Cazaly Resources Limited
ABN: 23 101 049 334
and
Controlled Entities
Annual Report
For the Year Ended
30 June 2017
CONTENTS
Cazaly Resources Limited Annual Report 2017
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
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CORPORATE DIRECTORY
Cazaly Resources Limited Annual Report 2017
JOINT MANAGING DIRECTORS
Nathan McMahon
Clive Jones
NON-EXECUTIVE DIRECTOR
Terry Gardiner
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 2017
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 2017.
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
Terry Gardiner (appointed 1 December 2016)
Kent Hunter (resigned 1 December 2016)
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 $1,427,577 (2016: $1,721,210). The Group’s net assets
at the end of the year are $20,532,994 (2016: $20,517,095).
Cash and cash equivalents as at year end were $723,262 (2016 - $1,585,592).
Exploration expenditure for the year was $1,446,350 (2016 - $410,439). The majority of this
expenditure was on the Parker Range, Mt Angelo, Mt Venn including the acquisition of Mt Venn
and Widgemooltha projects. Exploration expenditure written off for the year was $718,451
compared to $1,129,248 in the previous financial year. The main write offs in this year related
to the Mt Angelo, Halls Creek and Yilgarn areas as well as previously capitalised expenditures
relating to the various tenements and/or applications that were relinquished during the
financial year.
Net administration expenses and employee benefits for the year totalled $718,714 (2016 -
$670,414).
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.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2017
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.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2017
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.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2017
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.
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 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 petroleum properties or government regulations that require the
employment of local staff or contractors or require other benefits be provided to local
residents.
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Cazaly Resources Limited Annual Report 2017
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)
The Mount Venn project is located ~125 km northeast of Laverton and just 40 km west of Gold
Road Resources Ltd’s (ASX:GOR) Gruyere gold deposit (148 Mt @ 1.30 g/t Au for 6.16M oz., GOR
announcement, 22 April 2016) in the Eastern Goldfields region of Western Australia. The belt is
associated with the regionally significant Yamarna Shear Zone complex and has many
similarities with the Dorothy Hills greenstone belt which hosts Gruyere.
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Cazaly Resources Limited Annual Report 2017
Following grant and obtaining access to the
project, Cazaly conducted
two drilling
campaigns at Mount Venn during the year.
Targeting was largely based upon anomalous
in
gold and pathfinder geochemistry
association with favourable lithologies and
structural positions defined from geophysics
and previous mapping. Drilling
initially
focussed on two prospects, Three Bears and
Rutters.
The programmes proved
to be highly
successful in defining a major gold mineralised
structure at Three Bears and outlining
widespread zinc anomalism at Rutters.
Figure 1: Yamarna Shear Zone &
associated greenstone belts
Figure 2: Geology and 2017 drill locations within
the Mount Venn Greenstone Belt
the
results confirmed
The
Three Bears
mineralised corridor for over 3km. Mineralisation
occurs within a large shear structure close to the
contact between felsic volcanics and an
ultramafic unit (figure 3).
results
Better
from drilling at Three Bears
Extended included 12m @ 1.19g/t Au, 40m @
0.36 g/t Au, 36m @ 0.47 g/t Au, 28m @ 0.32 g/t
Au and 25m @ 0.21 g/t Au with several 4 metre
composite samples >1.0 g/t Au, 4m @ 2.14 g/t
Au and 4m @ 0.18 g/t Au.
Follow up RC drilling is currently being planned
to commence in September.
Areas of
recent
work
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2017
Figure 3: Three Bears Prospect, 2017 drilling
The confirmation that a large mineralised gold bearing structure is present in the area is
particularly significant for the region the key aspects of which include:
1. Large scale, gold bearing structures
2. Extensive near surface remobilised mineralisation
3. Presence of iron rich rocks including basalts, dolerite and gabbros
4. Internal granites (eg; Wartu Granite)
5. Tightly folded geometries (eg; Rutters Dolerite)
Given that the region has not previously been systematically explored for gold these features
and the confirmation of a large gold bearing structure, greatly enhances the prospectivity of
the region.
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Cazaly Resources Limited Annual Report 2017
Rutters Zinc Project
In February a programme of 30 RAB drillholes targeted a coincident auger geochemistry and
Zinc-Gold anomaly situated approximately 6km south of the Three Bears prospect along the
western margin of the Wartu granite (Figure 2). Results showed widespread and thick
anomalous zinc mineralisation within weathered felsic volcanics and included; 39m @ 2290
ppm Zn, 40m @ 1178 ppm Zn & 8m @ 0.52 g/t Au.
The host volcanics display pervasive, fine grained sulphides, predominantly pyrite, whilst
reprocessing of historic airborne EM (Electromagnetic) data highlighted a +1.5km long
coincident anomaly below the geochemical anomaly. The company has just finalised
processing of a ground based Dipole-Dipole Induced Polarisation (IP) which has highlighted a
moderate but consistent shallow IP anomaly coincident with the geochemistry and regional
EM anomaly (Figures 4 & 5).
Figure 4: Rutters Zinc-Gold Prospect, 2017 drilling & Geophysics
The presence of extensive Zinc mineralisation, with coincident elevated levels of gold, arsenic,
silver, copper and lead, occurring within a felsic volcanic pile indicates the potential for primary
VMS (Volcanic Massive Sulphide) mineralisation at depth. The presence of pervasive pyrite
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Cazaly Resources Limited Annual Report 2017
alteration, typically proximal to such mineralisation, and coincident EM & IP anomalies suggests
the potential presence of base metal mineralisation.
RC holes are currently being planned to test the IP anomaly.
Figure 5: Rutters Zinc-Gold Prospect, Dipole-Dipole IP anomaly, Line 2700mN
Goldfields Lithium Alliance (“GLiA”, CAZ 50%/LIT 50%)
Cazaly and Lithium Australia Limited (ASX: LIT) have an agreement to combine their respective
holdings for the exploration and development of Pegmatite Minerals including lithium minerals
in the Goldfields region of Western Australia (the Goldfields Lithium Alliance or “GLiA”).
The agreement includes offers the Alliance rights to pegmatite minerals over any existing or
additional ground secured within a 100km radius of Kalgoorlie for an initial period of 5 years.
The Alliance includes LIT’s rights to the Coolgardie Rare Metals Venture (CRMV). 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.
Teutonic Base Metal Project (CAZ 30%/Metallum 70%)
The Company is in joint venture with Metallum Limited (ASX:MNE) over the Teutonic project
which comprises exploration licence 37/1037 located north of Leonora in the eastern goldfields
of Western Australia. Reprocessing of historic data by MNE highlighted a number of discrete
anomalies within the same stratigraphy hosting the Jaguar and Bentley VMS base metal
deposits located ~20km to the north. Recent EM by MNE delineated a 350m long conductor
called Mustang in the area. Follow up work by MNE, announced on 23 May 2017, reported
preliminary results from a MLEM geophysical survey which identified several prospective
bedrock conductors occurring within the target stratigraphic horizon which contains the
Mustang conductor. The results further confirm the prospectivity of the Teutonic Project to host
base metal mineralisation similar to the deposits to the north.
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Cazaly Resources Limited Annual Report 2017
Figure 6: Regional geology and location of the Teutonic Project and Mustang Conductor showing
proximity to the Jaguar and Bentley VMS deposits
Parker Range Iron Ore (CAZ 100%)
.
During the June quarter the Company was granted an extension of its rights to commence
mining at the project for a further five years to 2022 by the Minister for Environment.
The project hosts a near mine-ready iron ore deposit located in the Yilgarn of Western Australia
key features of which include ultra-low Phosphorous haematite ore, completed full DFS,
located nearby to major infrastructure and has its key approvals to mine in place.
McKenzie Springs Nickel/Graphite (CAZ 100%)
Located immediately south & along strike of the Savannah Nickel Mine (Panoramic Res.),
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.
Halls Creek Copper (DDD 80%, CAZ 20%)
Hosts the VMS Mt Angelo North copper-zinc deposit and the Mt Angelo Cu Porphyry.
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Cazaly Resources Limited Annual Report 2017
Czech Republic (CAZ 80%)
Two uranium project applications, Brzkov & Horni Venice, located in the Czech Republic. State
enterprise Diamo are closing the country’s only operating uranium mine & has indicated
interest in mining at Brzkov.
Corporate
Shares
On 22 August 2016, the Company issued the following fully paid ordinary shares in the capital
of the Company:
2,500,000 shares issued to the vendors of Yamarna West Pty Ltd;
1,538,462 shares issued as consideration for the Widgiemooltha project;
175,000 shares issued to a consultant; and
6,666,666 shares were issued to Directors on the conversion of convertible notes.
On 15 May 2017, the Company issued 14,120,000 fully paid ordinary shares in the Company, at
an issue price of $0.05 per share, on the completion of the placement announced to the ASX
on 9 May 2017. The completion of the book build placement raised gross proceeds of $706,000.
A free attaching quoted option was also issued on a one for two basis. The quoted options
were issued on the same terms as other quoted options, with an exercise price of $0.11 per
share and expiry date of 21st August 2018.
Options
Quoted
The Company issued a total of 11,853,847 quoted options exercisable at $0.11 on or before 21
August 2018 as per the terms and conditions set out in the cleansing prospectus lodged with
the ASX on 17 August 2016.
As mentioned above, the Company issued a further 7,060,000 quoted options, exercisable at
$0.11 on or before 21 August 2018, as part of the book build placement.
Unquoted
During the financial year, Cazaly issued the following unquoted options:
2,500,000 options exercisable at $0.144 on or before 22 August 2019 as part
consideration to the vendors of Yamarna West Pty Ltd;
2,500,000 options exercisable at $0.216 on or before 22 August 2020 as part
consideration to the vendors of Yamarna West Pty Ltd;
175,000 options exercisable at $0.15 on or before 22 August 2018 issued to a consultant
in lieu of services provided;
1,450,000 options exercisable at $0.18 on or before 22 August 2019 issued to
employees under the Cazaly employee incentive scheme; and
3,333,334 options exercisable at $0.04 on or before 5 January 2018 issued to Directors
on the conversion of convertible notes.
At the annual general meeting held on 24 November 2016, the shareholders approved the
issue of a total of 5,000,000 unquoted options to the Directors, exercisable at $0.20 on or before
30 November 2018.
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Cazaly Resources Limited Annual Report 2017
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
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
Mr McMahon has provided corporate and tenement management
advice to the mining industry for nearly 25 years. Mr McMahon
specialises in native title negotiations, joint venture negotiations and
project acquisition due diligence. Mr McMahon is also a director of
other ASX listed mining companies.
Equity Holdings
27,236,099 fully paid ordinary shares
2,500,000 options exercisable at $0.20 expiring 30 November 2018
1,666,667 options exercisable at $0.04 expiring 5 January 2018
Other Directorships
Hodges Resources Ltd (since May 2008)
Dempsey Minerals Ltd (since February 2011)
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Cazaly Resources Limited Annual Report 2017
Clive Jones
Managing Director (Technical)
Qualifications
B.App.Sc(Geol), M.AusIMM.
Experience
Equity Holdings
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.
14,579,904 fully paid ordinary shares
2,500,000 options exercisable at $0.20 expiring 30 November 2018
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)
Terry Gardiner
Non-Executive Director (appointed 1 December 2016)
Qualifications
B.Bus.
Experience
Mr Gardiner has been involved in capital markets, corporate
advising, stockbroking & derivatives trading for over 20 years. For the
past twelve years Mr Gardiner has been an Executive Director of
boutique broker Barclay Wells Ltd. Mr Gardiner is also a director of
many public unlisted companies.
Equity Holdings
1,225,000 fully paid ordinary shares
150,000 options exercisable at $0.04 expiring 5 January 2018
59,923 listed options exercisable at $0.11 on or before 21 August 2018
Other Directorships
Dempsey Minerals Ltd (from December 2013)
Kent Hunter
Non-Executive Director (resigned 1 December 2016)
Mr Hunter held the position of Non-Executive Director from August 2003 to his resignation date.
Mike Robbins
Company Secretary
Mr Robbins has over 20 years resource industry experience gathered at both operational and
corporate levels, both within Australia and overseas. He is currently Company Secretary for
three other listed entities.
12. REMUNERATION REPORT - AUDITED
This report details the nature and amount of remuneration for each director of the Company.
Remuneration Policy
The remuneration policy of Cazaly has been designed to align director objectives with
shareholder and business objectives by providing a fixed remuneration component which is
assessed on an annual basis in line with market rates.
The Board of the Company believes the remuneration policy to be appropriate and effective
in its ability to attract and retain the best directors to run and manage the company, as well
as create goal congruence between directors and shareholders.
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Cazaly Resources Limited Annual Report 2017
12.
REMUNERATION REPORT – AUDITED (Cont’d)
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.
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 also a contract in place for the non-executive director, Terry Gardiner. Mr Gardiner
commenced on 1 December 2016 and his annual fee is $30,000 per annum.
15
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2017
12.
REMUNERATION REPORT – AUDITED (Cont’d)
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 Years Ended 30 June 2017 & 30 June 2016
The remuneration for key management personnel of the company during the year was as
follows:
Short-term Benefits
Post
Employment
Benefits
Other
Long-term
Benefits
Share based
Payment
Total
Performance
Related
Cash, salary
Cash
Non-cash
Other
Super
Other
Equity
Options
&
commissions
profit
share
Benefit
(iv)
$
$
$
$
$
$
$
$
$
%
Nathan McMahon – Managing Director (i)
2017
2016
180,000
180,000
-
-
Clive Jones – Managing Director (ii)
2017
2016
180,000
180,000
-
-
-
-
-
-
Kent Hunter – Non Executive Director (iii)
2017
2016
17,500
27,250
-
-
-
-
Terry Gardiner – Non Executive Director (iii)
2017
2016
17,500
-
Total Remuneration
2017
2016
395,000
387,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,490
205,490
12%
-
180,000
-
25,490
205,490
12%
-
-
-
-
-
180,000
17,500
27,250
17,500
-
-
-
-
-
-
50,980
445,980
11%
-
387,250
-
i) An aggregate amount of $180,000 (2016:$ 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 $180,000 (2016:$ 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.
iii) Mr Kent Hunter resigned as a director on 1 December 2016. Mr Terry Gardiner commenced as a director on 1
December 2016.
iv) The value of options granted to key management personnel as part of their remuneration is calculated as at the
grant date using a Black Scholes model. The following tables discloses the relevant calculation information:
No. of options
issued
Fair value at
grant date $
Estimated volatility
Expiry date
Exercise price Risk free interest rate
5,000,000
$0.01020
75%
28/11/2018
$0.200
1.75%
Related Party Information
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.
16
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2017
12.
REMUNERATION REPORT – AUDITED (Cont’d)
Key Management Personnel (KMP) Share and Option Holdings
Shares
30 June 2017
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
30 June 2016
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
Unquoted Options
30 June 2017
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
30 June 2016
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
Quoted Options
30 June 2017
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
Balance
01-07-16
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
30-06-17
21,622,766
11,146,571
212,501
925,000
32,981,838
Balance
01-07-15
Granted as
Remuneration
17,701,154
10,075,114
212,501
-
27,988,769
-
-
-
-
-
-
-
-
-
-
Options
Exercised
-
-
-
-
-
-
-
-
-
-
5,613,533
3,433,333
(212,501)
300,000
9,134,365
27,236,299
14,579,904
-
1,225,000
43,041,203
Net Change
Other
Balance
30-06-16
3,921,612
1,071,457
-
-
4,993,069
21,622,766
11,146,571
212,501
-
32,981,838
Balance
01-07-16
Issued
Exercised
Lapsed
Balance
30-06-17
Vested
during
the year
Vested
and
exercisable
1,500,000
4,166,667
1,500,000
4,166,667
500,000
-
-
-
3,500,000
8,333,334
-
-
-
-
-
(1,500,000)
4,166,667
4,166,667
4,166,667
(1,500,000)
4,166,667
4,166,667
4,166,667
(500,000)
-
-
-
-
-
-
-
(3,500,000)
8,333,334
8,333,334
8,333,334
Balance
01-07-15
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
Balance
01-07-16
Issued
Exercised
Lapsed
Balance
30-06-17
Vested
during
the year
Vested
and
exercisable
-
-
-
-
-
-
-
-
59,923
59,923
-
-
-
-
-
-
-
-
-
-
-
-
-
59,923
59,923
-
-
-
-
-
-
-
-
-
-
17
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2017
12.
REMUNERATION REPORT – AUDITED (Cont’d)
30 June 2016
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
Balance
01-07-15
Issued
Exercised
Lapsed
Balance
30-06-16
Vested
during the
year
Vested
and
exercisable
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i) Mr Hunter resigned on 1 December 2016. Mr Gardiner commenced as a director on 1 December 2016.
Voting and comments made at the Company’s 2016 Annual General Meeting
The adoption of the Remuneration Report for the financial year ended 30 June 2016 was put
to the shareholders of the Company at the Annual General Meeting held 24 November 2016.
The Company received 99.99% of the vote, of those shareholders who exercised their right to
vote, in favour of the remuneration report for the 2016 financial year. The resolution was passed
without amendment on a show of hands. The Company did not receive any specific feedback
at the AGM or throughout the year on its remuneration practices.
End of Remuneration Report (Audited).
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
T Gardiner
Directors Meetings/Resolutions
Number Eligible
14
14
7
6
Number Participated
14
14
7
6
The Group does not have a formally constituted audit committee as the Board considers that
the Group’s size and type of operation do not warrant such a committee.
14.
INDEMNIFYING OFFICERS OR DIRECTORS
In accordance with the constitution, except as may be prohibited by the Corporations Act
2001 every Officer, or agent of the Group shall be indemnified out of the property of the Group
against any liability incurred by him in his capacity as Officer or agent of the Group or any
related corporation in respect of any act or omission whatsoever and howsoever occurring or
in defending any proceedings, whether civil or criminal.
The Group has a Directors and Officers insurance policy in place.
18
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2017
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
Unquoted
5/1/2018
22/8/2018
30/11/2018
22/8/2019
22/8/2019
22/8/2020
Quoted
21/8/2018
$0.040
$0.150
$0.200
$0.180
$0.144
$0.216
5,974,168
175,000
5,000,000
1,450,000
2,500,000
2,500,000
$0.11
18,913,847
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.
On 26 November 2016, 3,500,000 unlisted options exercisable at $0.18 expired.
Options forfeited or cancelled
During, or since the end of the financial year, no options were forfeited or cancelled.
16.
PROCEEDINGS ON BEHALF OF GROUP
No person has applied for leave of Court to bring proceedings on behalf of the Group or
intervene in any proceedings to which the Group is a party for the purpose of taking
responsibility on behalf of the Group for all or any part of those proceedings.
The Group was not a party to any such proceedings during the year.
17. AUDITORS INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2017 has been
received and can be found on page 21.
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 2017.
19
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2017
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
22 September 2017
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.
20
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 2017, 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 22nd day of September 2017
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For Year Ended 30 June 2017
Note
2017
$
2016
$
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
143,159
290,780
258,911
23,137
(432,855)
(8,526)
(285,859)
(201,550)
(62,583)
(718,451)
-
(119,823)
(462,741)
(12,997)
(207,672)
(156,091)
(251,634)
(1,129,248)
30,645
154,611
(1,427,577)
-
(1,427,577)
-
(1,427,577)
(1,721,210)
-
(1,721,210)
-
(1,721,210)
(1,427,312)
(265)
(1,427,577)
(1,719,741)
(1,469)
(1,721,210)
(1,427,312)
(265)
(1,427,577)
(1,719,741)
(1,469)
(1,721,210)
Earnings/(loss) per share from continuing
and discontinued operations
Basic earnings/ (loss) per share
Diluted earnings per share
19
19
Cents
(0.83)
(0.83)
Cents
(1.27)
(1.27)
The accompanying notes form part of these financial statements.
22
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2017
Note
2017
$
2016
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
7
8
723,262
219,622
1,585,592
205,254
TOTAL CURRENT ASSETS
942,884
1,790,846
NON CURRENT ASSETS
Trade and other receivables
Financial assets
Property, plant and equipment
Exploration and evaluation assets
8
9
10
11
25,744
143,745
22,545
19,679,982
25,270
264,530
31,071
18,952,083
TOTAL NON CURRENT ASSETS
19,872,016
19,272,954
TOTAL ASSETS
20,814,900
21,063,800
CURRENT LIABILITIES
Trade and other payables
Provisions
Convertible Notes
12
13
14
204,692
77,214
-
278,923
67,782
200,000
TOTAL CURRENT LIABILITIES
281,906
546,705
TOTAL LIABILITIES
281,906
546,705
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Controlling entity interest
Non-controlling interest
20,532,994
20,517,095
15
16
17
27,712,676
218,304
(7,383,010)
20,547,970
(14,976)
26,487,504
115,744
(6,071,442)
20,531,806
(14,711)
TOTAL EQUITY
20,532,994
20,517,095
The accompanying notes form part of these financial statements.
23
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 June 2017
Issued Capital
(Accumulated
Losses)
And
Retained
Earnings
$
$
Option
Reserve
Non-
Controlling
Interest
Total
$
$
$
Balance at 1 July 2015
24,889,282
(4,355,599)
119,642
(13,242)
20,640,083
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 2016
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 2017
-
-
-
(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
-
-
-
(1,427,312)
-
(1,427,312)
-
-
-
(265)
(1,427,577)
-
-
(265)
(1,427,577)
1,253,750
-
-
(28,578)
-
-
115,744
-
-
218,304
(115,744)
-
-
-
-
-
1,253,750
218,304
-
(28,578)
-
27,712,676
-
(7,383,010)
-
218,304
-
(14,976)
-
20,532,994
The accompanying notes form part of these financial statements.
24
CONSOLIDATED CASH FLOW
STATEMENT
For the year ended 30 June 2017
Note
2017
$
2016
$
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Proceeds from reimbursement of
expenses
Proceeds from other income
Payments for exploration and evaluation
(781,341)
5,400
(1,009,943)
5,010
-
265,790
(1,093,101)
253,365
(710,423)
Net cash used in operating activities
20
(1,603,252)
(1,461,991)
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
52,500
-
-
-
270,000
-
237,516
120,898
Net cash provided by investing activities
52,500
628,414
Cash Flows from Financing Activities
Proceeds from issue of securities
Payment for costs of issue of securities
Proceeds from convertible notes
717,000
(28,578)
-
1,674,950
(76,728)
200,000
Net cash provided by financing activities
688,422
1,798,222
Net increase/(decrease) in cash held
(862,330)
964,645
Cash and cash equivalents at beginning
of the financial year
1,585,592
620,947
Cash and cash equivalents at end of the
financial year
7
723,262
1,585,592
The accompanying notes form part of these financial statements.
25
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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 22 September 2017 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 $1,427,577 (2016: $1,721,210) and net cash
outflows from operating activities of $1,603,252 (2016: $1,461,991). There was a working capital
surplus of $660,979 at 30 June 2017 compared to a surplus of $1,244,141 at 30 June 2016.
Pending the outcome of various applications, the Group could have lease and exploration
commitments of $542,725 (2016: $590,627) 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.
26
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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 2017 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%
27
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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.
28
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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).
29
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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 income (except for impairment losses). When the financial asset is derecognised,
the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive
income is reclassified into profit or loss.
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.
30
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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.
31
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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.
32
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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.
33
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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.
34
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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.
35
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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 2017
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
- unlisted Australian shares (i)
Recurring fair value measurements
Financial assets at fair value through
profit or loss:
- held-for-trading Australian
listed shares
102,505
-
102,505
-
-
-
-
102,505
41,240
41,240
41,240
143,745
30 June 2016
Note
Level 1
$
Level 2
$
Level 3
$
Total
$
264,530
-
-
264,530
(i) Directors have valued the shares on the last active trading price prior to delisting from the ASX.
36
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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 2017. 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
Although the Directors anticipate that the adoption of these standards may have an impact on
the Group’s financial statements, it is impractical at this stage to provide a reasonable estimate
of such impact.
37
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
2.
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
3.
PROFIT (LOSS) FOR THE YEAR
2017
$
2016
$
5,874
39,877
97,408
143,159
52,500
206,411
258,911
5,010
285,770
-
290,780
23,137
-
23,137
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
68,450
7,292
15,611
21,739
10,763
162,004
285,859
181,055
20,495
201,550
81,670
4,454
20,445
21,013
(4,901)
84,991
207,672
134,342
21,749
156,091
24,843
9,833
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 2017.
The totals of remuneration paid to key management personnel of the Company during the year
are as follows:
38
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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
2017
$
395,000
-
-
50,980
445,980
2016
$
387,250
-
-
-
387,250
22,500
22,500
22,000
22,000
-
-
-
-
-
-
(a)Numerical reconciliation of income tax expense to
prima facie tax payable:
Profit from continuing operations
(1,427,577)
(1,721,210)
Prima facie tax benefit on loss from ordinary activities
before income tax at 30% (2015: 30%)
(428,273)
(516,363)
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
-
363,353
-
49,044
183,690
287,700
285,250
1,248
Less:
Tax effect of:
Tax benefit of deductible equity raising costs
Movement in unrecognised temporary differences
Income (tax benefit)/loss attributable to entity
(11,382)
27,257
-
(9,667)
(231,858)
-
39
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
6.
INCOME TAX EXPENSE (Cont’d)
(b)
Deferred tax assets at 30% (2016: 30%)
comprise the following
Carry forward revenue losses
Capital raising and future black hole
deductions
Provisions and accruals
Other
Less: Set off of deferred tax liabilities
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
2017
$
2016
$
5,656,745
5,565,630
2,146
31,964
73,500
5,764,354
(5,764,354)
-
5,764,354
-
5,764,354
(5,764,354)
-
4,833
29,909
73,500
5,673,872
(5,673,872)
-
5,673,872
-
5,673,872
(5,673,872)
-
-
-
-
-
(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)
350,615
1,466,630
235,601
2,052,846
326,165
1,103,277
235,601
1,665,043
723,062
200
723,262
1,585,392
200
1,585,592
219,622
219,622
205,254
205,254
(i) Other receivables normally have 30 to 90 day terms. Other receivables disclosed above include
amounts of $179,311 (2016: $134,348) 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. $132,432 (2016: $132,432) is receivable from a company related to one of the Directors.
40
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
8.
TRADE AND OTHER RECEIVABLES (CONT’D)
Non-Current
Bonds (ii)
(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
Unlisted Australian public company 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
2017
$
2016
$
25,744
25,744
25,270
25,270
102,505
41,240
143,745
264,350
-
264,530
309,652
(302,652)
7,000
309,652
(298,699)
10,953
40,384
(36,839)
3,545
65,878
(53,878)
12,000
22,545
40,384
(35,480)
4,904
65,878
(50,664)
15,214
31,071
Movement in the carrying amounts for each class of property, plant and equipment between the
beginning and end of the current financial year.
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at the end of the year
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at the end of the year
Plant and
Equipment
$
10,953
-
-
(3,953)
7,000
Plant and
Equipment
$
18,171
-
-
(7,218)
10,953
2017
Office
Furniture
$
4,904
-
-
(1,359)
3,545
2016
Office
Furniture
$
8,914
-
(2,319)
(1,691)
4,904
Motor
Vehicles
$
15,214
-
-
(3,214)
12,000
Motor
Vehicles
$
19,302
-
-
(4,088)
15,214
Total
$
31,071
-
-
(8,526)
22,545
Total
$
46,387
-
(2,319)
(12,997)
31,071
41
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
11.
EXPLORATION AND EVALUATION ASSETS
Non-Current
Costs carried forward in respect of areas of interest in:
2017
$
2016
$
Exploration and evaluation phases at cost
19,679,982
18,952,083
Movement – exploration and evaluation
Brought forward
Exploration expenditure capitalised during the year
Acquisitions
Exploration expenditure capitalised on tenements sold
during the year
Exploration expenditure written off (i)
18,952,083
1,040,600
405,750
19,917,756
410,439
-
-
(718,451)
(246,864)
(1,129,248)
19,679,982
18,952,083
(i)
Exploration expenditure written off for the year was $718,451 compared to $1,129,248 in the previous
financial year. The main write offs in 2017 related to the Mt Angelo, Halls Creek and Yilgarn areas as well
as previously capitalized expenditures relating to the various tenements and/or applications that were
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
146,167
58,524
204,691
233,539
45,384
278,923
64,464
12,750
77,214
55,031
12,750
67,782
-
-
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.
42
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
15.
ISSUED CAPITAL
186,691,608 fully paid ordinary shares (2016:
160,116,480) with no par value
Movements in Ordinary Shares
2017
$
2016
$
27,712,676
26,487,504
30 June
2017
Number
30 June
2017
$
30 June
2016
Number
30 June
2016
$
Balance at the beginning of the year
Issue of shares at $0.03 each
Issue of shares at $0.065 each
Convertible note conversion
Issue of shares at $0.071 each
Issue of shares at $0.065 each
Issue of shares at $0.11 each
Conversion of options at $0.04 each
Issue of shares at $0.05 each
Issue of shares at $0.05 each
Less: transaction costs
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
160,116,480
-
-
6,666,666
2,500,000
1,538,462
175,000
275,000
14,120,000
800,000
26,487,504 130,477,121
6,831,667
22,307,692
-
-
-
-
500,000
-
-
-
-
-
200,000
177,500
100,000
19,250
11,000
706,000
40,000
(28,578)
24,889,282
204,950
1,450,000
-
-
-
-
20,000
-
-
(76,728)
Balance at the end of the year
186,691,608
27,712,676 160,116,480
26,487,504
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
Placement shares issued on 5 January 2016
Placement shares issued on 27 May 2016. Approved by shareholders at a general meeting on
12 August 2016.
Shares issued on conversion of two convertible notes provided by Directors. Approved by
shareholders at a general meeting on 12 August 2016.
Shares issued to the vendors of Yamarna West Pty Ltd. Approved by shareholders at the annual
general meeting on 24 November 2016.
Shares issued to the vendors of the Widgiemooltha project. Approved by shareholders at the
annual general meeting on 24 November 2016.
Shares issued to a consultant on 23 August 2016 in lieu of services provided.
Shares issued on the conversion of $0.04 options (expiry date 5 January 2018).
Placement shares issued on 15 May 2017.
Shares issued to consultant on 15 May 2017 in lieu of services provided.
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.
43
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
15.
ISSUED CAPITAL (Cont’d)
Movements in Options over Ordinary Shares
Exercise Period
Exercise
Price
Number
on issue at
30 June
2016
Issued
during the
year
Exercised/
Expired/
Cancelled
Number on
issue at 30
June 2017
Quoted
On or before 21 August 2018
Unquoted
On or before 31 July 2016
On or before 26 November 2016
On or before 5 January 2018 (i)
On or before 22 August 2018 (ii)
On or before 30 November 2018 (iii)
On or before 22 August 2019 (iv)
On or before 22 August 2019 (v)
On or before 22 August 2020 (v)
Total unquoted options
$0.11
- 18,913,847
-
18,913,847
$0.107
$0.180
$0.040
$0.150
$0.200
$0.180
$0.144
$0.216
100,000
3,500,000
2,915,834
-
-
-
-
-
-
-
3,333,334
175,000
5,000,000
1,450,000
2,500,000
2,500,000
6,515,834 14,958,334
(100,000)
(3,500,000)
(275,000)
-
-
-
-
-
(3,875,000)
-
-
5,974,168
175,000
5,000,000
1,450,000
2,500,000
2,500,000
17,599,168
(i)
(ii)
(iii)
(iv)
(v)
Issued on conversion of two convertible notes provided by Directors. Approved by shareholders
at a general meeting on 12 August 2016.
Issued to a consultant in lieu of services provided.
Issued to Directors. Approved by shareholders at the annual general meeting on 24 November
2016.
Issued to employees of the Company under the Cazaly EIS.
Issued to the vendors of Yamarna West Pty Ltd. Approved by shareholders at the annual general
meeting on 24 November 2016.
Unquoted options are issued to vendors, directors, employees and consultants. The unquoted
options may be subject to performance criteria, and are issued to directors, employees and
consultants to increase goal congruence between executives, directors and shareholders.
Unquoted options carry no dividend or voting rights.
Summary of Options Granted During the Year
Allottee
Employees and consultants
Employees and consultants
Directors
Vendors of Yamarna West
Vendors of Yamarna West
Capital risk management
No. of
options
issued
1,450,000
175,000
5,000,000
2,500,000
2,500,000
Fair value
at grant
date $
$0.03473
$0.02970
$0.01020
$0.02260
$0.02211
Estimated
volatility
75%
75%
75%
75%
75%
Expiry date
22/08/2019
22/08/2018
28/11/2018
22/08/2019
22/08/2020
Exercise
price
$0.180
$0.150
$0.200
$0.144
$0.216
Risk free
interest
rate
1.75%
1.75%
1.75%
1.75%
1.75%
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.
44
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
15.
ISSUED CAPITAL (Cont’d)
The working capital position of the Group at 30 June 2017 and 30 June 2016 are as follows:
Par
Cash and cash equivalents
Trade and other receivables
Financial assets
Current liabilities
Working capital position
16. OPTION RESERVE
Opening balance
Equity based payments
Transfers to accumulated losses
Closing balance
2017
$
723,262
219,622
143,745
(281,906)
804,725
115,744
218,304
(115,744)
218,304
2016
$
1,585,592
205,254
264,530
(546,705)
1,508,671
119,642
-
(3,898)
115,744
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
(6,071,442)
(1,427,312)
115,744
(7,383,010)
(4,355,599)
(1,719,741)
3,898
(6,071,442)
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.
45
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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 $723,262 (2016: $1,585,592).
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 2017 and 30 June
2016:
30 June 2017
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets – held for trading
Floating
Interest
Rate
$
723,062
-
-
723,062
Fixed
Interest
maturing
in 1 year
or less
$
-
25,744
-
25,744
Non-
interest
bearing
2017
Total
$
$
200
219,622
143,745
363,567
723,262
245,366
143,745
1,112,373
Weighted average effective interest rate
0.90%
Financial Liabilities
Trade and other payables
30 June 2016
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets – held for trading
-
-
-
-
204,691
204,691
204,691
204,691
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
-
-
-
-
278,923
278,923
278,923
278,923
46
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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
2017
2016
Carrying
Amount
$
723,262
245,366
143,745
1,112,373
204,691
204,691
Net fair
Value
$
723,262
245,366
143,745
1,112,373
204,691
204,691
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
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.
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
219.
EARNINGS PER SHARE
a)
Reconciliation of earnings to profit or loss:
2017
$
7,231
(7,231)
7,231
(7,231)
2016
$
15,854
(15,854)
15,854
(15,854)
Loss for the year
Loss used to calculate basic and diluted EPS
(1,427,312)
(1,427,312)
(1,719,741)
(1,719,741)
47
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
19.
EARNINGS PER SHARE (Cont’d)
2017
No. of Shares
2016
No. of Shares
b) Weighted average number of ordinary shares
outstanding during the year used in calculating
basic EPS
171,443,575
135,888,537
Weighted average number of dilutive options
outstanding
-
-
Weighted average number of ordinary shares
outstanding during the year used in calculating
dilutive EPS
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
171,443,575
135,888,537
2017
$
2016
$
(1,427,577)
(1,721,210)
8,526
-
(52,500)
106,536
119,823
718,451
-
12,997
(30,645)
(23,137)
-
(154,611)
1,129,248
-
(14,841)
(30,071)
(4,579)
(1,057,091)
(195,216)
(449,346)
Cash outflow from operations
(1,603,252)
(1,461,991)
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
$
542,725
975,446
815,526
2,333,697
$
590,627
1,740,681
1,002,398
3,271,518
48
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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
Yamarna West Pty Ltd
23. OPERATING SEGMENTS
Country of Incorporation Percentage Owned
2016
2017
Australia
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%
100%
80%
0%
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.
49
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
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.
2017
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
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
Exploration
$
Unallocated
$
Total
$
-
52,500
52,500
5,874
343,696
349,570
5,874
396,196
402,070
(665,951)
-
(761,626)
8,526
(1,427,577)
8,526
718,451
-
19,679,982
19,679,982
30,191
-
106,536
1,134,918
-
22,545
251,714
718,451
106,536
20,814,900
19,679,982
22,545
281,905
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
-
15,000
2,111,716
-
31,071
440,310
1,129,248
15,000
21,063,800
18,952,084
31,071
546,705
24.
EVENTS SUBSEQUENT TO REPORTING DATE
Since 30 June 2017, no event has arisen that would likely to materially affect the operations of
the Group, or the state of affairs of the Group no otherwise disclosed in the Group’s financial
report.
25. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
There are no other contingent liabilities or contingent assets outstanding at the end of the year.
50
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2017
26.
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
2017
$
2016
$
938,980
2,936,118
1,720,084
2,828,561
3,875,098
4,548,645
281,881
-
546,705
-
281,881
546,705
27,712,676
26,487,505
218,304
(24,337,763)
115,744
(22,601,310)
3,593,217
4,001,939
(1,639,045)
(690,480)
(1,639,045)
(690,480)
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.
27.
SHARE BASED PAYMENTS
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:
2017
2016
Number of
Options
Weighted
Ave Exercise
Price $
Number of
Options
Weighted
Ave Exercise
Price $
Balance at beginning of reporting
period
Expired during the year
Issued during the year
Balance at end of reporting period
Exercisable at end of reporting
period
3,600,000
0.178
3,700,000
0.176
(3,600,000)
6,625,000
6,625,000
6,625,000
0.178
0.194
0.194
(100,000)
-
3,600,000
3,600,000
0.100
-
0.178
The options outstanding at 30 June 2017 had a weighted average remaining life of 1.57 years (2016 – 0.39
years). The weighted average fair value of the options outstanding at 30 June 2017 was $0.016 (2016 -
$0.032).
51
DIRECTORS’ DECLARATION
Cazaly Resources Limited Annual Report 2017
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 2017 and of the
performance for the year ended on that date of the consolidated group;
2.
3.
in the directors’ opinion there are reasonable grounds to believe that the company will be
able to pay its debts as and when they become due and payable; and
the directors have been given the declarations required by s 295A of the Corporations Act
2001 from the Chief Executive Officer and Chief Financial Officer.
On behalf of the Directors
Nathan McMahon
Managing Director
Perth,
22 September 2017
52
Independent Auditor's Report
To the Members of Cazaly Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cazaly Resources Limited (“the Company”) and
its subsidiaries (“the Consolidated Entity”), which comprises the consolidated statement
of financial position as at 30 June 2017, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion:
a.
the accompanying financial report of the Consolidated Entity 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 2017 and of its financial performance for the year then ended;
and
(ii)
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards
as disclosed in Note 1.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those
standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Consolidated Entity in
accordance with the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Consolidated Entity incurred a net
loss of $1,427,577 during the year ended 30 June 2017. As stated in Note 1, these events or conditions, along
with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant
doubt on the Consolidated Entity’s ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit matter
How our audit addressed the key audit matter
Exploration and Evaluation Expenditure -
$19,679,982
(Refer to Note 11)
Exploration and evaluation is a key audit matter due
to:
The significance of the balance to the
Consolidated Entity’s consolidated financial
position.
The level of judgement required in evaluating
management’s application of the requirements of
AASB 6 Exploration for and Evaluation of
Mineral Resources. AASB 6 is an industry
specific accounting standard requiring the
application of significant judgements, estimates
and industry knowledge. This includes specific
requirements for expenditure to be capitalised as
an asset and subsequent requirements which
must be complied with for capitalised
expenditure to continue to be carried as an
asset.
The assessment of impairment of exploration
and evaluation expenditure being inherently
difficult.
Our procedures included, amongst others:
Assessing management’s determination of its
areas of interest for consistency with the
definition in AASB 6. This involved analysing the
tenements in which the consolidated entity holds
an interest and the exploration programmes
planned for those tenements.
For each area of interest, we assessed the
Consolidated Entity’s rights to tenure by
corroborating to government registries and
evaluating agreements in place with other parties
as applicable;
We tested the additions to capitalised
expenditure for the year by evaluating a sample
of recorded expenditure for consistency to
underlying records, the capitalisation
requirements of the Consolidated Entity’s
accounting policy and the requirements of
AASB 6;
We considered the activities in each area of
interest to date and assessed the planned future
activities for each area of interest by evaluating
budgets for each area of interest.
We assessed each area of interest for one or
more of the following circumstances that may
indicate impairment of the capitalised
expenditure:
the licenses for the right to explore expiring in
the near future or are not expected to be
renewed;
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Key audit matter
How our audit addressed the key audit matter
substantive expenditure for further
exploration in the specific area is neither
budgeted or planned
decision or intent by the Consolidated Entity
to discontinue activities in the specific area of
interest due to lack of commercially viable
quantities of resources; and
data indicating that, although a development
in the specific area is likely to proceed, the
carrying amount of the exploration asset is
unlikely to be recovered in full from
successful development or sale.
We assessed the appropriateness of the related
disclosures in note 11 to the financial
statements.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Consolidated Entity’s annual report for the year ended 30 June 2017, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease
operations, or has no realistic alternative but to do so.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to
obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Consolidated Entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Consolidated Entity’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Consolidated Entity to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Consolidated Entity audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2017.
The directors of the Company are responsible for the preparation and presentation of the remuneration report
in accordance with s 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.
Auditor’s Opinion
In our opinion, the Remuneration Report of the Company, for the year ended 30 June 2017, complies with
section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 22nd day of September 2017
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2017
Additional information required by Australian Securities Exchange Limited and not shown
elsewhere in this Annual Report is as follows. The information is made up to 18 September 2017.
DETAILS OF HOLDERS OF EQUITY SECURITIES
ORDINARY SHAREHOLDERS
There are 186,727,588 fully paid ordinary shares on issue, held by 2,358 individual shareholders.
Each member entitled to vote may vote in person or by proxy or by attorney and on a show of
hands every person who is a member or a representative or a proxy of a member shall have one
vote and on a poll every member present in person or by proxy or attorney or other authorised
representative shall have one vote for each share held.
TWENTY LARGEST SHAREHOLDERS (AS AT 18 SEPTEMBER 2017)
Ordinary Shareholders
Kingsreef Pty Ltd (NB & DL Family A/C)
Widerange Corporation Pty Ltd
Clive Jones
Thomas Francis Corr
Kingsreef Pty Ltd
New Page Investments Ltd
Nathan McMahon
Mr R W Patek & Mrs M H Patek (RWP Super Fund)
Maincoast Pty Ltd
Anthony Ramage
GGDT Developments Pty Ltd
Mr C W Chalwell & Mrs J R Chalwell (Chalwell Pension Fund)
Citicorp Nominees Pty Ltd
HSBC Custody Nominees (Australia) Ltd
Mr R C Gardner & Ms H Black (Tumeke Super Fund)
Buckland Capital Pty Ltd (D Millar S/F)
Clarksons Boathouse Pty Ltd (Clarkson Super Fund)
Paso Holdings Pty Ltd
Denis Bell
Peter Stanley Symonds
Fully Paid Ordinary
Number
Percentage
17,260,967
7,333,647
6,646,256
5,542,308
4,897,299
4,828,517
4,823,756
3,200,000
3,163,335
3,050,000
2,500,000
2,500,000
2,066,001
2,057,257
2,000,000
1,900,000
1,761,462
1,754,081
1,629,162
1,617,308
9.2%
3.9%
3.6%
3.0%
2.6%
2.6%
2.6%
1.7%
1.7%
1.6%
1.3%
1.3%
1.1%
1.1%
1.1%
1.0%
0.9%
0.9%
0.9%
0.9%
80,531,356
43.1%
VOTING RIGHTS
Subject to any rights or restrictions for the time being attached to any class or classes (at present
there are none) at general meetings of shareholders or classes of shareholders:
(a) each shareholder entitled to vote, may vote in person or by proxy, attorney or
representative;
(b) on a show of hands, every person present who is a shareholder or a proxy, attorney or
representative of a shareholder has one vote; and
58
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2017
(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 1,411 shareholders who hold less than a marketable parcel of shares.
STOCK EXCHANGE INFORMATION
DISTRIBUTION OF SHARE HOLDERS (AS AT 18 SEPTEMBER 2017)
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
141,320
1,871,193
3,146,702
28,860,562
152,707,811
186,727,588
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
27,982,022
14,479,904
14.99%
7.75%
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.
59
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2017
INTEREST IN MINING TENEMENTS AS AT 18 SEPTEMBER 2017
TID
PROJECT
ENTITY
% INT
TID
PROJECT
ENTITY
% INT
Not
Managed
E31/1019
E31/1020
M31/0427
E37/1037
M47/1450
E51/1290
M80/0247
CAROSUE
CAROSUE
CAROSUE
TEUTONIC BORE
HAMERSLEY
RUBY WELL
MT ANGELO
CAZR
CAZR
CAZR
SAMR
LOFE
SAMR
CAZR
10
10
10
100
49
7.5
20
Managed
E77/1235
E77/1403
L77/0220
L77/0228
L77/0229
M77/0741
M77/0742
M77/0764
P77/4162
P77/4164
E80/4808
P15/6010 *
P15/6011 *
P15/6012 *
P15/6013 *
P15/6014
P15/6015 *
P15/6016 *
P15/6019
P15/6020 *
P15/6021 *
P15/6022
E38/3111
E38/3150
EPM26213
EL 8483
Czech Rep *
Czech Rep *
* – application
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
MCKENZIE SPRINGS
GLIA
GLIA
GLIA
GLIA
GLIA
GLIA
GLIA
GLIA
GLIA
GLIA
GLIA
MOUNT VENN
MOUNT VENN
MOUNT TABOR (QLD)
BUNGONIA (NSW)
Horní Věžnice
Brzkov II
CAZR
CAZI
CAZI
CAZI
CAZI
CAZI
CAZI
CAZI
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
YAMW
YAMW
SAMR
CAZR
Discovery
Discovery
100
100
100
100
100
100
100
100
100
100
100
50
50
50
50
50
50
50
50
50
50
50
100
100
100
100
80
80
60