailed in the review of activities and operations, and elsewhere in this Report. 10 PEAKO LIMITED ABN 79 131 843 868 Matters subsequent to balance date In July 2019 the Company executed an Amended and Restated Farmin and Joint Venture Agreement with Sandrib Pty Ltd to effect a Stage 2 farm-in option by which it may earn an additional joint venture interest to increase its total interest in the Eastman project tenement (E80/4990) to 85%. On the 16 August 2019 the company completed a pro-rata non renounceable rights issue. A total of 38,489,359 new shares and 38,489,359 free attaching new options were subscribed for, raising gross proceeds of $756,945. At 30 June 2019 the Company had borrowings of $265,000 with Australis Finance Pty Ltd. The borrowings were repaid in full by September 2019. In September 2019 the Company commenced a drill program at its Eastman Project to test geophysical anomalies identified by the IP survey it conducted in 2018. Likely developments and expected results The likely developments in the company’s operations in future years and the expected result from those operations are dependent on exploration success in the tenements in which the company holds an interest. Environmental legislation The Group is subject to significant environmental legal regulations in respect to its exploration and evaluation activities in Australia. There have been no known breaches of these regulations and principles. Indemnification of directors and officers During the financial year and to the date of this report, the company did not pay premiums in respect of contracts insuring officers or auditors of the company against liabilities arising from their position of officers or auditor of the company. The Company has entered into Deeds of Access and Indemnity with each of the Directors referred to in this report who held office during the year indemnifying each against all liabilities incurred in their capacity as directors of the Company to the full extent permitted by law Meetings of directors The number of formal meetings of the Company’s board of directors and relevant committees attended by each director are set out in the table below. All other matters that required formal Board resolutions were dealt with via written circular resolutions. In addition, the directors met and corresponded at numerous times throughout the financial year to discuss the Group’s affairs. Directors’ Meetings Audit Committee Meetings Held Attended Held Attended Geoffrey Albers 2 2 2 2 Raewyn Clark 2 Peter Armitage Darryl Clark# 2 - # appointed 20 March 2019 2 2 2 2 2 2 - - - Proceedings on behalf of 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 Company, or to intervene in any proceedings to which the Company is a 11 PEAKO LIMITED ABN 79 131 843 868 party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. Corporate Governance Statement A corporate governance statement reporting on Peako’s governance framework, principles and practices is provided on the Peako website www.peako.com.au. Remuneration Report This report is audited. Directors / Executives Position Held Geoffrey Albers Non-Executive Chairman Raewyn Clark Executive Director Darryl Clark Non-Executive Director During the year there were no employees or consultants to the company that meet the definition of key management personnel, other than the directors. Remuneration levels are reviewed annually through a process that considers the performance of individual directors and the overall performance of the entity. Director Remuneration During the year under review, directors were remunerated a total of $Nil (2018: $Nil) which included shareholder-approved non-executive remuneration of $Nil (2018: $Nil). There is no performance related remuneration for directors. There is no direct relationship between remuneration of directors and the company’s performance for the last five years. Components of directors’ compensation are disclosed below. Primary benefits paid / payable Salary and/or consulting fees $ Directors’ fees $ Super- annuation $ Equity Settled Equity option issues $ TOTAL $ Year ended 30 June 2019 Directors Geoffrey Albers Raewyn Clark Peter Armitage Dr Darryl Clark Year ended 30 June 2018 Directors Geoffrey Albers Raewyn Clark Peter Armitage - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Loans to key management personnel No loans were made to key management personnel during the current or previous financial year. 12 PEAKO LIMITED ABN 79 131 843 868 REMUNERATION REPORT (Continued) Other transactions with key management personnel In the year ended 30 June 2019, the Company incurred consulting fees of $31,590 (2018: $33,412) with Samika Pty Ltd, a director-related entity of Raewyn Clark. The fees were provided under normal commercial terms and conditions with $1,215 remaining unpaid at 30 June 2019 (2018 $3,037). Key management personnel interest in equity holdings Fully paid ordinary shares 30 June 2019 Geoffrey Albers(1) Raewyn Clark Darryl Clark Peter Armitage (2) (1) Number of shares at start of year 1 July 2018 Other Change Number of shares at end of year 30 June 2019 41,331,763 2,688,132 - - - 41,331,763 - 300,000 - 44,019,895 - 300,000 - 2,988,132 44,119,895 (1) Other Change in shares – on market purchases (2) Peter Armitage resigned 20 March 2019 30 June 2018 Geoffrey Albers Raewyn Clark Peter Armitage 1 July 2017 30 June 2018 22,962,089 18,369,974* 41,331,763 - - 22,962,089 - - - - 18,369,974 41,331,763 * via rights issue participation Unlisted options (exercisable at $0.04 on or before 24 November 2019) Number of options at start of year Number of options at end of year Numbers of options vested and exercisable 30 June 2019 Geoffrey Albers Raewyn Clark Peter Armitage# # Peter Armitage resigned 20 March 2019 30 June 2018 Geoffrey Albers Raewyn Clark Peter Armitage * via right issue participation 1 July 2018 30 June 2019 30 June 2019 - 4,000,000 1,000,000 5,000,000 - 4,000,000 - 4,000,000 - 4,000,000 - 4,000,000 1 July 2017 - 4,000,000 1,000,000 5,000,000 30 June 2018 30 June 2018 - 4,000,000 1,000,000 - 4,000,000 1,000,000 5,000,000 5,000,000 13 PEAKO LIMITED ABN 79 131 843 868 REMUNERATION REPORT (Continued) Unlisted options (exercisable at $0.05 on or before 18 March 2021) 30 June 2019 Geoffrey Albers Raewyn Clark Darryl Clark # Number of options at start of year Number of options at end of year Numbers of options vested and exercisable 1 July 2018 30 June 2019 30 June 2019 - - - - - - - - 1,000,000 1,000,000 1,000,000 1,000,000 # Options issued prior to appointment on March 2019. Listed options (exerciseable at $0.025 on or before 30 June 2019) 30 June 2019 Geoffrey Albers Raewyn Clark Peter Armitage Options exercised/expired during year Number of options at start of year 1 July 2018 18,369,974 - - Number of options at end of year 30 June 2019 (18,369,974) Numbers of options vested and exercisable 30 June 2019 - - - - - - - - - - 18,369,974 (18,369,974) 30 June 2018 Geoffrey Albers Raewyn Clark Peter Armitage Options acquired during year Number of options at start of year 1 July 2017 Number of options at end of year Numbers of options vested and exercisable 30 June 2018 30 June 2018 - - 18,369,974* 18,369,974 18,369,974 - - - - - - 18,369,974 18,369,974 18,369,974 - - * acquired via pro-rata non renounceable rights issue End of remuneration report 14 PEAKO LIMITED ABN 79 131 843 868 Auditor independence Section 307C of the Corporations Act 2001 requires our auditors, Grant Thornton Audit Pty Ltd, to provide the directors of the Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 16 and forms part of this directors’ report for the year ended 30 June 2019. Non-audit services The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important. The Company 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 auditor has not provided any non-audit services and as such auditor independence was not compromised. This report is made in accordance with a resolution of the directors. R.L.Clark Director 24 September 2019 15 Collins Square, Tower 5 727 Collins Street Melbourne VIC 3008 Correspondence to: GPO Box 4736 Melbourne VIC 3001 T +61 3 8320 2222 F +61 3 8320 2200 E info.vic@au.gt.com W www.grantthornton.com.au Auditor’s Independence Declaration To the Directors of Peako Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit Peako Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been: a b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. Grant Thornton Audit Pty Ltd Chartered Accountants B L Taylor Partner – Audit & Assurance Melbourne, 24 September 2019 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 16 PEAKO LIMITED ABN 79 131 843 868 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2019 Financial income Expenses Audit fees Impairment of exploration assets Exploration costs Professional and consultancy fees Office costs Other costs Stock exchange and share registry costs Loss before income tax expense Income tax expense Note 2019 $ 2018 $ 73 73 518 518 18 6 2 (29,500) (59,982) (10,449) (39,300) (30,560) (93,117) (22,525) (285,433) (285,360) - (285,360) (25,117) - - (34,813) (33,504) (41,685) (21,821) (156,940) (156,422) - (156,422) Net loss for the year (285,360) (156,422) Other comprehensive income Items that may be reclassified to profit or loss Foreign exchange loss on translation of subsidiary financial statements Other comprehensive income net of tax Total comprehensive income for the year 74 74 (285,286) (9) (9) (156,431) Basic loss per share Diluted loss per share 3 3 Cents (0.39) (0.39) Cents (0.25) (0.25) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes . 17 PEAKO LIMITED ABN 79 131 843 868 Consolidated Statement of Financial Position as at 30 June 2019 Current Assets Cash and cash equivalents Trade and other receivables Prepayments Total Current Assets Note 4 5 Non-Current Assets Trade and other receivables 4 Exploration and evaluation assets 6 Total Non -Current Assets Total Assets Current Liabilities Trade and other payables Borrowings Total Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity 7 8 9 10 2019 $ 2018 $ 30,193 5,410 27,200 62,803 191,419 5,182 - 196,601 6,336 415,556 421,892 92,216 6,012 86,204 484,695 288,817 163,998 265,000 428,988 49,534 49,534 - 428,988 49,534 55,707 239,283 37,208,259 34,064 (37,186,616) 37,106,549 33,990 (36,901,256) 55,707 239,283 The above statement of financial position should be read in conjunction with the accompanying notes . 18 PEAKO LIMITED ABN 79 131 843 868 Consolidated Statement of Changes in Equity for the year ended 30 June 2019 Issued capital Share Foreign currency Accumulated Total equity compensation reserve translation reserve losses $ $ $ $ $ Balance at 1 July 2018 37,106,549 33,744 246 (36,901,256) 239,283 Loss for the year Other comprehensive loss Total comprehensive loss for the year - - - - - (285,360) (285,360) - - 74 - 74 74 (285,360) (285,286) Issue of Shares Costs of issue Balance at 30 June 2019 105,197 - (3,487) 37,208,259 - 33,744 - - (3,487) 55,707 320 (37,186,616) - - 105,197 Balance at 1 July 2017 36,808,483 33,744 255 (36,744,834) 97,648 Loss for the year Other comprehensive loss Total comprehensive loss for the year - - - - (156,422) (156,422) - - - (9) - (9) (9) (156,422) (156,431) Issue of Shares Costs of issue Balance at 30 June 2018 315,023 (16,957) - - - - - 315,023 - (16,957) 37,106,549 33,744 246 (36,901,256) 239,283 The above statement of changes in equity should be read in conjunction with the accompanying notes . 19 PEAKO LIMITED ABN 79 131 843 868 Consolidated Statement of Cash Flows for the year ended 30 June 2019 Cash flows from operating activities Payments to suppliers and employees Financial income (124,255) 73 (147,368) 550 Net cash outflows from operating activities 17 (124,182) (146,818) Note 2019 $ 2018 $ Cash flows from investing activities Payments to suppliers - exploration Net cash outflows from investing activities (332,253) (72,528) (332,253) (72,528) Cash flows from financing activities Proceeds from borrowings Proceeds from the issue of shares Share issue costs Net cash inflows from financing activities 265,000 30,197 - 295,197 - 315,023 (16,957) 298,066 Net increase / (decrease) in cash held (161,238) 78,720 Cash at the beginning of reporting period Effect of exchange rate fluctuations on cash held Cash at the end of the reporting period 191,419 12 112,685 14 30,193 191,419 The above statement of cash flows should be read in conjunction with the accompanying notes . 20 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies (a) Basis of preparation The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and other requirements of the law. The financial report has also been prepared on a historical cost basis. The Parent Entity is registered and domiciled in Australia. The financial statements comprise the consolidated financial statements for the Group. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. The financial statements are presented in Australian dollars, unless otherwise stated. Going concern For the year ended 30 June 2019 the Group incurred a net cash outflow from operating and investing activities of $456,435 (2018: $219,346) and a net loss after tax of $285,360 (2018: $156,422). As at 30 June 2019, the Group has negative working capital of $366,185 (2018: positive $147,067). The financial report has been prepared on a going concern basis. Directors expect that the Group will be able to successfully raise sufficient funding to enable it to continue as a going concern for at least 12 months from the signing of the annual financial report. Post balance date; on the 16 August 2019, the company completed a pro-rata non renounceable rights issue raising gross proceeds of $756,945. (b) Adoption of new and revised standards Changes in accounting policies on initial application of Accounting Standards The Group has adopted all of the new and revised Accounting Standards issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for annual reporting periods beginning on 1 July 2018. The adoption of the new and revised Australian Accounting Standards and Interpretations, including AASB 15 Revenue from Contracts with Customers, has had no impact on the company’s accounting policies or the amounts reported during the current year. AASB 9 Financial Instruments AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement requirements. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an ‘expected credit loss’ model for impairment of financial assets. The Group has assessed the classification and measurement of the Group’s financial liabilities and financial assets. When adopting AASB 9, the Group has applied transitional relief and elected not to restate prior periods. Rather, differences arising from the adoption of AASB 9 in relation to classification, measurement, and impairment are recognised in opening retained earnings as at 1 July 2018. 21 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued Changes in accounting policies on initial application of Accounting Standards (continued) The table below outlines the accounting treatment for financial assets and financial liabilities under AASB 139 as compared to AASB 9 Financial instrument Security deposits Trade and other payables Borrowings Derivative financial instruments Previous AASB 139 Amortised cost Current AASB 9 Amortised cost Amortised cost Amortised cost Amortised cost Fair value through profit or loss Amortised cost Fair value through profit or loss The Group’s other receivables do not meet the definition of a financial asset as they include GST receivable and prepayments. As a result, Group management is satisfied that there is no impact from the transition from AASB139 to AASB9. Impairment of financial assets AASB 9’s new impairment model use more forward looking information to recognise expected credit losses - the ‘expected credit losses (ECL) model’. The application of the new impairment model depends on whether there has been a significant increase in credit risk. The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. The Directors do not believe that new and revised standards issued by AASB (that are not as yet effective, will have any material financial impact on the financial statements, including AASB 16 Leases, which does not apply to leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources. 22 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued (c) Statement of compliance The financial report was authorised by the board of directors for issue on 24 September 2019. The consolidated financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, including the Accounting Interpretations, issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. The financial report of the company complies with International Financial Reporting Standards and interpretations adopted by the International Accounting Standards Board (d) Basis of consolidation The consolidated financial statements consolidate those of the parent company and all of its subsidiaries as of 30 June 2019 (“Group”). The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non- controlling interests based on their respective ownership interests. 23 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued (e) Exploration and evaluation expenditure Exploration and evaluation assets, including the costs of acquiring tenements, are capitalised as exploration and evaluation assets on an area of interest basis. Exploration and evaluation assets are only recognised if the rights to tenure of the area of interest are current and either: (i)the expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale or partial sale: or (ii)activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing. The tests contained in AASB6.20 are applied to determine whether exploration and evaluation assets are assessed for impairment: (i)the exploration and evaluation tenure right has expired or are expected to expire in the near future, and is not expected to be renewed. (ii)substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned. (iii)exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area. (iv)sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale Proceeds from the sale of exploration tenements or recoupment of exploration costs from farmin arrangements are credited against exploration costs previously capitalised. Any excess of the proceeds overs costs recouped are accounted for as a gain on disposal. 24 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued (f) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: (i) Interest income Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. (g) Cash and cash equivalents Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Temporary bank overdrafts are included in cash at bank and in hand. Permanent bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (h) Income tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the taxable temporary difference is associated with investments in controlled entities, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry- forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or 25 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continues (h) Income tax (continued) when the deductible temporary difference is associated with investments in controlled entities, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the financial period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (i) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: when the GST incurred on a 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 receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or 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. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. 26 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued (j) Impairment of assets The carrying amounts of the company’s assets are reviewed at each statement of financial position date to determine whether there are indicators of impairment. At each reporting date the company assesses whether there is any indication that individual assets are impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss where the asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of 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. Due to the uncertainty surrounding each of the interests that Group holds in relation to the Cadlao development project, the directors have, as a matter of caution, decided to continue to impair all of the interests associated with Cadlao. As a result, no value is attributed to those interests, with the assets therefore not included on the Statement of Financial Position. (k) Trade and other payables Trade payables and other payables are carried at amortised 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. (l) Provisions Where applicable, provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss and other comprehensive income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost. (m) Share-based payment transactions Equity settled transactions The fair value of options granted are recognised as an expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the grantee become unconditionally entitled to the options. 27 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued (n) Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (o) Earnings per share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares. (p) Foreign currency translation Both the functional and presentation currency of Peako Limited and its Australian subsidiaries is Australian dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance date. All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The functional currencies of the foreign operations are not nominated in Australian Dollars. As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of Peako Limited at the rate of exchange ruling at the balance date and their income statements are translated at the weighted average exchange rate for the year. The exchange differences arising on the translations are taken directly to a separate component of recognised in the foreign currency translation reserve in equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. 28 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued (q) (i) Trade and other receivables (relates to comparable period ending 30 June 2018 and earlier) Trade receivables are recognised at original invoice amounts less an allowance for uncollectible amounts and have repayment terms between 30 and 90 days. Collectability of trade receivables is assessed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance is made for doubtful debts where there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the company will not be able to collect all amounts due according to the original terms. (ii) Trade and other receivables and contract assets (relates to current period beginning 1 July 2018) The company makes uses of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the company uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. (r) Segment Reporting Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker, which has been identified as the Board of Directors of Peako Limited. (s) Parent entity financial information The financial information for the parent entity, Peako Limited, disclosed in Note 15 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, associates and joint venture entities are accounted for at cost in the parent entity’s financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments. 29 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued (t) Critical accounting estimates and judgements Management determine the development, selection and disclosure of the company’s critical accounting policies and estimates and the application of these policies and estimates. There are no estimates and judgements that are considered to have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods Management exercise judgement as to the recoverability of exploration expenditure. Any judgement may change as new information becomes available. If, after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploitation, then the relevant capitalised amount will be written off through profit or loss and other comprehensive income. Recovery of deferred tax assets Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits. Currently the Group has not recognised any deferred tax assets in the Statement of Financial Position. (u) Financial assets (applicable for comparable period ending 30 June 2018 and earlier) Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. 30 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued (v) Derecognition of financial assets and financial liabilities (applicable for comparable period ending 30 June 2018 and earlier) Financial assets A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is derecognised when: the rights to receive cash flows from the asset have expired; the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass- through’ arrangement; or the Group has transferred its rights to receive cash flows from the asset and either: o has transferred substantially all the risks and rewards of the asset, or o has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Group could be required to repay. When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. (w) Financial Instruments (applicable for current period beginning on 1 July 2018) Recognition and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. 31 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued Classification and initial measurement of financial assets Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories: • amortised cost • fair value through profit or loss (FVTPL) • fair value through other comprehensive income (FVOCI). In the periods presented the corporation does not have any financial assets categorised as FVOCI. The classification is determined by both: • the entity’s business model for managing the financial asset • the contractual cash flow characteristics of the financial asset. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. Subsequent measurement of financial assets Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): • they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows • the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding Impairment of financial assets IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’. This replaced IAS 39’s ‘incurred loss model’. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss. 32 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 1: Statement of significant accounting policies continued Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. In applying this forward-looking approach, a distinction is made between: • financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and • financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’). ‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date. ‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category. Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. Classification and measurement of financial liabilities The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. 33 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 2: Income tax Consolidated Income tax expense recognised in statement of comprehensive income 2019 $ 2018 $ Current income tax Current income tax payable Deferred income tax Relating to origination and reversal of temporary differences Income tax expense - - - - - - Reconciliation to income tax expense on accounting profit / (loss) Accounting loss before tax Tax benefit at the statutory income tax rate of 30% Non-deductible expenses Non-assessable income Unrealised tax losses not recognised Temporary differences not recognised Income tax expense (278,028) (83,408) 3,337 (6) 193,574 (113,497) - (156,422) (46,927) 1,804 (49) 80,489 (35,317) - Unrecognised deferred tax balances Deferred tax assets: Tax revenue losses (Australian) Tax capital losses (Australian) Tax revenue losses (Foreign) Unamortised business related costs Accruals & provisions Deferred tax liabilities: Exploration expenses Accrued income Net unrecognised deferred tax assets 15,352,060 4,430,516 174,175 6,228 18,000 14,706,812 4,430,516 174,175 21,182 17,500 (450,088) - 19,530,891 (86,204) (13) 19,263,968 Potential tax benefit @ 30% (2018: 30%) 5,859,267 5,779,190 The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because there is presently no expectation of future taxable profit against which the Group could utilise such benefits. 34 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 3: Earnings per share Consolidated 2019 2018 $ $ The loss and weighted average number of ordinary shares used in the calculation of basic and dilutive loss per share is as follows: Net loss for the year The weighted average number of ordinary shares Total basic and dilutive loss per share (cents) (278,028) 72,563,243 (0.39) (156,422) 62,066,523 (0.25) Note 4: Trade and other receivables Current GST Non-current Security deposit Note 5: Prepayments Prepaid tenement rent 5,410 5,182 6,336 6,012 27,200 - The Company applied for exploration tenement E80/5346 in March 2019. If the tenement is granted rent paid on application will cover rent required on the first year of exploration in the tenement. As at 30 June 2019 and to the date of signing the report the tenement has not been granted. If the tenement is not granted the rent paid on application is fully refundable. Note 6: Exploration and evaluation assets Balance at the beginning of the year Costs for the year Exploration Written off (1) Balance at the end of the year 86,204 389,334 (59,982) 415,556 8,322 77,882 - 86,204 (1) Participating interests in exploration licences E45/3637 and E80/5050 were acquired via farmin during the year. In June 2019 the company decided to relinquish these interests. The recoupment of exploration project acquisition costs carried forward is dependent upon the recoupment of costs through successful development and commercial exploitation, or alternatively by sale of the respective areas. Exploration assets relate to the areas of interest in the exploration phase for minerals exploration licences as shown in the table below: 30/06/201 9 30/06/201 E 45/3278 E 80/4990 8 E 45/3278 E 80/4990 Notes Granted 30 September 2016 In November 2017 the company executed an agreement with Sandrib Pty Ltd under which it has the right to earn a 60% interest. In July 2019 the company executed a further agreement with Sandrib Pty Ltd under which it has the right to earn a further 25% for a total 85% interest. Granted 28 September 2 018 E 80/5182 - 35 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 7: Trade and other payables Current Trade and other payables* Director-related entities – other payables (Note 14) Consolidated 2019 $ 2018 $ 67,607 96,391 163,998 29,198 20,336 49,534 * Trade payables are non-interest bearing and are normally paid on 30 day terms. Note 8: Borrowings Balance at the beginning of the year Drawdowns Balance at the end of the year - 265,000 265,000 - - - The borrowings are a line of credit facility from Australis Finance Pty Ltd which has an interest rate of 7% p.a. Australis Finance Pty Ltd is a director-related entity (note 14). These borrowing were repaid in full by September 2019 (note 16). Note 9: Issued Capital As at 30 June 2019 there were 76,978,545 fully paid ordinary shares on issue (2018: 72,020,678). Movement in ordinary share capital 2019 $ Consolidated 2018 $ 2019 # 2018 # At the beginning of the year Shares issued during the year Costs associated with share issue Consolidation 37,106,549 105,197 (3,487) 36,808,483 315,023 (16,957) - - 72,020,678 4,957,867 51,019,137 21,001,541 - - - - Balance at the end of the year 37,208,259 37,106,549 76,978,545 72,020,678 Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares. On a show of hands every shareholder 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. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. Movement in ordinary share capital 2019 Listed 2018 Listed 2019 Unlisted 2018 Unlisted At the beginning of the year Options granted Expired/exercised 21,001,541 - (21,00,541) - 21,001,541 - 5,000,000 1,000,000 - 5,000,000 - - Balance at the end of the year - 21,001,541 6,000,000 5,000,000 36 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 10: Reserves Foreign currency translation reserve (a) Share compensation reserve (b) Consolidated 2019 $ 320 33,744 34,064 2018 $ 246 33,744 33,990 (a) (b) Foreign currency translation reserve The foreign currency translation reserve represents foreign exchange movements on the translation of financial statements for controlled entities from the functional currency into the presentation currency of Australian dollars. Share compensation reserve The share compensation reserve is used to record the value of equity benefits provided to employees, consultants and directors as part of their remuneration. Note 11: Share based payments Share options to directors and consultants No options were granted to directors in the year ended 30 June 2019. (2018: 5,000,000 options). 1,000,000 options (exerciseable at $0.05 (5.0 cents) on or before 18 March 2021 were granted to Darryl Clark prior to his appointment as a director. The accounting value of the options granted was $1,540. Note 12: Financial instruments (a) Capital risk management Prudent capital risk management implies maintaining sufficient cash and marketable securities to ensure continuity of tenure to exploration assets and to be able to conduct the Group’s business in an orderly and professional manner. The Board monitors its future capital requirements on a regular basis and will when appropriate consider the need for raising additional equity capital, debt funding or to farm-out exploration projects as a means of preserving capital. (b) Categories of financial instruments The Group’s principal financial instruments comprise of cash and short-term deposits and short term borrowings. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken. (c) Financial risk management objectives The Group is exposed to market risk (including, interest rate risk and equity price risk), credit risk and liquidity risk. The main risks arising from the Group’s financial instruments are interest rate risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. 37 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 12: Financial instruments (continued) (d) Market risk There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk from the previous period. Interest rate risk management All cash balances attract a floating rate of interest. Excess funds that are not required in the short term are placed on deposit for a period of no more than 6 months. The Group’s exposure to interest rate risk and the effective interest rate by maturity periods is set out below. Interest rate sensitivity analysis At 30 June 2019, if interest rates had changed on cash and cash equivalent by 100 basis points (1%) and all other variables were held constant, the Group’s after tax profit would have been $302 (2018: $1,911) lower/higher as a result of higher/lower interest income on cash and cash equivalents. (e) Credit risk management Credit risk relates to the risk that counterparties will default on their contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from any defaults. (f) Liquidity risk management Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. Liquidity risk is monitored to ensure sufficient monies are available to meet contractual obligations as and when they fall due. The following are the contractual maturities of the financial liabilities, including interest payments. Contractual amounts have not been discounted. Carrying Amount $ Contractual cash flows $ 0-12 months $ 1-2 years $ 2-10 years $ 163,998 265,000 428,998 163,998 265,000 428,998 163,998 265,000 428,998 49,534 49,534 49,534 49,534 49,534 49,534 - - - - - - - - - - 30 June 2019 Consolidated: Non-derivative Financial Liabilities Trade and other payables Borrowings 30 June 2018 Consolidated: Non-derivative Financial Liabilities Trade and other payables (g) Foreign currency risk The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currency. The functional currency of the group is denominated is Australian dollars. 38 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 12: Financial instruments (continued) (g) Foreign currency risk (continued) The Group’s policy is to maintain and hold the sufficient foreign currency to meet its liabilities when due. Surplus financial assets are transferred and held within Australian dollar currency based financial products. Unhedged amounts in respect of cash, receivable and payable in foreign currency Receivables – non-current Consolidated 2018 $ 6,012 2019 $ 6,336 The only foreign currency the Group is currently exposed to is the US dollar. At 30 June 2019 if AUD:USD rates had changed by +/- 10% and all other variables were held constant, the Group’s after tax loss would have been $634 (2018: $(601)) higher/ (lower) as a result of lower/higher foreign exchange translations on cash, receivables and payables. Note 13: Commitments for expenditure Not longer than 1 year Longer than 1 year and not longer than 5 years 99,680 88,000 959,500 40,000 1,059,180 128,000 Expenditure commitments (minerals) The Group has a commitment in minerals tenement E45/3278 which has a current year commitment of $20,000. The permit year ends 29 September each year and currently expires 29 September 2021. In November 2017 the Group signed a farmin agreement in relation to the tenement E80/4990. The yearly expenditure commitment is $68,000 On 28 September 2018 the Group was granted minerals tenement E80/5182. The yearly expenditure commitment is $118,000. Note 14: Related party disclosure The ultimate parent entity in the wholly-owned group and the ultimate Australian parent entity is Peako Limited. The consolidated financial statements include the financial statements of Peako Limited and the controlled entities listed in the following table: Name of entity Peak Oil & Gas (Australia) Pty Ltd Peak Oil & Gas (Singapore) Pte Ltd Peak Royalties Ltd Peak Oil & Gas Philippines Ltd Energy Best Limited SA Drilling Pty Ltd Samarai Pty Ltd Country of Class of shares incorporation Ordinary Australia Singapore Ordinary British Virgin Islands Ordinary British Virgin Islands Ordinary British Virgin Islands Ordinary Ordinary Australia Ordinary Australia Equity holding % 2018 2019 100 100 100 100 100 100 100 100 100 100 100 100 100 100 39 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 14: Related party disclosure (continued) Director-related entities During the year services and/or facilities were provided under normal commercial terms and conditions by director-related entities as disclosed below: Entity Related director Service Samika Pty Ltd Exoil Pty Ltd Octanex Limited Consulting RL Clark EG Albers Office services EG Albers Accounting and administrative support Amounts paid 2019 $ 31,590 30,589 59,850 Amounts paid 2018 $ 33,412 33,698 18,615 Payable at 30/06/19 $ 1,215 32,461 62,715 Payable at 30/06/18 $ 3,037 8,840 8,459 122,029 85,725 96,391 20,336 Director – related borrowings During the year the Company drew down $265,000 (2018: $nil) (note 8) against a line of credit facility from Australis Finance Pty Ltd,with interest rate of 7% p.a. Australis Finance Pty Ltd is a director-related entity of EG Albers. Note 15: Parent Entity Disclosures Parent Entity Financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net Assets Issued capital Accumulated losses Options reserve Total Equity Financial performance Loss for the year Other comprehensive income Total comprehensive loss 2019 $ 30,193 132,726 162,919 401,931 - 44,877 (239,012) 59,125,131 (59,397,887) 33,744 (239,012) 2018 $ 191,419 91,386 282,805 44,878 - 44,878 237,927 59,023,421 (58,819,238) 33,744 237,927 (578,649) (152,011) - - (578,646) (152,011) Note 16: Matters Subsequent to Balance Date In July 2019 the Company executed an Amended and Restated Farmin and Joint Venture Agreement with Sandrib Pty Ltd to effect a Stage 2 farm-in option by which it may earn an additional joint venture interest to increase its total interest in the Eastman project tenement (E80/4990) to 85%. On the 16 August 2019 the company completed a pro-rata non renounceable rights issue. A total of 38,489,359 new shares and 38,489,359 free attaching new options were subscribed for, raising gross proceeds of $756,945. 40 PEAKO LIMITED ABN 79 131 843 868 Notes to the Financial Statements for the Year Ended 30 June 2019 Note 16: Matters Subsequent to Balance Date (continued) The company had borrowings of $265,000 at 30 June 2019 with Australis Finance Pty Ltd; a director- related entity (note 14). These borrowing were repaid in full by September 2019 (note 8). In September 2019 the Company commenced a drill program at its Eastman Project to test geophysical anomalies identified by the IP survey it conducted in 2018. Note 17: Reconciliation of loss after income tax to net cash outflow from operating activities Reconciliation of loss from ordinary activities after income tax to net cash outflow from operating activities Net loss for the year Foreign exchange (loss) gain Impairment of exploration asset Exploration expenditure expensed Decrease in trade and other receivables Decrease in trade and other payables Net cash outflow from operating activities Note 18: Auditor’s remuneration The auditors of the Group are Grant Thornton Audit Pty Ltd. Assurance services Grant Thornton Audit Pty Ltd Non-Audit services Grant Thornton Audit Pty Ltd Total auditors’ remuneration Note 19: Segment information (285,360) (262) 59,982 7,332 (228) 94,354 (156,422) (258) - - (3,394) 13,256 (124,182) (146,818) 29,500 25,117 - - 29,500 25,117 Segment information is presented using a 'management approach', i.e. segment information is provided on the same basis as information used for internal reporting purposes by the directors. At regular intervals, the board is provided management information at a group level for the company’s cash position, and a company cash forecast for the next twelve months of operation. On this basis, no segment information is included in these financial statements. 41 PEAKO LIMITED ABN 79 131 843 868 Directors’ Declaration The directors of the company declare that: The financial statements, comprising the consolidated statement of profit or loss and other 1. comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity, and accompanying notes, are in accordance with the Corporations Act 2001 and: (a) (b) (c) comply with Accounting Standards and the Corporations Regulations 2001; give a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of its performance for the year ended on that date; and the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1(a). In the directors’ opinion, there are reasonable grounds to believe that the company will be 2. able to pay its debts as and when they become due and payable. 3. The remuneration disclosures included in pages 12 to 14 of the directors’ report, (as part of audited Remuneration Report), for the year ended 30 June 2019, comply with section 300A of the Corporations Act 2001. The directors have been given the declarations by the chief executive officer and chief 4. 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: R.LClark Director 24 September 2019 42 Collins Square, Tower 5 727 Collins Street Melbourne Victoria 3008 Correspondence to: GPO Box 4736 Melbourne Victoria 3001 T 61 3 8320 2222 F 61 3 8320 2200 E info.vic@au.gt.com W www.grantthornton.com.au Independent Auditor’s Report To the Members of Peako Limited Report on the audit of the financial report Opinion We have audited the financial report of Peako Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the Directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year ended on that date; and b complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material uncertainty related to going concern We draw attention to Note 1(a) in the financial statements, which indicates that the Group incurred a net loss of $285,360 during the year ended 30 June 2019, and as of that date, the Group had negative working capital of $366,185. As stated in Note 1(a), these events or conditions, along with other matters as set forth in Note 1(a), indicate that a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 www.grantthornton.com.au ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. 43 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Key audit matter How our audit addressed the key audit matter Exploration and evaluation assets - Notes 6 The tenements held by Peako Limited and its subsidiaries are in the exploration stage and exploration expenditure is capitalised in accordance with Australian Accounting Standard AASB 6 Exploration for and Evaluation of Mineral Resources. The group is required to assess at each reporting date if there are any triggers for impairment which may suggest the carrying value is in excess of the recoverable value. Any impairment losses are then measured in accordance with AASB 136 Impairment of Assets. AASB 6 requires exploration and evaluation asset to be assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. AASB 6 provides a list of 4 indicators, however that list is not exhaustive and therefore subjectivity is involved in the assessment. This area is a key audit matter as significant judgement is required in determining whether the facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount, and then consequently in measuring any impairment loss. Our procedures included, amongst others: Obtaining the management prepared reconciliation of capitalised exploration and evaluation expenditure and agreeing to the general ledger; Selecting a sample of capitalised exploration and evaluation expenditure and obtain documentation to support the amount capitalised in line with AASB 6; Critically reviewing management's assessment of impairment indicators for the Group's capitalised exploration assets under AASB 6 by: o o Assessing the period for the right to explore the areas of interest had not expired or will not expire in the near future without an expectation of renewal; Enquiring of management regarding their intentions to carry out exploration and evaluation activity in the relevant exploration area, including review of managements’ budgeted expenditure; o Understanding whether any data exists that indicates the carrying value of these exploration and evaluation assets are unlikely to be recovered from successful development or by sale; and o Considering any other available evidence of impairment. Assessing management's consequent determination of impairment loss. Reviewing related financial statement disclosures. Information other than the financial report and auditor’s report thereon The Directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 44 Responsibilities of the Directors’ for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report. Report on the remuneration report Opinion on the remuneration report We have audited the Remuneration Report included in pages 10 to 12 of the Directors’ report for the year ended 30 June 2019. In our opinion, the Remuneration Report of Peako Limited, for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001. Responsibilities 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. Grant Thornton Audit Pty Ltd Chartered Accountants B L Taylor Partner – Audit & Assurance Melbourne, 24 September 2019 45 PEAKO LIMITED ABN 79 131 843 868 Additional Shareholder Information (unaudited) The shareholder information set out below was applicable as at 16 October 2019. A. Distribution of equity securities – ordinary shares Analysis of numbers of equity security holders by size of holding: 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and above Total Ordinary shares 227 204 61 144 62 698 There were 546 holders of less than a marketable parcel of ordinary shares. B. Equity security holders – ordinary shares Twenty largest holders Name Southern Energy Pty Pty Ltd Hawkestone Resources Pty Ltd Sacrosanct Pty Ltd Mr Ernest Geoffrey Albers 500 Custodian Pty Ltd Australis Finance Pty Ltd Ram Platinum Pty Ltd Mr Michael Leslie Jefferies Auralandia Pty td Albers Custodian Company Pty Ltd Great Missenden Holdings Pty Ltd Mr Charles Waite Morgan Sanperez Pty Ltd Lotaka Pty Ltd Sagepark Holdings Pty Ltd Jimzbal Pty Ltd Pontia Pty Ltd Mr Issy Lissek Christopher William Reindler Mrs Julia Grace Parfitt No. of ordinary shares held 18,418,903 17,990,720 10,530,000 8,436,264 7,560,000 5,390,808 5,169,689 4,000,000 3,290,808 2,970,000 2,742,340 2,629,736 2,500,000 2,500,000 2,139,041 2,000,000 1,886,637 1,595,570 1,400,000 1,400,000 104,550,516 % of issued shares 14.53% 14.19% 8.31% 6.65% 5.96% 4.25% 4.08% 3.16% 2.60% 2.34% 2.16% 2.07% 1.97% 1.97% 1.69% 1.58% 1.49% 1.26% 1.10% 1.10% 82.47% Substantial holders – ordinary shares C. Substantial shareholders as disclosed in substantial shareholding notices given to the Company are as follows: Albers Group Number Held 78,115,963 Percentage 61.62% 46 PEAKO LIMITED ABN 79 131 843 868 D. Distribution of listed Option Holders exerciseable at $0.025 on or before 30 April 2020 Analysis of numbers of option holders by size of holding: 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and above Total E. Equity security holders – listed options Twenty largest holders Options Held 12 10 6 13 23 64 Name Hawkestone Resources Pty Ltd Sacrosanct Pty Ltd Mr Michael Leslie Jefferies 500 Custodian Pty Ltd Sanperez Pty Ltd Lotaka Pty Ltd Jimzbal Pty Ltd Albers Custodian Company Pty Ltd Mr Charles Waite Morgan Ram Platinum Pty Ltd Dr Joshua A Ehrlich Mr SG & Mrs SD & Miss MB Jacobs MR Charles Stephen Mark Fletcher Mrs Julia Grace Parfitt Fists Investment Partners Pty Ltd Anthony Harold Michaels Mr Issy Lissek Mrs Kelly Anne Seville Mrs Jannah Esther Lea Ward F. Unlisted Option Holders No. of Listed options held 3,689,948 3,510,000 3,100,000 2,520,000 2,500,000 2,500,000 2,000,000 990,000 876,579 750,000 500,000 500,000 500,000 500,000 500,000 401,108 250,000 225,000 200,000 26,212,635 % of issued listed option 13.57% 12.91% 11.40% 9.27% 9.19% 9.19% 7.36% 3.64% 3.22% 2.76% 1.84% 1.84% 1.84% 1.84% 1.84% 1.48% 0.92% 0.83% 0.74% 96.41% Two holders hold 5,000,000 unlisted options (exercisable at $0.04 on or before 24 November 2019). One holder holds 1,000,000 unlisted options (exercisable at $0.05 on or before 30 November 2019. 47 PEAKO LIMITED ABN 79 131 843 868 Minerals Exploration Interests Mining Tenements held at 30 June 2019 and their location Western Australia (Paterson Province) E 45/3278 (100%) E 45/3345 (100%) E 45/3477 (100%) E 45/3292 (100%) Western Australia (East Kimberley) E 80/4990 (60%) E 80/5182 (100%) E 80/5346 (100%) Granted Application Application Application Granted Granted Application Tenements acquired during the year and their location Western Australia (East Kimberley) E 80/4990 (60%) E 80/5346 (100%) E 80/5080 (60%) Western Australia (Pilbara) E 45/3736 (25%) Granted Application Granted Granted Tenements disposed of during the year and their location Western Australia (Pilbara) E 45/3736 (25%) Western Australia (East Kimberley) E 80/5080 (60%) Granted Granted Beneficial percentage interests held in farm-in or farm-out agreements at 30 June 2019: Farm-out Agreements Nil. Farm-in Agreements: Western Australia (East Kimberley) E 80/4990 Granted – Peako earning a 60% interest via Farmin arrangement with Sandrib Pty Ltd with stage 2 option to increase interest to 85% 48 PEAKO LIMITED ABN 79 131 843 868 Petroleum Interests Petroleum Tenements held at 30 June 2019 and their location The Philippines SC-6 Cadlao Granted Tenements acquired during the year and their location Nil. Tenements disposed of during the year and their location Nil. Beneficial percentage interests held in farm-in or farm-out agreements at 30 June 2018: Farm-out Agreements Nil. Beneficial percentage interests in farm-in or farm-out agreements acquired or disposed of Farm-in / Other Agreements Peako’s interests in relation to the SC6 Cadlao Oilfield re-development project are held via its subsidiary Peak Oil & Gas (Australia) Pty Ltd (Peak). The interests are all disputed, as follows: 1. A 25% Cadlao joint venture interest (held in trust by Cadlao Development Company Limited (Cadco)) for Peak or, alternatively, an entitlement to receive $6.7 million as consideration for the buyback of the 25% interest; and 2. A prospective indirect economic interest held by way of a 40% shareholding held by our subsidiary, Energy Best Limited (EBL), in VenturOil Philippines Inc (VenturOil) (itself a 20% interest holder in the Cadlao Joint Venture) and a 5% interest in the Service Contract SC6 Cadlao held by VenturOil in trust for EBL. The 40% shareholding and subsequent associated funding obligation was intended to provide EBL with 75% dividend rights in respect to its 40% shareholding. 3. An aggregate 80% interest in overriding royalty interests relating to 3.3% of production held by Peak Royalties Limited 4. A loan receivable from VenturOil for US$736,188 49
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