Cazaly Resources
Annual Report 2015

Plain-text annual report

Cazaly Resources Limited ABN: 23 101 049 334 and Controlled Entities Annual Report For the Year Ended 30 June 2015 CONTENTS Cazaly Resources Limited Annual Report 2015 Corporate Directory Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Additional Shareholder Information 1 2 17 18 19 20 21 22 48 49 51 CORPORATE DIRECTORY Cazaly Resources Limited Annual Report 2015 MANAGING DIRECTOR Nathan McMahon MANAGING DIRECTOR Clive Jones NON-EXECUTIVE DIRECTOR Kent Hunter COMPANY SECRETARY Mike Robbins PRINCIPAL & REGISTERED OFFICE Level 2, 38 Richardson Street WEST PERTH WA 6005 Telephone: (08) 9322 6283 Facsimile: (08) 9322 6398 AUDITORS Bentleys Audit & Corporate (WA) Pty Ltd Level 1, 12 Kings Park Road WEST PERTH WA 6005 Telephone: (08) 9226 4500 Facsimile: (08) 9226 4300 SHARE REGISTRAR Advanced Share Registry Services 110 Stirling Highway NEDLANDS WA 6009 Telephone: (08) 9389 8033 Facsimile: (08) 9389 7871 STOCK EXCHANGE LISTING Australian Securities Exchange (Home Exchange: Perth, Western Australia) Code: CAZ BANKERS National Australia Bank 100 St Georges Terrace PERTH WA 6000 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 Your directors present their report, together with the financial statements of Cazaly Resources Limited (‘the Company’ or ‘Cazaly’) and its controlled entities (‘the Group’) for the financial year ended 30 June 2015. 1. DIRECTORS AND COMPANY SECRETARY Directors The names of directors in office at any time during or since the end of the year are: Nathan McMahon Clive Jones Kent Hunter Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Company Secretary Mike Robbins 2. PRINCIPAL ACTIVITIES The principal activity of the Group during the financial period was mineral exploration. There were no significant changes in the nature of the Group’s principal activities during the financial period. 3. OPERATING RESULTS & FINANCIAL POSITION The loss after tax for the year was $1,388,795 (2014:$1,776,871). The Group’s net assets at the end of the year are $20,640,083 (2014: $22,028,878). Cash and cash equivalents as at year end were $620,947 (2014 - $147,731). Exploration expenditure for the year was $239,813 (2014 - $1,464,971). The majority of this expenditure was on the Halls Creek and Parker Range projects. Exploration expenditure written off for the year was $1,104,148 compared to $2,543,058 in the previous financial year. The main writes off this year were the Huckitta JV expenditure of $310,248, Marillana $57,397, Mt Stuart $88,402, Hamersley $58,283, Albion Downs $50,324 and the previously capitalised expenditures relating to the various tenements that were relinquished during the financial year. Net administration expenses and employee benefits for the year totalled $883,965 (2014 - $1,088,203). During the next financial year the Group intends to continue to further develop its core projects (Parker Range and McKenzie Springs) and explore new mining opportunities both in Australia and overseas. These opportunities are being explored by the Board and corporate consultants who operate on a success fee basis only. 4. RISKS There are specific risks associated with the activities of the Group and general risks which are largely beyond the control of the Group and the Directors. The risks identified below, or other risk factors, may have a material impact on the future financial performance of the Group and the market price of the Company’s shares. 2 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 All mining ventures are exposed to risks and the Board continues to monitor risks associated with current projects whilst also analysing the risks associated with any new mining opportunities. These risks may cover such areas as:  Title Risk This may specifically cover mining tenure whereby country specific mining laws and legislation apply. Any opportunity in Australia and overseas will be subject to particular risks associated with operating in Australia or the respective foreign country. These risks may include economic, social or political instability or change, hyperinflation, currency non-convertibility or instability and changes of law affecting foreign ownership, exchange control, exploration licensing, export duties, investment into a foreign country and repatriation of income or return of capital, environmental protection, land access and environmental regulation, mine safety, labour relations as well as government control over mineral properties or government regulations that require the employment of local staff or contractors or require other benefits be provided to local residents.  Exploration Risk The Board realises that mineral exploration and development are high risk undertakings due to the high level of inherent uncertainty. There can be no assurance that exploration of the Group’s tenements, or of any other tenements that may be acquired by the Group in the future, will result in the discovery of economic mineralisation. Even if economic mineralisation is discovered there is no guarantee that it can be commercially exploited. Any future exploration activities of the Group may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, native title process, changing government regulations and many other factors beyond the control of the Group.  Resource Estimates The Group’s main projects contain JORC Code compliant resources. There is no guarantee that a JORC Code compliant resource will be discovered on any of the Group’s other tenements. Resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis the estimates are likely to change. This may result in alterations to development and mining plans which may, in turn, adversely affect the Group’s operations and the value of the Company’s Listed Shares.  Access Risks – Cultural Heritage and Native Title The Group must comply with various country specific cultural heritage and native title legislation including access agreements which require various commitments, such as base studies and compliant survey work, to be undertaken ahead of the commencement of mining operations. 3 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 It is possible that some areas of those tenements may not be available for exploration due to cultural heritage and native title legislation or invalid access agreements. The Group may need to obtain the consent of the holders of such interests before commencing activities on affected areas of the tenements. These consents may be delayed or may be given on conditions which are not satisfactory to the Group.  JV and Contractual Risk The Group has and may have additional options where it can increase its holding in the selective assets by achieving or undertaking selected milestones. The Group’s ability to achieve its objectives and earn or maintain an interest in these projects is dependent upon it and the registered holders of those tenements complying with their respective contractual obligations under joint venture agreements in respect of those tenements, and the registered holders complying with the terms and conditions of the tenements and any other relevant legislation.  Economic General economic conditions, introduction of tax reform, new legislation, the general level of activity within the resources industry, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Group’s exploration, development and possible production activities, as well as on its ability to fund those activities.  Market conditions Share market conditions may affect the value of the Company’s quoted securities regardless of the Group’s operating performance. Share market conditions are affected by many factors such as: introduction of tax reform or other new legislation; interest rates and inflation rates; - general economic outlook; - - - changes in investor sentiment toward particular market sectors; - - the demand for, and supply of, capital; and terrorism or other hostilities. The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Group or any return on an investment in the Company.  Volatility in Global Credit and Investment Markets Global credit, commodity and investment markets have recently experienced a high degree of uncertainty and volatility. The factors which have led to this situation have been outside the control of the Group and may continue for some time resulting in continued volatility and uncertainty in world stock markets (including the ASX). This may impact the price at which any Listed Options and Shares trade regardless of operating performance and affect the Company’s ability to raise additional equity and/or debt to achieve its objectives, if required. 4 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015  Commodity Price Volatility and Exchange Rates Risks If the Group achieves success leading to mineral production, the revenue it will derive through the sale of gold, iron ore or any other minerals it may discover exposes the potential income of the Group to commodity price and exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond the control of the Group. Such factors include supply and demand fluctuations for commodities and metals, technological advancements, forward selling activities and other macro-economic factors such as inflation expectations, interest rates and general global economic conditions. Furthermore, international prices of various commodities are denominated in United States dollars whereas the income and expenditure of the Group are and will be taken into account in Australian currency. This exposes the Group to the fluctuations and volatility of the rate of exchange between the United States dollar and the Australian dollar as determined in international markets. If the price of commodities declines this could have an adverse effect on the Group’s exploration, development and possible production activities, and its ability to fund these activities, which may no longer be profitable.  Environmental Risks The operations and proposed activities of the Group are subject to each project’s jurisdiction, laws and regulations concerning the environment. As with most exploration projects and mining operations, the Group’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. Future legislation and regulations governing exploration, development and possible production may impose significant environmental obligations on the Group. The cost and complexity of complying with the applicable environmental laws and regulations may prevent the Group from being able to develop potential economically viable mineral deposits. The Group may require approval from the relevant authorities before it can undertake activities that are likely to impact the environment. Failure to obtain such approvals or to obtain them on terms acceptable to the Group may prevent the Group from undertaking its desired activities. The Group is unable to predict the effect of additional environmental laws and regulations, which may be adopted in the future, including whether any such laws or regulations would materially increase the Group’s cost of doing business or affect its operations in any area. There can be no assurances that new environmental laws, regulations or stricter enforcement policies, once implemented, will not oblige the Group to incur significant expenses and undertake significant investments in such respect which could have a material adverse effect on the Group’s business, financial condition and results of operations. The above risks are not exhaustive but are the minimum exposure areas observed by the Group. Outside of the above, the Group is continually assessing Industry type risk (covering resources, commercial, commodity prices & volatility, insurance and environmental) and general type risk (economic, share markets, government & legal and global volatility). 5. DIVIDENDS PAID OR RECOMMENDED The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. 5 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 6. REVIEW OF OPERATIONS Corporate The Company received its full entitlement ($2 million) under the contingency royalty payment scheme with Phoenix Gold Limited. The last $250,000 quarterly contingency payment was received on 2 January 2015. On 9 June 2015 the Company announced that it had sold a package of royalties for a potential total of $2.35M comprising royalties held over the Kalgoorlie Gold project (“KGP”) and the Halls Creek Copper project (“HCCP”). The sale was to a private mining investment group and comprises various payments subject to a range of conditions including third party waivers of pre-emptive rights and production hurdles. In summary, the schedule of payments is as follows: (a) Payment of $453,000 received upon signing; (b) Payment of $147,000 received following satisfaction of third party rights with respect to the HCCP; (c) Payment of $750,000 upon the commencement of commercial mining at the KGP by June 2017; and (d) Payment of $1,000,000 upon satisfaction of conditions relating to the production of 140,000ozs gold from the KGP. Payments (a) and (b) were received on 29 June 2015. The sale of the royalties ensures the early realisation of cashflows and enables the Company to focus on its existing projects. In December 2014 the Company also entered into a Controlled Placement Agreement (CPA). The CPA provides Cazaly with up to $2 million of standby equity capital over the coming 12 months. Importantly, Cazaly retains full control of the placement process, including having sole discretion as to whether or not to utilise the CPA. The CPA provides Cazaly with the flexibility to quickly and efficiently raise capital, including the ability to take advantage of suitably attractive opportunities should they arise. Cazaly is under no obligation to raise capital under the CPA. If Cazaly does decide to utilise the CPA, the Company has control, allowing Cazaly to decide the frequency, timing, maximum size and minimum issue price of any capital raisings under the CPA. The Group has continued to reduce its tenement holdings and is focussed on its most advanced projects. Cost cutting measures were initiated early in the financial year and are ongoing. Projects Parker Range (CAZ 100%) Despite the recent downturn in the iron ore market, the Company continues to seek avenues to commence the development of the Parker Range iron ore project. The Parker Range project is the only “mine ready” iron ore deposit in the region not currently in operation. Parker Range has a fully completed definitive feasibility study and all key approvals are in place to commence development. In May 2014, the WA Transport Minister, Mr Dean Nalder, announced that Yilgarn Esperance Solution (YES) Limited, a consortium headed up by Asciano had been chosen to design, build and operate the new Multi-User Iron Ore Facility (MUIOF) planned for the Port of Esperance. Given the state of the iron ore market during the financial year no progress has been made on the development by Asciano. 6 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 Cazaly intends to update the DFS once the YES consortium and the port have completed formal documentation. Discussions with potential project finance and commercial partners are continuing. McKenzie Springs (CAZ 100%) The nickel potential of the area previously defined priority targets that contained nickel, copper and cobalt mineralisation in geological settings similar to the nearby Savannah Nickel operation (3.1 Mt @ 1.5% Ni, 0.89% Cu and 0.08% Co, Panoramic Resources, July 2013). The Savannah Nickel Operation has been in production since 2004 and exports concentrate to China via the port of Wyndham (240km to the north via the Great Northern Highway). Recent near mine exploration by Panoramic has indicated potential to extend the resource and mine life beyond 2017 with the discovery of a new lode at Savannah North. Mineralisation identified within the Company’s McKenzie Springs tenement is associated with the basal contact of mafic-ultramafic rocks in a similar geological setting to the Savannah Nickel Mine situated ~9km to the north. Gossan outcrops were sampled returning results confirming the potential for ore grade mineralisation and previous results. Of particular note is one very high grade result which returned 12.8% Cu, 1.92% Ni and 0.17% Co taken from the Mackenzie Springs No.1 gossan. Following reconnaissance work and research of historic data the Company identified evidence of graphite bearing units associated with high grade metamorphic rocks of the Tickalara Metamorphic suite which trend throughout the McKenzie Springs project for ~15 kilometres. This is the same unit hosting Lamboo Resources Limited’s neighbouring Macintosh Graphite Project (7.135Mt @ 4.73% TGC) (ASX:LMB, January 2014). The host graphitic schist it is rarely seen in outcrop although the prospective stratigraphy is thought to trend for some ~15km throughout the project. Samples assayed returned Total Graphitic Carbon (TGC) grades of 22.4 and 23.9% TGC. The Company also received encouraging first pass results from the petrographic analyses of graphite samples collected from the project. The Company intends to collect further samples with a view to performing flotation testwork in due course. It is also planned to further define the acquisition and assessment of an airborne this stratigraphic horizon electromagnetic (EM) survey to more accurately define targets for future drill testing. through Burbridge Gold Deposits (CAZ 100%) Cazaly has taken the opportunity to assess the gold potential of its holdings in the Southern Cross region. This has led to the recognition of a group of small but potentially viable gold prospects situated immediately north of the Mount Caudan iron ore deposit called the Burbidge Group. The prospects are located on granted mining leases M77/765 and M77/766 nearby to existing haul roads and associated infrastructure all within 15 kilometres of the 2.5Mtpa Marvel Loch gold mill which was recently recommissioned by Hanking. In-house resource estimates were updated on a series of adjacent gold prospects. The updated resource estimates (as announced to the ASX in the CAZ June 2015 quarterly activities report) are shown in Table 1 below: 7 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 Table 1 – Burbidge Gold Resource Estimate Ounces Au RESOURCE CATEGORY Tonnes BURBIDGE GROUP PROSPECT ZEUS BURBIDGE ZEUS SOUTH LITTLE BURBIDGE EAST BURBIDGE EAST TOTAL Above resources reported at a lower cut-off grade of 1.0 g/t gold. No upper grade cuts have been applied. Assay results are from reverse circulation (RC) and diamond drilling (DDH). Totals may show variation due to rounding. Further details are contained in the June 2015 and March 2015 ASX quarterly activities reports. Refer Competent Person’s Statement (*). Grade (g/t Au) 2.76 1.64 1.08 1.59 1.99 1.97 INFERRED INFERRED INFERRED INFERRED INFERRED 142,900 121,700 29,100 129,300 45,500 468,600 12,680 6,420 1,010 6,610 2,910 29,600 INFERRED Gold mineralisation at the Zeus prospect was identified in the late 1980’s, south of the Bronco and Great Victoria open cut gold mines. Drilling along the geological contact intersected gold mineralisation in a vertical structure, above an oxidised massive sulphide unit on a contact between metasediments and mafic volcanics. Previous tenement holders Gondwana Resources Limited followed up high grade gold intersects and conducted three rounds of RC in-fill drilling at Zeus, Burbidge and Burbidge East prospects. Hamersley Iron Ore Project (CAZ 30%/WFE 70%) The Company reduced its holding in this project during the year as reported to the ASX by Winmar Resources Ltd (‘WFE’) on 6 February 2015. The Hamersley Iron project contains the Winmar Deposit which includes both Channel Iron (‘CID’) and Detrital Iron (‘DID’) styles of mineralisation. The CID covers an area of 2.0 by 2.5 km and, in the southwest, is overlain by the DID. The overall indicated/inferred resource for the project is 343Mt @ 54.5% Fe (57.9% CaFe)(refer WFE ASX announcement dated 22 May 2013). Halls Creek Copper Project (CAZ 20%/DDD 80%) The Company has an agreement with 3D Resources Limited (‘DDD’) to earn up to a 75% interest in the Halls Creek Copper Project, located in the Kimberley region of Western Australia. The Halls Creek Project comprises a large package of six tenements covering an area of approximately 298 km², near the township of Halls Creek covering part of the Halls Creek Mobile Zone which is highly prospective for a range of commodities including base metals, gold, diamonds and nickel. The project hosts the Mount Angelo North Cu-Zn-Ag volcanogenic massive sulphide deposit. Cazaly has access to a large tenement package which is particularly prospective for the discovery of further similar copper and copper-zinc mineralisation. Mineralisation at Mount Angelo North occurs as significant pod of zoned (Zn - Cu/Zn - Cu) massive sulphide the upper extents of which is characterised by a near surface to surface zone of oxidised mineralisation. The Halls Creek project also hosts the Mt Angelo Porphyry Copper deposit which comprises widespread low grade copper mineralisation occurring with the granophyric phase of the Angelo Microgranite. A maiden resource estimate for the deposit (see table 2) was announced to the ASX in the CAZ September 2013 quarterly activities report. Pickands Mather had previously estimated a low grade Cu resource of approximately 21 million short tonnes grading 0.44% Cu. 8 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 Table 2 - Mount Angelo North Resource Estimate Classification Tonnes CuEqu. (Mt) % Oxide Mineralisation Indicated Inferred 0.17 0.07 Fresh Mineralisation Indicated Inferred 0.93 0.60 Lower Mineralisation 1.57 1.41 1.92 1.38 Cu % 1.13 1.07 1.46 1.02 Zn % 0.96 1.12 1.67 1.33 Ag g/t 26.1 11.1 12.5 9.0 Inferred 0.04 0.97 0.63 1.22 8.5 TOTAL 1.78 1.60 1.21 1.39 11.6 Above resources reported at a lower cut-off grade of 0.8%CuEqu.Refer Competent Person’s Statement (**). This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. Huckitta JV (CAZ 20%/MTH 80%) Located immediately south of the Leaky Bore tenement, the project comprised two tenements (EL25643 and 25653) which were subject to the Sammy Joint Venture with Mithril Resources Limited (‘MTH’). Following the relinquishment of both tenements in July and August 2015, the joint venture has been dissolved and associated exploration expenditure has been written off in the financial year ended 30 June 2015. 7. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES The Group will continue its mineral exploration activity at and around its exploration projects with the object of identifying commercial resources. The Group also intends to identify new mineral exploration opportunities within Australia and the rest of the world for further potential acquisitions which may offer value enhancing opportunities for shareholders. 8. SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the state of affairs of the Group during the financial year. 9. AFTER BALANCE DATE EVENTS The Directors are not aware of any matters or circumstances at the date of the report, other than those referred to in this report or the financial statements or notes thereto, that has significantly affected or may significantly affect the operations, the results of operations or the state of affairs of the Group in subsequent financial years. 9 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 10. ENVIRONMENTAL ISSUES The Group’s exploration activities are subject to the 1978 (WA) Mining Act. The Group has a policy of complying with or exceeding its environmental performance obligations. The Board of Cazaly believes that the Group has adequate systems in place for the management of its environmental requirements. The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The Directors are not aware of any breach of environmental legislation for the financial year under review. 11. INFORMATION ON DIRECTORS Nathan McMahon Managing Director (Corporate and Administration) Qualifications B.Com Experience Mr McMahon has provided tenement management advice to the mining industry for approximately 17 years to in excess of 20 public listed mining companies. Mr McMahon has specialised in native title negotiations, joint venture negotiations and project acquisition due diligence. Mr McMahon is a Director of several listed companies. Equity Holdings Fully Paid Ordinary Shares – 18,355,154 Unlisted Options – 1,500,000 exercisable at $0.18 expiring 26 November 2016 Other Directorships Hodges Resources Ltd (since May 2008) Dempsey Minerals Ltd (since February 2011) Clive Jones Managing Director (Technical) Qualifications B.App.Sc(Geol), M.AusIMM. Experience Mr Jones has been involved in mineral exploration for over 25 years and has worked on the exploration for a range of commodities including gold, base metals, mineral sands, uranium and iron ore. Mr Jones is a Director of several ASX listed companies as well as being Chairman of Unity Mining Ltd. Equity Holdings Fully Paid Ordinary Shares – 10,075,114 Unlisted Options – 1,500,000 exercisable at $0.18 expiring 26 November 2016 Other Directorships Corazon Mining Ltd (since February 2005) Cortona Resources Ltd (from January 2006 to January 2013) Bannerman Resources Ltd (since January 2007) Unity Mining Ltd (since January 2013) 10 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 Kent Hunter Non-Executive Director Qualifications B.Bus, CA. Experience Mr Hunter is a Chartered Accountant with over 17 years’ corporate and company secretarial experience. He has been involved in the listing of over 20 exploration companies on ASX in the past decade. He has experience in capital raisings, ASX compliance and regulatory requirements and is also a Company Secretary for other ASX Listed entities. Equity Holdings Fully Paid Ordinary Shares – 212,501 Unlisted Options – 500,000 exercisable at $0.18 expiring 26 November 2016 Other Directorships Mike Robbins Company Secretary Classic Minerals Ltd (since November 2013) Krakatoa Resources Ltd (from January 2012 to December 2013) Stratum Metals Ltd (from December 2010 to October 2013) Western Manganese Ltd (from June 2010 to July 2013) Carbon Conscious Ltd (from November 2010 to August 2014) Mr Robbins has over 20 years resource industry experience gathered at both operational and corporate levels, both within Australia and overseas. During that time, he has held numerous project and head office management positions and is currently Company Secretary for three other listed entities. 12. REMUNERATION REPORT - AUDITED This report details the nature and amount of remuneration for each director of the Company. Remuneration Policy The remuneration policy of Cazaly has been designed to align director objectives with shareholder and business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with market rates. The Board of the Company believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best directors to run and manage the company, as well as create goal congruence between directors and shareholders. The Board’s policy for determining the nature and amount of remuneration for board members is set out below. The remuneration policy, setting the terms and conditions for the executive directors and other senior staff members, was developed by the managing directors and approved by the board after seeking professional advice from independent external consultants. In determining competitive remuneration rates, the Board seeks independent advice on local and international trends among comparative companies and industry generally. It examines terms and conditions for employee incentive schemes benefit plans and share plans. Independent advice is obtained to confirm that executive remuneration is in line with market practice and is reasonable in the context of Australian executive reward practices. 11 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 12. REMUNERATION REPORT – AUDITED (Cont’d) The Group is exploration and development focussed, and therefore speculative in terms of performance. Consistent with attracting and retaining talented executives, directors and senior executives are paid market rates associated with individuals in similar positions, within the same industry. The Board acquired and were issued shares as part of the terms of the Initial Public Offer in 2003. Board members have retained these securities which assist in aligning their objectives with overall shareholder value. Options and performance incentives will be issued in the event that the entity moves from an exploration entity to a producing entity, and key performance indicators such as profits and growth can be used as measurements for assessing Board performance. All remuneration paid to directors is valued at the cost to the Company and expensed or carried forward on the balance sheet for time that is attributable to exploration and evaluation. Options are valued using the Black-Scholes methodology. The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The managing directors in consultation with independent advisors determine payments to the non-executive directors and review their remuneration annually, based on market practice, duties and accountability. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the Company. However, to align directors’ interests with shareholder interests, all directors are encouraged to hold shares in the company. Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration The remuneration policy has been tailored to increase goal congruence between shareholders and directors and executives. This has been achieved by the issue of shares to the majority of the directors and executives to encourage the alignment of personal and shareholder interest. Employment Contracts of Directors and Senior Executives The employment conditions of the joint Managing Directors, Nathan McMahon and Clive Jones, are each formalised in contracts of employment. These contracts commenced on 1 July 2010 and have a 3 year terms (with an option for a 3 year extension). The contracts provide Messrs. McMahon and Jones with annual salaries of $180,000 each. The company may terminate these agreements at any time and without prior notice if serious misconduct has occurred. In this event only the fixed proportion of the remuneration is payable and only up until the date of the termination. There is no formal contract in place for the non-executive director, Kent Hunter. Mr Hunter was paid under terms agreed to by a directors’ resolution at $27,250 per year. This fee has remained the same since 2010. The employment contracts stipulate a range of one to three-month resignation periods. The Company may terminate an employment contract without cause by providing one to three months written notice or making payment in lieu of notice, based on the individual’s annual salary component. Termination payments are not payable on resignation or under the circumstances of unsatisfactory performance. 12 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 12. REMUNERATION REPORT – AUDITED (Cont’d) Details of Remuneration for Year Ended 30 June 2015 The remuneration for key management personnel of the company during the year was as follows: Short-term Benefits Post- Employ- ment Benefits Other Long-term Benefits Share based Payment Total Performance Related Cash, salary & commiss -ions Cash profit share Non-cash Other Benefit Super- annuation Other Equity Options $ $ $ $ $ $ $ Nathan McMahon – Managing Director (ii) 2015 2014 180,000 180,000 - - Clive Jones – Managing Director (iii) 2015 2014 180,000 180,000 - - - - - - Kent Hunter – Non Executive Director 2015 2014 27,250 27,250 Total Remuneration 2015 2014 387,250 387,250 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (i) $ - $ 180,000 % - 47,622 227,622 20.9% - 180,000 - 47,622 227,622 20.9% - 27,250 - 15,874 43,124 36.8% - 387,250 - 111,118 498,368 22.2% The fair value of the Options was calculated at the date of grant using a Black-Scholes model. i) ii) An aggregate amount of $180,000 (2014:$ 180,000) was paid, or was due and payable to Kingsreef Pty Ltd, a company controlled by Mr Nathan McMahon, for the provision of corporate and tenement management services to the Company. iii) An aggregate amount of $180,000 (2014:$ 180,000) was paid, or was due and payable to Widerange Corporation Pty Ltd, a company controlled by Mr Clive Jones, for the provision of geological services to the Company. Related Party Information Transactions between related parties are on commercial terms and conditions, no more favourable than those available to other parties unless otherwise stated. Remuneration (excluding the reimbursement of costs) received or receivable by the directors of the Group and aggregate amounts paid to superannuation plans in connection with the retirement of directors are disclosed in Note 4 to the accounts. Mr McMahon was at any time during the financial years ended 30 June 2015 and 30 June 2014, a director and shareholder of Hodges Resources Limited (“Hodges”) and Dempsey Minerals Limited (“Dempsey”). Hodges and Dempsey have an agreement in place, based on normal commercial terms and conditions, to reimburse the Company for office rental and administration and overheads. 13 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 12. REMUNERATION REPORT – AUDITED (Cont’d) Aggregate amounts of each of the above types of other transaction with related parties of the Company: Sales Rent, administrative and office overheads:  Hodges Resources Limited  Dempsey Minerals Limited Key Management Personnel (KMP) Shareholdings 2015 $ 2014 $ 56,084 39,980 96,064 61,566 42,860 104,426 The number of ordinary shares in Cazaly Resources Limited held by each KMP of the Group during the financial year is as follows: 30 June 2015 N McMahon C Jones K Hunter 30 June 2014 N McMahon C Jones K Hunter Balance 1 July 2014 Granted as Remuneration Options Exercised Net Change Other Balance 30 June 2015 17,191,690 10,075,114 37,501 27,304,305 - - - - Balance 1 July 2013 Granted as Remuneration Options Exercised 16,822,939 9,563,862 2,052,103 28,438,904 - - - - - - - - - - - - 509,464 - 175,000 684,464 17,701,154 10,075,114 212,501 27,988,769 Net Change Other Balance 30 June 2014 368,751 511,252 (2,014,602) (2,014,602) 17,191,690 10,075,114 37,501 27,304,305 Key Management Personnel (KMP) Option Holdings The number of options over ordinary shares held by each KMP of the Group during the financial year is as follows. 30 June 2015 N McMahon C Jones K Hunter Balance 01-07-14 1,500,000 1,500,000 500,000 3,500,000 Issued Exercised Lapsed Balance 30-06-15 Vested during the year Vested and exercisable - - - - - - - - - - - - 1,500,000 1,500,000 500,000 3,500,000 - - - - 1,500,000 1,500,000 500,000 3,500,000 14 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 12. REMUNERATION REPORT – AUDITED (Cont’d) 30 June 2014 Balance 01-07-13 Issued Exercised Lapsed N McMahon C Jones K Hunter - - - - 1,500,000 1,500,000 500,000 3,500,000 End of Remuneration Report (Audited). 13. MEETINGS OF DIRECTORS - - - - - - - - ,000)(250 ,000) Balance 30-06-14 Vested during the year Vested and exercisable 1,500,000 1,500,000 500,000 3,500,000 - - - - 1,500,000 1,500,000 500,000 3,500,000 The number of directors' meetings and/or circular resolutions held and/or conducted during the financial year, each director held office during the financial year and the number of meetings and/or circular resolutions attended and/or signed off by each director is: Director N McMahon C Jones K Hunter Directors Meetings/Resolutions Number Eligible 6 6 6 Number Attended 5 6 6 The Group does not have a formally constituted audit committee as the Board considers that the Group’s size and type of operation do not warrant such a committee. 14. INDEMNIFYING OFFICERS OR DIRECTORS In accordance with the constitution, except as may be prohibited by the Corporations Act 2001 every Officer, or agent of the Group shall be indemnified out of the property of the Group against any liability incurred by him in his capacity as Officer or agent of the Group or any related corporation in respect of any act or omission whatsoever and howsoever occurring or in defending any proceedings, whether civil or criminal. The Group has insurance policies in place for Directors and Officers insurance. The premium paid on this policy was $10,285. 15. OPTIONS Options on Issue At the date of this report unissued ordinary shares of the Company under option are: Expiry Date Exercise Price Number Under Option Grant Date 31/07/2016 26/11/2016 $0.107 $0.180 100,000 3,500,000 01/08/2013 25/11/2013 Option holders do not have any rights to participate in any issue of shares or other interests in the Company or any other entity. There have been no unissued shares or interest under option of any controlled entity within the Group during or since the reporting date. 15 DIRECTORS’ REPORT Cazaly Resources Limited Annual Report 2015 Options Expired or Lapsed On 11 January 2015, 925,000 unlisted options exercisable at $0.33 expired. On 4 February 2015, 100,000 unlisted options exercisable at $0.49 expired. On 31 July 2015, 100,000 unlisted options exercisable at $0.10 expired. Options forfeited or cancelled During, or since the end of the financial year, no options were forfeited or cancelled. 16. PROCEEDINGS ON BEHALF OF GROUP No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was not a party to any such proceedings during the year. 17. AUDITORS INDEPENDENCE DECLARATION The lead auditor’s independence declaration for the year ended 30 June 2015 has been received and can be found on page 16. 18. NON AUDIT SERVICES The Board of Directors is satisfied that the provision of non-audit services performed during the year by the Group’s auditors is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. No other fees were paid or payable to the auditors for non-audit services performed during the year ended 30 June 2015. This report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors. Nathan McMahon Managing Director 30 September 2015 Competent Persons Statement (*) This information that relates to exploration targets, exploration results, resource reporting and drilling data of Cazaly operated projects is based on information compiled by Mr Clive Jones and Mr Don Horn who are Members of The Australasian Institute of Mining and Metallurgy and/or The Australian Institute of Geoscientists and are employees of the Company. Mr Jones and Mr Horn have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Persons as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Jones and Mr Horn consent to the inclusion in their names in the matters based on their information in the form and context in which it appears. (**) This information that relates to exploration targets, exploration results, resource reporting and drilling data of Cazaly operated projects is based on information compiled by Ms Felicity Repacholi who is a Member of The Australian Institute of Geoscientists and was an employee of the Company. Ms Repacholi has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Ms Repacholi consents to the inclusion of her name in the matters based on their information in the form and context in which it appears. 16 To The Board of Directors As lead audit director for the audit of the financial statements of Cazaly Resources Limited for the financial year ended 30 June 2015, I declare that to the best of my knowledge and belief, there have been no contraventions of: the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. Yours faithfully BENTLEYS Chartered Accountants MARK DELAURENTIS CA Director Dated at Perth this 30th day of September 2015 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For Year Ended 30 June 2015 Cazaly Resources Limited Annual Report 2015 Note 2015 $ 2014 $ 2 2 6 Revenue from continuing operations Other Income Employee benefits Depreciation Administrative expenses Compliance and regulatory expenses Occupancy expenses Written-off exploration expenditure Equity based payments Loss on sale of financial assets Reversal /(Impairment) of financial assets Loss before income tax Income tax (expense)/ benefit Loss for the year Other comprehensive income Total comprehensive income for the year Loss for the year attributable to: Members of the parent entity Non-controlling interest Total comprehensive income attributable to: Members of the parent entity Non-controlling interest 237,833 613,668 1,100,000 1,149,798 (564,860) (26,083) (319,105) (175,419) (336,845) (1,104,148) - (28,759) (171,409) (630,327) (37,578) (457,426) (266,110) (329,311) (2,543,058) (119,642) 77,241 (1,388,795) - (1,388,795) - (1,388,795) (2,542,745) 765,874 (1,776,871) - (1,776,871) (1,384,856) (3,939) (1,388,795) (1,775,571) (1,300) (1,776,871) (1,384,856) (3,939) (1,388,795) (1,775,571) (1,300) (1,776,871) Earnings/(loss) per share from continuing and discontinued operations Basic earnings/ (loss) per share Diluted earnings per share 18 18 Cents (1.06) (1.06) Cents (1.37) (1.37) The accompanying notes form part of these financial statements. 18 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2015 Cazaly Resources Limited Annual Report 2015 Note 2015 $ 2014 $ CURRENT ASSETS Cash and cash equivalents Trade and other receivables 7 8 620,947 172,849 147,731 377,399 TOTAL CURRENT ASSETS 793,796 525,130 NON CURRENT ASSETS Trade and other receivables Financial assets Property, plant and equipment Exploration and evaluation assets Deferred tax assets 8 9 10 11 6 146,168 316,790 46,387 19,917,756 - 146,168 1,070,182 72,470 20,782,091 6,154,058 TOTAL NON CURRENT ASSETS 20,427,101 28,224,969 TOTAL ASSETS 21,220,897 28,750,099 CURRENT LIABILITIES Trade and other payables Provisions 12 13 504,763 76,051 517,127 50,036 TOTAL CURRENT LIABILITIES 580,814 567,163 NON CURRENT LIABILITIES Deferred tax liabilities 6 TOTAL NON CURRENT LIABILITIES - - 6,154,058 6,154,058 TOTAL LIABILITIES 580,814 6,721,221 NET ASSETS EQUITY Issued capital Reserves Accumulated losses Controlling entity interest Non-controlling interest 20,640,083 22,028,878 14 15 16 24,889,282 119,642 (4,355,599) 20,653,325 (13,242) 24,889,282 374,280 (3,225,381) 22,038,181 (9,303) TOTAL EQUITY 20,640,083 22,028,878 The accompanying notes form part of these financial statements. 19 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2015 Cazaly Resources Limited Annual Report 2015 Issued Capital (Accumulated Losses) And Retained Earnings $ $ Option Reserve Non- Controlling Interest Total $ $ $ Balance at 1 July 2013 24,800,080 (1,553,497) 358,325 (8,003) 23,596,905 Loss for the year Other comprehensive income for the year Total comprehensive income for the year Transactions with owners, in their capacity as owners, and other transfers: Shares issued during the year Equity based payments Option reserve Transaction costs Tax effect of equity raising cost Balance at 30 June 2014 Loss for the year Other comprehensive income for the year Total comprehensive income/(loss) for the year Transactions with owners, in their capacity as owners, and other transfers: Shares issued during the year Equity based payments Option reserve Transaction costs Tax effect of equity raising cost Balance at 30 June 2015 - - - (1,775,571) - (1,775,571) - - - (1,300) (1,776,871) - - (1,300) (1,776,871) 140,800 - - (12,000) - - 103,687 - - 119,642 (103,687) - - - - - 140,800 119,642 - (12,000) (39,598) 24,889,282 - (3,225,381) - 374,280 - (9,303) (39,598) 22,028,878 - - - - - - - (1,384,856) - (1,384,856) - - - (3,939) (1,388,795) - - (3,939) (1,388,795) - - 254,638 - - - (254,638) - - - - - - - - - - 24,889,282 - (4,355,599) - 119,642 - (13,242) - 20,640,083 The accompanying notes form part of these financial statements. 20 CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 June 2015 Cazaly Resources Limited Annual Report 2015 Note 2015 $ 2014 $ Cash Flows from Operating Activities Payments to suppliers and employees Interest received Other revenue Proceeds from gold sale Payments for exploration and evaluation (1,015,271) 5,394 - - (420,131) (953,028) 9,398 - 290,040 (1,336,156) Net cash used in operating activities 19 (1,430,008) (1,989,746) Cash Flows From Investing Activities Proceeds from sale of exploration assets Proceeds from sale of royalty Proceeds from sale of equity investments Purchase of plant and equipment Purchase of equity investments Purchase of tenement Proceeds for Joint Venture Management 750,000 600,000 553,224 - - - - 1,335,500 - 65,195 (969) - - - Net cash provided by investing activities 1,903,224 1,399,726 Cash Flows from Financing Activities Proceeds from issue of securities Payment for costs of issue of securities Net cash provided by financing activities - - - 151,668 (12,000) 139,668 Net increase/(decrease) in cash held 473,216 (450,352) Cash and cash equivalents at beginning of the financial year 147,731 598,083 Cash and cash equivalents at end of the financial year 7 620,947 147,731 The accompanying notes form part of these financial statements. 21 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES These consolidated financial statements and notes represent those of Cazaly Resources Limited (‘the Company’ or ‘Cazaly’) and Controlled Entities (‘the Group’). Cazaly Resources Limited is a listed public company, incorporated and domiciled in Australia. The financial statements were authorised for issue on 30 September 2015 by the directors of the Company. Basis of Preparation The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Australian Accounting Standards set out in accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. These financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non- current assets, financial assets and financial liabilities. Going Concern The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Group incurred a loss after tax for the year of $1,388,795 (2014: Loss of $1,776,871) and net cash outflows from operating activities of $1,430,008 (2014: $1,989,746). There was a working capital surplus of $212,982 at 30 June 2015 compared to a working capital deficit of $42,033 at 30 June 2014. Pending the outcome of various applications, the Group could have lease and exploration commitments of $2,463,436 (2014: $6,164,151) due within the next twelve months. The directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month period from the date of signing this financial report. Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern basis of preparation is appropriate because: - - - the Directors have an appropriate plan to raise additional funds as and when it is required. In light of the Group’s current exploration projects, the Directors believe that the additional capital required can be raised in the market; and the Directors have an appropriate plan to contain certain operating and exploration expenditure if appropriate funding is unavailable; and the Directors will divest its interest in financial assets held for trading as and when required to fund ongoing expenditure. 22 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Should the Group not achieve the matters set out above, there is material uncertainty whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not contain any adjustments relating to the recoverability and classification of recorded assets or to the amounts or classification of recorded assets or liabilities that might be necessary should the Group not be able to continue as going concern. (a) Principles of Consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by the Company at the end of the reporting period. A controlled entity is any entity over which the Company has the power to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered. Where controlled entities have entered or left the Group during the year, the financial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 21 to the financial statements. In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the Group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the Company. Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are shown separately within the Equity section of the consolidated Statement of Financial Position and Statement of Profit or Loss and other Comprehensive Income. The non- controlling interest in the net assets comprises their interests at the date of the original business combination and their share of changes in equity since that date. (b) Plant and Equipment Plant and equipment are stated at cost less accumulated depreciation and impairment. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. (c) Depreciation Depreciation is provided on plant and equipment. Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Plant and equipment Office furniture and equipment Motor vehicle Depreciation Rate 40.0% 18.0% 22.5% 23 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement of Profit or Loss and other Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (d) Exploration, Evaluation and Development Expenditure Costs incurred during exploration and evaluations relating to an area of interest are accumulated. Costs are carried forward to the extent they are expected to be recouped through successful development, or by sale, or where exploration and evaluation activities have not yet reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves. In these instances the entity must have rights of tenure to the area of interest and must be continuing to undertake exploration operations in the area. Accumulated costs carried forward in respect of an area of interest that is abandoned are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest will be 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 of interest. Costs of site restoration are provided 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 clauses of the mining permits. Such costs have been estimated of future costs, current legal requirements and technology on an undiscounted basis. (e) Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to entities in the consolidated group are classified as finance leases. Finance leases are capitalised by recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual values. Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. (f) Financial Instruments Initial Recognition and Measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. 24 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified as “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately. Classification and Subsequent Measurement Finance instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amounts calculated using the effective interest method. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss. The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments. (i) Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss. (ii) Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold to maturity. Investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at amortised cost. Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. (All other investments are classified as current assets.) (iii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period. (All other loans and receivables are classified as non-current assets). 25 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (iv) Available-for-sale investments Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three preceding categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value with gains or losses being recognised in other is impairment comprehensive derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. income (except financial asset losses). When the for Available-for-sale financial assets are included in non-current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as current assets. (v) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Impairment At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in profit or loss. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point. Financial guarantees Where material, financial guarantees issued, which require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due, are recognised as a financial liability at fair value on initial recognition. The Group has no such financial guarantees. De-recognition Financial assets are de-recognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are de-recognised where the related obligations are discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. (g) Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short- term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position. 26 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (h) Trade and Other Receivables Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the entity will not be able to collect the debts. Bad debts are written off when identified. (i) Revenue and Other Income Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST). (j) Impairment of Assets At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another standard (eg in accordance with the revaluation model in AASB 116). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other standard. Where 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. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. (k) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (l) Taxation The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. 27 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Tax Consolidation Cazaly and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under tax consolidation legislation. Each entity in the group recognises its own current and deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are immediately transferred to the head entity. (m) Trade and Other Payables Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the company prior to the end of the financial year that are unpaid and arise when the company becomes obliged to make future payments in respect of the purchase of these goods and services. 28 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (n) Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. (o) Equity Based Payments The Group operates equity-settled share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the good or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is shown in the option reserve. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. (p) Issued Capital Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (q) Earnings Per Share Basic earnings per share is calculated as net earnings attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for an bonus element. Diluted earnings per share is calculated as net earnings attributable to members, adjusted for costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that would have been recognised as expenses; and other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. 29 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (r) Employee Benefits Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. (s) Interest in Joint Operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. When a Group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its interest in a joint operation:      its assets, including its share of any assets held jointly; its liabilities, including its share of any liabilities incurred jointly; its revenue from the sale of its share of the output arising from the joint operation; its share of the revenue from the sale of the output by the joint operation; and its expenses, including its share of any expenses incurred jointly. The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the AASBs applicable to the particular assets, liabilities, revenues and expenses. When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a sale or contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognised in the Group's consolidated financial statements only to the extent of other parties' interests in the joint operation. When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a purchase of assets), the Group does not recognise its share of the gains and losses until it resells those assets to a third party. (t) Critical Accounting Estimates and Judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. 30 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Key Judgements –Exploration and evaluation expenditure Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. These costs are carried forward in respect of an area that has not at balance sheet date reached a stage that permits reasonable assessment of the existence of economically recoverable reserves, refer to the accounting policy stated in note 1(d). Key Judgements - Share based payment transactions The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model. Key Judgments – Environmental issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the directors understanding thereof. At the current stage of the company’s development and its current environmental impact the directors believe such treatment is reasonable and appropriate. Key Estimate – Taxation Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the best estimates of directors. These estimates take into account both the financial performance and position of the company as they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents that directors’ best estimate, pending an assessment by the Australian Taxation Office. (u) Fair value measurements The Group measures and recognises the following assets and liabilities at fair value on a recurring basis after initial recognition:  Financial assets held for trading The Group does not subsequently measure any liabilities at fair value on a non-recurring basis. (i) Fair Value Hierarchy AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows: Level 1 Level 2 Level 3 Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Measurements based on unobservable inputs for the asset or liability. 31 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3. (ii) Valuation techniques The Company selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation technique selected by the Company is the Market approach whereby valuation techniques use prices and other relevant information generated by market transactions for identical or similar assets or liabilities. When selecting a valuation technique, the Company gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable. The following table provides the fair values of the Company’s assets and liabilities measured and recognised on a recurring basis after initial recognition and their categorisation within the fair value hierarchy: 30 June 2015 Note Level 1 $ Level 2 $ Level 3 $ Total $ Recurring fair value measurements Financial assets at fair value through profit or loss: - held-for-trading Australian listed shares Recurring fair value measurements Financial assets at fair value through profit or loss: - held-for-trading Australian listed shares 316,790 - - 316,790 30 June 2014 Note Level 1 $ Level 2 $ Level 3 $ Total $ 1,070,182 - - 1,070,182 32 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (v) New accounting standards for application in future periods New standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2015, and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Company are set out below. The Company does not plan to adopt these standards early. Standard/Interpretation AASB 9 ‘Financial Instruments’, and the relevant amending standards AASB 15 ‘Revenue from Contracts with Customers’ Effective for annual reporting periods beginning on or after Expected to be initially applied in the financial year ending 1 January 2018 30 June 2018 1 January 2018 30 June 2018 33 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 2. 2. REVENUE & OTHER INCOME interest received Revenue - - option fees - - profit on sale of shares - other revenue recoupment of office costs on-charged Other Income - proceeds on sale of tenement - production royalty - proceeds on sale of royalty - contingency royalty 3. PROFIT (LOSS) FOR THE YEAR 2015 $ 2014 $ 5,394 - 227,782 - 4,657 237,833 - - 600,000 500,000 1,100,000 9,398 260,494 286,596 4,430 52,750 613,668 93,150 56,648 - 1,000,000 1,149,798 Profit (loss) before income tax from continuing operations includes the following specific expenses: Expenses Administrative expenses Consulting Advertising, printing and stationery Travel and accommodation Insurance Memberships Other Compliance and regulatory expenses ASX, ASIC, registry and secretarial Legal Employee Benefits Superannuation Termination benefits 4. KEY MANAGEMENT PERSONNEL Interests of Key Management Personnel 132,129 47,548 18,202 18,155 27,444 75,627 319,105 127,709 47,710 175,419 133,553 69,373 29,856 42,639 23,603 158,402 457,426 223,027 43,083 266,110 11,624 - 45,044 21,960 Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each member of the Group’s key management personnel for the year ended 30 June 2015. The totals of remuneration paid to key management personnel of the Company during the year are as follows: 34 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 4. KEY MANAGEMENT PERSONNEL (Cont’d) Short-term employee benefits Post-employment benefits Other long-term benefits Share based payments No compensation was paid in respect to KMP in termination benefits 5. AUDITORS REMUNERATION Remuneration of the auditor for: - Auditing or reviewing the financial report 6. INCOME TAX EXPENSE The components of the tax expense/(income) comprise: Current tax Deferred tax 2015 $ 387,250 - - - 387,250 2014 $ 387,250 - - 111,118 498,368 28,000 28,000 42,900 42,900 - - - - (765,874) (765,874) (a)Numerical reconciliation of income tax expense to prima facie tax payable: Profit from continuing operations (1,388,795) (2,542,745) Prima facie tax benefit on loss from ordinary activities before income tax at 30% (2014: 30%) (416,639) (762,824) Add: Tax effect of: Current year capital losses not recognised Movement in unrecognised temporary differences Effect of tax losses derecognised Derecognition of previously recognised tax losses Other non-allowable items - (65,380) 491,513 40,383 7,521 104,000 (128,561) 3,904 - 44,754 Less: Tax effect of: Tax benefit of deductible equity raising costs Utilisation of previously unrecognised capital losses Income (tax benefit)/loss attributable to entity (5,204) (52,194) - (27,147) - (765,874) 35 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 6. INCOME TAX EXPENSE (Cont’d) (b) Deferred tax assets at 30% (2014: 30%) comprise the following 2015 $ 2014 $ Carry forward revenue losses Carry forward capital losses Unrealised Fair Value Adjustment Capital raising and future black hole deductions Provisions and accruals Other Less: Set off of deferred tax liabilities 5,850,880 - - 8,207 32,286 73,567 5,964,940 (,5,964,940) - Deferred tax liabilities at 30% (2014: 30%) comprise the following Exploration expenditure Other Less: Set off of deferred tax asset (c) Deferred tax recognised directly in equity: Relating to equity raising costs 5,964,940 - 5,964,940 (5,964,940) - 5,891,263 - - 11,581 176,384 74,830 6,154,058 - 6,154,058 6,154,058 - 6,154,058 - 6,154,058 - - (39,597) (39,597) (d) Unrecognised deferred tax assets at 30% (2014: 30%) comprise the following: Deferred tax assets have not been recognized in respect to the following as they are not considered to have met the recognition criteria: Investments Tax revenue losses Capital losses 7. CASH AND CASH EQUIVALENTS Cash at bank Petty cash 8. TRADE AND OTHER RECEIVABLES Current Trade receivables (i) Other debtors Non-Current Bonds (ii) (i) Trade receivables have 30 to 90 day terms. (ii) Bonds are term deposits, held by way of bank guarantee. There were no trade receivables past due but not impaired. 544,672 535,800 51,910 1,132,382 633,852 3,904 104,105 741,861 620,747 200 620,947 147,531 200 147,731 86,200 86,649 172,849 334,635 42,764 377,399 146,168 146,168 146,168 146,168 36 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 9. FINANCIAL ASSETS Current Financial assets, at fair value through profit or loss: Held-for-trading Australian listed shares 10. PROPERTY, PLANT AND EQUIPMENT 2015 $ 2014 $ 316,790 316,790 1,070,182 1,070,182 Land & Property at Cost - - Plant and Equipment At cost Accumulated depreciation Office Furniture and Equipment At cost Accumulated depreciation Motor Vehicle At cost Accumulated depreciation 316,091 (297,920) 18,171 316,091 (279,123) 36,968 42,703 (33,789) 8,914 68,287 (48,985) 19,302 42,703 (31,672) 11,031 68,287 (43,816) 24,471 46,387 72,470 Movement in the carrying amounts for each class of plant and equipment between the beginning and end of the current financial year. Balance at the beginning of the year Additions Disposals Depreciation expense Carrying amount at the end of the year Balance at the beginning of the year Additions Disposals Depreciation expense Carrying amount at the end of the year Land & Property $ - - - - - Land & Property $ 5,000 - (5,000) - - Plant and Equipment $ 36,968 - - (18,797) 18,171 Plant and Equipment $ 63,679 968 - (27,679) 36,968 2015 Office Furniture $ 11,031 - - (2,117) 8,914 2014 Office Furniture $ 13,850 - - (2,819) 11,031 Motor Vehicles $ 24,471 - - (5,169) 19,302 Total $ 72,470 - - (26,083) 46,387 Motor Vehicles $ 31,551 - - (7,080) 24,471 Total $ 114,080 968 (5,000) (37,578) 72,470 37 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 11. EXPLORATION AND EVALUATION ASSETS Non-Current Costs carried forward in respect of areas of interest in: Exploration and evaluation phases at cost Movement – exploration and evaluation Brought forward Exploration expenditure capitalised during the year Exploration expenditure written off (i) 2015 $ 2014 $ 19,917,756 20,782,091 20,782,091 21,860,178 239,813 (1,104,148) 1,464,971 (2,543,058) 19,917,756 20,782,091 (i) Exploration expenditure written off for the year was $1,104,148 compared to $2,543,058 in the 2014 financial year. The main areas written off in 2015 were the Huckitta JV, Marillana, Mt Stuart, Hamersley, Albion Downs and previously capitalised expenditures relating to the various tenements relinquished during the financial year. The value of the Group’s interest in exploration expenditure is dependent upon: - - - the continuance of the Group’s rights to tenure of the areas of interest; the results of future exploration; and the recoupment of costs through successful development and exploitation of the areas of interest, or alternatively, by their sale. The Group’s exploration properties may be subjected to claim(s) under native title, or contain sacred sites, or sites of significance to Aboriginal people. As a result, exploration properties or areas within the tenements may be subject to exploration restrictions, mining restrictions and/or claims for compensation. At this time, it is not possible to quantify whether such claims exist, or the quantum of such claims. 12. TRADE AND OTHER PAYABLES Current Trade creditors Other creditors and accrued expenses Creditors are non-interest bearing and settled at 30 day terms. 13. PROVISIONS Current Provision for annual leave Provision for long service leave 371,020 133,743 399,159 117,968 504,763 517,127 52,084 23,967 76,051 38,450 11,586 50,036 38 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 14. ISSUED CAPITAL 130,477,121 fully paid ordinary shares (2014: 130,477,121) with no par value 24,889,282 24,889,282 2015 $ 2014 $ Movements in Ordinary Shares 30 June 2015 Number 30 June 2015 $ 30 June 2014 Number 30 June 2014 $ Balance at the beginning of the year Issue of shares at $0.16 each Less: tax effect of equity raising costs Less: transaction costs Balance at the end of the year (i) (ii) 130,477,121 24,889,282 129,597,118 24,800,080 140,800 - (39,598) - (12,000) - 130,477,121 24,889,282 130,477,121 24,889,282 880,003 - - - - - (i) (ii) Shares issued on 12 July 2013 under the Company Non-Renounceable Entitlement Issue. The entitlement was based on the issue of 1 new share for every 12 shares held, at an issue price of $0.16 per new share. Deferred tax recognised directly in equity relating to equity raising costs. Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held and in proportion to the amount paid up on the shares held. At shareholders meetings each ordinary share is entitled to one vote in proportion to the paid up amount of the share when a poll is called, otherwise each shareholder has one vote on a show of hands. Movements in Options over Ordinary Shares Exercise Period Exercise Price Number on issue at 30 June 2014 Issued during the year Exercised/ Expired/ Cancelled Number on issue at 30 June 2015 On or before 11 January 2015 On or before 4 February 2015 On or before 31 July 2015 On or before 31 July 2016 On or before 26 November 2016 $0.330 $0.490 $0.100 $0.107 $0.180 925,000 100,000 100,000 100,000 3,500,000 4,725,000 - - - - - - (925,000) (100,000) - - - (1,025,000) - - 100,000 100,000 3,500,000 3,700,000 Capital risk management The Board controls the capital of the Group in order to provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. The Group’s capital includes ordinary share capital. There are no externally imposed capital requirements. 39 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 14. ISSUED CAPITAL (Cont’d) The working capital position of the Group at 30 June 2015 and 30 June 2014 are as follows: Pare Cash and cash equivalents Trade and other receivables Financial assets Trade and other payables Working capital position 15. OPTION RESERVE Opening balance Equity based payments Transfers to accumulated losses Closing balance 2015 $ 620,947 172,849 316,790 (504,763) 605,823 2014 $ 147,731 377,399 1,070,182 (517,127) 1,078,185 374,280 - (254,638) 119,642 358,325 119,642 (103,687) 374,280 This reserve is used to record the value of equity benefits provided to the employees and directors as part of their remuneration. 16. ACCUMULATED LOSSES Opening balance Net loss attributable to members Transfers from option reserve Closing balance 17. FINANCIAL RISK MANAGEMENT (3,225,381) (1,384,856) 254,638 4,355,599 (1,553,497) (1,775,571) 103,687 (3,225,381) The Group’s principal financial instruments comprise receivables, payables, held-for-trading investments, cash and short-term deposits. The Board of Directors has overall responsibility for the oversight and management of the Group’s exposure to a variety of financial risks (including fair value interest rate risk, credit risk, liquidity risk and cash flow interest rate risk). The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Interest rate risks The Group’s exposure to market interest rates relates to cash deposits held at variable rates. The Board constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions. Credit risk The maximum exposure to credit risk at balance date is the carrying amount (net of provision of doubtful debts) of those assets as disclosed in the Statement of Financial Position and notes to the financial statements. The Consolidated group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit risk related to balances with banks and other financial institutions is managed by the board. The board’s policy requires that surplus funds are only invested with counterparties with a Standard & Poor’s rating of at least A+. All of the Group’s surplus funds are invested with AA and A+ Rated financial institutions, the amount is $620,947 (2014: $147,731). 40 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 17. FINANCIAL RISK MANAGEMENT (Cont’d) Liquidity risk The responsibility for liquidity risk management rests with the Board of Directors. The Consolidated group manages liquidity risk by maintaining sufficient cash or credit facilities to meet the operating requirements of the business and investing excess funds in highly liquid short term investments. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Maturity profile of financial instruments The following tables detail the Group’s exposure to interest rate risk as at 30 June 2015 and 30 June 2014: 30 June 2015 Financial assets Cash and cash equivalents Trade and other receivables Financial assets – held for trading Floating Interest Rate $ 620,747 - - 620,747 Fixed Interest maturing in 1 year or less $ - 146,168 (i) - 146,168 Non- interest bearing 2015 Total $ $ 200 172,849 316,790 489,839 620,947 319,017 316,790 1,256,754 Weighted average effective interest rate 0.60% Financial Liabilities Trade and other payables 30 June 2014 Financial assets Cash and cash equivalents Trade and other receivables Financial assets – held for trading - - - - 504,763 504,763 504,763 504,763 Floating Interest Rate $ 147,531 - - 147,531 Fixed Interest maturing in 1 year or less $ - 146,168(i) - 146,168 Non- interest bearing 2014 Total $ $ 200 377,399 1,070,182 1,447,781 147,731 523,567 1,070,182 1,741,480 Weighted average effective interest rate 2.29% Financial Liabilities Trade and other payables - - 517,127 517,127 517,127 517,127 (i) Term deposits associated with office rent bond and bonds on mining tenements. 41 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 17. FINANCIAL RISK MANAGEMENT (Cont’d) Net Fair Values The carrying value and net fair values of financial assets and liabilities at balance date are: Financial assets Cash and deposits Receivables Investment held for trading Financial liabilities Payables 2015 2014 Carrying Amount $ 620,947 319,017 316,790 1,256,754 504,763 504,763 Net fair Value $ 620,947 319,017 316,790 1,256,754 504,763 504,763 Carrying Amount $ 147,731 523,567 1,070,182 1,741,480 517,127 517,127 Net fair Value $ 147,731 523,567 1,070,182 1,741,480 517,127 517,127 The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. All financial instruments measured at fair value are level one, meaning fair value is determined from quoted prices in active markets for identical assets. Sensitivity Analysis Interest Rate Risk The Company has performed sensitivity analysis relating to its exposure to interest rate risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks. Interest Rate Sensitivity Analysis At 30 June 2015, the effect on loss as a result of changes in the interest rate, with all other variables remaining constant would be as follows: Change in loss Increase in interest rate by 100 basis points   Decrease in interest rate by 100 basis points Change in equity Increase in interest rate by 100 basis points   Decrease in interest rate by 100 basis points 218. EARNINGS PER SHARE a) Reconciliation of earnings to profit or loss: 2015 $ 7,660 (7,660) 7,660 (7,660) 2014 $ 3,015 (3,015) 3,015 (3,015) Loss for the year Loss used to calculate basic and diluted EPS (1,384,856) (1,384,856) (1,775,571) (1,775,571) 42 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 18. EARNINGS PER SHARE (Cont’d) 2014 No. of Shares No. of Shares 2015 b) Weighted average number of ordinary shares outstanding during the period used in the calculation of basic EPS 130,477,121 130,442,996 Weighted average number of dilutive options outstanding - - Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS 130,477,121 130,442,996 19. CASH FLOW INFORMATION Reconciliation of cash flows from operating activities with profit/(loss) after income tax Profit/(Loss) after income tax Non-operating cash flows in loss for the year: Depreciation Net Loss on sale of shares Net Profit on sale of exploration assets Employee & Consultant equity settled transactions Fair value adjustment to investments Exploration write-off Income tax expense recognised in profit or loss Changes in assets and liabilities: Decrease/(increase) in trade receivables and prepayments Increase/(decrease) in trade payables, accruals and employee entitlements Decrease/(increase) in exploration 2015 $ 2014 $ (1,388,795) (1,776,871) 26,083 28,759 (1,100,000) 37,578 - (1,335,500) - 171,409 1,104,148 119,642 (77,241) 2,543,058 - (765,874) (45,450) 710,570 13,651 (239,813) 19,864 (1,464,972) Cash outflow from operations (1,430,008) (1,989,746) 20. COMMITMENTS On 25 February 2010, the Group entered into a lease agreement with CB Richard Ellis (C) Pty Ltd for the premises at Level 2, 38 Richardson Street, West Perth, Western Australia. The initial term, was for a three (3) years expiring on 1 April 2013, this has been extended for a further term which expires on 31 May 2016 in consideration for a rental fee of $225,350 per annum. In order to maintain rights of tenure to mining tenements, the Group would have the following discretionary exploration expenditure requirements up until expiry of leases. These obligations, which are subject to renegotiation upon expiry of the leases, are not provided for in the financial statements and are payable: 43 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 20. COMMITMENTS (Cont’d) No longer than one year Longer than one year, but not longer than five years Longer than five years 2015 $ 2014 $ 2,463,436 6,736,623 - 9,200,059 6,164,151 15,651,245 - 21,815,396 At the moment the Group has commitments in excess of cash, however the Board believes it will be able to raise the additional funds to satisfy the commitments for the future. If the Group decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the statement of financial position may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these obligations. 21. CONTROLLED ENTITIES Parent Entity Cazaly Resources Limited Controlled Entities Cazaly Iron Pty Ltd Sammy Resources Pty Ltd Cazroy Pty Ltd Baker Fe Pty Ltd Baldock Fe Pty Ltd Lockett Fe Pty Ltd Hase Fe Pty Ltd Caz Yilgarn Pty Ltd Discovery Minerals Pty Ltd 22. OPERATING SEGMENTS Country of Incorporation Percentage Owned 2014 2015 Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 100% 100% 100% 100% 100% 100% 100% 100% 80% 100% 100% 100% 100% 100% 100% 100% 100% 80% The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources. The Group is managed primarily on the basis of its exploration and corporate activities. Operating segments are therefore determined on the same basis. Exploration Segment assets, including acquisition cost of exploration licenses, all expenses related to the tenements and profit on sale of tenements are reported on in this segment. Segment assets Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location. Unless indicated otherwise in the segment assets note, deferred tax assets and intangible assets have not been allocated to operating segments. 44 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 22. OPERATING SEGMENTS (Cont’d) Segment liabilities Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and are not allocated. Segment liabilities include trade and other payables. Unallocated items The following items of revenue, expense, assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment:   non-recurring items of revenue or expense; deferred tax assets and liabilities. 2015 Revenue Interest received Other Total segment revenue Segment net operating profit (loss) before tax Depreciation Impairment of exploration assets Share based payments Segment assets Exploration expenditure Capital expenditure Segment liabilities 2014 Revenue Interest received Other Total segment revenue Segment net operating profit (loss) before tax Depreciation Impairment of exploration assets Share based payments Segment assets Exploration expenditure Capital expenditure Segment liabilities Exploration $ Unallocated $ Total $ - 1,100,000 1,100,000 5,394 232,439 237,833 5,394 1,332,439 1,337,833 (4,148) - (1,384,647) 26,083 (1,388,795) 26,083 1,104,148 - 19,917,756 - 269,460 - - 1,104,148 - - 46,387 311,354 19,917,756 46,387 580,814 Exploration $ Unallocated $ Total $ - 1,149,798 1,149,798 9,398 604,270 613,668 9,398 1,754,068 1,763,466 (1,393,260) - (1,149,485) 37,578 (2,542,745) 37,578 2,543,058 - 20,782,091 - - - 119,642 2,543,058 119,642 - 72,470 6,721,221 20,782,091 72,470 6,721,221 45 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 23. EVENTS SUBSEQUENT TO REPORTING DATE There has not been any other matter or circumstance that has arisen since the end of the financial Year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. 24. PARENT ENTITY DISCLOSURES (a) Statement of financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Issued capital Reserves: Equity settled employee benefits Retained profits Total Equity (b) Statement of Profit or Loss and Other Comprehensive Income Total profit/ (loss) Total comprehensive income Loans to Controlled Entities 2015 $ 2014 $ 797,182 9,030,278 459,944 9,620,574 9,827,460 10,080,518 580,571 608,181 567,399 608,181 1,118,752 1,175,580 24,889,282 24,889,282 119,642 (16,370,216) 477,967 (16,462,311) 8,638,708 8,904,938 (266,217) (967,266) (266,217) (967,266) Loans are provided by Cazaly (‘the Parent’) to its controlled entities for their respective operating activities. Amounts receivable from controlled entities are non-interest bearing with no fixed term of repayment. The eventual recovery of the loan will be dependent upon the successful commercial application of these projects or the sale to third parties. 25. SHARE BASED PAYMENTS There were no options issued to directors, employees, consultants or suppliers during the year. 46 NOTES TO THE FINANCIAL STATEMENTS Cazaly Resources Limited Annual Report 2015 25. SHARE BASED PAYMENTS (Cont’d) The following table illustrates the number and weighted average exercise prices of and movements in share options issued under the Employee Incentive Plan during the year: 2015 2014 Number of Options Weighted Ave Exercise Price $ Number of Options Weighted Ave Exercise Price $ 4,725,000 0.21 1,875,000 0.39 - - - (1,025,000) 3,700,000 3,700,000 - - - 0.35 0.18 200,000 3,500,000 - (850,000) 4,725,000 4,725,000 0.10 0.18 - 0.44 0.21 Balance at beginning of reporting period Granted during the period Employee & consultants Directors Exercised during the period Expired during the period Balance at end of period Exercisable at end of reporting period reporting (i) (ii) The compensation options outstanding at 30 June 2015 had a weighted average remaining life of 1.37 years (2014 – 1.97 years). The weighted average fair value of the options outstanding at 30 June 2015 was $0.04 (2014 - $0.065). 26. CONTINGENT LIABILITIES AND CONTINGENT ASSETS Except as referred below, there are no other contingent liabilities or contingent assets outstanding at the end of the year: Contingent Assets As announced to the market on 9 June 2015, the Company sold a package of royalties for a potential total of $2.35M comprising royalties held over the Kalgoorlie Gold project (“KGP”) and the Halls Creek Copper project (“HCCP”). The sale was to a private mining investment group and comprises various payments subject to a range of conditions including third party waivers of pre-emptive rights and production hurdles. In summary, the schedule of payments is as follows: (a) Payment of $453,000 received upon signing; (b) Payment of $147,000 received following satisfaction of third party rights with respect to the HCCP; (c) Payment of $750,000 upon commencement of mining at the KGP; and (d) Payment of $1,000,000 upon satisfaction of conditions relating to the production of 140,000ozs gold from the KGP. Payment parts (a) and (b) were received on the 29 June 2015. The remaining payments are contingent assets and are dependent upon the liquidity of the private investment group and the production profile from the KGP. 47 DIRECTORS’ DECLARATION Cazaly Resources Limited Annual Report 2015 In accordance with a resolution of the directors of Cazaly Resources Limited, the directors of the Company declare that: 1. the financial statements and notes, as set out, are in accordance with the Corporations Act 2001 and: a. b. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards (IFRS); and give a true and fair view of the financial position as at 30 June 2015 and of the performance for the year ended on that date of the consolidated group; 2. 3. in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and the directors have been given the declarations required by s 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer. On behalf of the Directors Nathan McMahon Managing Director Perth, 30 September 2015 48 We have audited the accompanying financial report of Cazaly Resources Limited (“the Company”) and Controlled Entities (“the Consolidated Entity”), which comprises the statement of financial position as at 30 June 2015, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the Consolidated Entity, comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year. The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standards AASB 101: Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. In our opinion: a. The financial report of Cazaly Resources Limited is in accordance with the Corporations Act 2001, including: i. giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2015 and of its performance for the year ended on that date; and ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; b. The financial statements also comply with International Financial Reporting Standards as disclosed in Note 1. Without qualifying our opinion, we draw attention to Note 1 in the financial report which indicates that the Consolidated Entity incurred a loss of $1,388,795. This condition, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast significant doubt about the ability of the Consolidated Entity to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2015. 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. In our opinion, the Remuneration Report of Cazaly Resources Limited for the year ended 30 June 2015, complies with section 300A of the Corporations Act 2001. BENTLEYS Chartered Accountants MARK DELAURENTIS CA Director Dated at Perth this 30th day of September 2015 ADDITIONAL SHAREHOLDER INFORMATION Cazaly Resources Limited Annual Report 2015 Additional information required by Australian Securities Exchange Limited and not shown elsewhere in this Annual Report is as follows. The information is made up to 18 September 2015. DETAILS OF HOLDERS OF EQUITY SECURITIES ORDINARY SHAREHOLDERS There are 130,477,121 fully paid ordinary shares on issue, held by 2,311 individual shareholders. Each member entitled to vote may vote in person or by proxy or by attorney and on a show of hands every person who is a member or a representative or a proxy of a member shall have one vote and on a poll every member present in person or by proxy or attorney or other authorised representative shall have one vote for each share held. TWENTY LARGEST SHAREHOLDERS (AS AT 18 SEPTEMBER 2015) Ordinary Shareholders Kingsreef Pty Ltd (NB & DL Family A/C) New Page Investments Ltd Clive Bruce Jones Anthony Robert Ramage Nathan McMahon Widerange Corporation P/L Maximise Your Body Pty Ltd (JSH Family A/C) GGDT Developments Pty Ltd Anthony Ramage (ARR Super Fund) Citicorp Nominees Pty Ltd Debra Lee McMahon HSBC Custody Nominees (Australia) Ltd Kris Chambers Apollinax Inc Michael John Hamill Fusion Resources Pty Ltd Xiao Xiao Li Rivelle Hasson Kingsreef P/L TJ Gardiner & VH Gardiner (Terry James Gardiner Super Fund) Fully Paid Ordinary Number Percentage 11,624,932 8,000,000 6,646,256 5,825,000 4,793,755 2,913,856 2,564,602 2,500,000 2,250,000 1,628,870 1,552,595 1,529,781 1,150,000 1,000,000 1,000,000 1,000,000 860,000 743,000 731,466 650,000 8.91% 6.13% 5.09% 4.46% 3.67% 2.23% 1.97% 1.92% 1.72% 1.25% 1.19% 1.17% 0.88% 0.77% 0.77% 0.77% 0.66% 0.57% 0.56% 0.50% 58,964,113 45.19% VOTING RIGHTS Subject to any rights or restrictions for the time being attached to any class or classes (at present there are none) at general meetings of shareholders or classes of shareholders: (a) each shareholder entitled to vote, may vote in person or by proxy, attorney or representative; (b) on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and 51 ADDITIONAL SHAREHOLDER INFORMATION Cazaly Resources Limited Annual Report 2015 (c) on a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder shall, in respect of each fully paid share held, or in respect of which he/she has appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares shall have a fraction of a vote equivalent to the proportion which the amount paid up bears to the total issue price for the share. HOLDERS OF NON-MARKETABLE PARCELS There are 1,608 shareholders who hold less than a marketable parcel of shares. STOCK EXCHANGE INFORMATION DISTRIBUTION OF SHARE HOLDERS (AS AT 18 SEPTEMBER 2015) 1 to 1,001 to 5,001 to 1,000 5,000 10,000 10,001 to 100,000 100,001 and over SUBSTANTIAL SHAREHOLDERS Ordinary Shares 145,630 2,037,230 3,253,077 23,511,544 101,529,640 130,477,121 As at report date, the following shareholders are recorded as Substantial Shareholders: Substantial Shareholder Ordinary Shares held % Held Nathan McMahon Clive Jones Anthony Robert Ramage New Page Investments Ltd SHARE BUY-BACKS 18,355,154 10,075,114 8,075,000 8,000,000 14.07% 7.72% 6.19% 6.13% There is no current on-market buy-back scheme. OTHER INFORMATION Cazaly Resources Limited, incorporated and domiciled in Australia, is a public listed Company limited by Shares. 52 ADDITIONAL SHAREHOLDER INFORMATION Cazaly Resources Limited Annual Report 2015 INTEREST IN MINING TENEMENTS AS AT 18 SEPTEMBER 2015 TID PROJECT ENTITY % INT TID PROJECT ENTITY % INT Not Managed E31/1019 E31/1020 E36/0733 E37/1037 E38/1540 E47/1617 M47/1450 E51/1290 E69/2230 M31/0427 P46/1360 P46/1361 P46/1362 P46/1363 P46/1364 P46/1365 P46/1366 E38/1541 CAROSUE CAROSUE YEELIRRIE TEUTONIC BORE JUTSON ROCKS HAMERSLEY HAMERSLEY RUBY WELL NEBO CAROSUE QUARTZ CIRCLE QUARTZ CIRCLE QUARTZ CIRCLE QUARTZ CIRCLE QUARTZ CIRCLE QUARTZ CIRCLE QUARTZ CIRCLE JUTSON ROCKS CAZR CAZR SAMR SAMR CAZR LOFE LOFE SAMR SAMR CAZR CAZR CAZR CAZR CAZR CAZR CAZR CAZR CAZR 10 10 100 100 30 49 49 100 100 10 20 20 20 20 20 20 20 30 Managed E80/4772 E80/4774 E80/3370 E80/3496 E80/3517 E80/3938 M80/0247 E47/1561 E52/3020 E77/1101 E77/1235 E77/1403 E77/2135 E77/2142 L77/0220 L77/0228 L77/0229 M77/0741 M77/0742 M77/0764 M77/0765 M77/0766 E63/1689 P77/3700 P77/3702 P77/4046 P77/4047 P77/4162 P77/4164 E80/4811 E80/4773 E80/4808 E47/2774 E47/2884 E39/1829 ALICE DOWNS HALLS CREEK MT ANGELO MT ANGELO MT ANGELO MT ANGELO MT ANGELO MT WALKINS ROBINSON RANGES PARKER RANGE PARKER RANGE PARKER RANGE PARKER RANGE JILBADJI PARKER RANGE PARKER RANGE PARKER RANGE PARKER RANGE PARKER RANGE PARKER RANGE PARKER RANGE PARKER RANGE LEAKE PARKER RANGE PARKER RANGE PARKER RANGE PARKER RANGE PARKER RANGE PARKER RANGE LAMBOO HALLS CREEK MABEL DOWNS MT FARQUHAR GREGORY TROPICANA CAZR CAZR CAZR CAZR CAZR CAZR CAZR CAZI CAZR CAZI CAZR CAZI CAZI SAMR CAZI CAZI CAZI CAZI CAZI CAZI SAMR SAMR CAZR CAZI CAZI CAZI CAZI SAMR SAMR SAMR SAMR SAMR CAZR CAZR SAMR 100 100 20 20 20 20 20 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 53 

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