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2023 ReportANNUAL REPORT 2020 ABN 14 118 619 042 Contents Chairman’s Letter Directors’ Report Auditor’s Independence Declaration Independent Auditor’s Report 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 Shareholder Information Corporate Directory 1 2 22 23 27 28 29 30 31 32 58 59 62 Competent Person Statement The information in this presentation that relates to Exploration Results is based on information compiled by geologists employed by Boya SAU (a wholly owned subsidiary of Chesser Resources) and reviewed by Mr Michael Brown, who is a member of the Australian Institute of Geoscientists (MAIG). Mr Brown is the Managing Director of Chesser Resources Limited. Mr Brown is considered to have sufficient experience deemed relevant to the style of mineralisation and type of deposit under consideration, and to the activity that he is undertaking to qualify as a Competent person as defined in the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (the 2012 JORC Code). Mr Brown consents to the inclusion in this report of the matters based on this information in the form and context in which it appears. References to prior ASX Announcements This report contains information extracted from previous ASX market announcements reported in accordance with the JORC Code (2012) and available for viewing at www.chesserresources.com.au. Chesser Resources confirms that in respect of these announcements it is not aware of any new information or data that materially affects the information included in any original ASX market announcement. The announcements are as follows: Diamba Sud Project: Announcements dated: 3rd April 2017, 22nd February 2018, 28th May 2018, 27th August 2018, 25th March 2019, 10th April 2019, 6th May 2019, 14th May 2019, 26th August 2019, 3rd September 2019, 14 October 2019, 21 January 2020, 2 March 2020, 17 June 2020, 21 July 2020, 28 July 2020 and 13 August 2020. Chairman’s Letter CHAIRMAN’S LETTER Chairman’s Letter to Shareholders Dear Shareholders, As your recently appointed Chairman, I am pleased to present Chesser Resources Limited’s (the “Company” or “Chesser”) 2020 Annual Report. The past year has seen the Company rapidly advance its strategically located Diamba Sud Project in eastern Senegal following the announcement of two high-grade gold discoveries. These discoveries mark a significant step towards achieving the Company’s principal objective of unearthing the next major gold deposit in West Africa. The Diamba Sud Project lies to the immediate west of the regionally significant Senegal Mali Shear Zone (“SMSZ”) that transects a prolific Birimian greenstone belt hosting over 45 million ounces of gold, including Barrick Gold’s ~18 million ounce Loulo-Gounkoto mining complex. Drilling completed during the year to June 2020 was focused on the high-grade gold zones at Area A and Area D. These both lie within an extensive gold geochemical auger anomaly referred to as the Northern Arc Target, which trends into Barrick Gold’s neighbouring Bambadji tenement to the east. Through the insights provided by diamond drilling, the Company is developing a better understanding of the primary gold mineralisation and structural controls of the Area A and Area D discoveries. The results from the mostly shallow drilling completed throughout the year have consistently returned highly encouraging widths and grades of gold mineralisation with distinctive alteration that is the hallmark of the many large deposits located along the SMSZ. These characteristics point to the potential of a large hydrothermal system emerging at Diamba Sud. During the year, the Company also made significant steps in unlocking the potential of the Area D target following transformational high-grade intersection at less than 60m depth. Further spectacular intersections reported post year- end confirmed this discovery, which is a priority target for follow-up drilling in the upcoming field season commencing in October 2020. I would like to thank my fellow Board members and management as well as our in-country team for their ongoing efforts and positive outcomes during the past year. Chesser’s exploration success to date has largely been achieved under the leadership of Mike Brown (Managing Director) working collaboratively with Chesser’s in-country team, headed by Gareth O’Donovan (Exploration Manager). Finally, I thank you for your continuing support and we look forward to updating you on our progress during the forthcoming field season as we move forward in our quest of advancing the discoveries at Diamba Sud. Yours sincerely, Mark Connelly Chairman Chesser Resources Limited Annual Report 2020 | 1 Director’s Report DIRECTORS’ REPORT Directors’ Report The directors of Chesser Resources Limited (the “Company” or “Chesser”) submit herewith the year financial report of the Company and the entities it controlled for the year ended 30 June 2020 (collectively “Group”). To comply with the provisions of the Corporations Act 2001, the directors report as follows. Directors 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 Mark Connelly, Non-Executive Chairman (appointed 10 July 2020) • Mr Michael Brown, Managing Director • Mr Simon O’Loughlin, Non-Executive Director • Mr Simon Taylor, Non-Executive Director • Mr Robert Greenslade, Non-Executive Director (appointed 8 April 2020) • Mr Stephen Kelly, Executive Director (resigned 10 July 2020) Company Secretary Mr Stephen Kelly was the Company Secretary during the whole of the year under review and up to the date of this report. Mr Mark Connelly (Non-Executive Chairman) Mr Connelly has extensive experience and involvement in African gold exploration and development including the merger of Papillon Resources with B2 Gold Corp and the merger of Adamus Resources with Endeavour Mining. He is currently Non-Executive Chairman at Oklo Resources Limited, TAO Commodities Limited, Calidus Resources Limited and Primero Group Limited. Mr Connelly is a member of the Australian Institute of Company Directors, a member of the Australian Institute of Management and a member of the Society of Mining, Metallurgy and Exploration. Former directorships in last 3 years: In the last 3 years, Mr Connelly has been a Director of West African Resources Limited, Ausdrill Ltd, Toro Gold Plc, Tiger Resources Limited, Saracen Mineral Holdings Limited and Cardinal Resources Limited. Mr Simon O’Loughlin, BA(Acc) (Non-Executive Director) 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 a Non- Executive Director of Bod Australia Limited , Stellar Resources Limited and Petratherm Limited. 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 Kibaran Resources Ltd, Odin Mining Ltd, ARC Exploration Limited, Piedmont Lithium Limited and Oklo Resources Limited. 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 Stellar Resources Limited. Former directorships in last 3 years: TW Holdings Limited, Bod Australia Limited and ARC Exploration Limited. 2 | Annual Report 2020 Chesser Resources Limited DIRECTORS’ REPORT Mr Robert Greenslade, BEcon, (Non-Executive Director) Mr Greenslade has extensive experience in investment banking with over 30 years’ experience in mergers and acquisitions, capital raisings and strategic advisory predominantly in the resources industry. Robert is currently a director and co-founder of GP Securities a private investment vehicle focusing on various industries including private equity, resources, manufacturing in the food and retail sectors and technology. Until February 2016, Robert was a Managing Director at Standard Chartered Bank and Head of Australia, Mining and Metals Division, following the Bank’s acquisition of Gryphon Partners Advisory, (a boutique corporate advisory firm focusing on the resources sector of which Robert was a co-founder), in 2011. Prior to Gryphon Partners Advisory, Robert held various senior roles at Normandy Mining Limited, including Head of Corporate Development and at Newmont Mining following Newmont’s takeover of Normandy. Former directorships in last 3 years: Nil Mr Michael Brown, BSc (Geology), BA, MBA (Managing Director) Mr Brown has over 25 years’ experience in exploration, mining, energy, finance and capital markets. He has held senior executive roles with Kinross Gold and Pacific Hydro and has local and international experience as an exploration and mine geologist. Mr Brown was most recently a member of the executive team at ASX listed Austral Gold (ASX: AGD), a junior producer with mines in Chile and Argentina. Prior to that, he was CEO of Argentex Mining, a TSX Listed precious metals explorer acquired by AGD. Mr Brown has an MBA from Melbourne Business School, and a double BSc (Honours-Geology), BA from The University of Melbourne. He is a member of Australian Institute of GeoScientists and is fluent in Spanish. He has considerable experience in negotiating with local authorities, government agencies and communities and worked in West Africa in his time with Kinross Gold. Former directorships in last 3 years: Nil Mr Stephen Kelly, B.Bus, ACA (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 has more than 30 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 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 Limited were: Number of Ordinary Shares # Number of Options over Ordinary Shares # Mr Mark Connelly Mr Simon O’Loughlin Mr Simon Taylor Mr Michael Brown Mr Robert Greenslade - 3,433,334 4,300,001 1,458,000 23,562,748 - 1,350,000 1,800,000 3,000,000 1,250,000 # 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 2020, and the numbers of meetings attended by each director were as follows: Number of meetings held Board Meetings: 4 Number of meetings eligible to attend Number of meetings attended Mr Mark Connelly (appointed 10 July 2020) Mr Simon O’Loughlin Mr Simon Taylor Mr Robert Greenslade (appointed 8 April 2020) Mr Michael Brown Mr Stephen Kelly (resigned 10 July 2020) - 4 4 2 4 4 - 4 4 2 4 4 The full Board fulfilled the roles of the Audit, Risk and Compliance Committee and the Remuneration and Nominations Committee during the financial year. Chesser Resources Limited Annual Report 2020 | 3 Principal Activities The principal activities undertaken by the Company during the year are summarised as follows: Permits The Company’s 53.3km2 Diamba Sud and 241.9km2 Diamba Nord exploration permits are valid for two years and can be extended for an additional three-year period and a subsequent two-year period. Exploration Activities The Company’s exploration activities during the year were focussed on its Senegal projects, and the flagship Diamba Sud Project in particular. DIAMBA SUD The Diamba Sud Project comprises two rectangular blocks joined by a corridor to create a contiguous tenement (Figure 1). The northern segment of Diamba Sud (termed DS-1) adjoins an open pit gold mine (Karakaene) operated by Afrigold along its western margin and has had previous programs of geochemistry, rock chip sampling and drilling. Figure 1: Schematic regional geology of eastern Senegal, showing the Diamba Sud Project and its proximity to both the SMSZ, and the major gold operations and projects on or adjacent to splays off the SMSZ. 4 | Annual Report 2020 Chesser Resources Limited DIRECTORS’ REPORT Figure 2: Diamba Sud Gold Project location with respect to significant gold mining operations, the Senegal Mali Shear Zone and associated splay structures (LHS) and a zoomed image of the auger geochemical gold anomalies and drilling targets (Area A, D and Western Splay) (RHS). Exploration programs previously undertaken by the Company successfully delineated three large gold geochemical anomalies for follow-up drill testing: Northern Arc, Western Flank and Southern Zone. Three discrete follow-up drilling campaigns were undertaken during the year, focussed on the Northern Arc and Western Flank targets to better understand the style, nature, potential host and controls to the underlying gold mineralisation. Northern Arc target: Previous exploration within Northern Arc discovered the presence of high-grade gold mineralisation at Area A and multiple significant intersections at Area D. Area A An initial follow-up program at Area A during the September quarter consisted of drilling on a westerly azimuth along two east-west oriented traverses to test the area immediately adjoining the previously reported significant intercepts. Best intersections included: 21m at 6.62 g/t gold from 53m 4m at 3.44 g/t gold from 76m 14m at 9.53 g/t gold from 75m The high-grade gold mineralisation correlated with a broad chargeability anomaly coincident with an interpreted felsic intrusive (resistivity high) and provided a target for further drilling to test for possible depth and strike extensions. A further phase of drilling at Area A, including diamond drilling, commenced in the December quarter returning the following significant intersections: 16m at 8.51 g/t gold from 86m, in fresh rock, including - 10m at 13.11 g/t gold from 86m 4m at 9.36 g/t gold from 14m, in saprolite, including - 2m at 18.20 g/t gold from 14m 4m at 13.28 g/t gold from 103m, including - 2m at 24.43 g/t gold from 103m Chesser Resources Limited Annual Report 2020 | 5 DIRECTORS’ REPORT The results confirmed a high-grade gold discovery at Diamba Sud, extending Area A at depth and in multiple directions, including confirmation of a northwest-southeast feeder structure interpreted as the principal host of the high-grade mineralisation. The gold mineralisation is principally structurally hosted, with a second style of minerlaisation within altered sedimentary breccias. This is interpreted to have formed by fluids flowing upwards along the structures then moving laterally into the sedimentary breccia, with strong hydrothermal brecciation. Both the structurally hosted and the lithological hosted pyrite mineralisation are associated with intense albite-carbonate-hematite alteration, typical of the assemblages found associated with other Tier 1 gold operations along the SMSZ. These characteristics provide strong indications that Area A is part of, or proximal to, a larger hydrothermal system, with marked similarities to other large systems and Tier 1 operations on the SMSZ. The final phase of drilling at Area A confirmed the presence of a new potentially significant structural trend, intersecting a wide zone of gold mineralisation along a southwest-northeast trend. Gold mineralisation is hosted within altered sedimentary breccias underlying a felsic intrusive. Significant intersections included: 23m at 3.50 g/t gold from 96m, including - 6m at 5.44 g/t gold from 96m, and - 6m at 5.60 g/t gold from 110m 8m at 1.58 g/t gold from 127m 8m at 1.37 g/t gold from 147m The interpreted host structures and associated gold mineralisation remain open along strike and are priority targets for follow-up drilling. Figure 3: Area A plan view showing drilling locations and results. Conjugate NE-SW and NW-SE trending faults are shown to control mineralisation. A north-south trending fault/dyke runs down the eastern side of Area. 6 | Annual Report 2020 Chesser Resources Limited DIRECTORS’ REPORT Figure 4: Area A section showing the two controlling structures (NE-SW and NW-SE) hosting the high-grade mineralisation Area D An initial follow-up program at Area D during the September quarter was drilled on a westerly azimuth to test for potential north and northwest trending host structures extending from the previously reported significant intercepts. Best intersections included: 53m at 2.61 g/t gold from 57m, including - 17m at 4.97 g/t gold from 59m 4m at 2.23 g/t gold from 93m 4m at 2.75 g/t gold from 99m 14m at 1.74 g/t gold from 8m 2m at 1.47 g/t gold from 18m 2m at 4.99 g/t gold from 22m Further phases of drilling completed at Area D during the December, March and June quarters confirmed the presence of a northwest-southeast striking host structure, particularly in an area within the Northern Arc gold geochemical anomaly which had not previously been fully assessed, with two previous holes not being able to reach the target depth due to excess water and clay. Chesser Resources Limited Annual Report 2020 | 7 DIRECTORS’ REPORT The RC holes were drilled on a southwest-northeast orientated line and returned significant mineralisation over wide zones, marked by strong limonite staining. Assay results received post year-end highlighted high-grade intervals of up to 67.80 g/t gold within broad continuous zones of mineralisation. Significant intersections included; 48m at 6.70 g/t gold from 24m, including - 10m at 25.14 g/t gold from 62m 55m at 4.27 gold from 16m 38m at 4.63 g/t gold from 8m, including - 18m at 7.04 g/t gold from 28m, including - 4m at 18.30 g/t gold from 30m 36m at 2.93 g/t gold from 6m, including - 10m at 6.13 g/t gold from 16m A second RC line, drilled parallel and 50m to the southeast intersected sedimentary breccias, carbonates and minor felsic intrusives, typical of the rocks observed in Area A. Whilst more drilling is needed in this area to understand the controls to the mineralisation, the Company currently believes a late-stage, northeast trending fault observed at the northern end of Area A may extend between these two lines and truncate the host structure. Figure 5: Results from Area D drilling. Late-stage fault appears to offset the geology between the two drill lines. 8 | Annual Report 2020 Chesser Resources Limited DIRECTORS’ REPORT Figure 6: Area D Section looking northwest (A – A’). Western Flank Target: Western Splay A gradient array induced polarization (GAIP) geophysical survey undertaken over this area indicated the presence of a major northwest-trending splay structure extending from the SMSZ to the west of the Company’s previous drilling. Given the spatial association of all major gold deposits along the SMSZ either on or adjacent to splays extending from the SMSZ (e.g. Boto, Fekola, Gounkoto, Loulo, Yatela and Sadiola), this structure represents a high priority target for future exploration activities. Results released after year-end from drilling at one of the targets at the Western Splay area successfully intersected a mineralised structure approximately 5km to the southwest of the Area A discovery and immediately west of the main Western Splay structure. The drilling confirmed a mineralised trend over ~300m, which is believed to extend by at least a further ~200m to the artisanal workings located along strike. Best intersections included: 22m at 2.12 g/t gold from 36m, including - 1m at 13.90 g/t gold from 54m 2m at 19.80 g/t gold from 4m 6m at 1.79 g/t gold from 28m 10m at 1.10 g/t gold from 111m This structure and the broader Western Splay area are considered highly prospective with multiple targets expected to be tested in future drilling. Chesser Resources Limited Annual Report 2020 | 9 DIRECTORS’ REPORT Figure 7: Results from Western Splay target area drilling. The structure appears to be a sub-parallel structure to the main Western Splay structure based on geophysics. Historic drilling and artisanal activity indicate a potential strike length of 500m, open in both directions. Future Drill Programs The Company is compiling all information from the most recent drill program and incorporating it into the database for review, analysis and planning of next steps at Diamba Sud. The highly significant results from Area D, the consistent results from Area A and the multiple, lightly tested targets at Western Splay provide an excellent platform to launch the forthcoming drilling program at Diamba Sud. The Company is expecting to increase its expenditure commitment significantly with a large program, currently estimated at 20,000 m of RC and DD drilling, planned to commence as soon as practical at the expected end of the current wet season in October. Figure 8: Diamba Sud Gold Project showing location of drilling undertaken during the year, highlights of drilling results, auger geochemical anomalies map, highly prospective NW-SE trends and late NE trending fault 10 | Annual Report 2020 Chesser Resources Limited DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report CCoorrppoorraattee aaccttiivviittiieess During the year the Company: • Completed a private placement to sophisticated and institutional investors on 20 September 2019 to raise $1.89 million (before costs) through the issue of 31,507,295 fully paid ordinary shares at an issue price of $0.06 per share. • Appointed Mr. Rob Greenslade as a Non-Executive Director of the Company in April 2020. Mr. Greenslade has extensive experience in investment banking with over 30 years’ experience in mergers and acquisitions, capital raisings and strategic advisory services predominantly in the resources industry. Mr. Greenslade was previously Managing Director at Standard Chartered Bank and Head of Australia, Metals and Mining Division, following the Bank’s acquisition of Gryphon Partners Advisory, a boutique corporate advisory firm focusing on the resources sector of which he was a co-founder. Prior to Gryphon Partners Advisory, Rob held various senior positions at Normandy Mining Limited, including Head of Corporate Development and at Newmont Mining following Newmont’s takeover of Normandy. • Completed a private placement to sophisticated and institutional investors on 6 April 2020 to raise $1.68 million (before costs) through the issue of 42 million fully paid ordinary shares at an issue price of $0.04 per share. OOppeerraattiinngg rreessuulltt The Company reported a loss after tax for the year of $1,135,683 (2019: loss of $2,018,453). The significant items affecting the loss after tax were: • A decrease in Impairment of capitalised exploration and evaluation expenditure. There was no impairment in the financial year. In the prior period impairment charges totaling $732,955 were recognised in relation to the Woye, Youboubou and Garaboureya tenements which have been relinquished by the Group. • A decrease in travel expenses to $81,709 (2019: $177,878) reflecting reduced international travel by Group personnel in the financial year as a consequence of COVID-19 related travel restrictions. In the year ended 30 June 2020, the Group incurred capitalised exploration and evaluation expenditure totaling $2,616,793 (2019: $1,519,643). This expenditure was principally incurred in relation to the Phase 3 and Phase 4 exploration drilling programs undertaken on the Diamba Sud gold project. SSiiggnniiffiiccaanntt cchhaannggeess iinn tthhee rreeppoorrttiinngg yyeeaarr The financial position and performance of the group was particularly affected by the following events and transactions during the year-ended 30 June 2020: • On 20 September 2019, Chesser issued 31,507,295 fully paid ordinary shares at an issue price of $0.06 to raise $1.89 million before transaction costs. In addition to the Placement, on 18th December 2020, the Company issued a further 583,333 shares at the Placement price of $0.06 per share to Directors to raise funds totaling $35,000. A further $155,701 was received from the exercise of options. • On 18 December 2019, Chesser issued 1,890,438 fully paid ordinary shares to Taylor Collison in payment of the lead manager fee payable in relation to the 20 September 2019 capital raising. • On 6 April 2020, Chesser issued 42,000,000 fully paid ordinary shares at an issue price of $0.04 to raise $1.68 million before transaction costs. Chesser Resources Limited Annual Report 2020 | 11 15 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report DDiivviiddeennddss No dividends were paid or declared during the year and no recommendation is made as to payment of dividends. IImmppaacctt ooff CCOOVVIIDD--1199 The outbreak of the COVID-19 pandemic in early 2020 and the subsequent travel and trade restrictions imposed by the governments of numerous countries including Australia have caused disruption to businesses and economic activity. The Board and Management of the Group have considered the impact of the COVID- 19 pandemic on the Group’s operations and financial performance and have determined that the Group has not been materially impacted by the COVID-19 pandemic at this stage. The Group received a $12,342 cash boost grant from the Australian government during the financial year as part of the Australian government’s economic response to the COVID-19. EEvveennttss ooccccuurrrriinngg aafftteerr bbaallaannccee sshheeeett ddaattee Except as noted below, no matter or circumstance has arisen since the end of the 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: • Appointed Mr. Mark Connelly as Non-Executive Chairman of the Company in July 2020. Mr. Mark Connelly is a seasoned executive with an impressive track record in African gold exploration and development, including the US$570 million merger of Papillon Resources with B2 Gold Corp in 2014 and the US$600 million merger of Adamus Resources with Endeavour Mining in 2011. More recently Mark was the Chairman of ASX listed West African Resources through the development, construction and commissioning of the Sanbrado mine in Burkina Faso, West Africa’s newest gold producer. Mark is currently Non-Executive Chairman at Oklo Resources. Following the appointment, Mr Simon O’Loughlin moved to a Non-Executive Director role. • Mr Stephen Kelly resigned as Non-Executive Director on 10th July 2020 and will continue to serve as Company Secretary and Chief Financial Officer. • On 10 July 2020, the Company entered into contractual commitments to issue up to 75,000,000 fully paid ordinary shares at an issue price of $0.08 to raise up to $6 million before costs. The capital raising was settled in two tranches as follows: - - Tranche 1 comprising the issue of 29,339,068 fully paid ordinary shares settled on 17 July 2020. Tranche 2 comprising the issue of 45,660,932 fully paid ordinary shares settled on 8 September 2020 • On 12 July 2020, 23,809,524 A Class Performance Shares expired without vesting. • On 17 July 2020, the Company issued 21,000,000 unlisted options at an issue price of $0.08 and an expiry date of 16 July 2021. • On 8 September the Company issued 2,000,000 unlisted options with an exercise price of $0.08 and an expiry date of 30 November 2023 to Taylor Collison as consideration for corporate advisory and lead manager services. • In the period from 1 July 2020 to the date of this report, the Company has received $372,374 cash proceeds from the exercise of 4,591,092 options. 12 | Annual Report 2020 Chesser Resources Limited 16 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report LLiikkeellyy ddeevveellooppmmeennttss aanndd eexxppeecctteedd rreessuullttss ooff ooppeerraattiioonnss Following the highly encouraging exploration results to date which have confirmed a new high-grade gold discovery at the Diamba Sud Project it is anticipated that the short-term focus of the Group will continue to be the exploration of the Diamba Sud Project with additional exploration activity being undertaken at the Diamba Nord Project. EEnnvviirroonnmmeennttaall RReegguullaattiioonn The Company was not subject to any significant environmental regulation under a law of the Commonwealth of a State or Territory of Australia. AAuuddiittoorr''ss iinnddeeppeennddeennccee ddeeccllaarraattiioonn A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is attached to this report. SShhaarreess uunnddeerr OOppttiioonn Unissued ordinary shares of the Company under option at the date of this report are as follows: GGrraanntt DDaattee EExxppiirryy DDaattee EExxeerrcciissee pprriiccee NNuummbbeerr ooff ooppttiioonnss uunnddeerr ooppttiioonnss 12/07/2017 31/12/2020 11/09/2017 31/12/2020 04/01/2019 31/12/2021 15/03/2019 31/12/2021 15/03/2019 31/12/2021 15/03/2019 31/12/2022 15/03/2019 31/12/2022 18/12/2019 30/11/2021 17/7/2020 16/7/2021 8/9/2020 30/11/2023 $0.10 $0.10 $0.05 $0.05 $0.05 $0.05 $0.05 $0.12 $0.08 $0.08 3,300,000 727,658 2,000,000 500,000 5,000,000 500,000 1,000,000 2,000,000 16,681,250 2,000,000 3333,,770088,,990088 No option holder has any right under the options to participate in any other share issue of the company or any other entity. SShhaarreess iissssuueedd aass aa rreessuulltt ooff tthhee eexxeerrcciissee ooff ooppttiioonnss The Company issued 2,595,024 fully paid ordinary shares at an issue price of $0.06 during the financial year as a result of the exercise of options. In the period from 1 July 2020 to the date of this report, the Company has received $372,374 cash proceeds from the exercise of 4,591,092 options. SScchheedduullee ooff mmiinniinngg tteenneemmeennttss As at 30 June 2020, the Company had interests in the following tenements: TTEENNEEMMEENNTT Diamba Sud Diamba Nord LLOOCCAATTIIOONN Senegal Senegal IINNTTEERREESSTT 100% 100% Chesser Resources Limited Annual Report 2020 | 13 17 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report RReemmuunneerraattiioonn RReeppoorrtt ((AAuuddiitteedd)) aa)) PPoolliiccyy ffoorr ddeetteerrmmiinniinngg tthhee nnaattuurree aanndd aammoouunntt ooff kkeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell rreemmuunneerraattiioonn The Board of Chesser Resources Limited is responsible for determining and reviewing compensation arrangements for the Non- Executive Directors and the Executive Director. 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. Non-Executive Director Remuneration OObbjjeeccttiivvee The Board seeks to set aggregate remuneration at a level which provides the Group with the ability to attract and retain directors of a high calibre, whilst incurring a cost which is acceptable to shareholders. SSttrruuccttuurree 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 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 plus statutory superannuation. Non-Executive Directors who are called upon to perform extra services beyond the director’s ordinary duties may be paid additional fees for those services. No fees were paid to Non- Executive Directors for additional services during the year ended 30 June 2020 (2019: $Nil). Non-executive directors may also be granted options from time to time. The options granted are considered by the Board to be an effective means of appropriately compensating Directors whilst preserving the Company’s cash reserves and providing an alignment between Director and shareholder interests. Executive Director and Key Management Personnel Remuneration OObbjjeeccttiivvee 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. SSttrruuccttuurree 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. 14 | Annual Report 2020 Chesser Resources Limited 18 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report Variable Remuneration - Short and Long-Term Incentives OObbjjeeccttiivvee 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. • • SSttrruuccttuurree 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. bb)) RReemmuunneerraattiioonn,, GGrroouupp ppeerrffoorrmmaannccee aanndd sshhaarreehhoollddeerr wweeaalltthh 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. FFiinnaanncciiaall YYeeaarr 2020 2019 2018 2017 2016 TToottaall RReemmuunneerraattiioonn $$ 515,089 533,391 417,200 215,700 202,546 EEPPSS ((CCeennttss)) (0.40) (0.95) (0.49) (0.58) (0.31) DDiivviiddeennddss ((CCeennttss)) SShhaarree PPrriiccee ((CCeennttss)) - - - - - 9.4 4.4 6.0 4.5 3.2 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. Chesser Resources Limited Annual Report 2020 | 15 19 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report KKeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell 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): NNaammee Simon O’Loughlin Simon Taylor Robert Greenslade Michael Brown Stephen Kelly PPoossiittiioonn HHeelldd Non-Executive Chairman Non-Executive Director Non-Executive Director (appointed 8 April 2020) Managing Director Executive Director, CFO and Company Secretary The Company has entered into a Consultancy Agreement with MEMM Capital Pty Ltd pursuant to which Mr Michael Brown was engaged to provide Managing Director services to the Company effective from 5 November 2018. The key terms of the Agreement are: • Mr Brown will be paid $280,000 per annum, inclusive of superannuation. • Mr Brown was granted the following incentive options: - - - - 500,000 incentive options exercisable at A$0.05 each on or before 30 November 2021, vesting immediately 500,000 incentive options exercisable at A$0.05 each on or before 30 November 2021, vesting on 5 November 2019 1,000,000 incentive options exercisable at A$0.05 each on or before 30 November 2021, vesting on the Company’s share price achieving a 10-day VWAP of $0.075 prior to 31 May 2020 1,000,000 incentive options exercisable at A$0.05 each on or before 30 November 2021, vesting on the Company’s share price achieving a 10-day VWAP of $0.10 prior to 31 May 2021 • • • The Company provided an interest free, non-recourse loan in the amount of $30,000 to be used for the sole purpose of acquiring loan funded shares. The Company agreed to reimburse up to $25,000 in moving expenses incurred in relocating to Australia. The Agreement may be terminated by either Mr Brown or the Company by providing three months’ notice. 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 $10,000 (2019: monthly cap of $10,000), • 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. cc)) DDeettaaiillss ooff rreemmuunneerraattiioonn 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. 16 | Annual Report 2020 Chesser Resources Limited 20 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report 22002200 CCaasshh aanndd ssaallaarryy ffeeeess SSuuppeerr-- aannnnuuaattiioonn SShhaarree BBaasseedd PPaayymmeennttss^^ TToottaall rreemmuunneerraattiioonn Non-Executive Directors Mr Simon O’Loughlin Mr Simon Taylor Mr Robert Greensladea TToottaall NNoonn--EExxeeccuuttiivvee DDiirreeccttoorrss $ 40,000 40,000 10,000 9900,,000000 $ 3,800 3,800 - 77,,660000 Executive Directors Mr Michael Brown Mr Stephen Kellyb TToottaall EExxeeccuuttiivvee DDiirreeccttoorrss TToottaall KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell CCoommppeennssaattiioonn a Appointed 8 April 2020 b Resigned 10 July 2020 ^ Equity-settled share-based payments as per Corporations Regulation 2M.3.03(1) Item 11. 280,000 120,000 440000,,000000 449900,,000000 77,,660000 - - -- $ 2,510 3,346 - 55,,885566 9,123 2,510 1111,,663333 1177,,448899 $ 4466,,331100 4477,,114466 1100,,000000 110033,,445566 228899,,112233 112222,,551100 441111,,663333 551155,,008899 22001199 Non-Executive Directors Mr Simon O’Loughlin Mr Simon Taylor TToottaall NNoonn--EExxeeccuuttiivvee DDiirreeccttoorrss Executive Directors Mr Michael Browna Mr Stephen Kelly TToottaall EExxeeccuuttiivvee DDiirreeccttoorrss CCaasshh aanndd ssaallaarryy ffeeeess SSuuppeerr-- aannnnuuaattiioonn SShhaarree bbaasseedd ppaayymmeennttss TToottaall rreemmuunneerraattiioonn $ 40,000 40,000 8800,,000000 183,556 120,000 330033,,555566 $ 3,800 3,800 77,,660000 - - -- $ 2,583 3,444 66,,002277 21,625 2,583 2244,,220088 - - 3300,,223355 $ 4466,,338833 4477,,224444 9933,,662277 220055,,118811 112222,,558833 332277,,776644 111122,,000000 111122,,000000 553333,,339911 Other Key Management Personnel Mr Simon McDonaldb TToottaall OOtthheerr KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell TToottaall KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell CCoommppeennssaattiioonn a Appointed 5 November 2018 b Resigned 31 January 2019 ^ Equity-settled share-based payments as per Corporations Regulation 2M.3.03(1) Item 11. 112,000 112,000 449955,,555566 77,,660000 - - PPrrooppoorrttiioonn ooff rreemmuunneerraattiioonn tthhaatt iiss ppeerrffoorrmmaannccee bbaasseedd % 5% 7% - 66%% 33%% 22%% 33%% 33%% PPrrooppoorrttiioonn ooff rreemmuunneerraattiioonn tthhaatt iiss ppeerrffoorrmmaannccee bbaasseedd % 6% 7% 66%% 1111%% 22%% 1111%% -- - 66%% Chesser Resources Limited Annual Report 2020 | 17 21 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report dd)) SShhaarree--bbaasseedd ccoommppeennssaattiioonn During the 2020 financial year the Company did not issue any share-based compensation to key management personnel. During the 2019 financial year, 5,500,000 options with an exercise price of $0.05 and an expiry date of 30 November 2021 were issued to key management personnel. The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are as follows: DDaattee ooff ggrraanntt VVeessttiinngg aanndd eexxeerrcciissee ddaattee EExxppiirryy ddaattee VVeesstteedd EExxeerrcciissee pprriiccee VVaalluuee ppeerr ooppttiioonn aatt ggrraanntt ddaattee NNuummbbeerr ggrraanntteedd 26/02/2019 26/02/2019 30/11/2021 $0.05 $0.0105 916,667 100% 26/02/2019 05/11/2019 30/11/2021 $0.05 $0.0105 916,667 100% 26/02/2019 26/02/2019 Subject to achieving 10-day VWAP of $0.075 Subject to achieving 10-day VWAP of $0.10 30/11/2021 $0.05 $0.0101 1,833,333 100% 30/11/2021 $0.05 $0.0085 1,833,333 100% The number of options over ordinary shares in the company provided as remuneration to directors and key management personnel is shown in section (e) below. When exercisable, each option is convertible into one ordinary share of Chesser Resources Limited. 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. Except as noted above, 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. 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 trinomial 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 During the financial year, 2,000,000 options previously issued as remuneration were exercised. The fair value of those options at the time of exercise was $14,000 (2019: nil options exercised) 18 | Annual Report 2020 Chesser Resources Limited 22 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report ee)) UUnnlliisstteedd ooppttiioonn hhoollddiinnggss 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: 22002200 BBaallaannccee aatt ssttaarrtt ooff yyeeaarr GGrraanntteedd aass ccoommppeennssaattiioonn EExxeerrcciisseedd HHeelldd oonn aappppooiinnttmmeenntt aass kkeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell BBaallaannccee aatt eenndd ooff yyeeaarr VVeesstteedd aanndd eexxeerrcciissaabbllee UUnnvveesstteedd KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell ooff CChheesssseerr RReessoouurrcceess LLiimmiitteedd R Greenslade S Taylor S O’Loughlin M Brown S Kelly TToottaall - 2,600,000 1,950,000 3,000,000 1,950,000 99,,550000,,000000 - (800,000) (600,000) - (600,000) ((22,,000000,,000000)) - - - - - -- 1,250,000 - - - - 11,,225500,,000000 1,250,000 1,800,000 1,350,000 3,000,000 1,350,000 88,,775500,,000000 1,250,000 1,800,000 1,350,000 3,000,000 1,350,000 88,,775500,,000000 - - - - - -- 22001199 BBaallaannccee aatt ssttaarrtt ooff yyeeaarr GGrraanntteedd aass ccoommppeennssaattiioonn EExxeerrcciisseedd LLaappsseedd BBaallaannccee aatt eenndd ooff yyeeaarr VVeesstteedd aanndd eexxeerrcciissaabbllee UUnnvveesstteedd KKeeyy MMaannaaggeemmeenntt PPeerrssoonnnneell ooff CChheesssseerr RReessoouurrcceess LLiimmiitteedd S Taylor S O’Loughlin M Brown S Kelly S McDonalda TToottaall a Resigned 31 January 2019 1,000,000 750,000 3,000,000 750,000 - 55,,550000,,000000 1,600,000 1,200,000 - 1,200,000 2,000,000 66,,000000,,000000 - - - - - -- - - - - (2,000,000) ((22,,000000,,000000)) 2,600,000 1,950,000 3,000,000 1,950,000 - 99,,550000,,000000 1,766,667 1,325,000 500,000 1,325,000 - 44,,991166,,666677 833,333 625,000 2,500,000 625,000 - 44,,558833,,333333 SShhaarree hhoollddiinnggss ff)) 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 (2019: nil). In the prior period the Company provided Mr Brown a non-recourse loan of $30,000 in relation to his acquisition of 600,000 shares. SShhaarreess hheelldd oonn aappppooiinnttmmeenntt aass kkeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell 23,562,748 - - - - 2233,,556622,,774488 22002200 BBaallaannccee aatt ssttaarrtt ooff yyeeaarr AAccqquuiissiittiioonnss dduurriinngg tthhee yyeeaarr BBaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr R Greenslade S Taylor S O’Loughlin M Brown S Kelly TToottaall 1 Represents shares acquired on the exercise of options. 2 Represents shares subscribed for by the Key Management Personnel pursuant to an issuance of shares by the 23,562,748 4,300,001 3,433,334 1,458,333 1,745,000 3344,,449999,,441166 - 800,0001 600,0001 333,3332 850,0003 22,,558833,,333333 - 3,500,001 2,833,334 1,125,000 895,000 88,,335533,,333355 Company at an issue price of $0.038 per Share. 3 Comprised 250,000 shares subscribed for by the Key Management Personnel pursuant to an issuance of shares by the Company and 600,000 shares acquired on the exercise of options. Chesser Resources Limited Annual Report 2020 | 19 23 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report 22001199 BBaallaannccee aatt ssttaarrtt ooff yyeeaarr S Taylor S O’Loughlin M Brown S Kelly S McDonalda TToottaall 2,500,001 1,833,334 - 500,000 - 44,,883333,,333355 a Resigned 31 January 2019 SShhaarreess hheelldd oonn aappppooiinnttmmeenntt aass kkeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell - - - - - -- PPuurrcchhaasseess // ((ddiissppoossaallss)) dduurriinngg tthhee yyeeaarr BBaallaannccee aatt tthhee eenndd ooff tthhee yyeeaarr 1,000,0001 1,000,0001 1,125,0002 395,0001 - 33,,552200,,000000 3,500,001 2,833,334 1,125,000 895,000 - 88,,335533,,333355 1 Represents shares subscribed for by the Key Management Personnel pursuant to an issuance of shares by the Company at an issue price of $0.038 per Share. 2 Comprised 525,000 shares subscribed for by the Key Management Personnel pursuant to an issuance of shares by the Company at an issue price of $0.038 per Share and 600,000 shares issued to Mr Brown as Loan Funded Shares. No shares were received by key management personnel on the exercise of options during the 2019 financial year. gg)) LLooaannss ttoo kkeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell Except as noted below, there were no loans to key management personnel at any time during the financial year: • In the prior financial year, the Company provided the Managing Director an interest free, non-recourse loan in the amount of $30,000 to be used for the sole purpose of acquiring loan funded shares. The loan and the issue of the loan funded shares were approved by the Company’s shareholders on 26 February 2019. As at 30 June 2020 an amount of $3,000 was owing to KCG Advisors Pty Ltd for these services (2019: $Nil). hh)) OOtthheerr ttrraannssaaccttiioonnss wwiitthh kkeeyy mmaannaaggeemmeenntt ppeerrssoonnnneell Except as disclosed in this Remuneration Report and noted below, there were no transactions with key management personnel during the financial year (2019:$Nil). • During the year, the Company paid KCG Advisors Pty Ltd, a company related to Mr Stephen Kelly who was an Executive Director of the Company during the reporting period, a total of $9,000 (2019: $Nil) for the provision of services including office rental for the Company’s registered office, internet and communications services and software subscriptions. VVoottiinngg aanndd ccoommmmeennttss mmaaddee aatt tthhee CCoommppaannyy’’ss 22001199 AAnnnnuuaall GGeenneerraall MMeeeettiinngg ii)) The Company received more than 98% of “yes” votes on its remuneration report for the financial year ended 30 June 2019. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. EEnndd ooff RReemmuunneerraattiioonn RReeppoorrtt 20 | Annual Report 2020 Chesser Resources Limited 24 | P a g e DIRECTORS’ REPORT Chesser Resources Limited Financial Report for the year ended 30 June 2020 Directors’ report IInnssuurraannccee ooff ooffffiicceerrss 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 PPrroocceeeeddiinnggss oonn bbeehhaallff ooff tthhee GGrroouupp 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 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. NNoonn--aauuddiitt SSeerrvviicceess 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 (2019: none) 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. AAuuddiittoorr''ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is attached to this report. AAuuddiittoorr Pitcher Partners continues in office in accordance with section 327 of the Corporations Act 2001. RRoouunnddiinngg ooff aammoouunnttss iinn aaccccoorrddaannccee wwiitthh AASSIICC CCoorrppoorraattiioonnss ((RRoouunnddiinngg iinn FFiinnaanncciiaall // DDiirreeccttoorrss’’ RReeppoorrttss)) IInnssttrruummeenntt 22001166//119911 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. Mike Brown Managing Director Brisbane, 30 September 2020 Chesser Resources Limited Annual Report 2020 | 21 25 | P a g e DIRECTORS’ REPORT The Directors Chesser Resources Limited Level 14 167 Eagle Street BRISBANE QLD 4000 Auditor’s Independence Declaration In relation to the independent audit for the year ended 30 June 2020, 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; and (ii) no contraventions of APES110 Code of Ethics for Professional Accountants (including Independence Standards). This declaration is in respect of Chesser Resources Limited and the entities it controlled during the year. PITCHER PARTNERS JASON EVANS Partner Brisbane, Queensland 30 September 2020 26 | P a g e 22 | Annual Report 2020 Chesser Resources Limited AUDITOR’S INDEPENDENCE DECLARATION INDEPENDENT AUDITOR’S REPORT Independent Auditor’s Report To the Members of Chesser Resources Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Chesser Resources Limited, (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated income statement, the consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (a) (b) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial performance for the year then ended; and complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) “the Code” that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 27 | P a g e Chesser Resources Limited Annual Report 2020 | 23 INDEPENDENT AUDITOR’S REPORT Key audit matter How our audit addressed the matter Exploration and evaluation expenditure - Impairment Refer to Note 5: Critical accounting estimates and judgements and Note 13: Exploration and Evaluation Expenditure The Group is involved in exploration and evaluation activities with a focus on gold deposits in Senegal. Exploration and evaluation expenditure totalling $6,596,618 as disclosed in Note 13 represents a significant balance recorded in the consolidated Statement of Financial Position. AASB6 Exploration for and Evaluation of Mineral Resources requires the exploration and evaluation assets to be assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. As described in Note 5 to the financial statements, management performed an impairment assessment at 30 June 2020 in accordance with the accounting policy described in Note 13 which required management to make certain estimates and assumptions as to future events and circumstances surrounding the development and commercial exploitation of their Senegal Projects. Our procedures included: • Understanding the control environment through which exploration and evaluation expenditure is incurred, recorded and assessed for impairment; • Obtaining an understanding of the status of ongoing exploration programs and future intentions for the areas of interest, including future budget spend and related work programs; • Enquiring of management and reviewed ASX announcements and minutes of directors meetings to ensure the group had not decided to discontinue exploration and evaluation at its areas of interest; • Reviewing the director’s estimates and assumptions included in their assessment of potential indicators of impairment; • Assessing whether the relevant expenditure meets the asset recognition requirements of AASB6 Exploration for and Evaluation of Mineral Resources; • Verifying that each exploration licence remains valid; and • Assessing the adequacy of the related disclosures made in Note 5 and Note 13 of the financial statements. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Pitcher Partners is an association of independent firms. An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. 24 | Annual Report 2020 Chesser Resources Limited INDEPENDENT AUDITOR’S REPORT Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. Pitcher Partners is an association of independent firms. An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Chesser Resources Limited Annual Report 2020 | 25 INDEPENDENT AUDITOR’S REPORT From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 14 to 20 of the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Chesser Resources Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. Responsibilities 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. PITCHER PARTNERS JASON EVANS Partner Brisbane, Queensland 30 September 2020 Pitcher Partners is an association of independent firms. An Independent Queensland Partnership ABN 84 797 724 539. Liability limited by a scheme approved under Professional Standards Legislation. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. 26 | Annual Report 2020 Chesser Resources Limited Chesser Resources Limited Consolidated Income Statement For the year ended 30 June 2020 CONSOLIDATED INCOME STATEMENT Notes 22002200 $$ 22001199 $$ 7 12 13 Revenue and other income Auditors’ remuneration Key management personnel and employee remuneration Depreciation expense Finance charges General and administrative expenses Impairment of capitalised exploration expenditure Other expenses Professional fees Travel expenses Business development costs Share based payments expense Share registry and exchange listing fees Foreign exchange (losses) / gains 1133,,440022 ((5522,,000000)) ((550077,,004411)) ((7711,,111166)) ((33,,660077)) ((113300,,333399)) -- ((117799,,880022)) -- ((8811,,770099)) -- ((3322,,119922)) ((6644,,882288)) ((2266,,445511)) 1,396 (37,500) (467,398) (53,379) (3,994) (146,706) (732,955) (214,757) (20,973) (177,878) (32,599) (45,710) (86,839) 839 LLoossss bbeeffoorree iinnccoommee ttaaxx eexxppeennssee ffrroomm ccoonnttiinnuuiinngg ooppeerraattiioonnss ((11,,113355,,668833)) (2,018,453) Income tax expense LLoossss ffoorr tthhee yyeeaarr aafftteerr ttaaxx 10 -- - ((11,,113355,,668833)) (2,018,453) Loss attributable to Owners of Chesser Resources Limited ((11,,113355,,668833)) (2,018,453) Basic and diluted loss per share (cents per share) 17 ((00..4400)) (0.95) The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 31 | P a g e Chesser Resources Limited Annual Report 2020 | 27 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Chesser Resources Limited Consolidated statement of Comprehensive Income For the year ended 30 June 2020 LLoossss ffoorr tthhee yyeeaarr aafftteerr ttaaxx OOtthheerr ccoommpprreehheennssiivvee iinnccoommee Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations Income tax relating to these items OOtthheerr ccoommpprreehheennssiivvee iinnccoommee ffoorr tthhee yyeeaarr,, nneett ooff ttaaxx 22002200 $$ 22001199 $$ ((11,,113355,,668833)) (2,018,453) - - -- 402 - 402 TToottaall ccoommpprreehheennssiivvee lloossss ffoorr tthhee yyeeaarr ((11,,113355,,668833)) (2,018,051) Comprehensive loss attributable to the owners of Chesser Resources Limited ((11,,113355,,668833)) (2,018,051) The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 28 | Annual Report 2020 Chesser Resources Limited 32 | P a g e Chesser Resources Limited Consolidated Statement of Financial Position As at 30 June 2020 CONSOLIDATED STATEMENT OF FINANCIAL POSITION CCuurrrreenntt aasssseettss Cash and cash equivalents Trade and other receivables Prepayments TToottaall ccuurrrreenntt aasssseettss NNoonn--ccuurrrreenntt aasssseettss Property, plant and equipment Exploration and evaluation expenditure Notes 22002200 $$ 22001199 $$ 21(a) 11 11,,227788,,660099 8800,,881199 5511,,886699 1,243,371 58,819 28,099 11,,441111,,229977 11,,333300,,228899 12 13 119955,,007766 66,,559966,,661188 177,040 3,979,825 TToottaall nnoonn--ccuurrrreenntt aasssseettss 66,,779911,,669944 44,,115566,,886655 TToottaall aasssseettss CCuurrrreenntt lliiaabbiilliittiieess Trade and other payables TToottaall ccuurrrreenntt lliiaabbiilliittiieess TToottaall lliiaabbiilliittiieess NNeett aasssseettss EEqquuiittyy Issued capital Reserves Accumulated losses TToottaall eeqquuiittyy 88,,220022,,999911 55,,448877,,115544 14 551133,,999966 315,100 551133,,999966 551133,,999966 331155,,110000 331155,,110000 77,,668888,,999955 55,,117722,,005544 15 16 1144,,224444,,773377 22,,009988,,117733 ((88,,665533,,991155)) 77,,668888,,999955 10,636,305 2,053,981 (7,518,232) 55,,117722,,005544 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 33 | P a g e Chesser Resources Limited Annual Report 2020 | 29 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Chesser Resources Limited Consolidated Statement of Changes in Equity For the year ended 30 June 2020 22002200 IIssssuueedd CCaappiittaall $ RReesseerrvveess $ AAccccuummuullaatteedd LLoosssseess $ TToottaall EEqquuiittyy $ BBaallaannccee aass aatt 11 JJuullyy 22001199 1100,,663366,,330055 22,,005533,,998811 ((77,,551188,,223322)) 55,,117722,,005544 Loss for the year Other comprehensive income TToottaall ccoommpprreehheennssiivvee lloossss ffoorr tthhee yyeeaarr TTrraannssaaccttiioonnss wwiitthh oowwnneerrss iinn tthheeiirr ccaappaacciittyy aass oowwnneerrss:: - - - - - - (1,135,683) - (1,135,683) (1,135,683) - (1,135,683) Issue of equity securities Costs of issuing equity securities Share based payments TToottaall ttrraannssaaccttiioonnss wwiitthh oowwnneerrss iinn tthheeiirr ccaappaacciittyy aass oowwnneerrss 3,874,566 (266,134) - 3,608,432 - - 44,192 44,192 - - - - 3,874,566 (266,134) 44,192 3,652,624 BBaallaannccee aass aatt 3300 JJuunnee 22002200 1144,,224444,,773377 22,,009988,,117733 ((88,,665533,,991155)) 77,,668888,,999955 22001199 IIssssuueedd CCaappiittaall $ RReesseerrvveess $ AAccccuummuullaatteedd LLoosssseess $ TToottaall EEqquuiittyy $ BBaallaannccee aass aatt 11 JJuullyy 22001188 88,,884400,,551122 22,,000077,,886699 ((55,,449999,,777799)) 55,,334488,,660022 Loss for the year Other comprehensive income TToottaall ccoommpprreehheennssiivvee lloossss ffoorr tthhee yyeeaarr TTrraannssaaccttiioonnss wwiitthh oowwnneerrss iinn tthheeiirr ccaappaacciittyy aass oowwnneerrss:: - - - - 402 402 (2,018,453) - (2,018,453) (2,018,453) 402 (2,018,051) Issue of equity securities Costs of issuing equity securities Share based payments TToottaall ttrraannssaaccttiioonnss wwiitthh oowwnneerrss iinn tthheeiirr ccaappaacciittyy aass oowwnneerrss 1,929,636 (133,843) - 1,795,793 - - 45,710 45,710 - - - - 1,929,636 (133,843) 45,710 1,841,503 BBaallaannccee aass aatt 3300 JJuunnee 22001199 1100,,663366,,330055 22,,005533,,998811 ((77,,551188,,223322)) 55,,117722,,005544 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 34 | P a g e 30 | Annual Report 2020 Chesser Resources Limited Chesser Resources Limited Consolidated Statement of Cash Flows For the year ended 30 June 2020 CONSOLIDATED STATEMENT OF CASH FLOWS CCaasshh ffllooww ffrroomm ooppeerraattiinngg aaccttiivviittiieess Interest received Other income Interest paid Payments to suppliers and employees NNeett ccaasshh fflloowwss uusseedd iinn ooppeerraattiinngg aaccttiivviittiieess CCaasshh ffllooww ffrroomm iinnvveessttiinngg aaccttiivviittiieess Payments for property, plant and equipment Payments for exploration and evaluation expenditure NNeett ccaasshh uusseedd iinn iinnvveessttiinngg aaccttiivviittiieess CCaasshh ffllooww ffrroomm ffiinnaanncciinngg aaccttiivviittiieess Proceeds from share issue Costs of issuing equity securities NNeett ccaasshh pprroovviiddeedd bbyy ffiinnaanncciinngg aaccttiivviittiieess RReeccoonncciilliiaattiioonn ooff ccaasshh aanndd ccaasshh eeqquuiivvaalleennttss Cash and cash equivalents at the beginning of the year Net increase (decrease) in cash and cash equivalents Foreign exchange difference on cash and cash equivalents 22002200 $$ 22001199 $$ 11,,006600 1122,,334422 ((33,,660077)) ((995577,,999955)) ((994488,,220000)) 1,396 - (3,994) (1,191,716) ((11,,119944,,331144)) 21(b) ((8899,,115522)) ((22,,554477,,884422)) ((22,,663366,,999944)) (65,540) (1,678,329) ((11,,774433,,886699)) 33,,776611,,113399 ((114400,,770077)) 33,,662200,,443322 1,875,600 (79,807) 11,,779955,,779933 11,,224433,,337711 3355,,223388 -- 2,385,360 (1,142,390) 401 Cash and cash equivalents at 30 June 21(a) 11,,227788,,660099 11,,224433,,337711 Non-cash financing and investing activities 21(c) The accompanying accounting policies and explanatory notes form an integral part of the financial statements 35 | P a g e Chesser Resources Limited Annual Report 2020 | 31 Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 1. GGeenneerraall iinnffoorrmmaattiioonn 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 Level 14, 167 Eagle Street, Brisbane City QLD 4000. The entity's principal activity during the financial year was the gold exploration in Senegal, West Africa. 2. AApppplliiccaattiioonn ooff nneeww aanndd rreevviisseedd AAccccoouunnttiinngg SSttaannddaarrddss AAddooppttiioonn ooff NNeeww aanndd RReevviisseedd SSttaannddaarrddss The Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current year including AASB16 Leases. The adoption of these new and revised accounting standards and interpretations did not have any material effect on the financial results or financial position of the Group or the Company for the reporting period. NNeeww aaccccoouunnttiinngg ssttaannddaarrddss nnoott yyeett aaddoopptteedd The Directors do not consider that the adoption of any new standards and Interpretations in issue but not yet effective at the date of these financial statements will have a material impact on the financial statements of the Group. 3. aa)) SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess SSttaatteemmeenntt ooff ccoommpplliiaannccee 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 standards were authorised for issue by the Directors on 30 September 2020. bb)) GGooiinngg ccoonncceerrnn As at 30 June 2020 the Group had cash reserves of $1,278,609 (2019: $1,243,371), net working capital of $897,301 (2019 $1,015,189) and net assets of $7,688,995 (2019: $5,172,054). The Group incurred a loss for the year ended 30 June 2020 of $1,135,683 (2019 loss: $2,018,453), net cash outflows from operating activities of $948,200 (2019: $1,194,314 outflows) and net outflows from investing activities of $2,636,994 (2019: $1,743,869 outflows). As detailed in note 23, subsequent to 1 July 2020 the Company raised $6,000,000 before transaction costs through the issue of 75,000,000 shares at an issue price of $0.08 per share and to the date of these financial statements had received $372,374 on the exercise of options. Taking into consideration the funds received by the Company subsequent to 30 June 2020, the Directors have prepared the financial statements on a going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. 32 | Annual Report 2020 Chesser Resources Limited 36 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 3. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd)) cc)) BBaassiiss ooff pprreeppaarraattiioonn The consolidated general purpose 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 AASB 136. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 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. dd)) PPrriinncciipplleess ooff ccoonnssoolliiddaattiioonn The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Chesser Resources Limited ("Company" or "parent entity") as at 30 June 2020 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. 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. Chesser Resources Limited Annual Report 2020 | 33 37 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 3. SSiiggnniiffiiccaanntt aaccccoouunnttiinngg ppoolliicciieess ((ccoonnttiinnuueedd)) ee)) FFoorreeiiggnn ccuurrrreennccyy ttrraannssllaattiioonn 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. 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. 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 recognizable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the date of the transactions), and • All resulting exchange differences are recognized 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 recognized 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 reclassed to profit or loss, as part of the gain or loss on sale where applicable. 34 | Annual Report 2020 Chesser Resources Limited 38 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 4. FFiinnaanncciiaall rriisskk mmaannaaggeemmeenntt The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables 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, the Western African Franc 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. 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 Chief Financial Officer. The Board agrees the strategy for managing future cash flow requirements and projections. The Group holds the following financial instruments all of which are carried at amortised cost. Financial Assets Cash and cash equivalents Trade and other receivables Financial Liabilities Trade and other payables 22002200 $$ 2019 $ 1,278,609 80,819 1,359,428 513,996 513,996 1,243,371 58,819 1,302,190 309,959 309,959 Chesser Resources Limited Annual Report 2020 | 35 39 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 4. FFiinnaanncciiaall rriisskk mmaannaaggeemmeenntt ((ccoonnttiinnuueedd)) aa)) MMaarrkkeett rriisskk ((ii)) FFoorreeiiggnn eexxcchhaannggee rriisskk 3300 JJuunnee 22002200 Cash and cash equivalents Trade and other receivables Trade and other payables Total assets Net exposure 3300 JJuunnee 22001199 Cash and cash equivalents Trade and other receivables Trade and other payables 105,135 Total assets 11,,111166,,005544 Net exposure 11,,001100,,991199 AUD Denominated Balances USD Denominated Balances CFA Denominated Balances TTOOTTAALL 3300 JJuunnee 22002200 851,306 21,969 887733,,227755 175,348 669977,,992277 168,723 - 116688,,772233 27,819 114400,,990044 258,580 58,850 331177,,443300 310,829 66,,660011 1,278,609 80,819 11,,335599,,442288 513,996 884455,,443322 AUD Denominated Balances USD Denominated Balances CFA Denominated Balances TTOOTTAALL 3300 JJuunnee 22001199 1,092,946 23,108 4,093 28,477 3322,,557700 120,079 ((8877,,550099)) 146,332 1,243,371 7,234 58,819 115533,,556666 11,,330022,,119900 84,745 6688,,882211 309,959 999922,,223311 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 22002200 $$ ((99,,111100)) 99,,111100 2019 $ (1,869) 1,869 IInntteerreesstt rraattee rriisskk ((iiii)) The Group’s exposure to interest rate risk arises predominantly from cash and cash equivalents bearing variable interest rates, as the Group intends to hold any fixed rate financial assets to maturity. At the end of the reporting period the Group maintained the following variable rate accounts: 3300 JJuunnee 22002200 3300 JJuunnee 22001199 Weighted average interest rate % 0.1% Balance $$ 11,,227788,,660099 Weighted average interest rate %% 0.5% Balance $$ 11,,224433,,337711 Cash and cash equivalents 36 | Annual Report 2020 Chesser Resources Limited 40 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 4. FFiinnaanncciiaall rriisskk mmaannaaggeemmeenntt ((ccoonnttiinnuueedd)) IInntteerreesstt rraattee rriisskk ((ccoonnttiinnuueedd)) ((iiii)) At the end of the reporting period, if the interest rates had changed, as illustrated in the table below, with all other variables remaining constant, after-tax profit and equity would have been affected as follows: +.1% (10bp) / (2019: +1%) -0.1% (10bp)/ (2019: -1%) AAfftteerr--ttaaxx lloossss hhiigghheerr // ((lloowweerr)) 22002200 $$ 1,279 (1,279) 22001199 $$ 12,434 (12,434) EEqquuiittyy hhiigghheerr // ((lloowweerr)) 22002200 $$ 22001199 $$ 1,279 (1,279) 12,434 (12,434) CCrreeddiitt rriisskk bb)) cc)) Credit risk primarily arises from cash and cash equivalents and term deposits deposited with banks and receivables. Cash and cash equivalents and term deposits are primarily placed with National Australia Bank Limited, which has an independently rated credit rating of A1+. The Company has no past due or impaired financial assets in the period covered by these financial statements. The carrying value of financial assets represents the maximum exposure to credit risk. LLiiqquuiiddiittyy rriisskk dd)) Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents in order to meet the Group’s forecast requirements. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Surplus funds are generally only invested in bank deposits. At reporting date, the Group did not have access to any undrawn borrowing facilities. Maturity of financial liabilities The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. LLeessss tthhaann 33 mmoonntthhss $$ TToottaall ccoonnttrraaccttuuaall ccaasshh fflloowwss $$ 44 ttoo lleessss tthhaann 77 mmoonntthhss $$ CCaarrrryyiinngg aammoouunntt $$ 30 June 2020 Trade and other payables 449999,,999911 1144,,000055 551133,,999966 551122,,119944 30 June 2019 Trade and other payables LLeessss tthhaann 33 mmoonntthhss $$ 309,959 44 ttoo lleessss tthhaann 77 mmoonntthhss $$ TToottaall ccoonnttrraaccttuuaall ccaasshh fflloowwss $$ CCaarrrryyiinngg aammoouunntt $$ - 309,959 309,959 FFaaiirr vvaalluuee eessttiimmaattiioonn ee)) ff)) 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. Chesser Resources Limited Annual Report 2020 | 37 41 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 5. 5. CCrriittiiccaall aaccccoouunnttiinngg eessttiimmaatteess aanndd jjuuddggeemmeennttss When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results. Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expense is provided below. Exploration and evaluation expenditure As at 30 June 2020 the Group had capitalised exploration and evaluation expenditure of $6,596,618 in relation to the Senegal Projects. The ultimate recoupment of capitalised exploration and development expenditure is dependent on the successful development and commercial exploitation, or alternatively sale, of the respective areas of interest. The Company’s continued development of its mineral property interests is dependent upon the determination of economically recoverable reserves, the ability of the Company to obtain the financing necessary to maintain operations, successfully complete its exploration and development programs and the attainment of future profitable production. The recognition of this expenditure as an asset requires management to make certain estimates and assumptions as to future events and circumstances. These estimates and assumptions may change as new information becomes available. If after having capitalised expenditure under the accounting policy a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be expensed in the statement of comprehensive income. Share based payments The Group measures the cost of equity settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. Fair value is calculated using a trinomial valuation model, taking into account the terms and conditions upon which the options were granted. The assumptions used in these valuation models is set out in note 16. Deferred tax assets No members of the Group have generated taxable income in the financial year and as such the Group continues to carry forward tax losses that give rise to deferred tax assets. Given that the Group’s projects remain in early exploration stages, it is unlikely that the Group will generate taxable income in the foreseeable future in the absence of asset sales. Taking account of the above, the deferred tax assets have not been recognised in the financial statements as management does not believe that the members of the Group satisfy the criteria set out in AASB 112. 6. SSeeggmmeenntt iinnffoorrmmaattiioonn The Group has identified its operating segments based on the internal reports that were reviewed and used by the Managing Director or the Chief Executive Officer (Chief Operating Decision Maker) in assessing performance and determining the allocation of resources during the year. The Group is managed primarily on a geographic basis, that is, the location of the respective areas of interest. Operating segments are therefore determined on the same basis. AAccccoouunnttiinngg ppoolliiccyy 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 or 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. 38 | Annual Report 2020 Chesser Resources Limited 42 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 6. SSeeggmmeenntt iinnffoorrmmaattiioonn ((ccoonnttiinnuueedd)) All operating segments are in the exploration and development phase and did not generate any revenue in the current or prior year. Assets, liabilities and cash flows are not allocated to segments in the internal reports that are prepared for the Chief Operating Decision Maker. AAccttiivviittyy bbyy sseeggmmeenntt Senegal Projects The Senegal Projects, which during the financial consisted of two exploration projects, are located adjacent and to the west of the Senegal Mali Shear Zone in the Kédougou Inlier with a total area of 295kms2. The projects are: Diamba Sud and Diamba Nord. During the 2019 financial year, the Company relinquished its interests in the Woye, Youboubou and Garaboureya projects and impaired all capitalised exploration and evaluation expenditure relating to those projects. 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. The following tables present revenue and profit information for the Group’s operating segments for the year ended 30 June 2020 and 2019, respectively. Chesser Resources Limited Annual Report 2020 | 39 43 | P a g e NOTES TO THE FINANCIAL STATEMENTS 22 00 44 33 11 ,, $ 22 00 44 33 11 ,, $ ,, )) 99 11 11 66 33 66 33 (( ,, ,, )) 77 11 77 22 22 66 33 (( ,, ,, )) 66 22 33 99 11 00 11 (( ,, ,, )) 44 22 99 55 00 00 11 (( ,, -- -- -- -- -- -- -- -- -- $ $ $ ll aa tt oo TT ee tt aa rr oo pp rr oo CC u o b a r a G a y e R u o b u o b u o Y e y o W -- )) 66 99 44 00 33 (( ,, )) 66 99 44 00 33 (( ,, $ aa bb mm aa DD ii dd rr oo NN -- $ dd uu SS aa bb mm aa DD ii ,, )) 77 99 22 66 88 55 22 (( ,, ,, )) 77 99 22 66 88 55 22 (( ,, s t n e m e t a t s l a i c n a n i f e h t o t s e t o N 0 2 0 2 e n u J 0 3 d e d n e r a e y e h t r o F )) dd ee uu nn ii tt nn oo cc (( nn oo ii tt aa mm rr oo ff nn ii tt nn ee mm gg ee SS ee cc nn aa mm rr oo ff rr ee pp tt nn ee mm gg ee SS )) ii (( . 6 e u n e v e r t n e m g e s l a t o T e r u t i d n e p x e t n e m g e S t l u s e r t n e m g e S 00 22 00 22 ee nn uu JJ 00 33 rr aa ee YY x a t e r o f e b s s o l p u o r G o t t l u s e r t n e m g e s f o n o i t a i l i c n o c e R d e t i i m L s e c r u o s e R r e s s e h C )) -- (( )) 66 11 11 11 77 (( ,, )) 22 99 11 22 33 (( ,, )) 11 55 44 66 22 (( ,, ,, 33 99 77 66 11 66 22 ,, ,, )) 33 88 66 55 33 11 11 (( ,, ,, )) 33 55 44 88 11 00 22 (( ,, e g a P | 4 4 , 4 3 6 9 1 5 1 , 9 3 8 ) 9 7 3 3 5 ( , ) 0 1 7 5 4 ( , ) 5 5 9 2 3 7 ( , 6 9 3 1 , ll aa tt oo TT $ 6 9 3 1 , $ ee tt aa rr oo pp rr oo CC , ) 8 7 2 8 0 7 2 ( , , ) 2 8 8 6 0 7 2 ( , , ) 4 4 6 8 8 1 1 ( , , ) 8 4 2 7 8 1 1 ( , - ) 2 6 0 5 ( , ) 2 6 0 5 ( , $ u o b a r a G a y e R u o b u o b u o Y e y o W - ) 4 5 2 4 ( , ) 4 5 2 4 ( , $ - ) 7 2 9 0 4 ( , ) 7 2 9 0 4 ( , $ aa bb mm aa DD ii dd rr oo NN $ - ) 0 7 4 4 9 1 ( , ) 0 7 4 4 9 1 ( , - $ dd uu SS aa bb mm aa DD ii , ) 1 2 9 4 7 2 1 ( , , ) 1 2 9 4 7 2 1 ( , x a t e r o f e b s s o l p u o r G o t t l u s e r t n e m g e s f o n o i t a i l i c n o c e R x a t e r o f e b s s o l t e N 99 11 00 22 ee nn uu JJ 00 33 rr aa ee YY e u n e v e r t n e m g e s l a t o T e r u t i d n e p x e t n e m g e S t l u s e r t n e m g e S l e r u t i d n e p x e n o i t a u a v e d n a n o i t a r o p x e f o t n e m l r i a p m I e r u t i d n e p x e d e s i l a t i p a C e s n e p x e s t n e m y a p d e s a b e r a h S e s n e p x e n o i t a i c e r p e D e m o c n i r e h t O • • • • • x a t e r o f e b s s o l t e N l e r u t i d n e p x e n o i t a u a v e d n a n o i t a r o p x e f o t n e m l r i a p m I e r u t i d n e p x e d e s i l a t i p a C e s n e p x e s t n e m y a p d e s a b e r a h S e s n e p x e n o i t a i c e r p e D s e s n e p x e r e h t O • • • • • 40 | Annual Report 2020 Chesser Resources Limited NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 6. SSeeggmmeenntt iinnffoorrmmaattiioonn ((ccoonnttiinnuueedd)) ((ii)) SSeeggmmeenntt aasssseettss The following table shows assets by geographical segment. 3300 JJuunnee 22002200 Segment assets 3300 JJuunnee 22001199 Segment assets 7. RReevveennuuee aanndd ootthheerr iinnccoommee Interest income Government grants AAccccoouunnttiinngg ppoolliiccyy SSeenneeggaall $ AAuussttrraalliiaa $ TToottaall $ 77,,009922,,552277 11,,111100,,446644 88,,220022,,999911 4,338,655 1,148,499 5,487,154 22002200 $$ 2019 $ 11,,006600 1122,,334422 1133,,440022 1,396 - 11,,339966 Interest Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Government grants Government grant revenue is recognised at fair value when there is reasonable assurance that the grant will be received. 8. EExxppeennsseess The group has identified a number of items which are material due to the significance of their nature and/or amount. These are listed separately here to provide a better understanding of the financial performance of the group. Short-term lease payments Operating lease rentals Superannuation contributions 22002200 $$ 2019 $ 4455,,553399 -- 88,,443300 - 45,957 7,600 Payments associated with short-term leases of property are recognised on a straight-line basis as an expense in the Income Statement. Short term leases are leases with a lease term of 12 months or less. Lease payments for short-term leases amounting to $45,539 (2019: $45,957) are recognised as expenses in the Income Statement. All short-term leases are cancellable by the Company by providing 2 months or less notice to the lessor. Chesser Resources Limited Annual Report 2020 | 41 45 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 9. RReemmuunneerraattiioonn ooff aauuddiittoorrss During the year the following fees were paid or payable for services provided by the auditor of the parent entity and its related practices: 22002200 $$ 2019 $ Pitcher Partners Brisbane (i) Audit and assurance services Audit and review of financial reports Total auditors’ remuneration 10. IInnccoommee ttaaxx ((aa)) IInnccoommee ttaaxx bbeenneeffiitt Current and deferred tax 5522,,000000 5522,,000000 37,500 37,500 -- -- - - ((bb)) DDeeffeerrrreedd iinnccoommee ttaaxx//((rreevveennuuee)) Deferred income tax/(revenue) included in tax expense comprises: (Increase)/decrease in deferred tax assets Increase/(decrease) in deferred tax liabilities ((cc)) RReeccoonncciilliiaattiioonn ooff iinnccoommee ttaaxx eexxppeennssee ttoo pprriimmaa ffaacciiee iinnccoommee ttaaxx Loss before income tax from continuing operations Tax at the Australian tax rate of 27.5% (2019: 27.5%) Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Different tax rates in other jurisdictions Non-deductible expenses Deductible capital raising costs Deferred tax assets not recognised / (recognised) Income tax benefit ((dd)) DDeeffeerrrreedd ttaaxx aasssseettss // lliiaabbiilliittiieess ccoommpprriissee Accruals Provisions Prepayments Impairment of investments in and loans to subsidiaries Tax losses available for offset against future taxable income Net deferred tax assets Deferred tax assets not recognised 66,,446666 ((66,,446666)) -- ((11,,113355,,668833)) ((331122,,331133)) ((11,,664444)) 115511,,330066 ((1133,,884433)) ((117766,,449944)) 117766,,449944 -- 5522,,005544 -- ((1144,,226633)) 223355,,886688 33,,220088,,330099 33,,448811,,996688 ((33,,448811,,996688)) -- 42 | Annual Report 2020 Chesser Resources Limited 161,713 (161,713) - (2,018,453) (555,075) (2,791) 404,303 (13,843) (167,406) 167,406 - 7,563 16,811 (7,797) 89,468 3,060,802 3,166,847 (3,166,847) - 46 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 10. IInnccoommee ttaaxx ((ccoonnttiinnuueedd)) ((ee)) UUnnrreeccooggnniisseedd ddeeffeerrrreedd ttaaxx aasssseettss Deferred tax assets have not been recognised in respect of the following items: Temporary differences and tax losses at 27.5% (2019: 27.5%) 22002200 $$ 2019 $ 33,,448811,,996688 3,167,847 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 of the Company and the nature of the Company’s business activities. AAccccoouunnttiinngg ppoolliiccyy 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. Chesser Resources Limited Annual Report 2020 | 43 47 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 11. TTrraaddee aanndd ootthheerr rreecceeiivvaabblleess Current Other receivables 22002200 $$ 2019 $ 8800,,881199 58,819 Other receivables represent the Company’s GST receivable and deposits paid in advance of drilling. AAccccoouunnttiinngg PPoolliiccyy Trade and other receivables are recognised initially at fair value and subsequently at the amount considered recoverable. Trade and other receivables are generally due for settlement within 30 days except for advance payments made on drilling contracts. 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 assessed for expected credit losses on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. 12. PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt FFiieelldd EEqquuiippmmeenntt MMoottoorr VVeehhiicclleess OOffffiiccee EEqquuiippmmeenntt TTOOTTAALL Carrying amount at 1 July 2018 56,847 105,241 2,791 116644,,887799 Additions Depreciation Carrying amount at 30 June 2019 Additions Depreciation Carrying amount at 30 June 2020 - (12,751) 44,096 - (12,751) 31,345 39,467 (32,159) 112,549 55,304 (39,874) 127,979 26,073 (8,469) 20,395 33,848 (18,491) 35,752 6655,,554400 ((5533,,337799)) 117777,,004400 8899,,115522 ((7711,,111166)) 119955,,007766 AAccccoouunnttiinngg PPoolliiccyy 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 Field equipment Motor vehicles Office equipment Useful lives 3 – 5 years 5 years 3 years Depreciation Basis Straight Line Straight Line Straight Line The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. 44 | Annual Report 2020 Chesser Resources Limited 48 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 12. PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt ((ccoonnttiinnuueedd)) An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. 13. EExxpplloorraattiioonn aanndd eevvaalluuaattiioonn eexxppeennddiittuurree 22002200 $$ 2019 $ At cost 66,,559966,,661188 3,979,825 Movements in exploration and evaluation expenditure during the year is summarized as follows: Carrying amount at beginning of period Exploration expenditure during the period Impairment of exploration and evaluation expenditure (i) Carrying amount at end of period 33,,997799,,882255 22,,661166,,779933 -- 66,,559966,,661188 3,193,146 1,519,634 (732,955) 3,979,825 i. Impairment of exploration expenditure During the year ended 30 June 2019 the Group impaired of exploration and evaluation expenditure related to the Woye, Youboubou and Garaboureya projects as the exploration activity undertaken by Chesser subsequent to acquiring the projects has not indicated sufficient exploration potential to justify Chesser undertaking further exploration activity and as such Chesser has relinquished or surrendered its interest in those tenements. The ultimate recoupment of capitalised exploration and development expenditure is dependent on the successful development and commercial exploitation, or alternatively sale, of the respective areas of interest. The Company’s continued development of its mineral property interests is dependent upon the determination of economically recoverable reserves, the ability of the Company to obtain the financing necessary to maintain operations, successfully complete its exploration and development programs and the attainment of future profitable production. AAccccoouunnttiinngg PPoolliiccyy 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 Chesser Resources Limited Annual Report 2020 | 45 49 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 13. EExxpplloorraattiioonn aanndd eevvaalluuaattiioonn eexxppeennddiittuurree ((ccoonnttiinnuueedd)) 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 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. 14. TTrraaddee aanndd ootthheerr ppaayyaabblleess Trade payables Accruals Total trade and other payables 22002200 $$ 2019 $ 331111,,332266 220022,,667700 551133,,999966 249,728 65,372 315,100 AAccccoouunnttiinngg PPoolliiccyy Trade and other payables 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, non-interest bearing 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 measure at amortised cost using the effective interest method. 15. IIssssuueedd ccaappiittaall 22002200 $$ 2019 $ Ordinary shares – fully paid 1144,,224444,,773377 10,636,305 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. ((aa)) MMoovveemmeennttss iinn oorrddiinnaarryy sshhaarreess Opening Balance 30 June 2019 Share issue on 20 September 2019 (a) Share issue on 18 November 2019 (b) Shares issued on 18 December 2019(c) Shares issued on 8 January 2020(d) Shares issued on 6 April 2020(e) Share issue costs Closing Balance 30 June 2020 46 | Annual Report 2020 Chesser Resources Limited 3300 JJuunnee 22002200 NNoo.. $$ 248,780,181 31,507,295 211,095 4,557,700 300,000 42,000,000 - 332277,,335566,,227711 10,636,305 1,890,438 12,666 273,462 18,000 1,680,000 (266,134) 1144,,224444,,773377 50 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 15. IIssssuueedd ccaappiittaall ((ccoonnttiinnuueedd)) The following movements have occurred against Share Capital during the year: a) On 20 September 2019, Chesser issued 31,507,295 fully paid ordinary shares at $0.06 per share via a private placement; b) On 18 November 2019, Chesser issued 211,095 fully paid ordinary shares at $0.06 per share pursuant to exercise of options; c) On 18 December 2019, Chesser issued 2,083,929 fully paid ordinary shares at $0.06 per share pursuant to exercise of options, 1,890,438 fully paid ordinary shares at $0.06 per share to Taylor Collison as payment of a capital raising fee and 583,333 fully paid shares at $0.06 per share pursuant to Director Subscription; d) On 8 January 2020 Chesser issued 300,000 fully paid ordinary shares at $0.06 per share pursuant to exercise of options; e) On 6 April 2020, Chesser issued 42,000,000 fully paid ordinary shares at $0.04 per share via a private placement. MMoovveemmeennttss iinn oorrddiinnaarryy sshhaarreess Opening Balance 30 June 2018 Share issue on 4 January 2019 (a) Share issue on 19 January 2019 (b) Shares issued on 15 March 2019(c) Shares issued on 23 May 2019(d) Share issue costs Closing Balance 30 June 2019 3300 JJuunnee 22001199 NNoo.. 198,683,181 20,780,000 1,246,800 3,695,200 24,375,000 - 224488,,778800,,118811 $$ 8,840,512 789,640 47,378 117,618 975,000 (133,843) 1100,,663366,,330055 The following movements have occurred against Share Capital during the year: a) b) c) d) On 4 January 2019, Chesser issued 20,780,000 fully paid ordinary shares at $0.038 per share via a private placement; On 19 January 2019 Chesser issued 1,246,800 fully paid ordinary shares at $0.038 per share to Taylor Collison as payment of a capital raising fee; On 15 March 2019 Chesser issued 2,920,000 fully paid ordinary shares at $0.038 per share to Directors pursuant to a subscription, issued 600,000 ordinary shares funded via a loan to Michael Brown and issued 175,200 fully paid ordinary shares at $0.038 per share to Taylor Collison as payment of a capital raising fee; On 23 May 2019, Chesser issued 24,375,000 fully paid ordinary shares at $0.04 per share via a private placement. ((bb)) CCaappiittaall mmaannaaggeemmeenntt 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. Chesser Resources Limited Annual Report 2020 | 47 51 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 15. IIssssuueedd ccaappiittaall ((ccoonnttiinnuueedd)) ((cc)) SShhaarree ooppttiioonnss At 30 June 2020, the following options for ordinary shares in the Company were on issue: Options with a $0.06 exercise price expiring 31 Dec 2019 Options with a $0.10 exercise price expiring 31 Dec 2020 Options with a $0.05 exercise price expiring 31 Dec 2021 Options with a $0.05 exercise price expiring 31 Dec 2022 Options with a $0.12 exercise price expiring 30 Nov 2021 Total options on issue 4,300,000 (2,595,024) (1,704,976) 4,300,000 - - 7,500,000 - - 1,500,000 - - - - - 17,600,000 (2,595,024) (1,704,976) - -- - 44,,330000,,000000 - 77,,550000,,000000 - 11,,550000,,000000 2,000,000 22,,000000,,000000 2,000,000 1155,,330000,,000000 On issue at 1 July 2019 Options exercised Options lapsed Options issued as consideration for capital raising fees On issue at 30 June 2020 The options do not provide the holder with any voting rights, any entitlement to dividends or any entitlement to the proceeds on liquidation in the event of a winding up. Refer note 16 for further details regarding the accounting treatment of the options issued during the year. At 30 June 2019, the following options for ordinary shares in the Company were on issue: Options with a $0.06 exercise price expiring 31 Dec 2019 Options with a $0.10 exercise price expiring 31 Dec 2020 Options with a $0.05 exercise price expiring 31 Dec 2021 Options with a $0.05 exercise price expiring 31 Dec 2022 Total options on issue On issue at 1 July 2018 Options issued to Key Management Personnel and other employees Options issued as consideration for capital raising fees On issue at 30 June 2019 4,300,000 - 4,300,000 - - 5,500,000 - 1,500,000 8,600,000 7,000,000 - - 2,000,000 - 2,000,000 44,,330000,,000000 44,,330000,,000000 77,,550000,,000000 11,,550000,,000000 1177,,660000,,000000 Refer note 16 for further details regarding the accounting treatment of the options issued during the 2019 financial year. 48 | Annual Report 2020 Chesser Resources Limited 52 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 16. RReesseerrvveess Share based payments reserve Foreign currency translation reserve MMoovveemmeennttss:: Foreign currency translation reserve Balance at 1 July 2019 Currency translation difference for the year Balance at 30 June 2020 Share based payments reserve Balance at 1 July 2019 Options issued Balance at 30 June 2020 NNaattuurree aanndd ppuurrppoossee ooff rreesseerrvveess 22002200 $$ 2019 $ 22,,009988,,117733 2,053,981 -- - 22,,009988,,117733 22,,005533,,998811 -- -- -- 22,,005533,,998811 4444,,119922 22,,009988,,117733 (402) 402 -- 2,008,271 45,710 22,,005533,,998811 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. Share based payments reserve The Share based payment reserve is used to record the fair value of share-based payments made by the Company. AAccccoouunnttiinngg PPoolliiccyy Share-based compensation benefits are provided to directors and key management personnel and to external service provides as consideration services provided. 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 as remuneration is recognised as share-based payments 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. The following share-based payment transactions were recognised during the year: Chesser Resources Limited Annual Report 2020 | 49 53 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 16. RReesseerrvveess ((ccoonnttiinnuueedd)) Options issued to directors (ii) Options issued to third-party vendors (i) and (iii) Options issued to employees (iv) Loan funded shares issue to directors (v) SShhaarree--bbaasseedd ppaayymmeennttss eexxppeennssee ffoorr tthhee ffiinnaanncciiaall yyeeaarr 3300 JJuunnee 22002200 $$ 3300 JJuunnee 22001199 $$ 17,489 19,015 7,688 - 4444,,119922 22,194 8,695 6,781 8,040 4455,,771100 (i) On 9 November 2019 the Company issued 2,000,000 options to the brokers in consideration for services provided to the Company in relation to the September share placement. The options were issued with an exercise price of $0.12 and an expiry date of 30 November 2021. The options vested immediately. The fair value of the options at grant date has been estimated using the Black Scholes valuation model, taking into account the terms and conditions upon which the options were granted. The following assumptions were used: Exercise price Expected volatility Risk-free interest rate Expected life of share options (days) Grant date share price Fair value per option $0.12 52% 0.80% 713 $0.06 $0.006 (ii) On 26 February 2019 the shareholders approved the grant to Directors of 5,500,000 unlisted options over ordinary shares with an exercise price of $0.05 and an expiry date of 30 November 2021 subject to the following vesting conditions: • 916,667 of the incentive options to be issued shall be exercisable at A$0.05 each on or before 30 November 2021, vesting immediately • 916,667 of the incentive options to be issued shall be exercisable at A$0.05 each on or before 30 November 2021, vesting on 5 November 2019. • 1,833,333 of the incentive options to be issued shall be exercisable at A$0.05 each on or before 30 November 2021, vesting on the Company’s share price achieving a 10-day VWAP of $0.075 prior to 31 May 2020. The vesting condition was satisfied prior to 31 May 2020. • 1,833,333 of the incentive options to be issued shall be exercisable at A$0.05 each on or before 30 November 2021, vesting on the Company’s share price achieving a 10-day VWAP of $0.10 prior to 31 May 2021. The vesting condition was satisfied prior to 30 June 2020. The fair value of the options at grant date has been estimated using a trinomial option valuation model, taking into account the terms and conditions upon which the options were granted. The following assumptions were used: 50 | Annual Report 2020 Chesser Resources Limited 54 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 16. RReesseerrvveess ((ccoonnttiinnuueedd)) Immediately vesting Exercise price Expected volatility Risk-free interest rate Expected life of share options (days) Grant date share price Fair value per option $0.05 50% 2.07% 1,008 $0.05 $0.0105 Vesting 5 November 2019 $0.05 50% 2.07% 1,008 $0.05 $0.0105 10 day VWAP of $0.075 prior to 31 May 2020 $0.05 50% 2.07% 1,008 $0.05 $0.0101 10 day VWAP of $0.10 prior to 31 May 2021 $0.05 50% 2.07% 1,008 $0.05 $0.0085 (iii) On 4 January 2019 the Group issued 2,000,000 unlisted options over ordinary shares with an exercise price of $0.05 and an expiry date of 30 November 2021 as partial consideration for corporate advisory and broking services provided to the Company and subject to the following vesting conditions: • 333,333 of the incentive options to be issued shall be exercisable at A$0.05 each on or before 30 November 2021, vesting immediately • 333,333 of the incentive options to be issued shall be exercisable at A$0.05 each on or before 30 November 2021, vesting on 5 November 2019. • 666,667 of the incentive options to be issued shall be exercisable at A$0.05 each on or before 30 November 2021, vesting on the Company’s share price achieving a 10-day VWAP of $0.075 prior to 31 May 2020 • 666,667 of the incentive options to be issued shall be exercisable at A$0.05 each on or before 30 November 2021, vesting on the Company’s share price achieving a 10-day VWAP of $0.10 prior to 31 May 2021 The fair value of the options at grant date has been estimated using a trinomial option valuation model, taking into account the terms and conditions upon which the options were granted. The following assumptions were used: Immediately vesting Exercise price Expected volatility Risk-free interest rate Expected life of share options (days) Grant date share price Fair value per option $0.05 52% 1.72% 1,062 $0.04 $0.0115 Vesting 5 November 2019 $0.05 52% 1.72% 1,062 $0.04 $0.0115 10 day VWAP of $0.075 prior to 31 May 2020 $0.05 52% 1.72% 1,062 $0.04 $0.011 10 day VWAP of $0.10 prior to 31 May 2021 $0.05 52% 1.72% 1,062 $0.04 $0.0095 (iv) On 1 December 2018 the Group granted to employees 1,500,000 unlisted options over ordinary shares on the following conditions: i. 500,000 Options will have an exercise price of A$0.05, an expiry of 1 December 2022 and vested on 1 December 2019. ii. 500,000 Options will have an exercise price of A$0.05, an expiry of 1 December 2022 and will vest on 1 December 2020. Chesser Resources Limited Annual Report 2020 | 51 55 | P a g e NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 16. RReesseerrvveess ((ccoonnttiinnuueedd)) iii. 500,000 Options will have an exercise price of A$0.075, an expiry of 1 December 2022 and will vest on 1 December 2021. The fair value of the options at grant date has been estimated using a trinomial option valuation model, taking into account the terms and conditions upon which the options were granted. The following assumptions were used: Exercise price Expected volatility Risk-free interest rate Expected life of share options (days) Grant date share price Fair value per option Vesting 1 December 2019 $0.05 50% 1.92% 1,461 $0.04 $0.0135 Vesting 1 December 2020 $0.05 50% 1.92% 1,461 $0.04 $0.0135 Vesting 1 December 2021 $0.075 50% 1.92% 1,461 $0.04 $0.009 (v) On 15 March 2019 the Group issued 600,000 Loan Funded Shares to a Director. The Director was granted an interest free limited recourse loan to assist in the purchase of Shares, with the Shares acquired at their market value. The loan will be limited recourse so that at any time the Director may divest their Shares in full satisfaction of the loan balance. In accordance with the requirements of applicable AASB2, the loan funded shares are to be accounted for as an option granted to the employee with an exercise price equal to the market price of the Company’s shares at the grant date. Consequently, the loan funded shares have been valued using an option pricing model using the following inputs: Exercise price Expected volatility Risk-free interest rate Term Suboptimal exercise factor Grant date share price Fair value per option Loan funded shares $0.04 50% 2.07% 2.78 years 2.50 $0.04 $0.01 52 | Annual Report 2020 Chesser Resources Limited 56 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 17. LLoossss ppeerr sshhaarree The following reflects the operating loss after tax and number of shares used in the calculation of the basic and diluted earnings/(loss) per share. Loss per share (cents per share) Diluted loss per share (cents per share) 22002200 $$ ((00..4400)) ((00..4400)) 2019 $ (0.95) (0.95) Loss attributable to Owners of Chesser Resources Limited ((11,,113355,,668833)) (2,018,453) Weighted average number of ordinary shares used in the calculation of basic loss per share Weighted average number of ordinary shares used in the calculation of diluted loss per share SShhaarreess Shares 228855,,668899,,779988 212,934,354 228855,,668899,,779988 212,934,354 Options and other potential equity securities on issue at the end of the period have not been included in the determination of diluted earnings per share as the Group has incurred a loss for the period and they are therefore not dilutive in nature. AAccccoouunnttiinngg ppoolliiccyy Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), dividend by the weighted average number of ordinary shares, adjusted for any bonus element. The diluted earnings per share is calculated as net profit or loss attributable to members of the parent dividend by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. The weighted average number of shares was based on the consolidated weighted average number of shares in the reporting period. The net profit or loss attributable to members of the parent is adjusted for: • Costs of servicing equity (other than dividends) and preference share dividends; • The after-tax effect if dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • Other non-discretionary changes in revenue or expenses during the period that would result from the dilution of potential ordinary shares. 18. PPaarreenntt eennttiittyy ddiisscclloossuurreess The financial information for the parent entity Chesser Resources Limited has been prepared on the same basis as the consolidated financial statements except as set out below. 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 recognized in the parent entity's profit or loss when its right to receive the dividend is established. Chesser Resources Limited Annual Report 2020 | 53 57 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 18. PPaarreenntt eennttiittyy ddiisscclloossuurreess ((ccoonnttiinnuueedd)) 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. As at and throughout the financial year ending 30 June 2019 and 30 June 2018 the parent entity of the Group was Chesser Resources Limited. SSuummmmaarryy ffiinnaanncciiaall iinnffoorrmmaattiioonn aa)) The individual financial statements for the parent entity show the following aggregations. RReessuullttss Profit/(loss) for the year Total comprehensive income for the year FFiinnaanncciiaall PPoossiittiioonn Current assets Non-current assets Current liabilities Net Assets Contributed equity Share-based payments reserve Accumulated losses 22001199 22002200 $$ $$ CChheesssseerr RReessoouurrcceess LLiimmiitteedd ((11,,006688,,221177)) ((11,,006688,,221177)) (2,406,802) (2,406,802) 11,,007799,,226611 66,,664400,,880099 77,,772200,,007700 220033,,116655 220033,,116655 1,148,498 3,880,894 5,029,392 96,894 96,894 77,,551166,,990055 4,932,498 1144,,224444,,773377 22,,009988,,117733 ((88,,882266,,000055)) 77,,551166,,990055 10,636,305 2,053,981 (7,757,788) 4,932,498 GGuuaarraanntteeeess eenntteerreedd iinnttoo bbyy tthhee ppaarreenntt eennttiittyy bb)) Chesser Resources Limited has not entered into any guarantees in the current or previous financial year, in relation to the debt of its subsidiaries CCoonnttiinnggeenntt lliiaabbiilliittiieess ooff tthhee ppaarreenntt eennttiittyy cc)) The parent entity did not have any contingent liabilities as at 30 June 2020 or 30 June 2019. CCoonnttrraaccttuuaall ccoommmmiittmmeennttss ffoorr ccaappiittaall eexxppeennddiittuurree dd)) The parent entity did not have any contractual commitments for capital expenditure as at 30 June 2020 (2019: $nil). 54 | Annual Report 2020 Chesser Resources Limited 58 | P a g e Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 NOTES TO THE FINANCIAL STATEMENTS SSuubbssiiddiiaarriieess 19. 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 CCoouunnttrryy ooff iinnccoorrppoorraattiioonn CCllaassss ooff sshhaarreess EEqquuiittyy hhoollddiinngg 22002200 % 110000 110000 110000 110000 110000 110000 110000 110000 22001199 % 110000 110000 110000 110000 110000 110000 110000 110000 Boya Gold Pty Ltd Australia Boya Minerals Pty Ltd Australia Boya Senegal SAU Senegal Erin Mineral Resources Pty Ltd Australia Erin Minerals Pty Ltd Australia Erin Senegal SAU Senegal Chesser Senegal SAU Senegal Bondou SAU@ Senegal @ Bondou SAU was incorporated during the 2019 financial year with Chesser Resources Limited as the founding and Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary sole shareholder. RReellaatteedd ppaarrttiieess 20. 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. During the year, the Company paid KCG Advisors Pty Ltd, a company related to Mr Stephen Kelly who was an Executive Director of the Company during the reporting period, a total of $9,000 (2019: $Nil) for the provision of services including office rental for the Company’s registered office, internet and communications services and software subscriptions. There were no other transactions between the Group and other related parties in the current or prior financial year. 21. CCaasshh ffllooww iinnffoorrmmaattiioonn aa)) CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss Cash at bank and on hand bb)) RReeccoonncciilliiaattiioonn ooff ccaasshhfflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess Loss before tax Depreciation and amortisation Impairment of capitalised exploration expenditure Foreign exchange (losses) / gains Share based payments expense 22002200 $$ 22001199 $$ 11,,227788,,660099 1,243,371 ((11,,113355,,668833)) (2,018,453) 7711,,111166 -- 2266,,445511 3322,,119922 53,379 732,955 (839) 45,710 Chesser Resources Limited Annual Report 2020 | 55 59 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 21. CCaasshh ffllooww iinnffoorrmmaattiioonn ((ccoonnttiinnuueedd)) c) RReeccoonncciilliiaattiioonn ooff ccaasshhfflloowwss ffrroomm ooppeerraattiinngg aaccttiivviittiieess ((ccoonnttiinnuueedd)) Change in operating assets and liabilities (net of disposals): (Increase)/decrease in trade or other receivables (Increase)/decrease in prepayments Increase/(decrease) in trade and other payables Net cash outflow from operating activities dd)) NNoonn--ccaasshh iinnvveessttiinngg aanndd ffiinnaanncciinngg aaccttiivviittiieess Issue of shares in settlement of capital raising costs Issue of options in settlement of capital raising costs Issue of loan funded shares 22002200 $$ 22001199 $$ 3344,,440033 ((2233,,777700)) 4477,,009911 ((994488,,220000)) 113,426 12,000 - (41,254) 17,096 17,092 (1,194,314) 54,036 - 30,000 AAccccoouunnttiinngg ppoolliiccyy Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management. 22. CCoommmmiittmmeennttss aanndd ccoonnttiinnggeenntt lliiaabbiilliittiieess ((aa)) CCoommmmiittmmeennttss OOppeerraattiinngg lleeaasseess Commitments for minimum lease payments in relation to operating leases are payable as follows: Within one year Later than one year but not later than five years 22002200 $$ 22001199 $$ -- -- -- 4,201 - 4,201 Payments associated with short-term leases of property are recognised on a straight-line basis as an expense in the Income Statement. Short term leases are leases with a lease term of 12 months or less. TTeenneemmeenntt eexxppeennddiittuurree ccoommmmiittmmeennttss Commitments for minimum exploration expenditure required to retain tenue on the Group’s exploration tenements are: Within one year Later than one year but less than five years Later than five years 56 | Annual Report 2020 Chesser Resources Limited 22002200 $$ -- 1,160,597 -- 11,,116600,,559977 22001199 $$ -- 3,581,586 -- 33,,558811,,558866 60 | P a g e NOTES TO THE FINANCIAL STATEMENTS Chesser Resources Limited Notes to the financial statements For the year ended 30 June 2020 22. CCoommmmiittmmeennttss aanndd ccoonnttiinnggeenntt lliiaabbiilliittiieess ((ccoonnttiinnuueedd)) ((bb)) CCoonnttiinnggeenntt lliiaabbiilliittiieess Pursuant to the terms of the agreement for the acquisition of the Senegal exploration tenements, the Group issued the following performance shares on 12 July 2017: • 23,809,524 Class A performance shares, expiring 12 July 2020 • 23,809,524 Class B performance shares, expiring 12 July 2021 The performance shares will convert into fully paid ordinary shares on the following conditions: • Class A - Upon certification by an independent Competent Person of a JORC Mineral Resource of 0.5Moz Au with an average grade of at least 2.0g/t gold in relation to the Projects; and • Class B - Upon certification by an independent Competent Person of a total JORC Mineral Resource of 1.0Moz Au with an average grade of at least 2.0g/t gold in relation to the Projects 23. EEvveennttss ooccccuurrrriinngg aafftteerr tthhee rreeppoorrttiinngg ppeerriioodd Except as noted below, no matter or circumstance has arisen since the end of the 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: • Appointed Mr Mark Connelly Non-Executive Chairman on 10th July 2020. Mr Simon O’Loughlin moved to a Non- Executive Director role. • Mr Stephen Kelly resigned as Non-Executive Director on 10th July 2020 and will continue to serve as Company Secretary and Chief Financial Officer. • On 10 July 2020, the Company entered into contractual commitments to issued up to 75,000,000 fully paid ordinary shares at an issue price of $0.08 to raise up to $6 million before costs. The capital raising was settled in two tranches as follows: - - Tranche 1 comprising the issue of 29,339,068 fully paid ordinary shares settled on 17 July 2020. Tranche 2 comprising the issue of 45,660,932 fully paid ordinary shares settled on 8 September 2020 • On 12 July 2020, 23,809,524 A Class Performance Shares expired without vesting. • On 17 July 2020, the Company issued 21,000,000 unlisted options at an issue price of $0.08 and an expiry date of 16 July 2021. • On 8 September 2020 the Company issued 2,000,000 unlisted options with an exercise price of $0.08 and an expiry date of 30 November 2023 to Taylor Collison as consideration for corporate advisory and lead manager services. • In the period from 1 July 2020 to the date of this report, the Company has received $372,374 cash proceeds from the exercise of 4,591,092 options. Chesser Resources Limited Annual Report 2020 | 57 61 | P a g e DIRECTORS’ DECLARATION CCHHEESSSSEERR RREESSOOUURRCCEESS LLTTDD DDIIRREECCTTOORRSS’’ DDEECCLLAARRAATTIIOONN 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 2020 and of its performance, as represented by the results of its operations and its cash flows, for the year ended on that date. (b) The financial report also complies with International 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. (d) 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. MMiikkee BBrroowwnn MMaannaaggiinngg DDiirreeccttoorr BBrriissbbaannee,, 3300 SSeepptteemmbbeerr 22002200 58 | Annual Report 2020 Chesser Resources Limited 62 | P a g e SHAREHOLDER INFORMATION SHAREHOLDER INFORMATION In accordance with ASX Listing Rule 4.10, the Company provides the following information to shareholders not elsewhere disclosed in the Annual Report. The shareholder information set out below was applicable as at 11 September 2020. A. CORPORATE GOVERNANCE STATEMENT The Company has prepared a Corporate Governance Statement which sets out the corporate governance practices that were in operation in the year ended 30 June 2020. In accordance with ASX Listing Rule 4.10.3, the Corporate Governance Statement will be available for review on the Company’s website www.chesserresources.com.au and will be lodged with the ASX at the same time that this Annual Report is lodged with the ASX. B. DISTRIBUTION AND NUMBER OF HOLDERS OF EQUITY SECURITIES The distribution and number of holders of equity securities on issue in the Company as at 11 September 2020, and the number of holders holding less than a marketable parcel of the company’s ordinary shares based on the closing market price as at 11 September 2020 is as follows: Listed fully paid ordinary shares (ASX:CHZ) 98 0.01% 293 0.23% 204 0.42% 680 7.22% 436 92.12% 1,711 100% Unlisted Performance Shares (ASX: CHZAA) - 0.00% - 0.00% - 0.00% 1 0.32% 24 99.68% 25 100% Unlisted Options various exercise dates and prices (ASX:CHZAO) - 0.00% 1 0.02% 10 0.69% 9 1.23% 13 98.05% 33 100% Unlisted $0.08 options expiring 16 July 2021 (ASX:CHZAP) - 0.00% - 0.00% -0 0.00% 7 3.44% 34 96.56% 41 100% Unlisted $0.08 options expiring 30 November 2023 (ASX:CHZAQ) - 0.00% - 0.00% - 0.00% - 0.00% 1 100% 1 100% Range 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total There were 225 holders of less than a marketable parcel of shares as at 11 September 2020. As at 11 September 2020, there were NIL equity securities which were subject to restrictions. Chesser Resources Limited Annual Report 2020 | 59 63 | P a g e SHAREHOLDER INFORMATION SHAREHOLDER INFORMATION C. TWENTY LARGEST QUOTED EQUITY SECURITY HOLDERS The Company has only one class of quoted equity securities, being fully paid ordinary shares (ASX:CHZ). The names of the twenty largest holders of fully paid ordinary shares, the number of fully paid ordinary shares and the percentage of fully paid ordinary shares on issue as at 11 September 2020 was as follows: Name HSBC Custody Nominees (Australia) Limited Elliot Services Pty Ltd GP Securities Pty Ltd Citicorp Nominees Pty Ltd BNP Paribas Nominees Pty Ltd CPO Superannuation Fund Jarhamche Pty Ltd J P Morgan Nominees Australia Pty Limited Calama Holdings Pty Ltd AWJ Family Pty Ltd Torres Investments Pty Ltd Mr Michael Andrew Whiting + Mrs Tracey Anne Whiting Souttar Superannuation Pty Ltd Mase Global Investments Limited BPM Capital Limited Kale Capital Corporation Ltd Jimzbal Pty Ltd National Nominees Limited Mr Angus William Johnson + Mrs Lindy Johnson Taycol Nominees Pty Ltd Total Balance of register Units 19,992,119 18,141,218 13,865,523 13,726,243 10,496,667 8,634,452 7,615,441 7,565,462 7,366,667 5,796,940 5,150,000 5,027,114 4,981,177 4,510,819 4,410,800 4,400,000 4,300,001 4,000,000 3,636,667 3,582,808 157,200,118 249,227,840 406,427,958 % of Units 4.92 4.46 3.41 3.38 2.58 2.12 1.87 1.86 1.81 1.43 1.27 1.24 1.23 1.11 1.09 1.08 1.06 0.98 0.89 0.88 38.68 61.32 100.00 D. HOLDERS OF MORE THAN TWENTY PERCENT OF EACH CLASS OF UNQUOTED SECURITIES Each unlisted option and performance shares entitles to the holder to acquire one fully paid ordinary shares subject to any vesting conditions being satisfied and in the case of options subject to the holder paying the exercise price The names of the holders of more than 20% of each class of options or performance shares, other than under an Employee Incentive Scheme, is set out below: MGC Pharmaceuticals Ltd Holder 60 | Annual Report 2020 Chesser Resources Limited Unlisted Performance Shares (ASX: CHZAA) Units 5,714,286 % of units 24.00 64 | P a g e SHAREHOLDER INFORMATION SHAREHOLDER INFORMATION D. HOLDERS OF MORE THAN TWENTY PERCENT OF EACH CLASS OF UNQUOTED SECURITIES (continued) Taycol Nominees Pty Ltd Holder E. VOTING RIGHTS Unlisted $0.08 options expiring 30 November 2023 (ASX:CHZAQ) Units 2,000,000 % of units 100.00 At a general meeting of the Company, every holder of ordinary shares present in person or by proxy, attorney or representative has one vote on a show of hands, and on a poll, one vote for each ordinary share held. Options and performance shares do not carry any voting rights. F. SUBSTANTIAL SHAREHOLDERS As at 16 September 2020, the names of the substantial shareholders of the Company and the number of equity securities in which those substantial shareholders and their associates have a relevant interest, as disclosed in substantial shareholding notices given to the Company were as follows: Name Number held % Robert Greenslade 23,562,748 issued of capital 5.80% G. ON-MARKET BUY-BACK The Company is not currently conduction an on-market buy-back. H. ON-MARKET BUY-BACK The Company did not purchase securities on market during the reporting period. Chesser Resources Limited Annual Report 2020 | 61 65 | P a g e CORPORATE DIRECTORY Board of Directors Mr Mark Connelly Mr Robert Greenslade Mr Simon O’Loughlin Mr Simon Taylor Mr Michael Brown Company Secretary Mr Stephen Kelly CORPORATE DIRECTORY Non-Executive Chairman Non-Executive Director Non-Executive Director Non-Executive Director Managing Director Registered Office and Principal Place of Business Level 14 167 Eagle Street Brisbane QLD 4000 Phone number: + 61 7 3854 2387 Postal address PO Box 5807 Brisbane QLD 4000 Website: www.chesserresources.com.au Share Registry Computershare Investor Services Pty Ltd Level 1 200 Mary Street Brisbane QLD 4000 Phone number: 1 300 552 270 Stock Exchange Australian Securities Exchange 20 Bridge Street Sydney, NSW 2000 ASX Code CHZ Auditors Pitcher Partners 62 | Annual Report 2020 Chesser Resources Limited 66 | P a g e CORPORATE DIRECTORY Level 14, 167 Eagle Street Brisbane QLD 4000 chesserresources.com.au
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