Brockman Mining Limited
Annual Report 2017

Plain-text annual report

ANNUAL REPORT CONTENTS ANNUAL REPORT 2017 Corporate Information Chairman’s Message Management Discussion and Analysis Directors and Management Corporate Governance Report Environment, Social and Governance Report Directors’ Report Independent Auditor’s Report Consolidated Statement of Comprehensive Income Consolidated Balance Sheet Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Financial Summary ASX Additional Information 2 3 4 17 20 34 41 47 50 51 52 54 55 93 94 1 CORPORATE INFORMATION BOARD OF DIRECTORS PRINCIPAL PLACE OF BUSINESS IN Non-executive Directors Kwai Sze Hoi (Chairman) Liu Zhengui (Vice Chairman) Ross Stewart Norgard Executive Directors AUSTRALIA Level 2, 56 Ord Street, West Perth T: +61 8 9389 3000 F: +61 8 9389 3033 PRINCIPAL SHARE REGISTRARS AND TRANSFER OFFICE MUFG Fund Services (Bermuda) Limited Chan Kam Kwan, Jason (Company Secretary) The Belvedere Building, Kwai Kwun, Lawrence Colin Paterson Independent Non-executive Directors Uwe Henke Von Parpart Yap Fat Suan, Henry Choi Yue Chun, Eugene COMPANY SECRETARY Chan Kam Kwan, Jason AUDITOR PricewaterhouseCoopers Certified Public Accountants REGISTERED OFFICE (BERMUDA) Clarendon House 2 Church Street Hamilton HM11 Bermuda 69 Pitts Bay Road, Pembroke HM08, Bermuda BRANCH SHARE REGISTRARS AND TRANSFER OFFICE IN HONG KONG Tricor Secretaries Limited Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong BRANCH SHARE REGISTRARS AND TRANSFER OFFICE IN AUSTRALIA Computershare Investor Services Pty Ltd Level 11 172 St Georges Terrace, PERTH WA 6000 PRINCIPAL BANKER Hang Seng Bank Limited Standard Chartered Bank (Hong Kong) Limited PRINCIPAL PLACE OF BUSINESS IN HONG KONG Bank of Communications Westpac Banking Corporation Unit 3903B Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong WEBSITE www.brockmanmining.com T: 852 3766 1079 F: 852 3007 9138 www.irasia.com/listco/hk/brockmanmining STOCK CODE 159 (Main Board of The Stock Exchange of Hong Kong Limited) BCK (Australian Securities Exchange) CHAIRMAN’S MESSAGE ANNUAL REPORT 2017 Dear Shareholders, D e s p i t e m a r k e t a n d r e g u l a t o r y c o n s t r a i n t s , t h e I would like to thank my fellow Directors and Company’s management team has not ceased to continue the management for their hard work, as we navigate discussion and negotiation with relevant parties, hoping through increasingly volatile iron ore market. I hereby to strike viable solutions to our infrastructure bottleneck. also express my heartfelt thanks to all shareholders We remain optimistic and confident in our flagship of the Company for their genuine support. We look project – to bring Marillana into production. forward for a better outcome for the Company next year. Whilst continuing the studies and negotiations for over 20Mtpa production from Marillana, the Company is also focusing on progressing its initial iron ore development through the production of 2.5Mtpa from a single pit in Marillana (Project Maverick). Project Maverick is to utilise performance based standard road trains for Kwai Sze Hoi transport to Port Hedland and export through the Utah Chairman Point Bulk Handling Facility at Port Hedland (UPBHF). 20 September 2017 During this reporting period, the Company engaged a Project Management Consultant (PMC), which carried out a competitive early contractor engagement (ECE) process with several mining contractors and process plant designers/constructors. Following the ECE, the Company has selected preferred contractors. C o n t i n u e d a n d o n g o i n g e n g a g e m e n t w i t h t h e preferred contractors has enabled the Company to reduce forecast capital and operating costs whilst not impacting on the productivity and product quality. With most of the key approvals required to facilitate the commencement of project construction secured, Brockman is now finalizing the funding arrangement for the Project Maverick. 3 MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW During the year, the Group recorded no revenue and has put all its resources in the iron ore operation in IRON ORE OPERATIONS – WESTERN AUSTRALIA This segment of the business comprised of the 100% Western Australia. Loss for the year was HK$38.3 million, owned Marillana Iron Ore Project (“Marillana”), the a significant decrease compared to HK$627.2 million Ophthalmia Iron Ore Project (“Ophthalmia”) and other of last corresponding year. The decrease is due to regional exploration projects. the impairment loss of HK$678.4 million recorded last year while this year there was not any impairment loss. The loss before income tax expense for the year for this Administrative expenses was also reduced significantly segment and attributable to the Group was HK$20.4 from HK$36.8 million for the year ended 30 June 2016 million (2016: HK$482.4 million). Total expenditure to HK$10.9 million for current year, due to a series of associated with mineral exploration for the year ended costs saving measures including reduction of number of 30 June 2017 amounted to HK$20.7 million (2016: $16.6 employees and operating lease expenses. million). Total expenditure associated with mineral exploration and evaluation for each of the projects in Western Australia for the financial periods are summarised as follows: Year ended 30 June 2017 HK$’000 17,182 1,494 2,054 20,730 2016 HK$’000 12,106 2,000 2,509 16,615 Project Marillana Ophthalmia Regional Exploration No development expenditures have been recognised in the financial statements during the year ended 30 June 2017 (year ended 30 June 2016: Nil). Total capital expenditure for each of the projects in Western Australia for the financial periods is summarised as follows: Year ended 30 June 2017 HK$’000 Addition to property, plant & equipment 3,263 — 3,263 Addition to mining properties — — — 2016 HK$’000 Addition to property, plant & equipment 173 — 173 Addition to mining properties — — — Project Marillana Ophthalmia ANNUAL REPORT 2017 Figure 1: Project location map – Brockman tenements Impairment The Group has assessed whether any indicators of impairment exist with reference to both external and internal sources of information. As at 30 June 2017, the Group assessed and concluded there were no indicators for impairment present. Key assumptions utilised in determining the recoverable value of the properties in Australia are not materially different from those utilised during the previous assessment. MARILLIANA PROJECT OVERVIEW The 100% owned Marillana is Brockman’s flagship project located within mining lease M47/1414 in the Hamersley Iron Province within the Pilbara region of Western Australia. It is located approximately 100 km north-west of the township of Newman. The project area covers 82 square km bordering the Hamersley Range, where extensive areas of supergene iron ore mineralisation, the source of hematite detrital mineralisation at Marillana, have developed within the dissected Brockman Iron Formation that caps the Range. 55 MANAGEMENT DISCUSSION AND ANALYSIS Figure 2: Marillana tenement showing location of Mineral Resources and proposed Maverick pit The Group currently is progressing on a two-phase 2. The development of larger tonnage operation commercial development strategy for Marillana: underpinned by a long-term rail and port 1. A small-scale development over a small portion The target production of Project Agincourt is of the deposit to produce 2.5 – 3.0Mtpa (wet) more than 20Mtpa (wet), which is going to be of iron ore product (“Project Maverick”). The developed in stages along with the infrastructure development of Project Maverick is an interim solution development. The development of infrastructure solution (“Project Agincourt”). solution to establish the Group and its high quality Marillana product (~61.5% Fe) in the iron ore market, and generate cash flow as the Company continues to progress development for the larger Marillana Project. Project Agincourt is subject to further studies on mine scheduling as well as infrastructure logistics. ANNUAL REPORT 2017 To facilitate Project Agincourt, the Company has To facilitate the project construction early activities commenced studies to build its own railway line, t h e C o m p a n y h a s p u r c h a s e d s e c o n d h a n d while at the same time continuing to pursue other accommodation rooms plus minor ancillary camp viable infrastructure cooperation options. Despite buildings. These units will enable the establishment of the protracted historical and expected future legal the Project Maverick construction and future operations challenges, the Company has never wavered in village. establishing its right to regulated Access on the TPI railway line. The rail access to the TPI railway line To date, the Group is progressing funding discussions for remains one of the options for an infrastructure solution Project Maverick with potential joint venture partners contemplated by the Group. who are progressing their due diligence process. PROJECT MAVERICK Project Maverick is an interim solution to establish Brockman as a producer and introduce the high quality Marillana product to the iron ore market. The development of an operating mine at the Marillana mining lease is anticipated to be major step towards commercialising an infrastructure solution for the future larger scale 20+ Mtpa operations Project Agincourt. Project Maverick relates to a very small portion of the total mineralisation at Marillana, with an initial production rate of 2.5 to 3.0Mtpa of final product. Mine planning studies have demonstrated that the Maverick pit can be extended to produce a total of 83.8Mt of ore and 27.8Mt of waste to be mined over 14 years, whilst maintaining the strip ratio at 0.33:1. Beneficiated product will be transported to Port Hedland by road haulage. FUNDING AND FEASIBILITY STUDY D u r i n g t h e y e a r , B r o c k m a n e n g a g e d a P r o j e c t Management Consultant (“PMC”) for the Maverick Project. The PMC services for Project Maverick were separated into mining, processing, non-process infrastructure and general infrastructure components. The PMC carried out a competitive early contractor engagement (“ECE”) process with several mining contractors and process plant designers/constructors, f o l l o w i n g w h i c h B r o c k m a n s e l e c t e d p r e f e r r e d contractors. Continued and ongoing engagement with the preferred contractors has enabled refinement of the process plant design, the mine schedule, non-process infrastructure requirements and early earthworks. These refinements have enabled the Company to reduce forecast capital and operating costs whilst not impacting on the productivity and product quality. The development of Project Maverick is able to draw on the results and information received from over six years of detailed study over the Marillana deposit. Metallurgy and Marketing Extensive beneficiation test work has been completed as part of the DFS and FEED studies on ore samples taken from the “Maverick” deposit. The most recent and definitive ‘Phase 7’ pilot scale test work confirmed the Group’s confidence in the deposit and beneficiation process, with the product yield and specification exceeding forecast amounts. The preferred contractor for the design and construction of the Maverick processing plant has also been heavily involved in the development of the process flow sheet design during the DFS and FEED studies, as well as the design and implementation of the Phase 7 test work programme. During the year, Brockman completed a technical marketing programme to secure offtake agreements for the Maverick product. The results to date have been positive with several Chinese steel mills and international commodity trading houses expressing an interest in the product. Brockman has despatched samples to a number of Chinese steel mills for confirmatory sinter testing and value in use determination, based on their current blends. To date those tests have provided positive results and confirmation of Maverick’s product quality. Approvals All major key approvals including Ministerial approval under the Environmental Protection Act 1986 (WA) have been received and most of the standard works approvals enabling the Company to progress project construction early activities have been received. The restructuring of the Department of Water and Environmental Regulation has however led to delays in the assessment and processing of approval applications including Brockman’s vegetation and groundwater monitoring and management plans. This delay has contributed to the Company revising its expected schedule for the project, with first ore on ship now expected in Q3 2018. The Company expects to obtain these approvals in September 2017. 77 MANAGEMENT DISCUSSION AND ANALYSIS After Project Maverick funding is secured, Brockman intends to progress with port allocation and stockyard lease arrangement at UPBHF with the Pilbara Port Authority. Infrastructure Following execution of the Heads of Agreement (“HOA”) with Qube Bulk Pty Ltd (“Qube”) in March 2016. Brockman and Qube are in the final stages of negotiation of a Logistics Service Agreement. The key enabler for the HOA and subsequently the Logistics Service Agreement was the Western Australian State Government initiative in approving the use of performance based standard road trains on prescribed roads in the Pilbara of up to 140 tonnes. Since then, the Western Australian State Government has further granted provisional approval for road trains with increased payloads of up to 153 tonnes (“Ultra Quads”) and this provides further cost savings in road haulage. Once project Maverick funding arrangement is secured. Brockman intends to progress with the port allocation and stock yard lease at UPBHF with the Pilbara Ports Authority. PROJECT AGINCOURT Project Agincourt is predicated on Brockman securing a long term rail and port solution for the transportation and export of 20+ Mtpa of iron ore product. Studies Brockman continues to focus its efforts on optimisation studies for Project Agincourt including cost savings opportunities for the capital and operating cost estimates, in readiness for when an infrastructure solution is secured. This includes, the Company re-evaluating the mine plan to reduce haul distances, increase product yields in the early mine life and minimise rehandling of waste materials, all of which is anticipated to have a positive impact on mining costs. Approvals All required environmental baseline and impact assessment studies and cultural heritage surveys have been completed and key State and Commonwealth environmental approvals have been received for Marillana. RAIL AND PORT INFRASTRUCTURE The key to unlocking the value of the Group’s highly prospective iron ore mineral tenements relies on securing a rail and port infrastructure solution and funding. The Company continues to actively pursue various viable infrastructure alternatives. Independent Railway An independent railway is one of a number of logistic solutions being considered by the Company. In 2016 the Company completed a study of a 26 tonne axle load (light rail) railway which significantly reduces capital costs when compared to traditional Pilbara heavy haul railway systems. Access Despite the protracted historical and expected future legal challenges, the Company has never wavered in establishing its right to regulated Access on the TPI railway line. This remains a viable railway infrastructure alternative for the facilitation of Project Agincourt. Port Brockman, as a foundation member of the North West Infrastructure joint venture (“NWI”), has a potential port solution through the Western Australian State Government conferral of 50Mtpa export capacity to NWI and the related potential port stock yards and berth locations (SP3 and SP4 in South West Creek in the Port Hedland inner harbour). NWI is focused on developing SP3 and SP4 into a multi-user port facility to support export from its foundation members as well as other junior iron ore mining companies. This focus is in line with State Government’s policy. Currently, the development of the port facility is reliant on securing a viable rail solution to connect potential users mines with the port. RESOURCES AND RESERVES Brockman reports its Mineral Resources and Ore Reserves on annual basis, in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition (the “JORC Code 2012”), unless otherwise noted. Mineral Resources are quoted inclusive of Ore Reserves. ANNUAL REPORT 2017 This information on Resources and Reserves for the 1,238 Mt of Indicated Mineral Resources and 219 Mt Marillana Project was prepared and first disclosed under of Inferred Mineral Resources (see Tables 1 and 2). In guidelines of the 2004 Edition of the ‘Australasian Code accordance with the requirements of the JORC Code for Reporting of Exploration Results, Mineral Resources 2004, the Marillana Ore Reserves are based solely on and Ore Reserves’ (the ‘JORC Code 2004’). It has not the Measured and Indicated Mineral Resources at been updated since to comply with the JORC Code Marillana. 2012 on the basis that the information has not materially changed since it was last reported. The 201 Mt of Inferred Mineral Resources (“Non CID”) is based on wide-spaced drilling to the north of the Marillana has a significant Mineral Resource estimate Indicated Mineral Resource boundary, which has of 1.63 billion tonnes (“Bt”) of hematite Detrital and demonstrated continuity of the detrital mineralisation in Channel Iron (“CID”) mineralisation, comprising 173 this area. In addition the mineralisation remains open to million tonnes (“Mt”) of Measured Mineral Resources, the north of the Inferred Mineral Resource boundary. Table 1: Detrital (beneficiation feed) Mineral Resource Summary (cut-off grade: 38% Fe) Mineralisation type Resource classification Tonnes (Mt) Grade (% Fe) Detrital Pisolite Total Measured Indicated Inferred Indicated Measured Indicated Inferred GRAND TOTAL Total tonnes may not add up, due to rounding Table 2: CID Mineral Resource Summary (cut-off grade: 52% Fe) Resource classification Indicated Inferred TOTAL Tonnes (Mt) 84.2 17.7 101.9 Fe (%) 55.8 54.4 55.6 CaFe (%) 61.9 60.0 61.5 173 1,036 201 117 173 1,153 201 1,527 AI2O3 (%) 3.6 4.3 3.7 41.6 42.5 40.7 47.4 41.6 43.0 40.7 42.6 SiO2 (%) 5.0 6.6 5.3 P (%) 0.097 0.080 0.094 LOI (%) 9.8 9.3 9.7 CaFe represents calcined Fe and is calculated by Brockman using the formula CaFe = Fe%/((100-LOI)/100) Table 3: Marillana Detrital Ore Reserves* Reserve classification Proved Probable TOTAL * Reserves are included within Resources Table 4: Marillana CID Ore Reserves* Tonnes (Mt) Fe (%) 133 868 1,001 41.6 42.5 42.4 Reserve classification Probable TOTAL Tonnes (Mt) 48.5 48.5 Fe (%) 55.5 55.5 CaFe (%) 61.5 61.5 AI2O3 (%) 5.3 5.3 SiO2 (%) 3.7 3.7 P (%) 0.09 0.09 LOI (%) 9.7 9.7 * Reserves are included within Resources 99 MANAGEMENT DISCUSSION AND ANALYSIS Based on extensive beneficiation testwork, the Detrital The Mineral Resource and Reserve estimation (see Ore Reserves are expected to produce a final product Tables 1 to 4) was prepared by Golder Associates grading 60.5 – 61.5% Fe with impurity levels comparable Pty Ltd and has been classified in accordance with with other West Australian direct shipping hematite the guidelines of the JORC Code 2004. It has been ore (“DSO”) iron ore products. The CID Ore is a DSO estimated within geological boundaries using a 38% product which would be prepared for export as a Fe cut-off grade for beneficiation feed mineralisation separate product. Currently the Group is focusing on and 52% Fe cut-off grade for CID mineralisation. It has developing and producing the Detrital mineralisation not been updated since to comply with the JORC only. Code 2012 on the basis that the information has not materially changed since it was last reported. There has Metallurgical testwork, undertaken since publication been no change in the Marillana Resource and Reserve of the Ore Reserve, investigated improvement in the estimates during the year. product yield from beneficiation feed by recovering additional -1 mm fines material at +60% Fe, could add a further 30 Mt of total product over the life of the mine. This material was considered as waste in the earlier studies. Marillana represents one of the largest published hematite Ore Reserve positions in the Pilbara, outside the three major producers (BHPB, Rio and FMG). The Detrital Ore is upgraded to a high-quality, sinter feed product via simple beneficiation, which is supported by low-cost mining, low waste ore ratios and large continuous ore zones. OPHTHALMIA PROJECT OVERVIEW The 100% owned Ophthalmia Iron Ore Project, located north of Newman in the East Pilbara region of Western Australia, is the most significant iron ore project for the Company outside of its flagship Marillana Project. Since the discovery of significant occurrences of bedded hematite mineralisation by field reconnaissance mapping and surface sampling in August 2011, major exploration drilling programmes have been completed and JORC compliant Mineral Resources have been estimated and reported for the Sirius, Coondiner, and Kalgan Creek deposits. The total Mineral Resource at Ophthalmia is 341 Mt grading 59.3% Fe (Table 5). ANNUAL REPORT 2017 Figure 3: Location of Ophthalmia Prospects and Resources Approvals Feasibility Study The Native Title Agreement with the Nyiyaparli people The upgraded Mineral Resources and the excellent that was executed in May 2015 covers all tenements conversion from Inferred to Indicated Resources comprising the Ophthalmia Iron Ore Project and was support the development of a DSO mining operation based on the existing agreement with the Nyiyaparli at Ophthalmia, predicated on the Company achieving people covering the Marillana Iron Ore Project (signed a rail and port infrastructure solution for the Marillana in 2009). It takes into consideration the Nyiyaparli Project. The finalisation of a Pre-Feasibility Study people’s interests with regard to the management (“PFS”) that commenced in 2015 was deferred until of Cultural Heritage and Protection of the land and an infrastructure solution for the Company’s Marillana environment at the Ophthalmia Project, as well as project has been secured. providing education and training opportunities for the local Nyiyaparli people. Metallurgy The signing of this agreement paves the way for the CISRI (China lron & Steel Resources Institute Group) in granting of mining leases over the project area once China for a comprehensive sinter testwork programme. Brockman has established an infrastructure solution to The bulk sample was generated in 2013 by compositing facilitate development of the project. diamond drill core from 7 holes spaced across the entire deposit. A bulk sample of ore from the Sirius deposit was sent to 1111 MANAGEMENT DISCUSSION AND ANALYSIS The sinter testwork program showed that there are Mineral Resources no fatal flaws in the sintering performance of blends Ophthalmia has a Mineral Resource estimate of 340.9 where Sirius fines replaces either Pilbara Blend of MAC million tonnes of hematite mineralisation, compromising (Mining Area C) fines up to 30%. Most parameters 280 million tonnes of Indicated Resources and 61 million show only gradual changes as substitution increases, tonnes classified as Inferred Resources (see Table 5). except that mix moisture and fuel loads do increase significantly. There is little change in sinter productivity The resource estimate was classified in accordance or granulation, RDI (Reduction Degradation Index) is with guidelines provided in the JORC Code 2012. Refer similar or improved marginally, as has its softening and to ASX Announcement dated 1 December 2014. melting performance. RI (Reducibility Index) is lower but still well within tolerance. Table 5: Ophthalmia DSO Mineral Resource Summary Deposit Class Kalgan Creek1 Coondiner1 (Pallas and Castor) Sirius1 Ophthalmia Project Indicated Inferred Sub Total Indicated Inferred Sub Total Indicated Inferred Sub Total Indicated Inferred Total 30 June 2017 (1) Tonnes (Mt) 34.9 24.4 59.3 140.5 17.1 157.6 105.0 19.0 124.0 280.4 60.5 340.9 Fe (%) 59.3 59.5 59.4 58.5 58.1 58.4 60.4 60.2 60.3 59.3 59.3 59.3 CaFe* (%) 62.7 63.2 62.9 62.0 61.5 62.0 63.7 63.4 63.6 62.7 62.8 62.7 SiO2 (%) 4.08 4.38 4.21 5.18 6.06 5.27 3.54 4.09 3.62 4.43 4.73 4.49 AI2O3 (%) 4.57 3.90 4.29 4.46 4.45 4.46 3.97 3.83 3.95 4.29 4.03 4.24 S (%) 0.009 0.007 0.009 0.007 0.008 0.007 0.007 0.009 0.007 0.007 0.008 0.007 P (%) 0.183 0.157 0.173 0.176 0.155 0.174 0.18 0.17 0.18 0.178 0.160 0.175 LOI (%) 5.49 5.81 5.63 5.71 5.47 5.68 5.22 5.14 5.20 5.50 5.50 5.50 * (1) CaFe represents calcined Fe and is calculated by Brockman using the formula CaFe = Fe%/((100-LOI)/100). Total tonnes may not add due to rounding. No changes since 30 June 2016 WEST PILBARA PROJECT Overview The West Pilbara Project comprises four tenements c e n t r e d a r o u n d D u c k C r e e k , l o c a t e d a b o u t 100-130 km WNW of Paraburdoo in the West Pilbara region. (Refer to Figure 1). At Duck Creek, mineralisation comprises discrete mesas of channel iron deposits (“CID”) 15-30 m above the surrounding plains with stripping ratios expected to be very low for the targets identified. Seven mesas containing ore grade CID mineralisation have been identified from surface sampling, but only six have been drilled due to access limitations. Brockman has completed an Inferred Mineral Resource estimate of 18.3 Mt grading 56.5% Fe, for the channel iron deposit (“CID”) mineralisation at Duck Creek (E47/1725), as detailed in Table 6 below. The Mineral Resource estimate has been classified in accordance with guidelines of the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The Mineral Resource estimate is based on the results of 45 vertical RC holes drilled on sections varying from approximately 200 to 400 m apart along the long axis of each mesa, supported by surface sampling to confirm the lateral extent of mineralisation. MANAGEMENT DISCUSSION AND ANALYSIS ANNUAL REPORT 2017 Table 6: Duck Creek Mineral Resource estimate – (at a lower cut-off grade of 54% Fe) Mesa Classification 1 2 3 4 5 6 Inferred Inferred Inferred Inferred Inferred Inferred All Inferred Tonnes (Mt) 4.1 5.1 2.3 1.4 3.0 2.4 18.3 Fe (%) 55.8 56.6 56.4 56.4 56.3 58.0 56.5 CaFe* (%) 63.2 64.1 61.6 61.9 61.4 62.8 62.8 SiO2 (%) 4.40 3.58 5.71 6.43 6.32 5.15 4.91 AI2O3 (%) 2.69 2.44 4.53 3.34 4.07 3.25 3.22 S (%) 0.058 0.037 0.023 0.087 0.020 0.015 0.037 P (%) 0.032 0.041 0.065 0.077 0.071 0.112 0.060 LOI (%) 11.8 11.7 8.4 8.9 8.4 7.6 10.0 CaFe represents calcined Fe and is calculated by Brockman using the formula CaFe = Fe%/((100-LOI)/100). * Total tonnes may not add due to rounding. OTHER PROJECTS Irwin-Coglia Ni-Co and Ni-Cu Prospect – 40% Interest The Group has a 40% interest in the Irwin-Coglia nickel- laterite project, located about 150 km south-east of Laverton in Western Australia. Murrin Murrin Holdings Pty Ltd and Glenmurrin Pty Ltd, holds the remaining 60% interest. Both entities are the owners of the Murrin Murrin Ni-Co laterite mine and high-pressure acid leach treatment plant near Laverton. Currently the project is managed by Murrin Murrin Holdings Pty Ltd. Mining studies by Murrin Murrin showed that the ore body represents high potential value but this value cannot be currently realised due to chloride in feed constraints. In 2012, Murrin Murrin has carried out further studies on the washing of chloride from its high chloride deposits (including Irwin – Coglia) but limits on the amount of low-chloride wash water available and the cost of installing excess capacity continue to restrict the wash capacity available. Murrin Murrin is continuing to take steps to allow incremental increases in chloride levels in the process plant feed. Desktop investigations indicate low salinity water may be available from an area east of the deposits, which may provide an opportunity for a chloride wash process. Competent Persons Statements Marillana Mineral Resources and Ore Reserves The information in this report that relates to Mineral Resources and Ore Reserves at Marillana is based on information compiled by Mr. I Cooper, Mr. J Farrell and Mr. A Zhang. The Ore Reserves statement has been compiled in accordance with the guidelines defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the ‘JORC Code 2004’). The Ore Reserves have been compiled by Mr. Iain Cooper, who is a Member of Australasian Institute of Mining and Metallurgy and a full time employee of Golder Associates Pty Ltd. Mr. Cooper has sufficient experience in Ore Reserve estimation relevant to the style of mineralisation and type of deposit under consideration to qualify as Competent Person as defined in the JORC Code 2004. Mr. Cooper consents to the inclusion of the matters based on this information in public releases by Brockman, in the form and context in which it appears. Mr. J Farrell, who is a Member of the Australasian Institute of Mining and Metallurgy and a former full- time employee of Golder Associates Pty Ltd, produced the Mineral Resource estimates for Marillana and Ophthalmia based on the data and geological interpretations provided by Brockman. Mr. Farrell has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the JORC Code 2004. Mr. Farrell consented to the inclusion in this report of the matters based on his information in the form and context that the information appears. Mr. A Zhang, who is a Member of the Australasian Institute of Mining and Metallurgy and a full-time employee of Brockman Mining Australia Pty Ltd, provided the geological interpretations and the drill hole data used for the Mineral Resource estimations at the Marillana project. Mr. Zhang has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the JORC Code 2004. Mr. Zhang consents to the inclusion in this report of the matters based on his information in the form and context that the information appears. 13 MANAGEMENT DISCUSSION AND ANALYSIS Ophthalmia Mineral Resources Annual Report Mineral Resources and Ore Reserves The information in this statement which relates to the Statement Ophthalmia Mineral Resource is based on information The information in this report that relates to the complied by Mr. Sia Khosrowshahi who is a full-time Brockman Mining Iron Ore Division Annual Report employee of Golder Associates Pty Ltd, and Member Mineral Resources and Ore Reserves Statements as a n d C h a r t e r e d P r o f e s s i o n a l o f t h e A u s t r a l a s i a n a whole is based on information compiled by Aning Institute of Mining and Metallurgy. Mr. Khosrowshahi Zhang, a full-time employee of Brockman Mining has sufficient relevant experience to the style of Australia Pty Ltd, and a Member of the Australasian mineralisation and type of deposit under consideration Institute of Mining and Metallurgy. The Annual Report and to the activity for which he is undertaking to qualify Mineral Resources Statement and Ores Reserves as a Competent Person as defined in the JORC Code Statement is based on, and fairly represents, information 2012. Mr. Khosrowshahi consents to the inclusion in this and supporting documentation prepared by the report of the matters based on his information in the Competent Persons named above. The Annual Report form and context that the information appears. Mineral Resources and Ore Reserves Statement has The Competent Person responsible for the geological in the form and context in which it appears in the been issued with the prior written consent of Mr Zhang, interpretation and the drill hole data used for the Annual Report. resource estimation is Mr. Aning Zhang. Mr. Zhang is a full-time employee of Brockman Mining Australia Pty Mineral Resources and Ore Reserves Governance of Ltd, is a Member of the Australasian Institute of Mining Internal Controls and Metallurgy and has sufficient experience which Brockman ensures that the Mineral Resources and Ore is relevant to the style of mineralisation and type of Reserves estimates quoted are subject to governance deposit under consideration and to the activity for arrangements and internal controls activated at a site which he is undertaking to qualify as a Competent level and at the corporate level. Internal and external Person as defined in the JORC Code 2012. Mr. Zhang review of Marillana Resources and Ore Reserves consents to the inclusion in this report of the matters estimation procedures and results are carried out based on his information in the form and content in through a technical review team which is comprised which it appears. of highly competent and qualified professionals. These reviews have not identified any material issues. Duck Creek Mineral Resource The information in this report that relates to Mineral Resources at Duck Creek is based on information complied by Mr. A Zhang. Mr. A Zhang has sufficient experience that is relevant to the style of mineralisation, type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the JORC Code, 2004 Edition. Mr. Zhang consents to the inclusion in this report of the matters based on his information in the form and context that the information appears. MANAGEMENT DISCUSSION AND ANALYSIS ANNUAL REPORT 2017 LIQUIDITY AND FINANCIAL RESOURCES The Group monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The Group currently finances its short term funding requirement with borrowings. The Group’s ability to achieve its Marillana iron ore project development schedule is reliant on access to appropriate and timely funding. The current ratio is measured at 0.41 times as at 30 June 2017 compared to 0.48 times as at 30 June 2016. The gearing ratio of the Group (long term debts over equity and long term debts) is measured at 0.16 (2016: 0.06). During the reporting period, the Group did not engage in the use of any financial instruments for hedging purposes, and there is no outstanding hedging instrument as at 30 June 2017. RISK DISCLOSURE (a) Commodities Price Risk — Iron Ore Price Risk The fair value of the Group’s mining properties in Australia are exposed to fluctuations in the expected future iron ore price. We have not used any commodity derivative instruments or futures for speculation or hedging purposes. The management will review the m a r k e t c o n d i t i o n f r o m t i m e t o t i m e a n d determine the best strategy to deal with the fluctuation of and iron ore price. (b) Exchange Rate Risk The Group is exposed to exchange rate risk primarily in relation to our mineral tenements that are denominated in Australian dollar. Depreciation in Australian dollar may adversely affect our net asset value and earnings when the value of such assets is converted to Hong Kong dollars. During the year, no financial instrument was used for hedging purpose. (c) Funding Risk T h e c o m m e n c e m e n t o f e x p l o r a t i o n a n d production of the Iron Ore project depends on whether the Group can secure the necessary funding. The management is exploring all the feasible alternatives and is actively seeking investors and partners to procure the funding. (d) Risk of the project will not be materialised This risk is largely driven by various factors such as commodity prices, government regulations, regulation related to prices, taxes, royalties, land tenure, viable infrastructure solution, capital raising ability and etc., The Board will therefore closely monitor the development progress of the projects. FINANCIAL GUARANTEE At 30 June 2016 and 2017, the Company did not have any financial guarantees. CONTINGENT LIABILITIES The Group did not have any contingent liabilities as at 30 June 2017. STAFF AND REMUNERATION As at 30 June 2017, the Group employed 34 full time employees (2016: 42 employees), of which 14 employees were in the PRC (2016: 24 employees), 8 employees were in Australia (2016: 7 employees) and 12 in Hong Kong (of which includes 7 non-executive directors) (2016: 11 employees). The remuneration policy and packages of the Group’s employees, senior management and directors are maintained at market level and reviewed annually and when appropriate by the management and the remuneration committee. 15 MANAGEMENT DISCUSSION AND ANALYSIS Remuneration Policy The Group’s compensation strategy is to cultivate a pay-for-performance culture to reward employee performance that will maximise shareholder value in the long term. The Group from time to time reviews remuneration packages provided to its employees to ensure that the total compensation is internally equitable, externally competitive and supports the Group’s business strategy. ENVIRONMENTAL POLICY AND COMPLIANCE WITH RELEVANT LAWS AND REGULATIONS Environmental Protection As a responsible entity, the Group has endeavoured to comply with local laws and regulations in relation to waste disposal and environmental protection. At corporate level, the Group also encourages staff to save energy, minimise the use of natural resources and paper products. W e o p e r a t e e f f e c t i v e a n d s u s t a i n a b l e i r o n o r e business work actively through all areas of its business to minimise the actual and potential environmental impact of the Company activities, respect the rights of the traditional owners and value the indigenous cultural heritage associated with its operations. Furthermore, the mining operation in the PRC is halted, damages to the environment is expected to be minimal. We will continue to ensure in the future that we are accountable for our environmental footprint shall our operation resumes, while waste management, tailings storage facility, and hazardous waste management issues would be of our top concerns. Compliance with Laws and Regulations During the year, to the best knowledge of the management, the Group has complied with the relevant standards, laws and regulations that have a significant impact to our businesses. At the same time, the Group always maintains a safe working environment for staff in accordance with relevant safety policies. Relationship with Employees, Customers and Suppliers The Group believes that human resources is the most important asset for the Group’s sustainable development. We offer competitive remuneration packages and high quality working environment for our employees. It is our customs to respect each other and to ensure that fairness is applied to everyone. From time to time, we provide relevant on-the-job training to enhance employees’ professional knowledge. The Group also organises different leisure events and frequent group discussions for the participation of employees to enhance the working relationship of the employees and communication with management. We also strive to maintain good working relationships with our suppliers and customers. DIRECTORS AND MANAGEMENT ANNUAL REPORT 2017 As at the date of this report, the Company has the Mr. Ross Stewart Norgard following directors and senior management: Mr. Ross Stewart Norgard, aged 71. Mr. Norgard joined NON-EXECUTIVE DIRECTORS Mr. Kwai Sze Hoi Mr. Kwai Sze Hoi, aged 67. Mr. Kwai joined the Group since June 2012. He is the Chairman of the Group. Mr. Kwai graduated from Anhui University in 1975. Mr. Kwai has more than 30 years of experience in international shipping and port operation businesses, and is a successful entrepreneur. In 1990, he founded Ocean Line Holdings Ltd (“Ocean Line”). Ocean Line wholly owns, operates and manages a fleet of total deadweight tonnage of 3 million metric tonnes, with routes running worldwide. Besides, Ocean Line also has investments in infrastructures and operates other shipping related businesses including ports, terminals, warehouses, logistics, ship repairs and crew manning etc. The diversified business of Ocean Line puts it in a highly competitive position globally. The addition to the shipping businesses, Ocean Line also invests in real estate, mining, financial services, securities, trading and hotel businesses. Mr. Kwai is the father of Mr. Kwai Kwun, Lawrence, an Executive Director of the Group. the Company as Non-executive Director in August 2012. He is a chartered accountant and former managing director of KMG Hungerfords and its successor firms in Perth, Western Australia. For the past 30 years he has worked extensively in the fields of raising venture capital and the financial reorganisation of businesses. He has held numerous positions on industry committees including past chairman of the Western Australian Professional Standards Committee of the Institute of Chartered Accountants, a current member of the National Disciplinary Committee, a former member of Lionel Bowens National Corporations Law Reform Committee, chairman of the Duke of Edinburghs Awards Scheme and a former member of the University of Western Australia’s Graduate School of Management (MBA programme). Mr. Norgard is also a director of Nearmap Limited (formerly known as Ipernica Limited) (Chairman since 1987) and was a director of Ammtec Ltd from 1994 to November 2010. Prior to his present appointment as Non-executive Director of the Company, he was the non-executive Deputy Chairman of Brockman Resources Limited, a former ASX listed entity now a wholly owned subsidiary of Brockman Mining Limited. Mr. Liu Zhengui Mr. Liu Zhengui, aged 70. Mr. Liu joined the Group April 2012, and became the Vice Chairman of the Group since June 2012. Mr. Liu Zhengui has over 40 EXECUTIVE DIRECTORS Mr. Kwai Kwun, Lawrence years of experience in corporate finance and capital Mr. Kwai Kwun, Lawrence, aged 36, joined the Board management. Mr. Liu holds a bachelor degree in in March 2014. Previously he served the Group as Vice management engineering from HeFei University of President and member of the Executive Committee. Mr. Technology. He is currently a director of Shandong School of Economics and Social Development （山 東 社會經濟發展研究院）and is the chairman of Shandong Dongyin Investment Management Co., Ltd （山東東銀投 資管理有限公司）. He is also a financial consultant of the Shandong provincial government. During the period Kwai remains a member of the Executive Committee after his appointment as an Executive Director. Mr. Kwai has extensive experience in investment in international shipping, port operations and ship building, mining and finance company. Mr. Kwai graduated from Harvard University in the United States with a Bachelor of of 2004 to 2009, Mr. Liu was the chairman of Bank of Mathematics degree. Mr. Kwai’s role with the Company China Group Investment Limited (BOCGI). Prior to that, focuses on the oversight of investment of the Group. he served as the chief executive of Bank of China’s Mr. Kwai is the son of Mr. Kwai Sze Hoi, the Chairman of branches in three different provinces for 16 years. the Group. 17 DIRECTORS AND MANAGEMENT Mr. Chan Kam Kwan, Jason Mr. Yap Fat Suan, Henry Mr. Chan Kam Kwan, Jason, aged 44, joined the Group Mr. Yap Fat Suan, Henry, aged 71, joined the Group in January 2008. He is the Company Secretary and a in January 2014. He holds a master degree in Business director of several Brockman subsidiary companies. Administration from the University of Strathclyde, He is also a member of the Executive Committee. Mr. Glasgow, in the United Kingdom. He is a fellow member Chan graduated from the University of British Columbia of the Institute of Chartered Accountants in England in Canada with a Bachelor of Commerce Degree and and Wales and an associate member of the Hong he holds a certificate of Certified Public Accountant Kong Institute of Certified Public Accountants. He has issued by the Washington State Board of Accountancy extensive experience in finance and accounting. He in the United States of America. Mr. Chan has extensive retired as the managing director of Johnson Matthey experience in corporate finance. Hong Kong Limited in June 2007 and prior to that appointment he was the general manager of Sun Mr. Colin Paterson, also the Chief Executive Officer of Hung Kai China Development Limited. He is also an Australian Operation independent non-executive director of Concord New Mr. Colin Paterson, aged 56, has over 30 years’ Energy Group Limited and Frontier Services Group experience in the resources sector covering a diverse Limited, which are listed on the Main Board of the Stock range of geological environments throughout Australia, Exchange. but principally in Pilbara iron ore as well as gold and nickel exploration in the Archaean of Western Australia. Mr. Choi Yue Chun, Eugene He has extensive experience in the technical super Mr. Choi Yue Chun, Eugene, aged 45, joined the Group vision of exploration projects; resource development, in June 2014. He holds a Bachelor of Laws degree project generation and project evaluations. He was from The University of Hong Kong, and was admitted principal geologist with Asarco Australia Ltd and held as a solicitor of the High Court of Hong Kong in 1997. a similar position with Mining Project Investors Pty Ltd Currently Mr. Choi is a member of the Law Society (subsequently MPI Mines Limited). Following which he of Hong Kong. He has over 15 years of experience in was the founding director of Brockman Mining Australia the legal field, specialising in corporate finance and Pty Ltd. INDEPENDENT NON-EXECUTIVE DIRECTORS Mr. Uwe Henke Von Parpart Mr. Uwe Henke Von Parpart, aged 76, joined the Group compliance matters for listed companies in Hong Kong. Mr. Choi is currently the senior legal counsel of Rusal Global Management B.V. SENIOR MANAGEMENT HONG KONG Mr. Hendrianto Tee in January 2008. He received a Fulbright scholarship and Business Development Director did his graduate work in mathematics and philosophy Mr. Hendrianto Tee joined Brockman Mining Limited (Ph.D.) at Princeton University and the University of in January 2009 as the Chief Investment Officer after Pennsylvania. spending a large part of his career focusing on debt capital markets with several global financial institutions, Mr. Parpart is a partner and the Head of Strategy at among others Fleet Boston (now Bank of America Merrill Capital Link International, prior to his position at Capital Lynch) and UBS AG. In October 2014, Mr. Tee rejoined Link, he was the Executive Managing Director and Brockman Mining Limited as the Business Development Chief Strategist for Reorient Group Limited in Hong Director overseeing project funding and development. Kong. In this capacity, he was responsible for macro- Prior to rejoining, Mr. Tee spent 3 years in investment economic, fixed-income and equity-markets research and advisory activities covering the natural resources and strategy in Asia. His analyses are published on sector in Australia, Canada and Indonesia. Mr. Tee a weekly and daily basis and frequently featured on graduated from Walsh University, USA, with a Bachelor CNBC Asia and Bloomberg TV. Mr. Parpart has also of Arts Degree (Magna Cum Laude). contributed to numerous magazines and newspapers and until recently was a columnist for Forbes Global and Shinchosha Foresight Magazine (Tokyo). IRON ORE OPERATIONS — AUSTRALIA Mr. Colin Paterson Chief Executive Officer of Australian Operation Mr. Paterson’s biography is as shown on page 18. Mr. Derek Humphry Chief Financial Officer of Australian Operation Mr. Derek Humphry, aged 49. Mr. Humphry is a qualified Chartered Accountant with over 20 years’ accounting and industry experience, more recently focusing in the areas of corporate consolidation, mineral project evaluation, and joint venture, debt and equity financing. He started his career with an international Chartered Accounting firm and has since worked with industrial minerals, gold, and nickel producers. In the past Mr. Humphry has been involved in ASX, AIM and TSX listings, mergers, and the development of several new mines. Mr. Blair Smith General Manager – Operations Mr. Smith is a General, Operations and Project Management professional with over 21 years of experience in Greenfield and Brownfield mine site development incorporating port and rail. He has held senior roles with a number of ASX listed companies such as Deputy Project Director/Registered Mine Manager for FMG, Operations Manager for Leighton Contractors, Thiess, Ausenco Minerals, Abigroup (formerly Simon Engineering/Henry Walker Elton), and State Manager for O’Donnell Griffin. He has extensive project delivery experience as the Owner/Operator, EPCM and/or Contractor including subcontractors across all disciplines in construction and operations in base metals throughout Australia, Indonesia, Africa including offshore fabrication in China. He is also a former executive member of the Chamber of Commerce & Industry and former Chair of the Goldfields Mining Expo in Kalgoorlie, Western Australia. ANNUAL REPORT 2017 1919 CORPORATE GOVERNANCE REPORT COMPLIANCE OF THE CODE ON CORPORATE GOVERNANCE PRACTICES The Company is listed on both the Australian Securities CHAIRMAN AND CHIEF EXECUTIVE OFFICER The roles of the Chief Executive Officer and Chairman are separate and exercised by different individuals. The Exchange (“ASX”) and the Stock Exchange of Hong position for the chief executive officer at the Group Kong Limited (“SEHK”). The Company compiled with level has been vacant during the period. Nonetheless, all aspects of the Corporate Governance Code as set Mr. Colin Paterson, an executive director of the out in Appendix 14 of the Rules Governing the Listing Company, also serves as the Chief Executive Officer of Securities on the SEHK (“the HK Listing Rules”) and of Brockman Mining Australia Pty Ltd (a wholly-owned the ASX Corporate Governance Council’s ‘Corporate subsidiary of the Company), and is responsible for the Governance Principles and Recommendations 3rd oversight of the core iron ore business operation. Edition (“the CGPR”) which applies for year-end commencing 1 July 2016, (“the ASX Principles”) during The Chairman held interests in the shares of the the entire year ended 30 June 2017. Except for the C o m p a n y , a n d i s n o t i n d e p e n d e n t a s h e i s a followings: substantial shareholder of the Company. The Board has determined that his commercial experience is (i) Under Code Provision A.2.1, which requires the more beneficial to shareholders at this stage of the roles of chairman and chief executive should Company’s development than the independence be separate and should not be performed requirement outlined in the Principles. by the same individual. The position of Chief Executive Officer at the Group level has been vacant during the period. Nonetheless, Mr. Colin Paterson, who serves as the chief executive officer of Brockman Mining Australia Pty Ltd (a wholly-owned subsidiary of the Company), is responsible for the oversight of the core iron ore business operation; and (ii) Under the Code Provision A.6.7, non-executive Directors should attend general meetings. During the year, due to director’s other commitments and travels, not all of the non-executive directors of the Company attended the general meeting. BOARD OF DIRECTORS The Board is responsible to shareholders for the BOARD MEMBERSHIP The Board has been structured for an effective composition, with a balance of skills, experience and commitment to adequately discharge its responsibilities and duties. During the year ended 30 June 2017, three of the nine Directors are independent. Whilst this is not a majority of Independent non-executive directors, it is believed that a suitable balance between the composition of executive and non-executive directors is maintained. Each of the independent non-executive Directors has made an annual confirmation stating compliance with the independence criteria set out in Rule 3.13 of the HK Listing Rules and Principle 2.4 of the ASX Principles. The Directors consider all of the independent non-executive Directors are independent a n d a l l a r e c a p a b l e o f e f f e c t i v e l y e x e r c i s i n g overall strategic direction of the Group, including independent judgment. establishing goals for management and monitoring the achievement of those goals with the objective of enhancing the Company and shareholders’ value. The Board has delegated responsibility for the management of the Company’s business and affairs to the Executive Committee. The responsibilities reserved for the Board of Directors are set out in the Board Charter, a copy of which is available on the website of the Company. The Board Charter is reviewed periodically and each Director is provided with a letter of appointment which outlines their key terms and conditions so each Director clearly understands their responsibilities. CORPORATE GOVERNANCE REPORT ANNUAL REPORT 2017 Directors in office during the year are as follows: Name of Director/role Non-Executive Directors Kwai Sze Hoi, Chairman Liu Zhengui, Vice Chairman Ross Stewart Norgard Independent Non-Executive Directors Uwe Henke Von Parpart Yap Fat Suan, Henry Choi Yue Chun, Eugene Executive Directors Date of appointment 15 June 2012 27 Apr 2012 22 Aug 2012 2 Jan 2008 8 Jan 2014 12 Jun 2014 Chan Kam Kwan, Jason, 2 Jan 2008 Company Secretary Kwai Kwun Lawrence Colin Paterson 13 Mar 2014 25 Feb 2015 Period in office as at the date of Board Meeting General Meeting Annual Report Attended/Eligible Attended/Eligible (year of service) to attend* to attend* 5 5 5 9 3 3 9 3 2 6/6 6/6 6/6 6/6 6/6 6/6 6/6 6/6 6/6 0/1 0/1 0/1 0/1 1/1 1/1 1/1 0/1 0/1 * Represents total number of board and general meetings held during the period. Determination of eligibility has taken into account the respective directors’ period in office. A total of 6 meetings were held during the year ended 30 June 2017. Biographical details of the Directors are stated under the section ‘Directors and Management’. 21 CORPORATE GOVERNANCE REPORT The Board has established different sub-committees with members as at 30 June 2017 as follows: Remuneration Health, Safety, and Environment & Risk Nomination Audit Performance Sustainability Management Executive Committee Committee Committee Committee Committee Committee Member Member Member Member Member Member Member Member Member Chairman Non-Executive Directors Kwai Sze Hoi (Chairman) Liu Zhengui (Vice Chairman) Ross Stewart Norgard Executive Director Cham Kam Kwan Jason (Company Secretary) Kwai Kwun Lawrence Colin Paterson Independent Non-Executive Directors Yap Fat Suan Henry Uwe Henke Von Papart Chai Yue Chun Eugene Chairman Chairman Chairman Member Member Member Member Member Member Member Chairman Member All Committees of the Board have access to professional advice where necessary. Minutes of Committee meetings are kept by the Secretary of the meeting. CORPORATE GOVERNANCE REPORT ANNUAL REPORT 2017 Board Skills Matrix The following table summarises the combination of skills and experience of the board: Experience, skills & attributes Board Committee Committee Committee Committee Committee Executive Health, Safety Remuneration & Environment & Risk Nomination Audit performance Sustainability Management Total Non-Executive Directors Total Executive Directors Total Independent Non-Executive Directors Experience Corporate leadership Successful experience in CEO and/or other senior corporate leadership International experience Senior experience in multiple international locations Resources industry experience Relevant industry (resources, mining, exploration) experience Other Board level listed experience Membership of other listed entities (last 3 years) Knowledge and skills Finance and capital management Governance Risk and Compliance Gender Male Female 3 3 3 9 2 4 5 7 2 9 0 2 0 3 5 2 1 2 5 2 5 0 0 0 3 3 2 0 1 3 2 3 0 2 0 3 5 2 1 2 5 2 5 0 1 0 2 3 1 1 2 3 1 3 0 0 1 1 3 1 2 2 1 2 3 0 0 3 0 3 1 2 2 1 1 3 0 23 CORPORATE GOVERNANCE REPORT Induction of Directors • Succession planning for the Board and senior Following appointment, directors are supported through management; an induction briefing given by the corporate legal counsel, which seeks to familiarise the directors on listing • The appointment and re-election of Directors; rules, responsibilities and legal obligations of being and appointed as Directors of the Company. Furthermore, meetings with senior management are held at times • Ensuring appropriate skills are available to the to familiarise the directors with the operations of Board to discharge its duties and add value to the Company. In addition, written directors’ training the Company. material is circulated at times to keep directors abreast of the latest updates in regulations. The Committee consists of a majority of independent NOMINATION COMMITTEE The Board has established a Nomination Committee which carries out its duties in accordance with the Terms of Reference and Nomination Policy, a copy of which is located on the website. The Committee’s primary functions are: • To identify suitable candidates for nomination to the Board, Board Committee and senior management; Name of member Independent Non-Executive Directors Yap Fat Suan Henry — Chairman Uwe Henke Von Parpart Choi Yue Chun Eugene Non-Executive Directors Kwai Sze Hoi Liu Zhengui Directors and was comprised of the following members during the year ended 30 June 2017: Meetings attended/ eligible to attend(*) 1/1 1/1 1/1 1/1 1/1 (*) Represents the total number of meetings held during the year ended 30 June 2017. APPOINTMENT AND RE-ELECTION OF DIRECTORS In accordance with the By-Laws of the Company and to comply with relevant HK and ASX Listing Rules, every Director should be subject to retirement by rotation at least once every three years. Non-Executive Directors were appointed for a fixed term of 3 years. All Directors appointed to fill a casual vacancy should be subject to re-election by shareholders at the first annual general meeting after their appointment and not less than one- third of the Directors should be subject to retirement and re-election every year. In accordance with our Bye-Laws 87(1), at each AGM one-third of the directors shall retire from office by rotation so that each Director shall retire at least once every three years. Messrs. Kwai Kwun, Lawrence, Choi Yue Chun, Eugene and Yap Fat Suan, Henry will be standing for re-election at the forth coming annual general meeting. No Directors’ service contract contains a provision requiring greater than one year’s notice or requires compensation greater than one year’s emoluments. CORPORATE GOVERNANCE REPORT ANNUAL REPORT 2017 The Company normally provides reasonable notice period of every Board meeting to all the Directors to give them an opportunity to attend. If such notice is not possible, permission to waive is obtained from the Directors. Prior to each meeting of the Board, the Directors are provided with appropriate, complete and reliable information to ensure timely consideration before each Board meeting to enable them to make informed decisions. The Board is provided with the opportunity to meet independently from Executive Directors as and when required. Each Director also has separate and independent access to senior management whenever necessary. REMUNERATION AND PERFORMANCE COMMITTEE The Board has a Remuneration and Performance Committee to ensure that the Company is able to attract, retain, and motivate a high-calibre team which is essential to the success of the Company. The Committee carries out its duties accordance with the Terms of Reference and Policy, a copy of which is located on the website. The Committee consists of a majority of independent Directors and was compromised of the following members during the year ended 30 June 2017: CONTINUING PROFESSIONAL DEVELOPMENT Each of the Directors keeps abreast of his responsibilities as a Director of the Company and of the conduct, business activities and development of the Company, as well as the laws and regulations applicable to the Company. Comprehensive inductions are conducted upon appointment and the Company ensures suitable professional development is undertaken by Directors and members of senior management, with an objective to keep them abreast of the listing rules amendments and refresh their knowledge and skills on corporate governance. The Directors provide and the Company maintains a record of all professional development undertaken during the period. Mr. Chan Kam Kwan, Jason, being an Executive Director and the Company Secretary of the Company received no less than 15 hours of relevant professional training during the financial year. All other Directors reviewed written professional development materials during the year ended 30 June 2017. BOARD MEETINGS The Board conducts meetings on a regular basis as required by business needs. The By-Laws of the Company allows board meetings to be conducted by way of telephone or video-conference. Any resolutions can be passed by way of written resolutions circulated to and signed by all Directors from time to time when necessary except for matters in which a substantial shareholder or a Director or their respective associates has a conflict of interest. The Board held 4 meetings during the year ended 30 June 2017. Name of Director/role Non-Executive Directors Kwai Sze Hoi Liu Zhengui Independent Non-Executive Directors Yap Fat Suan, Henry, Chairman Uwe Henke Von Parpart Choi Yue Chun Eugene (*) Represents the total number of meetings held during the year ended 30 June 2017. Meetings attended/ eligible to attend(*) 1/1 1/1 1/1 1/1 1/1 25 CORPORATE GOVERNANCE REPORT T h e p r i n c i p a l d u t i e s o f t h e R e m u n e r a t i o n a n d Performance review of the Board Performance Committee include, inter alia, reviewing B o a r d p e r f o r m a n c e a n d i n d i v i d u a l D i r e c t o r and making recommendations to the Board on performance are reviewed on an ongoing basis t h e C o m p a n y ’ s r e m u n e r a t i o n p o l i c y ; m a k i n g and evaluated annually by the Remuneration and recommendations to the Board on the remuneration Performance Committee. Individual Directors may meet o f E x e c u t i v e a n d N o n - E x e c u t i v e D i r e c t o r s , a n d with the Chairman of the Committee to discuss their members of the senior management; reviewing and view towards their remuneration packages. making recommendations to the Board in respect of performance-based remuneration by reference to Remuneration of Executive Directors corporate goals and objectives resolved; and ensuring The Remuneration and Performance Committee of no Director or any of his or her associates is involved in the Board of Directors of the Company is responsible deciding his own remuneration. for reviewing compensation arrangements for the Executive Directors including the Chief Executive In addition to its duties surrounding remuneration, Officer (if any) and the senior management team, and the Committee is also responsible for the annual make recommendation to the Board for approval. performance review of the Board, Board Committees The Committee assesses the appropriateness of the and individual Director’s performance. nature and amount of remuneration of Directors and REMUNERATION AND PERFORMANCE The terms of reference in respect of the Remuneration and Performance Committee distinguishes the structure of the Non-Executive Directors’ remuneration from that of Executive Directors and senior executives. Non-Executive Director Compensation The Board is determined to attract and retain high calibre Non-Executive Directors to work with the Company, whilst at the same time preserving cash. Accordingly, the structure of the Non-Executive Directors’ remuneration allows for remuneration in the form of scheme of options, granted under the share option scheme. Whilst this represents a departure from the Code and Principles, the Committee believes it is appropriate for the size of the Company, and is satisfied by the fact that all Director participation under the share option scheme is approved by Shareholders and the grant aligns with the long term performance of the Company. The Company’s Bye-laws provide that the Directors’ remuneration shall be determined by the Company in general meeting. The Company has fixed a maximum sum of A$1 million in aggregate for Non- Executive Directors per annum, unless otherwise and approved by the Shareholders. senior managers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. Executive compensation framework The Company aims to reward the executive with a level and mix of compensation commensurate with their position and responsibilities within the Company. The Remuneration and Performance Committee is assisted in the process by the use of independent salary data, if applicable. The executive pay and reward framework has 2 components: base pay and long-term incentives through participation in the Brockman Share Options Scheme. Details of the Share Option Scheme can be referenced in the financial statements. Performance review – Executives S e n i o r e x e c u t i v e s ’ p e r f o r m a n c e i s r e v i e w e d o n a n o n g o i n g b a s i s a n d e v a l u a t e d a n n u a l l y b y the Remuneration and Performance Committee. The evaluation is undertaken by each executive completing a questionnaire on performance issues or each executive having one-on-one interviews with the chairman of the Committee. Performance evaluations were completed during the period for senior executives. Individual executives may meet with the chairman of the Committee to discuss their responses. CORPORATE GOVERNANCE REPORT ANNUAL REPORT 2017 Remuneration of Directors and senior management based compensation) of the members of the senior For details of the remuneration of each Director management by band for the year ended 30 June 2017 in the financial period, refer to the notes to the is set out below: financial statements. The emoluments (includes share- HK$0 to HK$1,000,000 HK$1,000,001 – HK$2,000,000 HK$2,000,001 – HK$3,000,000 Number of members 2017 Number of members 2016 2 2 4 8 4 4 2 10 AUDIT COMMITTEE The Board has established an Audit Committee to carry out its oversight of the Company’s financial reporting system and internal control procedures. The Committee carries out its duties accordance with the Terms of Reference, a copy of which is located on the website. The Committee consists of a majority of Independent Directors, none of whom have been employed as previous or current auditors of the Company. The composition and expertise of the Committee is as follows at during the year ended 30 June 2017: Name of Director/role Expertise Independent Non-Executive Directors Meeting attended/ eligible to attend(*) Yap Fat Suan, Henry, Fellow member of the Institute of Chartered Accountants 2/2 Chairman in England and Wales and an associate member of Hong Kong Institute of Certified Public Accountants Uwe Henke Von Parpart Graduated from Princeton University and the University 2/2 of Pennsylvania with a PhD Mathematics and Philosophy. Upto March 2016, Managing Director and Chief Strategist for Reorient Financial Markets Limited Choi Yue Chun, Eugene Graduated from the University of Hong Kong with a 2/2 Bachelor of Laws degree, admitted as a solicitor of the High Court of Hong Kong in 1997 and member of the Law Society of Hong Kong (*) Represents the total number of meetings held during the year ended 30 June 2017. The primary responsibilities of the Audit Committee are, (b) to review and monitor the external auditor’s inter alia, i n d e p e n d e n c e a n d o b j e c t i v i t y a n d t h e effectiveness of the audit process in accordance (a) to consider and make recommendations to the with applicable standards; Board on the appointment, reappointment and removal of the external auditor (and to approve (c) to develop and implement policy on the the remuneration and terms of engagement engagement of an external audit or to supply of the external auditor) and any questions of non-audit services; resignation or dismissal of that auditor; 27 CORPORATE GOVERNANCE REPORT (d) to review the financial information of the Company and monitor the integrity of the financial statements; (e) to review the Group’s financial reporting system risk management and internal control systems and evaluate the adequacy of the Company’s accounting control system by reviewing written reports from the external auditors; monitor management’s responses and actions to correct deficiencies; (f) to review the adequacy and effectiveness of the Company’s financial controls, and to review the Company’s internal control a n d r i s k m a n a g e m e n t s y s t e m s t h r o u g h active communication and discussion with management, internal audit and the external auditors; (g) to consider findings of major investigations of risk DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The financial statements of the Company for the year ended 30 June 2017 have been reviewed by the Board and the Audit Committee and audited by the external auditor, PricewaterhouseCoopers. The Directors acknowledge their responsibility for preparing the financial statements of the Group and presenting a balanced, clear and comprehensive assessment of the Group’s performance and prospects. The Directors ensure that the preparation of the financial statements of the Group are in accordance with statutory requirements and applicable accounting standards. The Directors also ensure that the publication of the financial statements of the Group in a timely manner. The report of the auditor of the Company about their reporting responsibilities on the financial statements of the Group is set out in the Independent Auditor’s management and internal control, matters as Report. delegated by the Board; (h) to review the Group’s financial and accounting p o l i c i e s a n d p r a c t i c e s , e x t e r n a l a u d i t o r s EXECUTIVE COMMITTEE The Board has constituted the Executive Committee management letter, and any material queries and delegated the responsibility of the day-to-day raised by the auditor to management; and to management and has empowered the Executive ensure the Board will provide a timely response Committee to implement policies and strategies, for the to the issues raised by the external auditors; business activities and operations, internal control and administration of the Group. The Committee carries out (i) to review arrangements that the employees of all the general powers of management and control of the Company can use, in confidence, to raise the activities of the Group as vested in the Board, save concerns about possible improprieties in financial for those matters which are reserved for the Board’s reporting, internal control and other matters; to decision and approval pursuant to the written terms of ensure proper arrangements are in place for fair reference of the Executive. The members include the and independent investigations of these matters Executive Directors and certain senior management and for appropriate follow-up action; and appointed by the Board from time to time. The Executive Committee meets whenever it is necessary to (j) to act as the key representative body for carry out its obligations. overseeing the issuer’s relations with the external auditor. The external auditors and the senior executives are invited to attend the meeting for annual financial statements with specific time set aside for discussion without the presence of management. Minutes of the Audit Committee Meeting are kept by a secretary of the meeting. Draft and final versions of minutes of the meeting are sent to all members of the committee for their comment and records respectively, in both cases within a reasonable time after the meetings. The Term of Reference of the Audit Committee is available in the website of the Company. CORPORATE GOVERNANCE REPORT ANNUAL REPORT 2017 HEALTH, SAFETY, ENVIRONMENT AND SUSTAINABILITY COMMITTEE The Board has established a Committee to oversee the health, safety, environmental and sustainability activities of the Company. The Committee carries out its duties accordance with the Terms of Reference and Policy, a copy of which is located on the website. The Committee consists of a majority of independent Directors and was comprised of the following members during the year ended 30 June 2017: Name of Director/role Independent Non-Executive Directors Choi Yue Chun, Eugene, Chairman Yap Fat Suan, Henry Non-Executive Director Ross Stewart Norgard Meetings attended/ eligible to attend(*) 1/1 1/1 1/1 (*) Represents the total number of meetings held during the year ended 30 June 2017. The principle duties of the Committee are: (d) ensuring that the Company monitors trends and reviews current and emerging issues in the field (a) reviewing and monitoring the sustainability, of sustainability, environment, health and safety, environmental, safety and health policies and and evaluates their impact on the Company; activities of the Company; and (b) e n c o u r a g i n g , s u p p o r t i n g a n d c o u n s e l l i n g (e) reviewing and making recommendations to the management in developing short and long Board with respect to environmental aspects term policies and standards to ensure that of expansions, acquisitions and dispositions with the principles set out in the sustainability, material environmental implications. environmental, health and safety policies are being adhered to and achieved; (c) regularly reviewing community, environmental, health and safety response compliance issues and incidents to determine, on behalf of the Board, whether the Company is taking all necessary action in respect of those matters and that the Company has been duly diligent in carrying out its responsibilities and activities in that regard; 29 CORPORATE GOVERNANCE REPORT RISK MANAGEMENT COMMITTEE The Board has established a Committee to oversee the risk and the management and internal control of the processes by which risk is considered for both ongoing operations and prospective actions of the Company. The Committee carries out its duties in accordance with the Terms of Reference and Policy, a copy of which is located on the website. The Committee was comprised of the following members during the year ended 30 June 2017: Name of Director/role Executive Directors Colin Paterson (Chairman) Non-Executive Directors Ross Stewart Norgard Independent Non-Executive Directors Choi Yue Chun, Eugene Meetings attended/ eligible to attend(*) 1/1 1/1 1/1 (*) Represents the total number of meetings held during the year ended 30 June 2017. Whilst the risk management committee was not chaired by an independent director and it does not comprise of a majority of independent directors, the committee was comprised of mainly non-executive directors who do not participate in the daily operation of the Group. The Company considers that objectivity can still be maintained with such arrangements. INTERNAL CONTROL AND RISK MANAGEMENT The Board has overall responsibility for the Group’s system of internal control and for the assessment and management of risk. The Board has conducted a review of and is satisfied with the effectiveness of the system of internal control of the Group. The Company has outsourced its internal audit function and has engaged an independent management consultancy company to assess the internal control measures of the Group on a yearly basis. It was founded that there are no significant weakness in the Company’s internal control and risk management systems. The Board also reviews at least annually the adequacy of resources, qualifications and experience of staff of the Group’s accounting and financial reporting function, and their training programmes and budget. The Executive Directors of the Company, reports directly to the Board and the Audit Committee, and monitors the existence and effectiveness of the controls in the Group’s business operations. R i s k m a n a g e m e n t e n c o m p a s s e s a l l a r e a s o f the Company’s activities. Once a business risk is i d e n t i f i e d , t h e r i s k m a n a g e m e n t p r o c e s s e s a n d systems implemented by the Company are aimed at providing the necessary framework to enable the business risk to be managed. Management has the key role of identifying risks and enabling processes for risk management. Senior management are required to report risks identified to the Risk Management Committee or Chief Executive Officer. The Risk Management Committee will meet periodically to review and ensure that the Company has in place processes to assess and manage specific and general business risks and appropriate mitigation procedures where applicable. The overall results of this assessment are presented to the Board, in oral and written form, at every Board meeting by the Chairman of the Risk Management Committee, and updated as needed. The Board reviews the Company’s risk management at every Board meeting, and where required, makes improvements to its risk management and internal compliance and control systems. CORPORATE GOVERNANCE REPORT ANNUAL REPORT 2017 The Executive Directors also discusses the audit plan with the Audit Committee and the external auditors. The audit plan is reassessed during the period as needed to ensure that adequate resources are deployed and the plan’s objectives are met. In addition, regular dialogues are maintained within the Group’s external auditors so that both are aware of the significant factors which may affect their respective scope of work. Reports from the external auditors on relevant financial reporting matter is presented to the Audit Committee, and, as appropriate, to the Board. AUDITORS’ REMUNERATION The aggregate remuneration in respect of services provided by PricewaterhouseCoopers for the year ended 30 June 2017 was HK$1,660,000 of which H K $ 1 , 0 8 0 , 0 0 0 r e p r e s e n t s a n n u a l a u d i t f e e s a n d HK$580,000 represents fees for non-audit services. COMPANY SECRETARY The Company Secretary is responsible to the Board for ensuring that Board procedures are followed and that the activities of the Board are carried out For risk management, the Board, the Risk Management efficiently and effectively. The Company Secretary Committee, and the management have reviewed the assists the Chairman to prepare agendas and Board Group’s financial, operation, compliance and strategic papers for meetings and disseminates such documents aspects and identified certain risk areas. Certain types to the Directors and Board Committees in a timely of risks and internal control weaknesses have been manner. The Company Secretary is responsible for identified and the relevant measures implemented to ensuring that the Board is fully briefed on all legislative, mitigate these risks are disclosed under section headed regulatory and corporate governance developments “Management Discussion and Analysis”: when making decisions. The Company Secretary is also directly responsible for the Group’s compliance Although the Company is not required to comply with the continuing obligations of the Listing Rules with Section 295A of the Corporations Act (being a and The Codes on Takeovers and Mergers and Share company incorporated in Bermuda), the Board requires Repurchases, including publication and dissemination the Executive Director and CFO to state in writing to of the Company’s reports and financial statements and the Board that: interim reports within the period as per the Listing Rules, timely dissemination of announcements and information The financial records of the Company have been relating to the Group to the market and ensuring that properly maintained and the financial statements appropriate notification is made when there are any comply with the appropriate accounting standards and dealings by Directors in the securities of the Group. give a true and fair view of the Company’s financial The Company Secretary is accountable directly to the position, and that the opinion has been based on Board. the basis of a sound system of risk management and internal control which are operating effectively. The Company Secretary also advises the Directors on MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted a Securities Trading Policy which applies, inter alia, to all Directors and Key Management Personnel. The Securities Trading Policy complies with the ASX Listing Rules and the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 of the HK Listing Rules. A copy of the Company’s Securities Trading Policy is available on the website of the Company. their obligations in respect of disclosure of interests in securities, connected transactions and inside information and ensures that the standards and disclosures required by the Listing Rules are observed. With respect to the secretarial function of the Group, the Company Secretary maintains formal minutes of the Board meetings and other Board committee meetings. During the year, Mr Chan Kam Kwan Jason, the Company Secretary of the Company, has undertaken no less than 15 hours of professional training to update his skills and knowledge. 31 CORPORATE GOVERNANCE REPORT The Group values feedback from shareholders on its effort to promote transparency and foster investor relationships. Comments and suggestions are always welcomed. SHAREHOLDERS RIGHTS How shareholders can convene a special general meeting Subject to Section 74 of the Companies Act 1981 of Bermuda (the ‘Act’) and the By-Law 58 of the Company, the Board may whenever it thinks fit call special general meetings, and members holding at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings for the Company shall at all times have the right, by written requisition to the Board or the Company Secretary of the Company, to require a special general meeting to be called by the Board for the transaction of any business specified in such requisition; and such meeting shall be held within two months after the deposit of such requisition. If within 21 days of such deposit the Board falls to proceed to convene such meeting the requisitionists themselves may do so in accordance with the provisions of Section 74(3) of the Company Act 1981 of Bermuda. Procedures for directing Shareholders’ Enquiries to the Board S h a r e h o l d e r s e n q u i r i e s c a n b e d i r e c t e d t o inquiry@brockmanmining.com or by writing to the Company Secretary office, whose contact details are as follows: Unit 3903B, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong. The enquiries would then be assessed and considered (if appropriate) to put to the Board. Shareholders may also make enquiries with the Board at the general meetings of the Company. CONTINUOUS DISCLOSURE The Directors are committed to keeping the market fully informed of material developments to ensure compliance with the ASX Listing Rules, and the HK Listing Rules. The Directors have observed the disclosure requirements of the ASX Listing Rules and the HK Listing Rules, and to ensure accountability at a senior management level for that compliance. A copy of the Communications Strategy and Continuous Disclosure Policy can be found on the website. COMMUNICATON WITH SHAREHOLDERS The Board is committed in providing clear and full performance information of the Group to shareholders and have established a communications strategy, a copy of which can be found on the Company’s website. The strategy is designed to promote effective c o m m u n i c a t i o n w i t h s h a r e h o l d e r s t h r o u g h o u t the year and encourage effective participation at general meetings. In addition to the circulars, notices and financial reports sent to shareholders, additional information of the Group is also available to shareholders on the Group’s website. As well as ensuring timely and appropriate access to information for all investors via announcements to the ASX and SEHK, the Company will also ensure that all relevant documents are released on the website of the Company for the purpose of both stakeholders and shareholders. Copies of all corporate governance policies, charters and terms of references are available on the website of the Company. Each year the Company’s external auditor attends the AGM and is available to answer questions from security holders relevant to the audit. Shareholders are encouraged to attend the annual general meeting for which at least 20 clear business days’ notice is given. The Chairman and Directors are available to answer questions on the Group’s business at the meeting. In accordance with the Bye-Laws of the Company, a minimum of 14 days’ notice is required for every shareholder’s meeting and all shareholders shall have statutory rights to call for special general meetings and put forward agenda items for consideration in the general meetings. All resolutions at the general meeting are decided by a poll which is conducted by the Group’s branch share register in Hong Kong. CORPORATE GOVERNANCE REPORT ANNUAL REPORT 2017 Procedures for Putting Forward Proposals at a General Meeting Any number of shareholders representing not less than 5% of the total voting rights of the Company on the date of the requisition or not less than 100 shareholders of the Company are entitled to put forward a proposal for consideration at a general meeting of the Company. Shareholders should follow the procedures as set out in Section 79 of the Act for putting forward such proposals. Provision of Information in Respect of and by Directors Updated information with regard to the change in other Directorships of the Directors of the Company are on our website or in the 2017 Annual Report. CONSTITUTIONAL DOCUMENTS There was no significant change in the memorandum and articles of association and the Bye-Laws of the Company during the year. The memorandum and articles of association and the Bye-Laws of the Company are available on the Company’s website. 33 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT STAKEHOLDER ENGAGEMENT Through engagement with the Group’s shareholders, including but not limited to the government, aboriginals, shareholders and investors, employees, customers, suppliers, industry peers, negotiation parties, etc. we strive to develop the optimal strategy to enhance sustainability of the Group meanwhile minimizing the potential damage to the environment which may cause by our operations. Stakeholders communications and expectations can be summarized as follows: Stakeholders Engagement and Communication means Expectations Shareholders and Investors — AGM — Exchange views with shareholders and reporting overall business performance — Maximize shareholders return — Information disclosure and transparency — Protection of interests and fair treatment of shareholders Government Employees Aboriginals Industry peers — On site inspection — Research and discussions, — To comply with laws and regulations approvals submission — Promote regional economic — Annual reports — Negotiations — Trainings — Emails development and employment — Infrastructure planning and development — Good working environment — Career development opportunities — Health and safety — Meetings in person — Negotiation of compensation — Protect interests of aboriginals — Due compensations — Negotiations and agreement — Industry conferences — Alliance to gain bargaining powers of for viability on infrastructure solutions to be shared — Social responsibilities Public and communities — Social investment — Volunteering — Annual reports ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT ANNUAL REPORT 2017 COMMUNICATION WITH STAKEHOLDERS The Company convenes an annual general meeting MATERIALITY ASSESSMENT T h r o u g h u n d e r s t a n d i n g o u r m a j o r s t a k e h o l d e r s ’ (AGM) each year, and it provides an effective platform c o n c e r n s t o t h e G r o u p ’ s E S G i s s u e s , w e h a v e for the Board of Directors to exchange views with identified the focus for our ESG actions and report, shareholders. In addition to the AGM, for maintaining which mainly includes environment and natural close relationship with customers, suppliers and other resources, employment, health and safety, training stakeholders, the Company communicates from time and development, and community investment. This to time with stakeholders and listen to their views and report will set up a framework for the collection of Key needs through visit, phone and email correspondence Performance Indicators data however the materiality etc. The Company’s overall business performance is of these KPIs will change when the Group’s projects also reported to investors through the Annual Report. materialize. A B C D E F Emissions Use of Resources Environment and natural resources Employment Health and Safety Development and training G H I J K Labour standards Supply chain management Product Responsibility Anti-corruption Community Investment 35 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT ENVIRONMENTAL, SOCIAL AND GOVERNANCE PERFORMANCE ENVIRONMENT AND NATURAL RESOURCES T h e G r o u p i s c o m m i t t e d t o p r o m o t i n g a n environmentally conscious work environment and has focused on measures to minimize waste and electricity consumption, initiate paper and cartridges recycling, and promoting electronic communications and storage. We encourage our office employees to switch off idle lights, air conditioners and other office equipment, and we remind our employees to print and photocopy on both sides of paper. The group also encourages its staffs to choose public transportation and carpool to reduce car driving and thus the impact on the environment and transportation. Although the company is a mining company, the existing stage of operation would not post severe damage to the environment as the iron ore mine in the Australia is still in the pursuit of seeking for necessary fundings. The Company is committed to the principles of good corporate and environmental citizenship, and shall take into careful consideration of environmental, social responsibility and sustainability issues when choosing its vendors to commence its projects. The Group aims to minimize its environmental footprint and its damage to the natural resources. We foresee that tailings and waste rock management, water use and discharge, and land management and rehabilitation would be the most important areas of concerns and the Group shall closely monitor these aspects should the projects materialize in the future. The Company has set out its objectives and targets for the advancement of our projects, most of which include the successful application for approvals under the Environmental Protection Act 1986(WA) and other related approvals required to commence the early works. CARE FOR EMPLOYEES Recruitment The Group aims to provide employees a comfortable and healthy working environment and ensure that their rights and interests are protected. The Group has established a sound system of human resources management covering various aspects of employment. D u r i n g o u r r e c r u i t m e n t p r o c e s s , e m p l o y e e s a r e hired based on consideration of their experience, qualifications and knowledge. All employees have entered into written employment contracts prior to employment to ensure job title, job duties, working hours, holidays, remuneration, termination process and benefits are agreed. Promotion, compensation and dismissal We motivate employees by promotion and salary increments based on results of regular performance appraisals. Staff dismissals are based on the Hong Kong Employment Ordinance or relevant local laws and regulations, as well as the requirements stipulated in the employment contracts. Working hours, rest periods and benefits Five-days work week arrangement is adopted to facilitate work-life balance. In addition to all rest days and statutory holidays as specified in local laws and regulations, employees are entitled to paid annual leaves, maternity leaves, paternity leaves, marriage leaves and compassionate leaves. Employees are also entitled to benefits such as medical benefits, MPF scheme contributions and other benefits subject to the Group’s human resources policies. Ethical standards and diversity All Directors, senior management and employees of the Company are expected to conduct themselves with integrity, openness, honesty and fairness, and in the best interests of the Company. The Board has established a Code of Conduct and Ethics, which is supported by a Whistleblower Policy, to guide all Directors, members of senior management and employees. A copy of the Code of Conduct and Ethics and Whistleblower Policy is available in the corporate governance section of the Company’s website. The Company’s recognition of the benefits of diversity where people from different gender, age, ethnicity and cultural backgrounds can bring fresh ideas and perceptions which make the workplace more efficient is reinforced in the Diversity Policy, a copy of which is available in the corporate governance section of the Company’s website. This policy outlines specific diversity initiatives designed to facilitate equal employment opportunities and requires the Company to set out specific diversity initiatives and targets with the aim of reporting the progress towards the metrics in the annual report. These key metrics include: • P r o p o r t i o n o f w o m e n a p p o i n t e d a s N o n - Executive Directors of the Company; • • • • Proportion of women in the workplace; Proportion of women in senior management; Parental leave return rates; and Employee turnover. ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT ANNUAL REPORT 2017 The following metrics shows the comparison over historical data. The historical data is as follows: Proportion of women appointed as Non-Executive Directors Proportion of women in the workplace Proportion of women in senior management Parental leave return rates Employee turnover 2017 0 21% 13% 100% 24% 2016 2015 0 24% 10% N/A 82% 0 10% 11% N/A 45% The Board is continually looking to achieve diversity will endeavour to appoint individuals who will provide a mix of diverse experiences, perspectives and skills appropriate for the Company, including appropriate technical and commercial skills relevant to the mining industry. The proportion of women employees in the whole organisation is approximately 24%. Total workforce by employment type and geographical region: Current workforce Australia China Hong Kong Corporate Corporate Services Project Development Exploration Mining Operation TOTAL 1 2 4 1 — 8 2 4 — — 8 14 7 5 — — — 12 37 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT HEALTH, SAFETY AND SUSTAINABILITY The Company is committed to the development of a sustainable iron ore business in Western Australia that benefits its employees, contractors, suppliers, partners and the community. W e w i l l a c h i e v e t h i s t h r o u g h t h e e f f e c t i v e implementation and proactive management of our commitments and obligations to workplace health and safety, the environment and to the communities in which we operate. To operate an effective and sustainable iron ore business, the Company will: For our mining operation, the Group strives to achieve zero working incidents. Previously the operation of our copper mine business implemented a strict safety standard and personnel were delegated as safety officers responsible for the oversight and implementation of safety measures undertaken by our mining operation. The Company provided personal protective equipment to all mining staffs, such as safety coats, helmets, safety shoes, masks and safety glasses etc. Safety equipment is provided based on the assessment of hazardous level. The Group shall adhere to our Operational Health and Safety Policy for all our future projects and our Company’s health and safety objectives are summarized as follows: • Focus on the elimination and management of workplace hazards and risks. — Achieve “Zero Harm” to people, the community and the workplace environment; • • Act ethically and responsibly in all its interactions. Promote a culture which focuses its employees, contractors, suppliers and partners on workplace health and safety as the responsibility of all those who work in its business. — Support, encourage and promote efforts to achieve industry-leading occupational health and safety performance; — Eliminate or manage circumstances which may lead to injury, property damage and business interruption; and • Provide a workplace free from bullying or discrimination and offering equal opportunity to all employees. — A c h i e v e h e a l t h a n d s a f e t y p e r f o r m a n c e consistent with the OHS Policy • Work actively through all areas of its business to minimise the actual and potential environmental impact of the Company’s activities. Brockman will employ the following principles: — Everyone has a responsibility for health and safety of themselves and their colleagues • Respect the rights of the traditional owners and value the indigenous cultural heritage associated with its operations. — Hazards should be identified and their risks eliminated or controlled We will implement systems and ensure that resources a re al l ocated to im plement and moni tor thes e commitments and its legal obligations. Our employees, contractors and partners will be regularly informed of the Company’s progress towards these goals. — Every task, however urgent or important, can be done safely — Health and safety standards will not be limited to only minimum legal requirements The policy and the system that support it will be routinely measured to ensure the delivery of our commitments and system improvements made where the need arises. ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT ANNUAL REPORT 2017 These objectives will be achieved by: — Providing employees and contractors with the necessary responsibility training and resources to assist them to perform their tasks safely and effectively; — Establishing and enforcing accountabilities for employees and contractors regarding health and safety policy, objectives and performance; COMMUNITY INVESTMENT We provide opportunities for our employees to be a part of our local communities. We mobilise our employees to volunteer their time and skills in contributing to the society at the same time enriching their knowledge of environmental and social issues, moreover, to prevent and mitigate any potential and actual negative impacts on the community. The Company had sponsor charity run/marathon for — Complying with all applicable laws, regulations employees. and statutory obligations; — D e m o n s t r a t i n g e f f e c t i v e l e a d e r s h i p a n d OPERATIONAL PRACTICES management of health and safety through risk assessment and the development and implementation of safe operational procedures; and communication in health and safety issues. DEVELOPMENT AND TRAINING Employees are the most important assets of the SUPPLY CHAIN MANAGEMENT The Company has established sound procurement procedures and requirement for vendors/equipment acquisitions. Upon selection for new vendors, not o n l y t h e C o m p a n y w i l l e v a l u a t e t h e v e n d o r s ’ performance, equipment reliability and pricing, but also the environmental attributes such as impact to the Company. First-class professionals and management environment and energy saving functionalities. We will team are the guarantee of successful business, also take into consideration of the vendors’ previous and therefore we are eager to provide them with performance in terms of creditability and compliance relevant trainings and encourage them to fully utilize with local regulations. their potentials. We subsidize our employees for their continuing education, and encourage employees to participate in various workshops and seminars according to their respective areas of interest and job nature. PRODUCT RESPONSIBILITY The Company will ensure all required documentation is obtained prior to shipment of ore. Sinter testworks c o n d u c t e d h a s p r o v i d e d p o s i t i v e r e s u l t s a n d confirmation of Maverick’s product quality and the Group will strive to maintain the product’s quality upon future delivery of ore. The Company upholds the confidentiality regarding c u s t o m e r s ’ , p r o s p e c t i v e c u s t o m e r s ’ o r b u s i n e s s counterparts’ information. Confidentiality agreements were in place to protect any leakage of information. 39 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT ANTI-CORRUPTION Company has established rules against bribery or corruption, which forbid employees to accept gift from other people in business relationship. To ensure effective implementation, every employee has been trained on these rules. Furthermore, Company have set up a whistle blower policy (details of which can be found on the company website), and Brockman encourages stakeholders to pursue and report any misconduct, fraudulent or corrupt practices, breaches in rules, coercion or harassment and etc. Active channels are in place for employees to report directly in event of any potential source of bribery/corruption in any business execution. B r o c k m a n t a k e s a z e r o t o l e r a n c e a p p r o a c h t o corruption and bribery and is committed to acting professionally, fairly and with integrity in all our business dealings. Our whistleblower policy adopted encourages employees to report on any incidences of fraud, misappropriation or corruption while the reporters’ privacy are completely protected. DIRECTORS’ REPORT ANNUAL REPORT 2017 The Directors present their report together with the audited consolidated financial statements of the Group for the year ended 30 June 2017. DISTRIBUTABLE RESERVES As at 30 June 2017, the Company has no reserve available for distribution to the shareholders. PRINCIPAL ACTIVITIES AND GEOGRAPHICAL ANALYSIS OF OPERATIONS The Company is an investment holding company. The principal activities of the Company are exploration and development of iron ore mining projects in Western Australia. Detailed activities of each of the Company’s subsidiaries are as set out in Note 35 to the consolidated financial statements. RESULTS AND APPROPRIATIONS The results of the Group for the year ended 30 June 2017 are set out in the consolidated statement of comprehensive income on pages 50. REVIEW OF OPERATIONS It is recommended that the financial statements be read in conjunction with the 30 June 2017 annual report and any public announcements made by the Company during the period. Detailed business review is set out in pages 4 to 16. In accordance with the continuous disclosure requirements, readers are referred to the announcements lodged with the ASX regarding exploration and other activities of the Company. PRE-EMPTIVE RIGHTS There are no provisions for pre-emptive rights under the Company’s Bye-laws, or the laws in Bermuda, which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders. FINANCIAL SUMMARY A summary of the results and of the assets and liabilities of the Group for the last five financial period/year is set out on page 93. DIRECTORS The Directors of the Company during the year and up to the date of this report were: Non-executive Directors: Kwai Sze Hoi (Chairman) Liu Zhengui (Vice Chairman) Ross Stewart Norgard Executive Directors: Colin Paterson Chan Kam Kwan, Jason (Company Secretary) Kwai Kwun, Lawrence FINAL DIVIDEND The Board does not recommend the payment of a dividend. Independent Non-executive Directors: Uwe Henke Von Parpart Yap Fat Suan, Henry Choi Yue Chun, Eugene In accordance with Clauses 87(1) of the Company’s Bye-laws, Messrs. Kwai Kwun Lawrence, Yap Fat Suan Henry and Choi Yue Chun, Eugene shall retire and, being eligible, offer themselves for re-election at the forthcoming annual general meeting. 41 DIRECTORS’ REPORT CONFIRMATION OF INDEPENDENCE All the independent non-executive directors are appointed for a specific term and will be subject to DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS As at 30 June 2017, the interests and short positions retirement by rotation and re-election in accordance of the Directors and chief executives and their with the HK Listing Rules and the Bye-laws of the respective associates in the shares, underlying shares Company. The Company has received from each of and debentures of the Company and its associated the Independent Non-executive Directors, an annual corporations (within the meaning of Part XV of the confirmation of his independence pursuant to Rule 3.13 Securities and Futures Ordinance (“SFO”)) as recorded of the HK Listing Rules. The Company considered all of in the register maintained by the Company pursuant the Non-executive Directors are independent. to Section 352 of the SFO, or which were otherwise required to be notified to the Company and the SEHK, pursuant to the Model Code were as follows: DIRECTOR’S SERVICE CONTRACTS None of the directors who are proposed for re- election at the forthcoming annual general meeting has a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation. (i) Long positions in the ordinary shares of HK$0.10 each of the Company Name of Director Capacity Mr. Kwai Sze Hoi Jointly (Note) Interests of controlled corporation (Note) Mr. Liu Zhengui Beneficial owner Mr. Ross Stewart Norgard Beneficial owner Interests of controlled corporation Mr. Colin Paterson Beneficial owner Mr. Kwai Kwun Lawrence Beneficial owner Interest of his spouse Interests of controlled corporation Mr. Chan Kam Kwan, Jason Beneficial owner Mr. Uwe Henke Von Parpart Beneficial owner Mr. Yap Fat Suan, Henry Beneficial owner Mr. Choi Yue Chun, Eugene Beneficial owner Number of issued ordinary shares held Number of share options held Approximate percentage of the issued share capital of the Company 60,720,000 1,776,960,137 — 64,569,834 178,484,166 30,173,004 22,625,442 28,658,412 59,000,000 — — 400,000 — — — — — — 8,000,000 — — — — — — — 0.72% 21.20% 0.00% 0.77% 2.13% 0.27% 0.27% 0.34% 0.70% 0.00% 0.00% 0.00% 0.00% Note: The 1,776,960,137 shares were held by Ocean Line Holdings Ltd., a company held as to 60% by Mr. Kwai Sze Hoi and as to 40% by Ms. Cheung Wai Fung (Mr. Kwai’s spouse). In addition, Mr. Kwai and Ms. Cheung have a joint direct interest in 60,720,000 shares of the Company. Save as disclosed above, none of the Directors and chief executives, nor their associates had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations as at 30 June 2017. ANNUAL REPORT 2017 SHARE OPTIONS The share option scheme (the “Share Option Scheme”) of the Company was adopted by the Company pursuant to the resolution of the shareholders passed in the AGM on 13 November 2012. Particulars of the Share Option Scheme are set out in Note 27 to the consolidated financial statements. Details of the options outstanding as at 30 June 2017 which have been granted to Qualified Persons under the Share Option Scheme are as follows: Directors Colin Paterson Total Weighted average exercise price Option type 2015A Outstanding Granted Lapsed Outstanding as at 1 July 2015 during the year during as at the year 30 June 2017 8,000,000 8,000,000 0.45 — — — — — — 8,000,000 8,000,000 0.45 The total number of securities available for issue under the share option scheme amounts to 781,448,213 as at the date of the annual report, representing 9.32% of the issued share capital outstanding. DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES Other than as disclosed in the section “Directors’ and MANAGEMENT CONTRACTS No contracts concerning the management and administration of the whole or any substantial part of Chief Executives’ Interests”, at no time during the the business of the Company were entered into or period was the Company, its holding company, or any existed during the year. RELATED PARTY TRANSACTIONS Significant related party transactions entered into by the Group during the year ended 30 June 2017 are disclosed in Note 34 to the consolidated financial statements. of its subsidiaries or fellow subsidiaries, a party to any arrangements to enable the Directors of the Company nor their associates to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. DIRECTORS’ INTERESTS IN COMPETING BUSINESS None of the Directors has any interests in competing business to the Group. DIRECTORS’/CONTROLLING SHAREHOLDERS’ INTERESTS IN TRANSACTIONS ARRANGEMENTS AND CONTRACTS THAT ARE SIGNIFICANT IN RELATION TO THE GROUP BUSINESS Details of the related party transactions for the year are set out in Note 34 to the consolidated financial statements. Other than as disclosed therein, no contracts of significance to which the Company, transactions, arrangements and, subsidiaries or fellow subsidiaries was a party and in which a Director or a controlling shareholder of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the period. 4343 DIRECTORS’ REPORT SUBSTANTIAL SHAREHOLDERS As at 30 June 2017, the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO shows that the following shareholders had notified the Company of relevant interests and short positions in the issued share capital of the Company: Long positions in ordinary shares and underlying shares of HK$0.10 each of the Company Name of shareholder Capacity Ocean Line Holdings Ltd (Note 1) Beneficial owner Kwai Sze Hoi (Note 1) Interest held by controlled corporations Interest held jointly with another person Cheung Wai Fung (Note 1) Interest held by controlled corporations Interest held jointly with another person Equity Valley Investments Limited Beneficial owner The XSS Group Limited (Note 2) Interest held by controlled corporations Cheung Sze Wai, Catherine (Note 2) Interest held by controlled corporations Luk Kin Peter Joseph (Note 2) Interest held by controlled corporations Number of shares or underlying shares Percentage of the issued share capital of the Company 1,776,960,137 1,776,960,137 60,720,000 1,776,960,137 60,720,000 515,574,276 515,574,276 515,574,276 515,574,276 21.20% 21.20% 0.72% 21.20% 0.72% 6.15% 6.15% 6.15% 6.15% KQ Resources Limited Beneficial owner 1,015,928,146 12.12% Notes: 1. 2. Ocean Line is owned as to 60% by Mr. Kwai Sze Hoi and as to 40% by Ms. Cheung Wai Fung (Mr. Kwai’s spouse). In addition, Mr. Kwai and Ms. Cheung have a joint direct interest in 60,720,000 shares. The 515,574,276 shares were held by Equity Valley Investments Limited. Equity Valley Investments Limited is wholly-owned by The XSS Group Limited, of which 50%, 20% and 30% of its issued share capital were held by Mr. Luk Kin Peter Joseph, Ms. Cheung Sze Wai, Catherine (Mr. Luk’s spouse) and Ms. Chong Yee Kwan (Mr. Luk’s mother) respectively. Other than as disclosed above, the Company has not been notified of any other relevant interests or short positions in the issued share capital of the Company as at 30 June 2017. ANNUAL REPORT 2017 PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES During the year, neither the Company nor any of its AUDITOR T h e f i n a n c i a l s t a t e m e n t s f o r t h e f i n a n c i a l y e a r e n d e d 3 0 J u n e 2 0 1 7 h a v e b e e n a u d i t e d b y subsidiaries purchased, redeemed or sold any of the PricewaterhouseCoopers who retire and, being eligible, listed securities of the Company. offer themselves or re-appointment at the forthcoming annual general meeting of the Company. By order of the Board Kwai Sze Hoi Chairman Hong Kong, 20 September 2017 PERMITTED INDEMNITY PROVISION Pursuant to the Bye-laws of the Company, the Directors shall be indemnified and secured harmless out of the assets and profits of the Company against all losses and liabilities & etc which they may incur or sustain by reason about the execution of their duties, provided that this indemnity shall not extend to any matter in respect of any fraud or dishonesty which may attach to any of the directors. The Company has also arranged appropriate directors’ and liability insurance coverage for the directors and officers of the Group. MAJOR CUSTOMERS AND SUPPLIERS As the mining operation in China was suspended during the year, no revenue was received and there were no customers attributable to any sales. Aggregate operating and administrative expenses attributable to the Group’s five largest suppliers were less than 33% of total operating and administrative expenses (include exploration and evaluation expenses) for the year. At no time during the year did any Director, any associate of a Director, or any shareholder of the Company, which to the knowledge of the Directors owned more than 5% of the Company’s share capital, have any beneficial interests in these customers or suppliers. CORPORATE GOVERNANCE The Company is committed to maintain a high standard of corporate governance practices. Information on the corporate governance practices is adopted by the Company as set out in the Corporate Governance Report on pages 20 to 33 of the annual report. SUFFICIENCY OF PUBLIC FLOAT Based on the information that is publicly available to the Company and within the knowledge of the Directors, as at the date of this report, there was sufficient of public float of the Company’s securities as required under the HK Listing Rules. 4545 INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF BROCKMAN MINING LIMITED (incorporated in Bermuda with limited liability) OPINION What we have audited The consolidated financial statements of Brockman Mining Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 50 to 92, which comprise: • • • • • the consolidated balance sheet as at 30 June 2017; the consolidated statement of comprehensive income for the year then ended; the consolidated statement of changes in equity for the year then ended; the consolidated statement of cash flows for the year then ended; and the notes to the consolidated financial statements, which include a summary of significant accounting policies. Our opinion In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 30 June 2017, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance. BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. MATERIAL UNCERTAINTY RELATED TO GOING CONCERN We draw attention to Note 2 to the consolidated financial statements, which states that the Group recorded no revenue together with a net loss attributable to equity holders of the Company of HK$38,308,000, and had operating cash outflows of HK$44,573,000 for the year ended 30 June 2017. As at the same date, the Group’s current liabilities exceeded its current assets by HK$36,256,000 and its cash and cash equivalents amounted to HK$23,995,000. These matters, along with other matters as described in Note 2, indicates the existence of a material uncertainty which may cast significant doubt about the ability of the Group to continue as a going concern. Our opinion is not modified in respect of this matter. INDEPENDENT AUDITOR’S REPORT ANNUAL REPORT 2017 KEY AUDIT MATTER Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements 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 matter described below to be the key audit matter to be communicated in our report. Key audit matter identified in our audit is summarised as follows: • Assessment of impairment indicators for mining properties Key Audit Matter How our audit addressed the Key Audit Matter Assessment of impairment indicators for mining In addressing this matter, we performed the following procedures: properties R e f e r t o n o t e s 3 ( f ) , 4 ( a ) a n d 1 9 t o t h e consolidated financial statements M i n i n g p r o p e r t i e s r e p r e s e n t t h e v a l u e o f mining and exploration projects in Australia. As at 30 June 2017, the carrying amounts of mining properties amounted to HK$829,031,000, — — We understood and evaluated the approach adopted in management’s assessment of indicators. We have also validated the internal controls over management’s assessment; We discussed with management to understand the latest development of the mining project, including validation of supporting evidence in relation to key developments; representing approximately 97% of the Group’s — total assets. We evaluated the reasonableness of the key factors in management’s assessment of impairment indicators: Management assessed whether events or changes in circumstances indicate a potential material change to the recoverable value of the mining properties since 30 June 2016. As at 30 June 2017, management performed an assessment of impairment indicators, taking into account the long-term iron ore price, estimated mine life, production volumes, capital and operating costs and long term exchange rate of Australian dollars (“A$”) to United States dollars (“US$”). Based on this assessment, management concluded that as at 30 June 2017, there is no indication that the recoverable value of the mining properties has materially changed and thus impairment assessment is not required. We focused on this area because of the significance of the mining properties, as well as the significant judgements involved in the assessment of impairment indicators. (a) (b) (c) (d) we compared the long-term iron ore price with comparable analysts’ forecast from the market; w e c o m p a r e d t h e e s t i m a t e d m i n e l i f e a n d production volumes to the latest mine plan which has been approved by the Board of Directors; we compared capital and operating costs with quotation and contracts with key suppliers or contractors; and we assessed the long-term exchange rate of A$ to US$ used in management’s assessment by checking to analysts’ forecasts. Based on the information we obtained and the aforementioned audit procedures performed, we consider the key factors and significant judgements made by the management in the assessment of impairment indicators of mining properties to be supportable. 47 INDEPENDENT AUDITOR’S REPORT OTHER INFORMATION The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual report other than the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. RESPONSIBILITIES OF DIRECTORS AND THE AUDIT COMMITTEE FOR THE CONSOLIDATED FINANCIAL STATEMENTS The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, 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. The Audit Committee is responsible for overseeing the Group’s financial reporting process. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. We report our opinion solely to you, as a body, in accordance with Section 90 of the Companies Act 1981 of Bermuda and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs 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 these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. INDEPENDENT AUDITOR’S REPORT ANNUAL REPORT 2017 • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Chan Hin Gay, Gabriel. PricewaterhouseCoopers Certified Public Accountants Hong Kong, 20 September 2017 49 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2017 Year ended 30 June Note 2017 HK$’000 Revenue Cost of sales Gross loss Other income Other gains/(losses) Selling and administrative expenses Exploration and evaluation expenses Impairment losses Operating loss Finance income Finance costs Finance costs, net Share of losses of joint ventures Loss before income tax Income tax credit Loss for the year Other comprehensive income/(loss): Item that may be reclassified to profit or loss Exchange differences arising on translation of foreign operations Other comprehensive income/(loss) for the year Total comprehensive loss for the year Loss for the year attributable to equity holders of the Company Total comprehensive loss attributable to equity holders of the Company Loss per share attributable to the equity holders of the Company during the year Basic loss per share Diluted loss per share 7 9 11 12 9 9 13 14 14 14 32 15 17 17 2016 HK$’000 11,590 (16,918) (5,328) 1,949 (18,182) (36,794) (19,869) (678,391) (756,615) 356 (895) (539) (909) (758,063) 130,905 (627,158) (39,479) (39,479) (666,637) (627,158) — — — 1,041 2 (10,893) (20,730) (3,538) (34,118) 41 (3,514) (3,473) (717) (38,308) — (38,308) 14,788 14,788 (23,520) (38,308) (23,520) (666,637) HK cents HK cents (0.46) (0.46) (7.48) (7.48) The notes on pages 55 to 92 form an integral part of these consolidated financial statements. CONSOLIDATED BALANCE SHEET As at 30 June 2017 Non-current assets Mining properties Property, plant and equipment Interests in joint ventures Other non-current assets Current assets Other receivables, deposits and prepayments Amounts due from related parties Cash and cash equivalents Total assets Equity Share capital Reserves Total equity Non-current liabilities Other payables Amount due to a related party Deferred income tax liabilities Borrowings Provisions Current liabilities Trade payables Other payables and accrued charges Amounts due to related parties Total liabilities Total equity and liabilities ANNUAL REPORT 2017 As at 30 June 2017 HK$’000 829,031 3,673 430 283 2016 HK$’000 797,807 653 242 273 833,417 798,975 1,218 — 23,995 25,213 2,030 2,176 32,772 36,978 858,630 835,953 838,198 (374,235) 463,963 838,198 (350,781) 487,417 31,333 1,392 246,817 52,812 844 333,198 10,722 50,561 186 61,469 394,667 858,630 25,540 — 237,521 8,085 1,065 272,211 10,872 64,208 1,245 76,325 348,536 835,953 Note 19 20 32 23 34 22 26 25 34 28 29 25 24 25 34 The consolidated financial statements on pages 50 to 92 were approved by the Board of Directors on 20 September 2017 and were signed on its behalf. Kwai Kwun, Lawrence Director Chan Kam Kwan, Jason Director The notes on pages 55 to 92 form an integral part of these consolidated financial statements. 51 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2017 l a t o T 0 0 0 ’ $ K H 5 0 8 , 3 5 1 , 1 ) 8 5 1 , 7 2 6 ( ) 9 7 4 , 9 3 ( ) 9 7 4 , 9 3 ( ) 7 3 6 , 6 6 6 ( — 9 4 2 9 4 2 r e h t O s e v r e s e r 0 0 0 ’ $ K H 5 2 2 , 8 5 4 — — — — — — — y n a p m o C e h t f o s r e d o h l y t i u q e o t l e b a t u b i r t t A d e s a b r - e a h S y r o t u t a t S d e t l a u m u c c A n o i t a l s n a r T n o i t a s n e p m o c s e v r e s e r r e a h S s e s s o l 0 0 0 ’ $ K H e v r e s e r 0 0 0 ’ $ K H ) 1 8 1 , 1 8 0 , 4 ( ) 3 6 1 , 1 1 6 ( e v r e s e r 0 0 0 ’ $ K H 3 1 8 , 9 7 7 0 8 , 9 ) e t o N ( 0 0 0 ’ $ K H ) 8 5 1 , 7 2 6 ( — — — ) 8 5 1 , 7 2 6 ( ) 9 7 4 , 9 3 ( ) 9 7 4 , 9 3 ( ) 9 7 4 , 9 3 ( ) 3 4 ( — ) 3 4 ( 9 5 — 9 5 — — — — — 9 4 2 9 4 2 — — — — ) 6 1 ( — ) 6 1 ( i m u m e p r — — — — — — — 0 0 0 ’ $ K H 6 0 1 , 0 6 4 , 4 r e a h S l a t i p a c 0 0 0 ’ $ K H 8 9 1 , 8 3 8 — — — — — — — f o n o i t a l s n a r t n o g n i s i r a s e c n e r e f f i d e g n a h c x E s n o i t r a e p o n g e i r o f r a e y e h t r o f s s o l e v i s n e h e p m o c r r e h t o l a t o T r a e y e h t r o f s s o l e v i s n e h e p m o c r l a t o T s e v r e s e r y r o t u t a t s o t s n o i t a i r r p o p p A s r e d o h l y t i u q e h t i w s n o i t c a s n a r T ) 7 2 e t o N ( n o i t a s n e p m o c d e s a b r - e a h S s r e d o h l y t i u q e h t i w s n o i t c a s n a r t l a t o T 5 1 0 2 l y u J 1 t a e c n a a B l s s o l e v i s n e h e r p m o C r a e y e h t r o f s s o L s s o l e v i s n e h e r p m o c r e h t O 7 1 4 , 7 8 4 5 2 2 , 8 5 4 ) 2 8 3 , 8 0 7 , 4 ( ) 3 8 5 , 0 5 6 ( 2 6 0 , 0 8 1 9 7 , 9 6 0 1 , 0 6 4 , 4 8 9 1 , 8 3 8 6 1 0 2 e n u J 0 3 t a e c n a a B l . s t n e m e t a t s l i a c n a n i f d e t a d i l o s n o c e s e h t f o t r a p l r a g e t n i n a m o r f 2 9 o t 5 5 s e g a p n o s e t o n e h T CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2017 ANNUAL REPORT 2017 l a t o T 0 0 0 ’ $ K H 7 1 4 , 7 8 4 ) 8 0 3 , 8 3 ( 8 8 7 , 4 1 8 8 7 , 4 1 ) 0 2 5 , 3 2 ( — 6 6 6 6 r e h t O s e v r e s e r 0 0 0 ’ $ K H 5 2 2 , 8 5 4 — — — — — — — ) 8 0 3 , 8 3 ( — — — ) 8 0 3 , 8 3 ( — — — 8 8 7 , 4 1 8 8 7 , 4 1 8 8 7 , 4 1 1 0 1 — 1 0 1 — — — — — 6 6 6 6 — — — — ) 1 0 1 ( — ) 1 0 1 ( 0 9 6 , 9 s e s s o l 0 0 0 ’ $ K H e v r e s e r 0 0 0 ’ $ K H ) 2 8 3 , 8 0 7 , 4 ( ) 3 8 5 , 0 5 6 ( e v r e s e r 0 0 0 ’ $ K H 2 6 0 , 0 8 1 9 7 , 9 ) e t o N ( 0 0 0 ’ $ K H y n a p m o C e h t f o s r e d o h l y t i u q e o t l e b a t u b i r t t A d e s a b r - e a h S y r o t u t a t S d e t l a u m u c c A n o i t a l s n a r T n o i t a s n e p m o c s e v r e s e r r e a h S i m u m e p r — — — — — — — 0 0 0 ’ $ K H 6 0 1 , 0 6 4 , 4 r e a h S l a t i p a c 0 0 0 ’ $ K H 8 9 1 , 8 3 8 — — — — — — — f o n o i t a l s n a r t n o g n i s i r a s e c n e r e f f i d e g n a h c x E s n o i t r a e p o n g e i r o f r a e y e h t r o f s s o l e v i s n e h e p m o c r r e h t o l a t o T r a e y e h t r o f s s o l e v i s n e h e p m o c r l a t o T s e v r e s e r y r o t u t a t s o t s n o i t a i r r p o p p A s r e d o h l y t i u q e h t i w s n o i t c a s n a r T ) 7 2 e t o N ( n o i t a s n e p m o c d e s a b r - e a h S s r e d o h l y t i u q e h t i w s n o i t c a s n a r t l a t o T 6 1 0 2 l y u J 1 t a e c n a a B l s s o l e v i s n e h e r p m o C r a e y e h t r o f s s o L s s o l e v i s n e h e r p m o c r e h t O 3 6 9 , 3 6 4 5 2 2 , 8 5 4 ) 0 9 6 , 6 4 7 , 4 ( ) 4 9 6 , 5 3 6 ( 8 2 1 , 0 8 6 0 1 , 0 6 4 , 4 8 9 1 , 8 3 8 7 1 0 2 e n u J 0 3 t a e c n a a B l s i n o i t a i r r p o p p A . s n o i t l a u g e r d n a s w a l C R P h t i w e c n a d o c c a r n i ) ” C R P “ ( i a n h C f o c i l b u p e R l s ’ e p o e P e h t n i d e h s i l b a t s e s d n u f e v r e s e r y t e f a s t n e s e p e r r s e v r e s e r y r o t u t a t s e h T : e t o N . r a e y e h t g n i r u d d e t i o p x e l y t i t n a u q i i g n n m o t i r g n d o c c a e d a m . s t n e m e t a t s l i a c n a n i f d e t a d i l o s n o c e s e h t f o t r a p l r a g e t n i n a m o r f 2 9 o t 5 5 s e g a p n o s e t o n e h T 53 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2017 Cash flows from operating activities Net cash used in operating activities Cash flows from investing activities Interest received Proceeds from disposal of property, plant and equipment 30(b) Purchases of property, plant and equipment Investments in joint ventures Stamp duty paid Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Net cash generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year Effects of foreign exchange rate changes Cash and cash equivalents at end of the year 22 Cash used for exploration and evaluation activities was included Year ended 30 June 2017 HK$’000 2016 HK$’000 (44,573) (45,147) Note 30(a) 41 8 (3,263) (913) — (4,127) 40,161 — 40,161 (8,539) 32,772 (238) 23,995 356 150 (1,429) (894) (26,304) (28,121) 8,438 (120) 8,318 (64,950) 98,297 (575) 32,772 in operating activities (23,057) (17,673) The notes on pages 55 to 92 form an integral part of these consolidated financial statements. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2017 1 GENERAL INFORMATION Brockman Mining Limited (the “Company”) and its subsidiaries (collectively, the “Group”) principally engage in the acquisition, exploration and towards future development of iron ore project in Australia; and in the exploitation, processing and sales of mineral resources, including copper ore concentrates and other mineral ore products in the People’s Republic of China (“PRC”). The Company is a public limited company incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the “SEHK”) and Australian Securities Exchange (the “ASX”). The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. These consolidated financial statements are presented in thousands of Hong Kong dollars (“HK$”), unless otherwise stated. 2 BASIS OF PREPARATION The consolidated financial statements of Brockman Mining Limited have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRS”). The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. Going concern For the year ended 30 June 2017, the Group recorded a net loss attributable to equity holders of the Company of HK$38,308,000 and had operating cash outflows of HK$44,573,000. The Group did not record any revenue during the year and the loss for the year was primarily attributable to the exploration costs for the mine in Australia and the administrative expenses incurred by operation in Hong Kong and Australia. As at 30 June 2017, the Group’s current liabilities exceeded its current assets by HK$36,256,000, and cash and cash equivalents of the Group amounted to HK$23,995,000. For the year ended 30 June 2016, all of the Group’s revenue were derived from its sales of copper ore concentrates produced from its copper mine in the PRC for which the production was put on halt since January 2016. On 1 September 2016, the Group announced that in light of the sustained copper price weakness and the potential increase in capital expenditure to meet the new local requirements for environmental protection in the PRC, the directors resolved that it will no longer finance the continuing development of its copper mine in the PRC. The Group intends to focus its resources on developing its core iron ore mining projects in Western Australia (the “Marillana project”), which is currently still at the exploration and evaluation stage. Before commencement of commercial production of the Marillana project, the Group would require significant amounts of financing for its development which are currently yet to be secured. All the above conditions indicate the existence of a material uncertainty which may cast significant doubt about the ability of the Group to continue as a going concern. 55 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2 BASIS OF PREPARATION (Continued) Going concern (Continued) In view of these circumstances, the directors of the Company have given careful consideration to the future liquidity and development of the Marillana project and its available sources of financing to assess whether the Group will have sufficient funds to fulfill its financial obligations to continue as a going concern. The Group has taken the following measures to improve the Group’s financial position and alleviate its liquidity pressure, which include, but not limited to, the following: (i) (ii) (iii) (iv) (v) On 20 September 2016, the Group obtained a loan from its substantial shareholder amounted to US$5,130,000 (equivalent to HK$40,000,000) which is unsecured, bears interest at 12% per annum and repayable on 19 December 2017. During the year, the substantial shareholder agreed to extend the repayment date to 30 October 2018; On 30 June 2017, the Group obtained written agreements from several creditors of its copper mine in the PRC to defer the repayment of other payables and borrowing amounted to HK$43,673,000 until 31 December 2018; On 21 September 2016, an individual shareholder has undertaken to grant a loan of up to HK$60,000,000 to the Group. The loan is available for draw down within 14 months from 21 September 2016. Such loan, once drawn down, will be unsecured, bear interest at 15% per annum and will be repayable on 21 December 2017. On 19 September 2017, the individual shareholder has extended the last drawdown date and repayment date to 30 October 2018 and increased the loan facility from HK$60,000,000 to HK$90,000,000, of which HK$55,000,000 can only be drawn down for purpose of financing the payment to settle liabilities in respect of the mine in the PRC when necessary. Up to the date of approval of these financial statements, no loan has been drawn down under this arrangement; Having received indications of interests from certain investors to invest in the Marillana project, the Group has been negotiating the terms of investments with these investors who are also undergoing due diligence on the project. The Group will continue its effort to negotiate the terms with the investors. The Group is actively pursuing other fund raising alternatives to fund the commencement of the initial mining operation; Despite the ongoing discussion with potential investors, the Group does not have any commitment for capital expenditure of such developments at this stage and no expenditures in relation to such development will be committed by the Group before the investments are finalised and secured; In respect of the ongoing exploration and evaluation activities in the same mine, the directors will continue to maintain the minimum exploration and evaluation activities, by incurring estimated expenditure of approximately HK$5,944,000, required to maintain the current right of tenure to exploration tenements in Australia; and (vi) Implementation of other cost-saving measures with the objective of keeping the administrative and daily operational expenditures to a minimum in all locations. The directors of the Company have reviewed the Group’s cash flow projections which cover a period of not less than twelve months from 30 June 2017. They are of the opinion that, taking into account the above-mentioned plans and measures, the Group will have sufficient financial resources to satisfy its future working capital requirements and to meet its financial obligations as and when they fall due within the next twelve months from 30 June 2017. Accordingly, the directors of the Company consider that it is appropriate to prepare the Group’s consolidated financial statements on a going concern basis. Notwithstanding the above, significant uncertainties exist as to whether the Group is able to obtain the necessary funding and achieve the plans and measures as described in (iii) to (vi) above. The Group’s ability to continue as a going concern would depend upon (i) successful draw down of the loan of HK$90,000,000 from the individual shareholder as and when needed; (ii) successful raising of new financing as and when needed to fund the development of the Marillana project, including successful conclusion of the terms of investments with potential investors; (iii) successful execution of the development plan of the Marillana project, followed by its successful and economically viable commercial production; and (iv) successful implementation of the operational plans and measures to control costs. Should the Group be unable to continue as a going concern, adjustments would have to be made to write down the carrying values of the Group’s assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets and non-current liabilities as current assets and current liabilities, respectively. The effects of these adjustments have not been reflected in the Group’s consolidated financial statements. ANNUAL REPORT 2017 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Changes in accounting policy and disclosures (i) New and amendments to standards adopted by the Group The following standards and amendments to standards are effective for accounting year beginning on or after 1 July 2016, and have been adopted in preparing these consolidated financial statements: Annual improvements Project 2014 IAS 1 (Amendment) IAS 16 and IAS 38 (Amendment) IAS 16 and IAS 41 (Amendment) IAS 27 (Amendment) IFRS10, IFRS12 and IAS28 Annual Improvements 2012-2014 Cycle Disclosure Initiative Clarification of Acceptable Methods of Depreciation and Amortisation Agriculture: Bearer Plants Equity Method in Separate Financial Statements Investment Entities: Applying the Consolidation Exception (Amendment) IFRS 11 (Amendment) IFRS 14 Accounting for Acquisitions of Interests in Joint Operations Regulatory Deferral Accounts (ii) New and amendments to standards and interpretations not yet adopted The following new standards, amendments to standards and interpretations have been issued, but are not effective for the Group’s financial year ended 30 June 2017 and have not been early adopted: IAS 7 (Amendment) IAS 12 (Amendment) IFRS 12 (Amendment) The Disclosure Initiative Recognition of Deferred Tax Assets for Unrealised Losses Annual Improvement to IFRS 2014-2016 Cycle (amendment to Disclosure of Interests in Other Entities) Effective for annual periods beginning on or after 1 January 2017 1 January 2017 1 January 2017 Annual Improvements Project IFRS 1 Annual Improvements 2014-2016 Cycle 1 January 2018 and IAS 28 IFRS 2 (Amendment) IFRS 9 IFRS 15 IFRS 15 (Amendment) IFRIC22 (amendments) Classification and Measurement of Share- 1 January 2018 based Payment Transactions Financial Instruments Revenue from Contracts with Customers Clarification to IFRS15 Foreign Currency Transactions and Advance Considerations 1 January 2018 1 January 2018 1 January 2018 1 January 2018 IFRIC23 IFRS 16 IFRS 10 and IAS 28 (Amendment) Uncertainty Over Income Tax Treatments Leases Sale or Contribution of Assets between an 1 January 2019 1 January 2019 To be determined Investor and its Associate or Joint Venture None of these is expected to have a significant effect on the consolidated financial statements of the Group, except for the following set out below: IFRS 9 Financial instruments The new standard addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The Group has yet to undertake a detailed assessment of the classification and measurement of its financial assets, but management considers that except for cash and cash equivalents, there is limited financial assets. The amendment is not expected to have significant impact on Group’s financial statements. 57 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (a) Changes in accounting policy and disclosures (Continued) (ii) New and amendments to standards and interpretations not yet adopted (Continued) IFRS 9 Financial instruments (Continued) There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The derecognition rules have been transferred from IAS 39 Financial Instruments: Recognition and Measurement and have not been changed. There is a change in hedge accounting rules that more hedge relationships might be eligible for hedge accounting, as the standard introduces a more principles-based approach. The Group does not have any such hedging instruments. The new impairment model requires the recognition of impairment provisions based on expected credit losses rather than only incurred credit losses as is the case under IAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at fair value through other comprehensive income, contract assets under IFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments and certain financial guarantee contracts. The Group has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, and it may result in an earlier recognition of credit losses. The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Group’s disclosures about its financial instruments particularly in the year of the adoption of the new standard. IFRS 9 must be applied for financial years commencing on or after 1 January 2018. The Group does not intend to adopt IFRS 9 before its mandatory date. IFRS 15 Revenue from contracts with customers IFRS 15 will replace IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The new standard permits either a full retrospective or a modified retrospective approach for the adoption. Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios. A further clarification to IFRS 15 was issued in relation to the identification of performance obligations, principal versus agent consideration, as well as licensing application guidance. For the year ended 30 June 2017, there was no revenue recognised. Management will further assess the contractual arrangement with respective to future production and effects of applying the new standard on the Group’s financial statements. IFRS 15 is mandatory for financial years commencing on or after 1 January 2018. The Group does not intend to adopt the standard before its effective date. IFRS 16 Leases IFRS 16 will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change. The standard will affect primarily the accounting for the Group’s operating leases. As at 30 June 2017, the Group has non-cancellable operating lease commitments of HK$479,000 (Note 31(a)). However, the Group has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Group’s profit and classification of cash flows. Some of the commitments may be covered by the exception for short-term and low value leases and some commitments may relate to arrangements that will not qualify as leases under IFRS 16. The new standard is mandatory for financial years commencing on or after 1 January 2019. The Group does not intend to adopt the standard before its effective date. There are no other IFRSs or interpretations that are not yet effective that would be expected to have a material impact on the Group. ANNUAL REPORT 2017 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (b) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies. (i) (ii) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions with equity holders of the Group. The difference between fair value of any consideration paid and the relevant share acquired of the carrying amount of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. Disposal of subsidiaries When the Group ceases to have control of a subsidiary, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. It means the amounts previously recognised in other comprehensive income are reclassified to profit or loss or transferred to another category of equity or specified/permitted by applicable IFRSs. (iii) Separate financial statements Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable. Impairment testing of the investments in subsidiaries is required upon receiving dividends from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill. (c) Joint arrangements The Group had applied IFRS 11 to all joint arrangements. Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in joint ventures equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group. (d) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (“CODM”). The CODM has been identified as the executive directors of the Company, who are responsible for allocating resources, assessing performance of the operating segments, and making strategic decisions. 59 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (e) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Hong Kong dollars, which is the Company’s functional and the Group’s presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of profit or loss. (iii) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: — — assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each consolidated statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rates on the dates of the transactions); and — all resulting currency translation differences are recognised in other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Currency translation differences arising are recognised in other comprehensive income. (iv) Disposal of foreign operation and partial disposal On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, a disposal involving loss of control over a subsidiary that includes a foreign operation, or a disposal involving loss of joint control over a joint venture that includes a foreign operation), all of the currency translation differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated currency translation differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (that is, reductions in the Group’s ownership interest in joint ventures that do not result in the Group losing joint control) the proportionate share of the accumulated exchange difference is reclassified to profit or loss. ANNUAL REPORT 2017 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (f) Mining properties Mining properties are stated in the balance sheet at cost less subsequent accumulated amortisation and any accumulated impairment losses. Mining properties are amortised using the units of production method based on the proven and probable mineral reserves and starts when commercial production commences. Mining properties acquired in a business combination are identified and recognised as intangible assets separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair values at the acquisition date. Impairment reviews of mining properties are undertaken if events or changes in circumstances indicate a potential impairment. The carrying value of mining properties is compared to the recoverable amount, which is the higher of value-in-use and the fair value less costs of disposal. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Mining properties that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. (g) Property, plant and equipment Property, plant and equipment including buildings held for use in the production or supply of goods or services, or for administrative purposes, other than construction in progress, are stated at historical cost less subsequent accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the consolidated statement of comprehensive income during the financial period in which they are incurred. Depreciation is calculated using the straight-line method to allocate their cost to their residual value at the following rates per annum: Buildings Leasehold improvements Plants, furniture, fixtures and equipment Motor vehicles 5% Shorter of remaining lease terms or 25% 12.5% — 25% 10% — 20% The assets’ residual value and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Construction-in-progress represents buildings, plant and machinery under construction and ending installation and is stated at cost less accumulated impairment losses, if any. Cost includes the costs of construction of buildings, the costs of plant and machinery and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policies. No provision for depreciation is made on construction-in-progress until such time as the relevant assets are completed and ready for intended use. When the assets concerned are brought to use, the costs are transferred to property, plant and equipment and depreciated in accordance with the policy as stated above. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised in the consolidated statement of comprehensive income. (h) Impairment of non-financial assets Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 61 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (i) Financial assets Classification The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group’s loans and receivables comprise “other receivables and deposits”, “amounts due from related parties” and “cash and cash equivalents” in the consolidated balance sheet. Recognition and measurement Regular way purchases and sales of financial assets are recognised on the trade-date — the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterpart. Impairment of financial assets Assets carried at amortised cost The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated statement of comprehensive income. If a loan or held- to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of comprehensive income. ANNUAL REPORT 2017 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (j) Other receivables Receivables are amounts due from vendors for goods provided or services performed. If collection of other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. (k) (l) (m) (n) Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held at call with banks. Share 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. Trade and other payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. (o) Borrowing costs General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. (p) Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated statement of comprehensive income, except to the extent that it relates to items recognised directly in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity respectively. All wholly-owned Australian subsidiaries of the Company form a tax consolidated group under Australian tax law and are taxed as a single entity. Brockman Mining Holdings (Australia) Pty Ltd (“BMH”), a wholly-owned subsidiary of the Company, is the head entity of the Australian tax consolidated group. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. 63 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (p) Current and deferred income tax (Continued) Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination which at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the Group is unable to control the reversal of the temporary difference for associates. Only when there is an agreement in place that gives the Group the ability to control the reversal of the temporary difference in the foreseeable future, deferred tax liability in relation to taxable temporary differences arising from the associate’s undistributed profits is not recognised. Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. (q) Employee benefits (i) Short-term obligations Salaries, annual bonuses, annual leave entitlement and the cost of non-monetary benefits expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. (ii) Other long term employee benefit obligations The liability for long service payment which is not expected to be settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of the expected future payments to be made in respect of services provided by employees up to the end of a reporting period. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of services. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. (iii) Pension obligations The Group participates in various defined contribution schemes. The schemes are generally funded through payments to insurance companies, trustee-administrated funds or the relevant government authorities. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to the employee services in the current and prior periods. Payments to state-managed retirement benefit and Mandatory Provident Fund retirement benefits scheme are charged as expenses when employees have rendered services entitling them to the contributions. For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available. ANNUAL REPORT 2017 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (r) Share-based payments (a) Equity-settled share-based payment transactions The Group operates equity-settled, share-based compensation plans, under which the entity receives services from directors, employees or consultants as consideration for equity instruments (share options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted: • • • Including any market performance conditions (for example, an entity’s share price); Excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining as an employee of the entity over a specified time period); and Including the impact of any non-vesting conditions (for example, the requirement for employees to save or holding shares for a specified period of time). When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. (b) Share-based payment transactions among group entities The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity in the parent entity accounts. (s) Provisions Provisions for environment restoration, restructuring costs and legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using pre-tax that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. (t) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for inventories supplied in the normal course of business, net of goods and services tax or value-added tax, discounts. Revenue on provisionally priced sales is recognised at the estimated fair value of the total consideration received or receivable. Contract terms for copper ore concentrates allow for a price adjustment based on the final assay of the goods by the customer to determine content. Recognition of the sales revenue for copper ore concentrates is based on the most recently determined estimate of product specifications with a subsequent adjustment made to revenue upon final determination. 65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (u) Interest income Interest income from a financial asset is accrued on a time basis at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. (v) Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the consolidated statement of comprehensive income over the year necessary to match them with the costs that they are intended to compensate. (w) Exploration and evaluation costs The Group has a policy of expensing all exploration and evaluation expenditure, except for acquisition costs, in the financial year in which it is incurred, unless its recoupment out of revenue to be derived from the successful development of the prospect, or from sale of that prospect, is assured beyond reasonable doubt. (x) Consumption tax (Goods and Services Tax and Value-added Tax) Revenues, expenses and assets are recognised net of the amount of consumption tax except: • where the consumption tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the consumption tax 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 are stated with the amount of consumption tax included. The net amount of consumption tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the consolidated statement of cash flows on a gross basis and the consumption tax 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 consumption tax recoverable from, or payable to, the taxation authority. (y) Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of comprehensive income on a straight-line basis over the period of the lease. ANNUAL REPORT 2017 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Impairment of mining properties in Australia Mining properties are reviewed for impairment whenever events or changes in circumstances indicate a potential material change to the recoverable value of the mining properties. The Group performs an assessment of impairment indicators, taking into account the long-term iron ore price, estimated mine life, production volumes, capital and operating costs and long term exchange rate of A$ to US$, and determines if there is indication that the recoverable value of the mining properties has materially changed and performs further impairment assessment. Determining whether the mining properties in Australia are impaired requires an estimation of the recoverable amount of the cash-generating unit to which the mining properties have been allocated, by value-in-use and fair value less costs of disposal approaches. The Group estimates the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. Where the actual future cash flows are less than expected, a material impairment loss may arise. As at 30 June 2017, the carrying amount of the mining properties is approximately HK$829,031,000 (2016: HK$797,807,000). There is no impairment loss recognised for the year ended 30 June 2017 (2016: HK$436,351,000). (Details of the key assumptions used are disclosed in Note 19.) (b) Income taxes While deferred income tax liabilities are provided in full on all taxable temporary differences, deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. In assessing the amount of deferred income tax assets that need to be recognised, the Group considers future taxable income and ongoing prudent and feasible tax planning strategies. In the event that the Company’s estimates of projected future taxable income and benefits from available tax strategies are changed, or changes in current income tax regulations are enacted that would impact the timing or extent of the Company’s ability to utilise the temporary differences in the future, adjustments to the recorded amount of net deferred income tax assets and income tax expense would be made. As at 30 June 2017, the Group did not recognise any deferred income tax assets in the balance sheet. Details of the Group’s deferred income tax are set out in Note 28. 5 CAPITAL RISK MANAGEMENT The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debts and equity balances. The directors of the Company consider that the capital structure of the Group consists of long-term debts, and equity attributable to equity holders of the Company comprising issued capital and reserves. The directors of the Company review the capital structure by considering the cost of capital and the risks associated with each class of capital. Based on recommendations of the directors, the Group will balance its overall capital structure through payment of dividends, new share issues as well as the issue of the new debt or the repayment of existing debts. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. The gearing ratios at 30 June 2017 and 2016 were as follows: Long-term debts (including borrowings, due to related parties and other payables to a third party) Total equity Total capital Gearing ratio 2017 HK$’000 85,537 463,963 549,500 15.57% 2016 HK$’000 33,625 487,417 521,042 6.45% 67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6 FINANCIAL RISK MANAGEMENT (a) Financial risk factors The Group’s activities expose itself to a variety of financial risks: market risk (including foreign exchange risk, commodities price risk, cash flow and fair value interest rate risk), credit risk and liquidity risk. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. The Group does not and is prohibited to enter into derivative contracts for speculative purposes. (i) Foreign exchange risk The Group mainly operates in Hong Kong, the PRC and Australia with most of the transactions originally denominated in the respective local currency. Foreign exchange risk arises when future commercial transactions or recognised financial assets or liabilities are denominated in a currency that is not the entity’s functional currency. The Group is exposed to foreign exchange risk from various currencies, primarily with respect to Australian Dollars (“A$”), Renminbi (“RMB”) and United States Dollars (“US$”). The Group manages its foreign exchange risk by performing regular reviews of the Group’s net foreign exchange exposures and through natural hedges wherever possible. The Group does not use any derivative financial instrument to mitigate the foreign exchange risk. Given the exchange rate peg between the HK$ and the US$, the Group will not be exposed to any significant exchange rate risk for the transactions conducted in HK$ or US$. As at 30 June 2017 and 2016, the Group was not exposed to any significant exchange risk for RMB and A$ as most of the Group’s RMB or A$ denominated financial assets and liabilities are held by the Group’s companies with RMB or A$ as the functional currency. (ii) Commodities price risk The Group’s iron ore projects in Australia are yet to commence commercial operations and are therefore not exposed to any commodity price volatility. However, iron ore price fluctuation will be relevant to its future activities. The Group does not use any derivative financial instrument for speculation or hedging purposes. As at 30 June 2017 and 2016, the Group is not exposed to any significant commodities price as the commodities price movements do not affect the measurement of the carrying amount of its financial assets or liabilities. ANNUAL REPORT 2017 6 FINANCIAL RISK MANAGEMENT (Continued) (a) Financial risk factors (Continued) (iii) Cash flow and fair value interest rate risks The Group is exposed to interest rate volatility on its financial assets and liabilities. As at 30 June 2017, the Group was exposed to fair value interest rate risk relating to non-current other payables and borrowings. However, the impact of interest rate movements is not material. The Group does not have an interest rate hedging policy. However, management monitors interest rate exposures and will consider hedging significant interest rate exposures should the need arises. (iv) Credit risk The Group’s maximum exposure to credit risk which could cause a financial loss to the Group due to failure to discharge an obligation by the counterparties arises from the carrying amount of the other receivables and deposits, amounts due from related parties and cash and cash equivalents as stated in the consolidated balance sheet. Management reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the credit risk of the Group is significantly reduced. The credit risk on cash and cash equivalents is limited for the Group because counterparties are mainly the banks with high credit-rating. The Group manage concentration of credit risk, with exposure spread over a number of financial institutions. (v) Liquidity risk The Group monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The Group generally finances its short term funding requirement with facilities available from shareholders, credit facilities from suppliers and equity funding. The Group’s ability to deliver its Marillana iron ore project is reliant on access to appropriate export infrastructure and timely funding. 69 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6 FINANCIAL RISK MANAGEMENT (Continued) (a) Financial risk factors (Continued) Liquidity risk (Continued) (v) The following table details the Group’s remaining contractual maturities for its financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. As at 30 June 2017 Non-derivative financial liabilities: Trade payables Other payables Borrowings Amounts due to related parties As at 30 June 2016 Non-derivative financial liabilities: Trade payables Other payables Borrowings Amounts due to related parties Within 1 year of demand HK$’000 Total undiscounted cash flows HK$’000 Carrying amount at year end date HK$’000 1-2 years HK$’000 10,722 15,020 — 186 25,928 10,872 22,593 — 1,245 34,710 — 33,251 59,771 1,392 94,414 — 26,853 8,661 — 35,514 10,722 48,271 59,771 1,578 10,722 46,354 52,812 1,578 120,342 111,466 10,872 49,446 8,661 1,245 70,224 10,872 48,133 8,085 1,245 68,335 (b) Fair value estimation The fair values of the Group’s financial assets, including other receivables and deposits, amounts due from related parties and cash and cash equivalents; and the Group’s financial liabilities, including trade and other payables, amounts due to related parties and borrowings, approximate their carrying amounts due to their short-term maturities. 7 REVENUE Revenue represents the amounts received and receivable from sales of mineral ore products for the year. An analysis of the Group’s revenue for the year is as follows: Sales of copper ore concentrates Year ended 30 June 2017 HK$’000 — 2016 HK$’000 11,590 ANNUAL REPORT 2017 8 SEGMENT INFORMATION Operating segments are reported in a manner consistent with internal reporting provided to executive directors of the Company, the Group’s CODM who are responsible for allocating resources and assessing performance of the operating segments. The executive directors consider the performance of the Group from a business perspective. (a) Business segments The Group’s reportable operating segments are as follows: Mineral tenements in — tenements acquisition, exploration and towards future development of iron ore Australia project in Western Australia Mining operations in the PRC — exploitation, processing and sales of copper ore concentrates in the PRC Others primarily relate to the provision of corporate services for investment holding companies. These activities are excluded from the reportable operating segments and are presented to reconcile to the totals included in the Group’s consolidated statement of comprehensive income and consolidated balance sheet. CODM has been identified as the executive directors. CODM reviews the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports. CODM assesses and reviews the performance of the operating segments based on segment results which is calculated as loss before income tax. Segment assets reported to CODM are measured in a manner consistent with that in the consolidated balance sheet. The following is an analysis of the Group’s revenue and results by business segment: Mineral tenements in Australia HK$’000 Mining operation in the PRC HK$’000 For the year ended 30 June 2017: Segment revenue from external customers Segment results Other information: Depreciation of property, plant and equipment Impairment losses Exploration and evaluation expenses Reversal of over-provision of social security expenses Share of losses of joint ventures — (20,355) (295) — (20,730) — (717) — (801) — (3,538) — 3,851 — Others HK$’000 Total HK$’000 — — (17,152) (38,308) (36) — — — — (331) (3,538) (20,730) 3,851 (717) 71 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 8 SEGMENT INFORMATION (Continued) (a) Business segments (Continued) Mineral tenements in Australia HK$’000 Mining operation in the PRC HK$’000 Others HK$’000 Total HK$’000 For the year ended 30 June 2016 Segment revenue from external customers — 11,590 — 11,590 (482,418) (256,482) (19,163) (758,063) Segment results Other information: Depreciation of property, plant and equipment Impairment losses Write-off of inventories Amortisation of mining properties (460) (436,351) — — Exploration and evaluation expenses (16,615) Reversal of over-provision of social security expenses Share of losses of joint ventures Additional stamp duty assessment Income tax credit — (909) (17,777) 130,905 (4,347) (242,040) (3,451) (2,100) (3,254) 2,402 — — — (403) — — — — — — — — (5,210) (678,391) (3,451) (2,100) (19,869) 2,402 (909) (17,777) 130,905 The revenue from external parties reported to executive directors of the Company is measured in a manner consistent with that in the consolidated statement of comprehensive income. There was no revenue recognised for the year ended 30 June 2017 whilst for the year ended 30 June 2016, revenue of HK$11,590,000 represented sales to a single customer from the PRC. The following is an analysis of the Group’s assets by business segment as at the respective balance sheet dates: As at 30 June 2017: Segment assets Total segment assets include: Interests in joint ventures Additions to property, plant and equipment As at 30 June 2016: Segment assets Total segment assets include: Interests in joint ventures Additions to property, plant and equipment Mineral tenements in Australia HK$’000 Mining operation in the PRC HK$’000 836,018 430 3,263 26 — — Others HK$’000 Sub-total HK$’000 22,586 858,630 — — 430 3,263 801,992 3,670 30,291 835,953 242 173 — 1,247 — 9 242 1,429 ANNUAL REPORT 2017 8 SEGMENT INFORMATION (Continued) (b) Geographical information The mining operation is located in the PRC and the mineral tenements are located in Australia. The following is an analysis of the carrying amounts of the Group’s mining properties, property, plant and equipment and interests in joint ventures analysed by geographical area in which the assets are located: Hong Kong Australia 9 EXPENSES BY NATURE Amortisation of mining properties (included in cost of sales) Auditor’s remuneration — Audit services — Non-audit services Cost of inventories Write-off of inventories Depreciation of property, plant and equipment Operating lease expenses Employee benefit expense (Note 10) Exchange (gain)/loss Exploration and evaluation expenses (excluding staff costs and rental expenses) 2017 HK$’000 19 833,115 833,134 2016 HK$’000 61 798,641 798,702 2017 HK$’000 — 2016 HK$’000 2,100 1,080 580 — — 331 1,864 21,239 (7,938) 13,741 1,400 559 4,807 3,451 5,210 7,296 26,444 3,567 11,959 73 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 10 EMPLOYEE BENEFIT EXPENSE Wages, salaries and welfares Retirement benefit scheme contributions Share-based compensation 2017 HK$’000 19,858 1,315 66 21,239 2016 HK$’000 24,799 1,396 249 26,444 (a) Five highest paid individuals Of the five individuals who received the highest emoluments in the Group for the year, two (2016: two) are the directors of the Company whose emoluments are disclosed in Note 16. The emoluments of the remaining three (2016: three) individuals are as follows: Salaries and other benefits Contribution to retirement benefit scheme Compensation for loss of office The emoluments of the remaining individuals fell within the following bands: HK$1,500,001 — HK$2,000,000 HK$2,000,001 — HK$2,500,000 HK$2,500,001 — HK$3,000,000 2017 HK$’000 5,972 424 — 6,396 Number of individuals 2017 — 3 — 3 2016 HK$’000 5,365 410 895 6,670 2016 2 — 1 3 11 OTHER INCOME Government grant (Note a) Write back of long outstanding payables Others ANNUAL REPORT 2017 2017 HK$’000 647 394 — 1,041 2016 HK$’000 425 1,517 7 1,949 Notes: (a) Government grant mainly represents incentive credits provided by the Australia Federal Government, for research and development activities carried out in Australia. 12 OTHER GAINS/(LOSSES) Additional stamp duty assessment (Note) Gain/(loss) on disposal of property, plant and equipment Note: 2017 HK$’000 — 2 2 2016 HK$’000 (17,777) (405) (18,182) The acquisition of Brockman Resources Limited Pty Ltd (now known as Brockman Mining Australia Pty Ltd) in 2012, resulted in Western Australian stamp duty being incurred, primarily relating to the acquisition land value attributable to the iron ore projects acquired. In December 2013, the Office of State Revenue in Western Australia (‘OSR’) issued an interim assessment notice for A$11,700,000 (equivalent to HK$82,961,000) which was broadly consistent with Group’s self-assessment and independent valuation of the acquired land and chattel, which the Company paid in January 2014. In February 2016, the Group received a final assessment from the OSR amounted to A$4,465,000 (equivalent to HK$26,304,000). The Group paid this additional sum in accordance with OSR requirements and lodged an objection seeking to recover this additional sum assessed. In light of the uncertainty surrounding the outcome of the objection, the Group has not raised any receivable and is awaiting the outcome of the objection. 13 IMPAIRMENT LOSSES Impairment of mining properties (Note 19) Impairment of property, plant and equipment (Note 20) Impairment of other non-current assets Impairment of other receivables 2017 HK$’000 — — — 3,538 3,538 2016 HK$’000 645,152 20,881 12,358 — 678,391 75 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 14 FINANCE COSTS, NET Finance income Interest income on bank deposits Finance costs Interest expenses on borrowings (Note 29) Reversal/(unwinding) of interests on long-term payables Finance costs, net 2017 HK$’000 2016 HK$’000 41 356 (4,122) 608 (3,473) (254) (641) (539) 15 INCOME TAX CREDIT No provision for Hong Kong Profits tax or overseas income tax has been made in the consolidated financial statements as the Group has no assessable profit for the year (2016: Nil). The applicable corporate income tax rates are 25% and 30% for subsidiaries in the PRC and Australia, respectively. Deferred income tax (Note 28) 2017 HK$’000 — 2016 HK$’000 (130,905) The income tax on the Group’s loss before income tax differs from the theoretical amount that would arise using the enacted tax rate of the consolidated entities as follows: Loss before income tax Tax calculated at the applicable domestic tax rate of respective companies (Note) Income not subject to tax Expenses not deductible for tax purposes Tax losses for which no deferred income tax asset was recognised Note: The weighted average applicable tax rate was 23.9% (2016: 25.6%). 2017 HK$’000 (38,308) (9,137) (3,396) 922 11,611 — 2016 HK$’000 (758,063) (194,080) (70) 51,020 12,225 (130,905) ANNUAL REPORT 2017 16 BENEFITS AND INTERESTS OF DIRECTORS (a) Directors’ emoluments The remuneration of every director for the year ended 30 June 2017 is set out below: Discretionary bonuses HK$’000 Housing allowance HK$’000 Estimated money value of other benefits (Note (ii)) HK$’000 Employer’s contribution to a retirement benefit scheme HK$’000 — — — — — — — — — — — 960 — — — — — — — 960 — — — — — — — 66 66 — 50 50 — — — — — 205 305 Fees HK$’000 — — — 240 228 228 228 228 — 1,152 Salary HK$’000 — 40 1,000 — — — — — 2,443 3,483 Name Kwai Sze Hoi Chan Kam Kwan, Jason Kwai Kwun, Lawrence Liu Zhengui Yap Fat Suan, Henry Choi Yue Chun, Eugene Uwe Henke Von Parpart Ross Steward Norgard Colin Paterson Total The remuneration of every director for the year ended 30 June 2016 is set out below: Name Kwai Sze Hoi Chan Kam Kwan, Jason Kwai Kwun, Lawrence Warren Talbot Beckwith (Note (i)) Liu Zhengui Yip Kwok Cheung, Danny (Note (i)) Yap Fat Suan, Henry Choi Yue Chun, Eugene Uwe Henke Von Parpart Ross Steward Norgard Colin Paterson Total Fees HK$’000 — — — — 240 77 228 228 228 228 — 1,229 Salary HK$’000 — 40 1,000 — — — — — — — 2,118 3,158 No director waived any emoluments during the year. Discretionary bonuses HK$’000 Housing allowance HK$’000 Estimated money value of other benefits (Note (ii)) HK$’000 Employer’s contribution to a retirement benefit scheme HK$’000 — 83 83 — — — — — — — — — 960 — — — — — — — — — 166 960 — — — — — — — — — — 249 249 — 50 50 — — — — — — — 197 297 Total HK$’000 — 1,050 1,050 240 228 228 228 228 2,714 5,966 Total HK$’000 — 1,133 1,133 — 240 77 228 228 228 228 2,564 6,059 77 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 16 BENEFITS AND INTERESTS OF DIRECTORS (Continued) (a) Directors’ emoluments (Continued) Note: (i) Warren Talbot Beckwith and Yip Kwok Cheung, Danny resigned as independent non-executive directors on 2 July 2015 and 2 November 2015 respectively. (ii) Other benefits This represents non-cash benefits including share options. (b) Directors’ retirement benefits No retirement benefits were paid to or receivable by any directors in respect of their other services in connection with the management of the affairs of the Company or its subsidiaries undertaking (2016: Nil). (c) Directors’ termination benefits No payment was made to directors as compensation for early termination of the appointment during the year (2016: Nil). (d) Consideration provided to third parties for making available directors’ services No payment was made to the former employer of directors for making available the services of them as a director of the Company (2016: Nil). (e) Information about loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors As at 30 June 2017, there are no loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors during the year (2016: Nil). (f) Directors’ material interests in transactions, arrangements or contracts No significant transactions, arrangements and contracts in relation to the Company’s business to which the Company was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year (2016: Nil). (g) Remuneration paid or receivable in respect of accepting office as director There are no remuneration paid or receivable in respect of accepting office as director and other emoluments paid or receivable in respect of director’s other services in connection with the management of the affairs of the Company or its subsidiary undertaking during the year (2016: Nil). ANNUAL REPORT 2017 17 LOSS PER SHARE Basic loss per share is calculated by dividing the loss attributable to the equity holders of the Company by the weighted average number of ordinary shares in issue during the year. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. Loss for the year attributable to the equity holders of the Company (HK$’000) Weighted average number of ordinary shares for the purpose of calculating the basic and diluted loss per share (thousands) Loss per share attributable to the equity holders of the Company — Basic (HK cents) — Diluted (HK cents) Year ended 30 June 2017 2016 (38,308) (627,158) 8,381,982 8,381,982 (0.46) (0.46) (7.48) (7.48) Diluted loss per share is the same as basic loss per share for the year ended 30 June 2017 and 2016 because the effect of the assumed exercise of share options of the Company during these years was anti-dilutive. 18 DIVIDEND No dividend was paid or proposed during the year ended 30 June 2017, nor has any dividend been proposed since the balance sheet date (2016: Nil). 79 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 19 MINING PROPERTIES At 1 July 2015 Amortisation Impairment losses (Note 13) Exchange differences At 30 June 2016 Exchange differences At 30 June 2017 Mining right in the PRC HK$’000 226,635 (2,100) (208,801) (15,734) — — — Mining properties in Australia HK$’000 1,277,938 — (436,351) (43,780) 797,807 31,224 829,031 Total HK$’000 1,504,573 (2,100) (645,152) (59,514) 797,807 31,224 829,031 Mining properties in Australia The mining properties in Australia represent the carrying value of mining and exploration projects in Australia (including the Marillana iron ore project) acquired by the Group. For the year ended 30 June 2017 As at 30 June 2017, the Group assessed whether events or changes in circumstances indicate a potential material change to the recoverable value of the mining properties since 30 June 2016. The Group performed an assessment of impairment indicators, taking into account the long-term iron ore price, estimated mine life, production volumes, capital and operating costs and long term exchange rate of A$ to US$. Based on this assessment, management concluded that as at 30 June 2017, there is no indication that the recoverable value of the mining properties has materially changed and thus impairment assessment is not required. For the year ended 30 June 2016 During the year ended 30 June 2016, the Group has assessed and concluded that the then significant decline in long term iron ore price forecasts from 30 June 2015 to be impairment indicator and therefore performed an impairment assessment as at 31 December 2015. Key assumptions used in determining the recoverable amount at this date are summarised as follows: Estimated mine life 31 December 2015 30 June 2015 25 years from 2019 25 years from 2020 Long-term iron ore price (per dry metric tonne unit (“dmtu”)) UScents 80/dtmu UScents 97/dmtu Total production mined* Long term exchange rate of A$ to US$ Discount rate 249 million tonnes 467 million tonnes 0.70 12.5% 0.72 13.0% * The carrying value assessment matched production rates with an initial optimised mine plan. This mine plan used a higher cut-off grade to maximise returns over an initial 20 years mine life at reduced production rates. Reserve tonnes in excess of this initial optimised mine plan remain available for future mine planning. ANNUAL REPORT 2017 19 MINING PROPERTIES (Continued) Based on the above impairment assessment, an impairment loss of approximately HK$436,351,000 was recognised in the first half of the year ended 30 June 2016. The impairment reduces the deferred income tax liability brought to account following the business combination relating to the value attributed to the mine properties acquired. The reduction in the deferred income tax liability as a result of the impairment was HK$130,905,000. Subsequent to the impairment loss recognised in the first half of the year ended 30 June 2016, the Group has continued to assess whether any indications of impairment exist with reference to both external and internal sources of information. As at 30 June 2016, the Group assessed and concluded there were no indications of impairment present, noting that key assumptions utilised in determining the recoverable value of the mining properties in Australia remain consistent with those utilised during the previous assessment. Methodology As at 31 December 2015, the recoverable amount of the mining properties in Australia (including the Marillana iron ore project) was determined by applying the fair value less cost of disposal approach with reference to the discounted cash flow forecasts which applied the valuation assumptions that a knowledgeable and willing buyer would be expected to use. The fair value estimates are considered to be level 3 fair value measurements; they are derived from valuation techniques which include inputs that are not based on observable market data. The Group considers the inputs and the valuation approach to be consistent with the approach expected to be taken by market participants. Future cash flows are based on a number of assumptions, including commodity price expectations which is based on market consensus forecasts, foreign exchange rates, reserves and resources and expectations regarding future operating performance and capital requirements which are subject to risk and uncertainty. An adverse change in one or more of the assumptions used to estimate fair value could result in a reduction of the estimated fair value. 81 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 20 PROPERTY, PLANT AND EQUIPMENT For the year ended 30 June 2016 At 1 July 2015 Additions Disposals Depreciation Impairment loss (Note 13) Exchange differences At 30 June 2016 At 30 June 2016 Cost Accumulated depreciation Net book amount For the year ended 30 June 2017 At 1 July 2016 Additions Disposals Depreciation Exchange differences At 30 June 2017 At 30 June 2017 Cost Accumulated depreciation Net book amount Leasehold improvements HK$’000 Buildings HK$’000 9,432 1,100 — — (671) (8,053) (708) — — — — — (317) (351) (399) (33) — — — — Plants, furniture, fixtures and equipment HK$’000 16,816 1,429 (238) (4,150) (12,036) (1,168) 653 1,286 (633) 653 Leasehold improvements HK$’000 Buildings HK$’000 Plants, furniture, fixtures and equipment HK$’000 Motor vehicles HK$’000 Subtotal HK$’000 Construction in progress HK$’000 66 — — (38) (23) (5) — 3,748 (3,748) — 27,414 1,429 (555) (5,210) (20,511) (1,914) 653 5,034 (4,381) 653 401 — — — (370) (31) — — — — Total HK$’000 27,815 1,429 (555) (5,210) (20,881) (1,945) 653 5,034 (4,381) 653 Motor vehicles HK$’000 Subtotal HK$’000 Construction in progress HK$’000 Total HK$’000 — — — — — — — — — — — — — — — — — — 653 4 (6) (331) 15 335 1,456 (1,121) 335 — — — — — — 3,748 (3,748) — 653 4 (6) (331) 15 335 5,204 (4,869) 335 — 3,259 — — 79 3,338 3,338 — 3,338 653 3,263 (6) (331) 94 3,673 8,542 (4,869) 3,673 There was no depreciation expense (2016: HK$3,381,000) included in cost of sales and depreciation of HK$331,000 (2016: HK$1,829,000) was included in selling and administrative expenses. 21 FINANCIAL INSTRUMENTS Loan and receivables Other non-current assets Other receivables and deposits Amounts due from related parties Cash and cash equivalents Other financial liabilities at amortised cost Trade payables Other payables Borrowings Amounts due to related parties 22 CASH AND CASH EQUIVALENTS Cash on hand Bank balances Short-term bank deposits The balance of cash and cash equivalents are denominated in the following currencies: HK$ A$ RMB US$ 23 OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Other receivables Deposits Prepayments ANNUAL REPORT 2017 2017 HK$’000 283 797 — 23,995 25,075 2017 HK$’000 10,722 46,354 52,812 1,578 111,466 2017 HK$’000 13 23,982 — 23,995 2017 HK$’000 3,191 2,040 15 18,749 23,995 2017 HK$’000 794 3 421 1,218 2016 HK$’000 273 1,499 2,176 32,772 36,720 2016 HK$’000 10,872 48,133 8,085 1,245 68,335 2016 HK$’000 29 13,303 19,440 32,772 2016 HK$’000 4,376 2,967 34 25,395 32,772 2016 HK$’000 1,194 305 531 2,030 83 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 24 TRADE PAYABLES Trade payables of the Group principally represent amounts outstanding to suppliers. The normal credit period is between 30 days and 90 days. In certain circumstances, the credit period has been extended to over 90 days. As at 30 June 2016 and 30 June 2017, all trade payables are due over 90 days. 25 OTHER PAYABLES, ACCRUED CHARGES AND PROVISION Accrued payroll and employee benefits Provision for land restoration costs Other payables and accrued expenses (Note a) Receipt in advance Less: Non-current portion Amount shown under current liabilities 2017 HK$’000 18,460 12,718 49,926 1,634 82,738 (32,177) 50,561 2016 HK$’000 22,852 12,843 54,168 950 90,813 (26,605) 64,208 Amounts classified as non-current liabilities are unsecured, interest-free and not repayable within 12 months and is carried at amortised cost using the effective interest method. Note: (a) The balance mainly represents fund advance from third parties, provision of long service leave, payables for purchase of fixed assets and other miscellaneous payables and accruals. 26 SHARE CAPITAL Ordinary shares of HK$0.1 each Authorised: At 1 July 2015 and 30 June 2016 Increase in authorised shares At 30 June 2017 Issued and fully paid: Number of shares ’000 Share capital HK$’000 10,000,000 10,000,000 20,000,000 1,000,000 1,000,000 2,000,000 As at 1 July 2015, 30 June 2016 and 2017 8,381,982 838,198 ANNUAL REPORT 2017 27 SHARE OPTION SCHEME Share option scheme of the Company The 2012 share option scheme (the “2012 Share Option Scheme”) of the Company was adopted by the Company pursuant to the approval by shareholders at the Annual General Meeting on 13 November 2012. The 2012 Share Option Scheme replaced the old share option scheme which expired in August 2012 for the primary purpose of providing incentives or rewards to selected participants for their contribution to the Group. The 2012 Share Option Scheme is valid and effective for a period of ten years from the date of its adoption and expired in August 2022. Share options granted under the old share option scheme prior to its expiry shall continue to be valid and exercisable pursuant to its rule. The fair value of the employee services and consultancy services received in exchange for the grant of the share options is recognised as an expense, with a corresponding adjustment to employee share-based compensation reserve, over the vesting period. At the end of each reporting period, the Company revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the consolidated statement of comprehensive income, with a corresponding adjustment to equity. Details of specific categories of outstanding options as at 30 June 2016 and 30 June 2017 are as follows: Option type Date of grant Vesting period Number of share options granted Exercise period Exercise price (HK$) 2015A 19 January 2015 19 January 2015 19 January 2015 — 18 January 2016 19 January 2015 — 18 January 2017 4,000,000 4,000,000 19 January 2016 – 18 January 2018 19 January 2017 – 18 January 2018 0.450 0.450 The fair values of all the share options were calculated using the Binomial model prepared by an independent valuer. The inputs into the model were as follows: Exercise price Volatility Expected option life Annual risk-free rate Expected dividend yield 2015A HK$0.45 49% 3 years 0.648% 0% The volatility measured at grant date is referenced to the historical volatility of shares of the Company. For the year ended 30 June 2017, the Company recognised the total expense of HK$66,000 (2016: reversal of HK$249,000) in relation to the share options granted by the Company or forfeited during the year. Movements in the number of share options outstanding and their related weighted average exercise prices are as follows: 2017 2016 Average exercise price in HK$ per share option Number of share options (thousands) Average exercise price in HK$ per share option 0.45 — 0.45 8,000 — 8,000 0.81 0.82 0.45 Number of share options (thousands) 316,500 (308,500) 8,000 At 1 July Lapsed At 30 June As at 30 June 2017, out of the 8,000,000 outstanding options (2016: 8,000,000 outstanding options), 4,000,000 options (2016: 4,000,000 options) were vested during the year and become exercisable, with weighted average exercise price of HK$ 0.45 (2016: HK$0.45) per option. There options will be expired on 18 January 2018. 85 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 27 SHARE OPTION SCHEME (Continued) Share option scheme of the Company (Continued) As at 30 June 2017, the weighted average remaining contractual life of outstanding share options was 0.6 year (2016: 1.6 years). No share option had been exercised during the year (2016: Nil). 28 DEFERRED INCOME TAX The following is the major deferred income tax liabilities recognised by the Group and movements thereon during the current and prior year: At 1 July 2015 Credited to consolidated statement of comprehensive income Exchange differences At 30 June 2016 Exchange differences At 30 June 2017 Mining properties in Australia HK$’000 (381,510) 130,905 13,084 (237,521) (9,296) (246,817) All deferred tax liabilities are expected to be settled more than twelve months after the balance sheet. Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred income tax assets in respect of losses amounting to approximately HK$1,485,000,000 as at 30 June 2017 (2016: HK$1,429,000,000). Tax losses of HK$1,388,000,000 (2016: HK$1,333,000,000) are available indefinitely to offset against future taxable income, of which HK$1,166,000,000 (2016: HK$1,128,000,000) is relating to overseas subsidiaries which the utilisation of tax losses is subject to the satisfaction of the loss recoupment rules in respective tax jurisdiction. Tax losses of HK$97,000,000 (2016: HK$96,000,000) will expire in one to five years from 30 June 2017. 29 BORROWINGS Non-current Loan from a substantial shareholder Loan from a third party 2017 HK$’000 43,782 9,030 52,812 2016 HK$’000 — 8,085 8,085 As at 30 June 2016, the loan from a third party was repayable on 31 December 2017. It is denominated in Renminbi and carry interests at prevailing market interest rates in the PRC. During the year, the third party agreed to extent the repayment date to 31 December 2018. During the year ended 30 June 2017, the weighted average effective interest rate per annum was 4.83% (2016: 4.83%). As at 30 June 2017, the borrowing from a substantial shareholder is unsecured, bears interest at 12% per annum and repayable on 30 October 2018. 30 NOTES TO STATEMENT OF CASH FLOWS (a) Cash used in operating activities Cash flows from operating activities Loss before income tax Adjustments for: Impairment losses Write-off of inventories Write-back of long outstanding payables Depreciation of property, plant and equipment Amortisation of mining properties Share-based compensation Additional stamp duty assessment Finance income Finance costs (Gain)/Loss on disposal of property, plant and equipment (note b) Share of losses of joint ventures Exchange (gain)/loss Operating cash flows before movements in working capital Decrease in inventories (Increase)/decrease in other receivables and deposits (Decrease)/increase in provisions Decrease in trade and other payables Increase in amounts due to related parties Cash used in operating activities (b) In the statement of cash flows, proceeds from disposals of property, plant and equipment comprise: Net book amount (Note 20) Gain/(loss) on disposal of property, plant and equipment (Note 12) Proceeds from disposal of property, plant and equipment Year ended 30 June 2017 HK$’000 6 2 8 ANNUAL REPORT 2017 Year ended 30 June 2017 HK$’000 2016 HK$’000 (38,308) (758,063) 3,538 — (394) 331 — 66 — (41) 3,514 (2) 717 (7,938) (38,517) — (549) (233) (5,614) 340 (44,573) 678,391 3,451 (1,517) 5,210 2,100 249 17,777 (356) 895 405 909 3,567 (46,982) 509 3,978 173 (3,945) 1,120 (45,147) 2016 HK$’000 555 (405) 150 87 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 COMMITMENTS (a) (b) (c) Operating lease commitments (i) The Group had commitments mainly for future minimum lease payments under non-cancellable operating lease in respect of office premises which fall due as follows: Not later than 1 year Later than 1 year and no later than 5 years 2017 HK$’000 479 — 479 2016 HK$’000 955 440 1,395 Leases are negotiated for an average of one year (2016: two years) and rentals are fixed for the lease period. Capital commitments As at 30 June 2017, the Group did not have any capital commitments (2016: Nil) Exploration expenditure commitments In order to maintain current rights of tenure to exploration tenements in Australia, as at 30 June 2017, the Group is required to meet or exceed a minimum level of exploration expenditure of A$1,299,000 equivalent to approximately HK$7,794,000 (2016: A$1,459,000, equivalent to approximately HK$8,424,000), over the next year. Exploration expenditure commitments for subsequent years are contingent upon production of iron ore from the area of interest. Obligations are subject to change upon expiry of the existing exploration leases or when application for a mining lease is made and have not been provided for in the consolidated financial statements. (d) Joint venture commitments The Group is involved in some joint venture arrangements. The Group’s share of such commitment is A$125,000 (equivalent to approximately HK$751,000) (2016: A$126,000, equivalent to approximately HK$723,000). 32 INTERESTS IN JOINT VENTURES At 1 July Contributions to the joint ventures Share of losses Exchange differences At 30 June 2017 HK$’000 2016 HK$’000 242 913 (717) (8) 430 288 894 (909) (31) 242 Details of the Group’s interest in the joint ventures are as follows: Name of joint ventures Interest held in share of output Principal activities North West Infrastructure Pty Ltd (Note a) Irwin-Coglia JV (Note b) 37% 40% Port and related infrastructure Nickel exploration Notes: (a) (b) North West Infrastructure Pty Ltd is a joint venture incorporated in Australia which is seeking to develop port and related infrastructure on behalf of the North West Iron Ore Alliance (“NWIOA”) members. Irwin-Coglia is an unincorporated joint venture operating in Australia for the purpose of exploration activities and holding of tenement interests. ANNUAL REPORT 2017 32 INTERESTS IN JOINT VENTURES (Continued) The management considers the interests in joint ventures are not individually material to the Group. Summarised financial information of the joint ventures is set as below: Loss after tax and total comprehensive loss Group’s share of loss for the year Year ended 30 June 2017 HK$’000 (1,938) (717) 2016 HK$’000 (2,457) (909) 33 RETIREMENT BENEFITS SCHEMES The Group operates a defined contribution retirement benefits scheme (the “MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance for its employees in Hong Kong. The Group contributes at least 5% of the employees’ basic salaries to the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The employees of the Group’s subsidiaries in the PRC are members of a state-managed retirement benefits scheme operated by the PRC government. The PRC subsidiaries are required to contribute an average 20% of payroll costs to the retirement benefits scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit scheme is to make the specified contributions. The employees of the Group subsidiaries in Australia are entitled to superannuation through a defined contribution plan under which fixed contributions of up to 9.50% are required to be made to a superannuation fund with no further legal or constructive obligation to pay. The total cost charged to the cost of sales and selling and administrative expenses of approximately HK$1,315,000 (2016: HK$1,396,000) represents contributions to these schemes by the Group in respect of the current year. 34 RELATED PARTY DISCLOSURES (a) Material related party transactions Save as disclosed elsewhere in this consolidated financial statements, the Group has no significant related party transactions during the year. (b) Related party balances The amounts due from/to related parties included as current assets, current liabilities or non-current liabilities are unsecured, interest-free and repayable on demand. The amount due to a related party included as non-current liabilities is unsecured, interest-free and repayable on 31 December 2018. (c) Compensation of key management personnel The remuneration of directors and other members of key management during the year was as follows: Wages, salaries and other short-term welfare Post-employment benefits Termination benefits Share-based compensation expenses Year ended 30 June 2017 HK$’000 12,115 756 — 66 2016 HK$’000 12,240 754 895 249 12,937 14,138 The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. 89 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 35 SUBSIDIARIES The following is a list of the principal subsidiaries as at 30 June 2017 and 30 June 2016: Name of subsidiaries Place of incorporation Place of operation Subsidiaries directly held by the Company: Brockman Mining (Management) Limited Hong Kong Hong Kong Golden Genie Limited Wah Nam Iron Ore Limited Best Resources Developments Limited Subsidiaries indirectly held by the Company: BVI BVI BVI Hong Kong Hong Kong Hong Kong Brockman East Pty Ltd Australia Australia Brockman Exploration Pty Ltd Australia Australia Brockman Infrastructure Pty Ltd Australia Australia Brockman Iron Pty Ltd Australia Australia Brockman Ports Pty Ltd Australia Australia Brockman Marevick Pty Ltd Australia Australia Brockman Mining Australia Pty Ltd Australia Australia Brockman Mining Holding (Australia) Pty Ltd Australia Australia Particular of issued share capital Proportion ownership interest held by the Company 2017 2016 Principal activities 1 Ordinary share of HK$1 1 Ordinary share of US$1 1 Ordinary share of US$1 1 Ordinary share of US$1 1 Ordinary share of A$1 1 Ordinary share of A$1 1 Ordinary share of A$1 1 Ordinary share of A$1 76 Ordinary shares of A$1 each 2 ordinary share of A$1 each 145,053,151 Ordinary shares of A$1 each 12 Ordinary shares of A$1 each 100% 100% Investment holding 100% 100% Investment holding 100% 100% Investment holding 100% 100% Investment holding 100% 100% Exploration and evaluation 100% 100% Exploration and evaluation 100% 100% Rail infrastructure company 100% 100% Exploration and evaluation 100% 100% Port infrastructure Company 100% — Exploration and evaluation 100% 100% Investment holding 100% 100% Investment holding 綠春鑫泰礦業有限公司 Luchun Xingtai Mining Company Limited (Note a)1 Smart Year Investments Limited PRC BVI Hong Kong PRC RMB20,000,000 100% 100% Exploration, processing and sales of copper ore concentrates Wah Nam Australia Finance Pty Ltd Australia Australia Yilgarn Mining (WA) Pty Ltd Australia Australia 10,000 Ordinary shares of US$1 each 3,027,006 Ordinary shares of A$1 each 841,001 Ordinary shares of A$1 each 100% 100% Investment holding 100% 100% Investment holding 100% 100% Exploration and evaluation Note a: The subsidiary has accounting year end date of 31 December. It prepares, for the purpose of consolidation, financial statements as at the same date as the Group. 1 The English name is for identification purpose only. ANNUAL REPORT 2017 36 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY As at 30 June 2017 HK$’000 2016 HK$’000 Note Non-current assets Investments in subsidiaries Amounts due from subsidiaries Property, plant and equipment Current assets Other receivables, deposits and prepayment Amounts due from subsidiaries Cash and cash equivalents Total assets Equity Share capital Reserves Total equity Current liabilities Other payables and accrued charges Amount due to a subsidiary Non-current liabilities Borrowing Total liabilities Total equity and liabilities Note (a) — 567,329 14 567,343 40 6,839 16,134 23,013 590,356 838,198 (539,705) 298,493 1,121 246,960 248,081 43,782 43,782 291,863 590,356 — 552,279 43 552,322 14 26,103 4,448 30,565 582,887 838,198 (503,903) 334,295 1,612 246,980 248,592 — — 248,592 582,887 The balance sheet of the Company were approved by the Board of Directors on 20 September 2017 and were signed on its behalf. Kwai Kwun, Lawrence Director Chan Kam Kwan, Jason Director 91 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 36 BALANCE SHEET AND RESERVE MOVEMENT OF THE COMPANY (Continued) Note (a) Reserves movement of the Company At 1 July 2015 Comprehensive loss: Loss for the year Share-based compensation (Note 27) At 30 June 2016 Comprehensive income: Loss for the year Share-based compensation (Note 27) Share premium HK$’000 4,460,106 Share-based compensation reserve HK$’000 Accumulated losses HK$’000 79,813 (4,226,288) Total HK$’000 313,631 — — — 249 (817,783) (817,783) — 249 4,460,106 80,062 (5,044,071) (503,903) — — — 66 (35,868) (35,868) — 66 At 30 June 2017 4,460,106 80,128 (5,079,939) (539,705) 37 EVENTS OCCURRING AFTER THE REPORTING PERIOD Save for the events mentioned in Note 2, there is no significant event occurred subsequently after the balance sheet date. FINANCIAL SUMMARY ANNUAL REPORT 2017 Year ended 30 June 2017 HK$’000 (Note a) Year ended 30 June 2016 HK$’000 (Note a) Year ended 30 June 2015 HK$’000 (Note a) — 11,590 36,525 RESULTS Revenue Loss before income tax (38,308) (758,063) (1,603,584) Income tax credit/(expenses) — 130,905 367,036 Loss for the year/period Year ended 30 June 2014 HK$’000 (Note a) 38,739 (213,074) — Year ended 30 June 2013 (Restated) HK$’000 (Note a) 50,298 (467,566) (948) from continuing operations (38,308) (627,158) (1,236,548) (213,074) (468,514) Profit/(loss) for the year from discontinued operation — — — 3,973 Loss for the year/ period (38,308) (627,158) (1,236,548) (209,101) Attribute to: Equity holders of the Company — — — (38,308) (627,158) (1,236,548) Non-controlling interest — — — (38,308) (627,158) (1,236,548) Loss per share — Basic (HK cents) — Diluted (HK cents) (0.46) (0.46) (7.48) (7.48) (14.75) (14.75) As at 30 June 2017 As at 30 June 2016 As at 30 June 2015 (207,098) (2,003) (209,101) (2.56) (2.56) As at 30 June 2014 HK$’000 HK$’000 HK$’000 HK$’000 (8,328) (476,842) (449,384) (27,458) (476,842) (6.01) (6.01) As at 30 June 2013 (Restated) HK$’000 ASSETS AND LIABILITIES Total assets Total liabilities Equity attributable to equity 858,630 (394,667) 463,963 835,953 (348,536) 487,417 1,657,462 3,831,926 3,896,362 (503,657) (1,052,530) (1,139,816) 1,153,805 2,779,396 2,756,546 holders of the Company 463,963 487,417 1,153,805 2,779,396 2,713,471 Non-controlling interest — — — — 43,075 Total equity 463,963 487,417 1,153,805 2,779,396 2,756,546 Notes: (a) The financial figures were extracted from the Consolidated Financial Statements. 93 ASX ADDITIONAL INFORMATION Additional information in accordance with the listing requirements of the Australian Securities Exchange Limited are as follows: A. DISTRIBUTION OF SHAREHOLDINGS AS AT 20 SEPTEMBER 2017 Category 1 — 1,000 1,001 — 5,000 5,001 — 10,000 10,001 — 100,000 100,001 and over Total: Ordinary shares Unlistedoptions @HK$0.45 Shareholders Size of holding Holders Size of holding 773 205 99 678 406 193,599 486,212 809,299 28,023,662 8,352,469,359 2,161 8,381,982,131 1 1 8,000,000 8,000,000 The number of shareholders holding less than a marketable parcel of shares as at 20 September 2017 is 1,359. Unquoted Securities As at 20 September 2017, unlisted options amounted to a total of 8,000,000 units, all of which are expiring 18 January 2018 with an exercise price of HK$0.45. B. TWENTY LARGEST SECURITY HOLDERS AS AT 20 SEPTEMBER 2017 Name 1 OCEAN LINE HOLDINGS LTD 2 THE HONGKONG AND SHANGHAI BANKING 3 CM SECURITIES (HONGKONG) CO LTD 4 EQUITY VALLEY INVESTMENTS LIMITED 5 YUNFENG SECURITIES LTD 6 SUN HUNG KAI INVESTMENT SERVICES LTD 7 CITIBANK N.A. 8 KINGSTON SECURITIES LTD 9 KQ RESOURCES LIMITED 10 CORNERSTONE PACIFIC LIMITED 11 ROSS STEWART NORGARD / LONGFELLOW NOMINEES PTY LTD 12 ZHANG HAOYANG 13 HING WONG SECURITIES LTD 14 UBS SECURITIES HONG KONG LTD 15 GUOYUAN SECURITIES BROKERAGE (HONG KONG) 16 BARWICK INVESTMENTS LIMITED 17 DBS VICKERS (HONG KONG) LTD 18 NON-CONSENTING MARKET PARTICIPANT 19 DEUTSCHE BANK AG 20 STANDARD CHARTERED BANK (HONG KONG) LTD * Δ Δ * Δ Δ Δ Δ * * * * Δ Δ Δ * Δ Δ Δ Δ Number of shares 1,207,743,902 909,250,626 764,904,972 499,972,276 396,071,020 371,784,201 344,133,747 275,201,000 268,000,000 250,000,000 243,054,000 200,000,000 189,231,000 183,800,957 177,310,800 174,668,000 144,662,400 100,929,400 91,200,000 80,206,470 % 14.409% 10.848% 9.126% 5.965% 4.725% 4.436% 4.106% 3.283% 3.197% 2.983% 2.900% 2.386% 2.258% 2.193% 2.115% 2.084% 1.726% 1.204% 1.088% 0.957% The number of shares stated herein are retracted and sorted from the register of shareholders (“*”) and the participant report from the Central Clearing and Settlement System of the Hong Kong Stock Exchange (“CCASS”) (“Δ”). As the Company does not have information in relation to the ultimate beneficial owners of the shares held by the participants of the CCASS, the numbers herein may not reflect the actual number of shares beneficially owned by each of the shareholders. ANNUAL REPORT 2017 C. SUBSTANTIAL HOLDERS Name of shareholder Capacity Number of Percentage of the shares or issued share capital underlying shares of the Company Ocean Line Holdings Ltd (Note) Beneficial owner 1,776,960,137 Kwai Sze Hoi (Note) Interest held by controlled corporations 1,776,960,137 Interest held jointly with another person 60,720,000 Cheung Wai Fung (Note) Interest held by controlled corporations 1,776,960,137 Interest held jointly with another person 60,720,000 Equity Valley Investments Limited Beneficial owner 515,574,276 (Note) The XSS Group Limited (Note) Interest held by controlled corporations 515,574,276 Cheung Sze Wai, Catherine (Note) Interest held by controlled corporations 515,574,276 Luk Kin Peter Joseph (Note) Interest held by controlled corporations 515,574,276 21.20% 21.20% 0.72% 21.02% 0.72% 6.15% 6.15% 6.15% 6.15% KQ Resources Limited Beneficial owner 1,015,928,146 12.12% Notes: Please refer to Notes 1 & 2 under section headed: Substantial Shareholders on P.44. D. VOTING RIGHTS The voting rights attaching to each class of equity securities are set out below: a) Ordinary shares Each shareholder present in person or by proxy, attorney or representative in a meeting shall have one vote on a poll for each share held. b) Options No voting rights. E. STOCK EXCHANGE LISTING Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the ASX Limited. F. INCOME TAX Brockman Mining Limited is taxed as a public company. 95 ASX ADDITIONAL INFORMATION G. TENEMENT SCHEDULE — AS AT 20 SEPTEMBER 2017 Tenement number Commodity Status Interest held Project Coolawanyah Duck Creek Duck Creek Duck Creek East Duck Creek East Fig Tree Innawally Pool Irwin Hills Irwin Hills Irwin Hills Jeerinah East Juna Downs Juna Downs Madala Bore Marandoo Marillana Marillana Marillana Marillana Mindy Mt Grant Mt King Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Ophthalmia Parson George Phils Bore Punda Springs Shovelanna Tom Price Tenement type West Pilbara West Pilbara West Pilbara West Pilbara West Pilbara East Pilbara West Pilbara Goldfields Goldfields Goldfields West Pilbara West Pilbara West Pilbara West Pilbara West Pilbara East Pilbara E E E E E E E L L M E E E E E L East Pilbara M East Pilbara East Pilbara West Pilbara East Pilbara West Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara East Pilbara West Pilbara West Pilbara East Pilbara West Pilbara E E E E E E E E E E P E R R R E E E E E 47/3491 47/1725 47/3152 47/2215 47/2994 47/3025 46/1087 39/0232 39/0163 39/1088 47/3441 47/3363 47/3364 47/3285 47/3105 45/0238 47/1414 47/3170 47/3532 47/3585 45/4496 47/3446 47/1598 47/1599 47/2280 47/2291 47/2594 47/1715 47/3549 47/0013 47/0015 47/0016 47/3217 47/2905 47/3575 46/0781 47/3565 Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Granted Granted Granted Granted Granted Granted Granted Nickel/Cobalt Granted Nickel/Cobalt Granted Nickel/Cobalt Granted Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Iron Ore Granted Granted Granted Granted Granted Application Granted Application Application Application Granted Application Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Granted Application Application Granted Application 

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