Canterbury Resources
Annual Report 2019

Plain-text annual report

ABN 59 152 189 369 ASX Code: CBY CANTERBURY RESOURCES LIMITED ANNUAL REPORT - 2019 1 2 8 9 18 19 23 53 54 58 60 Corporate Directory Table of Contents Board of Directors John Anderson Non-Executive Chairman Chairman's Report Review of Operations Grant Craighead Managing Director Schedule of Tenements Michael Erceg Executive Director Ross Moller Gary Fallon Non-Executive Director Non-Executive Director Company Secretary Ross Moller Veronique Morgan-Smith Registered Office Suite 108, 55 Miller Street, Pyrmont, NSW 2009 Telephone: +61 2 9392 8020 Website: canterburyresources.com.au Email: admin@canterburyresources.com.au Share Registrar Automic Group Level 5, 126 Phillip Street, Sydney NSW 2000 Telephone: +61 2 8072 1400 automicgroup.com.au hello@automicgroup.com.au Website: Email: Auditors BDJ Level 13, 122 Arthur Street, North Sydney PO Box 1664, North Sydney, NSW 2059 Solicitors Dentons Australia Limited 77 Castlereagh Street Sydney, NSW 2000 Australia Broker Canaccord Genuity (Australia) Limited ASX Code: CBY Directors Report Auditor's Independence Declaration Consolidated Financial Statements Notes to the Financial Statements Directors' Declaration Independent Auditor's Report Shareholder Information Corporate Governance Statement Cover photo: Drilling at the Briggs Project, Queensland an initial resource estimate for this deposit during the coming year. In parallel, recent results from scout drilling at the Ekoato prospect in Papua New Guinea have included a high-grade result that demonstrates the fertility of this copper-gold porphyry mineralisation system. Planning for the next phase of exploration has commenced. We are also achieving pleasing progress at some of our earlier stage, greenfield prospects in Papua New Guinea and Vanuatu, with a transition into a scout drilling phase anticipated at several prospects in the not too distant future. At the Bismarck Project, technical challenges have been a catalyst for a review and re-prioritizing of drilling activities, and joint venture partner Rio Tinto is assessing a possible resumption of drilling in 2020. I would like to take this opportunity to thank my fellow Directors and consultants who have worked diligently on the Company’s activities over the past year, as well as our wide range of stakeholders including land owners and joint venture partners. Canterbury has entered an exciting period as an resource company. On behalf of emerging your Board I would like to thank all shareholders for look forward to reporting their support, and the and exploration our results resource delineation activities over the coming year. of I Chairman's Report Dear Fellow Shareholder On behalf of your Board of Directors, I am pleased to the eighth Annual Report to present shareholders of Canterbury Resources Limited. The financial year to 30 June 2019 has been a very important one for the Company. We have made excellent exploration progress at multiple projects and at the same time successfully completed an IPO, raising approximately $6,147,222 to support our ongoing growth. Following the IPO the Company was admitted to the official list of the ASX, under the ticker code CBY, with official quotation of ordinary fully paid shares commencing on 7 March 2019. Listing on the ASX has been an important milestone as it provides improved access to risk capital for the Company and the IPO capital raising has already been a catalyst for an expansion and acceleration of our exploration and resource delineation programs. These activities provide high leverage success scenario. shareholders under a for the following Significantly, IPO, we have commenced drilling programs at several projects and have generated positive early results. We are particularly encouraged by progress at the Briggs Project in Queensland where very broad intervals of copper mineralisation are being encountered in ongoing drilling and we are on track to complete Yours sincerely, John Anderson Chairman 1 Annual Report 2019 Review of Operations INTRODUCTION Canterbury is a Sydney based mineral exploration company that was formed in 2011 with the aim of creating shareholder value by generating, exploring and monetising potential large scale copper-gold projects in proven mineral belts throughout the southwest Pacific region – a region that hosts numerous world-class copper and gold deposits, such as Ok Tedi, Grasberg, Panguna (Bougainville), Lihir and Cadia. We have steadily built a portfolio of porphyry copper-gold and epithermal gold-silver deposits projects at various stages of advancement, throughout Papua New Guinea, eastern Australia and Vanuatu, and our experienced management team includes resource professionals with a strong track record of exploration and operational success in these regions. 2 Annual Report 2019 Review of Operations QUEENSLAND ▲ Briggs& Mannersley Projects (CBY 100%) The Briggs and Mannersley projects are located in south east Queensland inland from Gladstone, at the southern end of the northwest-southeast trending Mt Morgan structural belt. The high-grade Mt Morgan mine produced around 8Moz of gold and 350,000t of copper before its closure in 1989. The potential to delineate an economic project in this region is enhanced by its accessibility to critical infrastructure, including power, transport, industrial services and skilled labour. The Briggs and Mannersley tenements were acquired from Rio Tinto Exploration Pty Limited (“Rio Tinto”) in early 2017 and Rio Tinto retains a 1% Net Smelter Royalty, plus certain claw-back rights in the event of a major resource being delineated. Canterbury recently lodged an application (EPM27317 Fig Tree Hill) surrounding the Briggs and Mannersley tenements, which significantly expands our holdings in the region. At the Briggs porphyry prospect, historic mapping and shallow drilling has identified three large intrusive centres (Northern, Central and Southern zones) that outcrop along a ~2km northwest-southeast oriented mineralised corridor. Limited historical drilling has outlined broad intercepts of low grade disseminated copper mineralisation, often overlain by a higher-grade supergene enriched copper blanket. In June 2019 Canterbury commenced a diamond drilling program focused on a ~500m strike length of the Central Porphyry Zone. The holes are designed to systematically test potential depth extensions of the known mineralisation, with the objectives of quantifying a near-surface resource and providing vectors for locating a higher-grade core of the system, which is speculated to occur associated with a causative intrusion (porphyry). Figure 1 Queensland Projects, Location Plan 3 Annual Report 2019 Review of Operations Whilst the 2019 drill program is still in the early phase, initial results and visual observations of drill core are very encouraging and strongly support Canterbury’s objective of quantifying a significant near-surface resource in the not too distant future. Figure 2 Briggs BD019-003, Chalcopyrite (Copper) Mineralisation in Quartz Zone PAPUA NEW GUINEA ▲ Ekuti Range Project (CBY 100%) The Ekuti Range Project is in a well-endowed metallogenic belt that hosts world class epithermal and porphyry style deposits, including the Hidden Valley gold mine (2017 Mineral Resources 8Moz gold) and the Wafi-Golpu project (2017 Mineral Resources 26Moz gold, 8.8Mt copper). The tenements have reasonable access to infrastructure, being ~20km southwest of the regional towns of Wau and Bulolo and ~80km southwest of the port city of Lae. The Menyamya Road, which links to Lae, crosses the northwestern portion of the tenements. Canterbury established a base in the region in 2014, and since then has investigative undertaken multiple including mapping, programs, geophysical petrology, sampling, interpretation drilling. Whist and historical explorers directed much of their of effort outcropping high grade narrow, copper-gold lodes around Otibanda, Canterbury has redirected its efforts at large-scale porphyry discovery of systems. been widespread encouraging, across mineralisation multiple prospects. encountered assessment Results have with at During 2019 a four-hole scout drilling program was completed at the Ekoato porphyry copper-gold prospect. The intersected broad zones of drilling hydrothermal brecciation several holes – a feature that was not widely in 4 Annual Report 2019 Figure 3 Ekuti Range Project Location Plan Review of Operations observed at surface. Fine pyrrhotite (Fe-sulphide) and chalcopyrite (Cu-sulphide) were observed throughout the hydrothermal breccia zones. The interpretation is that economic grades may be developed in the upper parts of the intrusion (porphyry) and in the overlying metasediments within a brecciated carapace. Fault zones, which are being worked at surface for free-gold by artisanal miners, appear to have been conduits for mineralising fluids emanating from the putative buried intrusive and one hole, EK004, intersected 18.0m at 6.23g/t Au, 13.0g/t Ag and 0.18% Cu from 164m through one of these fault zones. This high-grade mineralisation and the observed down-hole geology provide strong evidence of a fertile copper-gold porphyry mineralisation system. Planning for a follow-up program is in progress, along with planning for a potential scout drilling phase at the Yalua prospect located towards the southern end of Canterbury’s tenements. At Yalua a recent soil sampling program has identified a broad 1km2 soil geochemical anomaly (copper and molybdenum) which is coincident with mapped quartz sulphide (pyrite and chalcopyrite) stockwork veins, an outcropping dioritic intrusion and a magnetic anomaly. The prospect has never been drilled. Figure 4 Schematic Geological Model - Ekoato Prospect ▲ Bismarck Project (CBY 40%, Rio Tinto 60%) The Bismarck Project on central Manus Island in northern PNG, covers a large porphyry copper and gold province. In 2016 Rio Tinto Exploration (PNG) Limited entered into a Farm-In and Joint Venture Agreement with the right to earn equity in, and potentially acquire, the Project. Under the joint venture, Rio Tinto is currently sole-funding a Stage-2 exploration phase aimed at increasing its interest to 80%. The region has undergone extensive early stage exploration over the past 50 years, however historical drilling is yet to discover any economic deposits. Nevertheless, multiple mineralisation styles have been recognised, low-grade porphyry-style copper including gold bearing mineralisation and potential high-sulphidation copper-gold systems associated with extensive areas of silica- alunite lithocap. low-sulphidation epithermal quartz veins, 5 Annual Report 2019 Review of Operations Figure 5 Bismarck Hole BISM0001 Recognition of extensive lithocap in the southeast of the project has had important implications for ongoing exploration for porphyry mineralisation. Lithocaps, defined as zones of advanced argillic alteration, may form above porphyry systems and may host late stage metal-rich ore zones. Fertile lithocaps may also vector to concealed sizeable porphyry copper-gold deposits at depth. In late 2018 Rio Tinto commenced a drilling program aimed at testing several buried porphyry copper-gold targets that they identified during 2017. The targets are principally based on geophysical anomalies, with some supporting surface geochemical anomalism. Unfortunately, the drilling encountered adverse ground conditions and unsatisfactory drilling progress. As a result of these difficulties, Rio Tinto paused their program in early-mid 2019 and initiated a review of the drilling approach, as well as a re-prioritisation of drill targets. This review is ongoing. ▲ Ipi River Project (CBY 100%) The Ipi River Project, located 150km north-northwest of Port Moresby, contains multiple historical porphyry copper-gold and epithermal gold-silver prospects, including the Ipi River porphyry copper-gold prospect where limited historical drilling has demonstrated the existence of a fertile porphyry copper-gold system. Canterbury continues to acquire and reassess historical data for the region, including drill core and geophysical (IP) survey data. This geophysical data has recently been re-processed, and interpretation indicates the presence of several strong IP anomalies that appear to be associated with significant near- surface copper mineralisation. Two drill holes from Petromin’s activities in the late 2000’s intersected broad zones of low-grade copper mineralisation on the margins of the IP zone. Planning has commenced for a reconnaissance assessment program. 6 Annual Report 2019 Review of Operations VANUATU ▲ Santo and Malekula Projects (CBY 100%) Vanuatu has been subjected to sporadic historical exploration, which has recognized widespread epithermal gold-silver and porphyry copper-gold mineralization. On Espiritu Santo and Malekula, the geology, structural setting and styles of mineralisation are regarded as being analogous to the gold and base metal deposits of the Hauraki province in the Coromandel Peninsular of New Zealand, which have supported gold-silver-base metal production since the mid-1800s and have produced more than 10Moz gold. During 2019 Canterbury’s focus shifted to the Tafuse prospect on Santo, where epithermal style gold-silver- basemetal mineralisation occurs within an 800m by 250m alteration envelope within volcanics that are intensely hydrofractured and argillically altered. Land access negotiations were successfully completed with assistance from the Vanuatu Mines Department and an initial program of surface mapping and sampling was completed in mid-2019. Results are awaited. OUTLOOK Canterbury’s near-term strategy is centered on further assessment of its portfolio of potential large-scale copper-gold projects in proven mineral belts throughout the southwest Pacific region. Many of our technical and financial resources will be directed at the more advanced projects, Briggs and Ekuti Range, where exploration results have been particularly encouraging. This is expected to include undertaking a maiden resource estimate for the Briggs copper deposit following completion of the current drilling program. In parallel, we will continue assessment at our earlier stage projects, with the aim of generating attractive drill targets. In addition, our joint venture partner at the Bismarck Project, Rio Tinto, is currently assessing opportunities for a resumption of drilling in 2020. Declaration and JORC Compliance: The technical information in this report which relates to Exploration Results is based on information compiled by Mr Michael Erceg, MAIG RPGeo. Mr Erceg is an Executive Director of Canterbury Resources Limited and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Erceg consents to the inclusion in this report of the matters based on that information in the form and context in which it appears. Forward Looking Statements: Forward-looking statements are statements that are not historical facts. Words such as “expect(s)”, “feel(s)”, “believe(s)”, “will”, “may”, “anticipate(s)”, “potential(s)”and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to statements regarding future production, resources or reserves and exploration results. All such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of the Company, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward- looking information and statements. These risks and uncertainties include, but are not limited to: (i) those relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits and conclusions of economic evaluations, (ii) risks relating to possible variations in reserves, grade, planned mining dilution and ore loss, or recovery rates and changes in project parameters as plans continue to be refined, (iii) the potential for delays in exploration or development activities or the completion of feasibility studies, (iv) risks related to commodity price and foreign exchange rate fluctuations, (v) risks related to failure to obtain adequate financing on a timely basis and on acceptable terms or delays in obtaining governmental approvals or in the completion of development or construction activities, and (vi) other risks and uncertainties related to the Company’s prospects, properties and business strategy. Our audience is cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof, and we do not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or non-occurrence of any events. 7 Annual Report 2019 Schedule of Tenements TENEMENT INFORMATION (as at 30 June 2019) Tenement Location Project Status Interest at Period End EPM 19198 SE Queensland Briggs * Granted EPM 18504 SE Queensland Mannersley * Granted EPM 27317 SE Queensland Fig Tree Hill Application EL 2302 Morobe Province, PNG Ekuti Range Granted EL 2314 Morobe Province, PNG Ekuti Range Granted EL 2418 Morobe Province, PNG Ekuti Range Granted EL 2509 Central Province, PNG Ipi River Granted EL 2378 Manus Island, PNG Bismarck ** Granted EL 2390 Manus Island, PNG Bismarck ** Granted PL 1836 Malekula, Vanuatu Malekula Granted PL 1837 Malekula, Vanuatu Malekula Granted PL 1851 Santo, Vanuatu Santo Granted Malekula 3 Malekula, Vanuatu Malekula Application Malekula 4 Malekula, Vanuatu Malekula Application Malekula 5 Malekula, Vanuatu Malekula Application Santo 2 Santo, Vanuatu Santo Application 100% 100% 100% 100% 100% 100% 100% 40% 40% 100% 100% 100% 100% 100% 100% 100% * ** Subject to 1% NSR and certain claw back rights in favour of Rio Tinto Exploration Pty Ltd Subject to a Joint Venture and Farm-In Agreement with Rio Tinto Exploration (PNG) Limited which is currently sole- funding exploration to earn an 80% JV interest 8 Annual Report 2019 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Directors’ report The directors of Canterbury Resources Limited submit the annual report of the consolidated entity (“the group”) consisting of Canterbury Resources Limited (“the company”) and the entities it controlled at the end of, or during the financial year ended 30 June 2019. The directors report as follows: Directors The following persons were directors of the company during the whole of the financial year and up to the date of this report, unless noted otherwise: John Ernest Douglas Anderson - Non-Executive Chairman Grant Alan Craighead - Managing Director Ross Earle Moller - Non - Executive Director and Company Secretary Gary Noel Fallon - Non-Executive Director Michael Matthew Erceg - Executive Director (appointed 6 March 2019) Information about the directors At the date of this report there are six senior executives comprising five males and one female. John Ernest Douglas Anderson - BCom, MBA, GAICD Non-Executive Chairman Experience and expertise John has +40 years’ experience in banking, investment banking and general consulting in Australia and Chile. He has held positions of Managing Director or Chairman with several public and private companies in Australia, and as a Director of mining companies in Chile. John has experience in general financing and capital raisings, developing and implementing business plans for new and existing entities, and taking companies from IPO through to operations. In ASX listed companies, in the capacity of director, managing director or chairman, John has been a member of audit, remuneration and finance committees, and was Chairman of Anchor Resources Ltd from IPO through to the sale of controlling interest in 2011. John was appointed to the Canterbury Board in 2011. None None Chairman Ordinary shares (Escrowed) – 2,236,669 Ordinary shares (Un-Escrowed) – 675,331 Options (Escrowed) under ESOP expiring 30 June 2020 – 150,000 Options (Escrowed) under ESOP expiring 30 June 2021 – 125,000 Other current directorships Former directorships in last 3 years Special responsibilities Interests in Canterbury shares and options Ross Earle Moller - BCom, Dip AppCorpGov, CA ANZ, AGIA, ICSA, GAICD Non - Executive Director and Company Secretary Experience and expertise Ross is a Chartered Accountant and Chartered Secretary and brings +30 years’ experience in providing corporate advisory and secretarial services to a range of listed and unlisted companies. He has expertise in financial management, corporate governance and strategic planning, as well as commercial and legal risk issues. Ross is based in Singapore and is an Executive Director of a Management Consultancy business that operates across the Asia-Pacific region. None None None Ordinary shares (Escrowed) – 1,836,668 Ordinary shares (Un-Escrowed) – 525,832 9 Other current directorships Former directorships in last 3 years Special responsibilities Interests in Canterbury shares and options Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Directors’ report Information about the directors (cont’d) Grant Alan Craighead - BSc, MAusIMM, GAICD Managing Director Experience and expertise Grant is a geologist with +40 years’ experience in the exploration, mining and financial sectors. This includes eight years as Manager Geology with Elders Resources NZFP Ltd and five years as a resource analyst at Macquarie Bank. During his period with Elders, he was directly associated with exploration and development successes including Red Dome, Selwyn, Wafi- Golpu, Glendell, Narama and Kidston. He was a co-founder of Anchor Resources Ltd and its Managing Director during the sale of controlling interest in 2011. He is also a co-founder and executive director of Breakaway Investment Group, a financial company that provides private equity and advisory services in the resource sector. None None Managing Director Ordinary shares (Escrowed) – 5,004,659 Ordinary shares (Un-Escrowed) – 2,366,927 Options (Escrowed) under ESOP expiring 30 June 2021 – 125,000 Other current directorships Former directorships in last 3 years Special responsibilities Interests in Canterbury shares and options Michael Matthew Erceg - BSc, MSc, Dip Min Econ, MAIG, RPGeo Executive Director (appointed 6 March 2019) Experience and expertise Other current directorships Former directorships in last 3 years Special responsibilities Interests in Canterbury shares and options Michael is a geologist with 40 years’ experience in mineral exploration, mine development and operations in New Zealand, Australia, Papua New Guinea, Vanuatu, the Philippines and China. He is a specialist in southwest Pacific porphyry copper-gold and epithermal gold-silver systems, and has a strong understanding of their geological, geochemical, geophysical and alteration in managing remote area footprints. He has extensive experience reconnaissance and advanced exploration programs, including an ability to readily adapt to culturally diverse environments and work effectively with local professional staff. During his career he has made significant direct contribution to the discovery and/or delineation of the Red Dome, Northwest Mungana, Wafi-Golpu, Ok Tedi, New Holland underground and Murrawombie/Larsens/Northeast ore bodies. None None Manager Exploration Ordinary shares (Escrowed) – 449,168 Ordinary shares (Un-Escrowed) – 215,832 Options (Escrowed) under ESOP expiring 30 June 2020 – 150,000 Options (Escrowed) under ESOP expiring 30 June 2021 – 125,000 10 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Directors’ report Information about the directors (cont’d) Gary Noel Fallon - BAppSc, MSEG, GAICD Non-Executive Director Experience and expertise Gary is a geophysicist with 35 years’ of mineral and coal exploration experience. He is Director and principal consultant to Geophysical Resources and Services (GRS), a geophysical contracting and consulting company. He has extensive experience in precious, base metal and coal exploration and mining projects, focusing on the application of geophysical techniques to operating mines. Prior to co-founding GRS, he worked for Scintrex Consulting, Whim Creek Consolidated, Dominion Mining and MIM Exploration, providing exposure to both open cut and underground metalliferous and coal mining operations. Gary was a co-founder of Anchor Resources Ltd and a Director at the time of the sale of controlling interest in 2011. None None None Ordinary shares (Escrowed) – 2,461,907 Ordinary shares (Un-Escrowed) – 641,664 Options (Escrowed) under ESOP expiring 30 June 2020 – 150,000 Options (Escrowed) under ESOP expiring 30 June 2021 – 125,000 Other current directorships Former directorships in last 3 years Special responsibilities Interests in Canterbury shares and options Company secretary information Veronique Morgan-Smith - LLB Hons (UK), MBDE (Fr), CAPA (Fr), Law Dip. (Aus) Company Secretary and In-House Legal Counsel Véronique was appointed as Company Secretary and In-House legal Counsel in November 2013. She has +18 years’ experience as a corporate transactions lawyer, both in major international law firms and in-house, as an Australian solicitor and a French avocat d’affaires. She has advised multinational companies and smaller businesses from start-up through to domestic and cross-border transactions and joint-ventures in various legal systems, including Australia, France, the UK, the US, Hong Kong, OHADA Africa, South Africa and various Pacific Islands. Her broad practice has focused on mining and mineral resources in recent years, and she acts as the company secretary of several private and public companies. Véronique uses her varied legal expertise to assist the Board in corporate governance and compliance matters, capital raisings and corporate transactions. At the date of this report, there are six senior executives comprising five males and one female. Principal activity The principal activity of the group is participation in mineral exploration projects, with tenements currently held in Queensland, Papua New Guinea and Vanuatu. The group primarily targets prospects with potential to host large scale copper and/or gold deposits. There were no significant changes in the group’s activities during the year. Financial result The consolidated loss of the group after providing for income tax for the year ended 30 June 2019 was $1,015,172 (2018: loss $627,181). The net assets of the group rose by $7,099,894 from $3,529,179 at 30 June 2018 to $10,629,073 at 30 June 2019, principally due to the group’s loss for the year of $1,015,172 offset by an increase in issued capital of $8,043,004. 11 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Directors’ report Dividends There were no dividends paid or declared for the period ended 30 June 2019 (2018: nil). The directors have not made any recommendations for payment of dividends in respect of the financial year. Significant changes in the state of affairs During the year Canterbury Resources Limited completed an Initial Public Offering (IPO) raising $6,147,222.30 and was admitted to the official list of the ASX under the ticker code CBY, with official quotation of its ordinary fully paid shares commencing on 7 March 2019. Review of operations During the year, the company continued to advance and expand its portfolio of exploration properties in the SW Pacific region, covering areas prospective for porphyry copper-gold systems and/or epithermal gold-silver systems. The company also completed an IPO for listing on the ASX, raising approximately $6.15 million (before costs) at share price of $0.30 per share, and commenced trading on the ASX on 7 March 2019 under the ticker code CBY. In Papua New Guinea, Canterbury holds three projects that are prospective for porphyry related copper-gold mineralisation; Ekuti Range, Bismarck and Ipi River. Within the 100% owned Ekuti Range Project, a four-hole (~1.200m) scout drilling program was completed at the Ekoato prospect, testing an extensive area of surface gold and copper mineralisation. Encouraging results were achieved, with the drilling encountering broad breccia zones interpreted to have formed above a fertile porphyry- style mineralisation system. Structural zones appear to have been conduits for mineralising fluids emanating from the putative buried intrusive (porphyry), with drill hole EK004 recorded a high-grade result of 18.0m at 6.23g/t Au, 13.0g/t Ag and 0.18% Cu through one of these zones. The Bismarck Project (CBY 40%) on Manus Island is the subject of a Farm-In and Joint Venture (“JV”) with Rio Tinto Exploration (PNG) Limited (“RTX PNG”) whereby RTX PNG has the right to earn an equity interest by completing various obligations under staged exploration programs. RTX PNG has entered the Stage 2 exploration phase whereby it can increase its JV interest from 60% to 80%. A drilling program commenced in late 2018 testing large, buried porphyry copper-gold targets and was paused after encountering adverse ground conditions. RTX PNG is examining opportunities to achieve a better drilling performance, with the timing for a recommencement of drilling under consideration. The Ipi River Project (CBY 100%) was granted during the year and covers a known mineralised porphyry copper- gold system. The company is acquiring and interpreting historical exploration data ahead of commencement of field activities. At the Briggs & Mannersley Project (CBY 100%; subject to 1% NSR and certain claw-back rights in favour of Rio Tinto Exploration Pty Limited) in Queensland, a diamond drilling program commenced in June 2019, designed to further assess the resource potential in the central portion of the Briggs porphyry copper deposit. This includes testing a for a potential higher-grade core of this large system. In Vanuatu, a third tenement has been granted that covers the Tafuse epithermal gold-silver prospect on Espiritu Santo (CBY 100%). An initial program of mapping and sampling is planned in the near term aimed at defining potential drill targets. 12 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Directors’ report Commitments for expenditure In order to maintain the company’s tenements in good standing with the relevant authorities, the company incurs exploration expenditure under the terms of each licence. The indicative minimum exploration expenditure requirement for FY20 is approximately $1.8 million, of which approximately $0.8 million is covered by JV partners. This is a pro rata estimate, based on annualised licence terms, converted to AUD at current exchange rates. Directors’ meetings The following table sets out the number of directors’ meetings (including meetings of committees of directors). Committee Board Meetings Risk Audit Remuneration Governance Nomination Held Attended Held Attended Held Attended Held Attended Held Attended Held Attended R Moller J Anderson G Craighead G Fallon M Erceg 11 11 11 11 4 11 10 11 10 4 2 2 2 2 2 1 2 2 2 2 2 - - 2 - 2 - - 2 - 2 2 - 2 - 2 2 - 2 - 1 1 1 1 1 1 1 1 1 1 - - - - - - - - - - Events since the end of the financial year There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect significantly the activities, or the state of affairs of the group in future financial years. Environmental regulation The Manager Exploration reports to the Board on all significant safety, health and environmental incidents. The Board also has a Risk Committee which has oversight of the safety, health and environmental performance of the group. The activities of the group are subject to environmental regulation under the jurisdiction of the countries in which those activities are conducted, including Australia, Papua New Guinea and Vanuatu. Each tenement is subject to environmental regulation as part of their granting. Each site is also required to also manage their environmental obligations in accordance with group policies. The group has internal reporting systems. Environmental incidents are reported and assessed according to their environmental consequence and environmental authorities are notified where required and remedial action is undertaken. Climate change The group’s exploration activities are assessed as having relatively low energy intensity, producing low exposure to climate change risks related to the transition to a lower carbon economy. Exploration activities may be carried out at sites that are vulnerable to physical climate impacts. Extreme weather events have the potential to damage infrastructure and disrupt or delay field activities. The group is adapting its site-specific operating plans to ensure that this risk factor is considered. Remuneration of key management personnel Information about the remuneration of key management personnel is set out in the remuneration report section of this directors’ report. The term ‘key management personnel’ refers to those persons having authority and responsibility for planning, directing and controlling the activities of the consolidated entity, directly or indirectly, including any director (whether executive or otherwise) of the group. 13 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Directors’ report Share options granted to directors and senior management During the year, there were no options issued to the directors or senior management. Remuneration report (audited) This remuneration report for the year ended 30 June 2019 outlies the remuneration arrangement of the company and the group in accordance with the requirements of the Corporations Act 2001 (the “Act”) and its regulations. This information has been audited as required by section 308(3C) of the Act. The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the company and the group, directly or indirectly, including any director (whether executive or otherwise) of the parent company. Details of key management personnel Details of KMP including the top five remunerated executives of the group are set out below. Directors John Anderson Grant Craighead Gary Fallon Ross Moller Michael Erceg Remuneration philosophy Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director and Co-company Secretary Executive Director - appointed 6 March 2019 The objectives of the company’s remuneration framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders. The Board believes that executive remuneration satisfies the following key criteria:      competitiveness and reasonableness acceptability to shareholders performance linkage/alignment of executive compensation transparency capital management. These criteria results in a framework which can be used to provide a mix of fixed and variable remuneration, and a blend of short and long term incentives in line with the company’s limited financial resources. Fees and payments to the company’s non-executive directors and senior executives reflect the demands which are made on, and the responsibilities of, the directors and senior management. Such fees and payments are reviewed annually by the Board. The company’s executive and non-executive directors, senior executives and officers are entitled to receive options under the company’s employee share option scheme. 14 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Directors’ report Remuneration report (audited) (cont’d) Remuneration of key management personnel 2019 Directors R E Moller J E D Anderson GA Craighead GN Fallon M Erceg 2018 Directors R E Moller J E D Anderson GA Craighead GN Fallon Short-term employee benefits Salary and directors’ fees $ 45,000 58,500 - 41,096 - 144,596 Consulting fees $ 8,400 68,400 240,000 - 21,000 337,800 Post- employment benefits Super- annuation $ Share based payments Options $ - - - 5,205 - 5,205 - - - - - - Short-term employee benefits Salary and directors’ fees $ Consulting fees $ 22,500 22,500 - 20,566 65,566 - 42,600 122,727 - 165,327 Post- employment benefits Super- annuation $ - - - 2,603 2,603 Share based payments Options $ 5,250 5,250 5,250 5,250 21,000 Total $ 53,400 126,900 240,000 46,301 21,000 487,601 Total $ 27,750 70,350 127,977 28,419 254,496 No performance based remuneration was paid in 2019 (2018: nil). The performance and remuneration of directors and senior executives is reviewed annually. Non-executive director remuneration arrangements Directors are entitled to remuneration out of the funds of the company but the remuneration of the non-executive directors (“NED”) may not exceed in any year the amount fixed by the company in general meeting for that purpose. The aggregate remuneration of the NEDs has been fixed at a maximum of $250,000 per annum to be appointed among the NEDs in such a manner as the Board determines. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in consequence of their attendance at Board meetings and otherwise in the execution of their duties as directors. For the year to 30 June 2019, the Chairman’s fee was set at $54,000 per annum and NED fees at $45,000 per annum. Service agreements Remuneration and other terms of employment for key management personnel are formalised in employment contracts and contractor agreements. Details of these agreements are set out below. For the year to 30 June 2019, the managing director’s remuneration was set at $240,000 per annum, plus GST (2018: $20,000 per month plus GST; for a contract term of 36 months. There were no termination payments. Mr Erceg was appointed as an Executive Director on 6 March 2019, and his remuneration was set at $1,200 per day, plus GST. 15 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Directors’ report Remuneration report (cont’d) Transactions with associates of directors G Craighead is a director of, and has a significant financial interest in, Breakaway Mining Services Pty Ltd, a company that provided technical and office services to the company during the year. These services were provided under normal commercial terms and conditions, and fees totalled $256,056 in FY19 ($197,838 in FY18). Employee share option plan The company operates an employee share option plan for employees and contractors of the consolidated entity. In accordance with the provisions of the plan, as approved by the shareholders at a previous annual general meeting in 2013, eligible employees may be granted options to purchase parcels of ordinary shares at an exercise price of $0.40 per ordinary share. Each employee share option converts into one ordinary share of the company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The option carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The options granted expire on their expiry date, or one month after the resignation of the employee, whichever is the earlier. Terms and conditions of share-based payment arrangements affecting remuneration of key management personnel in the current financial year or future financial years: Options Series CBY03A CBY04 CBY05 Grant date Exercise Price 26/02/2016 28/03/2017 20/02/2018 $0.20 $0.25 $0.40 Expiry date Vesting date 30/06/2019 26/02/2016 30/06/2020 28/03/2017 30/06/2021 20/02/2018 Proceedings on behalf of company No person has applied for leave of court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year. Future developments Disclosure of information regarding likely developments in the operations of the group in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the group. Accordingly, this information has not been disclosed in this report. 16 Canterbury ABN 59152189 369 Resources Limited and Controlled Entities Directors' report Indemnification of Officers and Auditors incurred group secretary, During the financial year, the company paid a premium in respect group, the liability as such a director, 2001. The contract of insurance The group has not otherwise, indemnified liability incurred during or since the end of the financial an officer or auditor or auditor. or agreed to indemnify as such an officer and all executive secretary officers or executive disclosure prohibits officer to the extent permitted by the Corporations of the nature of the liability and the amount of the premium. of the group or of any related year, except to the extent by law, body corporate against a permitted of a contract insuring the directors of the a Act of the group and of any related body corporate against Non-audit services The group's June 2019 (2018: Nil). auditor, BDJ Partners did not provide non-audit services to the group during the year ended 30 Auditor's independence declaration The auditor's independence declaration is included after this report. This directors' Corporations Act 2001. report is signed in accordance with a resolution of directors made pursuant to s.298(2) of the On behalf of the Directors 17 Auditor's Independence Declaration To the directors of Canterbury Resources Limited As engagement partner for the audit of Canterbury Resources Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been: i) no contraventions of the independence requirements of the Corporations Act 2001 in relation to the audit; and ii) no contraventions of any applicable code of professional conduct in relation to the audit. BDJ Partners ………………………………………………… Greg Cliffe Partner 24 September 2019 Phone (cid:1748)(cid:1093)(cid:1088)(cid:1)(cid:1089)(cid:1)(cid:1096)(cid:1096)(cid:1092)(cid:1093)(cid:1)(cid:1095)(cid:1092)(cid:1087)(cid:1087)(cid:1)(cid:1)(cid:1) Email (cid:29)(cid:31)(cid:37)(cid:1213)(cid:29)(cid:31)(cid:37)(cid:1141)(cid:30)(cid:42)(cid:40)(cid:1141)(cid:28)(cid:48)(cid:1) (cid:1) Office (cid:13)(cid:32)(cid:49)(cid:32)(cid:39)(cid:1)(cid:1095)(cid:1142)(cid:1)(cid:1088)(cid:1089)(cid:1091)(cid:1)(cid:1) (cid:24)(cid:28)(cid:39)(cid:38)(cid:32)(cid:45)(cid:1)(cid:20)(cid:47)(cid:45)(cid:32)(cid:32)(cid:47)(cid:1)(cid:1) (cid:15)(cid:42)(cid:45)(cid:47)(cid:35)(cid:1)(cid:20)(cid:52)(cid:31)(cid:41)(cid:32)(cid:52)(cid:1)(cid:1) (cid:15)(cid:20)(cid:24)(cid:1)(cid:1089)(cid:1087)(cid:1093)(cid:1087)(cid:1) (cid:1) Postal (cid:17)(cid:16)(cid:1)(cid:3)(cid:42)(cid:51)(cid:1)(cid:1088)(cid:1093)(cid:1093)(cid:1091)(cid:1142)(cid:1) (cid:15)(cid:42)(cid:45)(cid:47)(cid:35)(cid:1)(cid:20)(cid:52)(cid:31)(cid:41)(cid:32)(cid:52)(cid:1) (cid:15)(cid:20)(cid:24)(cid:1)(cid:1089)(cid:1087)(cid:1092)(cid:1096)(cid:1) Liability limited by a scheme approved under Professional Standards Legislation. Please refer to the website for our standard terms of engagement. Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2019 Revenue Finance income - interest income Other gains and (losses) IPO expenses Administration expenses Corporate costs Consultancy Depreciation and amortisation expense Exploration expense Travel expense Insurance Registration fees Share based payment expense Other expenses Loss before tax Income tax benefit Loss for the year Attributable to: Owners of the company Other comprehensive income for the year Total comprehensive loss for the year Total comprehensive loss attributable to: Owners of the company Basic loss per share (cents per share) Diluted loss per share (cents per share) Note 3 4 4 4 5 6 6 2019 $ 36,398 28,496 (1,480) (282,147) (202,372) (172,833) (361,127) (3,758) (1,804) (7,131) (13,500) - - (33,914) (1,015,172) - (1,015,172) 2018 $ 20,508 - - - (140,328) (100,193) (249,353) (3,546) (66,204) (7,439) (14,002) (3,540) (42,000) (21,084) (627,181) - (627,181) (1,015,172) (627,181) 72,062 - (943,110) (627,181) (943,110) (627,181) (0.0150) (0.0150) (0.0118) (0.0118) The accompanying notes form part of these financial statements. 19 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Consolidated statement of financial position as at 30 June 2019 Assets Current assets Cash and cash equivalents Trade and other receivables Other current assets Total current assets Non-current assets Property, plant and equipment Intangible assets Capitalised exploration and development expenditure Other assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Note 16(a) 7 8 9 10 11 8 12 2019 $ 2018 $ 2,865,787 100,315 8,293 2,974,395 45,620 2,718,341 5,579,474 10,442 8,353,877 171,068 6,500 7,168 184,736 13,157 2,718,341 1,835,396 9,401 4,576,295 11,328,272 4,761,031 699,199 699,199 1,231,852 1,231,852 699,199 1,231,852 10,629,073 3,529,179 13 14 15 12,614,548 189,662 (2,175,137) 4,571,544 117,600 (1,159,965) 10,629,073 3,529,179 The accompanying notes form part of these financial statements. 20 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Consolidated statement of changes in equity for the year ended 30 June 2019 Balance at 1 July 2017 Loss for the year Total comprehensive loss for the year Transactions with owners of the company: Shares issued during the year Losses introduced Share based payment Allocation of share options Issued capital $ Reserves $ Accumulated losses $ Total $ 2,019,720 - 132,436 - (570,088) (627,181) 1,582,068 (627,181) - - (627,181) (627,181) 2,551,824 - - - - - 42,000 (56,836) - (19,532) - 56,836 2,551,824 (19,532) 42,000 - Balance at 30 June 2018 4,571,544 117,600 (1,159,965) 3,529,179 Balance at 1 July 2018 Loss for the year Foreign currency translation Total comprehensive income/(loss) for the year Transactions with owners of the company: Shares issued during the year (net of share issue costs) 4,571,544 - - 117,600 - 72,062 (1,159,965) (1,015,172) - 3,529,179 (1,015,172) 72,062 - 72,062 (1,015,172) (943,110) 8,043,004 - - 8,043,004 Balance at 30 June 2019 12,614,548 189,662 (2,175,137) 10,629,073 The accompanying notes form part of these financial statements. 21 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Consolidated statement of cash flows for the year ended 30 June 2019 Cash flows from operating activities Interest received Other receipts Payments to suppliers and employees Note 2019 $ 2018 $ 28,496 39,707 (1,052,339) - 20,508 (584,444) Net cash used in operating activities 16(b) (984,136) (563,936) Cash flows from investing activities Payments for property, plant and equipment Payments for exploration and development expenditure (36,222) (3,200,724) (15,663) (418,356) Net cash used in investing activities (3,236,946) (434,019) Cash flows from financing activities Proceeds from issue of shares 6,843,739 945,825 Net cash generated by financing activities 6,843,739 945,825 Net effect of foreign exchange Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year 72,062 2,622,657 171,068 - (52,130) 223,198 Cash and cash equivalents at the end of the year 16(a) 2,865,787 171,068 The accompanying notes form part of these financial statements. 22 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 1. General information Canterbury Resources Limited (the “company”) is a public company incorporated in Australia. The address of its registered office and principal place of business is as follows: Suite 108 55 Miller Street Pyrmont NSW 2009 The principal activity of the group is participation in mineral exploration projects, with tenements currently held in Queensland, Papua New Guinea and Vanuatu. The group primarily targets prospects with potential to host large scale copper and/or gold deposits. These consolidated financial statements and notes represent Canterbury Resources Limited (“the company”) and its controlled entities (the “group”). 2. Significant accounting policies Statement of compliance These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law. The financial statements comprise the consolidated financial statements of the group. For the purposes of preparing the consolidated financial statements, the company is a for-profit entity. The financial statements are general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law. Accounting Standards include Australian Accounting Standards (‘AAS’). Compliance with AAS ensures that the financial statements and notes of the group comply with International Financial Reporting Standards (‘IFRS’). The financial statements were authorised for issue by the directors on 30 September 2019. Basis of preparation The consolidated financial statements have been prepared on the basis of historical cost, except for certain non- current assets and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share- based payment transactions that are within the scope of AASB 2, leasing transactions that are within the scope of AASB 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in AASB 102 ‘Inventories’ or value in use in AASB 136 ‘Impairment of Assets’ 23 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) The principal accounting policies are set out below. (a) Basis of consolidation The consolidated financial statements incorporate the financial statements of the company and the entities controlled by the company (its subsidiaries) made up to 30 June each year. Control is achieved when the company: • has the power over the investee; • is exposed, or has rights, to variable returns from its involvement with the investee; and • has the ability to use its power to affects its returns. The company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the company has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The company considers all relevant facts and circumstances in assessing whether or not the company’s voting rights in an investee are sufficient to give it power, including: • the size of the company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; • potential voting rights held by the company, other vote holders or other parties; • rights arising from other contractual arrangements; and • any additional facts and circumstances that indicate that the company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings. Consolidation of a subsidiary begins when the company obtains control over the subsidiary and ceases when the company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in profit or loss from the date the company gains control until the date when the company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the company. Total comprehensive income of the subsidiaries is attributed to the owners of the company. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the group’s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the group are eliminated on consolidation. (b) Business combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the group, liabilities incurred by the group to the former owners of the acquiree and the equity instruments issued by the group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. 24 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (b) Business combinations (cont’d) At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:    deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with AASB 112 ‘Income Taxes’ and AASB 119 ‘Employee Benefits’ respectively; liabilities or equity instruments related to share-based payment arrangements of the acquiree or share- based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with AASB 2 ‘Share-based Payment’ at the acquisition date; and assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ are measured in accordance with that Standard. Where the consideration transferred by the group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. (c) Revenue recognition Revenue is measured based on the consideration to which the group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The group recognises revenue when it transfers control of a service to a customer. The group recognises operating revenue from the provision of support services. Such services are recognised as a performance obligation satisfied at a point in time. (d) Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The group as lessee Assets held under finance leases are initially recognised as assets of the group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. 25 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (e) Taxation The company is part of a tax-consolidated group under Australian taxation law, of which Canterbury Resources Limited is the head entity. As a result, Canterbury Resources Limited is subject to income tax through its membership of the tax-consolidated group. The consolidated current and deferred tax amounts for the tax- consolidated group are allocated to the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach, with deferred taxes being allocated by reference to the carrying amounts in the financial statements of each member entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits arising from this allocation process are then accounted for as immediately assumed by the head entity, as under Australian taxation law the head entity has the legal obligation (or right) to these amounts. Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax sharing agreement with the head entity. Under the terms of the tax funding arrangement, Canterbury Resources Limited have agreed to pay a tax equivalent payment to or from the head entity equal to the tax liability or asset assumed by the head entity for that period as noted above. Such amounts are reflected in amounts receivable from or payable to the head entity. Accordingly, the amount arising under the tax funding arrangement for each period is equal to the tax liability or asset assumed by the head entity for that period and no contribution from (or distribution to) equity participants arises in relation to income taxes. The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations or if an entity should leave the tax-consolidated group. The effect of the tax sharing agreement is that the company’s liability for tax payable by the tax consolidated group is limited to the amount payable to the head entity under the tax funding arrangement. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the consolidated statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The group‘s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. 26 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (e) Taxation (cont’d) The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the year Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. (f) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less which are convertible to a known amount of cash and subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position. (g) Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Depreciation is calculated on a straight-line basis so as to write off the cost or revalued amount of each fixed asset over its estimated useful life, as follows to its estimated residual value. Class of property, plant and equipment Plant and equipment Website development costs Computer hardware Motor vehicles Depreciation rate 15% 25% 33.33% 25% 27 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (g) Property, plant and equipment (cont’d) Depreciation rates and methods shall be reviewed at least annually and, where changed, shall be accounted for as a change in accounting estimate. Where depreciation rates or methods are changed, the net written down value of the asset is depreciated from the date of the change in accordance with the new depreciation rate or method. Depreciation recognised in prior financial years shall not be changed, that is, the change in depreciation rate or method shall be accounted for on a ‘prospective’ basis. The assets' residual value and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. (h) Exploration and development expenditure Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable area of interest. These costs are only capitalised to the extent that they are expected to be recovered through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in which the decisions to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area. Costs of site restoration are provided for over the life of the project from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with local laws and regulations and clauses of the permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted for on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legalisation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. (i) Impairment of assets (excluding goodwill) At the end of each reporting period, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. 28 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (i) Impairment of assets (excluding goodwill) (cont’d) Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. (j) Goodwill Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the group’s cash-generating units (or groups of cash-generating units) expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a cash generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. (k) Financial instruments Financial assets and financial liabilities are recognised when the group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. 29 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (k) Financial instruments (cont’d) Financial assets All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are measured subsequently in their entirety at either amortised cost. Classification of financial assets Debt instruments that meet the following conditions are measured subsequently at amortised cost: • the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The group’s financial assets at amortised cost includes trade receivables. Amortised cost and effective interest method The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition. The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance. Impairment of financial assets The group recognises a loss allowance for expected credit losses on trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The group always recognises lifetime expected credit losses (ECL) for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. 30 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (k) Financial instruments (cont’d) Financial assets (cont’d) Measurement and recognition of expected credit losses The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the entity’s understanding of the specific future financing needs of the debtors, and other relevant forward-looking information. For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the group in accordance with the contract and all the cash flows that the group expects to receive, discounted at the original effective interest rate. If the group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the entity measures the loss allowance at an amount equal to 12-month ECL at the current reporting date, except for assets for which simplified approach was used. The group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account. Derecognition of financial assets The entity derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the entity neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the entity recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the entity retains substantially all the risks and rewards of ownership of a transferred financial asset, the entity continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. Financial liabilities Financial liabilities, including trade and other payables, are initially measured at fair value, net of transaction costs. All financial liabilities are measured subsequently at amortised cost using the effective interest method. Derecognition The group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. 31 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (l) Goods and Services Tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except: i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or ii. for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the consolidated statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified within operating cash flows. (m) Foreign currencies For the purpose of the consolidated financial statements, the results and financial position of the group are expressed in Australian dollars (‘$’), which is the functional currency of the company and the presentation currency for the consolidated financial statements. In preparing the financial statements, transactions in currencies other than the company’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise. For the purpose of presenting these consolidated financial statements, the assets and liabilities of the group’s foreign operations are translated into Australian dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity. (n) Comparative amounts When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (o) Critical accounting judgments and key sources of estimation uncertainty In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. 32 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (o) Critical accounting judgments and key sources of estimation uncertainty (cont’d) Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Useful lives of property, plant and equipment As described at (g) above, the group reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. Impairment testing Goodwill is evaluated for impairment annually or whenever certain triggering events or circumstances, that would more likely than not reduce the fair value of a reporting unit below its carrying amount, are identified. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors (for example, interest rate and foreign exchange rate fluctuations, and loss of key personnel), supply costs, unanticipated competitive activities, and acts by governments and courts. Capitalised exploration and development expenditure Exploration, evaluation and development expenditures incurred are only capitalised to the extent that they are expected to be recovered through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area. Costs of site restoration have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted for on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legalisation. (p) Share based payments Employee share option plan Canterbury Resources Limited operates an employee share option plan for employees and contractors of the consolidated entity. In accordance with the provisions of the plan, as approved by the shareholders at a previous annual general meeting in 2013, eligible employees may be granted options to purchase parcels of ordinary shares at an exercise price of $0.40 per ordinary share. Each employee share option converts into one ordinary share of the company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The option carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The options granted expire on their expiry date, or one month after the resignation of the employee, whichever is the earlier. Terms and conditions of share-based payment arrangements affecting remuneration of key management personnel in the current financial year or future financial years: 33 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (p) Share based payments (cont’d) Employee share option plan (ESOP) (cont’d) Options Series Grant date Exercise Price Expiry date Vesting date CBY03A – ESOP OPTIONS 26/02/2016 CBY04 – ESOP OPTIONS 28/03/2017 CBY05 – ESOP OPTIONS 20/02/2018 $0.20 $0.25 $0.40 30/06/2019 26/02/2016 30/06/2020 28/03/2017 30/06/2021 20/02/2018 These options were valued based on the Cox Ross Rubenstein option pricing model, the value of the options was assessed using the annual volatility of returns based on the daily share price history pf CooperMoly (a comparable company as it is a PNG focussed copper exploration company) for a period of 12 months immediately proceeding and including the measurement date on Australian Stock exchange (“ASX”). The table below summarises the total options movement for the year, including ESOP and non-ESOP: Status* At beginning of period Granted during period Forfeited during period Exercised during period At end of period ESOP (unlisted) 3,350,000 - 795,000 355,000 2,200,000 Non-ESOP (unlisted) 6,812,725 5,000,000 4,631,427 2,181,298 5,000,000 Totai 10,162,725 5,000,000 5,426,427 2,536,298 7,200,000 *Irrespective of any restrictions applicable to those options under ASX requirements. (q) Going concern basis This financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. The directors are aware of the fact that future development and administration activities are constrained by available cash assets, and believe future identified cash flows are sufficient to fund the short term working capital and forecasted exploration requirements of the company. The directors are confident of securing funds as and when necessary to meet the company’s obligations as and when the fall due, and consider the adoption of the going concern basis to be appropriate in the preparation of these financial statements. Should the fund raising be unsuccessful, it would indicate a material uncertainty which may cast doubt about the consolidated entity’s ability to continue as a going concern and the consolidated entity’s ability to pay its debts as and when they fall due. (r) Adoption of new and revised Accounting Standards Amendments to Accounting Standards that are mandatorily effective for the current year In the current year, the group has adopted all of the new and revised Standards and interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. There has been no material impact of these changes on the group's accounting policies. 34 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (r) Adoption of new and revised Accounting Standards (cont’d) Amendments to Accounting Standards that are mandatorily effective for the current year (cont’d) Impact of the application of AASB 15 Revenue from Contracts with Customers The group has adopted AASB 15 ‘Revenue from Contracts with Customers’ and AASB 2014-5 ‘Amendments to Australian Accounting Standards arising from AASB 15’ from 1 July 2018. AASB 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. AASB 15 has replaced past revenue recognition guidance including AASB 118 Revenue, AASB 111 Construction Contracts and the related Interpretations. The core principle of AASB 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition: • Step 1: Identify the contract(s) with a customer; • Step 2: Identify the performance obligations in the contract • Step 3: Determine the transaction price • Step 4: Allocate the transaction price to the performance obligations in the contract • Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation Under AASB 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. The directors of the group have assessed that the only performance obligation is from the provision of support services and accordingly, revenue will be recognised for this performance obligation at the point in time when services are rendered. This is similar to the current identification of separate revenue components under AASB 118. The group has implemented the modified retrospective method of transition to AASB 15. The adoption of AASB 15 has not resulted in any material impact on comparative figures. As such, comparatives have not been restated. The application of AASB 15 has not had a significant impact on the financial position and/or financial performance of the group. Impact of the application of AASB 9 Financial Instruments In the current year, the group has applied AASB 9 Financial Instruments and the related consequential amendments to other AASB Standards that are effective for an annual period that begins on or after 1 January 2018. The transition provisions of AASB 9 allow an entity not to restate comparatives. The group has assessed that restatement will not have a material impact and has elected not to restate comparatives in respect of the classification and measurement of financial instruments. Additionally, the group adopted consequential amendments to AASB 7 Financial Instruments: Disclosures that were applied to the disclosures for 2018 and to the comparative period. AASB 9 introduced new requirements for: 1) The classification and measurement of financial assets and financial liabilities, 2) Impairment of financial assets, and 3) General hedge accounting. 35 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (r) Adoption of new and revised Accounting Standards (cont’d) Amendments to Accounting Standards that are mandatorily effective for the current year (cont’d) Impact of the application of AASB 9 Financial Instruments (cont’d) Details of these new requirements as well as their impact on the group’s financial statements are described below. Classification and measurement of financial assets The date of initial application (i.e. the date on which the group has assessed its existing financial assets and financial liabilities in terms of the requirements of AASB 9) is 1 July 2018. Accordingly, the group has applied the requirements of AASB 9 to instruments that continue to be recognised as at 1 July 2018 and has not applied the requirements to instruments that have already been derecognised as at 1 July 2018. All recognised financial assets that are within the scope of AASB 9 are required to be measured subsequently at amortised cost or fair value on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. Specifically, debt instruments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured subsequently at amortised cost. The directors of the group reviewed and assessed the group’s existing financial assets as at 1 July 2018 based on the facts and circumstances that existed at that date and concluded that the initial application of AASB 9 has had the following impact on the group’s financial assets as regards their classification and measurement: Classification and measurement of financial liabilities The group has not designated any financial liabilities as at fair value through profit or loss. There are no changes in classification and measurement for the company’s financial liabilities. Impairment of financial assets In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model as opposed to an incurred credit loss model under AASB 39. The expected credit loss model requires the group to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised. Specifically, AASB 9 requires the group to recognise a loss allowance for expected credit losses on trade receivables. In particular, AASB 9 requires the group to measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument has increased significantly since initial recognition, or if the financial instrument is a purchased or originated credit-impaired financial asset. However, if the credit risk on a financial instrument has not increased significantly since initial recognition (except for a purchased or originated credit-impaired financial asset), the group is required to measure the loss allowance for that financial instrument at an amount equal to 12-months ECL. AASB 9 also requires a simplified approach for measuring the loss allowance at an amount equal to lifetime ECL for trade receivables, contract assets and lease receivables in certain circumstances. 36 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 2. Significant accounting policies (cont’d) (r) Adoption of new and revised Accounting Standards (cont’d) Amendments to Accounting Standards that are mandatorily effective for the current year (cont’d) Impact of the application of AASB 9 Financial Instruments (cont’d) The financial assets are assessed to have low credit risk. As such, the group assumes that the credit risk on these financial instruments has not increased significantly since initial recognition. The group applies the simplified approach and recognises lifetime ECL for these assets. Given the nature and profile of the group’s customer base reflecting a low credit risk, the directors have assessed that the application of AASB 9 did not result in any material ECL for trade receivables. General hedge accounting The application of the AASB 9 hedge accounting requirements has had no other impact on the results and financial position of the group for the current and/or prior years. Standards and Interpretations on issue not yet adopted At the date of authorisation of the financial statements, the group has not applied the following new and revised Australian Accounting Standards, Interpretations and amendments that have been issued but are not yet effective: Standard/Interpretation AASB 16 Leases AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015-2017 Cycle AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material AASB 2019-1 Amendments to Australian Accounting Standards – References the Conceptual Framework to Interpretation 23 Uncertainty over Income Tax Treatments Impact of adoption of AASB 16 Leases Effective for annual reporting periods beginning on or after Expected to be initially applied in the financial year ending 1 July 2019 1 July 2019 30 June 2020 30 June 2020 1 July 2020 30 June 2021 1 July 2020 30 June 2021 1 July 2019 30 June 2020 AASB 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and lessees. AASB 16 will supersede the current lease guidance including AASB 117 Leases and the related interpretations when it becomes effective. AASB 16 will be effective for annual years beginning on or after 1 July 2019. Early application is permitted, provided the new revenue standard, AASB 15 Revenue from Contracts with Customers, has been applied, or is applied at the same date as AASB 16. The directors do not anticipate that the application of AASB 16 in the future will have a material impact on amounts reported in respect of the group’s lease arrangements. However, it is not practicable to provide a reasonable estimate of the effect of AASB 16 until the group undertakes a detailed review. 37 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 3. Revenue Support services Exploration reimbursement Sundry income 4. Loss for the year Loss for the year has been arrived at after (charging)/crediting the following items of income and expense: Other (losses)/gains: Net unrealised foreign exchange loss Net realised foreign exchange loss Finance income: Interest income Depreciation expense 5. Income tax Income tax benefit Tax benefit comprises of: Current tax benefit Deferred tax benefit 2019 $ 33,003 - 3,395 36,398 (366) (1,114) (1,480) 28,496 (3,758) 2018 $ - 20,508 - 20,508 - - - - (3,546) - - - - - - The prima facie income tax expense in the consolidated statement of profit or loss and other comprehensive income is as follows: Loss before income tax from continuing operations (1,015,172) (627,181) Income tax benefit calculated at 27.5% (2018: 27.5%) Effect of previously unrecognised and unused tax losses and deductible temporary differences Income tax benefit attributable to loss 6. Loss per share Basic loss per share From continuing operations Diluted loss per share From continuing operations (279,172) (172,475) 279,172 - 2019 Cents per share (0.0150) (0.0150) 172,475 - 2018 Cents per share (0.0118) (0.0118) 38 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 6. Loss per share (cont’d) The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted loss per share are as follows: 2019 $ 2018 $ Loss used in the calculation of basic and diluted loss per share (1,015,172) (627,181) Weighted average number of ordinary shares for the purposes of basic and diluted loss per share (a) 67,688,483 34,436,252 (a) During the year ended 30 June 2019 the potential ordinary shares associated with the employee share option plan as set out in Note 2 are anti-dilutive and therefore excluded from the weighted average number of ordinary shares for the purposes of diluted earnings per share. The potential ordinary shares associated with the Performance Rights, as set out in Note 13 are anti-dilutive, and have not been included in the weighted average number of ordinary shares for the purposes of diluted earnings per share 7. Trade and other receivables Current Other receivables Goods and Services Tax receivable 8. Other assets Current Prepayments Non-current Tenements Consultancy fee 9. Property, plant and equipment 2019 $ 18,203 82,112 100,315 2018 $ 6,500 - 6,500 8,293 7,168 10,442 - 10,442 7,597 1,804 9,401 Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year: Plant and equipment $ Website development $ Computer hardware $ Motor vehicles $ Total $ 2019 At cost Balance at 1 July 2018 Additions Balance at 30 June 2019 Accumulated depreciation Balance at 1 July 2018 Depreciation expense Balance at 30 June 2019 2,973 - 2,973 (1,796) (208) (2,004) 15,000 - 15,000 (3,021) (2,795) (5,816) - 5,662 5,662 - (253) (253) - 30,560 30,560 - (502) (502) 17,973 36,222 54,195 (4,817) (3,758) (8,575) 39 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 9. Property, plant and equipment (cont’d) Plant and equipment $ Website development $ Computer hardware $ Motor vehicles $ Total $ 2018 At cost Balance at 1 July 2017 Additions Balance at 30 June 2018 Accumulated depreciation Balance at 1 July 2017 Depreciation expense Balance at 30 June 2018 2,973 - 2,973 (1,270) (526) (1,796) - 15,000 15,000 - (3,020) (3,020) Net book value 30 June 2018 1,177 11,980 - - - - - - - - - - - - - - 2,973 15,000 17,973 (1,270) (3,546) (4,816) 13,157 Net book value 30 June 2019 969 9,184 5,409 30,058 45,620 10. Intangible assets Non-current Goodwill on acquisition of Finny Limited 2019 $ 2018 $ 2,718,341 2,718,341 The group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. 11. Capitalised exploration and development expenditure Non-current Balance as at 1 July Additions Write-offs Balance as at 30 June 1,835,396 3,745,882 (1,804) 5,579,474 1,364,316 537,284 (66,204) 1,835,396 The exploration expenditure capitalised by the group ending 30 June 2019, is dependent on successful development and commercial exploitation, or alternatively, on the sale of the respective areas of interest. 12. Trade and other payables Current Unsecured Trade payables (i) Sundry payables and accrued expenses 2019 $ 2018 $ 28,061 671,138 699,199 17,781 1,214,071 1,231,852 (i) Trade payables are non-interest bearing and are normally settled on 30 days end of month terms. 40 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 13. Issued capital 81,508,197 fully paid ordinary shares (2018: 49,805,769) 12,614,548 4,571,544 Fully paid ordinary shares carry one vote per share and carry the right to dividends. Movements in issued capital 2019 No of shares $ 2018 No of shares $ Balance at the beginning of the year Shares issued during the year Balance at the end of the year 49,805,769 31,702,428 4,571,544 8,043,004 35,293,246 14,512,523 2,019,720 2,551,824 81,508,197 12,614,548 49,805,769 4,571,544 On 17 July 2018, the company completed the contingent consideration component of the Finny Limited transaction via the issue of 6,000,000 shares. This fully completed all payments under the terms of the Finny Limited acquisition. The company issued the following additional shares:        1,388,889 shares at a value of $0.225 as part of a personal placement offer, raising $312,500, 865,750 shares from the conversion of $0.20 options, raising $173,150, 500,000 shares from the conversion of $0.20 options, raising $100,000, 71,500 shares from the conversion of $0.20 options, raising $14,300, 150,000 shares from the conversion of $0.25 options, raising $37,500, 415,000 shares from the conversion of $0.20 options, raising $83,000 820,548 shares from the conversion of $0.20 options, raising $164,110, The company released a fourth supplementary prospectus dated 12 February 2019 and a fifth supplementary prospectus dated 28 February 2019. The offer under the company’s prospectus closed on 20 February 2019 and the company issued 20,490,741 fully paid ordinary shares at an issue price of $0.30 per share for a total capital raising of$6,147,222.30. In addition, 1,000,000 fully paid ordinary shares were issued to Canaccord at an issue price of $0.30 per share (in lieu of $300,000, ex-GST, of broking fees). 14. Reserves Share based payments (i) Options exercised Foreign currency translation 2019 $ 117,600 - 72,062 189,662 2018 $ 174,436 (56,836) - 117,600 (i) The share based payments reserve records the value of options issued to directors, employees and consultants as part of the remuneration for their services. 41 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 15. Accumulated losses Balance at the beginning of the year Options exercised Losses introduced Loss for the year Balance at the end of the year 16. Cash and cash equivalents 2019 $ 2018 $ (1,159,965) - - (1,015,172) (2,175,137) (570,088) 56,836 (19,532) (627,181) (1,159,965) For the purposes of the consolidated statement of cash flows, cash and cash equivalents include cash on hand and in banks. Cash and cash equivalents at the end of the reporting period as shown in the consolidated statement of cash flows can be reconciled to the related items in the consolidated statement of financial position as follows: (a) Reconciliation of cash Cash at bank Term deposits 2019 $ 355,494 2,510,293 2,865,787 (b) Reconciliation of loss for the year to net cash flows from operating activities Loss for the year Depreciation expense Non-cash share based payments Movements in working capital: (Increase) in trade and other receivables (Increase) in other assets (Decrease)/increase in trade and other payables Net cash flows used in operating activities 17. Commitments for expenditure 2019 $ (1,015,172) 3,758 - (93,815) (1,125) 122,218 984,136 2018 $ 171,068 - 171,068 2018 $ (627,181) 3,546 (42,000) - (571) 18,270 (563,936) Tenement expenditure (i) 1,000,000 1,671,202 (i) In order to maintain the group’s tenements in good standing with the relevant mining authorities, the group will be required to incur exploration expenditure under the terms of each exploration licence. This is a pro-rata estimate based on the terms for EPM 18504 and EPM 19198 in Queensland, PL1836, PL1837 and PL1851 in Vanuatu, and EL2302, EL2314, EL2418, EL2509, EL2378 and EL2390 in PNG, converted to AUD at current exchange rates. 42 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 18. Lease commitments Non-cancellable operating lease commitments Not later than 1 year Later than 1 year and not later than 5 years The operating leases relate to: 2019 $ 329,002 15,730 344,732 2018 $ - - - (i) the lease of a camp site in Papua New Guinea for a term of 12 months, with an expiry date of 15 April 2020. At the end of the lease term, there is an option to renew the lease on a month by month basis. (ii) the sub-lease of the company’s office space at Pyrmont, NSW, for a term of 24 months, with an expiry date of 17 February 2021. At the end of the lease term, there is an option to renew the lease for a further one year. 19. Contingent liabilities and contingent assets In the opinion of the directors, the group did not have any contingent liabilities or contingent assets at 30 June 2019 (2018: nil). 20. Auditors' remuneration Audit of the financial statements Investigating accountants report for inclusion in the company’s prospectus: Preparation Revision The auditor of Canterbury Resources Limited is BDJ Partners. 21. Subsidiaries 2019 $ 2018 $ 32,000 16,000 - - 32,000 10,000 7,500 33,500 The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2: Name of entity Country of incorporation Ownership interest Canterbury Exploration Pty Ltd Capella Ventures Pty Ltd Capella Vanuatu Ltd Canterbury Resources (PNG) Ltd Finny Ltd Australia Australia Vanuatu Papua New Guinea Papua New Guinea 2019 % 100 100 100 100 100 2018 % 100 100 100 100 100 43 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 22. Parent entity information The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the same as those applied in the consolidated financial statements. Refer to note 2 for a summary of the significant accounting policies relating to the group. Statement of financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Reserves Accumulated losses Total equity Total comprehensive loss 2019 $ 2018 $ 2,831,468 8,038,947 10,870,415 83,574 - 83,574 12,614,548 189,662 (2,017,369) 10,786,841 (953,071) 191,806 4,761,046 4,952,852 1,255,944 - 1,255,944 4,571,544 117,600 (992,236) 3,696,908 (545,981) Contingent liabilities The parent entity had no contingent liabilities at 30 June 2019 (2018: nil). Capital commitments - property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 (2018: nil). Guarantees The parent entity has not entered into any guarantees, in the current or previous financial year, with respect to the debts of its subsidiaries. 23. Key management personnel disclosures Directors The following persons were directors of the group during the financial year: JED Anderson GA Craighead GN Fallon RE Moller ME Erceg (appointed 6 March 2019) 44 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 23. Key management personnel disclosures (cont’d) Key management personnel compensation Remuneration of key management personnel 2019 Directors R E Moller J E D Anderson GA Craighead GN Fallon M Erceg 2018 Directors R E Moller J E D Anderson GA Craighead GN Fallon Short-term employee benefits Post- employment benefits Share based payments Salary and directors’ fees $ Consulting fees $ Super- annuation $ Options $ 45,000 58,500 - 41,096 - 144,596 8,400 68,400 240,000 - 21,000 337,800 - - - 5,250 - 5,250 - - - - - - Short-term employee benefits Salary and directors’ fees $ Consulting fees $ 22,500 22,500 - 20,566 65,566 - 42,600 122,727 - 165,327 Post- employment benefits Super- annuation $ - - - 2,603 2,603 Share based payments Options $ 5,250 5,250 5,250 5,250 21,000 Total $ 53,400 126,900 240,000 46,301 21,000 487,601 Total $ 27,750 70,350 127,977 28,419 254,496 No performance based remuneration was paid in 2019 (2018: nil). Transactions with associates of key management personnel Amounts recognised as expense Office overheads (i) 2019 $ 2018 $ 256,056 197,838 (i) Mr Grant Craighead, a director of the company, has a significant financial interest in Breakaway Mining Services Pty Limited. Breakaway Mining Services Pty Limited provides technical and office overhead services to the company during the year. These services were provided under normal commercial terms and conditions. The company entered into a services contract with Gage Resources Pty Limited (as trustee for Craighead Family Trust), dated 23 April 2018, for the services of Mr Grant Craighead as Managing Director of the company, for a term of 36 months, starting on 1 January 2018,. This term is automatically renewable unless terminated by 6 months written notice. The annual remuneration was $240,000 (plus GST). 45 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 23. Key management personnel disclosures (cont’d) Transactions with associates of key management personnel The contract is a related party contract as Gage Resources Pty Limited, as trustee for Craighead Family Trust, is an entity controlled by Mr Grant Craighead who is one of its two directors. On 1 July 2019, this contract was terminated and Mr Craighead was employed as a Managing Director and as an employee of the company. 24. Related party transactions (a) Parent entity The parent entity within the group is Canterbury Resources Limited. (b) Key management personnel Disclosures relating to key management personnel are set out in note 23. (c) Subsidiaries Interests in subsidiaries are set out in note 21. (d) Joint Venture Finny Limited has a farm-in and Joint Venture agreement with Rio Tinto. Where Rio Tinto has earnt 60% Joint Venture interest by sole-funding $5million of exploration, and is currently increasing to 80% by sole-funding the next $12.5 million, plus meeting various technical milestones. (e) Shared based payments Shared based payments are set out in note 23. 25. Operating segment The group operates in one reporting segment being the mining of minerals. 26. Employee share option plan The company operates an employee share option plan for employees and contractors of the group. In accordance with the provisions of the plan, as approved by the shareholders at a previous annual general meeting in 2013, eligible employees may be granted options to purchase parcels of ordinary shares at an exercise price of $0.40 per ordinary share. Each employee share option converts into one ordinary share of the company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The option carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The options granted expire on their expiry date, or one month after the resignation of the employee, whichever is the earlier. 46 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 26. Employee share option plan (cont’d) Terms and conditions of share-based payment arrangements affecting remuneration of key management personnel in the current financial year or future financial years: Options Series Grant date Exercise price Expiry date Vesting date CBY03A CBY04 CBY05 26/02/2016 28/03/2017 20/02/2018 $0.20 $0.25 $0.40 30/06/2019 26/02/2016 30/06/2020 28/03/2017 30/06/2021 20/02/2018 27. Financial instruments Capital management The group manages its capital to ensure that entities in the group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of its equity balance. In managing its capital, the group's primary objective is to ensure its continued ability to maintain its operations and provide a platform to enable a return for its equity shareholders to be made when successful commercial operations are achieved. In order to achieve this objective, the group seeks to maximise its fund raising to provide sufficient funding to enable the group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, either through new share issues, or reduction of debt, the group considers not only its short-term position but also its long-term operational and strategic objectives. The group’s overall strategy remains unchanged from 2018. The capital structure of the group consists of cash and bank balances (note 16) and equity of the group (comprising issued capital, reserves and accumulated losses as detailed in notes 13 to 15). The group is not subject to any externally imposed capital requirements. (a) Market risk The group‘s activities expose it primarily to the financial risks of changes in interest rates and foreign currency. There has been no change to the group‘s exposure to market risks or the manner in which these risks are managed and measured. 47 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 27. Financial instruments (cont’d) Capital management (cont’d) (a) Market risk (cont’d) (i) Interest rate risk management The group‘s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below: 2019 Financial assets Cash Term deposits Trade and other receivables Total assets Financial liabilities Trade and other payables Total liabilities 2018 Financial assets Cash Trade and other receivables Total assets Financial liabilities Trade and other payables Total liabilities Weighted average interest rate % Floating interest rate $ Fixed maturing in 1 yr to 5 yrs $ Non- interest bearing $ Total $ 0.00 1.95 0.00 0.00 355,494 2,510,293 - 2,865,787 - - - - - - - - - - 18,203 18,203 355,494 2,510,293 18,203 2,883,990 28,061 28,061 28,061 28,061 Weighted average interest rate % Floating interest rate $ Fixed maturing in 1 yr to 5 yrs $ Non- interest bearing $ Total $ 0.00 0.00 0.00 171,068 - 171,068 - - - - - - - - 6,500 6,500 171,068 6,500 177,568 - - - - 48 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 27. Financial instruments (cont’d) Capital management (cont’d) (a) Market risk (cont’d) (i) Interest rate risk management (cont’d) Sensitivity analysis The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance sheet date. The analysis assumes all other variables remain constant. 2019 Cash at bank Cash on short term deposit Tax charge of 27.5% Post tax profit increase/(decrease) 2018 Cash at bank Tax charge of 27.5% Post tax profit increase/(decrease) (ii) Currency risk Carrying amount $ 355,494 2,510,293 2,865,787 +0.5% interest rate profit & loss $ -0.5% interest rate profit & loss $ 1,777 12,551 14,328 (3,940) 10,388 (1,777) (12,551) (14,328) 3,940 (10,388) Carrying amount $ 171,068 +0.5% interest rate profit & loss $ -0.5% interest rate profit & loss $ 855 (855) (235) 235 (620) 620 The group's policy is, where possible, to allow group entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency. Where group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them) cash already denominated in that currency will, where possible, be transferred from elsewhere within the group. The group's exposure to foreign currency risk, which arises out of its investments in Vanuatu and Papua New Guinea, is as follows: Cash at bank Exploration expenditure capitalised Net exposure 2019 $ 60,815 5,579,474 5,640,289 2018 $ 1,490 343,260 344,750 49 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 27. Financial instruments (cont’d) Capital management (cont’d) (a) Market risk (cont’d) (ii) Currency risk (cont’d) Sensitivity analysis 2019 Cash at bank Capitalised exploration and development expenditure Tax charge of 27.5% Post tax profit increase/(decrease) 2018 Cash at bank Capitalised exploration and development expenditure Tax charge of 27.5% Post tax profit increase/(decrease) Carrying amount AUD$ 60,815 5,579,474 5,640,289 Carrying amount AUD$ 1,490 343,260 344,750 +10% VUV&KNA/AUD profit & loss AUD$ -10% VUV&KNA/AUD profit & loss AUD$ 6,082 557,947 564,029 (155,108) 408,921 (6,082) (557,947) (564,029) 155,108 (408,921) +10% VUV&KNA/AUD profit & loss AUD$ -10% VUV&KNA/AUD profit & loss AUD$ 149 34,326 34,475 (9,481) 24,994 (149) (34,326) (34,475) 9,481 (24,994) 50 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 27. Financial instruments (cont’d) Capital management (cont’d) (b) Credit risk Credit risk arises principally from the group's trade receivables. It is the risk that the counterpart fails to discharge its obligation in respect of the instrument. Ongoing credit evaluation is performed on the financial condition of trade and other receivables. The group does not have significant concentration of credit risk with respect to any single counter party or company of counter parties. (c) Liquidity risk Ultimate responsibility for liquidity risk management rests with the Board, which has established an appropriate liquidity risk management framework for the management of the group’s short medium and long-term funding and liquidity management requirements. The group manages liquidity risk by maintaining a reputable credit risk profile, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, The group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 45 days. The Board receives cash flow projections in a monthly basis as well as information regarding cash balances. At the balance sheet date, these projections indicated that the group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances. The group does not have any financing facilities in place and does not have a bank overdraft. Maturity analysis of financial assets and liability based on contractual obligations The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows. Trade and other payables mainly originate from the financing of assets used in ongoing operations such as, plant, equipment and investments in working capital (e.g. trade receivables). These assets are considered in the group's overall liquidity risk. 2019 Financial assets Cash Term deposits Trade and other receivables Total assets Financial liabilities Trade and other payables Total liabilities Carrying amount $ Contractual cash flows 6-12 months $ < 6 months $ > 12 months $ 355,494 2,510,293 18,203 2,883,990 355,494 2,510,293 18,203 2,883,990 28,061 28,061 28,061 28,061 - - - - - - - - - - - - - - Net maturity 2,855,929 2,855,929 On demand $ - - - - - - - 51 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Notes to the consolidated financial statements for the year ended 30 June 2019 27. Financial instruments (cont’d) Capital management (cont’d) (c) Liquidity risk (cont’d) Maturity analysis of financial assets and liability based on contractual obligations (cont’d) Carrying amount $ Contractual cash flows 6-12 months $ < 6 months $ > 12 months $ 2018 Financial assets Cash Term deposits Trade and other receivables Total assets Financial liabilities Trade and other payables Total liabilities 171,068 - 6,500 177,568 171,068 - 6,500 177,568 - - - - On demand $ - - - - - - - - - - - - - - - - - - - - - Net maturity 177,568 177,568 The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values. 28. Other information In accordance with Listing Rule 4.10.19, the company has used the cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives. 29. Events after the reporting period There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect significantly the activities, or the state of affairs of the group in future financial years. 52 Canterbury ABN 59152189 369 Resources Limited and Controlled Entities Directors' declaration The directors declare that: (a)in the directors' debts as and when they become due and payable; opinion, there are reasonable grounds to believe that the company will be able to pay its (b)in the directors' Reporting Standards, as stated in note 2 to the financial statements; opinion, the attached financial statements are in compliance with International Financial (c)in the directors' Corporations opinion, Act 2001, including position the financial and performance of the group, and the attached financial statements with Accounting and notes thereto Standards are in accordance with the and giving a true and fair view of compliance (d)the directors have been given the declarat ions required by s.295A of the Corporations Act 2001. Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001. On behalf of the Directors () g t i � ;:� t r�ig� - · · · · · · .. · · · · · · · · · · · · · · · ·· · · · · · · · .. · · · · · Sydney, 30 September 2019 53 Independent Auditor’s Report To the members of Canterbury Resources Limited, Report on the Financial Report Opinion We have audited the accompanying financial report of Canterbury Resources Limited (the company and its subsidiaries) (“the Group”), which comprises the consolidated statements of financial position as at 30 June 2019, the consolidated statements of profit or loss and other comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration. In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the group’s financial position as at 30 June 2019 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. further described We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 2 (q) to the financial statements which states that the directors are investigating options to raise additional funds. Should these measures be unsuccessful, it would indicate a material uncertainty which may cast doubt about the Group's ability to continue as a going concern and the Group's ability to pay its debts as and when they fall due. Our opinion is not qualified in respect of this matter. Phone (cid:1748)(cid:1093)(cid:1088)(cid:1)(cid:1089)(cid:1)(cid:1096)(cid:1096)(cid:1092)(cid:1093)(cid:1)(cid:1095)(cid:1092)(cid:1087)(cid:1087)(cid:1)(cid:1)(cid:1) Email (cid:29)(cid:31)(cid:37)(cid:1213)(cid:29)(cid:31)(cid:37)(cid:1141)(cid:30)(cid:42)(cid:40)(cid:1141)(cid:28)(cid:48)(cid:1) (cid:1) Office (cid:13)(cid:32)(cid:49)(cid:32)(cid:39)(cid:1)(cid:1095)(cid:1142)(cid:1)(cid:1088)(cid:1089)(cid:1091)(cid:1)(cid:1) (cid:24)(cid:28)(cid:39)(cid:38)(cid:32)(cid:45)(cid:1)(cid:20)(cid:47)(cid:45)(cid:32)(cid:32)(cid:47)(cid:1)(cid:1) (cid:15)(cid:42)(cid:45)(cid:47)(cid:35)(cid:1)(cid:20)(cid:52)(cid:31)(cid:41)(cid:32)(cid:52)(cid:1)(cid:1) (cid:15)(cid:20)(cid:24)(cid:1)(cid:1089)(cid:1087)(cid:1093)(cid:1087)(cid:1) (cid:1) Postal (cid:17)(cid:16)(cid:1)(cid:3)(cid:42)(cid:51)(cid:1)(cid:1088)(cid:1093)(cid:1093)(cid:1091)(cid:1142)(cid:1) (cid:15)(cid:42)(cid:45)(cid:47)(cid:35)(cid:1)(cid:20)(cid:52)(cid:31)(cid:41)(cid:32)(cid:52)(cid:1) (cid:15)(cid:20)(cid:24)(cid:1)(cid:1089)(cid:1087)(cid:1092)(cid:1096)(cid:1) Liability limited by a scheme approved under Professional Standards Legislation. Please refer to the website for our standard terms of engagement. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Intangible Assets and Capitalised Deferred Exploration and Evaluation Expenditure $8.1 million Refer to Notes 10 and 11 The consolidated entity owns the rights to several exploration licenses in Papua New Guinea, Vanuatu and Queensland. The intangible asset represents goodwill on acquisition of Finny Limited, predominantly relating to the exploration licences held by that company. Expenditure relating to these areas is capitalised and carried forward to the extent they are expected to be recovered through the successful development of the respective area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. This area is a key audit matter due to: (cid:120) The significance of the balances; (cid:120) The inherent uncertainty of the recoverability of the amounts involved; and (cid:120) The substantial amount of audit work performed. Our audit procedures included amongst others: (cid:120) Assessing whether any facts or circumstances exist that may indicate impairment of the capitalised assets; (cid:120) Performing detailed testing of source documents to ensure capitalised expenditure was allocated to the correct area of interest; (cid:120) Performing detailed testing of source documents to ensure expenditure was capitalised in accordance with Australian Accounting Standards; and (cid:120) Obtaining external confirmations to ensure the exploration licences are current and accurate. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2019 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Directors' Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group 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 has no realistic alternative but to do so. Auditor’s Responsibility for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (cid:120) Identify and assess the risks of material misstatement of the financial report, 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. (cid:120) 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. (cid:120) (cid:120) 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 financial report 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. (cid:120) Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors 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 directors 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 directors, we determine those matters that were of most significance in the audit of the financial report 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. Report on the Remuneration Report Opinion We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2019. In our opinion, the Remuneration Report of Canterbury Resources Limited for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDJ Partners ................................................ Gregory W Cliffe Partner 30 September 2019 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Shareholder information 1. Equity Number of securities Type 57,565,004 24,143,193 300,000 900,000 250,000 3,750,000 1,000,000 1,000,000 Fully paid ordinary shares - quoted Fully paid ordinary shares - restricted Unquoted options expiring on 30 June 2020 with an exercise price of $0.25 - unrestricted Unquoted options expiring on 30 June 2020 with an exercise price of $0.25 - restricted Unquoted options expiring on 30 June 2021 with an exercise price of $0.40 - unrestricted Unquoted options expiring on 30 June 2021 with an exercise price of $0.40 - restricted Unquoted options expiring on 30 June 2021 with an exercise price of $0.45 - restricted Unquoted options expiring on 30 June 2021 with an exercise price of $0.50 - restricted 2. Substantial holders Holder Name Mr Duncan John Hardie Gage Resources Pty Ltd James Sinton Spence 3. Small parcels Holding Balance % Issued Capital 6,464,913 5,871,586 5,444,444 7.91% 7.19% 6.66% At the prevailing market price of $0.245 per share at 27 September 2019, there were 26 shareholders with less than a marketable parcel of $500. 4. Voting rights There are no restrictions on voting rights. At a general meeting of the company every person who is or was the registered holder of a share at the time prescribed for that purpose in the notice convening the meeting ("Eligible Member") is entitled to vote in person, by proxy or representative. Each Eligible Member has one vote on a show of hands and each Eligible Member has one vote per share, or a fraction of a vote on a partly paid share, on a poll. A person who holds an ordinary share which is not fully paid is entitled, on a poll, to a fraction of a vote equal to the proportion which the amount paid bears to the total issue price of the share. A member is not entitled to vote if there are any calls or other sum outstanding on his or her shares. If a share is held jointly and more than one member votes in respect of that share, only the vote of the member whose name appears first in the register of members will be counted. Option holders have no voting rights until the options are exercised. There are no current on-market buy-back (LR 4.10.18). 58 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Shareholder information 5. Distribution Schedule a. Shares Holding Ranges Holders Total Units % Issued Share Capital 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - 9,999,999,999 Totals b. Options 11 31 106 125 81 354 1,773 89,358 811,541 5,248,363 75,557,162 81,708,197 0.00% 0.11% 0.99% 6.42% 92.47% 100.00% Holding Ranges Holders Total Units % Issued Options 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - 9,999,999,999 Totals 6. 20 largest shareholders Position Holder Name - - - - 12 12 - - - - - - - - 7,200,000 7,200,000 100.00% 100.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 Holding 6,464,913 Mr Duncan John Hardie Gage Resources Pty Ltd 5,871,586 James Sinton Spence Mr Anthony Williamson Fallon Nominees Pty Ltd Icekins Pty Ltd Merrill Lynch (Australia) Nominees Pty Limited Netwealth Investments Limited 5,444,444 3,131,112 3,103,571 2,912,000 2,500,000 2,416,000 Travel Systems Pty Ltd 2,362,500 St Jude Exploration Pty Ltd 2,250,000 Armada Trading Pty Ltd Mr Duncan John Hardie Moller Corporation Ltd 2,000,000 1,766,126 1,600,000 % IC 7.91% 7.19% 6.66% 3.83% 3.80% 3.56% 3.06% 2.96% 2.89% 2.75% 2.45% 2.16% 1.96% 59 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Shareholder information 6. 20 largest shareholders (cont’d) Position Holder Name 14 15 16 17 18 19 20 Gage Resources Pty Ltd Dr Susan Messner & Mr William Callender HSBC Custody Nominees (Australia) Limited Hanson RJL Pty Ltd Big Art Investments Pty Ltd Breakaway Investment Group Pty Limited Mr Lindsay George Dudfield & Mrs Yvonne Sheila Doling Dudfield Total Total issued capital CORPORATE GOVERNANCE STATEMENT Holding 1,500,000 1,323,333 1,311,383 1,266,666 1,200,000 1,165,609 1,065,033 % IC 1.84% 1.62% 1.61% 1.55% 1.47% 1.43% 1.30% 50,654,276 61.99% 81,708,197 100.00% Canterbury is committed to implementing high standards of corporate governance. The Board of Directors is responsible for corporate governance, and has the authority to determine, all matters relating to the strategic direction, policies, practices, management goals and operations of Canterbury. It also monitors the business and affairs of Canterbury on behalf of the Shareholders by whom they are elected and to whom they are accountable. The Board has endorsed most of the ASX Corporate Governance Council Principles and Recommendations (3rd edition, issued on 27 March 2014). The Corporate Governance Statement found at current at 30 www.canterburyresources.com.au/about-us/corporate-governance. June 2019 can be 60 Canterbury Resources Limited and Controlled Entities ABN 59 152 189 369 Corporate directory Board and Management John Ernest Douglas Anderson Non-Executive Chairman Grant Alan Craighead Managing Director Ross Earle Moller Non - Executive Director and Company Secretary Gary Noel Fallon Non-Executive Director Michael Matthew Erceg Executive Director (appointed 6 March 2019) Veronique Morgan-Smith Company Secretary and In-House Legal Counsel Registered Office & Principal Place of Business Suite 108 55 Miller Street Pyrmont, NSW 2009 Telephone: +61 (2) 9392 8020 Email: admin@canterburyresources.com.au Web: www.canterburyresources.com.au Auditors BDJ Partners Level 8, 124 Walker Street North Sydney NSW 2060 Share Registry Automic Level 5, 126 Phillip Street Sydney NSW 2000 Securities Exchange Listing The Company is listed on the Australian Securities Exchange Ltd (“ASX”) Home Exchange: Sydney, New South Wales ASX Code: CBY 61 

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