Cazaly Resources Limited
ABN: 23 101 049 334
and
Controlled Entities
Annual Report
For the Year Ended
30 June 2016
CONTENTS
Cazaly Resources Limited Annual Report 2016
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
19
20
21
22
23
24
50
51
53
CORPORATE DIRECTORY
Cazaly Resources Limited Annual Report 2016
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
AUDITORS
Bentleys Audit & Corporate (WA) Pty Ltd
Level 3, 216 St Georges Tce
Perth WA 6000
SHARE REGISTRAR
Advanced Share Registry Services
110 Stirling Highway
Nedlands WA 6009
PERTH WA 6000
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 2016
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 2016.
1.
DIRECTORS AND COMPANY SECRETARY
Directors
The following directors have been in office since the start of the financial year to the date of
this report unless otherwise stated:
Nathan McMahon
Clive Jones
Kent Hunter
Directors have been in office
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 Group’s loss after tax for the year was $1,721,210 (2015:$1,388,795). The Group’s net assets
at the end of the year are $20,517,095 (2015: $20,640,083).
Cash and cash equivalents as at year end were $1,585,592 (2015 - $620,947).
Exploration expenditure for the year was $410,439 (2015 - $239,813). The majority of this
expenditure was on the Parker Range and McKenzie Springs projects. Exploration expenditure
written off for the year was $1,129,248 compared to $1,104,148 in the previous financial year.
The main write offs this year were Quartz Springs expenditure of $137,395, Mt Walkins $349,168,
Gondwana $273,170, Mt Angelo $50,100 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 $670,414 (2015 -
$883,965).
During the next financial year the Group intends to continue to further develop its newly
acquired core projects whilst also exploring new key commodity 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 2016
All mining ventures are exposed to risks and the Group 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 Directors of the Company realise 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 projects may 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 2016
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 Group 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 2016
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, lithium 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.
Sovereign and Political Risk
The Company has an 80% interest in two uranium project applications in the Czech Republic.
foreign ownership, exchange control, exploration
The Company’s interests in the Czech Republic are subject to the risks associated with
operating in a foreign country. These risks may include economic, social or political instability
or change, hyperinflation, currency non-convertibility or instability and changes of law
affecting
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 petroleum properties or government regulations
that require the employment of local staff or contractors or require other benefits be
provided to local residents.
5
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
The Company may also be hindered or preventing from enforcing its rights with respect to
government instrumentalities because of the doctrine of sovereign immunity.
Any future material adverse changes in government policies or legislation in the Czech
Republic that affect ownership, development or mining activities, may affect the viability and
profitability of the Company.
The legal system operating in the Czech Republic is different to that in Australia and this may
result in risks such as:
Different forms of legal redress in the courts whether in respect of a breach of law or
regulation, or in ownership dispute.
A higher degree of discretion on the part of governmental agencies.
Differences in political and administrative guidance on implementing applicable rules
and regulations including, in particular, as regards local taxation and property rights.
Different attitudes of the judiciary and court.
Difficult in enforcing judgments.
The commitment by local business people, government officials and agencies and the
judicial system to abide by legal requirements and negotiated agreements may be more
uncertain, creating particular concerns with respect to licences and agreements for business.
These may be susceptible to revision or cancellation and legal redress may be uncertain or
delayed. There can be no assurance that joint ventures, licences, licence applications or
other legal arrangements will not be adversely affected by the actions of government
authorities or others and the effectiveness and enforcement of such arrangements cannot
be assured. Further, there is no guarantee that any applications for tenements will be granted
or granted on conditions satisfactory to the Company.
The Company’s future operations in the Czech Republic may be affected by changing
political conditions and changes to laws and petroleum and/or mining policies. The effects
of these factors cannot be accurately predicted and developments may impede the
operation or development of a project or even render it uneconomic.
The above risks are not exhaustive but are the minimum exposure areas observed by the
Group.
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.
6.
REVIEW OF OPERATIONS
Projects
Mt Venn Gold Project (100% CAZ)
On 20 May 2016, the Company acquired all the shares in private exploration company
Yamarna West Pty Ltd. Yamarna Wests’ key asset is exploration licence application E38/3111
which covers the majority of the Mount Venn greenstone belt located in the north-eastern
goldfields of Western Australia. The Company then added to this position by the application
of a further contiguous exploration licence (E38/3150) which increased this land holding to
control ~90% of the belt over ~50km.
The Mount Venn project is located 125 km northeast of Laverton and just 40 km west of Gold
Road Resources’ (’GOR’) Gruyere gold deposit (148 Mt @ 1.30 g/t Au for 6.16M oz per GOR
announcement dated 22 April 2016).
6
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
The belt lies adjacent to the boundary between the Burtville and Yamarna Terranes and has
many similarities with the Dorothy Hills greenstone belt which hosts Gruyere. Gruyere is
located on an inflection of the NW striking Dorothy Hills Shear, a first order structure
transecting much of the belt and into which an internal granite, the Gruyere Porphyry (host to
the gold mineralisation), has intruded. The Mount Venn belt also contains major shears and
internal granites which are being targeted by the Company.
Cazaly
Tenure
Figure 1: Location of the Mount Venn Project
The Mount Venn belt is probably one of the
most under explored greenstone belts for gold
regional scale
in Western Australia. Whilst
geochemical
surface
geophysical
programmes have been undertaken in the past
the focus has been on nickel and base metal
exploration and there has been almost no
systematic drilling undertaken for gold.
and
The Company has completed reprocessing of
regional geophysics, re-assessed geochemical
datasets and has commenced developing
models targeting gold mineralisation within the
belt. Preliminary assessment of this data has
highlighted extensive areas considered highly
prospective for gold mineralisation. This work has
largely been based upon anomalous gold and
pathfinder geochemistry
in association with
favourable lithologies and structural positions
defined from geophysics and previous mapping
and in areas with little to no systematic historic
drilling having been conducted.
The Company recently signed a Native Title Agreement with the Yilka People and the Cosmo
Newberry Aboriginal Corporation which covers the project area.
Goldfields Lithium Alliance (“GLiA”, CAZ 50%/LIT
50%)
their
In May 2016, Cazaly and Lithium Australia
to
Limited (ASX:LIT) signed an agreement
combine
the
exploration and development of pegmatite
minerals
the
Goldfields region of Western Australia (“the
Alliance”).
respective holdings
lithium minerals
including
for
in
Figure 2: Location of the Goldfields Lithium Alliance
to
to offer
The agreement includes the obligation for both
to
parties
pegmatite minerals over any existing or
additional ground secured within a 100km
radius of Kalgoorlie for an initial period of 5
years.
the Alliance
rights
7
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
The Alliance immediately granted Cazaly 50% of LIT’s rights to the Coolgardie Rare Metals
Venture (CRMV) which is contiguous with the Company’s recently announced Kangaroo Hills
Lithium Project (CAZ ASX release 13 April 2016). The CRMV is a LIT initiative with Focus Minerals
Limited (ASX:FML) and includes the historic lithium production centres of the Lepidolite Hill
and Tantalite Hill mines. Under LIT’s terms of its agreement with FML, LIT has the rights to all
metals derived from pegmatites on the property and will free-carry FML a 20% interest until a
decision is made to commit to feasibility.
Under the Alliance agreement CAZ will not be liable for any costs associated with
metallurgical testwork or feasibility studies for the CRMV which are to be borne solely by LIT.
LIT has been conducting metallurgical studies over material from Lepidolite Hill and has
announced plans for bulk sampling of mine waste dumps from Lepidolite Hill to further test its
100% owned Sileachtm extraction.
Further ground was added to the GLiA via the acquisition of the rights to ‘Pegmatite Minerals’
in the Widgiemooltha pegmatite field located ~45km south east of Coolgardie and 25km
south of the globally significant Mount Marion Lithium Project (60.5Mt @ 1.36% Li2O; NMT:ASX
Announcement 5th July 2016; “Mineral Resource Estimate increases 160% to 60.5Mt”) (Figure
2). The Widgiemooltha Project contains extensive pegmatites mapped by the Geological
Survey of Western Australia (“GSWA”) and are part of what appears to be a significant dyke
swarm in the area. Pegmatites are the primary hard rock host for lithium minerals, including
spodumene and lepidolite, mined globally and being targeted at Mount Marion.
Cobalt Projects (CAZ 100%)
The Company has also applied for Exploration Permits in both Queensland and New South
Wales covering historic workings and prospects with recorded significant cobalt and
manganese mineralisation. Cobalt is seeing a resurgence given its role as a key battery metal
alongside of graphite and lithium. Cobalt is present in lithium-ion batteries in the lithium
cobaltite cathodes used in smartphones, and also with lithium-nickel-manganese-cobalt and
lithium-nickel-cobalt-aluminium oxide cathodes which are both used in laptops and electric
vehicles.
Cobalt supply is currently constrained as it is typically a by-product from nickel and copper
mining both of which are in current decline. This, combined with the predicted escalation in
demand from the lithium battery market, sees cobalt as being a particularly vulnerable
component of the supply chain for battery manufacturers. Battery cell manufacturers who
have secure cobalt supply chains will have a critical advantage over their competitors.
covers
application
In Queensland, the Mount Tabor project
licence lies to the north west of Injune
and approximately 130km directly north
of Mitchell in south-central Queensland.
The
Jurassic
sediments of the intra-cratonic Surat
Basin and includes a series of Tertiary
mafic intrusives. Manganese rich pods
occur sporadically throughout the area
and are found to contain appreciable
amounts of potentially economic
cobalt.
Figure 3: Analysis of Bulk Samples, Mt Manganese (Mineral Deposits
8
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
Some of these pods were explored initially by Mineral Deposits Limited (‘MDL’) from 1979-1982
and then by Cobalt Resources NL (‘CRL’) in the 1990’s with further work more recently
conducted by Maranoa
Resources Limited (‘MRL’). This work highlighted cobalt
mineralisation over several prospects; Mt Manganese, Mt Gould, Alpha, Mt Bally-Lethbridge,
Mt Emily and Carnarvon extending over an area of approximately 20km within the licence.
Of particular interest is the Mt Manganese prospect where several grab samples assaying
over 1% Co were returned (MRL report Annual Report for EPM14261, October 2010). MDL
drilled 62 percussion holes and estimated a resource. CRN drilled a further 139 holes,
estimated a resource and carried out preliminary metallurgical studies that confirmed that
several leachants, including sulphuric acid, alkaline cyanide and ammonia may be suitable
for treating the mineralisation.
MRL developed a new genetic model for the mineralisation however, due to the depressed
market for cobalt at the time, the licence was relinquished.
In New South Wales, the Bungonia project permit is located ~40 kilometres south east of
Goulburn and covers ~240 square kilometres on the eastern edge of the Lachlan Fold Belt.
The Goulburn region hosts various styles of mineralisation including base metals, gold, tin,
tungsten, manganese, cobalt and nickel.
and
cobalt
significant
Previous exploration defined several areas
of
nickel
mineralisation some of which have been
historically mined as early as the 1890’s.
is
Cobalt-Nickel-Copper mineralisation
associated with intense deep weathering
of mafic or other metal
rocks
associated with manganiferous deposits
beneath basalt flows. This is akin to the
mineralisation also observed at
the
Company’s Mount Tabor Cobalt project in
Queensland.
rich
Of the prospects, primary areas of interest
include the Jacapa prospect where rock
chip samples returned several assays >1%
cobalt from manganiferous grits whilst at
Brooklyn similar mineralised grits were
observed extending for over 700m.
Figure 4: Location of the Bungonia Cobalt Project
Metallurgical test work previously undertaken was also positive with excellent recoveries of
83.2% cobalt, 79.5% copper and 85.9% nickel returned from acid leaching of a 80 kilogram
sample containing 1.15% cobalt, 0.39% copper and 0.26% nickel (North Broken Hill Pty Ltd -
GS1980/315). In 2009 an assessment of the Main (No.1) Bungonia South Cobalt Deposits and
surrounds concluded that there was good potential for further discoveries of significant
cobalt mineralisation within the project, however no further work was completed.
Parker Range Iron Ore Project (CAZ 100%)
Despite the relatively low iron ore price, 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.
9
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
McKenzie Springs Nickel/Graphite Project (CAZ 100%)
Located immediately south & along strike of the Savannah Nickel Mine (Panoramic
Resources Ltd), Kimberley, WA. Prospective ultramafic basal contact extends for ~15km.
Limited historic work, High grade gossan samples returned 12.8% Cu, 1.92% Ni, 0.17% Co.
The project also lies adjacent to Hexagon Resources Limited’s MacIntosh Graphite Project
which has an Indicated and Inferred resource of 17.2Mt @ 4.63% Total Graphitic Carbon for
797,200t of contained graphite. Reconnaissance work at McKenzie Springs by the Company
discovered an outcropping graphitic schist unit and identified further evidence of graphite
bearing units associated with high grade metamorphic rocks of the Tickalara Metamorphic
suite which trend throughout the tenement for ~15 kilometres. This is the same unit hosting
Hexagon’s Resources Limited’s neighbouring Macintosh Graphite Project.
Czech Republic Uranium Project (CAZ 80%)
Cazaly has two uranium project applications, Brzkov & Horni Venice, which are located in the
Czech Republic. The State mining enterprise, Diamo, is closing the country’s only operating
uranium mine & has publicly indicated an interest in mining at Brzkov.
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.
Corporate
On 22 December 2015, the Company announced the completion of a book build for a share
placement at an issue price of $0.03 per Share to raise approximately $205,000. The
placement included a free attaching unlisted Option (exercisable at $0.04 with a two (2) year
expiry date from issue) on the basis of one Option for every two Shares subscribed for.
On the same date, it was also announced that Directors, Mr Nathan McMahon and Mr Clive
Jones, had advanced the Company a total of $200,000 in debt funds by way of two
convertible notes. The principal terms of the convertible notes were designed to mirror the
placement terms. As such, each convertible note carried no coupon rate, was unsecured
and was convertible at $0.03 with a free attaching Option on the basis of one option for
every two shares converted. The maximum number of shares and options that could have
been issued, upon conversion, was therefore 6,666,666 and 3,333,334 respectively. The issue
of shares and options to Mr McMahon and Mr Jones was approved by shareholders at the
general meeting held on 12 August 2016.
On 20 May 2016, Cazaly announced the completion of a placement to sophisticated and
professional investors to raise $1,450,000. The issue price of the fully paid ordinary Shares was
$0.065 per Share. The placement included a free attaching listed option (exercisable at $0.11
with a two (2) year expiry date from issue) on the basis of one Option for every two Shares
subscribed for.
The placement shares were issued from the Company’s available capacity available under
ASX Listing Rules 7.1 and 7.1A. The issue of the free attaching listed option was subject to the
receipt of shareholder approval, which was granted at the general meeting held on 12
August 2016.
10
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
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 has continued to reduce its tenement holdings but is also focussed on sourcing
key commodity projects.
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
On 23 August 2016, the Company issued the following equities:
2,500,000 fully paid ordinary shares, 2,500,000 unlisted options exercisable at $0.144 on
or before 22 August 2019 and 2,500,000 unlisted options exercisable at $0.216 on or
before 22 August 2020 (issued to the vendor in relation to the Mt Venn purchase); and
1,538,462 fully paid ordinary shares (issued to the vendor in relation to Widgiemooltha
purchase)
On the same date, Mr McMahon and Mr Jones both converted their individual convertible
note into a combined total of 6,666,666 fully paid ordinary shares and 3,333,334 unlisted
options exercisable at $0.04 on or before 5 January 2018.
Apart from the above, 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.
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
tenement
Mr McMahon has provided corporate and
management advice to the mining industry for nearly 25 years to
in excess of
listed mining companies. Mr
McMahon specialises in native title negotiations, joint venture
negotiations and project acquisition due diligence. Mr McMahon
is also Non-Executive Chairman of Dempsey Minerals Ltd.
twenty publicly
Equity Holdings
25,636,099 fully paid ordinary shares
1,500,000 options exercisable at $0.18 expiring 26 November 2016
1,666,667 options exercisable at $0.04 expiring 5 January 2018
11
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 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 also a director of other ASX listed mining
companies.
Equity Holdings
14,479,904 fully paid ordinary shares
1,500,000 options exercisable at $0.18 expiring 26 November 2016
1,666,667 options exercisable at $0.04 expiring 5 January 2018
Other Directorships
Corazon Mining Ltd (since February 2005)
Bannerman Resources Ltd (since January 2007)
Unity Mining Ltd (from January 2013 to June 2016)
Kent Hunter
Non-Executive Director
Qualifications
B.Bus.
Experience
Mr Hunter is an Accountant with nearly 20 years’ corporate and
company secretarial experience. He has been involved in the
listing of over twenty companies on the ASX over the past
decade and has sound corporate governance, compliance and
regulatory experience.
Equity Holdings
212,501 fully paid ordinary shares
500,000 options 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)
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.
12
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
12.
REMUNERATION REPORT – AUDITED (Cont’d)
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.
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.
13
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
12.
REMUNERATION REPORT – AUDITED (Cont’d)
Employment Contracts of Directors and Senior Executives
The employment conditions of the Managing Directors are each formalised in contracts of
employment. These contracts commenced on 1 July 2010 and have 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.
Details of Remuneration for Year Ended 30 June 2016
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,
Cash
Non-cash
Other
Super-
Other
Equity Options
salary &
profit
Benefit
annuation
commiss
-ions
share
$
$
$
$
$
$
$
$
$
%
Nathan McMahon – Managing Director (i)
2016
2015
180,000
180,000
-
-
Clive Jones – Managing Director (ii)
2016
2015
180,000
180,000
-
-
-
-
-
-
Kent Hunter – Non Executive Director
2016
2015
27,250
27,250
Total Remuneration
2016
2015
387,250
387,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
180,000
180,000
180,000
180,000
27,250
27,250
387,250
387,250
-
-
-
-
-
-
-
-
i) An aggregate amount of $180,000 (2015:$ 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.
ii) An aggregate amount of $180,000 (2015:$ 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 corporate and technical
services to the Company.
14
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
12.
REMUNERATION REPORT – AUDITED (Cont’d)
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 Company and aggregate amounts paid to superannuation plans in connection with
the retirement of directors are disclosed in Note 4 to the accounts.
During the financial year, two directors of the Company, Mr Nathan McMahon and Mr Clive
Jones, advanced the Company a total of $200,000 in debt funds by way of the issue of two
convertible notes. The principal terms of the convertible notes were designed to mirror the
placement terms offered to sophisticated and professional investors in the December 2015
placement. As such, each convertible note carried no coupon rate, was unsecured and was
convertible at $0.03 with a free attaching Option on the basis of one option for every two
shares converted. The maximum number of shares and options that could have been issued,
upon conversion, was therefore 6,666,666 and 3,333,334 respectively. The issue of shares and
options to Mr McMahon and Mr Jones was approved by shareholders at the general meeting
held on 12 August 2016 and the shares and options issued on 23 August 2016.
During the financial years ended 30 June 2016 and 30 June 2015, Mr McMahon was a
director and shareholder of Hodges Resources Limited (“Hodges”) and Dempsey Minerals
Limited (“Dempsey”). Hodges and Dempsey had an agreement in place, based on normal
commercial terms and conditions, to reimburse the Company for office rental and
administration and overheads. This agreement expired on 31 May 2016.
Aggregate amounts of each of the above transactions for the financial year were as follows:
Hodges Resources Limited
Dempsey Minerals Limited
2016
$
45,128
47,765
92,893
2015
$
56,084
39,980
96,064
Receivable amounts outstanding at year end were as follows:
Hodges Resources Limited
Dempsey Minerals Limited
132,432
38,157
83,705
-
Key Management Personnel (KMP) Shareholdings
The number of ordinary shares in Cazaly Resources Limited held by each KMP of the
Company during the financial year is as follows:
30 June 2016
N McMahon
C Jones
K Hunter
Balance
01-07-15
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
30-06-16
17,701,154
10,075,114
212,501
27,988,769
-
-
-
-
-
-
-
-
3,921,612
1,071,457
-
4,993,069
21,622,766
11,146,571
212,501
32,981,838
15
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
12.
REMUNERATION REPORT – AUDITED (Cont’d)
30 June 2015
N McMahon
C Jones
K Hunter
Balance
01-07-14
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
30-06-15
17,191,690
10,075,114
37,501
27,304,305
-
-
-
-
-
-
-
-
509,464
-
175,000
684,464
17,701,154
10,075,114
212,501
27,988,769
Key Management Personnel (KMP) Option Holdings
The number of options over ordinary shares held by each KMP of the Company during the
financial year is as follows.
30 June 2016
N McMahon
C Jones
K Hunter
30 June 2015
N McMahon
C Jones
K Hunter
Balance
01-07-15
1,500,000
1,500,000
500,000
3,500,000
Balance
01-07-14
1,500,000
1,500,000
500,000
3,500,000
Issued
Exercised
Lapsed
Balance
30-06-16
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
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
Voting and comments made at the Company’s Annual General Meeting held on 26
November 2015
At the 26 November 2015 AGM, the Company did not receive at least 75% of votes to
support the adoption of the Remuneration Report for the year ended 30 June 2015. The
Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
As the Company received votes against its Remuneration Report representing greater than
25% of the votes cast by persons entitled to vote a first strike was received for remuneration
report purposes.
The Board take shareholder concerns about executive remuneration seriously and reviewed
their remuneration policy. There has been no increase in executive director salaries since 2007
and no increase in non-executive director fees since 2010. The Board remains confident that
the remuneration policy and the level and structure of its executive remuneration are suitable
for the company and its shareholders.
End of Remuneration Report (Audited).
16
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
13. MEETINGS OF DIRECTORS
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
7
7
7
Number Participated
7
7
7
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 a Directors and Officers insurance policy in place.
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
Unlisted
26/11/2016
5/1/2018 (i)
5/1/2018 (ii)
22/8/2018 (ii)
22/8/2019 (ii)
22/8/2019 (ii)
22/8/2020 (ii)
Listed
21/8/2018 (iii)
$0.180
$0.040
$0.040
$0.150
$0.180
$0.144
$0.216
3,500,000
2,915,834
3,333,334
175,000
1,450,000
2,500,000
2,500,000
$0.11
11,853,847
(i)
(ii)
(iii)
Issued on 6 January 2016
Issued on 23 August 2016
Issued on 22 August 2016
Option holders do not have any rights to participate in any issue of shares or other interests in
the Company or any other entity.
Options Expired or Lapsed
On 31 July 2016, 100,000 unlisted options exercisable at $0.107 expired.
17
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2016
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 2016 has been
received and can be found on page 19.
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 2016.
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 2016
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.
18
`
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit director for the audit of the financial statements of Cazaly Resources Limited
for the financial year ended 30 June 2016, 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 2016
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For Year Ended 30 June 2016
Note
2016
$
2015
$
Revenue from continuing operations
Other Income
Employee benefits
Depreciation
Administrative expenses
Compliance and regulatory expenses
Occupancy expenses
Written-off exploration expenditure
Gain/(Loss) on sale of financial assets
Revaluation /(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
2
2
3
3
6
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
290,780
237,833
23,137
1,100,000
(462,741)
(12,997)
(207,672)
(156,091)
(251,634)
(1,129,248)
30,645
154,611
(564,860)
(26,083)
(319,105)
(175,419)
(336,845)
(1,104,148)
(28,759)
(171,409)
(1,721,210)
-
(1,721,210)
-
(1,721,210)
(1,388,795)
-
(1,388,795)
-
(1,388,795)
(1,719,741)
(1,469)
(1,721,210)
(1,384,856)
(3,939)
(1,388,795)
(1,719,741)
(1,469)
(1,721,210)
(1,384,856)
(3,939)
(1,388,795)
Earnings/(loss) per share from continuing
and discontinued operations
Basic earnings/ (loss) per share
Diluted earnings per share
19
19
Cents
(1.27)
(1.27)
Cents
(1.06)
(1.06)
The accompanying notes form part of these financial statements.
20
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2016
Note
2016
$
2015
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
7
8
1,585,592
205,254
620,947
172,849
TOTAL CURRENT ASSETS
1,790,846
793,796
NON CURRENT ASSETS
Trade and other receivables
Financial assets
Property, plant and equipment
Exploration and evaluation assets
8
9
10
11
25,270
264,530
31,071
18,952,083
146,168
316,790
46,387
19,917,756
TOTAL NON CURRENT ASSETS
19,272,954
20,427,101
TOTAL ASSETS
21,063,800
21,220,897
CURRENT LIABILITIES
Trade and other payables
Provisions
Convertible Notes
12
13
14
278,923
67,782
200,000
504,763
76,051
-
TOTAL CURRENT LIABILITIES
546,705
580,814
TOTAL LIABILITIES
546,705
580,814
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Controlling entity interest
Non-controlling interest
20,517,095
20,640,083
15
16
17
26,487,504
115,744
(6,071,442)
20,531,806
(14,711)
24,889,282
119,642
(4,355,599)
20,653,325
(13,242)
TOTAL EQUITY
20,517,095
20,640,083
The accompanying notes form part of these financial statements.
21
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 June 2016
Issued Capital
(Accumulated
Losses)
And
Retained
Earnings
$
$
Option
Reserve
Non-
Controlling
Interest
Total
$
$
$
Balance at 1 July 2014
24,889,282
(3,225,381)
374,280
(9,303)
22,028,878
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 2015
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 2016
-
-
-
-
-
-
-
(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
-
-
-
(1,719,741)
-
(1,719,741)
-
-
-
(1,469)
(1,721,210)
-
-
(1,469)
(1,721,210)
1,674,950
-
-
(76,728)
-
-
3,898
-
-
-
(3,898)
-
-
-
-
-
1,674,950
-
-
(76,728)
-
26,487,504
-
(6,071,442)
-
115,744
-
(14,711)
-
20,517,095
The accompanying notes form part of these financial statements.
22
CONSOLIDATED CASH FLOW
STATEMENT
For the year ended 30 June 2016
Note
2016
$
2015
$
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Proceeds from reimbursement of
expenses
Payments for exploration and evaluation
(1,009,943)
5,010
(1,214,228)
5,394
253,365
(710,423)
198,957
(420,131)
Net cash used in operating activities
20
(1,461,991)
(1,430,008)
Cash Flows From Investing Activities
Proceeds from sale of exploration assets
Proceeds from sale of royalty
Proceeds from sale of investments
Proceeds term deposit bond
270,000
-
237,516
120,898
750,000
600,000
553,224
-
Net cash provided by investing activities
628,414
1,903,224
Cash Flows from Financing Activities
Proceeds from issue of securities
Payment for costs of issue of securities
Proceeds from convertible notes
1,674,950
(76,728)
200,000
Net cash provided by financing activities
1,798,222
-
-
-
-
Net increase/(decrease) in cash held
964,645
473,216
Cash and cash equivalents at beginning
of the financial year
620,947
147,731
Cash and cash equivalents at end of the
financial year
7
1,585,592
620,947
The accompanying notes form part of these financial statements.
23
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
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 2016 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 $1,721,210 (2015: $1,388,795) and net cash
outflows from operating activities of $1,461,991 (2015: $1,430,008). There was a working capital
surplus of $1,244,141 at 30 June 2016 compared to a surplus of $212,982 at 30 June 2015.
Pending the outcome of various applications, the Group could have lease and exploration
commitments of $528,439 (2015: $2,463,436) 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.
24
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
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, as at 30 June 2016 is contained in Note 22 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%
25
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
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.
26
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
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).
27
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
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
comprehensive
is
impairment
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.
28
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
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.
29
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
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.
30
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
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.
(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.
31
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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.
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.
32
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
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 asset, ‘Financial assets held for trading’ at fair value on
a recurring basis after initial recognition.
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.
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.
33
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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 2016
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
264,530
-
-
264,530
30 June 2015
Note
Level 1
$
Level 2
$
Level 3
$
Total
$
316,790
-
-
316,790
34
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(v) New accounting standards for application in future periods
Australian Accounting Standards and Interpretations that have recently been issued or
amended but are not yet mandatory, have not been early adopted by the group for the
annual reporting period ended 30 June 2016. 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’
AASB 16 ‘Leases’
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
1 January 2019
30 June 2018
30 June 2019
35
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
2.
REVENUE & OTHER INCOME
Revenue
-
-
- other revenue
interest received
recoupment of office costs on-charged
Other Income
- profit on sale of tenement
- proceeds on sale of royalty
- contingency royalty
3.
PROFIT (LOSS) FOR THE YEAR
2016
$
2015
$
5,010
285,770
-
290,780
23,137
-
-
23,137
5,394
227,782
4,657
237,833
-
600,000
500,000
1,100,000
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
4.
KEY MANAGEMENT PERSONNEL
Interests of Key Management Personnel
81,670
4,454
20,445
21,013
(4,901)
84,991
207,672
134,342
21,749
156,091
132,129
47,548
18,202
18,155
27,444
75,627
319,105
127,709
47,710
175,419
9,833
11,624
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 2016.
The totals of remuneration paid to key management personnel of the Company during the year
are as follows:
36
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
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
2016
$
387,250
-
-
-
387,250
2015
$
387,250
-
-
-
387,250
22,000
22,000
28,000
28,000
-
-
-
-
-
-
(a)Numerical reconciliation of income tax expense to
prima facie tax payable:
Profit from continuing operations
(1,721,210)
(1,388,795)
Prima facie tax benefit on loss from ordinary activities
before income tax at 30% (2015: 30%)
(516,363)
(416,639)
Add:
Tax effect of:
Current year capital losses not recognised
Effect of tax losses derecognised
Derecognition of previously recognised tax losses
Other non-allowable items
183,690
287,700
285,250
1,248
-
491,513
40,383
7,521
Less:
Tax effect of:
Tax benefit of deductible equity raising costs
Movement in unrecognised temporary differences
Utilisation of previously unrecognised capital losses
Income (tax benefit)/loss attributable to entity
(9,667)
(231,858)
-
-
(5,204)
(65,380)
(52,194)
-
37
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
6.
INCOME TAX EXPENSE (Cont’d)
(b) Deferred tax assets at 30% (2015: 30%)
comprise the following
2016
$
2015
$
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
5,565,630
-
-
4,833
29,909
73,500
5,673,872
(5,673,872)
-
5,850,880
-
-
8,207
32,286
73,567
5,964,940
(5,964,940)
-
Deferred tax liabilities at 30% (2015: 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
5,673,872
-
5,673,872
(5,673,872)
-
5,964,940
-
5,964,940
(5,964,940)
-
-
-
-
-
(d) Unrecognised deferred tax assets at 30% (2015: 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
Other receivables (i)
326,165
1,103,277
235,601
1,665,043
544,672
535,800
51,910
1,132,382
1,585,392
200
1,585,592
620,747
200
620,947
205,254
205,254
172,849
172,849
(i) Other receivables normally have 30 to 90 day terms. Other receivables disclosed above include
amounts (see below for aged analysis) that are past due at the end of the reporting period for
which the Group has not recognised any impairment because the amounts are still considered
recoverable.
38
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
8.
TRADE AND OTHER RECEIVABLES (CONT’D)
Age of receivables over 90 days that are past due but not impaired
134,348
66,618
Non-Current
Bonds (ii)
25,270
25,270
146,168
146,168
2016
$
2015
$
(ii) Bonds are term deposits, held by way of bank guarantee.
9.
FINANCIAL ASSETS
Current
Financial assets, at fair value through profit or loss:
Held-for-trading Australian listed shares
10.
PROPERTY, PLANT AND EQUIPMENT
Plant and Equipment
At cost
Accumulated depreciation
Office Furniture and Equipment
At cost
Accumulated depreciation
Motor Vehicle
At cost
Accumulated depreciation
264,530
264,530
316,790
316,790
309,652
(298,699)
10,953
316,091
(297,920)
18,171
40,384
(35,480)
4,904
65,878
(50,664)
15,214
31,071
42,703
(33,789)
8,914
68,287
(48,985)
19,302
46,387
Movement in the carrying amounts for each class of property, plant and equipment between
the beginning and end of the current financial year.
2016
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
Plant and
Equipment
$
18,171
-
-
(7,218)
10,953
Office
Furniture
$
8,914
-
(2,319)
(1,691)
4,904
Motor
Vehicles
$
19,302
-
-
(4,088)
15,214
2015
Plant and
Equipment
$
36,968
-
-
(18,797)
18,171
Office
Furniture
$
11,031
-
-
(2,117)
8,914
Motor
Vehicles
$
24,471
-
-
(5,169)
19,302
Total
$
46,387
-
(2,319)
(12,997)
31,071
Total
$
72,470
-
-
(26,083)
46,387
39
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
11.
EXPLORATION AND EVALUATION ASSETS
Non-Current
Costs carried forward in respect of areas of interest in:
2016
$
2015
$
Exploration and evaluation phases at cost
18,952,083
19,917,756
Movement – exploration and evaluation
Brought forward
Exploration expenditure capitalised during the year
Exploration expenditure capitalised on tenements sold
during the year
Exploration expenditure written off (i)
19,917,756
410,439
20,782,091
239,813
(246,864)
(1,129,248)
-
(1,104,148)
18,952,083
19,917,756
(i) Exploration expenditure written off for the year was $1,129,248 compared to $1,104,148 in
the 2015 financial year. The main areas written off in 2016 were Quartz Springs, Mt Walkins,
Gondwana, Mt Angelo 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.
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
14. CONVERTIBLE NOTES
Current
Convertible Notes
233,539
45,384
278,923
371,020
133,743
504,763
55,031
12,750
67,782
52,084
23,967
76,051
200,000
200,000
-
-
In December 2015, two directors, Mr Nathan McMahon and Mr Clive Jones, advanced a total of
$200,000 in debt funds by way of a convertible note to the Company. The principal terms of the
convertible note were designed to mirror the terms of the placement completed in December
2015. As such, the convertible notes carried no coupon rate, were unsecured and would
convertible at $0.03 with a free attaching option on the basis of one option for every two shares
converted. The convertible notes were converted on 22 August 2016 after shareholder approval
was obtained on 12 August 2016.
40
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
15.
ISSUED CAPITAL
160,116,480 fully paid ordinary shares (2015:
130,477,121) with no par value
26,487,504
24,889,282
2016
$
2015
$
Movements in Ordinary Shares
30 June
2016
Number
30 June
2016
$
30 June
2015
Number
30 June
2015
$
Balance at the beginning of the year
Issue of shares at $0.03 each
Issue of shares at $0.065 each
Conversion of options at $0.04 each
Less: transaction costs
Balance at the end of the year
(i)
(ii)
(iii)
130,477,121 24,889,282 130,477,121 24,889,282
-
-
-
-
160,116,480 26,487,504 130,477,121 24,889,282
6,831,667
22,307,692
500,000
-
204,950
1,450,000
20,000
(76,728)
-
-
-
-
(i)
(ii)
(iii)
Placement shares issued on 5 January 2016
Placement shares issued on 27 May 2016
Shares issued on 15 June 2016 on the conversion of $0.04 options
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 2015
Issued
during the
year
Exercised/
Expired/
Cancelled
Number on
issue at 30
June 2016
On or before 31 July 2015
On or before 31 July 2016
On or before 26 November 2016
On or before 5 January 2018 (i)
$0.100
$0.107
$0.180
$0.040
100,000
100,000
3,500,000
-
3,700,000
-
-
-
3,415,834
3,415,834
(100,000)
-
-
(500,000)
(600,000)
-
100,000
3,500,000
2,915,834
6,515,834
(i)
Free attaching options issued with placement shares on 6 January 2016.
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.
41
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
15.
ISSUED CAPITAL (Cont’d)
The working capital position of the Group at 30 June 2016 and 30 June 2015 are as follows:
e
Cash and cash equivalents
Trade and other receivables
Financial assets
Current liabilities
Working capital position
16. OPTION RESERVE
Opening balance
Transfers to accumulated losses
Closing balance
2016
$
1,585,592
205,254
264,530
(546,705)
1,508,671
2015
$
620,947
172,849
316,790
(580,814)
529,772
119,642
(3,898)
115,744
374,280
(254,638)
119,642
This reserve is used to record the value of equity benefits provided to the employees and
directors as part of their remuneration.
17. ACCUMULATED LOSSES
Opening balance
Net loss attributable to members
Transfers from option reserve
Closing balance
18.
FINANCIAL RISK MANAGEMENT
(4,355,599)
(1,719,741)
3,898
(6,071,442)
(3,225,381)
(1,384,856)
254,638
(4,355,599)
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.
42
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
18. FINANCIAL RISK MANAGEMENT (Cont’d)
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 $1,585,592 (2015: $620,947).
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 2016 and 30
June 2015:
30 June 2016
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets – held for trading
Floating
Interest
Rate
$
1,585,392
-
-
1,585,392
Fixed
Interest
maturing
in 1 year
or less
$
-
25,270
-
25,270
Non-
interest
bearing
2016
Total
$
$
200
205,254
264,530
469,984
1,585,592
230,524
264,530
2,080,646
Weighted average effective interest rate
0.78%
Financial Liabilities
Trade and other payables
30 June 2015
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets – held for trading
-
-
-
-
278,923
278,923
278,923
278,923
Floating
Interest
Rate
$
620,747
-
-
620,747
Fixed
Interest
maturing
in 1 year
or less
$
Non-
interest
bearing
2015
Total
$
$
-
146,168
-
146,168
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
-
-
-
-
504,763
504,763
504,763
504,763
43
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
18. 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
2016
2015
Carrying
Amount
$
1,585,592
230,524
264,530
2,080,646
278,923
278,923
Net fair
Value
$
1,585,592
230,524
264,530
2,080,646
278,923
278,923
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
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 2016, 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
19.
EARNINGS PER SHARE
a)
Reconciliation of earnings to profit or loss:
2016
$
15,854
(15,854)
15,854
(15,854)
2015
$
7,660
(7,660)
7,660
(7,660)
Loss for the year
Loss used to calculate basic and diluted EPS
(1,719,741)
(1,719,741)
(1,384,856)
(1,384,856)
44
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
19.
EARNINGS PER SHARE (Cont’d)
2015
No. of Shares No. of Shares
2016
b) Weighted average number of ordinary shares
outstanding during the year used in calculating
basic EPS
135,888,537
130,477,121
Weighted average number of dilutive options
outstanding
-
-
Weighted average number of ordinary shares
outstanding during the year used in calculating
dilutive EPS
135,888,537
130,477,121
20.
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 (Gain)/ 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
2016
$
2015
$
(1,721,210)
(1,388,795)
12,997
(30,645)
(23,137)
26,083
28,759
(1,100,000)
-
(154,611)
1,129,248
-
171,409
1,104,148
-
-
(30,071)
(45,450)
(195,216)
(449,346)
13,651
(239,813)
Cash outflow from operations
(1,461,991)
(1,430,008)
21. COMMITMENTS
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:
No longer than one year
Longer than one year, but not longer than five years
Longer than five years
2016
$
590,627
1,740,681
1,002,398
3,271,518
2015
$
2,463,436
6,736,623
-
9,200,059
45
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
21. COMMITMENTS (Cont’d)
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.
22. 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
23. OPERATING SEGMENTS
Country of Incorporation Percentage Owned
2015
2016
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.
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.
46
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
23.
OPERATING SEGMENTS (Cont’d)
Unallocated items
Non-recurring items of revenue or expenses are not allocated to operating segments as they are
not considered part of the core operations of any segment.
2016
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
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
Exploration
$
Unallocated
$
Total
$
-
23,137
23,137
5,010
285,770
290,780
5,010
308,907
313,917
(1,106,110)
-
(615,100)
12,997
(1,721,210)
12,997
1,129,248
-
18,952,084
18,952,084
-
106,395
-
-
2,111,716
-
31,071
479,205
1,129,248
-
21,063,800
18,952,084
31,071
585,600
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
19,917,756
-
269,460
-
-
1,303,141
-
46,387
311,354
1,104,148
-
21,220,897
19,917,756
46,387
580,814
24.
EVENTS SUBSEQUENT TO REPORTING DATE
On 23 August 2016, the Company issued the following equities:
2,500,000 fully paid ordinary shares, 2,500,000 unlisted options exercisable at $0.144 on or
before 22 August 2019 and 2,500,000 unlisted options exercisable at $0.216 on or before
22 August 2020 (issued to the vendor in relation to the Mt Venn purchase); and
1,538,462 fully paid ordinary shares (issued to the vendor in relation to Widgiemooltha
purchase)
On the same date, Mr McMahon and Mr Jones both converted their individual convertible note
into a combined total of 6,666,666 fully paid ordinary shares and 3,333,334 unlisted options
exercisable at $0.04 on or before 5 January 2018.
47
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
Apart from the above, 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.
25.
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
2016
$
2015
$
1,720,084
2,828,561
797,182
9,030,278
4,548,645
9,827,460
546,705
-
580,571
608,181
546,705
1,188,752
26,487,505
24,889,282
115,744
(22,601,310)
119,642
(16,370,216)
4,001,939
8,638,708
(690,480)
(266,217)
(690,480)
(266,217)
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.
26.
SHARE BASED PAYMENTS
There were no options issued to directors, employees, consultants or suppliers during the
financial year.
48
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2016
26.
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:
2016
2015
Number of
Options
Weighted
Ave Exercise
Price
$
Number of
Options
Weighted
Ave Exercise
Price
$
Balance at beginning of reporting
period
Expired during the period
Balance at end of
period
Exercisable at end of reporting
period
reporting
3,700,000
(100,000)
3,600,000
3,600,000
0.18
0.10
0.18
4,725,000
0.21
(1,025,000)
0.35
3,700,000
3,700,000
0.18
(i)
(ii)
The compensation options outstanding at 30 June 2016 had a weighted average
remaining life of 0.39 years (2015 – 1.37 years).
The weighted average fair value of the options outstanding at 30 June 2016 was $0.032
(2015 - $0.040).
27. 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.
49
DIRECTORS’ DECLARATION
Cazaly Resources Limited Annual Report 2016
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 2016 and of the
performance for the year ended on that date of the consolidated group;
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.
2.
3.
On behalf of the Directors
Nathan McMahon
Managing Director
Perth,
30 September 2016
50
Independent Auditor's Report
To the Members of Cazaly Resources Limited
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 2016, 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.
Directors Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and
the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standards AASB 101: Presentation of
Financial Statements, that the financial statements comply with International Financial
Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. 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.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Opinion
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 2016 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.
Emphasis of Matter – Going Concern
Without qualifying our opinion, we draw attention to Note 1 in the financial report which indicates that the
Consolidated Entity incurred a loss of $1,721,210. 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.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2016.
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Cazaly Resources Limited for the year ended 30 June 2016, complies
with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 30th day of September 2016
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2016
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 20 September 2016.
DETAILS OF HOLDERS OF EQUITY SECURITIES
ORDINARY SHAREHOLDERS
There are 170,996,608 fully paid ordinary shares on issue, held by 2,386 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 20 SEPTEMBER 2016)
Ordinary Shareholders
Kingsreef Pty Ltd (NB & DL Family A/C)
New Page Investments Ltd
Widerange Corporation Pty Ltd
Clive Jones
Kingsreef Pty Ltd
Nathan McMahon
HSBC Custody Nominees (Australia) Ltd
Acuity Capital Investment Management
Maincoast Pty Ltd
Anthony Ramage
Maximise Your Body Pty Ltd (JSH Family A/C)
GGDT Developments Pty Ltd
Citicorp Nominees Pty Ltd
Clarksons Boathouse Pty Ltd (Clarkson Super Fund)
Dennis Bell
Debra Lee McMahon
Pigequity Pty Ltd
Buckland Capital Pty Ltd
Thomas Francis Corr
Mr R W Patek & Mrs M H Patek (RWP Super Fund)
VOTING RIGHTS
Fully Paid Ordinary
Number
Percentage
11,915,044
8,000,000
7,333,647
6,916,256
4,897,299
4,823,756
3,606,704
3,000,000
2,863,334
2,800,000
2,661,402
2,500,000
2,472,391
1,761,462
1,629,162
1,552,595
1,550,000
1,538,462
1,250,000
1,200,000
6.97%
4.68%
4.29%
4.04%
2.86%
2.82%
2.11%
1.75%
1.67%
1.64%
1.56%
1.46%
1.45%
1.03%
0.95%
0.91%
0.91%
0.90%
0.73%
0.70%
74,271,514
43.43%
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
53
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2016
(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 1,052 shareholders who hold less than a marketable parcel of shares.
STOCK EXCHANGE INFORMATION
DISTRIBUTION OF SHARE HOLDERS (AS AT 20 SEPTEMBER 2016)
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
145,035
1,955,186
3,287,291
28,165,175
137,443,921
170,996,608
As at report date, the following shareholders are recorded as Substantial Shareholders:
Substantial Shareholder
Ordinary Shares held
% Held
Nathan McMahon & associated entities
Clive Jones & associated entities
25,636,099
14,479,904
14.99%
8.47%
SHARE BUY-BACKS
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.
54
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2016
INTEREST IN MINING TENEMENTS AS AT 20 SEPTEMBER 2016
TID
PROJECT
ENTITY
% INT
TID
PROJECT
ENTITY
% INT
Not
Managed
E31/1019
E31/1020
M31/0427
CAROSUE
CAROSUE
CAROSUE
E37/1037
TEUTONIC BORE
M47/1450
HAMERSLEY
E51/1290
E80/3370
E80/3496
E80/3517
RUBY WELL
MT ANGELO
MT ANGELO
MT ANGELO
M80/0247
MT ANGELO
CAZR
CAZR
CAZR
SAMR
LOFE
SAMR
CAZR
CAZR
CAZR
CAZR
10
10
10
100
49
75
20
20
20
20
Managed
E77/1101
E77/1235
E77/1403
L77/0220
L77/0228
L77/0229
M77/0741
M77/0742
M77/0764
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
M77/0765 (A)
PARKER RANGE
M77/0766 (A)
PARKER RANGE
P77/4162
P77/4164
E80/4773
E80/4808
E39/1837
P15/6010 *
PARKER RANGE
PARKER RANGE
HALLS CREEK
MCKENZIE SPRINGS
MT WELD
KANGAROO HILLS
P15/6011 *
KANGAROO HILLS
P15/6012 *
KANGAROO HILLS
P15/6013 *
KANGAROO HILLS
P15/6014 *
KANGAROO HILLS
P15/6015 *
KANGAROO HILLS
P15/6016 *
KANGAROO HILLS
P15/6019 *
KANGAROO HILLS
P15/6020 *
KANGAROO HILLS
P15/6021 *
KANGAROO HILLS
P15/6022 *
KANGAROO HILLS
E80/4902 *
E38/3111 *
E38/3150 *
SPINIFEX
MOUNT VENN
MOUNT VENN
EPM26213 *
MOUNT TABOR (QLD)
EL 5315 *
BUNGONIA (NSW)
CAZI
CAZR
CAZI
CAZI
CAZI
CAZI
CAZI
CAZI
CAZI
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
CAZR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
YAMW
YAMW
SAMR
CAZR
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
100
100
100
100
A – sold to Hanking Gold Mining Ltd (tenements awaiting transfer)
* – application
55