Cazaly Resources Limited
ABN: 23 101 049 334
and
Controlled Entities
Annual Report
For the Year Ended
30 June 2018
CONTENTS
Cazaly Resources Limited Annual Report 2018
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 2018
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
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
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 2018.
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
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 $1,472,564 (2017: $1,427,577). The Group’s net assets
at the end of the year are $21,398,306 (2017: $20,532,994).
Cash and cash equivalents as at year end were $1,474,219 (2017: $723,262).
Exploration expenditure for the year was $1,503,714 (2017: $1,466,350). The majority of this
expenditure was on Mt Venn and the Kaoko Kobalt Project in Namibia. Exploration expenditure
written off for the year was $641,517 compared to $718,451 in the 2017 financial year. The main
write offs this year related to the Halls Creek, the Tsumkwe project in Namibia, the Goldfields
Alliance, non-essential Parker Range and Coolgardie 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 $584,555 (2017:
$718,714).
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 2018
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 2018
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 2018
•
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 applications in the Czech Republic and a
51% interest in the Kaoko Kobalt Project in Namibia.
The Company’s interests in the Czech Republic and Namibia 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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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
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 or Namibia that affect ownership, development or mining activities, may affect the
viability and profitability of the Company.
The legal systems operating in the Czech Republic and Namibia are 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 and Namibia 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
Kaoko Kobalt Project (51%)
As announced on 26 March 2018, the Company acquired an option to earn the rights to a 95%
interest in the Kaoko Kobalt Project (‘Kaoko Project’) in Namibia. The Kaoko Project initially
comprised key exploration licence EPL6667 which was granted to a local Namibian company
(KDN Geo Consulting CC)(‘KDN’) for a 3 year period from February 2018.
The option acquired was for the right to purchase 100% of the capital in Kunene North Pty Ltd
(“Kunene”), an Australian unlisted proprietary company. Kunene’s main asset is the Joint
Venture (“KDN JV”) that Kunene holds with KDN. The KDN JV is administered through a jointly
owned Namibian company, Philco One Hundred and Seventy Three (Proprietary) Limited
(“Philco”).
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
KDN JV:
Philco is currently owned 51% by Kunene and 49% by KDN. Licence EPL6667 has now been
transferred to Philco. Kunene can earn further equity in Philco and the Kaoko Project as follows:
i)
ii)
iii)
iv)
v)
Spending N$1 million (~A$90,000) by 15 March 2019 to earn a further 25% in Philco (76%
total)
Paying KDN N$1 million (~A$90,000) no later than when Kunene has earned 76% equity
(*)
Spending N$2 million (~A$180,000) by 18 November 2020 to earn a further 19% in Philco
(95% total)
KDN’s remaining 5% free carried to a definitive feasibility study and to be NEEEF
(governmental draft “New Equitable Economic Empowerment
compliant
Framework”)
KDN’s expenditure thereafter to be carried in a loan account
(*) – On 19 April 2018, the Company issued KDN with 2 million fully paid shares in the Company
to obviate the N$1 million payment due in clause (ii) of the KDN JV.
Kunene Purchase Agreement:
The Company acquired 100% of the issued capital of Kunene, and therefore its rights under the
KDN JV, as follows:
i)
ii)
iii)
iv)
Paid an Option Fee of US$5,000 for an exclusive option period.
Issued 4 million fully paid shares in CAZ to the shareholders of Kunene
Issue 10.5 million CAZ fully paid shares upon the delineation of a JORC compliant
mineral resource containing at least 10,000t of contained cobalt (or other metal
equivalent)
Pay A$1 million (or issuing fully paid CAZ shares to that amount) upon a formal Decision
to Mine
The Kaoko Project is located in northern Namibia approximately 800km by road from the
capital of Windhoek and approximately 750km from port of Walvis Bay (Figure 1). It is primarily
prospective for base metal mineralisation (refer to ASX announcement dated 26 March 2018).
Figure 1 – Location of Kaoko Kobalt Project
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
The Kaoko Project is situated immediately to the north of, and abuts, Celsius Resources Limited’s
(“Celsius”) (ASX:CLA) Opuwo Cobalt project. IN April 2018, Celsius announced a maiden
resource for the project of 112Mt @ 0.11% Co & 0.41% Cu (CLA ASX release 16 April, 2018).
The Company also extended its potential tenure, to ~1,410km2 in the region, through the
application of two new Exploration Prospecting Licences contiguous with the existing EPL6667
(refer to ASX announcement dated 3 May 2018).
The Kaoko Project has only had cursory exploration in the past, the results of which highlighted
widespread base metal mineralisation. Aside from having the potential of ~80km of
prospective dolomite ore formation (‘DOF’) a previous regional 1km by 1km soils programme
delineated a 20km by 5km area of subdued magnetics coincident with anomalous Cu-Co-Zn-
Mn at the Kamwe prospect.
Initial work by the Company included a review of historical data and geological and logistical
reconnaissance of the Kamwe target, the extrapolated ‘DOF’ stratigraphic horizon in the
southwest and the Tsumeb stratigraphy in the far northeast.
The data review included analysing the historic multi-element geochemical database with
particular focus on the main target areas where mapping, airborne geophysics and further
geochemical sampling is planned to commence shortly. A number of metal associations,
geochemical trends and anomalies were identified from this work with several areas potentially
related to bedrock mineralisation or alteration highlighted. The review confirmed the ~20km x
5km Kamwe target as a high priority target with a highly anomalous and coherent association
of elements including Cu, Co, As, Ag, Pb, Zn, Ni, Mo and Ti associated with structural trends.
Two areas of outcropping copper bearing gossans were encountered within the Kamwe target
during initial field reconnaissance. The gossans, hosted by a sequence of dolomite dominant
rocks within the central Nosib Formation, occur as quartz-carbonate-barite-pyrite-chalcopyrite
veins associated with WNW-ESE trending shear zones. Kamwe represents a major target with
significant potential and an ideal ‘plumbing’ system related to major first and second order
faults/shears. Laboratory delays were experienced in analysing the samples however this has
now been resolved with results from sampling of the gossans returning high grade copper
values including; 17.8% and 10.2% Cu (as per ASX announcement dated 25 July 2018). Follow
up detailed geological mapping of this extensive target is currently being conducted and an
in-country exploration team has been established.
Reconnaissance in the southwest portion of EPL6667 targeted a ~20km long area being the
extrapolated stratigraphic position of the ‘DOF’. Being a dominantly shaley unit however, the
‘DOF’ is rarely observed in outcrop as it weathers quickly and is typically covered by more
recent alluvial and colluvial cover. Accordingly, the unit was not observed in the work. Review
of aerial photography of the other potential positions of the ‘DOF’ in the licence indicated that
it was unlikely to outcrop and that the optimal way to explore the presence of the unit was to
conduct an airborne electromagnetic (‘EM’) survey. Accordingly, a major combined airborne
EM and magnetic survey covering the extrapolated positions of the ‘DOF’, as well as other
target areas including the Kamwe target, was contracted to Skytem ApS and conducted in
September. The survey areas (Figure 3) are designed to delineate conductive horizons
including sulphide mineralisation associated with base metals to depths of around 300-400
metres. SkyTem ApS has recently conducted work in-country utilising its equipment to fly surveys
for neighbouring Celsius Resources and Namibian Critical Metals (TSX:NMI) at properties
adjacent to Cazaly’s Kaoko Project.
Other areas to be investigated include the Goudina, Etoto West and Okatjene base metal
occurrences (Figure 2) where outcropping rocks hosting galena (Pb) – malachite/azurite (Cu)
mineralisation have previously been observed.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
Figure 2: Copper distribution, ICP data on geology, Kaoko project
Parker Range Iron Ore Project (100%)
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. The
Company is in continued discussions with infrastructure advisors and is reviewing export
solutions. The nature of the ultra-low phosphorous ore makes this orebody in demand as a
blending ore.
The Company notes the following:
• Recent announcements of Mineral Resources Limited (ASX:MIN) dated 13 June 2018
and 19 July 2018 whereby it was stated that MIN has entered into a definitive
agreement with Cleveland-Cliffs Inc. (NYSE: CLF, Cliffs) to acquire the assets that were
used by its wholly owned subsidiary, Cliffs Asia Pacific Iron Ore Pty Ltd, to run its
Koolyanobbing iron ore operation in the Yilgarn region of Western Australia. The assets
that MIN will acquire include Cliffs’ tenements and all remaining iron ore as well as the
fixed plant, equipment and non-process infrastructure items on those tenements; and
The Port of Esperance has previously exported up to 13M tonnes per annum of iron ore
and MIN have indicated that they aim to export 6-6.25M tonnes per annum.
•
Mount Venn Project (100%)
The Company has entered into a Share Sale Agreement with Sulphide X Limited (‘Sulphide’), a
private company that plans to list on the ASX. An option fee has been paid and Sulphide has
an initial three month exclusivity period to conduct its due diligence on the Mount Venn
project.
If Sulphide proceeds with the acquisition, the Company receives proceeds of $1m plus
3,000,000 consideration shares or a minimum 5% equity in the Sulphide vehicle once listed. The
Company will also receive a once off payment of $500,000 upon the delineation of a 500,000
ounce JORC gold resource and a further $500,000 payment upon the delineation of a 1,000,000
ounce JORC resource. The Company will also retain a 1.5% Net Smelter Royalty which Sulphide
may purchase for $1,000,000 at any stage.
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Cazaly Resources Limited Annual Report 2018
Mount Tabor and Bungonia Cobalt Projects (100%)
In order to focus on their main projects, the Company elected to explore the divesture of the
Mount Tabor and Bungonia projects. An option agreement was signed with a private
company, who paid a nominal fee for a six month exclusivity option, but they recently decided
not to proceed with the purchase of these tenements.
Kurabuka Creek Project (100%)
The Kurabuka Creek Project comprises exploration licence application 09/2267 over 69 sub
blocks in the Bangemall Basin of Western Australia. The area is prospective for shale hosted
base metal mineralisation as demonstrated by historic work. BHP reported rock chip sampling
of workings in 1985 containing lead mineralization between 245ppm and 28.1% Pb (2.12% Pb
average) and zinc mineralization between 32ppm and 26.1% Zn (1.5% Zn average) from 20
samples.
Cazaly has collated all open file data sets and is preparing for field reconnaissance work
investigating the potential of this area to host significant mineralisation. Grant of the tenement
is expected during the current quarter.
McKenzie Springs Project (100% - FIN earning 51%)
During the quarter, FIN Resources Limited (ASX:FIN) listed on the ASX. Previously the Company
entered into an agreement with FIN whereby FIN may earn an upfront 51% working interest in
McKenzie Springs for the following consideration:
•
•
•
5,000,000 shares in FIN
10 million options in FIN (post consolidation) exercisable at 3 cents per share 3 years
from date of readmission – this will be approximately 4.34% of the issued capital in FIN
FIN will also commit to expenditure of $500,000 within 18 months from readmission
following which it will earn another 19% in the project to take its ownership in the project
to 70%.
The project is located immediately south & along strike of the Savannah Nickel Mine
(Panoramic Resources Ltd), Kimberley, WA. Prospective ultramafic basal contact extends for
~15km. Work by Cazaly has identified high grade gossan samples returned 12.8% Cu, 1.92% Ni,
0.17% Co. The project is also within 10km of the Hexagon Resources McIntosh Graphite
Resource. Reprocessing and imaging of historic VTEM data was completed by Cazaly with
several conductor targets potentially representing graphitic units ready for follow up.
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.
Goldfields Lithium Alliance
The Company withdrew from the Goldfields Lithium Alliance to focus on its core projects.
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
Corporate
On 14 December 2017, the Company announced the completion of a capital raising through
the issue of unsecured convertible notes via a Perth based portfolio management and
corporate advisory firm, Oracle Capital Group Pty Ltd (Oracle) to raise up to $750,000 through
the issue of up to 750,000 convertible notes, each with a face value of one dollar ($1.00). Oracle
(or their nominees) would also be entitled to 10 options for each convertible note issued,
exercisable at $0.06 on or before 31 December 2019. A total of 730,000 convertible notes were
issued and the associated 7,300,000 unquoted options were issued on 8 January 2018. The
conversion of the convertible note debt instruments to convertible equity was approved by
shareholders on 13 March 2018.
On 8 January 2018, the Company issued 1,083,455 fully paid ordinary shares in lieu of services
provided by a drilling contractor and a further 3,649,167 fully paid ordinary shares were issued
on the conversion of $0.04 unlisted options.
The Company also issued 3,166,035 fully paid ordinary shares to Acuity Capital, on the same
date, at average price of $0.056 for net proceeds of $177,298. These shares were issued under
the Controlled Placement Deed (‘CPD’) which remains in place. The CPD provides Cazaly with
up to $2 million of standby equity capital up until April 2019. Importantly, Cazaly retains full
control of the placement process, including having sole discretion as to whether or not to utilise
the CPD. Cazaly is under no obligation to raise capital under the CPD. If Cazaly does decide
to utilise the CPD, it is able to set a floor price (at its sole discretion) and the final issue price will
be calculated as the greater of that floor price set by Cazaly and a 10% discount to a Volume
Weighted Average Price (VWAP) over a period of Cazaly’s choosing (again at the sole
discretion of the Company).
On 19 April 2018, the Company issued a total of 6,000,000 fully paid ordinary shares to the
vendors and JV partner as initial consideration for the interest in the Kaoko Kobalt Project.
On 2 May 2018, the Company issued a total of 28,435,597 fully paid ordinary shares to
sophisticated and professional investors under a placement announced on 24 April 2018. Total
gross proceeds from the placement were $1,535,522.
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.
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Cazaly Resources Limited Annual Report 2018
10.
ENVIRONMENTAL ISSUES
The Company has a policy of complying with or exceeding its environmental performance
obligations. The Board believes that the Company has adequate systems in place for the
management of its environmental requirements. The Company 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 to in excess of
twenty public listed mining companies. Nathan has specialised in
native title negotiations, joint venture negotiations and project
acquisition due diligence.
Equity Holdings
28,772,022 fully paid ordinary shares
2,500,000 options exercisable at $0.20 expiring 30 November 2018
Other Directorships
Hodges Resources Ltd (since May 2008)
Galan Lithium Limited (since February 2011)
Clive Jones
Managing Director (Technical)
Qualifications
B.App.Sc(Geol), M.AusIMM.
Experience
Mr Jones has been involved in mineral exploration for over 25 years
and has worked on the exploration for a range of commodities
including gold, base metals, mineral sands, uranium and iron ore. Mr
Jones is also a director of other ASX listed mining companies.
Equity Holdings
15,329,904 fully paid ordinary shares
2,500,000 options exercisable at $0.20 expiring 30 November 2018
Other Directorships
Corazon Mining Ltd (since February 2005)
Bannerman Resources Ltd (since January 2007)
Unity Mining Ltd (from January 2013 to June 2016)
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DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
Terry Gardiner
Non-Executive Director
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
numerous public unlisted companies.
Equity Holdings
1,375,000 fully paid ordinary shares
Other Directorships
Galan Lithium Limited (from December 2013)
Mike Robbins
Company Secretary
Mr Robbins has over 25 years resource industry experience gathered at both operational and
corporate levels, both within Australia and overseas. During that time, he has held numerous
project and head office roles and is also Company Secretary for Galan Lithium Limited.
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 and executive
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 further tailoring
of goals between shareholders and the Directors and executives is achieved through the issue
of equity to the directors and executives to encourage the alignment of personal and
shareholder interest.
The Board of the Company believes the remuneration policy to be appropriate and effective
in its ability to attract and retain the best personnel to run and manage the Company, as well
as create goal congruence between Directors, executives and shareholders.
The remuneration policy, setting the terms and conditions for the Directors and executives 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 other incentive 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 people, the Directors and
executives are paid market rates associated with individuals in similar positions, within the same
industry.
13
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
12.
REMUNERATION REPORT – AUDITED (Cont’d)
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 and executive performance.
All remuneration paid to Directors and executives 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 as necessary, 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.
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 rolling terms
including CPI review clauses. 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. His annual fee
is $30,000 per annum.
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.
14
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
12.
REMUNERATION REPORT – AUDITED (Cont’d)
Details of Remuneration for Years Ended 30 June 2018 & 30 June 2017
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
$
$
$
$
$
$
$
Nathan McMahon – Managing Director (i)
2018
2017
180,000
180,000
-
-
Clive Jones – Managing Director (ii)
2018
2017
180,000
180,000
-
-
-
-
-
-
Kent Hunter – Non Executive Director (iii)
2018
2017
-
17,500
-
-
-
-
Terry Gardiner – Non Executive Director (iii)
2018
2017
30,000
17,500
Total Remuneration
2018
2017
390,000
395,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
%
$
-
180,000
25,490
205,490
-
180,000
25,490
205,490
-
-
-
-
-
-
17,500
30,000
17,500
390,000
50,980
445,980
-%
12%
-%
12%
-%
-%
-%
-%
-%
11%
i) An aggregate amount of $180,000 (2017:$ 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 $180,000 (2017:$ 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.
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.
15
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
12.
REMUNERATION REPORT – AUDITED (Cont’d)
Key Management Personnel (KMP) Share and Option Holdings
Shares
30 June 2018
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
30 June 2017
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
Unquoted Options
30 June 2018
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
30 June 2017
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
Balance
01-07-17
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
30-06-18
27,236,299
14,579,904
-
1,225,000
43,041,203
Balance
01-07-16
Granted as
Remuneration
21,622,766
11,146,571
212,501
925,000
33,906,838
-
-
-
-
-
-
-
-
-
-
-
750,000
-
150,000
900,000
1,535,723
-
-
-
1,535,723
28,772,022
15,329,904
-
1,375,000
45,476,926
Options
Exercised
Net Change
Other
Balance
30-06-17
-
-
-
-
-
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
Balance
01-07-17
Issued
Acquired
Exercised
Lapsed
Balance
30-06-18
Vested
during
the year
Vested
and
exercisable
4,166,667
4,166,667
-
-
-
-
-
-
(1,666,667)
2,500,000
(750,000)
(916,667)
2,500,000
150,000
(150,000)
-
-
-
-
-
8,333,334
150,000
(900,000)
(2,583,334)
5,000,000
-
-
-
-
-
2,500,000
2,500,000
-
-
5,000,000
Balance
01-07-16
Issued
Acquired
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
Quoted Options
30 June 2018
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
Balance
01-07-17
-
-
-
59,923
59,923
Issued
Exercised
Lapsed
Balance
30-06-18
Vested
during
the year
Vested
and
exercisable
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
59,923
59,923
-
-
-
-
-
-
-
-
59,923
59,923
16
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
12.
REMUNERATION REPORT – AUDITED (Cont’d)
30 June 2017
N McMahon
C Jones
K Hunter (i)
T Gardiner (i)
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
-
-
-
-
-
-
-
-
59,923
59,923
(i) Mr Hunter resigned as a Director on 1 December 2016. Mr Gardiner commenced as a Director on 1 December
2016.
Voting and comments made at the Company’s 2017 Annual General Meeting
The adoption of the Remuneration Report for the financial year ended 30 June 2017 was put
to the shareholders of the Company at the Annual General Meeting held 24 November 2017.
The Company received 100% of the vote, of those shareholders who exercised their right to
vote, in favour of the remuneration report for the 2017 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 held and conducted during the financial year, each director
held office during the financial year and the number of meetings attended by each director
is:
Director
N McMahon
C Jones
T Gardiner
Directors Meetings
Number Eligible
5
5
5
Number Participated
5
5
5
The Company does not have a formally constituted audit and risk committee or remuneration
and nomination committee as the Board considers that the Company’s size and type of
operation do not warrant the formation of such committees.
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 Company shall be indemnified out of the property of the
Company against any liability incurred by him in his capacity as Officer or agent of the
Company or any related corporation in respect of any act or omission whatsoever and
howsoever occurring or in defending any proceedings, whether civil or criminal. No
indemnification has been paid with respect to the Company’s auditor.
The Company has insurance policies in place for Directors and Officers insurance.
15. OPTIONS
Options forfeited or cancelled
During, or since the end of the financial year, no options were forfeited or cancelled.
17
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2018
15. OPTIONS (Cont’d)
Options Expired or Lapsed
On 22 August 2018, 175,000 unquoted options exercisable at $0.15 expired and on 21 August
2018, 18,913,847 quoted options exercisable at $0.11 expired.
Options on Issue
At the date of this report the Company had the following unquoted options on issue:
Expiry Date
Exercise Price
30/11/2018
22/8/2019
22/8/2019
31/12/2019
22/8/2020
$0.200
$0.180
$0.144
$0.060
$0.216
Number Under
Option
5,000,000
1,450,000
2,500,000
7,300,000
2,500,000
Option holders do not have any rights to participate in any issue of shares or other interests in
the Company or any other entity.
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 2018 has been
received and can be found on page 19.
18. NON AUDIT SERVICES
The Board of Directors is satisfied that the provision of non-audit services performed during the
year by the Group’s auditors is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. No other fees were paid or payable to the
auditors for non-audit services performed during the year ended 30 June 2018.
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
26 September 2018
Competent Persons Statement
This information that relates to exploration targets, exploration results, resource reporting and drilling data of Cazaly
operated projects is based on information compiled by Mr Clive Jones and Mr Don Horn who are Members of The
Australasian Institute of Mining and Metallurgy and/or The Australian Institute of Geoscientists and are employees of
the Company. Mr Jones and Mr Horn have sufficient experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Persons
as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’. Mr Jones and Mr Horn consent to the inclusion in their names in the matters based on their information in the
form and context in which it appears.
18
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit partner for the audit of the financial statements of Cazaly Resources
Limited for the financial year ended 30 June 2018, 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
DOUG BELL CA
Partner
Dated at Perth this 26th day of September 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For Year Ended 30 June 2018
Note
2018
$
2017
$
Revenue from continuing operations
Other Income
Employee benefits
Finance Costs
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
77,720
143,159
41,145
258,911
(312,892)
(111,382)
(6,171)
(271,662)
(181,929)
(65,948)
(641,517)
5,471
(5,399)
(432,855)
-
(8,526)
(285,859)
(201,550)
(62,583)
(718,451)
-
(119,823)
(1,472,564)
-
(1,472,564)
(1,472,564)
(1,427,577)
-
(1,427,577)
-
(1,427,577)
(1,472,389)
(175)
(1,472,564)
(1,427,312)
(265)
(1,427,577)
(1,472,389)
(175)
(1,472,564)
(1,427,312)
(265)
(1,427,577)
Earnings/(loss) per share from continuing
and discontinued operations
Basic earnings/ (loss) per share
Diluted earnings per share
20
20
Cents
(0.75)
(0.75)
Cents
(0.83)
(0.83)
The accompanying notes form part of these financial statements.
20
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
Note
2018
$
2017
$
7
8
1,474,219
221,711
102,160
1,798,090
723,262
219,622
-
942,884
Non current assets held for sale
9
727,328
-
TOTAL CURRENT ASSETS
2,525,418
942,884
NON CURRENT ASSETS
Trade and other receivables
Financial assets
Property, plant and equipment
Exploration and evaluation assets
8
10
11
12
26,306
245,456
18,337
19,685,931
25,744
143,745
22,545
19,679,982
TOTAL NON CURRENT ASSETS
19,976,030
19,872,016
TOTAL ASSETS
22,501,448
20,814,900
CURRENT LIABILITIES
Trade and other payables
Provisions
Convertible Notes
13
14
15
329,248
103,606
670,288
204,692
77,214
-
TOTAL CURRENT LIABILITIES
1,103,142
281,906
TOTAL LIABILITIES
1,103,142
281,906
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Controlling entity interest
Non-controlling interest
21,398,306
20,532,994
16
17
18
29,963,658
305,198
(8,855,399)
21,413,457
(15,151)
27,712,676
218,304
(7,383,010)
20,547,970
(14,976)
TOTAL EQUITY
21,398,306
20,532,994
The accompanying notes form part of these financial statements.
21
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 June 2018
Issued Capital
(Accumulated
Losses)
And
Retained
Earnings
$
$
Option
Reserve
Non-
Controlling
Interest
Total
$
$
$
Balance at 1 July 2016
26,487,504
(6,071,442)
115,744
(14,711)
20,517,095
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 2017
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
-
-
-
(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
-
-
(1,472,389)
(1,472,389)
2,335,802
-
-
(84,820)
-
-
-
-
-
-
-
-
-
-
86,894
-
-
(175)
(1,472,564)
(175)
(1,472,564)
-
-
-
-
-
2,335,802
-
86,894
(84,820)
-
Balance at 30 June 2018
29,963,658
(8,855,399)
305,198
(15,151)
21,398,306
The accompanying notes form part of these financial statements.
22
CONSOLIDATED CASH FLOW
STATEMENT
For the year ended 30 June 2018
Note
2018
$
2017
$
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Proceeds from other income
Payments for exploration and evaluation
(615,933)
3,842
10,065
(1,167,380)
(781,341)
5,400
265,790
(1,093,101)
Net cash used in operating activities
21
(1,769,406)
(1,603,252)
Cash Flows From Investing Activities
Purchase of Property, Plant & Equipment
Purchase of Equity Investments
Proceeds from sale of exploration assets
Proceeds from sale of investments
(1,963)
(8,000)
20,000
6,360
-
-
52,500
-
Net cash provided by investing activities
16,397
52,500
Cash Flows from Financing Activities
Proceeds from issue of securities
Payment for costs of issue of securities
Proceeds from convertible notes
1,858,786
(84,820)
730,000
717,000
(28,578)
-
Net cash provided by financing activities
2,503,966
688,422
Net increase/(decrease) in cash held
750,957
(862,330)
Cash and cash equivalents at beginning
of the financial year
723,262
1,585,592
Cash and cash equivalents at end of the
financial year
7
1,474,219
723,262
The accompanying notes form part of these financial statements.
23
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
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 26 September 2018 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 $1,472,564 (2017: $1,427,577) and net cash
outflows from operating activities of $1,769,406 (2017: $1,603,252). There was a working capital
surplus of $1,422,276 at 30 June 2018 compared to a surplus of $660,979 at 30 June 2017.
As at 30 June 2018, the Group had lease and exploration commitments of $662,003 (2017:
$542,725) due within twelve months.
The directors have prepared a cash flow forecast, which indicates that the Group will have
sufficient cash flows to meet all commitments and working capital requirements for the 12 month
period from the date of signing this financial report. Based on the cash flow forecasts and other
factors referred to above, the directors are satisfied that the going concern basis of preparation
is appropriate because:
-
-
-
the Directors have an appropriate plan to raise additional funds as and when it is required.
In light of the Group’s current exploration projects, the Directors believe that the additional
capital required can be raised in the market; and
the Directors have an appropriate plan to contain certain operating and exploration
expenditure if appropriate funding is unavailable; and
the Directors will divest its interest in financial assets held for trading as and when required
to fund ongoing expenditure.
24
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
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 2018 is contained in Note 22 to the financial
statements.
In preparing the consolidated financial statements, all inter-group balances and transactions
between entities in the Group have been eliminated on consolidation. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with those adopted by
the Company.
Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to
a parent, are shown separately within the Equity section of the consolidated Statement of
Financial Position and Statement of Profit or Loss and other Comprehensive Income. The non-
controlling interest in the net assets comprises their interests at the date of the original business
combination and their share of changes in equity since that date.
(b)
Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and impairment. The
carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in
excess of the recoverable amount from these assets. The recoverable amount is assessed on the
basis of the expected net cash flows that will be received from the asset’s employment and
subsequent disposal. The expected net cash flows have been discounted to their present values
in determining recoverable amounts.
(c)
Depreciation
Depreciation is provided on plant and equipment. Depreciation is calculated on a straight line
basis so as to write off the net cost or other revalued amount of each asset over its expected
useful life to its estimated residual value.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
Office furniture and equipment
Motor vehicle
Depreciation Rate
40.0%
18.0%
22.5%
25
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end
of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These gains and losses are included in the Statement of Profit or Loss and other Comprehensive
Income. When revalued assets are sold, amounts included in the revaluation reserve relating to
that asset are transferred to retained earnings.
(d)
Exploration, Evaluation and Development Expenditure
Costs incurred during exploration and evaluations relating to an area of interest are accumulated.
Costs are carried forward to the extent they are expected to be recouped through successful
development, or by sale, or where exploration and evaluation activities have not yet reached a
stage to allow a reasonable assessment regarding the existence of economically recoverable
reserves. In these instances the entity must have rights of tenure to the area of interest and must
be continuing to undertake exploration operations in the area.
Accumulated costs carried forward in respect of an area of interest that is abandoned are written
off in full against profit in the year in which the decision to abandon the area is made. When
production commences, the accumulated costs for the relevant area of interest will be amortised
over the life of the area according to the rate of depletion of the economically recoverable
reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of
continuing to capitalise costs in relation to that area of interest.
Costs of site restoration are provided over the life of the project from when exploration
commences and are included in the costs of that stage. Site restoration costs include the
dismantling and removal of mining plant, equipment and building structures, waste removal, and
rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been
estimated of future costs, current legal requirements and technology on an undiscounted basis.
(e)
Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of
the asset, but not the legal ownership, are transferred to entities in the consolidated group are
classified as finance leases. Finance leases are capitalised by recording an asset and a liability
equal to the present value of the minimum lease payments, including any guaranteed residual
values. Leased assets are depreciated on a straight-line basis over the shorter of their estimated
useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the
lessor, are charged as expenses in the periods in which they are incurred.
(f)
Financial Instruments
Initial Recognition and Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when
the entity becomes a party to the contractual provisions of the instrument. Trade date accounting
is adopted for financial assets that are delivered within timeframes established by marketplace
convention.
26
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Financial instruments are initially measured at fair value plus transactions costs, except where the
instrument is classified as “at fair value through profit or loss”, in which case transaction costs are
expensed to profit or loss immediately.
Classification and Subsequent Measurement
Finance instruments are subsequently measured at either of fair value, amortised cost using the
effective interest rate method, or cost.
Fair value is determined based on current bid prices for all quoted investments. Valuation
techniques are applied to determine the fair value for all unlisted securities, including recent arm’s
length transactions, reference to similar instruments and option pricing models.
Amortised cost is the amount at which the financial asset or financial liability is measured at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any
cumulative amortisation of the difference between that initial amounts calculated using the
effective interest method.
The effective interest method is used to allocate interest income or interest expense over the
relevant period and is equivalent to the rate that exactly discounts estimated future cash
payments or receipts (including fees, transaction costs and other premiums or discounts) through
the expected life (or when this cannot be reliably predicted, the contractual term) of the financial
instrument to the net carrying amount of the financial asset or financial liability. Revisions to
expected future net cash flows will necessitate an adjustment to the carrying value with a
consequential recognition of an income or expense in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as
being subject to the requirements of accounting standards specifically applicable to financial
instruments.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair
value through profit or loss’. Financial assets are classified as held for trading if they are acquired
for the purpose of selling in the near term. Derivatives are also classified as held for trading unless
they are designated as effective hedging instruments. Gains or losses on investments held for
trading are recognised in profit or loss.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are
classified as held-to-maturity when the Group has the positive intention and ability to hold to
maturity. Investments that are intended to be held-to-maturity, such as bonds, are subsequently
measured at amortised cost.
Held-to-maturity investments are included in non-current assets, except for those which are
expected to mature within 12 months after the end of the reporting period. (All other investments
are classified as current assets.)
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Such assets are carried at amortised cost using the
effective interest method. Gains and losses are recognised in profit or loss when the loans and
receivables are derecognised or impaired, as well as through the amortisation process.
Loans and receivables are included in current assets, except for those which are not expected to
mature within 12 months after the end of the reporting period. (All other loans and receivables
are classified as non-current assets).
27
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
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.
28
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(h)
Trade and Other Receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at original
invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts
is made when there is objective evidence that the entity will not be able to collect the debts. Bad
debts are written off when identified.
(i)
Revenue and Other Income
Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest
revenue is recognised on a proportional basis taking into account the interest rates applicable to
the financial assets. Revenue from the rendering of a service is recognised upon the delivery of
the service to the customers.
All revenue is stated net of the amount of goods and services tax (GST).
(j)
Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that an
asset may be impaired. The assessment will include the consideration of external and internal
sources of information including dividends received from subsidiaries, associates or jointly
controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an
impairment test is carried out on the asset by comparing the recoverable amount of the asset,
being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying
value. Any excess of the asset’s carrying value over its recoverable amount is recognised
immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with
another standard (eg in accordance with the revaluation model in AASB 116). Any impairment
loss of a revalued asset is treated as a revaluation decrease in accordance with that other
standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
(k)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In these
circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an
item of the expense. Receivables and payables in the statement of financial position are shown
inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as
a current asset or liability in the statement of financial position.
Cash flows are included in the cash flow statement on a gross basis. The GST components of cash
flows arising from investing and financing activities which are recoverable from, or payable to, the
ATO are classified as operating cash flows.
(l)
Taxation
The income tax expense (revenue) for the year comprises current income tax expense (income)
and deferred tax expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income
calculated using applicable income tax rates enacted, or substantially enacted, as at reporting
date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid
to (recovered from) the relevant taxation authority.
29
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity
instead of the profit or loss when the tax relates to items that are credited or charged directly to
equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Deferred tax assets also result where amounts have been fully expensed but future
tax deductions are available. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on
accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to
the period when the asset is realised or the liability is settled, based on tax rates enacted or
substantively enacted at reporting date. Their measurement also reflects the manner in which
management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only
to the extent that it is probable that future taxable profit will be available against which the
benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the
reversal of the temporary difference can be controlled and it is not probable that the reversal will
occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it
is intended that net settlement or simultaneous realisation and settlement of the respective asset
and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable
right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where it is
intended that net settlement or simultaneous realisation and settlement of the respective asset
and liability will occur in future periods in which significant amounts of deferred tax assets or
liabilities are expected to be recovered or settled.
Tax Consolidation
Cazaly and its wholly-owned Australian subsidiaries have formed an income tax consolidated
group under tax consolidation legislation. Each entity in the group recognises its own current and
deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’
approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from unused
tax losses and tax credits in the subsidiaries are immediately transferred to the head entity.
(m)
Trade and Other Payables
Trade payables and other payables are carried at amortised costs and represent liabilities for
goods and services provided to the company prior to the end of the financial year that are unpaid
and arise when the company becomes obliged to make future payments in respect of the
purchase of these goods and services.
30
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
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)
Share Based Payments
The Group operates equity-settled share-based payment employee share and option schemes.
The fair value of the equity to which employees become entitled is measured at grant date and
recognised as an expense over the vesting period, with a corresponding increase to an equity
account. Share-based payments to non-employees are measured at the fair value of goods or
services received or the fair value of the equity instruments issued, if it is determined the fair value
of the good or services cannot be reliably measured, and are recorded at the date the goods or
services are received. The corresponding amount is shown in the option reserve.
The fair value of shares is ascertained as the market bid price. The fair value of options is
ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions.
The number of shares and options expected to vest is reviewed and adjusted at the end of each
reporting period such that the amount recognised for services received as consideration for the
equity instruments granted shall be based on the number of equity instruments that eventually
vest.
(p)
Issued Capital
Issued and paid up capital is recognised at the fair value of the consideration received by the
Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in
equity as a reduction of the share proceeds received.
(q)
Earnings Per Share
Basic earnings per share is calculated as net earnings attributable to members, adjusted to
exclude costs of servicing equity (other than dividends) and preference share dividends, divided
by the weighted average number of ordinary shares, adjusted for an bonus element.
Diluted earnings per share is calculated as net earnings attributable to members, adjusted for
costs of servicing equity (other than dividends) and preference share dividends; the after tax
effect of dividends and interest associated with dilutive potential ordinary shares that would have
been recognised as expenses; and other non-discretionary changes in revenues or expenses
during the period that would result from the dilution of potential ordinary shares; divided by the
weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for
any bonus element.
(r)
Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to the end of the reporting period. Employee benefits that are expected to be settled
within one year have been measured at the amounts expected to be paid when the liability is
settled.
31
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(s)
Interest in Joint Operations
A joint operation is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities, relating to the
arrangement. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control.
When a Group entity undertakes its activities under joint operations, the Group as a joint operator
recognises in relation to its interest in a joint operation:
•
•
•
•
•
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liabilities incurred jointly;
its revenue from the sale of its share of the output arising from the joint operation;
its share of the revenue from the sale of the output by the joint operation; and
its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint
operation in accordance with the AASBs applicable to the particular assets, liabilities, revenues
and expenses.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator
(such as a sale or contribution of assets), the Group is considered to be conducting the transaction
with the other parties to the joint operation, and gains and losses resulting from the transactions
are recognised in the Group's consolidated financial statements only to the extent of other parties'
interests in the joint operation.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator
(such as a purchase of assets), the Group does not recognise its share of the gains and losses until
it resells those assets to a third party.
(t)
Critical Accounting Estimates and Judgements
The preparation of financial statements requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised and in any future periods affected.
The directors evaluate estimates and judgments incorporated into the financial report based on
historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data, obtained both
externally and within the group.
Key Judgements –Exploration and evaluation expenditure
Exploration and evaluation costs are carried forward where right of tenure of the area of interest
is current. These costs are carried forward in respect of an area that has not at balance sheet
date reached a stage that permits reasonable assessment of the existence of economically
recoverable reserves, refer to the accounting policy stated in note 1(d).
Key Judgements - Share based payment transactions
The Company measures the cost of equity-settled transactions with employees by reference to
the fair value of the equity instruments at the date at which they are granted. The fair value is
determined by an internal valuation using a Black-Scholes option pricing model.
32
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Key Judgments – Environmental issues
Balances disclosed in the financial statements and notes thereto are not adjusted for any pending
or enacted environmental legislation, and the directors understanding thereof. At the current
stage of the company’s development and its current environmental impact the directors believe
such treatment is reasonable and appropriate.
Key Estimate – Taxation
Balances disclosed in the financial statements and the notes thereto, related to taxation, are
based on the best estimates of directors. These estimates take into account both the financial
performance and position of the company as they pertain to current income taxation legislation,
and the directors understanding thereof. No adjustment has been made for pending or future
taxation legislation. The current income tax position represents that directors’ best estimate,
pending an assessment by the Australian Taxation Office.
(u)
Fair value measurements
The Group measures and recognises the asset, ‘Financial assets held for trading’ at fair value on
a recurring basis after initial recognition.
The Group does not subsequently measure any liabilities at fair value on a non-recurring basis.
(i) Fair Value Hierarchy
AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of
the fair value hierarchy, which categorises fair value measurements into one of three possible
levels based on the lowest level that an input that is significant to the measurement can be
categorised into as follows:
Level 1
Level 2
Level 3
Measurements based on
quoted prices (unadjusted)
in active markets for
identical assets or liabilities
that the entity can access at
the measurement date.
Measurements based on
inputs other than quoted
prices included in Level 1 that
are observable for the asset or
liability, either directly or
indirectly.
Measurements based on
unobservable inputs for the
asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using
one or more valuation techniques. These valuation techniques maximise, to the extent possible,
the use of observable market data. If all significant inputs required to measure fair value are
observable, the asset or liability is included in Level 2. If one or more significant inputs are not
based on observable market data, the asset or liability is included in Level 3.
33
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
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 2018
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
- unlisted Australian shares (i)
204,216
-
204,216
-
-
-
-
204,216
41,240
41,240
41,240
245,456
30 June 2017
Note
Level 1
$
Level 2
$
Level 3
$
Total
$
102,505
-
102,505
-
-
-
-
102,505
41,240
41,240
41,240
143,745
(i) Directors have valued the shares on the last active trading price prior to delisting from the ASX.
34
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(v) Convertible Notes
Convertible notes issued by the Group include embedded derivatives (option to convert to
variable number of shares in the Group). These convertible notes are recognized as financial
liabilities at fair value through profit or loss. On initial recognition, the fair value of the convertible
note will equate to the proceeds received less costs to issue and subsequently the liability is
measured at fair value at each reporting period until settlement. The fair value movements are
recognized on the profit and loss as finance costs.
(w) Non current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will
be recovered principally through a sale transaction rather than through continuing use. This
condition is regarded as met only when the asset (or disposal group) is available for immediate
sale in its present condition subject only to terms that are usual and customary for sales for such
asset (or disposal group) and its sale is highly probable. Management must be committed to the
sale, which should be expected to qualify for recognition as a completed sale within one year
from the date of classification.
When the Company is committed to a sale plan involving loss of control of a subsidiary, all of the
assets and liabilities of that subsidiary are classified as held for sale when the criteria described
above are met, regardless of whether the Group will retain a non-controlling interest in its former
subsidiary after the sale.
When the Group is committed to a sale plan involving disposal of an investment, or a portion of
an investment, in an associate or joint venture, the investment or the portion of the investment
that will be disposed of is classified as held for sale when the criteria described above are met,
and the Group discontinues the use of the equity method in relation to the portion that is classified
a held for sale. Any retained portion of an investment in an associate or a joint venture that has
not been classified as held for sale continues to be accounted for using the equity method. The
Group discontinues the use of the equity method at the time of disposal when the disposal results
in the Group losing significant influence over the associate or joint venture.
After the disposal takes place, the Group accounts for any retained interest in the associate or
joint venture in accordance with AASB 139 unless the retained interest continues to be an
associate or a joint venture, in which case the Group uses the equity method (see the accounting
policy regarding investments in associates or joint ventures above).
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of
their previous carrying amount and fair value less costs to sell.
(x) New accounting standards for application in future periods
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group,
together with an assessment of the potential impact of such pronouncements on the Group when
adopted in future periods, are discussed below:
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting
periods beginning on or after 1 July 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined
below) and includes revised requirements for the classification and measurement of financial
instruments requirements for financial instruments and hedge accounting.
35
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
The key changes that may affect the Group on initial application include certain simplifications to the
classification of financial assets, simplifications to the accounting of embedded derivatives, upfront
accounting for expected credit loss, and the irrevocable election to recognise gains and losses on
investments in equity instruments that are not held for trading in other comprehensive income. AASB 9
also introduces a new model for hedge accounting that will allow greater flexibility in the ability to
hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change
its hedge policies in line with the new hedge accounting requirements of the Standard, the application
of such accounting would be largely prospective.
The Group is in the process of completing its impact assessment of AASB 9. Based on a preliminary
assessment performed, the effects of AASB 9 are not expected to have a material effect on the Group.
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on
or after 1 July 2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards –
Effective Date of AASB 15).
AASB 15 establishes a single comprehensive model for entities to use in accounting for revenue arising
from contracts with customers.
When effective, this Standard will replace the current accounting requirements applicable to revenue
with a single, principles-based model. Apart from a limited number of exceptions, including leases, the
new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary
exchanges between entities in the same line of business to facilitate sales to customers and potential
customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides
the following five-step process:
-
-
-
-
-
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in
each prior period presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and
Errors (subject to certain practical expedients in AASB 15); or recognise the cumulative effect of
retrospective application to incomplete contracts on the date of initial application. There are also
enhanced disclosure requirements.
The Group is in the process of completing its impact assessment of AASB 15. Based a preliminary
assessment performed over each line of business and product type, the effects of AASB 15 are not
expected to have a material effect on the Group.
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in
AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that
eliminates the requirement for leases to be classified as operating or finance leases.
36
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
The main changes introduced by the new Standard are as follows:
-
recognition of a right-of-use asset and lease liability for all leases (excluding short-term leases with
a lease term 12 months or less of tenure and leases relating to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or
loss and unwinding of the liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement
of the lease liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease
components and instead account for all components as a lease; and
inclusion of additional disclosure requirements.
-
-
-
-
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to
comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as
an adjustment to opening equity on the date of initial application.
The Group is in the process of completing its impact assessment of AASB 16. Based on a preliminary
assessment performed, the effect of AASB 16 is not expected to have a material effect on the Group. It
is impracticable at this stage to provide a reasonable estimate of such impact.
37
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
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
2018
$
2017
$
4,404
26,681
46,635
77,720
31,080
10,065
41,145
5,874
39,877
97,408
143,159
52,500
206,411
258,911
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
76,106
17,843
16,100
19,463
10,205
131,945
271,662
157,856
24,073
181,929
68,450
7,292
15,611
21,739
10,763
162,004
285,859
181,055
20,495
201,550
24,843
24,843
Refer to the remuneration report contained in the directors’ report for details of the remuneration
paid or payable to each member of the Company’s key management personnel for the year
ended 30 June 2018.
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 2018
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
2018
$
390,000
-
-
-
390,000
2017
$
395,000
-
-
50,980
445,980
22,500
22,500
22,500
22,500
-
-
-
-
-
-
(a)Numerical reconciliation of income tax expense to
prima facie tax payable:
Profit from continuing operations
(1,472,564)
(1,427,577)
Prima facie tax benefit on loss from ordinary activities
before income tax at 27.5% (2017: 30%)
(404,955)
(428,273)
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
109,949
344,883
-
65,945
-
363,353
-
49,044
Less:
Tax effect of:
Tax benefit of deductible equity raising costs
Movement in unrecognised temporary differences
Income (tax benefit)/loss attributable to entity
(6,452)
(109,370)
-
(11,382)
27,257
-
39
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
6.
INCOME TAX EXPENSE (Cont’d)
(b)
Deferred tax assets at 27.5% (2017: 30%)
comprise the following
2018
$
2017
$
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 27.5% (2017: 30%) comprise the following
Exploration expenditure
Other
Less: Set off of deferred tax asset
(c)
Deferred tax recognised directly in equity:
Relating to equity raising costs
5,280,354
5,656,745
-
48,028
67,375
5,395,757
(5,395,757)
-
5,395,757
-
5,395,757
(5,395,757)
-
2,146
31,964
73,500
5,764,354
(5,764,354)
-
5,764,354
-
5,764,354
(5,764,354)
-
-
-
-
-
(d) Unrecognised deferred tax assets at 27.5% (2017: 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)
205,575
1,720,470
325,916
2,251,961
350,615
1,466,630
235,601
2,052,846
1,474,019
200
1,474,219
723,062
200
723,262
221,711
221,711
219,622
219,622
(i) Other receivables normally have 30 to 60 day terms. Other receivables disclosed above include
amounts of $179,306 (2017: $179,311) that are past due at the end of the reporting period for which the
Company has not recognised any impairment because the amounts are still considered recoverable.
$59,816 (2017: $132,432) is receivable from companies related to one of the Directors.
40
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
8.
TRADE AND OTHER RECEIVABLES (Cont’d)
Non-Current
Bonds (ii)
(ii) Bonds are term deposits, held by way of bank guarantee.
9.
NON-CURRENT ASSETS HELD FOR SALE
2018
$
2017
$
26,306
26,306
25,744
25,744
Non-current assets held for sale
727,328
727,328
-
-
The Company entered into a Share Sale Agreement with Sulphide X Limited (‘Sulphide’), a private
company that plans to list on the ASX. An option fee has been paid and Sulphide has a 3 month
exclusivity period to conduct its due diligence on the Mount Venn project. The exclusivity period
can be extended by 2 months at the request of Sulphide.
If Sulphide proceeds with the acquisition, the Company receives proceeds of $1m plus 3,000,000
consideration shares or a minimum 5% equity in the Sulphide vehicle once listed. The Company
will also receive a once off payment of $500,000 upon the delineation of a 500,000 ounce JORC
gold resource and a further $500,000 payment upon the delineation of a 1,000,000 ounce JORC
resource. The Company will also retain a 1.5% Net Smelter Royalty which Sulphide may purchase
for $1,000,000 at any stage.
10.
FINANCIAL ASSETS
Current
Financial assets, at fair value through profit or loss:
Held-for-trading Australian listed shares
Unlisted Australian public company shares
11.
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
204,216
41,240
245,456
102,505
41,240
143,745
311,615
(305,189)
6,426
309,652
(302,652)
7,000
40,384
(37,938)
2,446
65,878
(56,413)
9,465
18,337
40,384
(36,839)
3,545
65,878
(53,878)
12,000
22,545
Movement in the carrying amounts for each class of property, plant and equipment between the
beginning and end of the current financial year.
41
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
11.
PROPERTY, PLANT AND EQUIPMENT (Cont’d)
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
$
7,000
1,963
-
(2,537)
6,426
Plant and
Equipment
$
10,953
-
-
(3,953)
7,000
2018
Office
Furniture
$
3,545
-
-
(1,099)
2,446
2017
Office
Furniture
$
4,904
-
-
(1,359)
3,545
Motor
Vehicles
$
12,000
-
-
(2,535)
9,465
Motor
Vehicles
$
15,214
-
-
(3,214)
12,000
2018
$
Total
$
22,545
1,963
-
(6,171)
18,337
Total
$
31,071
-
-
(8,526)
22,545
2017
$
12.
EXPLORATION AND EVALUATION ASSETS
Non-Current
Costs carried forward in respect of areas of interest in:
Exploration and evaluation phases at cost
20,413,259
19,679,982
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
Transfer to Non current assets classified as held for sale
19,679,982
1,123,714
380,000
(128,920)
(641,517)
(727,328)
18,952,083
1,040,600
405,750
-
(718,451)
-
19,685,931
19,679,982
Exploration expenditure for the year was $1,503,714 (2017: $1,466,350). The majority of this
expenditure was on Mt Venn and the Kaoko Kobalt Project in Namibia. Exploration expenditure
written off for the year was $641,517 compared to $718,451 in the 2017 financial year. The main
write offs this year related to the Halls Creek, the Tsumkwe project in Namibia, the Goldfields
Alliance, non-essential Parker Range and Coolgardie areas as well as previously capitalised
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.
42
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
13.
TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors and accrued expenses
Creditors are non-interest bearing and settled on 30 to 45 day terms.
14.
PROVISIONS
Current
Provision for annual leave
Provision for long service leave
15.
CONVERTIBLE NOTES
Face value
Issue costs
- 7,300,000 options issued
- Consultancy costs settled in shares
Costs unwound during the period
Balance
2018
$
2017
$
251,248
78,000
329,248
146,167
58,524
204,691
64,464
12,750
77,214
86,268
17,338
103,606
730,000 -
(86,894) -
(44,400) -
71,582 -
670,288 -
On 14 December 2017, the Company announced the completion of a capital raising through the
issue of unsecured convertible notes via a Perth based portfolio management and corporate
advisory firm, Oracle Capital Group Pty Ltd (Oracle) to raise up to $750,000, through the issue of
up to 750,000 convertible notes, each with a face value of one dollar ($1.00). Oracle would also
be entitled to up to 10 options for each convertible note issued, exercisable at $0.06 on or before
31 December 2019. A total of 730,000 convertible notes were issued and 7,300,000 unquoted
options were issued on 8 January 2018.
The 7,300,000 unquoted options were valued at $86,864 based on the following assumptions:
Number of
Options
Fair Value at
Grant Date per
Option
Estimated
Volatility
Life of Option
(years)
Exercise Price
Share Price at
Grant Date
Risk Free
Interest Rate
7,300,000
$0.0119
67.5%
2
$0.06
$0.043
1.86%
Other key terms include:
(a) Maturity Date - 12 months from the date of issue
(b) Interest - 10% per annum. Only paid on redemption.
(c) Conversion Price - the lower of $0.047 or a 15% discount to the VWAP for the 5 trading days
prior to the Conversion Notice.
(d) Conversion prior to Repayment Date - the Company may convert all or any of the Notes
into Ordinary Shares at any time and at any frequency as at a date prior to the Repayment
Date by giving a Conversion Notice to the Noteholder.
(e) Conversion on Repayment Date - All outstanding Notes (excluding any Notes in respect of
which a Redemption Notice has been issued or a Conversion Notice has been issued) will
automatically convert into Ordinary Shares on the Repayment Date and the Company will
be deemed to have issued a Conversion Notice converting all outstanding Notes held by
the Noteholder at the Repayment Date.
(f) Security - the Convertible Notes are unsecured.
(g) Transferability and other restrictions - the Convertible Notes will only be
transferrable with the Company’s written consent.
43
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
16.
ISSUED CAPITAL
230,366,599 fully paid ordinary shares (2017:
186,191,608) with no par value
Movements in Ordinary Shares
2018
$
2017
$
29,963,658
27,712,676
30 June
2018
Number
30 June
2018
$
30 June
2017
Number
30 June
2017
$
Balance at the beginning of the
year
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
Issue of shares at $0.0403 each
Issue of shares at $0.0391 each
Issue of shares at $0.04098 each
Issue of shares at $0.05621 each
Issue of shares at $0.04 each
Issue of shares at $.06 each
Issue of shares at $0.054 each
Less: transaction costs
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
186,191,608
27,712,676 160,116,480
26,487,504
-
-
-
-
-
-
-
535,980
1,304,757
1,083,455
3,166,035
3,649,167
6,000,000
28,435,597
-
-
-
-
-
-
-
-
21,600
51,016
44,400
177,297
145,967
360,000
1,535,522
(84,820)
6,666,666
2,500,000
1,538,462
175,000
275,000
14,120,000
800,000
-
-
-
-
-
-
-
-
200,000
177,500
100,000
19,250
11,000
706,000
40,000
-
-
-
-
-
-
-
(28,578)
Balance at the end of the year
230,366,599
29,963,658 186,191,608
27,712,676
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
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.
Shares issued to a contractor, on 20 July 2017 and 3 November 2017 respectively, in lieu of
services provided.
Shares issued to consultants on 8 January 2018 in lieu of services provided.
Placement shares issued to Acuity Capital on 8 January 2018 under Controlled Placement
Deed.
Shares issued on the conversion of unquoted options on 8 January 2018.
Shares issued to the vendors and JV partner on 19 April 2018 as initial consideration for the
interest in the Kaoko Kobalt project.
Placement shares issued on 2 May 2018.
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.
44
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
16.
ISSUED CAPITAL (Cont’d)
At shareholders meetings each ordinary share is entitled to one vote in proportion to the paid up
amount of the share when a poll is called, otherwise each shareholder has one vote on a show
of hands.
Movements in Options over Ordinary Shares
Exercise Period
Exercise
Price
Number on
issue at 30
June 2017
Issued
during
the year
Exercised/
Expired/
Cancelled
Number on
issue at 30
June 2018
Quoted
On or before 21 August 2018
Unquoted
On or before 5 January 2018 (i)
On or before 22 August 2018
On or before 30 November 2018
On or before 22 August 2019
On or before 22 August 2019
On or before 22 August 2020
On or before 31 December 2019 (ii)
Total unquoted options
$0.11
18,913,847
-
-
18,913,847
$0.040
$0.150
$0.200
$0.180
$0.144
$0.216
$0.060
5,974,168
175,000
5,000,000
1,450,000
2,500,000
2,500,000
-
17,599,168
-
-
-
-
-
-
7,300,000
7,300,000
(5,974,168)
-
-
-
-
-
-
(5,974,168)
-
175,000
5,000,000
1,450,000
2,500,000
2,500,000
7,300,000
18,925,000
(i)
(ii)
3,649,167 options were converted on or before their expiry date with 2,325,001 options expirying
on 5 January 2018.
Issued on 8 January 2018 as part of the issue of convertible note announced on 14 December
2017. Approved by shareholders at a general meeting held on 13 March 2018.
Unquoted options are issued to 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.
Capital risk management
The Board controls the capital of the Group in order to provide the shareholders with adequate
returns and ensure that the Group can fund its operations and continue as a going concern. The
Group’s capital includes ordinary share capital. There are no externally imposed capital
requirements.
The working capital position of the Group at 30 June 2018 and 30 June 2017 are as follows:
Par
Cash and cash equivalents
Trade and other receivables
Financial assets
Current liabilities
Working capital position
2018
$
1,474,219
221,711
245,456
(1,103,142)
838,244
2017
$
723,262
219,622
143,745
(281,906)
804,725
45
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
17. OPTION RESERVE
Opening balance
Equity based payments
Transfers to accumulated losses
Closing balance
2018
$
2017
$
218,304
86,894
-
305,198
115,744
218,304
(115,744)
218,304
This reserve is used to record the value of equity benefits provided to employees and directors
as part of their remuneration and for the value of equity benefits provided to vendors in respect
of asset purchases.
18. ACCUMULATED LOSSES
Opening balance
Net loss attributable to members
Transfers from option reserve
Closing balance
19.
FINANCIAL RISK MANAGEMENT
(7,383,010)
(1,472,389)
-
(8,855,399)
(6,071,442)
(1,427,312)
115,744
(7,383,010)
The Group’s principal financial instruments comprise receivables, payables, held-for-trading
investments, cash and short-term deposits.
The Board of Directors has overall responsibility for the oversight and management of the Group’s
exposure to a variety of financial risks (including fair value interest rate risk, credit risk, liquidity risk
and cash flow interest rate risk).
The Group’s overall risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the Group.
Interest rate risks
The Group’s exposure to market interest rates relates to cash deposits held at variable rates. The
Board constantly analyses its interest rate exposure. Within this analysis consideration is given to
potential renewals of existing positions.
Credit risk
The maximum exposure to credit risk at balance date is the carrying amount (net of provision of
doubtful debts) of those assets as disclosed in the Statement of Financial Position and notes to the
financial statements. The Consolidated group has adopted a policy of only dealing with
creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of
mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its
counterparties are continuously monitored and the aggregate value of transactions concluded
is spread amongst approved counterparties.
Credit risk related to balances with banks and other financial institutions is managed by the
board. The board’s policy requires that surplus funds are only invested with counterparties with
a Standard & Poor’s rating of at least A+. All of the Group’s surplus funds are invested with AA
and A+ Rated financial institutions, the amount is $1,474,219 (2017: $723,262).
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.
46
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
19. FINANCIAL RISK MANAGEMENT (Cont’d)
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 2018 and 30 June
2017:
30 June 2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets – held for trading
Floating
Interest
Rate
$
1,474,019
-
-
1,474,019
Fixed
Interest
maturing
in 1 year
or less
$
-
26,306
-
26,306
Non-
interest
bearing
2018
Total
$
$
200
221,711
245,456
467,367
1,474,219
248,017
245,456
1,967,692
Weighted average effective interest rate
0.69%
Financial Liabilities
Trade and other payables
30 June 2017
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets – held for trading
-
-
-
-
329,249
329,249
329,249
329,249
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
-
-
204,691
204,691
204,691
204,691
47
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
19. 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
2018
2017
Carrying
Amount
$
1,474,219
248,017
245,456
1,967,692
329,249
329,249
Net fair
Value
$
1,474,219
248,017
245,456
1,967,692
329,249
329,249
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
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
220.
EARNINGS PER SHARE
a)
Reconciliation of earnings to profit or loss:
2018
$
14,740
(14,740)
14,740
(14,740)
2017
$
7,231
(7,231)
7,231
(7,231)
Loss for the year
Loss used to calculate basic and diluted EPS
(1,472,564)
(1,472,564)
(1,427,312)
(1,427,312)
48
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
20.
EARNINGS PER SHARE (Cont’d)
2018
No. of Shares
2017
No. of Shares
b) Weighted average number of ordinary shares
outstanding during the year used in calculating
basic EPS
197,076,315
171,443,575
Weighted average number of dilutive options
outstanding
-
-
Weighted average number of ordinary shares
outstanding during the year used in calculating
dilutive EPS
21.
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
Shares acquired on sale of tenement
Finance costs on convertible note
Net Profit on sale of exploration assets
Employee & Consultant equity settled
transactions
Fair value adjustment to investments
Exploration write-off
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
197,076,315
171,443,575
2018
$
2017
$
(1,472,564)
(1,427,577)
6,171
(5,471)
(100,000)
71,582
(20,000)
-
5,399
641,517
8,526
-
-
-
(52,500)
106,536
119,823
718,451
(104,811)
(14,841)
150,949
(942,178)
(4,579)
(1,057,091)
Cash outflow from operations
(1,769,406)
(1,603,252)
22. 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
$
662,003
1,446,684
715,568
2,824,255
$
542,725
975,446
815,526
2,333,697
49
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
22. COMMITMENTS (Cont’d)
The Group currently 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.
23. 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
Kunene North Pty Ltd
24. OPERATING SEGMENTS
Country of Incorporation Percentage Owned
2017
2018
Australia
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%
100%
80%
100%
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.
50
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
24.
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.
2018
Exploration
$
Unallocated
$
Total
$
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
Non current assets held for sale
Property, plant & equipment
Segment liabilities
51,080
51,080
4,404
63,381
67,785
4,404
114,461
118,865
(590,436)
-
(882,128)
6,171
(1,472,564)
6,171
641,517
-
20,413,259
19,685,931
727,328
-
26,272
-
-
2,087,189
-
-
18,337
1,076,870
641,517
-
22,5001,448
19,685,931
727,328
18,337
1,103,142
2017
Exploration
$
Unallocated
$
Total
$
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
Non current assets held for sale
Property, plant and equipment
Segment liabilities
-
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
25.
EVENTS SUBSEQUENT TO REPORTING DATE
Since 30 June 2018, 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.
26. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
As announced on 26 March 2018, the Company acquired an option to earn the rights to a 95%
interest in the Kaoko Kobalt Project (‘Kaoko Project’) in Namibia. The following contingent liabilities
remain at 30 June 2018:
51
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
26. CONTINGENT LIABILITIES AND CONTINGENT ASSETS (Cont’d)
Under the KDN JV:
Kunene North Pty Ltd can earn further equity in Philco and the Kaoko Project as follows:
i) Spending N$1 million (~A$90,000) by 15 March 2019 to earn a further 25% in Philco (76%
total)
ii)
iii)
Spending N$2 million (~A$180,000) by 18 November 2020 to earn a further 19% in Philco
(95% total)
KDN JV’s partner’s remaining 5% free carried to a definitive feasibility study and to be
NEEEF compliant (governmental draft “New Equitable Economic Empowerment
Framework”)
Under the Kunene Purchase Agreement:
The Company acquired 100% of the issued capital of Kunene, and therefore its rights under the
KDN JV, and has the following commitments outstanding:
iv) Issue 10.5 million CAZ fully paid shares upon the delineation of a JORC compliant mineral
resource containing at least 10,000t of contained cobalt (or other metal equivalent)
v)
Pay A$1 million (or issuing fully paid CAZ shares to that amount) upon a formal Decision
to Mine
27.
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
2018
$
2017
$
1,794,040
2,709,585
938,980
2,936,118
4,503,625
3,875,098
1,103,118
-
281,881
-
1,103,118
281,881
29,963,657
27,712,676
305,198
(26,868,348)
218,304
(24,337,763)
3,400,507
3,593,217
(2,530,595)
(1,639,045)
(2,530,585)
(1,639,045)
52
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2018
27.
PARENT ENTITY DISCLOSURES (Cont’d)
Loans to Controlled Entities
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.
28.
SHARE BASED PAYMENTS
The following table illustrates the number and weighted average exercise prices of and
movements in all options on issue during the year:
2018
2017
Number of
Options
Weighted
Ave Exercise
Price $
Number of
Options
Weighted
Ave Exercise
Price $
36,513,015
0.123
6,515,834
0.116
0.040
-
0.060
0.124
(5,974,168)
-
7,300,000
37,838,847
37,838,847
(3,600,000)
(275,000)
33,872,181
36,513,015
36,513,015
0.178
0.040
0.130
0.123
Balance at beginning of reporting
period
Expired during the year
Exercised during the year
Issued during the year
Balance at end of reporting period
Exercisable at end of reporting
period
The options outstanding at 30 June 2018 had a weighted average remaining life of 0.68 years (2017 – 1.32
years). The weighted average fair value of the options outstanding at 30 June 2018 was $0.008 (2017 -
$0.006).
Refer Note 15 for details of options issued during the year, which were in connection with the
convertible notes issued.
53
DIRECTORS’ DECLARATION
Cazaly Resources Limited Annual Report 2018
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 2018 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,
26 September 2018
54
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 2018, 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 2018 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 $1,472,564 during the year ended 30 June 2018. 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 this
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 –
$19,685,931
(Refer to Notes 1(d) and 12)
Exploration and evaluation expenditure is a key
audit matter due to:
− The significance of the balance to the
Consolidated Entity’s financial position.
Our procedures included, amongst others:
− We assessed management’s determination of its
areas of interest for consistency with the
definition in AASB 6. This involved analysing the
tenements in which the Group holds an interest
and the exploration programmes planned for
those tenements;
− We assessed the Consolidated Entity’s rights to
− The level of judgement required in evaluating
tenure for a sample of tenements;
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.
− 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 verified the acquisition of tenements to the
acquisition agreement and verified the
consideration paid;
− The assessment of impairment of exploration
and evaluation expenditure being inherently
difficult.
− We considered the activities in each area of
interest to date and assessed the planned future
activities;
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Key audit matter
How our audit addressed the key audit matter
− 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;
− 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.
Convertible Notes – $670,288
Our procedures amongst others included:
As disclosed in Note 15 to the financial statements,
the Consolidated Entity issued 730,000 convertible
notes and 7,300,000 unquoted options. As at 30
June 2018 the balance of the convertible note
liability was $670,288.
Convertible Notes are considered to be a key audit
matter due to:
−
the value of the balance; and
−
the complexities involved in the recognition and
measurement of convertible financial instruments
and associated transaction costs.
− analysing the agreement to identify the key
terms and conditions for each convertible note;
− verification of the funds received from the issue
of convertible notes during the year;
− assessing the accounting treatment of the
financial instruments in accordance with the
recognition and measurement as well as the
disclosure requirements of the relevant
Australian Accounting Standards;
− evaluating management’s option valuations and
assessing the assumptions and inputs used; and
− assessing the calculation including relevant
amortisation of finance costs for the year.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
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 2018, 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.
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.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
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.
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 2018.
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.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Auditor’s Opinion
In our opinion, the Remuneration Report of the Company, for the year ended 30 June 2018, complies with
section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
DOUG BELL CA
Partner
Dated at Perth this 26th day of September 2018
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2018
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 14 September 2018.
DETAILS OF HOLDERS OF EQUITY SECURITIES
ORDINARY SHAREHOLDERS
There are 230,366,599 fully paid ordinary shares on issue, held by 2,455 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 14 SEPTEMBER 2018)
Ordinary Shareholders
Kingsreef Pty Ltd (NB & DL Family A/C)
Widerange Corporation Pty Ltd
Clive Jones
Acuity Capital Investment Management
Kingsreef Pty Ltd
New Page Investments Ltd
Nathan McMahon
Thomas Francis Corr
J P Morgan Nominees Australia
Maincoast Pty Ltd
Mr R W Patek & Mrs M H Patek (RWP Super Fund)
Anthony Ramage
Buckland Capital Pty Ltd (D Millar S/F)
Mr P D Sheppeard & Mrs S F Sheppeard (Sheppeard Family S/F)
Citicorp Nominees Pty Ltd
Mr C W Chalwell & Mrs J R Chalwell (Chalwell Pension Fund)
GGDT Developments Pty Ltd
HSBC Custody Nominees (Australia) Ltd
Sequoi Nominees Pty Ltd
KDN Geo Consulting CC
Fully Paid Ordinary
Number
Percentage
13,655,967
7,333,647
6,646,256
5,000,000
4,897,299
4,828,517
4,793,755
4,375,500
3,989,295
3,533,849
3,400,000
3,200,000
3,000,000
2,821,000
2,805,836
2,500,000
2,500,000
2,320,246
2,000,000
2,000,000
5.9%
3.2%
2.9%
2.2%
2.1%
2.1%
2.1%
1.9%
1.7%
1.5%
1.5%
1.4%
1.3%
1.2%
1.2%
1.1%
1.1%
1.0%
0.9%
0.9%
85,601,167
37.2%
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
61
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2018
(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 1,406 shareholders who hold less than a marketable parcel of shares.
STOCK EXCHANGE INFORMATION
DISTRIBUTION OF SHARE HOLDERS (AS AT 14 SEPTEMBER 2018)
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
139,975
1,800,107
3,013,548
31,967,637
193,445,332
230,366,599
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
28,772,022
15,329,904
12.49%
6.65%
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.
62
ADDITIONAL SHAREHOLDER INFORMATION
Cazaly Resources Limited Annual Report 2018
INTEREST IN MINING TENEMENTS AS AT 14 SEPTEMBER 2018
TID
PROJECT
ENTITY
% INT
TID
PROJECT
ENTITY
% INT
Not
Managed
E31/1019
E31/1020
M31/0427
E37/1037
M47/1450
M80/0247
E39/1837
P26/4297
E80/4808
CAROSUE
CAROSUE
CAROSUE
TEUTONIC BORE
HAMERSLEY
MT ANGELO
MT WELD
KALGOORLIE EAST
MCKENZIE SPRINGS
CAZR
CAZR
CAZR
SAMR
LOFE
CAZR
CAZR
CAZR
SAMR
10
10
10
100
49
20
100
100
100
Managed
E77/1403
L77/0220
L77/0228
L77/0229
M77/0741
M77/0742
M77/0764
P77/4162
P77/4164
P15/6010
P15/6014
P15/6015
P15/6016
P15/6019
P15/6020
P15/6021
P15/6022
E38/3111
E38/3150
EPM26213
EL 8483
E09/2267 *
Czech Rep *
Czech Rep *
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
PARKER RANGE
GLIA
GLIA
GLIA
GLIA
GLIA
GLIA
GLIA
GLIA
MOUNT VENN
MOUNT VENN
MOUNT TABOR (QLD)
BUNGONIA (NSW)
KURABUKA CREEK
Horní Věžnice
Brzkov II
Namibia
EPL 6667
* – application
CAZI
CAZI
CAZI
CAZI
CAZI
CAZI
CAZI
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
SAMR
YAMW
YAMW
SAMR
CAZR
SAMR
Discovery
Discovery
Kunene
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
80
51
63