Chesser Resources Limited
ABN 14 118 619 042
Annual Report
for the year ended 30 June 2016
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Contents
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditors Report
Shareholder Information
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report
The directors of Chesser Resources Limited (the “Company”) submit herewith the annual report of the Company
and the entities it controlled for the financial year ended 30 June 2016. In order to comply with the provisions
of the Corporations Act 2001, the directors report as follows.
Directors and Company Secretary
The following persons were directors of Chesser Resources Limited during the whole of the year under review
and up to the date of this report, unless otherwise stated:
Mr Simon O’Loughlin, Non-Executive Chairman
Mr Simon Taylor, Non-Executive Director
Mr Stephen Kelly, Executive Director
Mr Gabriel Radzyminskiy, Non-Executive Director (resigned 11 March 2016)
Mr Frank Terranova, Non-Executive Director (resigned 15 October 2015)
Mr Philip Amery, Non-Executive Director (resigned 15 October 2015)
Mr Simon O'Loughlin, BA(Acc) (Non-Executive Chairman)
Mr O’Loughlin is the founding member of O’Loughlins Lawyers, an Adelaide based medium sized specialist
commercial law firm. For many years he has practiced both in Sydney and Adelaide, in the corporate and
commercial fields with, in more recent times, a particular focus on the resources sector. He also holds
accounting qualifications. He is the Chairman of Lawson Gold Limited and a Non-Executive Director of WCP
Resources Limited and Goldminex Ltd.
Mr O’Loughlin has extensive experience and involvement with companies in the small industrial and resources
sectors. He has also been involved in the listing and back-door listing of numerous companies on the ASX and
National Stock Exchanges. He is a former Chairman of the Taxation Institute of Australia (SA Division) and
Save the Children Fund (SA Division).
Former directorships in last 3 years
In the last 3 years he has been a director of Oncosil Ltd, Aura Energy Ltd, Reproductive Health Science Ltd and
Kibaran Resources Ltd.
Mr Simon Taylor, BSc(Geology), MAIG, GCertAppFin (Finsia) (Non-Executive Director)
Mr Taylor is a geologist with 20 years’ experience throughout Australia and overseas having held senior
geologist and exploration manager positions for numerous ASX listed resource companies. He has gained
considerable experience in exploration, project assessment and joint venture negotiations. His experience
includes providing consulting services to resource companies and financial corporations as a resource analyst.
Mr Taylor’s corporate experience includes project appraisal, advice on placements and fundraising. He is a
member of the Australian Institute of Geoscientists and is the Managing Director of Oklo Resources Limited
and Non-Executive Director of TW Holdings Limited.
Former directorships in last 3 years
King Solomon Mines Limited and Aguia Resources Limited.
Mr Stephen Kelly, B.Bus, ACA (Executive Director, Company Secretary and Chief Financial Officer)
Mr Kelly was appointed as the Company Secretary and Chief Financial Officer of the Company on 15 November
2012. A qualified Australian Chartered Accountant, Mr Kelly was previously Chief Financial Officer at Allied
Gold Mining PLC. He has more than 25 years’ international experience in the areas of external and internal
audit, risk management and compliance, treasury and corporate finance across a range of industry sectors
including mining, infrastructure, property development and banking and finance.
Former directorships in last 3 years
Nil
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
Interests in the shares and options of the Company
As at the date of this report, the interests of the directors in the shares and options of Chesser Resources Ltd
were:
Mr Simon O’Loughlin
Mr Simon Taylor
Mr Stephen Kelly
Number of Ordinary
Shares#
812,500
1,500,000
-
Number of Options over
Ordinary Shares#
-
-
600,000
# Includes shares in which the Director has an indirect interest through associated entities.
Meetings of Directors
The number of meetings of the Company’s board of directors and each board committee held during the year
ended 30 June 2016, and the numbers of meetings attended by each director were as follows:
Number of meetings held
F Terranova (resigned 15 October 2015)
S Taylor
S O'Loughlin
P Amery (resigned 15 October 2015)
G Radzyminski (resigned 11 March 2016)
S Kelly
Board Meetings
6
Number of
meetings
eligible to
attend
3
6
6
3
5
6
Number of
meetings
attended
3
6
6
3
5
6
The full Board fulfilled the roles of the Audit, Risk and Compliance Committee during the financial year.
Dividends
No dividends were paid or declared since the start of the financial period to the date of this report. No
recommendation for payments of dividends has been made.
Principal activities
The significant activities undertaken by the Company during the half-year are summarised below.
Equal Access Buy-Back
On 4 September 2015, the Company’s Shareholders approved the implementation of the 3.43 cent per share
Equal Access Buy Back (EABB).
The EABB closed on 6 October 2015 with acceptances received from shareholders for 101,673,563 shares.
On 15 October 2015 the Company made payments totalling $3,487,404 to Shareholders to complete the Equal
Access Buy Back process.
Farm In Agreement for the Kurnalpi Nickel Project
On 15 October 2015, the Company announced that it had executed a Binding Agreement Letter (Agreement)
with Mithril Resources Ltd (ASX: MTH) to earn up to an 80% interest in two tenements (EL28/2506 and
PL28/1271) located at Kurnalpi, approximately 60 kilometres north east of Kalgoorlie.
The Kurnalpi Project tenements are wholly-owned by Mithril and cover Archaen ultramafic / mafic sequences
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
which are prospective for both nickel sulphide and lode gold mineralisation.
The terms of the farm-in agreement are as follows:
Chesser has reimbursed Mithril its tenement acquisition costs amounting to $17,389.
Chesser can earn an initial 51% interest in EL28/2506 and PL28/1271 by completing expenditure of
$150,000 over 2 years.
Chesser can elect to earn an additional 29% interest through further expenditure of $100,000 over a
further 2 years (in total 80% by spending $250,000 over 4 years).
Once Chesser has earnt its 80% interest, Mithril has the right to contribute on a pro rata basis or dilute
as per industry standard formula. If Mithril’s interest dilutes below 10% it will be deemed to have
withdrawn and will be entitled to receive a 1.5% Net Smelter Royalty on all minerals.
Chesser is required to keep the tenements in good standing at all times and can withdraw from the
Agreement with 30 days’ notice provided the tenements are in good standing.
Operating result
The Group’s loss after providing for income tax amounted to $452,925 (2015: Profit $18,987,687). Included in
the operating loss for the financial year was a profit from discontinued operations of $Nil (2015: Profit from
discontinued operations of $20,276,328). The discontinued operations in the prior period comprised the
disposal of the Company’s ownership interests in the Kestanelik, Catak and Sisorta Gold Projects and the
disposal of the Company’s Turkish subsidiaries.
Matters subsequent to the end of the financial year
There has been no matter or circumstance has arisen since the end of the financial year that has significantly
affected, or may significantly affect the Group’s operations, the result of those operations or the Group’s state
of affairs.
Likely developments and expected results of operations
In addition to the Company’s investment in the Mithril JV, the Chesser Board is continuing to review other
investment opportunities that are available to the Company. The focus of this review is to identify investment
opportunities that meet the Company’s investment criteria and is not restricted to specific sectors or industries.
Environmental regulation
The Company was not subject to any significant environmental regulation under a law of the Commonwealth
or of a State or Territory of Australia.
Tenements
As at 30 June 2016 the Group did not have any interests in mining tenements.
Significant changes in state of affairs
Other than as disclosed in this report and the accompanying financial report, there were no other significant
changes in the Group’s state of affairs during the course of the financial year.
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
Shares under Option
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Grant
Date
Vest Date
Expiry
Date
Exercise
Price
Number
of options
14/12/2012
14/12/2012 13/12/2016
500,000
$0.50
14/12/2012
14/12/2012
14/12/2012 13/12/2016
14/12/2012 13/12/2016
1,000,000
1,500,000
$0.55
$0.60
14/12/2012
14/12/2012
14/12/2012 13/12/2016
14/12/2012 13/12/2016
1,000,000
1,000,000
$0.65
$0.70
14/12/2012
01/2/2013
14/12/2012 13/12/2016
01/02/2013 31/01/2017
$0.75
$0.35
1,000,000
200,000
01/2/2013
01/02/2014 31/01/2017
01/2/2013
01/02/2015 31/01/2017
20/10/2014
20/10/2014 31/12/2016
$0.40
$0.45
$0.26
200,000
200,000
500,000
7,100,000
Shares issued as a result of the exercise of options
No shares were issued during the financial year as a result of the exercise of options.
Remuneration Report
(a) Policy for determining the nature and amount of key management personnel remuneration
The Board of Chesser Resources Limited is responsible for determining and reviewing compensation
arrangements for the Directors, Managing Director and the Executive Team. The Board’s remuneration policy
is to ensure that the remuneration package properly reflects the person’s duties and responsibilities, with the
overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and
executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms.
It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost
to the Group. In accordance with best practice corporate governance, the structure of non-executive director
and executive remuneration is separate and distinct.
(i) Non-Executive Director Remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Group with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
Remuneration of non-executive directors is determined by the Board, within the maximum amount approved
by the shareholders from time to time (currently set at an aggregate of $400,000 per annum). The Board
intends to undertake an annual review of its performance and the performance of the Board committees
against goals set at the start of the year.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is
apportioned amongst directors is reviewed annually. The Board considers the fees paid to non-executive
directors of comparable companies when undertaking the annual review process.
Each non-executive director receives a fee for being a director of the Group. Non-Executive Directors receive
an annual fee of $40,000 inclusive of superannuation.
Directors who are called upon to perform extra services beyond the director’s ordinary duties may be paid
additional fees for those services. During the financial year Mr Simon Taylor received additional fees totalling
$11,000 for services provided in relation to the management of the Company’s participation in the Kurnalpi
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
Joint Venture and services provided in relation to the assessment of investment opportunities in the resources
sector.
(ii) Senior Executive Remuneration
Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their position
and responsibilities within the Group so as to:
Reward executives for Group and individual performance against agreed targets;
Align the interest of executives with those of shareholders;
Link reward with the strategic goals and performance of the Group; and
Ensure total remuneration is competitive by market standards.
Structure
In determining the level and make-up of executive remuneration, the Board has had regard to market levels
of remuneration for comparable executive roles. It is the Board’s policy that employment contracts are entered
into with all senior executives.
(iii) Variable Remuneration – Short and Long Term Incentives
Objective
The objectives of the incentives plan are to:
Recognise the ability and efforts of the employees of the Group who have contributed to the success of
the Group and to provide them with rewards where deemed appropriate;
Provide an incentive to the employees to achieve the long term objectives of the Group and improve the
performance of the Group; and
Attract persons of experience and ability to employment with the Group and foster and promote loyalty
between the Group and its employees.
Structure
Long term incentives granted to senior executives are delivered in the form of options in accordance with an
Employee Share Option Plan. As part of the Group’s annual strategic planning process, the Board and
management agree upon a set of financial and non-financial objectives for the Group. The objectives form the
basis of the assessment of management performance and vary but are targeted directly to the Group’s business
and financial performance and thus to shareholder value.
(b) Remuneration, Group performance and shareholder wealth
The development of remuneration policies and structures is considered in relation to the effect on Group
performance and shareholder wealth. They are designed by the Board to align Director and Executive
behaviour with improving Group performance and ultimately shareholder wealth.
The Board considers at this stage in the Group’s development, that share price growth itself is an adequate
measure of total shareholder return.
Executives are currently remunerated by a combination of cash base remuneration and options. The options
granted are considered by the Board to provide an alignment between the employees and shareholders
interests.
The table below shows for the current financial year and previous four financial years the total remuneration
cost of the key management personnel, earnings per ordinary share (EPS), dividends paid or declared, and
the closing price of ordinary shares on ASX at year end.
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
Financial Year
2016
2015
2014
2013
2012
Total
Remuneration
$
202,546
1,282,075
1,182,962
1,845,018
832,632
EPS
(Cents)
(0.31)
8.59
(3.27)
(2.72)
(2.16)
Dividends
(Cents)
Share Price
(Cents)
-
-
-
-
-
3.2#
3.4#
12
10
30
# The share price at 2016 and 2015 reflects the impact of the capital return of 15 cents per share made by the
Company in December 2014.
Given the stage of the Company’s development and the fact that it does not currently have any revenue
producing operations, the Board does not consider EPS or dividends paid or declared to be meaningful
measures for assessing executive performance.
Key management personnel
The following persons were key management personnel of the Group during the financial year (unless noted
otherwise the persons listed were key management personnel for the whole of the financial year):
Name
Simon O’Loughlin
Simon Taylor
Stephen Kelly
Frank Terranova
Philip Amery
Gabriel Radzyminski
Position Held
Non-Executive Director
Non-Executive Director
Executive Director, CFO and Company Secretary
Non-Executive Chairman (resigned 15 October 2015)
Non-Executive Director (resigned 15 October 2015)
Non-Executive Director (resigned 11 March 2016)
The Company has entered into a Consultancy Agreement with KCG Advisors Pty Ltd pursuant to which Mr
Kelly was engaged to provide Chief Financial Officer and Company Secretarial services to the Company
effective from 11 May 2015. The key terms of the Agreement are:
KCG Advisors Pty Ltd to receive $225 per hour, exclusive of GST, for services provided by Mr Kelly.
Unless otherwise agreed between the parties, a monthly cap of $6,500, exclusive of GST, will apply to
payments to KCG Advisors Pty Ltd; and
The Agreement may be terminated by either party at any time on the giving of not less than one month’s
notice in writing.
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
(c) Details of remuneration
Compensation paid, payable or provided by the Group or on behalf of the Group, to key management personnel
is set out below. Key management personnel include all Directors of the Group and certain executives who, in
the opinion of the Board and Managing Director, have authority and responsibility for planning, directing and
controlling the activities of the Group directly or indirectly.
2016
Cash
salary and fees
Total
remuneration
Proportion of
remuneration
that is
performance
based
$
Superannuation
$
$
%
Non-Executive Directors
Frank Terranova (resigned 15 October 2015)
6,260
Simon O’Loughlin
Simon Taylor
Phillip Amery (resigned 15 October 2015)
Gabriel Radzyminski (resigned 11 March
2016)
Total Non-Executive Directors
Executive Directors
Stephen Kelly
Total Executive Directors
Total Key Management Personnel
Compensation
36,200
47,200
5,160
21,041
115,861
78,000
78,000
595
3,800
3,800
490
-
8,685
-
-
6,855
40,000
51,000
5,650
21,041
124,546
78,000
78,000
-
-
-
-
-
-
-
193,861
8,685
202,546
During the financial year Mr Simon Taylor received additional fees totalling $11,000 for services provided in
relation to the management of the Company’s participation in the Kurnalpi Joint Venture and services provided
in relation to the assessment of investment opportunities in the resources sector.
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
2015
Name
Non-Executive Directors
Frank Terranova
Simon O’Loughlin
Simon Taylor
Phillip Amery
Gabriel Radzyminski
Robert Reynolds
Peter Lester
Morrice Cordiner
Total Non-Executive Directors
Executive Directors
Richard Valenta
Stephen Kelly
Total Executive Directors
Other Key Management Personnel
Nigel Ricketts
Total Other Key Management Personnel
Total Key Management Personnel
Compensation
Short-term employee
benefits
Post-
employment
benefits
Total
Cash
payments
Share-
based
payments
Termination
Benefits
Super-
annuation
Options(1)
Total
remunerati
on
Proportion of
remuneration
that is
performance
based(2)
$
$
$
$
$
%
Cash
Bonuses(3)
$
-
-
-
-
-
-
-
-
-
Cash
salary
and fees
$
5,000
36,667
36,667
4,167
4,167
36,747
24,641
24,641
172,697
165,846
263,564
429,410
62,960
62,960
40,000
75,000
115,000
50,000
50,000
327,989
19,282
347,271
-
-
-
-
-
-
-
-
-
-
-
463
3,392
3,392
385
385
3,399
2,279
2,279
15,974
19,638
33,706
53,344
11,036
11,036
5,463
40,059
40,059
4,552
4,552
40,146
26,920
26,920
188,671
553,474
391,551
945,025
123,996
123,996
-
-
-
-
-
-
-
-
-
-
6,883
6,883
17,500
17,500
5,463
40,059
40,059
4,552
4,552
40,146
26,920
26,920
188,671
553,474
398,434
951,908
141,496
141,496
-
-
-
-
-
-
-
-
-
7%
19%
35%
665,067
165,000
347,271
80,354
1,257,692
24,383
1,282,075
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
(d) Share-based compensation
Details of options over ordinary shares in the Group provided as remuneration to each director of Chesser
Resources Limited and each of the key management personnel of the parent entity and the Group are set out in
section (e) below. When exercisable, each option is convertible into one ordinary share of Chesser Resources
Limited.
There were no grants of options that affected remuneration in the current or will affect remuneration in a future
reporting period.
Options are granted to attract, retain and incentivise key management personnel.
The board has rules that contain restrictions on removing the ‘at risk’ aspect of the options granted to executives.
Executives may not enter into any transactions designed to remove the ‘at risk’ aspect of an instrument before it
vests.
There are no performance hurdles attaching to the options granted other than service vesting conditions. In the
event of termination (specified circumstances) only vested options are entitled to be exercised. Unvested options
are forfeited.
There were no changes during the financial year in options over ordinary shares in the Group provided as
remuneration to each director of Chesser Resources Limited and each of the key management personnel of the
group. During the year ended 30 June 2015, 500,000 options were issued to persons who ceased to be key
management personnel.
The assessed fair value at grant date of options granted to the individuals is allocated equally over the period from
grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at grant date
are independently determined using a Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk-free interest rate for the term of the option.
Shares provided on exercise of remuneration options
No shares were issued as a result of the exercise of options during the year.
(e) Unlisted option holdings
The numbers of options over ordinary shares in the Company held during the financial year by each director and
each key management person of the Group, including their personally related parties, are set out below:
2016
Name
Balance at
start of
year
Granted
as
compen-
sation
Ceasing to be
a key
management
person
Balance
at end of
the year
Vested
and
exercise-
able
Exercised
Unvested
Directors of Chesser Resources Limited
F Terranova
-
S Taylor
-
S O'Loughlin
-
G Radzyminski
P Amery
S Kelly
-
-
-
-
-
600,000
600,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
600,000
600,000
-
-
-
-
-
600,000
600,000
-
-
-
-
-
-
-
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
2015
Name
Balance at
start of
year
Granted
as
compen-
sation
Ceasing to be
a key
management
person
Balance
at end of
the year
Vested
and
exercise-
able
Exercised
Unvested
Directors of Chesser Resources Limited
F Terranova
-
-
S Taylor
-
-
S O'Loughlin
-
-
G Radzyminski
-
P Amery
-
S Kelly
600,000
R Valenta
-
R Reynolds
2,000,000
P Lester
2,000,000
M Cordiner
2,000,000
Other key management personnel of the Group
N Ricketts
-
-
-
-
-
-
-
6,600,000
500,000
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,000,000)
(2,000,000)
(2,000,000)
-
-
-
-
-
600,000
-
-
-
-
-
-
-
-
-
600,000
-
-
-
-
(500,000)
(6,500,000)
-
600,000
-
600,000
-
-
-
-
-
-
-
-
-
-
-
-
(f) Share holdings
The number of shares in the Company held during the financial year by each director of Chesser Resources Ltd
and other key management personnel of the Group, including their personally related parties, are set out below.
There were no shares granted during the reporting period as compensation (2015: nil).
Balance at the
start of the
year
2016
Shares held on
appointment as
key
management
personnel
Purchases /
(disposals)
during the year
Shares held on
ceasing to be
key
management
personnel
Balance at
the end of the
year
Directors of Chesser Resources Limited
Ordinary shares
F Terranova
S Taylor
S O'Loughlin
G Radzyminski
P Amery
S Kelly
N Ricketts
3,000,000
1,500,000
1,625,000
43,979,000
-
1,268,319
-
-
-
-
-
-
(3,000,000)
-
(812,500)
(17,000,000)
-
(1,268,319)
-
-
-
(26,979,000)
-
Other key management personnel of the Group
-
51,372,319
-
-
-
(22,080,819)
-
(26,979,000)
-
1,500,000
812,500
-
-
-
-
2,312,500
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Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
Balance at the
start of the
year
2015
Shares held on
appointment as
key
management
personnel
Purchases /
(disposals)
during the year
Shares held on
ceasing to be
key
management
personnel
Balance at
the end of the
year
Directors of Chesser Resources Limited
Ordinary shares
F Terranova
S Taylor
S O'Loughlin
G Radzyminski
P Amery
S Kelly
R Reynolds
R Valenta
P Lester
M Cordiner
N Ricketts
-
1,500,000
1,625,000
-
-
1,181,818
2,372,728
3,065,000
200,000
807,773
13,300,000
-
-
43,979,000
832,577
-
-
-
-
-
(10,300,000)
-
-
-
(832,577)
86,501
-
-
-
-
-
-
-
-
-
(2,372,728)
(3,065,000)
(200,000)
(807,773)
3,000,000
1,500,000
1,625,000
43,979,000
-
1,268,319
-
-
-
-
Other key management personnel of the Group
-
10,752,319
-
58,111,577
-
(10,746,076)
-
(6,445,501)
-
51,372,319
No shares were received by key management personnel on the exercise of options during the year.
(i) Loans to key management personnel
There were no loans to key management personnel at any time during the financial year.
(j) Other transactions with key management personnel
There were no other transactions with key management personnel.
(k) Voting and comments made at the Company’s 2015 Annual General Meeting
The Company received more than 97% of “yes” votes on its remuneration report for the financial year ended 30
June 2015. The Company did not receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
End of Remuneration Report
Insurance of officers
To the extent permitted by law, the Company has indemnified (fully insured) each director and the secretary of the
Company. The liabilities insured include costs and expenses that may be incurred in defending civil or criminal
proceedings (that may be brought) against the officers in their capacity as officers of the Company or a related
body, and any other payments arising from liabilities incurred by the officers in connection with such proceedings,
other than where such liabilities arise out of conduct involving a willful breach of duty by the officers or the improper
use by the officers of their position or of information to gain advantage for themselves or someone else or to cause
detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance
against legal costs and those relating to other liabilities.
Proceedings on behalf of the Group
The Group is not aware that any person has applied to the court under section 237 of the Corporations Act 2001
for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings in which the Group is a
13 | P a g e
Chesser Resources Limited
Annual Report for the year ended 30 June 2016
Directors’ report (continued)
party, for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the court under section
237 of the Corporations Act 2001.
Non-audit Services
The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Group and/or the Group are important. No non-audit assignments
were engaged with the auditor during the year (2015: none)
Non-audit services
Pitcher Partners
Tax advice services
Tax compliance services
Total remuneration for non-audit services
2016
$
2015
$
-
-
-
-
-
-
Details of the amounts paid or payable to the auditor, Pitcher Partners for audit services provided during the year
are set out in note 17 to the financial report.
Auditor's Independence Declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is
attached to this report.
Auditor
Pitcher Partners continues in office in accordance with section 327 of the Corporations Act 2001.
Rounding of amounts in accordance with ASIC Corporations (Rounding in Financial / Directors’ Reports)
Instrument 2016/191
The amounts in the Directors’ report and in the financial report have been rounded to the nearest dollar.
This report is made in accordance with a resolution of directors.
__________________________________
Stephen Kelly,
Executive Director
Brisbane, 30 September 2016
14 | P a g e
The Directors
Chesser Resources Limited
96 Stephens Road
South Brisbane QLD 4101
Auditor’s Independence Declaration
As lead auditor for the audit of Chesser Resources Limited for the year ended 30 June
2016, I declare that, to the best of my knowledge and belief, there have been:
(i) no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the
audit.
This declaration is in respect of Chesser Resources Limited and the entities it controlled
during the year.
PITCHER PARTNERS
Nigel Batters
Partner
Brisbane, Queensland
30 September 2016
Chesser Resources Limited
Annual report for the year ended 30 June 2016
Corporate Governance Statement (continued)
Corporate Governance Statement
Introduction
The Board of directors is responsible for the corporate governance of Chesser Resources Limited (the
Company) and its controlled entities (the Group). The Group operates in accordance with the corporate
governance principles as set out by the ASX corporate governance council and required under ASX listing
rules. The Group details below the corporate government practices in place at the end of the financial year, all
of which comply with the principles and recommendations of the ASX corporate governance council unless
otherwise stated.
Principle 1: Lay solid foundations for management and oversight
Board Responsibilities
The Board is accountable to the Shareholders for the performance of the Company and has overall
responsibility for its operations. Day to day management of the Group’s affairs and the implementation of the
corporate strategy and policy initiatives, are formally delegated by the Board to the Executive Director and
ultimately to senior executives.
The key responsibilities of the board include:
Approving the strategic direction and related objectives of the Group and monitoring management
performance in the achievement of these objectives;
Adopting budgets and monitoring the financial performance of the Group;
Reviewing annually the performance of the managing director and senior executives against the objectives
and performance indicators established by the Board;
Overseeing the establishment and maintenance of adequate internal controls and effective monitoring
systems;
Overseeing the implementation and management of effective safety and environmental performance
systems;
Ensuring all major business risks are identified and effectively managed; and
Ensuring that the Group meets its legal and statutory obligations.
For the purposes of the proper performance of their duties, the Directors are entitled to seek independent
professional advice at the Group’s expense, unless the Board determines otherwise. The Board schedules
meetings on a regular basis and other meetings as and when required.
The Company has adopted a Board Charter
www.chesserresources.com.au.
that may be viewed on
the Company’s website
Principle 2: Structure the board to add value
Size and composition of the Board
At the date of this statement the board consists of two non-executive directors, both of whom are considered to
be independent, and one executive director. The majority of Directors and the Chairman are independent.
Directors are expected to bring independent views and judgement to the Board’s deliberations.
Mr Simon O’Loughlin
Mr Simon Taylor
Mr Stephen Kelly
Non-Executive Director (Appointed 2 March 2006)
Non-Executive Director (Appointed 29 March 2007)
Executive Director (Appointed 12 February 2015)
The Board considers this to be an appropriate composition given the size and development of the Group at the
present time. The names of directors including details of their qualifications and experience are set out in the
Directors' Report of this Financial Report.
Independence
The Board is conscious of the need for independence and ensures that where a conflict of interest may arise,
the relevant Director(s) leave the meeting to ensure a full and frank discussion of the matter(s) under
consideration by the rest of the Board. Those Directors who have interests in specific transactions or potential
16 | P a g e
Chesser Resources Limited
Annual report for the year ended 30 June 2016
Corporate Governance Statement (continued)
transactions do not receive Board papers related to those transactions or potential transactions, do not
participate in any part of a Directors’ meeting which considers those transactions or potential transactions, are
not involved in the decision making process in respect of those transactions or potential transactions, and are
asked not to discuss those transactions or potential transactions with other Directors.
Messrs O’Loughlin and Taylor are considered independent directors as they have no other material relationship
or association with the Company or its subsidiaries other than their directorships. The Company therefore has
two independent, Non-Executive directors as that relationship is currently defined.
Nomination, retirement and appointment of Directors
The full Board has approved the Charter for the Nomination Committee which provides that the full Board will
perform the function of a Nomination Committee. A copy of the Charter is available on the Company’s website
www.chesserresources.com.au
The Company's constitution provides that at every Annual General Meeting, one third of the directors shall retire
from office but may stand for re-election.
The roles and responsibilities of the Nomination Committee are to:
(a) Size and Composition of the Board. To ensure that the Board has the appropriate blend of directors
with the necessary expertise and relevant industry experience, the Nomination Committee shall:
(i) regularly review the size and composition of the Board;
(ii)
identify and assess necessary and desirable director competencies and provide advice on the
competency levels of directors with a view to enhancing the Board;
(iii) make recommendations on the appointment and removal of directors;
(iv)
make recommendations on whether any directors whose term of office is due to expire should be
nominated for re‐election; and
regularly review the time required from non‐executive directors and whether non‐executive
directors are meeting that requirement.
(v)
The Board has not considered it necessary to create a formal document setting out the particular skills of
the existing Board. However, pursuant to the Board Charter, the composition of the Board is to be
reviewed regularly to ensure the appropriate mix of skills and expertise is present to facilitate successful
implementation of the Company’s strategy.
(b) Selection Process of new Directors. The Nomination Committee is empowered to engage external
consultants in its search for a new director. The initial appointment of a new Director is made by the
Board. The Company undertakes appropriate checks before appointing a person as a Director of the
Company and a written agreement setting out the terms of the Director’s appointment is entered into. A
newly appointed Director will be required to stand for election at the Company's next general meeting.
When the election of a Director is put to security holders at a meeting of members, all material information
relevant to the vote, including the Director’s qualifications and relevant professional experience is
incorporated in the meeting documents.
(d) Induction process. The Company does not have a formal induction program in place for new Directors.
However, as part of their individual appointments, the Board carefully reviews the suitability of each new
Director which includes an assessment of their skills and qualifications.
(c) Performance Appraisal Competency. The Nomination Committee shall develop a process for evaluation
of the performance of the Board, Board committees (if any), and when deemed appropriate by the Chair,
individual Board members. The objective of this evaluation will be to provide best practice corporate
governance to the Company. As at the date of this report the Board has not completed the performance
evaluation of the Directors.
(d) Succession Plans. The Nomi nati on Committee shall review the Company's succession plans.
Succession plans are to assist in maintaining the appropriate balance of skills, experience and expertise
on the Board. No Director, except an Executive Director may hold office for more than three years without
17 | P a g e
Chesser Resources Limited
Annual report for the year ended 30 June 2016
Corporate Governance Statement (continued)
re-submitting for re-election. The Company has not adopted a policy in relation to the retirement or tenure
of Directors.
Board Committees
It is the role of the Board to oversee the management of the Company and it may establish appropriate
committees to assist in this role.
The Board has established an Audit, Risk and Compliance Committee, a Remuneration Committee and a
Nomination Committee. Under their respective Charters, the full Board serves as the Audit, Risk and
Compliance Committee, Remuneration Committee and the Nomination Committee. The Board considers this
to be appropriate given the current size and scope of the Company’s operations and considers that no
efficiencies or other benefits would be obtained by establishing separate sub-committees. As the Company’s
operations grow and evolve, the Board will reconsider the appropriateness of forming separate sub-committees.
The Board approved Charter for each Board Committee is available on the Company’s website
www.chesserresources.com.au.
Principle 3: Promote ethical and responsible decision making
Code of Conduct
The Board recognises the need for Directors and employees to observe the highest standards of behaviour and
business ethics when engaging in corporate activity. The Group intends to maintain a reputation for integrity.
The Company’s officers and employees are required to act in accordance with the law and with the highest
ethical standards. The Board has adopted a formal code of conduct applying to the Board and all Employees.
The Code of Conduct may be accessed via the Company’s website www.chesserresources.com.au.
The Code of Conduct recognises that the Company (which includes Directors, senior executives, employees,
officers, contractors, sub-contractors and agents) is committed to the following principles:
To complying with the laws and regulations of each country in which the Company operates;
To increasing shareholder value and to ensuring shareholders are fully informed as to the true position
and performance of the Company through timely and accurate disclosure of information;
To the disclosure and management of any direct, indirect, actual, potential or perceived conflict of interest;
To ensuring that no Directors, senior executives, employees, officers, contractors, sub-contractors and
agents or their associated parties unlawfully derives a benefit through the abuse or misuse of their position
or by using for personal gain confidential information obtained through their association with the Company;
To not divulge any confidential information about the Company, its employees or its counterparties without
appropriate authorization;
To providing a healthy and safe workplace free of any form of discrimination or harassment;
To not directly, or indirectly offer, pay, solicit or accept bribes, secret commissions or other similar
payments or benefits in the course of conducting business; and
To act as a responsible corporate citizen and actively support the communities in which the Company
operates and to contribute to the needs of those communities.
Securities Trading Policy
The Company’s Securities Trading Policy regulates dealings in shares and other securities of the Company by
directors, employees and contractors (restricted persons) of the Company. The policy aims to ensure that
trading in the Company’s shares is fair and appropriate and maintains the reputation of the Company. The
Securities trading Policy may be viewed on the Company’s website at www.chesserresources.com.au.
The Securities Trading Policy prescribes that directors, employees and contractors (designated persons) may
only trade in the Company’s securities if the proposed dealing is:
(a) excluded trading under the policy (including the exercise of options or transactions that do not otherwise
change the beneficial holding of the designated person in the Company’s securities) ; or
(b) outside a Closed Trading Period; or
(c) within a Closed Trading Period and the Designated Person has obtained written clearance from the
appropriate authority as set out below and an Exceptional Circumstance applies.
18 | P a g e
Chesser Resources Limited
Annual report for the year ended 30 June 2016
Corporate Governance Statement (continued)
Under the Securities Trading Policy, “Closed trading period” includes the following:
(a) from the first day of January until the second day following the public release of the Company’s half year
results;
(b) from the first day of July until the second day following the public release of the sooner to occur of the
(c)
Company’s preliminary or final full year results;
from the first day following the close of each Quarter for which the Company is required to provide a
periodic Quarterly report to the ASX until the second day following the release of that report to the ASX;
(d) any other periods from time to time when Chesser Resources is considering matters which are subject to
ASX Listing Rule 3.1 (Continuous Disclosure) as resolved by the Board;
(e) any other periods when Designated Persons are not permitted to Deal in Company Securities as specified
by any stock or security exchange that the Company is or may be listed upon; and
(f) any other period when a Designated Person is in possession of Inside Information.
Directors must advise the Non- Executive Chairman before buying or selling securities in the Company. All
such transactions are reported to the Board. In accordance with the provisions of the Corporations Act and the
Listing Rules of the Australian Securities Exchange, the Company advises the ASX of any transaction
conducted by directors in the Company’s securities.
Diversity policy
Chesser’s Board proactively encourages a culture which embraces diversity and equal opportunity
throughout the Group and has put in place a Diversity Policy that may be viewed on the Company’s website
at www.chesserresources.com.au.
To support its objectives, the Company aims to identify programs that selectively develop and up skill its
workforce, including those aimed at advancing females to senior executive positions.
Chesser operates in a competitive industry, where there is a strong demand for high calibre employees
and Directors.
The Board of Directors is of the view that the best way to attract such high calibre candidates is to:
a) establish and select from a diverse pool of candidates, and then
b) make a decision based on the merit of the candidates.
The Company seeks to optimise its employment decision by:
a) actively encouraging qualified applicants from a diverse range of backgrounds to apply for vacant
positions;
b) creating and fostering a diverse talent pool by its employment processes; and
c) ensuring that its attraction, selection, employment and promotion processes and decisions (including where
appropriate the selection processes used by external recruitment consultants to short list high calibre
candidates) are conducted in line with the Company’s Diversity principles.
Where appropriate, the Board will consider setting key performance indicators for the Board, the CEO and Key
Management Personnel that are linked to the Diversity objectives set by the Board. The Board has not yet set
measurable objectives for achieving gender diversity. Given the current state of the Group’s development, and
the limited number of employees the Board does not consider it appropriate to establish formal diversity targets
at this time. The Board will review this position as circumstances change.
The number of women in the organisation is:
Number of women employees in the whole organisation
Number of women in senior executive positions
Number of women on the board
Nil
Nil
Nil
19 | P a g e
Chesser Resources Limited
Annual report for the year ended 30 June 2016
Corporate Governance Statement (continued)
Principle 4: Safeguard integrity in financial reporting
The Group aims to independently verify and safeguard the integrity of their financial reporting through
establishment of the following structure:
Review and consideration of the financial statements by the Audit, Risk and Compliance Committee;
A process to ensure the independence and competence of the Group’s external auditors.
Audit, Risk and Compliance Committee
The Audit, Risk and Compliance Committee comprises the full Board. The Board has approved a Charter for
the Audit, Risk and Compliance Committee which may be viewed on the Company’s website at
www.chesserresources.com.au.
The Audit, Risk and Compliance Committee’s primary responsibilities are to:
a) review and assess the Company’s processes which ensure the integrity of financial statements and
reporting, and associated compliance with legal and regulatory requirements, including applicable
accounting standards;
b) review and assess the appointment, qualifications, independence, performance and remuneration of, and
relationship with, the Company’s external auditors and the integrity of the audit process as a whole;
c) oversee the effectiveness of the Group’s systems of internal controls and risk management including
considering the appropriateness of implementing an internal audit function; and
d) oversee the policies and procedures for ensuring the Group's compliance with relevant regulatory and
legal requirements.
Due to the scale and size of the Company’s operations, the Board considers that it would not be efficient to
implement an internal audit function at this time.
Principle 5: Make timely and balanced disclosure
The Company has a policy that all shareholders and investors have equal access to the Company's information.
The Board ensures that all price sensitive information is disclosed to the ASX in accordance with the continuous
disclosure requirements of the Corporations Act and ASX Listing Rules. The Company Secretary has primary
responsibility for all communications with the ASX. The Company Secretary has primary responsibility for all
communications with the ASX and is accountable to the board through the chair for all governance matters.
The Company has established a Continuous Disclosure Policy that may be viewed on the Company’s website
www.chesserresources.com.au.
Principle 6: Respect the rights of shareholders
The Board strives to ensure that Shareholders are provided with sufficient information to assess the
performance of the Company and its Directors and to make well-informed investment decisions.
Information is communicated to Shareholders through:
annual, half-yearly and quarterly financial reports;
annual and other general meetings convened for Shareholder review and approval of Board proposals;
continuous disclosure of material changes to ASX for open access to the public; and
the Company maintains a website where all ASX announcements, notices and financial reports are
published as soon as possible after release to ASX.
All information disclosed to the ASX is posted on the Company's web site www.chesserresources.com.au.
The auditor is invited to attend the annual general meeting of Shareholders. The Chairman will permit
Shareholders to ask questions about the conduct of the audit and the preparation and content of the audit
report.
20 | P a g e
Chesser Resources Limited
Annual report for the year ended 30 June 2016
Corporate Governance Statement (continued)
The Company has not designed or publicly disclosed a communications policy and therefore has not
complied with recommendation 6.2 of the Corporate Governance Council. Given the size of the Company, the
board does not consider design of, or disclosure of a communications policy to be appropriate. The board
takes ultimate responsibility for these matters.
Principle 7: Recognise and manage risk
The Board has identified the significant areas of potential business and legal risk of the Group. The
identification, monitoring and, where appropriate, the reduction of significant risk to the Group is the
responsibility of the Managing Director and the Board. The Board has also established the Audit, Risk and
Compliance committee which addresses the risk of the Group.
The Board reviews and monitors the parameters under which such risks will be managed. Management
accounts are prepared and reviewed with the Managing Director at subsequent Board meetings. Budgets are
prepared and compared against actual results.
Management and the Board monitor the Group’s material business risks and reports are considered at regular
meetings. The Board has approved a Risk Management Policy and related Risk Management Framework that
is in the process of being implemented. The Risk Management Policy may be viewed on the Company’s website
www.chesserresources.com.au.
The Executive Director is required to state in writing to the Board that the Group’s financial reports present a
true and fair view, in all material respects, of the Group’s financial condition and operational results are in
accordance with relevant accounting standards. Included in this statement will be confirmation that the Group’s
risk management and internal controls as they relate to the preparation of the financial reports are operating
efficiently and effectively.
As a mining explorer, the Company is faced with a number of economic, environmental and social sustainability
risks. The Board, carrying out the functions of the Audit, Risk and Compliance Committee reviews and manages
these risks on an ongoing basis.
Principle 8: Remunerate fairly and responsibly
Non-Executive Director’s remuneration is clearly distinguished from that of executives. The Chairman and the
non-executive Directors are entitled to draw Directors fees and receive reimbursement of reasonable expenses
for attendance at meetings. The maximum aggregate annual remuneration which may be paid to non-executive
Directors is $400,000. This amount cannot be increased without the approval of the Company’s shareholders.
Remuneration for Non-Executive Directors is not linked to the performance of the Company.
The Board has established a Remuneration Committee, the Charter for which may be viewed on the Company’s
website www.chesserresources.com.au. In accordance with that Charter, the full Board serves as the
Remuneration Committee. Items that are usually discussed by a Remuneration Committee are marked as
separate agenda items at Board meetings. The Board deals with any conflicts of interest that may arise when
convening in the capacity of the Remuneration Committee by ensuring that no Directors participate in any
deliberations regarding their own remuneration or related issues.
The Company enters into a written agreement with each Director and executive setting out the terms of their
appointment. Given the size of the Company, the Board does not consider it appropriate to have in place a
process for periodically evaluating the performance of its senior executives. Notably, the performance of the
Executive Directors falls within the ambit of the Nomination Committee, and its functions are carried out by the
full Board. Executive pay consists of a base salary. No short term or long term incentive programs are currently
in place however this is reviewed on an ongoing basis taking into consideration to nature and scope of the
Company’s activities.
The Remuneration Report which forms part of the Directors’ Report summarises the remuneration
arrangements in place for directors and key management personnel of the Company.
21 | P a g e
Chesser Resources Limited
Consolidated Income Statement
For the year ended 30 June 2016
Revenue and other income
Employee benefits expense
Depreciation expense
Share options expense
Professional fees
Rental expense for office lease
Share registry and exchange listing fees
Loss on sale of financial assets at fair value through
profit or loss
Other expenses
Loss before income tax from continuing operations
Income tax benefit from continuing operations
Loss for the period from continuing operations
Discontinued operations
Profit / (loss) from discontinued operations
Profit / (loss) for the period
Profit / (loss) attributable to:
Owners of the parent – continuing operations
Owners of the parent – discontinued operations
Non-controlling interests – discontinued operations
Note
7
9
22
2016
$
2015
$
113,543
(191,226)
(19,312)
-
(133,380)
(65,710)
(75,832)
790,396
(1,188,568)
(27,520)
(24,384)
(434,919)
(42,773)
(99,497)
-
(81,008)
(70,149)
(191,227)
(452,925)
-
(452,925)
(1,288,641)
-
(1,288,641)
-
20,276,328
(452,925)
18,987,687
(452,925)
-
-
(452,925)
(1,288,641)
20,276,328
-
18,987,687
Earnings per share:
Basic and diluted profit / (loss) per share – continuing
and discontinued operations
Basic and diluted profit / (loss) per share – continuing
operations
19
Cents
Cents
(0.31)
(0.31)
8.59
(0.58)
The above Consolidated Income Statement should be read in conjunction with the accompanying notes
22 | P a g e
Chesser Resources Limited
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2016
Profit / (loss) for the period
(452,925)
18,987,687
Note
2016
$
2015
$
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations
Reclassification of adjustments related to foreign
operations disposed of during the year
Income tax relating to these items
Other comprehensive income for the period, net of
tax
-
-
-
-
(2,287,385)
(125,400)
-
(2,412,785)
Total comprehensive profit / (loss) for the period
(452,925)
16,574,902
Total comprehensive profit / (loss) attributable to:
Owners of Chesser Resources Limited
Non-controlling interests
(452,925)
-
16,574,902
-
(452,925)
16,574,902
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the
accompanying notes
23 | P a g e
Chesser Resources Limited
Consolidated Statement of Financial Position
As at 30 June 2016
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Exploration and evaluation assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY
Note
18(a)
10
11
2016
$
2015
$
3,964,589
-
12,306
7,894,885
46,179
-
3,976,895
7,941,064
12
13
-
38,820
19,312
-
38,820
19,312
4,015,715
7,960,376
14
111,889
116,221
111,889
116,221
111,889
116,221
3,903,826
7,844,155
15
16
16
5,838,418
(3,848,451)
1,913,859
9,325,822
(3,395,526)
1,913,859
3,903,826
7,844,155
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes
24 | P a g e
Chesser Resources Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2016
Issued
Capital
Ordinary
shares
$
Accumulated
Non-
controlling
Losses
$
Reserves
$
Interest
$
Balance at 1 July 2015
9,325,822
(3,395,526)
1,913,859
Total comprehensive
income
Profit for the year
Total comprehensive (loss)
for the year
Transactions with owners
in their capacity as owners
Return of capital paid
Balance at 30 June 2016
-
-
(452,925)
(452,925)
-
-
(3,487,404)
5,838,418
-
(3,848,451)
-
1,913,859
Total
$
7,844,155
(452,925)
(452,925)
(3,487,404)
3,903,826
-
-
-
-
-
Issued
Capital
Ordinary
shares
$
42,476,896
Accumulated
Non-
controlling
Losses
$
(18,485,795)
Reserves
$
(1,687,941)
Interest
$
Total
$
2,092,783
24,395,943
-
-
-
18,987,687
(3,897,418)
-
3,577,416
-
(2,092,783)
18,987,687
(2,412,785)
15,090,269
3,577,416
(2,092,783)
16,574,902
(33,151,074)
-
9,325,822
-
-
(3,395,526)
-
24,384
1,913,859
-
-
-
(33,151,074)
24,384
7,844,155
Balance at 1 July 2014
Total comprehensive
income
Profit for the year
Other comprehensive Loss
Total comprehensive profit
/ (loss) for the year
Transactions with owners
in their capacity as owners
Return of capital paid
Share options issued
Balance at 30 June 2015
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
25 | P a g e
Chesser Resources Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
Cash flows from operating activities
Interest received
Payments to suppliers and employees
Realised foreign exchange gains
Research and development tax offset received
Net cash outflows used in operating activities
Cash flows from investing activities
Payments for exploration and evaluation expenditure
Net proceeds from disposal of subsidiaries
Proceeds from the sale of financial assets at fair value through
profit or loss
Net cash inflows / (outflows) from investing activities
Cash flows from financing activities
Refund of security deposit
Capital return paid to shareholders
Net cash (outflows) used in financing activities
Net increase / (decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash
equivalents
Cash and cash equivalents at the end of the year
Notes
2016
$
2015
$
70,171
(539,846)
55,062
-
(414,613)
206,520
(3,112,649)
-
216,930
(2,689,199)
18(b)
(38,820)
-
(1,397,692)
43,294,945
-
(38,820)
384,195
42,281,448
15,000
(3,487,404)
(3,472,404)
-
(33,151,074)
(33,151,074)
(3,925,837)
7,894,885
(4,459)
3,964,589
6,441,175
1,070,536
383,174
7,894,885
18(a)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
26 | P a g e
Chesser Resources Limited
Annual report or the year ended 30 June 2016
Contents of the notes to the financial statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21
22.
23.
24.
25.
26.
General information
Application of new and revised Accounting Standards
Significant accounting policies
Financial risk management
Critical accounting estimates and judgements
Operating segments
Revenue and other income
Expenses
Income tax
Trade and other receivables
Other current assets
Property, plant and equipment
Exploration and evaluation expenditure
Trade and other payables
Contributed equity
Reserves and accumulated losses
Remuneration of auditors
Cash flow information
Earnings per share
Share based payments
Parent entity disclosures
Subsidiaries
Related parties
Key management personnel compensation
Commitments and Contingent Liabilities
Events occurring after the reporting period
28
28
28
36
39
39
40
40
41
42
42
42
43
43
43
44
45
45
46
46
48
49
51
51
51
51
27 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
1.
General information
Chesser Resources Limited (the Company) is a listed public company incorporated in Australia. The address of
its registered office and principal place of business is Suite 1, 47 Park Road, Milton QLD 4064.
The entity’s principal activity during the financial year was undertaking exploration activities in relation to the
Kurnalpi Project in Western Australia.
2.
Application of new and revised Accounting Standards
Adoption of New and Revised Standards
In the year ended 30 June 2016, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Group and effective for the current annual reporting
period.
As a result of this review, the Directors have determined that there is no material impact of the new and revised
Standards and Interpretations on the Group and, therefore, no material change is necessary to Group accounting
policies.
Standards and Interpretations On Issue Not Yet Adopted
The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet
effective for the year ended 30 June 2016. As a result of this review the Directors have determined that there is
no material impact, of the new and revised Standards and Interpretations on the Group and, therefore, no change
is necessary to Group accounting policies.
3.
Significant accounting policies
(a) Statement of compliance
The financial statements comprise the consolidated financial statements of the Group consisting of Chesser
Resources Limited and its subsidiaries. The Company is a for-profit entity for the purpose of preparing the financial
statements.
These financial statements are general purpose financial statements that have been prepared in accordance with
the Corporations Act 2001, Accounting Standards and Interpretations, and comply with the other requirements of
the law. Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting
Standards ensures that the financial statements and notes of the Company and the Group comply with
International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the Directors on 30 September 2016.
(b) Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for certain
financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as
explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration
given in exchange for goods and services. All amounts are presented in Australian dollars, unless otherwise
noted. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is directly
observable or estimated using another valuation technique. In estimating the fair value of an asset or liability, the
Group takes into account the characteristics of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the measurement date. Fair value for
measurement and / or disclosure purposes in these consolidated financial statements is determined on such a
basis, except for share-based payment transactions that are within the scope of AASB2 and measurements that
have some similarities to fair value but are not fair value such as value in use in AASB136.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3
28 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
based on the degree to which the inputs to the fair value measurement are observable and the significance of the
inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that that
the entity can access at the measurement date.
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
(c) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Chesser
Resources Limited (“Company” or “parent entity”) as at 30 June 2016 and the results of all subsidiaries for the
year then ended. Chesser Resources Limited and its subsidiaries together are referred to in this financial report
as the Group or the consolidated entity.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to
note 3(g).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income
statement, statement of comprehensive income, statement of changes in equity and balance sheet respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of the Company.
(d)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Executive Director.
(e)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue
are net of returns, trade allowances and rebates and amounts collected on behalf of third parties.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future
economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as
described below.
Government grants
Grants from government, including Australian Research and Development tax offsets, are recognised at their fair
value where there is a reasonable assurance that the grant will be received and the Company will comply with all
29 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
attached conditions.
Where a grant is received relating to research and development costs that have been expensed, the grant is
recognised as other income when the grant becomes receivable.
When the grant relates to an asset, the fair value is credited to a deferred income account and is released to the
Statement of Financial Performance over the expected useful life of the relevant asset by equal annual instalments.
Interest revenue
Interest is recognised using the effective interest method.
(f)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based
on the national income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Company’s subsidiaries and associates operate and
generate taxable income, Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting nor taxable profit
or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amounts and
tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal
of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a
net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
(g)
Business combinations
The acquisition method of accounting is used to account for all business combinations regardless of whether equity
instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the
Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and
the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-
acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the
non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
30 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share
of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the
net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate,
being the rate at which a similar borrowing could be obtained from an independent financier under comparable
terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
(h) Impairment of assets
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other
assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are largely independent of the cash inflows from other
assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of impairment at each reporting date.
(i) Cash and cash equivalents
For cash-flow presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(j) Exploration and evaluation expenditure
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and
evaluation assets on an area of interest basis. Costs incurred before the consolidated entity has obtained the
legal rights to explore an area are recognised in profit or loss.
Exploration and evaluation assets are only recognised if the rights to the area of interest are current and either:
the expenditures are expected to be recouped through successful development and exploitation of the
area of interest or by its sale; or
activities in the area of interest have not at the reporting date reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical
feasibility and commercial viability and facts and circumstances suggest that the carrying amount exceeds the
recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to
cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than
the area of interest.
Once the technical feasibility and commercial viability of an area of interest are demonstrable, exploration and
evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from
31 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
exploration and evaluation expenditure to property and development assets within property, plant and equipment.
Restoration costs that are expected to be incurred are provided for as part of the cost of the exploration and
evaluation phases that give rise to the need for restoration. Accordingly, these costs will be recognised gradually
over the life of the project as the phases occur.
(k)
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for impairment. Trade and other receivables are generally due
for settlement within 30 days. They are presented as current assets unless collection is not expected for more than
12 months after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are
written off by reducing the carrying amount directly.
(l)
Investments and other financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or
loss, available-for-sale, loans and receivables and held-to-maturity investments. The classification depends on the
purpose for which the assets were acquired.
The Group has no held-to-maturity investments or available-for-sale financial assets.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for those with maturities greater than 12 months
after the balance sheet date which are classified as non-current assets.
Subsequent to initial recognition, loans and receivables are carried at amortised cost using the effective interest
rate method. The Group assesses at each balance date whether there is objective evidence that a financial asset
or group of financial assets is impaired.
Financial assets at fair value through profit or loss
The Company has classified certain financial assets that were acquired principally for the purpose of being sold in
the near term as financial assets at fair value through profit or loss. Financial assets at fair value through profit or
loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss. Fair
value is determined using quoted market prices. The net gain or loss recognised recognised in profit or loss
incorporates any dividend or interest earned on the financial asset and is included
in revenue.
(m) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial
year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and
other payables are presented as current liabilities unless payment is not due within 12 months from the reporting
date. They are recognised initially at their fair value and subsequently measured at amortised cost using the
effective interest method.
(n) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax,
from the proceeds.
32 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
(o) Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards
of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair
value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding
rental obligations, net of finance charges, are included in liabilities. Each lease payment is allocated between the
liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and
equipment acquired under finance leases is depreciated over the estimated useful life of the asset. Where there
is no reasonable certainty that the lessee will obtain ownership, the asset is depreciated over the shorter of the
lease term and the asset’s useful life.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as
lessee are classified as operating leases. Payments made under operating leases are charged to profit or loss on
a straight-line basis over the period of the lease.
(p) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and maintenance are charged to the income statement
during the financial period in which they are incurred.
Depreciation of assets is calculated on the straight line method to allocate their cost, net of their residual values,
over their estimated useful lives. The depreciation rates used for each class of depreciable asset are:
Classification
Rate
Plant and equipment
5 – 50%
Depreciation
Basis
Straight Line
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
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 (note 3(h)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are
included in profit or loss.
(q) Employee benefits
(i)
(ii)
Short-term obligations
Liabilities for wages and salaries, expected to be settled wholly within 12 months after the end of the period
in which the employees render the related service are recognised in respect of employees' services
up to the end of the reporting period and are measured at the amounts expected to be paid when the
liabilities are settled. All other short-term employee benefit obligations are presented as payables.
Other long-term employee benefits
The liability for long service leave and annual leave which is not expected to be settled wholly within 12
months after the end of the period in which the employees render the related service is recognised in the
provision for employee benefits and measured as the present value of expected future payments to be
made in respect of services provided by employees up to the end of the reporting period using the
projected unit credit method. Consideration is given to expect future wage and salary levels, experience
of employee departures and periods of service. Expected future payments are discounted using market
yields at the end of the reporting period on corporate bonds with terms to maturity and currency that match,
as closely as possible, the estimated future cash outflows.
33 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
(iii)
(iv)
Superannuation
The Group makes contributions to defined contribution superannuation funds. Contributions are
recognised as an expense as they become payable.
Share-based payments
Share-based compensation benefits are provided to employees.
The fair value at grant date is determined using an option pricing model that takes into account the exercise
price, the term of the option, the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk-free interest rate for the term of the option.
The fair value of options granted is recognised as an employee benefits expense with a corresponding
increase in equity. The total amount to be expensed is determined by reference to the fair value of the
options granted, which includes any market performance conditions but excludes the impact of any service
and non-market performance vesting conditions and the impact of any non-vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected
to vest. The total expense is recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates
of the number of options that are expected to vest based on the non-marketing vesting conditions. It
recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding
adjustment to equity.
(r) Earnings per share
(i)
(ii)
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
issued during the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share
to take into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of additional ordinary shares that would have
been outstanding assuming the conversion of all dilutive potential ordinary shares.
(s) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred
is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to, the taxation authority, are presented as operating cash flows.
(t)
Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the financial year but not distributed at balance date.
(u)
Foreign currency translation
34 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operated (“the functional currency”). The consolidated
financial statements are presented in Australian dollars, which is Chesser Resources Limited’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as
qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net
investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the income statement, within
finance costs. All other foreign exchange gains and losses are presented in the income statement on a net
basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-
monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit
or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as
equities classified as available-for-sale financial assets are recognised in other comprehensive income.
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
assets and liabilities for each balance sheet presented are translated at the closing rate at the date
of that balance sheet
income and expenses for each statement of comprehensive income are translated at average
exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the dates
of the transactions), and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange difference is reclassified to profit or loss, as part of the gain or loss
on sale where applicable.
(v)
Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability
is initially measured at fair value and subsequently at the higher of the amount determined in accordance with
AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less
cumulative amortisation, where appropriate.
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between
the contractual payments under the debt instrument and the payments that would be required without the
guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.
Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no
35 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
compensation, the fair values are accounted for as contributions and recognised as part of the cost of the
investment.
(w)
Parent entity financial information
The financial information for the parent entity Chesser Resources Limited, disclosed in note 21 has been prepared
on the same basis as the consolidated financial statements except as set out below.
(i)
(ii)
(iii)
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial
statements of the Company. Dividends received from associates are recognised in the parent entity’s profit
or loss when its right to receive the dividend is established.
Financial guarantees
Where the Company has provided financial guarantees in relation to loans and payables of subsidiaries
for no compensation, the fair values of these guarantees are accounted for as contributions and
recognised as part of the cost of the investment.
Share based payments
The grant by the Company of options over its equity instruments to the employees of subsidiary
undertakings in the Group is treated as a capital contribution to that subsidiary undertaking. The fair value
of employee services received, measured by reference to the grant date fair value, is recognised over the
vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to
equity.
4. Financial risk management
The Group’s principal financial instruments comprise cash and cash equivalents, term deposits, trade and other
receivables, financial assets at fair value through profit or loss and trade and other payables. The Group does
not currently have any projects in production and as such the main purpose of these financial instruments is to
provide liquidity to finance the Group’s development and exploration activities. It is, and has been throughout the
financial year, the Group’s policy that no trading in speculative financial instruments shall be undertaken. The
main risks arising from the Group’s use of financial instruments are liquidity risk, counterparty or credit risk, interest
rate risk and foreign currency risk. During the year the Group has had some transactional currency exposures,
principally to the US dollar and the Euro. The Group has not entered into forward currency contracts to hedge
these exposures due to the short time frame associated with the currency exposure and the relatively modest
overall exposure at any one point in time.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expenses are recognised, in respect of each class of financial
asset and financial liability are disclosed in note 3 to the financial statements. Primary responsibility for
identification and control of financial risk rests with the board of directors. However, the day-to-day management
of these risks is under the control of the Managing Director and the Chief Financial Officer. The Board agrees the
strategy for managing future cash flow requirements and projections.
The Group holds the following financial instruments:
Financial Assets
Cash and cash equivalents *
Trade and other receivables *
Financial Liabilities
Trade and other payables **
Loans and receivables category
*
** Financial liabilities at amortised cost category
2016
$
3,964,589
-
3,964,589
111,889
111,889
2015
$
7,894,885
46,179
7,941,064
116,221
116,221
36 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
(a) Market risk
Foreign exchange risk
(i)
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures. The Group’s policy is to convert its local currency to the foreign currency at the time of the transaction.
Foreign exchange risk arises from future commercial transactions and recognised financial liabilities denominated
in a currency that is not the Group’s functional currency (which is the Australian dollar).
The Group manages foreign exchange risk on an as-needs basis. The risk is measured using sensitivity analysis
and cash-flow forecasting. The Group’s exposure to foreign currency risk, expressed in Australian dollars at the
reporting date, was as follows:
Cash and cash equivalents - USD
Trade and other payables
Total assets
2016
$
2015
$
4,492
4,492
-
2,671,924
2,671,924
-
Net exposure
4,492
2,671,924
The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against
the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to
key management personnel and represents management’s assessment of the reasonably possible change in
foreign exchange rates. A negative number in the table represents a decrease in the operating profit before tax
and reduction in equity where the Australian dollar strengthens against the relevant currency. For a 10%
strengthening of the Australian dollar against the relevant currency, there would be a comparable impact on the
loss or equity, and the balances below would be positive.
Profit / (loss) before tax and equity – 10% increase
Profit / (loss) before tax and equity – 10% decrease
2016
$
2015
$
449
(449)
267,192
(267,192)
Interest rate risk
(ii)
The Group’s exposure to interest rate risk arises predominantly from cash and cash equivalents bearing variable
interest rates, as the Group intends to hold any fixed rate financial assets to maturity. At the end of the reporting
period the Group maintained the following variable rate accounts:
30 June 2016
30 June 2015
Weighted
average
interest rate
%
Balance
$
Weighted
average
interest rate
%
Balance
$
Cash and cash equivalents
1.55%
3,964,589
2.15%
7,894,885
At the end of the reporting period, if the interest rates had changed, as illustrated in the table below, with all other
variables remaining constant, after-tax profit and equity would have been affected as follows:
After-tax loss
Equity higher /
37 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
higher / (lower)
(lower)
2016
$
2015
$
2016
$
2015
$
+1% (100bp)
-1% (100bp)
39,646
(39,646)
78,949
(78,949)
39,646
(39,646)
78,949
(78,949)
(b) Credit risk
Credit risk primarily arises from cash and cash equivalents and term deposits deposited with banks and
receivables. Cash and cash equivalents and term deposits are primarily placed with National Australia Bank
Limited and AMP Bank Limited, which have independently rated credit rating of AA- and A+ respectively.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents in order to meet the
Group’s forecast requirements. The Group manages liquidity risk by continuously monitoring forecast and actual
cash flows and matching the maturity profiles of financial assets and liabilities. Surplus funds are generally only
invested in bank deposits. At reporting date, the Group did not have access to any undrawn borrowing facilities.
Maturity of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining
period at the reporting date to the contractual maturity date.
30 June 2016
Less than 3
months
$
Total contractual
cash flows
$
Carrying amount
$
Trade and other payables
111,889
111,889
111,889
30 June 2015
Less than 3
months
$
Total contractual
cash flows
$
Carrying amount
$
Trade and other payables
116,221
116,221
116,221
(d) Fair value estimation
Financial assets at fair value through profit or loss are carried at their fair value as determined by reference to
quoted bid prices in an active, liquid market (Level 1). The carrying amount of other financial assets (net of any
provision for impairment) and financial liabilities as disclosed above is assumed to approximate their fair values
primarily due to their short maturities
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
5. Critical accounting estimates and judgements
The Group makes estimates and assumption concerning the future. The resulting accounting estimates will, by
definition, seldom equal the actual results. As at 30 June 2016 there were no critical estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year.
6. Operating segments
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the
38 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
Chief Financial Officer (chief operating decision maker) in assessing performance and determining the allocation
of resources.
The Group is managed primarily on a geographic basis, that is, the location of the respective Projects the Group
is seeking to explore and develop. Operating segments are therefore determined on the same basis. Reportable
segments disclosed are based on aggregating operating segments where the segments are considered to have
similar economic characteristics and meet the other aggregation criteria of AASB 8 Operating Segments.
Activity by segment
Kurnalpi Project
The Kurnalpi Project is situated at Kurnalpi approximately 60 kilometres north east of Kalgoorlie. On 15 October
2015 the Company entered into an earn in joint venture agreement with Mithril Resources Limited to earn up to
an 80% interest in the tenements comprising the project.
Kestanelik Project
The Kestanelik Project is situated in north western Turkey. During the prior financial year, the Company disposed
of its 100% ownership interest in the Kestanelik Project for cash consideration of US$40 million.
Sisorta Project
The Sisorta project is in north-eastern Turkey in which the Group had a 51% ownership interest. During the prior
financial year, the Company disposed of its interest in the Sisorta Project for cash consideration of $162,023.
Catak Project
During the prior financial year, the Company terminated its option to acquire an interest in the Catak Project.
Corporate
Expenditure incurred that is not directly allocated to other segments is reported as corporate costs in the internal
reports prepared for the chief operating decision maker.
Accounting policies adopted
The Chief Operating Decision Maker assesses the performance of the operating segments based on a measure
of gross expenditure that includes both expenditure that is capitalised in these financial statements and
expenditure that is expensed in the income statement in these financial statements. The measurement of gross
expenditure does not include the impairment of exploration expenditure but does include non-cash items such as
depreciation expense and share based payments expense. Interest revenue is allocated to the Corporate
segment. Other items of revenue are not allocated to segments.
i. Segment performance
30 June 2016
Total segment revenue
Total segment expenditure
Segment result
Reconciliation of segment result to net loss before tax
Other income
Depreciation
Capitalised expenditure
Net loss before tax
Kurnalpi
Project
$
-
Corporate
$
62,274
Total
$
62,274
(38,820)
(38,820)
(547,156)
(484,882)
(585,976)
(523,702)
51,269
(19,312)
38,820
(452,925)
39 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
30 June 2015
Total segment revenue
-
Kestanelik
Project
$
Karaayi
Project
$
Sisorta
Project
$
Catak
Project
$
-
-
-
-
(75,041)
(75,041)
-
-
-
Total segment expenditure
Segment result
(552,978)
(552,978)
Reconciliation of segment result to net loss before tax
Other income
Depreciation
Share based payments
Profit from discontinued operations
Capitalised expenditure
Net profit before tax
ii.
Segment assets and liabilities
Corporate
and other
costs
$
191,923
Total
$
191,923
(2,027,133)
(1,835,209)
(2,655,152)
(2,463,229)
598,473
(27,520)
(24,384)
20,276,328
628,018
18,987,687
The segment information presented to the Chief Financial Officer does not include the reporting of assets and
liabilities or cash flows by segment. As at 30 June 2016 and 30 June 2015 the Group’s assets were located
primarily in Australia.
Revenue and other income – continuing operations
7.
Interest revenue
Foreign exchange gains
Research and development tax offset
2016
$
2015
$
62,274
51,269
-
113,543
191,923
381,543
216,930
790,396
During the financial year the Group received $Nil (2015: $216,930) research and development refundable tax
offset which has been accounted for as a government grant and included in other income. There are no unfulfilled
conditions or other contingencies attaching to this grant, The Group did not benefit directly from any other forms
of government assistance.
8.
Expenses – continuing operations
Loss before income tax includes the following specific expenses:
Rental expenses relating to operating leases – minimum lease rentals
Superannuation contributions
9.
Income tax – continuing operations
2016
$
2015
$
65,710
8,685
68,155
82,931
40 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
(a) Income tax benefit
Current tax
Deferred tax
(b) Deferred income tax/(revenue)
Deferred income tax/(revenue) included in tax expense comprises:
(Increase)/decrease in deferred tax assets
Increase/(decrease) in deferred tax liabilities
-
-
-
-
-
-
(152,941)
152,941
-
(148,290)
148,290
-
(c) Reconciliation of income tax expense to prima facie income tax
Loss before income tax from continuing operations
(452,925)
(1,288,641)
Tax at the Australian tax rate of 30% (2015: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating
taxable income:
Share-based payments
Research and development offset
Other non-deductible expenses
Capital raising costs
Deferred tax assets not recognised
Income tax benefit
(d) Deferred tax assets / liabilities comprise
Interest receivable
Accruals
Unrealised foreign exchange gains
S 40-880 capital raising expenses and legal fees
Capitalised exploration and evaluation expenditure
Prepayments
Tax losses available for offset against future taxable income
Net deferred tax assets
Deferred tax assets not recognised
(135,878)
(386,592)
-
-
-
(69,071)
(204,949)
204,949
-
-
7,800
-
79,478
(11,646)
(3,691)
2,814,428
2,886,369
(2,886,369)
-
7,315
(65,079)
154,637
(107,597)
(397,316)
397,316
-
(2,369)
11,216
(175,662)
148,548
-
-
2,751,695
2,733,428
(2,733,428)
-
(e) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following
items:
Temporary differences and tax losses at 30% (2015: 30%)
2,886,369
2,733,428
Tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect
of these items because it is not probable that future taxable profit will be available against which the Group can
utilise the benefits from the deferred tax assets. The benefit of the tax losses will only be available if the Company,
or a tax consolidated group of which it is a member, derives future assessable income of a nature and of an
amount sufficient to enable the benefit from the tax losses to be realised, has complied and continues to comply
with conditions for deductibility imposed by current tax legislation and there are no adverse changes to such
legislation. The conditions for deductibility of the carried forward tax losses (continuity of ownership test and
continuity of business test) will need to be considered in light of any changes that may occur in both the ownership
41 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
of the Company and the nature of the Company’s business activities.
10.
Trade and other receivables
Current
Other receivables
11.
Other current assets
2016
$
2015
$
-
46,179
Prepayments
12,306
-
Property, plant and equipment
12.
Plant and equipment
At cost
Accumulated depreciation
Movements in property, plant and equipment during the year were as follows:
Carrying amount at beginning of year
Additions
Disposals
Depreciation
Carrying amount at end of year
127,945
(127,945)
-
127,945
(108,633)
19,312
19,312
-
-
(19,312)
-
159,525
-
(112,693)
(27,520)
19,312
Depreciation amounting to $Nil was capitalised to exploration and evaluation expenditure during the year (2015:
$Nil).
42 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
13.
Exploration and evaluation expenditure
At cost
Carrying amount at beginning of year
Impact of movements in foreign exchange rates
Additions
Disposals
Carrying amount at end of year
2015
$
2015
$
38,820
-
-
38,820
-
38,820
-
22,956,296
532,079
628,018
(24,116,393)
-
The ultimate recoupment of these costs is dependent on the successful development and commercial
exploitation, or alternatively, sale of the respective areas of interest.
Trade and other payables
14.
Trade payables
Accruals
Total trade and other payables
107,175
4,714
111,889
79,605
36,616
116,221
Trade payables and accruals are unsecured, non-interest bearing and due 30 days from the date of recognition.
15.
Contributed equity
Ordinary shares – fully paid
5,838,418
9,325,822
Effective 1 July, 1998 the Corporations legislation in place abolished the concepts of authorised capital and par
value shares. Accordingly, the parent does not have authorised capital nor par value in respect of its issued
shares.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary
shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled
to one vote.
(a)
Movements in share capital
Date
Details
12 December 2014
7 October 2015
Balance 30 June 2014
Capital return paid to shareholders
Balance 30 June 2015
Share buy back
Balance 30 June 2016
No. of
shares
Share
price
$
221,007,161
- $0.15
221,007,161
(101,673,563) $.034
119,333,598
42,476,896
(33,151,074)
9,325,822
(3,487,404)
5,838,418
Capital management
(b)
When managing capital, management’s objective is to ensure the entity continues as a going concern and to
maintain a structure that ensures the lowest cost of capital available and to ensure adequate capital is available
to meet the Group’s forecast expenditure commitments.
In order to maintain or adjust the capital structure, the Group may seek to issue new shares.
Total capital is calculated as ‘equity’ as shown in the statement of financial position.
43 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
(c)
At 30 June 2016, the following options for ordinary shares in the Company were on issue:
Share options
Director and employee options
16.
Reserves and accumulated losses
Reserves
(a)
Share-based payments reserve
Foreign currency translation reserve
Movements:
Share based payments reserve
Balance at beginning of year
Options issued
Balance at end of year
Movements:
Foreign currency translation reserve
Balance at beginning of year
Derecognition on disposal of overseas subsidiaries
Net exchange differences on translation of foreign controlled entities
Balance at end of year
(b)
Accumulated losses
2016
Number
2015
Number
7,100,000
7,100,000
2016
$
2015
$
1,914,271
(412)
1,913,859
1,914,271
(412)
1,913,859
1,914,271
-
1,914,271
1,889,887
24,384
1,914,271
(412)
-
-
(412)
(3,577,828)
3,577,416
-
(412)
Movements:
Balance at beginning of year
Net profit / (loss) for the year
Derecognition of foreign currency translation reserve attributable to non-
controlling interests in overseas subsidiaries disposed of
Balance at end of year
(3,395,526)
(452,925)
(18,485,795)
18,987,687
-
(3,848,451)
(3,897,418)
(3,395,526)
(c)
Nature and purpose of reserves
Share based payments reserve
The share based payments reserve is used to recognise the fair value of options issued but not exercised.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign controlled subsidiaries.
2016
$
2015
$
44 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
17. Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity
and its related practices:
(b) Pitcher Partners Brisbane
(i) Audit and assurance services
Audit and review of financial reports
(ii) Non-audit services
Tax advice and compliance services
Total remuneration of Pitcher Partners Brisbane
Total auditors’ remuneration
18. Cash flow information
(a)
Cash and cash equivalents
30,000
26,000
-
-
30,000
-
-
26,000
Cash at bank and on hand
3,964,589
7,894,885
(b)
Reconciliation of loss after income tax to net cash outflow from
operating activities
Profit / (loss) for the year
Gain on disposal of subsidiaries
Share based payments
Depreciation and amortisation
(Gain) / loss on disposal of financial assets at fair value through profit or loss
Net exchange differences
(452,925) 18,987,687
(21,244,676)
24,384
27,520
70,149
(349,535)
-
-
19,312
-
4,459
Change in operating assets and liabilities (net of disposals):
(Increase)/decrease in trade or other receivables
Increase/(decrease) in trade and other payables
18,874
(4,333)
47,441
(252,169)
Net cash outflow from operating activities
(414,613)
(2,689,199)
45 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
19. Earnings per share
2016
Cents
2015
Cents
Basic and diluted profit / (loss) per share – continuing and discontinued
operations
Basic and diluted profit / (loss) per share – continuing operations
(0.31)
(0.31)
8.59
(0.58)
(b) Weighted average number of ordinary shares used as the denominator
2016
Number
2015
Number
Number used in calculating basic earnings per share
146,353,696
221,007,161
(c) Information concerning earnings per share:
Options granted are considered to be potential ordinary shares and have been included in the determination of
diluted earnings per share to the extent to which they are dilutive. Details relating to options are set out in note
20. In 2016 and 2015 the options were anti-dilutive and are therefore not included in the calculation of diluted
earnings per share. The options could potentially dilute basic earnings per share in the future.
20. Share based payments
Employee Share Option Plan
The Group has established the Chesser Resources Limited Employee Share Option Plan and a summary of the
Rules of the Plan are set out below:
Eligible participants shall be full time or part time employees of the Company or an Associated Body Corporate.
Options are granted under the Scheme at the discretion of the Board and if permitted by the Board, may be
issued to an employee's nominee.
Each option entitles the holder to subscribe for and be allotted one Share. Shares issued pursuant to the
exercise of Options will in all respects, including bonus issues and new issues, rank equally and carry the same
rights and entitlements as other Shares on issue. The Options may not be exercised until the Shares have
been quoted on ASX throughout the 12-month period immediately preceding that exercise of the Options,
without suspension during that period exceeding in total 2 trading days.
Unless the Directors in their absolute discretion determine otherwise, Options shall lapse upon the earlier of:
a. The expiry of the exercise period;
b. The Option holder ceasing to be within the category of Eligible Participant by reason of dismissal,
resignation or termination of employments, office or services for any reason, except the Directors may
resolve within 30 days of such dismissal, resignation or termination, that the Options shall lapse on other
terms they consider appropriate;
c. The expiry of 1 year after the Option holder ceases to be within the category of Eligible Participant by
reason of retirement; and
d. A determination by the Directors that the Option holder has acted fraudulently, dishonestly or in breach of
his or her obligations to the Company or an Associated Body Corporate.
An option may not be transferred or assigned except that a legal personal representative of a holder of an
Option who has died or whose estate is liable to be dealt with under laws relating to mental health will be
entitled to be registered as the holder of that Option after that production to the Directors of such documents or
other evidence as the Directors may reasonably require to establish that entitlement.
Options will not be quoted on ASX. However, application will be made to ASX for official quotation of the shares
allotted pursuant to the exercise of options if the Company’s shares are listed on ASX at that time.
46 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
Option holders may only participate in new issues of securities by first exercising their options.
The Board may amend the Scheme Rules subject to the requirements of the Australian Securities Exchange listing
Rules.
The options hold no voting or dividend rights and are not transferable.
Set out below are summaries of options granted as share-based payments for services provided by directors and
employees.
Expiry
Date
Exercise
Price
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Lapsed
during the
year
Number
Balance at
30 June
2016
Grant
Date
2016
Vested
and
exercisabl
e at end of
the year
Number
14/12/2012
13/12/2016
14/12/2012
13/12/2016
14/12/2012
13/12/2016
14/12/2012
13/12/2016
14/12/2012
13/12/2016
14/12/2012
13/12/2016
01/2/2013
31/1/2017
01/2/2013
31/1/2017
01/2/2013
31/1/2017
20/10/2014
31/12/2016
Weighted average exercise price
$0.50
$0.55
$0.60
$0.65
$0.70
$0.75
$0.35
$0.40
$0.45
$0.26
500,000
1,000,000
1,500,000
1,000,000
1,000,000
1,000,000
200,000
200,000
200,000
500,000
7,100,000
$0.59
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
500,000
1,000,000
1,000,000
1,500,000
1,500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
200,000
200,000
200,000
500,000
7,100,000
$0.59
200,000
200,000
200,000
500,000
7,100,000
Expiry
Date
Exercise
Price
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Lapsed
during the
year
Number
Balance at
30 June
2016
Grant
Date
2015
Vested
and
exercisabl
e at end of
the year
Number
04/03/2010
02/03/2015
14/12/2012
13/12/2016
14/12/2012
13/12/2016
14/12/2012
13/12/2016
14/12/2012
13/12/2016
14/12/2012
13/12/2016
14/12/2012
13/12/2016
01/2/2013
31/1/2017
01/2/2013
31/1/2017
01/2/2013
31/1/2017
20/10/2014
31/12/2016
Weighted average exercise price
$0.18
$0.50
$0.55
$0.60
$0.65
$0.70
$0.75
$0.35
$0.40
$0.45
$0.26
105,000
500,000
1,000,000
1,500,000
1,000,000
1,000,000
1,000,000
200,000
200,000
200,000
-
6,705,000
$0.61
-
-
-
-
-
-
-
-
-
-
500,000
500,000
$0.26
-
-
-
-
-
-
-
-
-
-
-
-
(105,000)
-
-
-
-
-
-
-
-
-
-
-
-
500,000
500,000
1,000,000
1,000,000
1,500,000
1,500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
200,000
200,000
200,000
500,000
200,000
200,000
200,000
500,000
7,100,000
(105,000)
$0.18
7,100,000
$0.59
47 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
The weighted average remaining contractual life of share options outstanding at the end of the period was 0.5
years (2015 – 1.5 years). The assessed fair value at grant date of options issued is determined using the Black
Scholes option pricing model which takes into account the exercise price, the term of the option, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free
rate for the term of the option.
No options were granted during the year ended 30 June 2016 (2015: 500,000 options issued).
The model inputs for options granted during the year ended 30 June 2015 included:
Option premium
Exercise price (before capital return)
Expiry date
Vesting conditions
Share price at grant date
Expected price volatility of the Company’s shares
Expected dividend yield
Risk free interest rate
Employee Options
issued
20 October 2014
$Nil
$0.26
31 December 2016
Vest immediately
$0.15
66%
0%
2.53%
The weighted average fair value of options granted was $Nil (2015: $$0.035). The expected price volatility is
based on historic volatility (based on the remaining life of the options) adjusted for any expected changes to future
volatility due to publicly available information.
2016
$
2015
$
Expenses arising from share-based transactions
Options issued to directors and employees
-
24,384
21. Parent entity disclosures
As at and throughout the financial year ending 30 June 2016 and 30 June 2015 the parent entity of the Group
was Chesser Resources Limited.
a)
The individual financial statements for the parent entity show the following aggregations.
Summary financial information
48 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
Results
Profit / (loss) for the year
Total comprehensive income for the year
Financial Position
Current assets
Non-current assets
Current liabilities
Net Assets
Contributed equity
Share-based payments reserve
Accumulated losses
2016
$
2015
$
Chesser Resources Limited
(431,128)
16,863,868
(431,128)
16,863,868
3,977,348
38,820
4,016,168
84,891
84,891
7,936,027
21,507
7,957,534
107,725
107,725
3,931,277
7,849,809
5,838,418
1,914,271
(3,821,412)
3,931,277
9,325,822
1,914,271
(3,390,284)
7,849,809
Guarantees entered into by the parent entity
b)
Chesser Resources Limited has not entered into any guarantees in the current or previous financial year, in relation
to the debt of its subsidiaries.
c)
Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2016 or 30 June 2015.
d)
Contractual commitments for capital expenditure
The parent entity did not have any contractual commitments for capital expenditure as at 30 June 2016 (2015:
$nil).
22. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 3(c).
Name of entity
Country of
incorporation
Class of
shares
EBX Holdings Pty Ltd
Chesser Resources Holding Cooperatief U.A.
Dharana B.V.
Australia
Netherlands
Netherlands
Ordinary
Membership
Ordinary
During the 2015 financial year, the Company disposed of the following subsidiaries:
Equity holding (1)
2016
%
100
100
100
2015
%
100
100
100
i. On 24 October 2014 the Company disposed of its wholly owned subsidiary Bati Anadolu Madencilik Sanayi
Ve Ticaret A.S. (Bati) the owner of the Kestanelik Gold Project. The proceeds of US$40 million were received
in cash. No tax charge or credit arose in relation to the disposal.
ii. On 26 March 2015 the Company disposed of its 51% owned subsidiaries EBX Madencilik Ltd. A.S and EBX
(BVI) Ltd (EBX entities). Through which the Company held its ownership interest in the Sisorta Gold Project.
The proceeds of $162,023 were received in cash. No tax charge or credit arose in relation to the disposal.
49 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
iii. On 26 June 2015 the Company disposed of its wholly owned subsidiary Kaletepe Madencilik Sanayi Ve
Ticaret A.S (Kalatepe). The Company received $Nil consideration for the disposal of Kalatepe. No tax charge
or credit arose in relation to the disposal.
A.
Consideration received
Consideration received in cash and cash
equivalents
B.
Net assets disposed of
Bati
$
EBX entities
$
Kalatepe
$
Total
$
45,454,545
162,023
-
45,616,568
Bati
$
EBX entities
$
Kalatepe
$
Total
$
Net assets disposed of
Including cash and cash equivalents
22,650,939
4,758
465,989
11,242
-
23,116,628
1,510
17,510
C.
Financial performance and cash flow information
The financial performance and cash flow information presented are the period from 1 July 2014 to the date on
which the relevant subsidiary was disposed and for the year ended 30 June 2015.
Revenue
Expenses
Loss before income tax of discontinued operations
Income tax expense
Loss before income tax of discontinued operations
Gain on sale of subsidiaries after income tax
Profit / (loss) from discontinued operations
Net cash outflow from operating activities
Net cash inflow from investing activities
Net cash decrease attributable to disposed subsidiaires
D.
Gain / (loss) on disposal of subsidiaries
2015
$
98,923
(1,067,271)
(968,348)
-
(968,348)
21,244,676
20,276,328
(946,663)
(1,654,802)
(2,601,465)
Consideration received
Transaction costs
Net assets disposed of
Non-controlling interests
Bati
$
45,454,545
(2,321,623)
(22,650,939)
-
EBX entities
$
162,023
-
(465,689)
3,033,743
Kalatepe
$
Total
$
-
-
-
-
45,616,568
(2,321,623)
(23,116,628)
3,033,743
Cumulative exchange gains in respect of the net
assets of the subsidiary reclassified from equity to
profit and loss on loss of control of subsidiary
619,420
(2,587,239)
Gain / (loss) on disposal
21,101,403
142,838
435
435
1,967,384
21,244,676
50 | P a g e
Chesser Resources Limited
Notes to the Financial Statements (continued)
For the year ended 30 June 2016
23. Related parties
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not disclosed in this note.
There were no transactions between the Group and other related parties in the current or prior financial year.
24. Key management personnel compensation
The aggregate compensation paid to directors and other members of key management personnel of the
Company and the Group is set out below:
Short term employee benefits
Post-employment benefits
Termination benefits
Share based payments
25. Commitments and contingent liabilities
Operating leases
2016
$
2015
$
193,861
8,685
-
-
202,546
830,067
80,354
347,271
24,383
1,282,075
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Contingent liabilities
-
-
-
61,299
-
61,299
The Company did not have any material contingent liabilities as at 30 June 2016.
26. Events occurring after the reporting period
No matter or circumstance has arisen since the end of the financial year that has significantly affected, or may
significantly affect the Group’s operations, the result of those operations or the Group’s state of affairs.
51 | P a g e
CHESSER RESOURCES LIMITED
DIRECTORS’ DECLARATION
In the directors’ opinion:
(a)
the attached financial statements and notes are in accordance with the Corporations Act 2001,
including:
(i)
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its
performance, as represented by the results of its operations and its cash flows, for the financial
year ended on that date;
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in note
3(a); and
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
The directors have been given the declarations by the chief executive officer and chief financial officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of directors.
Stephen Kelly
Executive Director
Dated 30 September 2016
52 | P a g e
Independent Auditor’s Report to the Members of Chesser Resources Limited
Report on the Financial Report
We have audited the accompanying financial report of Chesser Resources Limited, which
comprises the consolidated statement of financial position as at 30 June 2016, the
consolidated statement of comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the consolidated entity comprising the
company and the entities it controlled at the year’s end or from time to time during the
financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB101 Presentation of
Financial Statements, that the financial statements comply with International Financial
Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require that we comply with relevant ethical requirements relating to audit engagements
and plan and perform the audit to obtain reasonable assurance whether the financial
report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the company’s preparation of the financial report
that gives a true and fair view in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Opinion
In our opinion:
a) the financial report of Chesser Resources Limited is in accordance with the
Corporations Act 2001, including:
i)
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
ii)
b) the consolidated financial report also complies with International Financial Reporting
Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 6 to 13 of the directors’
report for the year ended 30 June 2016. The directors of the company are responsible for
the preparation and presentation of the Remuneration Report in accordance with Section
300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Opinion
In our opinion the Remuneration Report of Chesser Resources Limited for the year ended
30 June 2016 complies with Section 300A of the Corporations Act 2001.
PITCHER PARTNERS
Nigel Batters
Partner
Brisbane, Queensland
30 September 2016
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 7 October 2016.
A. Distribution of securities
Analysis of the number of equity securities by size of holding:
Number of Holders
Holding
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Shares
82
150
132
311
127
802
Options
-
-
-
-
5
5
There were 396 holders of less than a marketable parcel of shares.
B. Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of equity securities are listed below:
Shareholder
One Managed Investment Funds Limited
National Nominees Limited
Jetosea Pty Ltd
CPO Superannuation Fund Pty Ltd
Chifley Portfolios Pty Ltd
Calama Holdings Pty Ltd
Mr Angus William Johnson & Mrs Lindy Johnson
Greenslade Holdings Pty Ltd
Mr Kee Tiang Tan & Mrs Sey Khim Tan
Mr Nicholas Dermott McDonald
Corporate Property Services Pty Ltd
Taycol Nominees Pty Ltd
Mr Luke Charles Anderson
Darroch Family Pty Ltd
AWJ Family Pty Ltd
Mr Michael Richard Schapel & Mrs Effie Schapel
Mr Luke Charles Anderson
Mr Nicholas Dermott McDonald
Mr Craig Peter Ball & Mrs Suzanne Katherine Ball
Souttar Superannuation Pty Ltd
% of total
shares on
issue
16.81
5.83
4.88
3.86
3.40
2.62
2.29
2.24
1.78
1.64
1.61
1.43
1.35
1.18
1.09
1.05
1.03
0.98
0.96
0.94
Units
20,061,242
6,953,058
5,819,481
4,600,839
4,061,134
3,125,000
2,727,500
2,671,269
2,122,779
1,952,257
1,920,332
1,701,418
1,615,000
1,410,000
1,296,940
1,253,919
1,225,000
1,167,986
1,142,523
1,125,000
67,952,677
59.64
SHAREHOLDER INFORMATION
Unquoted equity securities
Shareholder
Options issued to former Directors
Options issued under the Chesser Resources Limited Employee
Option plan to take up ordinary shares
Number on
issue
6,000,000
1,100,000
Number of
holders
3
2
Unquoted equity securities represent options to acquire ordinary shares. Each option entitles the holder to
acquire one ordinary share. The names of the holders of the unlisted options are:
Option holder
Mr R G Reynolds
M & S Super Investments Pty Ltd
Mr P Lester
Mr S Kelly
Mr N Ricketts
C. Substantial shareholders
Substantial shareholders in the Company are set out below:
Options
2,000,000
2,000,000
2,000,000
600,000
500,000
7,100,000
% of total
options on
issue
28.17%
28.17%
28.17%
8.45%
7.04%
100.00%
Sandon Capital Pty Ltd
D. Voting rights
Shareholder
Number held
26,979,000
Percentage
22.61%
The voting rights attaching to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon
a poll each share shall have one vote.
(b) Options
No voting rights.