ANNUAL REPORT
For the year ended 30 June 2017
Crater Gold Mining Limited (ASX: CGN) ABN 75 067 519 779
Contents
Chairman’s Statement
Review of Operations
Directors' Report
Auditor's Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor's Report
ASX Additional Information
Corporate Directory
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Chairman’s Statement
Dear Shareholders,
Development of the Crater Mountain tenements has been our main focus since 2012. Our driving force was the late Peter Macnab,
a geologist with an iconic reputation in Papua New Guinea, credited with more than 180m oz of discoveries, including Lihir. Mr
Macnab demonstrated success with the discovery of an epithermal gold zone (known as the Mixing Zone) at Nevera, and a number
of drill-holes indicative of porphyry mineralisation. In a declining gold price environment from 2013, which made raising capital
difficult, the Company began to focus on quick start mining through early development of a gold mine at the High Grade Zone ("HGZ")
to generate cash internally, with exploration activities temporarily suspended.
Mr Macnab sadly passed away in 2015. In his absence, performance in the HGZ only brought partial success as Level 1960 was found
to have been significantly mined out by previous artisanal miners. Steps to open the Level 1930 adit started in late 2016, but the
Company had by then encountered problems exacerbated by the accrual of substantial debt. Throughout these difficult years, I have
continuously supported the Company financially through loans from my company Freefire Technology Limited ("Freefire"). By early
2017, these loans, aggregated with the outstanding convertible notes and net trade payables, made it clear that the Company
required a thorough transformation.
With this in mind, we embarked on a partially underwritten rights issue earlier this year, and it is with regret that this issue eventually
failed because of inadequate subscription of the rights. We are now preparing for the launch of a new rights issue that will be fully
underwritten by my company Freefire, the proposed details of which were announced on September 1, 2017.
Practical actions, which have been taken in tandem with the new rights issue, will result in the refinancing of the Company to
substantially free it from debt and provide adequate working capital going forward. A new strategy has been adopted which will not
only include an increased focus on management of production at the HGZ, but the resumption of orderly and affordable exploration
on a progressive basis.
To ensure that the new strategy is met, we have already put in place a team of new management professionals including Mining
Consultant, Rob Usher with over 25 years’ experience in gold production including years in PNG at the Porgera mine, Chief Financial
Officer, Matthew O'Kane with over 20 years’ experience including MNCs as well as in public mining companies and Chief Operating
Officer, Curtis Church with over 25 years of mining and exploration operating experience in various mines around the world. These
gentlemen have been on the job since July and quality preparatory work has already been completed. We will also shortly be adding
an experienced Geologist to the technical advisory committee to the Board to complement the engineering skills of Rob Usher.
The Board and I will continue to seek ways to improve the professional leadership of the Company. We are currently experiencing a
paradigm change in the outlook in the Company and I certainly feel excited by the prospects of the revived energy that now exists in
the Company.
Samuel Chan Wing-Sun
Chairman
29 September 2017
Crater Gold Mining Limited
2
Review of Operations
Company Focus – High Grade Zone project at Crater Mountain, Papua New Guinea
The year ending 30 June 2017 was a challenging one for Crater Gold Mining Limited (“CGN” or the “Company”) and its subsidiary
companies (“the Group”).
The Company started the year focusing on mining the High Grade Zone (“HGZ”) at its flagship Crater Mountain project at the 1960
Level and stoping up towards surface at 1990 Level. However during this process considerable artisanal workings were discovered
and the resulting gold production did not meet target.
As a consequence, the Company announced the development of a second Adit at the 1930 level, 30m below the existing 1960 level.
It is the Company’s belief that the area between 1930 level and 1960 level has not been mined by artisanal miners due to increased
depth from surface, unlike the area between 1960 level and surface which was accessible by artisanal mining from surface. The
Company is therefore confident that the addition of the Second adit will result in higher gold production.
As at the end of the year the second adit at the 1930 level had been developed for approximately 27 metres and is estimated to
require an additional 100 metres of development to reach the zone of mineralisation with the appropriate target grades for
production ore.
The highlight of the year saw the Company announce the completion of a maiden resource estimate in accordance with JORC
guidelines for its HGZ project, part of the Crater Mountain Gold Project in Papua New Guinea (PNG).
The near term objective is to establish the Company as a profitable gold producer. We anticipate that the HGZ mine will generate
sufficient cash flow to fund further expansion of the HGZ mine and importantly, to fund the resumption of exploration activities at
Crater Mountain. If sufficient cash flow from the HGZ mine is generated it can potentially eliminate the need for further external
capital to fund exploration activities in the future.
While the immediate focus remains on generating positive cash flows from the HGZ mine, our goal is also to increase the current
JORC compliant resource of 24Mt at 1.0 g/t Au for 790,000 ounces at the nearby Mixing Zone project at Crater Mountain through
further exploration work (refer ASX Release of 24 November 2011: “Crater Mt – Initial Resource Estimate”). This information was
prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the
basis that the information has not materially changed since it was last reported. The Company is not aware of any new information
or data that materially affects the information contained in that ASX release. All material assumptions and technical parameters
underpinning the resource estimate continue to apply and have not materially changed).
Crater Mountain is located 50 km southwest of Goroka in the Eastern Highlands Province of PNG. Formerly a tier-1 BHP asset, there
has been in excess of 14,500 metres of diamond drilling to date, the majority focussed on the Nevera prospect, which hosts the HGZ
mine and the Mixing Zone project.
High Grade Zone gold mine, (HGZ) Crater Mountain, Papua New Guinea (100%)
Due diligence review of HGZ Mine led by Mr Robert Usher, mining engineer and former Executive General Manager of
PanAust Asia
Project review included high-level review of geological data by experienced career geologist, Mr Dorian L. (Dusty) Nicol
Maiden HGZ JORC gold resource
Project Review
The Company undertook a project review during the year. Although the Board remains confident that the Crater Mountain project
has good potential to deliver acceptable financial returns to the Company, delays in the HGZ mine meeting production and profit
targets, and the resulting lack of progress on exploration work, prompted a project review.
As part of the Review, a team visited the HGZ mine in May 2017 to conduct a due diligence review. The team was led by Mr Robert
Usher. Mr Usher is a mining engineer with more than 25 years’ experience. He was Executive General Manager of PanAust Asia from
2006 to 2014 and has significant gold production experience including in PNG with Placer Dome at its Porgera operation from 1993
to 1999. The work being supervised by Mr Usher at this time includes the completion of metallurgical test-work and detailed mine
planning. If results are successful, it is anticipated the Company would be able to provide more definition around the deliverables
and targets for the development of sustainable, cash flow positive commercial gold production. This cash would then be utilised to
further advance exploration work at the Crater Mountain Project.
Crater Gold Mining Limited
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Review of Operations
In August 2017 Mr Dorian L. (Dusty) Nicol undertook a high-level review of Nevera Prospect exploration data, including a visit to site
to spend time with our local PNG geologist, and to view the project first hand. Mr Nicol is a career geologist with over 40-years’
experience in discovery and resource development. He has worked extensively in Papua New Guinea for Esso Minerals and Rennison
Gold Fields, including on Crater Mountain and Kainantu gold projects.
HGZ Gold Mine
Development activities at the HGZ mine were put on hold initially pending an internal review due to the inability of the mine to
generate the cash flows expected by the Board. The result of that review was the decision to initiate an external third party review,
and also to increase the human resources available to manage in country activities in PNG.
As at the end of the year the second adit at the 1930 level had been developed for approximately 27 metres and is estimated to
require an additional 100 metres of development to reach the zone of mineralisation with the appropriate target grades for
production ore.
The Company started the year focusing on mining the HGZ at the 1960 Level and stoping up towards surface at 1990 Level. However
during this process considerable artisanal workings were discovered and the resulting gold production did not meet target
As a consequence, the Company announced the initiation of development of a second adit at the 1930 level, 30m below the existing
1960 level. The area between 1930 level and 1960 level has likely not been mined by artisanal miners due to the increased depth
from surface, unlike the area between 1960 level and surface, which was accessible from surface by artisanal mining methods. The
Company is confident that the addition of the second adit will result in higher gold production. The adit will access the depth
continuity of the central block of the high-grade zone as demonstrated by the previous drilling program undertaken by the Company.
The HGZ is high-grade high-sulphidation epithermal quartz-pyrite-gold mineralisation, extending from surface to possibly several
hundred metres depth (possibly in excess of 500m); local artisanal miners produced an estimated 15,000 ounces from a small area
of shallow workings (maximum 50m depth as encountered by the Company) in the base of a mineralised spur from 2005 to 2011.
HGZ JORC resource
Maiden high grade JORC gold resource
Potential to increase gold resource substantially
3 major gold veins identified contain most the gold
During the year the Company announced a maiden inferred resource estimate reported in accordance with JORC guidelines for its
HGZ gold mining project of 44,500 tonnes at 11.9 g/t for 17,100 ounces of gold (cut- off grade of 5 g/t Au).
The initial Inferred Resource at HGZ comprises:
Resource Category
Tonnes
Grade (Au g/t)
Inferred - cut-off of 5g/t au
44,500
Within this resource at a higher cut–off of
> 7.5g/t Au
23,500
11.9
17.2
Gold Oz
17,100
13,000
As part of the resource definition, mapping of the HGZ showed three distinct major high-grade gold veins (Figure 1). The three veins
are closely linked and are estimated to carry 11,800 ounces of gold. This will allow more efficient, targeted gold production.
Crater Gold Mining Limited
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Figure 1 - - N-S Composite Sections: The 3 identified high-grade veins N1, JL1 and L1
Review of Operations
This maiden resource at the HGZ marked a significant milestone for the Company, confirming the potential for profitable gold mining
from the HGZ mine. The report also provided us with more detail of the high-grade veins enabling us to target more selective mining
of the 3 main high-grade veins going forward. Whilst the initial JORC resource may seem modest, the gold is accessible and all
infrastructure is in place, allowing the Company to readily mine the 3 veins as well as other cross cutting structures.
The maiden resource estimate only considered the HGZ as identified to date. Development of the 1930 Level will pass through
approximately 100m of previously unexplored ground adjacent to the high-grade zone. This area is considered prospective for finding
additional gold bearing structures and it is the Company’s plan to conduct further underground drilling from the 1930 level adit as a
result.
The potential to increase the resource is considered substantial given that drilling to date has mostly been confined to a maximum
depth of 75m from surface (Figure 2). However there is also evidence from drilling that gold is encountered at least to a depth of
128m from surface (NEV022)
Crater Gold Mining Limited
5
Review of Operations
Figure 2 - Mineralised Zones at Crater Mountain Deposit. (9281000 mN)
Future strategy
The Company’s strategy is to become a profitable gold producer at the HGZ mine, whilst at the same time restarting further
exploration drilling work in both the HGZ and the Mixing Zone. Gold production at the HGZ mine is anticipated to generate a positive
cash flow for the Company, enabling it to potentially reduce or eliminate the need for further external funding in the future, and to
enable it to further develop the flagship Crater Mountain project and its other prospects in PNG and Queensland, Australia.
Corporate
The Company undertook a Corporate Review with the objective to restructure the Company’s debt profile and best position the
Company to advance its existing projects. Activities included engaging with third parties for a detailed review of the Company’s
projects, strategy and options to attract new funding to eliminate material debt.
Importantly, as announced to ASX on 16 February 2017 and 24 March 2017, Mr Sam Chan has committed to support the Company.
The Company has received consistent support from Mr Sam Chan via Freefire Technology Ltd ("Freefire") and this support is ongoing
as evidenced by Freefire's letter of support to the Company to September 2018.
Crater Gold Mining Limited
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Review of Operations
Rights Issue
On 27 July 2016 the Company announced an underwritten 1:8 rights issue at $0.07 per share to raise $2.12 million. The rights issue
was underwritten by Freefire Technology Ltd, a company associated with Chairman Mr Sam Chan. The rights issue was
undersubscribed in the amount of $822,971. The shortfall was taken up by the underwriter, Freefire Technology Limited.
Appointment of Mr Richard Johnson as Director
The Company announced the appointment of Mr Richard Johnson as a Director of the Company. Mr Johnson acted as the Company’s
PNG General Manager and also continued in that role until end of October 2016.
Loan Facility
The Company advised that it secured a loan facility of up to $800,000 from the Industrial and Commercial Bank of China (Asia) Limited
(ICBC, or the Bank). The ICBC loan facility is repayable on call and is guaranteed by interests associated with the Chairman, Mr Sam
Chan.
Valuation of PNG assets
In order to address the underlying reason for the Disclaimer of Conclusion on the Company’s 31 December 2016 Financial Statements,
an independent valuation of the Company’s projects in PNG was commissioned. The valuation process was completed and announced
on 15 June 2017. The conclusion was that the preferred market value of the PNG assets was estimated at $8,000,000, which resulted
in an impairment of non-current assets by $15,049,107.
Valuation of Australian assets
The Company’s Croydon project was independently valued in March 2017. The conclusion of this valuation for the Croydon projects
was $1,075,000. Given the Company’s written down value as at year end was $987,819 it was determined that no valuation
adjustment was required.
Annual General Meeting
All resolutions at the Company’s 2016 Annual General Meeting on 30 November 2016 were passed.
Subsequent to end of year
Rights Issue
On the 24 July 2017, the Company announced; (i) an eleven (11) for two (2) Entitlement Offer of up to 1,496,652,416 fully paid
ordinary shares (“New Shares”) at an issue price of $0.01 per New Share to raise up to $14,966,524 before costs; (ii) the proposed
sale of 100% of its Croydon Project for $1.2 million in cash; and (iii) a series of associated initiatives to refocus the Company and
accelerate the development of its flagship Crater Mountain Project in Papua New Guinea. The Entitlement Offer had a minimum raise
of $13.0 million so together with the proceeds from the Croydon sale the minimum proceeds would have been $14.2 million.
Subject to certain terms and conditions including Shareholders other than Freefire taking up entitlements to $2.1 million, Patersons
Securities Limited intended to partially underwrite the Entitlement Offer, which when combined with Freefire’s underwriting
commitment would have resulted in a minimum amount of $13.0M raised by the Entitlement Offer.
On the 30 August 2017 the Company announced that there had been insufficient take-up of rights by existing shareholders to trigger
the underwriting obligations and, as a result, the Rights Issue had been terminated. All application funds received were refunded to
applying shareholders.
Short Term Bridging Facility
On 9 August 2017 the Company executed a Short Term Bridging Facility with Freefire for $3,504,915. The purpose of the bridging
facility was to provide the Company funds to repay the Convertible Notes with interest upon maturity.
Convertible Notes
The Company’s Convertible Notes (CGNG) due on the 22nd of August 2017 were fully repaid upon expiry. The convertible notes were
removed from official ASX quotation at the close of trading on the 19 September 2017.
Crater Gold Mining Limited
7
Review of Operations
Fully underwritten Rights Issue
On 1 September 2017 Crater Gold Mining Ltd announced details of the Company’s proposed fresh rights issue. The Company is in the
process of preparing the fresh rights issue offer document. It is currently proposed that the Fresh Rights Issue will be made on a 9:2
basis, at a price of $0.01 per share to raise approximately $12,245,000. The Fresh Rights Issue will be fully and directly underwritten
by Freefire Technologies Ltd (Freefire), a company associated with Chairman, Mr Sam Chan. It was also announced that an interim
loan of $2 million would be advanced to the Company by Freefire in order to enable the repayment of outstanding creditors prior to
the closing of the fresh rights issue. To date the Company has received $0.8 million under this facility.
The Company and Freefire have agreed to abandon the sale of the Croydon Project to Freefire. Accordingly, that project will remain
within the Company and the prospectus for the Fresh Rights Issue will address the allocation of funds to advance that project.
Alex Molyneux
On 5 September 2017 the Company announced that Mr Alex Molyneux, previously the proposed Chairman of the Company under
the previous rights issue terms, would have no ongoing role with the Company. The Company confirmed that it anticipated the other
operational management previously announced would have ongoing involvement with the Company.
Technical work resumes on HGZ mine development
On the 14 August 2017 the Company announced it had resumed technical work on the development of HGZ Gold Mine at Crater
Mountain. Technical consultants have been retained to work to confirm final mine plans.
Mining Associates Limited (“MA”) has been retained to assist CGN confirm various mine planning parameters and develop a revised
mine plan. In particular, the Company will work with MA to identify stoping blocks with gold grades in excess of 10g/t, both above
the 1960 level and between the 1930 and 1960 levels. MA will also assist with confirmation of the Company’s recommended mining
method and design of horizontal and vertical development between 1930 and 1960 levels, to most efficiently extract the targeted
gold-bearing ore.
Minmet Services Pty Ltd (“Minmet”) has also been retained to assist with metallurgy for restart of HGZ gold Mine processing
operations. Minmet’s scope of work includes metallurgical test work and analysis to confirm operating plans but also direct
participation in the re-start of operations and identification of opportunities for optimisation of the plant. An early batch plant run
with representative ore will be undertaken shortly to collect plant data to ensure laboratory test work is aligned with actual plant
operating conditions. The detailed mine planning and plant optimisation work will be undertaken in parallel with the resumption of
development of the 1930 level adit at the HGZ Gold Mine.
Schedule of Tenements
Set out below is the schedule of tenements that the Company and its subsidiaries hold as at 30 June 2017.
Schedule of Crater Gold Mining Limited tenements:
Registered
Holder
%
Owned
Particulars
Project Name
EPM 8795
Croydon
EPM 13775 Wallabadah
EPM 16002
Foote Creek
CGN
CGN
CGN
EPM 18616
Black Mountain
CGN
EL 1115
EL 2203
EL 2249
EL 2318
EL 2334
EL 2335
Crater Mountain
Anomaly Ltd 1
Ubaigubi
Anomaly Ltd 1
Crater Mountain
Anomaly Ltd 1
South Crater
Anomaly Ltd 1
Crater Mountain
Anomaly Ltd 1
Crater Mountain
Anomaly Ltd 1
100
100
100
100
100
100
100
100
100
100
Status
Granted
Expiry
Area (Km2)
6/09/2018
19.2
Renewal lodged
5/3/2017
32
Granted
30/01/2018
28.8
Granted
18/06/2018
Renewal lodged
25/09/2016
Renewal lodged
10/09/2017
Renewal lodged
10/11/2017
Renewal lodged
10/09/2017
Renewal lodged
21/05/2017
Renewal lodged
21/05/2017
96
41
88
10
20
68
78
ML 510
HGZ
Anomaly Ltd 1
100
Granted
4/11/2019
1 Anomaly Limited is CGN’s 100% owned PNG subsidiary
Crater Gold Mining Limited
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Review of Operations
On 3 July 2017 the Company received notification that the renewal application for license EL1972 had be denied by the Minister of
Mining of Papua New Guinea effective 29 June 2017. After receiving this decision the Company decided to surrender licence EL2180.
The surrender of EL2180 was effected by the Government of Papua New Guinea on 15 August 2017. These licenses were both located
on Fergusson Island.
On 25 September 2017 the Company was notified by the Queensland Government Department of Natural Resources and Mines that
EPM13775 had been renewed until 6 March 2020.
The information contained in this report relating to exploration results and mineral resource estimate at Crater Mountain PNG is
based on and fairly represents information and supporting documentation prepared by Mr Richard Johnson, PNG General Manager
of Crater Gold Mining Limited. Mr Johnson is a Fellow of The Australasian Institute of Mining and Metallurgy and has the relevant
experience in relation to the mineralisation being reported upon 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. Mr Johnson consents to the inclusion
in this report of the matters based on his information in the form and context in which it appears.
COMPETENT PERSONS STATEMENT
Presentation of technical data and Competent Persons review
Resource estimates contained in this report were previously announced in the Company’s ASX news releases of:
•
•
21 December 2011 Initial Resource Estimate (This information was prepared and first disclosed under the JORC Code 2004.
It has not been updated since to comply with the JORC Code 2012). The Company confirms that it is not aware of any new
information or data that materially affects the information included in that announcement, and that all material
assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.
14 November 2016 titled ‘Maiden JORC Gold Resource at HGZ Project, Crater Mountain, PNG’.
Such resource estimates are subject to the relevant assumptions, qualifications and procedures described in the relevant ASX news
releases.
To date, the Company has only announced estimates of Inferred Mineral Resources. Nothing in this report or prior announcements
by the Company constitutes presentation of Mineral Reserves. As such, economic analysis cannot be applied based on the date
contained.
The information contained in this report relating to exploration results and mineral resource estimates is based on and fairly
represents information and supporting documentation prepared by Mr Dorian L. (Dusty) Nicol or prepared by appropriately qualified
external technical experts and reviewed by him. Mr Nicol has been assisting the Company as a technical consultant relating to his
areas of expertise. Mr Nicol is a Fellow of The Australasian Institute of Mining and Metallurgy and has the relevant experience in
relation to the mineralisation being reported upon 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. Mr Nicol consents to the inclusion in this report of
the matters based on his information in the form and context in which it appears.
The Company has an ’exploration target’ of ‘multi-million ounces’ for the epithermal gold resources at the Nevera Prospect at Crater
Mountain Project. A targeting exercise was carried out by Mining Associates (“MA”) for the Nevera prospect using a simple
10x10x10m block model informed by 5 m bench channel samples (not including rock chips) and a Nearest Neighbour (“NN”)
estimation technique with a limited search range. The NN method was chosen so that no averaging of the grades occurred although
there is a risk that estimates can be over selective. As the initial target is highly selective narrow underground mining, this is an
acceptable approach. An initial examination of the composited data shows two natural breaks in Au grade distribution. One at about
0.4 g/t Au and a second at about 10 g/t Au. MA suggests that these represent low grade and high mineralisation events respectively.
The block model was informed using a 100m spherical search so that no assumption was made of the direction and trend of
mineralisation. Informing samples consisted of 2,766 5 m downhole composites and 1,479 5 m bench samples. No domain selection
was used, but no blocks above the topography were estimated. Volume covered is about 700 m long, 700 m wide and 100 m to 350
m deep (variable with topography). This is certainly suitable for both selective mining and a bulk open pit. A bulk density of 2.5 t/m3
was used for reporting, the grade tonnage plot using cut-off grades from 1 to 20 g/t Au was reported. The target for Nevera prospect
bulk open pit mining using a cut-off grade 1 g/t Au is 24 Mt @ 2.7 g/t Au for 2Moz of contained Au. The target for the HGZ only for
selective underground mining using a cut-off grade 10g/t is 60-100koz @ 13-30 g/t. The exploration targets are conceptual in nature
as there has been insufficient exploration to define them as Mineral Resources. It is uncertain if further exploration will result in the
determination of a Mineral Resource under the JORC Code 2012. The exploration targets are not being reported as part of any Mineral
Resource.
No new information or data
This report contains references to exploration results and Mineral Resource estimates, all of which have been cross-referenced to
previous announcements made by the Company. The Company confirms that it is not aware of any new information or data that
Crater Gold Mining Limited
9
materially affects the information included in the relevant announcements and in the case of estimates of Mineral Resources, that
all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to
apply and have not materially changed.
Review of Operations
Crater Gold Mining Limited
10
Directors’ Report
The Directors present their report on the consolidated entity (referred to hereafter as "the Group") consisting of Crater Gold Mining
Limited (referred to hereafter as "the Company") and its controlled entities for the year ended 30 June 2017.
Directors
The following persons were Directors of Crater Gold Mining Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
S W S Chan (Non-executive Chairman)
R D Parker (Managing Director)
T M Fermanis (Non-executive Deputy Chairman)
R Johnson (Technical Director, appointed 19 July 2016)
L K K Lee (Finance Director)
D T Y Sun (Non-executive Director)
Activities
The principal activities of the Group consist of the exploration, evaluation and exploitation of potential world class gold and other
base metal projects. Further details of the Group’s activities are included in the Review of Operations on pages 3-10 of this report.
Review of Operations and Results
The Group incurred a loss of $25,284,741 for the year ended 30 June 2017 (2016: loss of $10,886,589). Further details of the Group’s
operations are included on pages 3-10 of this report.
Dividends
No dividends of the Company or any entity of the Group have been paid, declared or recommended since the end of the preceding
year. The Directors do not recommend the payment of any dividend for the year ended 30 June 2017.
Significant Changes in the State of Affairs
The Company continued to develop its gold mining production at the HGZ mine. In addition further work was conducted on
exploration activities across the Company’s tenements.
During the year the Company made two significant adjustments to the carrying values of assets. The first adjustment, as previously
disclosed in the half-year accounts, was the decision to fully impair the Mining Assets for the amount of $6,953,390. This decision
was taken as 1960 level has not produced the quantities of gold originally expected and the Board felt it prudent to fully impair
expenditure incurred to date in the development of the 1960 level adit. Secondly, in order to address the underlying reason for the
Disclaimer of Conclusion on the Company’s 31 December 2016 Financial Statements, an independent valuation of the Company’s
projects in PNG was commissioned. The valuation process was completed and announced on 15 June 2017. The conclusion was that
the preferred market value of the PNG assets was estimated at $8,000,000, which resulted in an impairment of non-current assets
by $15,049,107. The Company’s Corydon project was independently valued in March 2017. The conclusion of this valuation for the
Croydon projects was $1.075 million. Given the Company’s written down value as at year end was $987,819 it was determined that
no valuation adjustment was required
The Directors are not aware of any other significant change in the state of affairs of the Company that occurred during the financial
year other than as reported elsewhere in the Annual Report.
Events Subsequent to Reporting Date
On 3 July 2017 the Company received notification that the renewal application for license EL1972 had been denied by the Minister
of Mining of Papua New Guinea. After receiving this decision the Company decided to surrender licence EL2180. The surrender of
EL2180 was effected by the Government of Papua New Guinea on 15 August 2017. These licenses were both located on Fergusson
Island.
On 24 July 2017 the Company announced a capital raising and plans for restructuring of the Company. The capital raising was an 11
for 2 renounceable pro-rata entitlement offer at an issue price of $0.01 to raise at least $13.0 million. It was also proposed to sell
the Croydon project for $1.2 million. The recapitalisation would also involve the appointment of new members of the board and new
management. A prospectus was released on 26 July 2017 and followed up with a supplementary prospectus on 9 August 2017.
On 9 August 2017 the Company executed a Short Term Bridging Facility with Freefire for $3,504,915. The purpose of the bridging
facility was to provide the Company funds to repay the Convertible Notes with interest upon maturity. On 22 August 2017 the
Convertible Notes expired. All Convertible Notes and accrued interest were paid out by early September 2017.
On 1 September 2017 the Company advised that the capital raising had been terminated. It was also announced that a fresh rights
issue on a 9 for 2 basis was to be launched forthwith. The Company expects to make a further announcement on the fresh rights
issue in October. At the same time as cancelling the original rights issue it was confirmed that the sale of the Croydon project would
also be abandoned. It was also announced that an interim loan of $2 million would be advanced to the Company by Freefire in order
Crater Gold Mining Limited
11
Directors’ Report
to enable the repayment of outstanding creditors prior to the closing of the fresh rights issue. To date the Company has received
$0.8 million under this facility.
On 5 September 2017 the Company announced that Mr Alex Molyneux, previously the proposed Chairman of the Company, would
have no ongoing role with the business. The Company confirmed it anticipated the other operational management previously
announced the 24 July 2017 ASX announcement would have ongoing involvement with the Company.
On 25 September 2017 the Company was notified by the Queensland Government Department of Natural Resources and Mines that
EPM13775 had been renewed until 6 March 2020.
Likely Developments
Likely developments in the Group’s operations in future financial years and the expected results of those operations are referred to
on pages 3-10.
Future financial performance and outcomes depend on a number of variables such as the Group’s ability to continue to attract
funding and/or one or more joint venture partners, or alternatively to be bought out by a suitor.
Material business risks that could adversely affect the Company’s financial performance include availability of funding and/or inability
to attract one or more joint venture partners; political risk in the Company’s overseas country of operation.
Information on Directors and Secretary
The Directors and Secretary of the Company in office at the date of this report, unless otherwise stated, and their qualifications,
experience and special responsibilities are as follows:
S W S Chan BA (Non-Executive Chairman), age 68
Mr Chan has been a Director of the Company since 29 January 2013 and was appointed
as Non-Executive Chairman on 11 March 2013.
Mr Chan is a director and the controller of Freefire Technology Limited (“Freefire”), the
major shareholder in the Company.
Mr Chan received a Bachelor’s degree from the University of Manchester, UK in 1970
and qualified as a chartered accountant in 1973. He was the company secretary of
Yangtzekiang Garment Limited from 1974 to 1988 and has been a director of
Yangtzekiang Garment Limited since 1977. Mr Chan was appointed the Managing
Director of YGM Trading Limited from 1987 to 2006 and the Chief Executive Officer of
YGM Trading Limited from 2006 to 2010. He has been the Vice Chairman of the board
of YGM Trading Limited since 2010. Mr Chan is also on the board of Yangtzekiang
Garment Limited.
Mr Chan was formerly a Director of Hang Ten Group Holdings Limited (listed in Hong
Kong) from January 2003 to March 2012.
As at the date of this report, Mr Chan has an interest of 160,085,929 ordinary shares
and 100,241 Convertible Notes in the Company through his control of Freefire
Technology Limited and 2,800,000 options over ordinary shares in the Company.
R D Parker B Eng (Managing Director), age 46
Mr Parker has been a Director of the Company since 12 March 2013 and was appointed
Managing Director on 1 April 2015.
Mr Parker lives in Hong Kong. He is a qualified Marine Engineer and Marine Industries
Manager having graduated from Southampton Institute of Higher Education, Marine
Division, in Warsash, United Kingdom. Mr Parker is a professional Company Director.
As at the date of this report, Mr Parker has an interest in 96,036 ordinary shares and
2,800,000 options over ordinary shares in the Company.
T M Fermanis F Fin, MSAA (Executive Deputy Chairman), age 53
Mr Fermanis has been a Director of the Company since 2 November 2009 and was
appointed Deputy Chairman on 1 April 2015.
Mr Fermanis has extensive experience in stockbroking and has been an advisor since
1985 with extensive experience in the resource sector. He has been involved in gold
exploration in PNG for a number of years.
Mr Fermanis is a member of the Remuneration and Nomination Committee.
Crater Gold Mining Limited
12
Directors’ Report
As at the date of this report, Mr Fermanis has an interest in 602,311 ordinary shares,
40 Convertible Notes and 2,800,000 options over ordinary shares in the Company.
R L Johnson BSc Eng Mining, FAusIMM (Technical Director), age 65
Mr Johnson was appointed as Technical Director on 19 July 2016.
Mr Johnson, who acts as the Company’s PNG General Manager, is a mining engineer
with extensive experience managing projects in many regions, including PNG.
Between 2002 and 2005, Richard was responsible for turning around DRD Gold’s high
grade underground Tolukuma Gold Mine in PNG’s Central Province into a highly
profitable operation. He has also held senior executive and Director positions in
several other resources companies in the region, including Allied Gold and DRDGold.
As at the date of this report, Mr Johnson has an interest in 781,250 ordinary shares
and 2,800,000 options over ordinary shares in the Company
L K K Lee MCom, MAppFin, CPA (Finance Director), age 56
Mr Lee has been a Director of the Company since 6 June 2014 and was appointed
Finance Director on 1 April 2015.
Mr Lee received a Bachelor of Commerce degree and a Master of Commerce degree
from the University of New South Wales, Australia. He also holds a Master of Applied
Finance degree from the Macquarie University, Australia. He has over 25 years of
experience in finance, corporate finance, management, auditing and accounting. He
worked in an international accounting firm for several years and has worked as group
financial controller, chief financial officer and director of listed companies on the Hong
Kong Stock Exchange for over 10 years.
Mr Lee is a member of the Hong Kong Institute of Certified Public Accountants and a
member of CPA Australia.
Mr Lee is a member of the Audit Committee.
As at the date of this report, Mr Lee has an interest in 2,800,000 options over ordinary
shares in the Company.
D T Y Sun (Non-executive Director), age 69
Mr Sun has been a Director of the Company since 29 January 2013.
Mr Sun obtained a Bachelor of Economics from the University of Tasmania and held
management positions with the Ford Motor Company in Melbourne and in Brisbane,
as well as with Citibank NA and Lloyds Bank Plc in Hong Kong. He has been an executive
director of several listed companies in Hong Kong and has been engaged in advisory
services on strategic planning and corporate development, mainly in corporate finance,
since 1991.
Mr Sun is Chairman of the Audit Committee and of the Remuneration and Nomination
Committee.
As at the date of this report, Mr Sun has an interest in 2,800,000 options over ordinary
shares in the Company.
Heath Roberts Dip Law (SAB), Grad. Dip Legal Practice (UTS) (Company Secretary)
Mr Heath Roberts was appointed Company Secretary on 14 August 2015. Mr Roberts is a commercial solicitor with eighteen years
ASX listed company experience, to Executive Director level. He has acted as Company Secretary and/or Director for numerous ASX
listed and private companies.
Crater Gold Mining Limited
13
Directors’ Report
Directors’ Meetings
The Company held 1 Board meeting during the year. In addition to formal Board meetings during the year a number of issues were
dealt with by means of circular resolutions of the Board. The number of formal meetings attended by each Director was:
Name
S W S Chan
T M Fermanis
L K K Lee
R D Parker
R L Johnson
D T Y Sun
Board
Audit Committee
Remuneration and Nomination
Committee
Eligible to
Attend
1
1
1
1
1
1
Attended
-
1
1
1
1
1
Eligible to
Attend
-
-
-
-
-
-
Attended
-
-
-
-
-
-
Eligible to
Attend
-
-
-
-
-
-
Attended
-
-
-
-
-
-
The Eligible to Attend column represents the number of meetings held during the time the Director held office or was a member of
the Committee during the year.
Environmental Regulation and Performance
The Group is subject to environmental regulation in relation to its former mining activities in North Queensland by the Environmental
Protection Agency of Queensland. The Company complies with the Mineral Resources Act (1989) and Environmental Protection Act
(1994). It is also subject to the Environmental Act (2000) (Papua New Guinea) on its activities in PNG.
Shares under Option
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Grant date
Expiry date
23 December 2014
23 December 2014
23 December 2014
28 July 2015
9 September 2015
12 July 2016
30 September 2017
30 September 2017
30 September 2017
27 July 2019
27 July 2019
12 July 2020
Issue price of
shares ($)
$0.25
$0.25
$0.25
$0.25
$0.25
$0.125
Number of shares
under option
4,600,000
2,100,000
800,000
7,800,000
5,800,000
9,000,000
Type
Fair value ($)
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
$0.01
$0.01
$0.01
$0.02
$0.02
$0.01
Option holders do not have any rights under the options to participate in any share issue of the Company.
Shares Issued on the Exercise of Options
No shares have been issued on the exercise of options during the course of the year (2016: Nil) or subsequent to year end.
Indemnification and Insurance of Directors
During the year, the Company paid premiums of $20,127 (2016: $19,220) to insure the Directors and Officers of the Company in
relation to all liabilities and expenses arising as a result of the performance of their duties in their respective capacities to the extent
permitted by the Corporations Act 2001.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company
or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any
related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the
company for all or part of those proceedings.
Crater Gold Mining Limited
14
Directors’ Report
Non-Audit Services
The Company may decide to engage the auditor of the Company, BDO East Coast Partnership, on assignments additional to their
statutory audit duties where the auditor’s expertise and experience with the Company are important.
No amounts were paid or are payable to BDO East Coast Partnership for non-audit services provided during the year.
Remuneration Report (Audited)
The information provided under headings (a) - (d) is provided in accordance with section 300A of the Corporations Act 2001. These
disclosures have been audited.
a) Principles used to determine the nature and amount of remuneration
The Company has a Remuneration and Nomination Committee. The Board has adopted a Remuneration and Nomination Policy
which provides advice on remuneration and incentive policies and practices and specific recommendations on remuneration
packages and other terms of employment for executive Directors, other senior executives and Non-executive Directors. The
performance of the Company is taken into consideration when the remuneration policies of the Company are assessed by the
Committee. The Corporate Governance Statement provides further information on the role of this Committee.
Executive Remuneration
The remuneration policy ensures that contracts for services are reviewed on a regular basis and properly reflect the duties and
responsibilities of the individuals concerned. The executive remuneration structure is based on a number of factors including relevant
market conditions, knowledge and experience with the industry, organisational experience, performance of the Company and that
the remuneration is competitive in retaining and attracting motivated people. There are no guaranteed pay increases included in
the senior executives' contracts.
Non-executive Directors
Fees and payments to Non-executive Directors reflect the demands which are made on, and the responsibilities of, the Directors.
Non-executive Directors’ fees and payments are reviewed annually by the Board.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2017 are summarised below:
Sales revenue
EBITDA
EBIT
Loss after income tax
2017
$‘000
225
(17,417)
(24,561)
(25,285)
2016
$‘000
385
(10,061)
(10,259)
(10,887)
2015
$‘000
2014
$‘000
2013
$‘000
53
(1,865)
(1,871)
(2,517)
Nil
(2,249)
(2,236)
(2,236)
Nil
(3,053)
(3,061)
(3,061)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Total dividends per share (cents per share)
2017
$0.01
Nil
2016
$0.07
Nil
2015
$0.09
Nil
2014
$0.08
Nil
2013
$0.001
Nil
Basic earnings per share (cents per share)
(9.503)
(5.143)
(1.792)
(1.806)
(7.099)
Directors' Fees
The current base remuneration was last reviewed with effect from 26 March 2009.
Non-executive Director’s fees are determined within an aggregate Directors’ fee pool limit, which is periodically recommended for
approval by shareholders. The maximum currently stands at $200,000 per annum and was approved by shareholders at the Annual
General Meeting on 23 November 2010.
The following fees have applied for the year ended 30 June 2017:
Non-executive Director’s base fee - $35,000 per annum.
Work undertaken by the Non-executive Directors, in addition to that provided in their role as Non-executive Directors is
charged at $1,200 per day or pro-rata for part thereof.
Audit Committee and the Remuneration and Nomination Committee – no additional fees payable.
Except for retirement benefits provided by the superannuation guarantee legislation, there are no retirement benefits for the Non-
executive Directors.
Crater Gold Mining Limited
15
Directors’ Report
b) Details of remuneration
Directors and the key management personnel (as defined in section 300A Corporations Act 2001) of the Company and the Group are
set out in the following tables. The key management personnel of the Company and the Group includes the Directors as per page 16
and the following executive officers who have authority and responsibility for the planning, directing and controlling the activities of
the Group.
Director / key management
person
Short-term
Short-term
Post-
employment
Share-based payments
Total
Base
Fees/salary
Other 5
Superannuation
Options
% of
total
2017
Non-executive Directors
S W S Chan
D T Y Sun
Subtotal
Executive Directors
R D Parker, Managing
Director
R L Johnson, Technical
Director
L K K Lee, Finance Director
T M Fermanis, Executive
Chair/Investor
Deputy
Relations
Other key management
personnel
G R Boyce 1
H L Roberts 2
Total
2016
Non-executive Directors
S W S Chan
R P Macnab 3
D T Y Sun
Subtotal
Executive Directors
R D Parker, Managing
Director
L K K Lee, Finance Director
T M Fermanis, Executive
Deputy
Chair/Investor
Relations6
Other key management
personnel
G R Boyce
R L Johnson
J A Lemon 4
H L Roberts 2
Total
35,000
35,000
70,000
-
-
-
-
-
200,000
163,332
35,000
120,000
35,000
144,000
117,054
89,100
346,154
35,000
17,500
35,000
87,500
200,000
120,000
35,000
162,377
250,000
9,240
62,755
926,872
-
-
-
627,332
-
-
-
-
-
-
144,000
-
-
-
-
144,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,832
12,832
25,664
26.8%
26.8%
47,832
47,832
95,664
12,832
6.0%
212,832
12,832
12,832
7.3%
9.7%
176,164
132,832
12,832
6.7%
191,832
9,624
6,416
93,032
7.6%
6.7%
126,678
95,516
1,031,518
9,883
9,883
9,883
29,649
9,883
9,883
9,883
6,574
10,683
-
-
76,555
22.0%
36.1%
22.0%
4.7%
7.6%
5.2%
3.9%
4.1%
-
-
44,883
27,383
44,883
117,149
209,883
129,883
188,883
168,951
260,683
9,240
62,755
1,147,427
1. Mr Boyce resigned on 31 July 2017.
2. Mr Roberts acts in a part time capacity. Mr Roberts was appointed Company Secretary on 14 August 2015.
3. Mr Macnab passed away in December 2015.
4. Mr Lemon acts in a part-time capacity. Mr Lemon resigned as Company Secretary on 14 August 2015.
5. Other relates to services provided by Directors. Refer to Note 24 for details.
6. Mr Fermanis was classed as a non-executive director in 2016, this is a change to the prior year table, as in substance Mr Fermanis was an
executive director.
No other Directors, officers or executives of the Company received any share-based payments, other than those shown in the
remuneration table above.
Crater Gold Mining Limited
16
All remuneration is on fixed rates. Refer section (c) of this remuneration report. There were no performance based payments made
during the year.
A summary of Director and key management personnel remuneration follows.
Directors’ Report
Remuneration component
Short term
Post-employment benefits
Share-based payments
Total
2017
$
938,486
-
2016
$
1,070,872
-
93,032
76,555
1,031,518
1,147,427
c) Service agreements
On appointment to the Board, all Non-executive Directors enter into a service agreement with the Company in the form of a letter
of appointment. The letter summarises the Board policies and terms, including compensation, relevant to the office of Director.
Remuneration and other terms of employment for the Executive Directors and other key management personnel are also formalised
in service agreements. Major provisions of the agreements relating to remuneration are set out below. There are no current service
agreements that contain incentive clauses and as such future remuneration is not necessarily dependent on the performance results
of the Company:
Key management personnel
Commencement date
29 January 2013
Term of
agreement
No fixed term
Base salary and
fees
$35,000 pa
S W S Chan
Chairman
T M Fermanis
Deputy Chairman
D T Y Sun
Non-Executive Director
R D Parker
Managing Director
L.K K Lee
Finance Director
G Boyce 2
Chief Financial Officer
R Johnson
General Manager – PNG
H L Roberts 1
Company Secretary
2 November 2009
No fixed term
$179,000 pa
29 January 2013
No fixed term
$35,000 pa
1 April 2015
No fixed term
$200,000 pa
1 April 2015
No fixed term
$120,000 pa
1 November 2011
No fixed term
$975 pd
1 January 2013
No fixed term
$120,000 pa
14 August 2015
No fixed term
$1,200 pd
Superannuation
-
-
-
-
-
-
-
-
Period of
notice
4 weeks
4 weeks
4 weeks
4 weeks
4 weeks
4 weeks
4 weeks
4 weeks
1. Mr H L Roberts was appointed as Company Secretary on the 14 August 2015.
2. Mr G Boyce resigned on 31 July 2017.
d) Equity based compensation
Options granted as part of remuneration for the year ended 30 June 2017
The Employee Share Option Plan (“Plan”) is designed to provide long term incentives for executives to deliver long term shareholder
returns. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the Plan or to
receive any guaranteed benefits.
Share-based compensation for the year ended 30 June 2017
No shares were issued to Directors and other key management personnel as part of compensation during the year ended 30 June
2017 (2016: nil).
Crater Gold Mining Limited
17
Directors’ Report
Options and rights over equity instruments
The number of options over ordinary shares in the Company held during the financial year by each Director and key management
personnel of the Group, including their personally related parties are set out below:
Name
2017
Directors
S W S Chan
T M Fermanis
R Johnson
L K K Lee
R D Parker
D T Y Sun
Key management personnel
G R Boyce
H L Roberts
Balance at the
start of the
year
Granted during
the year as
compensation
Exercised
during the year
Other changes
during the year
Balance at the
end of the year
1,800,000
1,800,000
1,800,000
1,800,000
1,800,000
1,800,000
1,100,000
-
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
750,000
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,800,000
2,800,000
2,800,000
2,800,000
2,800,000
2,800,000
1,850,000
500,000
Options granted carry no dividend or voting rights.
Share holdings
The number of shares in the Company held during the financial year by each Director and key management personnel of the Group,
including their personally related parties are set out below:
Name
2017
Directors
S W S Chan
T M Fermanis
R Johnson
L K K Lee
R D Parker
D T Y Sun
Key management personnel
G R Boyce 3
H L Roberts
2016
Directors
S W S Chan
T M Fermanis
L K K Lee
R P Macnab
R D Parker
D T Y Sun
Key management personnel
G R Boyce 3
R Johnson
J A Lemon 1
H L Roberts
J V McCarthy
Balance at the
start of the
year
Granted during
the year as
compensation
Additions
Disposals /
Other changes 2
Balance at the
end of the year
131,848,176
602,471
781,250
-
239,604
-
108,823
-
106,737,341
602,471
-
-
221,754
-
108,823
781,250
45,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,237,753
-
-
-
17,799
-
-
-
-
-
-
-
160,085,929
602,471
781,250
-
257,403
-
-
-
(108,823)
-
-
-
25,110,835
-
-
-
17,850
-
-
-
-
-
-
-
-
-
-
-
-
131,848,176
602,471
-
-
239,604
-
-
-
(45,700)
-
-
108,823
781,250
-
-
-
1. Mr Lemon resigned during the course of the 2016 financial year and therefore ceased to be a KMP.
2. When a shareholder ceases to be a Director or Key Management, their existing shareholding is adjusted in the column “Other changes during
the year”.
3. Mr Boyce resigned on 31 July 2017.
Crater Gold Mining Limited
18
Directors’ Report
Other transactions with key management personnel and their related parties
Mr S W S Chan is a director and the controller of Freefire Technology Limited (“Freefire”), the major shareholder in the Company.
During the year the Company paid Freefire $119,852 in loan interest and fees (2016: $80,106) and $250,603 in interest on convertible
notes (2016: $251,289). During the course of the year Freefire made a number of short term loans to the Company at an annual
interest rate of 8% (see Note 3d for further information on the loan).
As of 30 June 2017:
Mr R D Parker’s close family members hold a total of 77 Convertible Notes of the Company on which they earned $193 in interest
(2016: $193).
Mr T Fermanis owns 40 Convertible Notes of the Company on which he earned $100 in interest (2016: $100).
Mr G R Boyce owns 200 Convertible Notes of the Company on which he earned $500 in interest (2016: $501).
This concludes the Remuneration Report, which has been audited.
Crater Gold Mining Limited
19
Directors’ Report
Auditor’s Independence Declaration
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 21.
Corporate Governance
The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, Crater Gold Mining
Limited and its Controlled Entities (‘the Group’) have adopted a corporate governance framework and practices to ensure they meet
the interests of shareholders.
The Australian Securities Exchange Corporate Governance Council’s Corporate Governance Principles and Recommendations – 3rd
edition (‘the ASX Principles’) are applicable for financial years commencing on or after 1 July 2015, consequently for the Group’s 30
June 2017 year end. As a result, the Group has chosen to publish its Corporate Governance Statement on its website rather than in
this Annual Report.
Crater Gold Mining Limited is listed on the Australia Securities Exchange (ASX). Accordingly, unless otherwise stated in this document,
the Board’s governance arrangements comply with the recommendations of the ASX Corporate Governance Council (including the
2014 amendments) as well as current standards of best practice for the entire financial year ended June 30 2017. The corporate
governance statement is current as at June 30 2017 and has been approved by the Board.
The Corporate Governance Statement and governance policies and practices can be found in the corporate governance section of
the Company’s website at http://www.cratergold.com.au.
The Group’s Corporate Governance Statement incorporates the disclosures required by the ASX Principles under the headings of the
eight core principles. All of these practices, unless otherwise stated, were in place for the full reporting period.
Signed for and on behalf of the Board in accordance with a resolution of the Directors.
On behalf of the Directors
R D Parker
Managing Director
Sydney
29 September 2017
T M Fermanis
Deputy Chairman
Crater Gold Mining Limited
20
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF CRATER GOLD MINING
LIMITED
As lead auditor of Crater Gold Mining Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect Crater Gold Mining Limited and the entities it controlled during the
period.
Gareth Few
Partner
BDO East Coast Partnership
Sydney, 29 September 2017
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Financial Year ended 30 June 2017
Notes
June
2017
$
June
2016
$
Continuing Operations
Revenue
Cost of sales
Gross profit / (loss) from gold production
Profit / (loss) on disposal of fixed assets
Interest income
Gross profit / (loss) from continuing activities
Expenses
Administration expense
Corporate compliance expense
Depreciation expense
Exploration and evaluation costs written off
Exploration and evaluation costs impaired
Financing expense
Impairment of Mining Asset
Loss before income tax expenses from continuing operations
Income tax expense
5
5
5
6
13
13
14
7
225,288
384,800
(823,178)
-
(597,890)
384,800
7,273
826
(7,988)
4,175
(589,791)
380,987
(1,674,795)
(1,985,640)
(104,018)
(133,355)
(191,139)
-
-
(2,333,494)
(15,049,107)
(6,195,942)
(722,501)
(627,133)
(6,953,390)
-
(25,284,741)
(10,886,589)
-
-
Loss for the year after income tax expense
(25,284,741)
(10,886,589)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss when specific
conditions are met:
Exchange differences on translating foreign operations (net of tax)
21
(616,932)
(3,240,970)
Total comprehensive income for the year
(25,901,673)
(14,127,559)
Loss per share from continuing operations attributable to the ordinary equity holders of the Company:
Basic loss - cents per share
Diluted loss - cents per share
8
8
(9.503)
(9.503)
(5.143)
(5.143)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
Crater Gold Mining Limited
22
Consolidated Statement of Financial Position
As at 30 June 2017
Notes
June
2017
$
June
2016
$
10
11
12
13
14
15
16
17
18
19
20
21
21
296,185
137,307
433,492
95,239
203,666
298,905
66,967
68,581
8,953,712
22,664,481
-
7,105,002
641,347
916,534
9,662,026
30,754,598
10,095,518
31,053,503
2,327,509
2,217,595
1,145,021
897,070
7,109,173
1,306,415
10,581,703
4,421,080
-
-
3,177,632
3,177,632
10,581,703
7,598,712
(486,185)
23,454,791
60,934,332
59,089,123
340,507
(226,644)
340,507
274,800
(61,534,380)
(36,249,639)
(486,185)
23,454,791
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Other financial assets
Exploration and evaluation
Mining assets
Plant and equipment
Total non-current assets
Total Assets
LIABILITIES
Current liabilities
Trade and other payables
Related party payables
Interest-bearing liabilities
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Total non-current liabilities
Total liabilities
Net Assets / (Liabilities)
EQUITY
Contributed equity
Convertible note reserve
Reserves
Accumulated losses
Total Equity
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Crater Gold Mining Limited
23
Consolidated Statement of Changes in Equity
For the Financial Year ended 30 June 2017
Note
s
21
20
20
Balance at 1 July 2016
Movement in share based payment reserve
Issue of share capital
Transaction costs
Transactions with owners
Comprehensive income for the year
Other comprehensive income
Exchange differences on translating foreign operations
21
Total comprehensive income for the year
Contributed
equity
Convertible
note reserve
Reserves
Accumulated
losses
$
$
$
$
Total
$
59,089,123
340,507
274,800
(36,249,639)
23,454,791
-
2,106,423
(261,214)
1,845,209
-
-
-
-
-
-
-
-
115,488
-
-
-
-
-
115,488
2,106,423
(261,214)
115,488
-
1,960,697
(25,284,741)
(25,284,741)
(616,932)
-
(616,932)
(616,932)
(25,284,741)
(25,901,673)
Balance at 30 June 2017
60,934,332
340,507
(226,644)
(61,534,380)
(486,185)
Balance at 1 July 2015
53,724,173
340,507
3,407,059
(25,363,050)
32,108,689
Movement in share based payment reserve
Issue of share capital
Transaction costs
Transactions with owners
Loss for the year
Other comprehensive income
Exchange differences on translating foreign operations
21
Total comprehensive income for the year
21
20
20
-
5,616,117
(251,167)
5,364,950
-
-
-
-
-
-
-
-
-
-
108,711
-
-
108,711
-
-
-
-
108,711
5,616,117
(251,167)
5,473,661
-
(10,886,589)
(10,886,589)
(3,240,970)
-
(3,240,970)
(3,240,970)
(10,886,589)
(14,127,559)
Balance at 30 June 2016
59,089,123
340,507
274,800
(36,249,639)
23,454,791
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Crater Gold Mining Limited
24
Consolidated Statement of Cash Flows
For the Financial Year ended 30 June 2017
June
2017
$
June
2016
$
Notes
225,288
384,800
(2,174,822)
(1,090,172)
826
4,175
(108,681)
(426,527)
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Net cash used in operating activities
30
(2,057,389)
(1,127,724)
Cash flows from investing activities
Purchases of property, plant and equipment
Payments for exploration and evaluation
Payments for mining assets
Proceeds from/(Payments for) security deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares and options
Share issue costs
Proceeds from borrowings
Repayment of borrowings
Net cash provided by financing activities
Net increase / (decrease) in cash held
Cash at the beginning of the period
Effects of foreign exchange movements on cash transactions and balances
Cash and cash equivalents at the end of the period
(28,333)
(265,641)
(1,743,041)
(2,738,784)
-
(1,611,302)
1,614
(2,136)
(1,769,760)
(4,617,863)
2,076,423
5,589,867
(261,214)
(251,167)
3,780,000
2,055,542
(1,618,878)
(2,008,867)
3,976,331
5,385,375
149,182
(360,212)
95,239
51,764
296,185
501,025
(45,574)
95,239
10
10
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Crater Gold Mining Limited
25
Notes to the Consolidated Financial Statements
1
Summary of Significant Accounting Policies
Crater Gold Mining Limited (the “Company”) and its legal subsidiaries together are referred to in this financial report as the Group or
the Consolidated Entity.
Details of the principal accounting policies adopted in the preparation of the financial report are set out below. These policies have
been consistently applied to all years presented, unless otherwise stated.
Crater Gold Mining Limited is a for profit public company, limited by shares and domiciled in Australia.
The financial statements were authorised for issue, in accordance with a resolution of the Directors, on 29 September 2017. The
Directors have the power to amend and reissue the financial statements.
a. Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards (AASB), Australian
Accounting Interpretations, and other authoritative pronouncements of the Australian Accounting Standards Board and the
Corporations Act 2001. These Financial Statements also comply with International Reporting Standards as issued by the International
Accounting Standards Board (IASB).
New, revised or amending Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Historical cost convention
The financial report has been prepared under the historical cost convention, as modified by the revaluation of available-for-sale
financial assets, financial assets and liabilities at fair value through the Statement of Profit or Loss and Other Comprehensive Income
and certain classes of plant and equipment.
Critical accounting estimates
The preparation of the financial report in conformity with Accounting Standards requires the use of certain critical accounting
estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The
areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 2.
b. Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in Note 29.
c. Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company or parent entity as at
30 June 2017 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when
the consolidated entity 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 consolidated entity. They are de-consolidated from the date that control ceases.
A list of consolidated entities is contained in Note 28 to the financial statements.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity 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 consolidated
entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without
the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the
book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other
comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses
incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated
entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or
loss in profit or loss.
Crater Gold Mining Limited
26
Notes to the Financial Statements
d. Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns
that are different to those of other business segments. Segment information is provided on the same basis as information used for
internal reporting purposes by the chief executive and the Board. In identifying its operating segments, management generally
follows the Group's project activities. Each of these activities is managed separately.
e.
Foreign currency translation
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 operates (‘the functional currency’). The consolidated financial statements are presented in
Australian dollars, which is The Company’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 the Statement of
Consolidated Income, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are reported as part of the
fair value gain or loss. Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets,
are included in the fair value reserve in equity.
Group companies
The results and financial position of all the Group entities (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 Statement of Financial Position presented are translated at the closing rate at the date of that
Statement of Financial Position;
income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and
other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation
is sold or borrowings repaid a proportionate share of such exchange differences are recognised in the Statement of Profit or Loss and
Other Consolidated Income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of foreign entities are treated as assets and liabilities of the foreign
entities and translated at the closing rate.
f. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
trade allowances and duties and taxes paid.
Sale of gold
Sale of gold is recognised at the point of sale, which is where the customer has taken delivery of the goods, the risks and rewards are
transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns, trade discounts
and net of royalties.
Interest revenue
Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent
in the instrument.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
g.
Income Tax
The income tax expense or revenue for the year comprises current income tax expense or income and deferred tax expense or
income.
Current income tax expense or revenue is the tax payable on the current period’s taxable income based on the applicable income tax
rate adjusted by changes in deferred tax assets and liabilities.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the income statements when
the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully
expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset
or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Crater Gold Mining Limited
27
Notes to the Financial Statements
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised
or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the
manner in which management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that
future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax
assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset
where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts
of deferred tax assets or liabilities are expected to be recovered or settled.
Tax Consolidation
Crater Gold Mining Limited and its wholly-owned Australian subsidiary have formed an income tax consolidated group under tax
consolidation legislation. Each entity in the group recognises its own current and deferred tax assets and liabilities. Such taxes are
measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from
unused tax losses and tax credits in the subsidiaries are immediately transferred to the head entity.
The tax consolidated group has entered a tax funding arrangement whereby each company in the group contributes to the income
tax payable by the group in proportion to their contribution to the group’s taxable income. Differences between the amounts of net
tax assets and liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are recognised as either
a contribution by, or distribution to the head entity.
h.
Leases
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight line basis over
the term of the lease.
i. Acquisition of assets
The purchase method of accounting is used for all acquisitions of assets (including business combinations) regardless of whether
equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given up, shares issued or liabilities
undertaken at the date of acquisition. Incidental costs directly attributable to the acquisition are taken to Profit or Loss under AASB 3.
Where equity instruments are issued in an acquisition, the value of the instruments is their market price as at acquisition date, unless
the notional price at which they could be placed in the market is a better indicator of fair value.
Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the
fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the
fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a
reassessment of the identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
j.
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
flows (cash generating units).
k. Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities on the Statement of Financial Position.
l.
Investments and other financial assets
Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting
date.
Loans and receivables
Crater Gold Mining Limited
28
Notes to the Financial Statements
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They
are included in current assets, except for those with maturities greater than 12 months after the Statement of Financial Position date,
which are classified as non-current assets. Loans and receivables are included in receivables in the Consolidated Statement of
Financial Position. They are subsequently measured at amortised cost using the effective interest rate method.
De-recognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another
party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between
the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid,
including the transfer of non-cash assets or liabilities assumed, is recognised in income statements.
Subsequent measurement
Available for sale financial assets and financial assets at fair value through income statements are subsequently carried at fair value.
Gains and losses arising from changes in the fair value of the financial assets at fair value through income statements category are
included in the income statement in the period in which they arise. Dividend income from financial assets at fair value through
income statements is recognised in the income statement as part of revenue from continuing operations when the Group’s right to
receive payments is established.
Impairment
The Group assesses at each Reporting Date whether there is objective evidence that a financial asset or group of financial assets is
impaired.
Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.
m. Comparatives
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in the presentation for the
current financial year.
n. Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is capitalised in respect of each identifiable area of interest. These costs are only
carried forward to the extent that they are expected to be recouped through the successful development of the area of interest or
when activities in the areas of interest have not yet reached a stage which permit reasonable assessment of the existence of
economically recoverable reserves.
The ultimate recoupment of capitalised costs is dependent on the successful development and commercial exploitation, or sale, of
the respective areas of interest. Accumulated costs in relation to an abandoned area are written off in full against profit/loss in the
year in which the decision to abandon the area is made.
Where costs are capitalised on exploration, evaluation and development, they are amortised over the life of the area of interest to
which they relate once production has commenced. Amortisation charges are determined on a production output basis, unless a
time basis is more appropriate under specific circumstances.
Exploration, evaluation and development assets are assessed for impairment if:
sufficient data exists to determine technical feasibility and commercial viability, and
facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment
testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest.
o. Mining assets
Capitalised mining development costs include expenditures incurred to develop new ore bodies to define further mineralisation in
existing ore bodies, to expand the capacity of a mine and to maintain production. Mining development also includes costs transferred
from exploration and evaluation phase once production commences in the area of interest.
Amortisation of mining development is computed by the units of production basis over the estimated proved and probable reserves.
Proved and probable mineral reserves reflect estimated quantities of economically recoverable reserves which can be recovered in
the future from known mineral deposits. These reserves are amortised from the date on which production commences. The
amortisation is calculated from recoverable proven and probable reserves and a predetermined percentage of the recoverable
measured, indicated and inferred resource. This percentage is reviewed annually.
Restoration costs expected to be incurred are provided for as part of development phase that give rise to the need for restoration.
p. Plant and equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount
from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the
Crater Gold Mining Limited
29
Notes to the Financial Statements
asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and
an appropriate proportion of fixed and variable overheads.
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
The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the Group commencing
from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Asset
Depreciation rates
Plant and Equipment
4% – 50%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Statement of Financial Position date.
An asset’s carrying amount is written down immediately to its recoverable amount where there are indicators of impairment.
The Company uses the unit-of-production basis when depreciating mine specific assets which results in a depreciation/amortisation
charge proportional to the depletion of the anticipated remaining life of mine production.
Amortisation of mine development costs is provided using the unit-of-production method.
q. Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days of recognition.
Receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Due
to their short term nature they are not discounted.
r. Borrowings
Borrowings are initially recognised at fair value net of transaction costs and subsequently at amortised cost, using the effective
interest method.
Convertible notes
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement of
financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an equivalent
non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until extinguished on conversion
or redemption. The increase in the liability due to the passage of time is recognised as a finance cost. The remainder of the proceeds
are allocated to the conversion option that is recognised and included in shareholders’ equity as a convertible note reserve, net of
transaction costs. The carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding
interest on convertible notes is expensed to profit or loss.
s. Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of GST, from the
proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not
included in the cost of the acquisition as part of the purchase consideration.
t.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial
year, adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Potential ordinary shares are anti-dilutive when their conversion to ordinary shares would increase earnings per share or decrease
loss per share from continuing operations. The calculation of diluted earnings per share does not assume conversion, exercise, or
other issue of potential ordinary shares that would have an anti-dilutive effect on earnings per share.
Crater Gold Mining Limited
30
Notes to the Financial Statements
u. Rounding of amounts
The Company is of a kind referred to in Class order 98/100, issued by the Australian Securities and Investments Commission, relating
to the ''rounding off'' of amounts in the financial report. Amounts in the financial report have not been rounded off in accordance
with that Class Order to the nearest thousand dollars, but to the nearest dollar.
v. Goods and services tax (GST) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from
the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from,
or payable to, the taxation authority is included with other receivables or payables in the Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from or payable to the taxation authority are presented as an operating cash flow.
Commitments and contingencies are disclosed gross of the amount of GST recoverable from, or payable to, the tax authorities.
w. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period
of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially
ready for their intended use or sale.
All other borrowing costs are recognised in the income statement in the period in which they are incurred.
x. Rehabilitation costs
The Company records the present value of the estimated cost of legal and constructive obligations to restore operating locations in
the period in which the obligation is incurred. The nature of restoration activities includes dismantling and removing structures,
rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and restoration, reclamation and revegetation
of afflicted areas.
When the liability is initially recorded, the present value of the estimated cost is capitalised by increasing the carrying amount of the
related mining assets.
y. New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have
not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2017. The consolidated entity's
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated
entity, are set out below.
AASB 9 Financial Instruments and its consequential amendments
This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January
2018 and completes phases I and III of the IASB's project to replace IAS 39 (AASB 139) 'Financial Instruments: Recognition and
Measurement'. This standard introduces new classification and measurement models for financial assets, using a single
approach to determine whether a financial asset is measured at amortised cost or fair value. The accounting for financial
liabilities continues to be classified and measured in accordance with AASB 139, with one exception, being that the portion
of a change of fair value relating to the entity's own credit risk is to be presented in other comprehensive income unless it
would create an accounting mismatch. Chapter 6 'Hedge Accounting' supersedes the general hedge accounting requirements
in AASB 139 and provides a new simpler approach to hedge accounting that is intended to more closely align with risk
management activities undertaken by entities when hedging financial and non-financial risks. The consolidated entity will
adopt this standard and the amendments from 1 July 2018 but the impact of its adoption is yet to be assessed by the
consolidated entity. Although the directors anticipate that the adoption of AASB 9 will impact the consolidated entity's
financial statements the impact of its adoption has been assessed to be immaterial.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single
standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied)
to be identified, together with the separate performance obligations within the contract; determine the transaction price,
adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance
obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct
observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be
presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the
service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied
over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised
as the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial
position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's
performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to
Crater Gold Mining Limited
31
Notes to the Financial Statements
understand the contracts with customers; the significant judgments made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated entity will adopt this
standard from 1 July 2018 but the impact of its adoption is yet to be assessed by the consolidated entity. The directors
anticipate that the adoption of AASB 9 will have no impact the consolidated entity's financial statements.
AASB 16: Leases
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and
related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to
be classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12 months of
tenure and leases relating to low-value assets);
depreciation of right-of-use assets in line with AASB 116 : Property, Plant and Equipment in profit or loss and unwinding
of the liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability
using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead
account for all components as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with
AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of
initial application. Although the directors anticipate that the adoption of AASB 16 will impact the consolidated entity's
financial statements the impact of its adoption has been assessed to be immaterial.
2
Critical Accounting Estimates and Judgements
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.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities are set out below.
Exploration and evaluation expenditure
Exploration and evaluation expenditure is reviewed regularly to ensure that the capitalised expenditure is only carried forward to the
extent that it is expected to be recouped through the successful development of the area of interest or when activities in the area of
interest have not yet reached a stage which permits a reasonable assessment of the existence of economically recoverable reserves.
This policy is outlined in Note 1.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model
taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the
next annual reporting period but may impact profit or loss and equity.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its property,
plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations
or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated
lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at
each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to
impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of
disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
It is reasonably possible that the underlying gold price assumption may change which may then impact the estimated life of mine
determinant and may then require a material adjustment to the carrying value of mining plant and equipment, mining infrastructure
and mining development assets. Furthermore, the expected future cash flows used to determine the value-in-use of these assets
are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including
reserves and production estimates, together with economic factors such as metal spot prices, discount rates, estimates of costs to
produce reserves and future capital expenditure.
Crater Gold Mining Limited
32
Notes to the Financial Statements
3
Financial Risk Management
The Group’s major area of risk is managing liquidity and cash balances and embarking on fundraising activities in anticipation of
further projects. The activities expose the Group to a variety of financial risks: market risk (including interest rate risk and price risk),
credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure
different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, and other risks,
ageing analysis for credit risk.
Risk management is carried out under policies set by the Managing Director and approved by the Board of Directors.
The Board provides principles for overall risk management, as well as policies covering specific areas, such as, interest rate risk, credit
risk and investment of excess liquidity.
a. Market risk
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency
that is not the Group’s functional currency. The Group operates internationally and is exposed to foreign exchange risk arising from
currency exposures to the Papua New Guinea Kina. As the Group is still in the development, exploration and evaluation stages, it has
not needed to use forward contracts to manage foreign exchange risk. The Board will continue to monitor the Group’s foreign
currency exposures.
The Group’s exposure to interest-rate risk is summarised in the following table. Fixed interest rate items mature within 12 months.
Price risk
The Group is exposed to both commodity price risk and revenue risk. The commodity prices impact the Group’s capacity to raise
additional funds and impact its sales of gold now that the Company is in production. Management actively monitors commodity
prices and does not believe that the current level in AUD terms warrants specific action.
b. Credit risk
The credit risk on financial assets of the Group which have been recognised in the consolidated Statement of Financial Position is
generally the carrying value amount, net of any provisions for doubtful debts. Management scrutinizes outstanding debtors on a
regular basis and no items are considered past due or impaired.
c.
Liquidity risk
Prudent liquidity management implies maintaining sufficient cash and marketable securities and the ability of the Group to raise
funds on capital markets. The Managing Director and the Board continue to monitor the Group’s financial position to ensure that it
has available funds to meet its ongoing commitments (refer to Note 4).
3
Financial Risk Management (cont.)
d. Cash flow interest rate risk
Consolidated
Notes
Floating
interest rate
Fixed interest
rate
Non-interest
bearing
2017
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Weighted average interest rate
Financial liabilities
Trade and other payables
Related party payables
Interest bearing liabilities - loans 1
Interest
bearing
convertible notes 2
liabilities
–
Weighted average interest rate
Net financial assets/(liabilities)
10
11
12
16
17
18
19
182,184
-
-
182,184
0.59%
-
-
-
-
-
0.00%
-
-
-
-
-
-
7,109,173
-
7,109,173
9.99%
114,001
137,307
66,967
381,275
2,327,509
1,145,021
-
-
3,472,530
-
Total
296,185
137,307
66,967
500,459
2,327,509
1,145,021
7,109,173
-
10,581,703
-
182,184
(7,109,173)
(3,091,255)
(10,081,244)
Crater Gold Mining Limited
33
Notes to the Financial Statements
2016
Financial assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Weighted average interest rate
Financial liabilities
Trade and other payables
Related party payables
Interest bearing liabilities - current 1
Interest bearing
liabilities – non-
current 2
Weighted average interest rate
Net financial assets/(liabilities)
10
11
12
16
17
18
19
80,279
-
-
80,279
2.09%
-
-
-
-
-
-
-
-
-
-
-
1,306,415
3,177,632
4,484,047
10.32%
14,960
203,666
68,581
287,207
2,217,595
897,070
-
-
3,114,665
95,239
203,666
68,581
367,486
2,217,595
897,070
1,306,415
3,177,632
7,598,712
80,279
(4,484,047)
(2,827,458)
(7,231,226)
The Convertible Notes were repayable on 22 August 2017. All other financial liabilities are due and payable within 12 months.
The Company has assessed the potential interest rate risk on floating interest rate assets and does not consider the risk to be material
to the Company.
1 Freefire Technology Limited
The Company has secured short-term, interest bearing loans totalling $2,893,698 (2016: $1,306,415) from its major shareholder,
Freefire Technology Limited (“Freefire”).
• The loan funds are to be used by the Company principally for the purpose of developing the High Grade Zone at the Company’s
Crater Mountain, PNG project and for general working capital.
•
Interest on the Principal Sums is payable by the Company to Freefire at the rate of 8% (2016: 8%) per annum.
• The loans are repayable by the Company to Freefire upon written demand by Freefire.
1 ICBC Loan Facility
On 25 August 2016 the Company announced that it had secured a loan facility of up to A$800,000 from the Industrial and Commercial
Bank of China (Asia) Limited (“ICBC”). The ICBC loan facility is repayable on call and is guaranteed by interests associated with the
Chairman, Mr Sam Chan. The interest rate is 2.75% per annum.
2 Convertible notes
On 22 August 2014 the consolidated entity issued 138,190 10% convertible notes, with a face value of $25 each, for total proceeds
of $3,454,750. Interest is paid on a semi-annual basis from 31 December 2014 onwards in arrears at a rate of 10% per annum based
on the face value.
Total transactions costs were $283,989 at the date of issue and unamortised transaction costs of $17,529 (2016: $120,389) have
been offset against the convertible notes payable liability. The convertible notes are unsecured.
On 22 August 2017 the convertible notes expired. All convertible notes and accrued interest were paid out by early September 2017
Crater Gold Mining Limited
34
Notes to the Financial Statements
3
e.
Financial Risk Management (continued)
Fair value estimation
The fair value of assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The
fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current
market interest rate that is available to the Group for similar financial instruments.
The Group measures fair values using the following fair value hierarchy that considers and reflects the significance of the inputs used
in making the measurements:
Level 1
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2
prices) or indirectly (derived from prices).
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as
Level 3
Inputs for the asset or liability that are not based on observable market data (significant unobservable inputs).
The determination of what constitutes ‘observable’ requires significant judgment by the Group. The Group considers observable
data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and
provided by independent sources that are actively involved in the relevant market.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due
to their short-term nature.
f.
Sensitivity analysis
Foreign currency risk sensitivity analysis
The Group is exposed to fluctuations in the value of the Australian Dollar to the PNG Kina (PKG). At 30 June 2017, the effect on profit
and equity of the Consolidated Group as a result of changes in the value of the Australian Dollar to the PKG, with all other variables
remaining constant, is as follows:
Movement to
AUD
PKG by + 5%
Change in profit
$
542,778
Change in equity
$
727,541
PKG by - 5%
(491,085)
(658,252)
4 Going Concern
These financial statements are prepared on a going concern basis. The Group has incurred a net loss after tax of $25,284,741 (2016:
$10,886,589) for the year ended 30 June 2017 with operating cash outflows of $2,283,550 (2016: outflows of $1,127,725). As at 30
June 2017, the Group had net current liabilities of $10,148,211 (2016: $4,122,175) including cash on hand of $296,185 (2016:
$95,239).
The Group’s key area of expenditure is the Crater Mountain Project in Papua New Guinea. The Group was granted Mining Lease ML
510 in November 2014 for the High Grade Zone project (“HGZ” project) at Crater Mountain. Whilst production to date has not reached
target levels, the Group has taken corrective actions, including the engagement of new in country operational leadership in PNG,
new technical advisors to the Board, and a new CFO. We are confident that these changes, plus the provision of adequate financial
support, will result in more significant production output in the near future generating positive cash flows from mining operations.
Whilst the above conditions indicate a material uncertainty which may cast significant doubt over the Group’s ability to continue as
a going concern, in determining the appropriateness of the accounts being presented on a going concern basis the Directors note the
following:
a) On 9 August 2017 the Company executed a Short Term Bridging Facility with Freefire for $3,504,915. The purpose of the
bridging facility was to provide the Company funds to repay the Convertible Notes with interest upon maturity. On 22 August
2017 the Convertible Notes expired. All Convertible Notes and accrued interest were paid out by early September 2017.
b) On 1 September 2017 the Company announced a fresh rights issue, which will be fully underwritten by Freefire. It also
announced on that day that an interim loan of $2 million would be advanced to the Company by Freefire in order to enable the
repayment of outstanding creditors prior to the closing of the fresh rights issue. To date the Company has received $0.8 million
under this facility, with the next drawdown of $0.8 million due in early October.
c)
In addition, the Group has successfully raised funds through share issues and debt funding on a number of occasions and the
Directors are confident that this could be achieved should the need arise. Management have received a letter of support from
Freefire stating that they intend to support the Group by way of further loans to cover any cash shortfall in the next 12 months
should the need for such funding arise to enable the Group to meet its liabilities as and when they fall due.
Should the Group be unable to continue as a going concern it may be required to realise its assets and discharge its liabilities other
than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements
do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of liabilities
that might result should the Company be unable to continue as a going concern and meet its debts as and when they fall due.
On this basis, the Directors are of the opinion that the financial statements should be prepared on a going concern basis and the
Group will be able to pay its debts as and when they fall due and payable.
Crater Gold Mining Limited
35
Note
5
Income from continuing operations
Revenue from gold sales
Interest received
Profit / (loss) from sale of property, plant and equipment
6
Expenses
Expenses, excluding finance costs, included in the
Statement of Profit or Loss and Other Comprehensive Income classified by nature
Audit fees
Accounting fees
Consulting fees
Director related expenses
- Directors’ fees
- reimbursable expenses
Total director related expenses
Depreciation and amortisation expense
Employee benefits expense
Employee share option plan costs
Exploration costs written off or impaired
Mining asset impairment
General administration expenses
Insurance
- Directors & officers indemnity insurance
- other
Total insurance
Marketing and promotion expenses
Minimum lease payments
Share registry / meeting costs
Telephone
Travel
Notes to the Financial Statements
June
2017
$
June
2016
$
Note
225,288
384,800
826
4,175
7,273
(7,988)
129,277
11,558
717,943
133,664
-
133,664
191,139
34,831
115,488
15,049,107
6,953,390
434,935
21,060
1,101
22,161
17,905
21,732
104,018
605
34,695
102,846
19,867
832,283
148,750
-
148,750
198,452
70,733
108,711
8,529,436
-
332,054
20,127
-
20,127
12,739
73,081
133,355
11,020
46,989
13
14
Crater Gold Mining Limited
36
Notes to the Financial Statements
June
2017
$
June
2016
$
Note
7
Income Tax
a. Numerical reconciliation of income tax revenue to prima facie tax receivable
Loss before income tax
(25,284,741)
(10,886,589)
Tax at the Australian tax rate of 27.5% (2016 – 30%)
(6,953,304)
(3,265,977)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible share based payments
Deferred tax asset not brought to account
Other
Net adjustment to deferred tax assets and liabilities for tax losses and temporary
differences not recognised
Income tax expense
b. Tax losses
31,759
527,636
8,394
32,613
-
12,765
(6,385,515)
(3,220,599)
6,385,515
3,220,599
-
-
Unused tax losses for which no deferred tax asset has been recognised
Opening balance
44,356,102
41,851,272
Reduction in opening deferred taxes resulting from reduction in tax rate
(1,108,902)
-
Taxable (income)/loss for the year
Closing balance
Potential Tax Benefits @ 27.5% (2016: 30%)
2,317,850
2,504,830
45,565,050
44,356,102
12,530,389
13,306,830
Crater Gold Mining Limited
37
Notes to the Financial Statements
June
2017
June
2016
Note
8
Earnings per Share
a. Basic loss per share
Loss from continuing operations attributable to the ordinary equity holders of the
Company (cents per share)
(9.503)
(5.143)
b. Diluted loss per share
Loss from continuing operations attributable to the ordinary equity holders of the
Company (cents per share)
(9.503)
(5.143)
The calculation of basic earnings per share at 30 June 2017 was based on the loss from continuing operations attributable to
ordinary shareholders of $25,284,741 (2016 loss: $10,886,589) and a weighted average number of ordinary shares outstanding
during the financial year ended 30 June 2017 of 266,080,056 (2016: 211,660,011), calculated as follows:
c. Weighted average number of shares used as a denominator
Basic loss per share
Diluted loss per share
2017
Shares
2016
Shares
266,080,056
211,660,011
266,080,056
211,660,011
At the year end, the consolidated entity had 30,100,000 options on issue (2016: 21,100,000), representing:
30,100,000 unlisted options with weighted average exercise price of $0.21 (2016: 21,100,000 at average $0.25)
9
Segment information
Croydon
$
Fergusson
Island
$
Crater
Mountain
$
Intersegment
eliminations /
unallocated
$
Consolidated
$
Full-year to 30 June 2017
Gold sales revenue
Cost of sales
Other revenue
Profit on disposal of assets
Assets written down/impaired
Other expenses
Segment profit (loss)
Segment assets
Segment liabilities
Full-year to 30 June 2016
Gold sales revenue (net)
Other revenue
Loss on disposal of assets
-
-
-
-
-
-
-
987,819
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
225,288
(823,178)
-
-
-
-
826
7,273
225,288
(823,178)
826
7,273
(22,002,497)
-
(22,002,497)
(549,934)
(2,142,519)
(2,692,453)
(23,150,321)
(2,134,420)
(25,284,741)
8,880,556
42,774,282
227,143
(32,192,579)
10,095,518
10,581,703
384,800
-
(3,771)
-
384,800
4,175
(4,217)
4,175
(7,988)
-
-
(8,529,436)
(6,195,942)
Assets written down/impaired
(4,889,891)
(342,787)
(3,296,758)
(2,556,397)
(342,787)
(3,296,758)
Assets impaired
Other expenses
-
-
(586,932)
(2,151,208)
(2,738,140)
Crater Gold Mining Limited
38
Notes to the Financial Statements
Segment profit (loss)
(4,889,891)
(342,787)
(3,502,661)
(2,151,250)
(10,886,589)
Segment assets
Segment liabilities
972,459
-
-
-
29,868,269
39,925,724
212,775
(32,327,012)
31,053,503
7,598,712
Reconciliation of Segment Profit to loss for the period from continuing operations:
Segment profit (loss)
Loss for the period from continuing operations
(25,284,741)
(25,284,741)
Segment information is presented using a “management approach”, i.e. segment information is provided on the same basis as
information used for internal reporting purposes by the chief executive and the Board. In identifying its operating segments,
management generally follows the Group's project activities. Each of these activities is managed separately.
The Chief Operating Decision Makers (“CODM”) review EBITDA (earnings before interest, tax, depreciation and amortisation). The
accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.
The information reported to the CODM is on at least a monthly basis.
Description of segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating decision makers with respect to
operating segments, are determined in accordance with accounting policies that are consistent with those adopted in the annual
financial statements of the consolidated entity.
Segment Assets
Where an asset is used across multiple segments, the asset is allocated to the segment that received the majority of the economic
value form the asset. In most instances, segment assets are clearly identifiable on the basis of their nature and physical condition.
Segment Liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the
segment. Borrowings are generally considered to relate to the consolidated entity as a whole and are not allocated. Segment
liabilities include trade and other payables and certain direct borrowings.
Croydon
This project consists of two sub-projects in far North West Queensland, the Croydon Polymetallic Project and the Croydon Gold
Project.
Fergusson Island
This project consists of an exploration project at Wapolu on Fergusson Island, in Milne Bay province, PNG.
Crater Mountain
This is an advanced exploration and production project located in the PNG Highlands approximately 50kms southwest of Goroka.
Geographical information
Sales to external customers
2017
$
2016
$
Geographical non-current
assets
2017
$
2016
$
Australia
Papua New Guinea
-
225,288
-
384,800
1,015,319
8,646,707
999,959
29,754,639
225,288
384,800
9,662,026
30,754,598
The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred tax assets, post-
employment benefits assets and rights under insurance contracts.
Types of products and services
The principal products and services of this operating segment are the mining and exploration operations in Australia and Papua New
Guinea.
Crater Gold Mining Limited
39
Notes to the Financial Statements
Major customers
During 2017 one customer accounted for 100 percent of total revenue (2016: 100%).
Note
10 Current Assets - Cash and Equivalents
Cash at bank and on hand
The effective (weighted average) interest rate on short term bank deposit was 0.41%
(2016: 2.1%).
11 Current Assets - Trade and Other Receivables
GST receivable
Other
12 Non-Current Assets - Other Financial Assets
Security deposits
13 Non-Current Assets - Exploration and Evaluation
Opening net book value
Expenditure capitalised
Exploration costs written off/impairment
Effect of movement in exchange rates
Closing net book value
June
2017
$
June
2016
$
296,185
95,239
17,458
119,849
137,307
104,596
99,070
203,666
66,967
66,967
68,581
68,581
22,664,481
1,843,909
(15,049,107)
(505,571)
8,953,712
30,781,160
2,882,549
(8,529,436)
(2,469,792)
22,664,481
The above impairments/write downs have been recognised as a result of not meeting the requirements of AASB 6, whereby
substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted
nor planned. The following individual assets have been fully impaired in PNG: Crater Mountain EL2334/2335 ($1,566,562), EL2249
($430,106) and EL2203 ($19,951); Fergusson Island EL1972 ($182,963) and EL2180 ($142,344). In Croydon, asset EPM9438 has
been fully impaired ($2,556,397).
The Company commissioned an independent valuation of its PNG projects which was completed on 10 April 2017. The valuation
arrived at a preferred valuation of AUD$8 million and the PNG projects were impaired to this value.
The Company’s Croydon project was independently valued in March 2017. The conclusion of this valuation for the Croydon
projects was $1.075 million. Given the Company’s written down value as at year end was $987,819 it was determined that no
valuation adjustment was required.
The ultimate recoupment of costs carried forward for exploration and evaluation assets is dependent on the successful
development and commercial exploitation or sale of the respective areas.
14 Non-Current Assets – Mining assets
Opening net book value
Additions
Reclassification of Mining assets
Depreciation
Amortisation expense/impairment expense
Effect of movement in exchange rates
Closing net book value
7,105,002
-
-
(19,356)
(6,953,390)
(132,256)
6,159,354
1,611,302
-
-
(44,411)
(621,243)
-
7,105,002
Crater Gold Mining Limited
40
Notes to the Financial Statements
Note
June
2017
$
June
2016
$
As a result of the granting of the mining lease, ML510 for Anomaly’s HGZ project at Crater Mountain in the Eastern Highlands
Province, the decision was taking to reclassify the relevant exploration and evaluation expenditure as a mining asset in line with
accounting standards. During the year, as previously disclosed in the half-year accounts, the decision to fully impair the Mining
Assets for the amount of $6,953,390 was made. This decision was taken as 1960 level has not produced the quantities of gold
originally expected and the Board felt it prudent to fully impair expenditure incurred to date in the development of the 1960 level
adit.
15 Non-Current Assets – Plant and Equipment
Plant and equipment
Cost
Accumulated depreciation
Net book value
1,680,938
(1,039,591)
641,347
1,772,619
(856,085)
916,534
A reconciliation of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and
prior financial years are set out below.
Carrying amount as at 1 July 2015
Additions
Disposals
Depreciation expense
Depreciation capitalised
Effect of movements in exchange rates
Carrying amount as at 30 June 2016
Additions
Disposals
Depreciation expense
Depreciation capitalised
Effect of movements in exchange rates
Carrying amount as at 30 June 2017
Note
16 Current Liabilities – Trade and Other Payables
Trade payables
Accruals
Other payables
17 Related Party Payables
G R Boyce
S W S Chan
T M Fermanis
Freefire Technology Ltd
Plant and
equipment
1,061,048
265,641
(7,988)
(154,041)
(143,764)
(104,362)
916,534
28,333
-
(171,783)
(100,867)
(30,870)
641,347
June
2017
$
194,589
829,371
1,303,549
2,327,509
June
2016
$
569,354
746,535
901,706
2,217,595
13,613
40,235
215,000
225,524
114,661
35,000
143,000
105,758
Crater Gold Mining Limited
41
Notes to the Financial Statements
Note
R Johnson
L K K Lee
R P Macnab
R D Parker
H Roberts
D T Y Sun
18 Current Liabilities Interest-bearing liabilities
Convertible notes
ICBC loan
Freefire Technology Limited loan
Refer to Note 3(d) for detailed information on financial instruments.
19 Non-current Liabilities Interest-bearing liabilities
Convertible notes
Refer to Note 3(d) for detailed information on financial instruments.
20 Contributed Equity
a.
Share capital
Equity Securities Issued
For the financial year ended 30 June 2017
As at 1 July 2016
Shares issued
As at 30 June 2017
For the financial year ended 30 June 2016
As at 1 July 2015
Shares issued
As at 30 June 2016
b. Ordinary Shares
June
2017
$
179,998
157,706
-
271,180
6,765
35,000
1,145,021
June
2016
$
187,497
98,750
8,750
156,114
12,540
35,000
897,070
3,415,475
800,000
2,893,698
7,109,173
-
-
1,306,415
1,306,415
-
-
3,177,632
3,177,632
No. of ordinary
shares
Total
$
242,026,860
30,091,761
272,118,621
59,089,123
1,845,209
60,934,332
171,825,400
70,201,460
242,026,860
53,724,173
5,364,950
59,089,123
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the
number of shares and the amounts paid on those shares.
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.
The Company does not have a limited amount of authorised capital and the fully paid ordinary shares have no par value.
Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns
for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares or sell assets to reduce debt.
Crater Gold Mining Limited
42
Notes to the Financial Statements
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to
the current company's share price at the time of the investment. The consolidated entity is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The capital risk management policy remains unchanged from the 30 June 2016 Annual Report.
c.
Employee Share Option Plan
Information relating to the Employee Share Option Plan, including details of options issued, exercised, lapsed and outstanding during
the financial year is set out in Note 25b.
d. Movements in share capital
Date
Details
For the financial year ended 30 June 2017
01-Jul-16
22-Jul-16
13-Sep-16
Balance 1 July - Ordinary Shares
Chancery Asset Management (non cash)
Rights Issue
Less: Transaction costs arising on share issues
No. of shares
242,026,860
428,571
29,663,190
272,118,621
Value
$
59,089,123
30,000
2,076,423
(261,214)
60,934,332
During the course of the year to June 2017 the Company raised a total of $2,076,423 through the issue of 29,663,190 shares at
$0.07 to various sophisticated investors.
For the financial year ended 30 June 2016
01-Jul-15
28-Sep-15
18-Nov-15
03-Dec-15
04-Dec-15
09-Mar-16
16-Mar-16
Balance 1 July - Ordinary Shares
Placement to sophisticated investors
Placement to Freefire (as underwriter of above issue)
Placement to sophisticated investors
Sinton Spence
Placement to sophisticated investors
Placement to sophisticated investors
Less: Transaction costs arising on share issues
e. Movement in options
Date
Details
For the financial year ended 30 June 2017
01-Jul-16
Opening Balance
12-Jul-16
ESOP
For the financial year ended 30 June 2016
01-Jul-15
Opening Balance
28-Jul-15
Director options
09-Sep-15
ESOP
28-Jul-15
Ordinary
171,825,400
15,312,500
25,110,835
13,200,000
328,125
10,000,000
6,250,000
242,026,860
53,724,173
1,225,000
2,008,867
1,056,000
26,250
800,000
500,000
(251,167)
59,089,123
Class of options
Listed
Unlisted
Total
-
-
-
-
21,100,000
21,100,000
9,000,000
9,000,000
30,100,000
30,100,000
6,700,000
6,700,000
7,800,000
7,800,000
5,800,000
5,800,000
800,000
800,000
-
21,100,000
21,100,000
Each option entitles the holder to purchase one share. The names of all persons who currently hold share options, granted at any
time, are entered in the register kept by the Company, pursuant to Section 168 of the Corporations Act 2001, which may be inspected
free of charge. Persons entitled to exercise these options have no right, by virtue of the options, to participate in any share issue by
the parent entity or any other body corporate.
The model inputs for options granted during the year ended 30 June 2017 included:
Crater Gold Mining Limited
43
Notes to the Financial Statements
Options were granted for no consideration;
Exercise prices of $0.125;
Grant dates 12 July 2016;
Expiry dates of 12 July, 2020
Immediately vesting
Share price at grant date of $0.071;
Expected volatility of the company’s shares 43.95%;
Expected dividend yield of 0%; and
Risk free rates of 1.92%.
Note
21 Reserves and Accumulated Losses
Reserves
Share based payment reserve
Share cancellation reserve
Foreign currency translation reserve
Movements
Share-based Payments Reserve
Balance 1 July 2016
Fair value of Employee Share Option Plan share options
Balance 30 June 2017
Share Cancellation Reserve
Balance 1 July 2016
Balance 30 June 2017
Foreign currency translation reserve
Balance 1 July 2016
Currency translation differences
Balance 30 June 2017
Accumulated Losses
Movements in accumulated losses were as follows:
Balance 1 July 2016
Loss for the year
Balance 30 June 2017
Nature and purpose of reserves
Share-based payments reserve
June
2017
$
June
2016
$
2,008,406
30,000
(2,265,050)
1,892,918
30,000
(1,648,118)
(226,644)
274,800
1,892,918
115,488
1,784,207
108,711
2,008,406
1,892,918
30,000
30,000
30,000
30,000
(1,648,118)
(616,932)
1,592,852
(3,240,970)
(2,265,050)
(1,648,118)
(36,249,639)
(25,284,741)
(25,363,050)
(10,886,589)
(61,534,380)
(36,249,639)
The share-based payments reserve is used to recognise:
The fair value of options issued to employees and Directors; and
The fair value of options issued as consideration for goods or services rendered.
Share cancellation reserve
The cancellation of shares in 2010 was realised within the share cancellation reserve.
Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve. The
reserve is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income when the net investment is
disposed.
June
June
Crater Gold Mining Limited
44
Notes to the Financial Statements
Note
22 Commitments
Operating leases
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
Later than one year but not later than five years
23 Guarantees and Deposits
Non-Current
Deposits lodged with the Queensland Department of Mines
Accommodation and rental bonds
Deposits lodged with PNG Department of Mining and Petroleum
24 Related Party transaction
a. Parent entity
Crater Gold Mining Limited is the parent entity.
b. Key management personnel
2017
$
2016
$
16,890
-
16,890
27,500
7,575
31,891
66,966
17,748
16,890
34,638
27,500
7,885
33,196
68,581
Disclosures relating to key management personnel are set out below and the remuneration report in the Directors' Report. The
aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out
below:
Remuneration component
Short term
Post-employment benefits
Share-based payments
Total
2017
$
938,486
-
93,032
2016
$
1,070,872
-
76,555
1,031,518
1,147,427
c.
Transactions with Related Parties
Mr S W S Chan is a director and the controller of Freefire Technology Limited (“Freefire”), the major shareholder in the Company.
During the year the Company paid Freefire $119,852 in loan interest and fees (2016: $80,106) and $250,603 in interest on convertible
notes (2016: $251,289). During the course of the year Freefire made a number of short term loans to the Company at an annual
interest rate of 8% (see Note 3d for further information on the loan. Mr S W S Chan also provided a 125% security deposit for the
ICBC loan of $800,000.
Mr R D Parker’s close family members hold a total of 77 Convertible Notes of the Company on which they earned $193 in interest
(2016: $193). Mr R D Parker is paid fees for his role as Managing Director totalling $200,000 (2016: $200,000).
Mr R L Johnson is paid fees for his role as Technical Director totalling $163,332 (2016: $250,000).
Mr T Fermanis owns 40 Convertible Notes of the Company on which he earned $100 in interest (2016: $100). Mr T Fermanis is paid
fees for his role as Executive Deputy Chairman/Investor Relations totalling $144,000 (2016: $144,000).
Mr L K K Lee is paid fees for his role as Finance Director totalling $120,000 (2016: $120,000).
Mr G R Boyce owns 200 Convertible Notes of the Company on which he earned $500 in interest (2016: $501).
All transactions with related parties are made at arms-length.
d. Receivable from and payable to Related Parties
Details can be found at Note 17.
e. Subsidiaries
For details relating to subsidiaries, refer to Note 28. Transactions and balances between subsidiaries and the parent have been
eliminated on consolidation of the Group.
Crater Gold Mining Limited
45
Notes to the Financial Statements
25 Share Option Based Payments
a. Recognised share option based payment expenses
The expense recognised for share options granted for employee services received during the year is shown in the table below:
Expense arising from equity settled share-based payment transactions
June
2017
$
June
2016
$
115,488
115,488
108,711
108,711
b. Employee Share Option Plan
The establishment of the Crater Gold Mining Employee Share Option Plan (“the Plan”) was approved by shareholders on 22 June
2007. The Plan is designed to provide long term incentives for executives, staff and contractors to deliver long term shareholder
returns. Participation in the Plan is at the Board’s discretion and no individual has a contractual right to participate in the Plan or to
receive any guaranteed benefits. Options granted under the Plan carry no dividend or voting rights.
Summary of options granted under the Employee Share Option Plan
The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share options issued
during the year:
Expiry Date
30/09/2017
30/09/2017
27/07/2019
27/07/2019
30/09/2017
12/07/2020
Exercise
price
$0.25
$0.25
$0.25
$0.25
$0.25
$0.125
Balance at
start of the
year
4,600,000
2,100,000
7,800,000
5,800,000
800,000
Granted
Exercised
Forfeited/expired
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,000,000
21,100,000
9,000,000
Balance at
end of the
year
4,600,000
2,100,000
7,800,000
5,800,000
800,000
9,000,000
30,100,000
The weighted average exercise price during the financial year was $0.21 (2016: $0.25). The weighted average remaining contractual
life of the options outstanding at the end of the financial year was 1.96 years (2016: 2.50 years).
Option pricing model – Employee Share Option Plan
The fair value of the equity-settled share options granted under the Employee Share Option Plan is estimated as at the date of grant
using a Black-Scholes option pricing Model taking into account the terms and conditions upon which the options were granted. The
model takes into account the historic dividends and share price volatilities and each comparator company to produce a predicted
distribution of relative share performance.
Historical volatility of 43.95% was the basis for determining expected share price volatility and it is not expected that this volatility
will change significantly over the life of the options. The expected life of the options is taken to be the full period of time from grant
date to expiry date as there is no expectation of early exercise of the options. The options are options to subscribe for ordinary
shares in the capital of the Company. The options are issued for no consideration. A risk free rate of 1.92% was used in the model.
Shares issued on exercise of the option will rank pari passu with all existing shares of the Company from the date of issue.
Crater Gold Mining Limited
46
Notes to the Financial Statements
25 Share Option Based Payments (cont.)
c.
Share option based payments made to unrelated party
The Company did not issue any options over ordinary shares to extinguish its liabilities (2016: Nil).
26 Equity settled liabilities
a.
Share based payments
2017
22-Jul-16
2016
04-Dec-15
Chancery Asset Management
428,571
428,571
$0.07
$0.07
30,000 Value of principal
30,000
Sinton Spence
328,125
328,125
$0.08
$0.08
26,250 Value of principal
26,250
b. Option based payments
The Company did not issue any options over ordinary shares to extinguish its liabilities (2016: Nil).
Note
27 Remuneration of Auditors
During the year, the following fees were paid or payable for services provided by BDO
East Coast Partnership, the auditor of the parent entity, its related practices and
unrelated firms.
BDO East Coast Partnership
Audit and review of financial reports
Non-audit services
BDO Papua New Guinea
(Auditors of Anomaly Limited)
Audit and review of financial reports
Non-audit services
June
2017
$
June
2016
$
114,250
-
114,250
15,027
-
15,027
84,500
-
84,500
18,346
-
18,346
28 Subsidiaries
a. Ultimate controlling entity
Crater Gold Mining Limited is the ultimate controlling entity for the Group.
b. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries in
accordance with the accounting policy described in Note 1.
Name of entity
Principal place of
business / Country
of Incorporation
Class of shares
Percentage ownership
Anomaly Resources Limited
Australia
Ordinary
Anomaly Limited
Papua New Guinea
Ordinary
2017
%
100
100
2016
%
100
100
The proportion of ownership interest is equal to the proportion of voting power held.
There are no significant restrictions over the consolidated entity’s ability to access or use assets, and settle liabilities.
Crater Gold Mining Limited
47
Notes to the Financial Statements
June
2017
$
June
2016
$
(48,581,386)
(48,581,386)
(8,565,029)
(8,565,029)
182,184
80,679
1,197,503
45,317,879
5,241,753
8,657,228
2,979,282
6,156,914
83,222,415
81,377,207
340,507
3,215,611
340,507
3,100,123
(94,238,258)
(45,656,872)
(7,459,725)
39,160,965
Note
29 Parent Entity information
Statement of Profit or Loss
Loss after income tax
Total Comprehensive Loss
Statement of Financial Position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Convertible note equity
Reserves
Accumulated losses
Total Equity
Guarantee
The parent company had no bank guarantees in respect of its subsidiaries as at 30 June 2017 (2016: nil)
Contingent liabilities
The parent company had no contingent liabilities as at 30 June 2017 (2016: nil).
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2017 (2016: nil).
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in Note 1, except for
the following:
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Crater Gold Mining Limited
48
Notes to the Financial Statements
Note
30 Reconciliation of loss for the period from continuing operations to net cash
inflow/(outflow) from operating activities
Loss for the period from continuing operations
Adjustments for non-cash income and expense items:
Depreciation and amortisation/impairment
Written down value of fixed asset disposals
Non-cash interest transactions
Exploration costs written off or impaired
Payables settled by equity payments
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade creditors and accruals
Net cash outflow from operating activities
June
2017
$
June
2016
$
(25,284,741)
(10,886,589)
7,144,529
198,452
-
7,988
464,003
200,606
15,049,107
8,529,436
145,488
134,961
66,359
357,865
12,641
674,781
(2,057,389)
(1,127,724)
31 Post Reporting Date Events
On 3 July 2017 the Company received notification that the renewal application for license EL1972 had be denied by the Minister of
Mining of Papua New Guinea effective 29 June 2017. After receiving this decision the Company decided to surrender licence EL2180.
The surrender of EL2180 was effected by the Government of Papua New Guinea on 15 August 2017. These licenses were both located
on Fergusson Island.
On 24 July 2017 the Company announced a capital raising and plans for restructuring of the Company. The capital raising proposed
was an 11 for 2 renounceable pro-rata entitlement offer at an issue price of $0.01 to raise at least $13.0 million. It was also proposed
to sell the Croydon project for $1.2 million. The recapitalisation would also involve the appointment of new members of the board
and new management. A prospectus was released on 26 July 2017 and followed up with a supplementary prospectus on 9 August
2017.
On 9 August 2017 the Company executed a Short Term Bridging Facility with Freefire for $3,504,915. The purpose of the bridging
facility was to provide the Company funds to repay the Convertible Notes with interest upon maturity. On 22 August 2017 the
Convertible Notes expired. All Convertible Notes and accrued interest were paid out by early September 2017.
On 1 September 2017 the Company advised that the capital raising had been terminated. It was also announced that a fresh rights
issue on a 9 for 2 basis was be launched forthwith, which will be fully underwritten by Freefire. The Company expects to make a
further announcement on the fresh rights issue in October. At the same time as cancelling the original rights issue it was confirmed
that the sale of the Croydon project would also be abandoned. It was also announced that an interim loan of $2 million would be
advanced to the Company by Freefire in order to enable the repayment of outstanding creditors prior to the closing of the fresh
rights issue. To date the Company has received $0.8 million under this facility.
On 5 September 2017 the Company announced that Mr Alex Molyneux, previously the proposed Chairman of the Company, would
have no ongoing role with the business. The Company confirmed it anticipated the other operational management previously
announced would have ongoing involvement with the Company.
32 Contingent Liabilities
The Group does not have any contingent liabilities (2016: nil). While the Company has provided for potential interest penalties that
may be levied on amounts overdue to the Papua New Guinea Internal Revenue Commission, as these penalties are prescribed, it has
not done so on amounts overdue for Papua New Guinea NASFUND contributions nor overdue Papua New Guinea Training Levy
amounts, as potential penalties are not prescribed and therefore cannot be determined. There is a chance that penalities will also be
levied on overdue NASFUND contributions and Training levies.
Crater Gold Mining Limited
49
Directors’ Declaration
In the directors' opinion:
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in Note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 30
June 2017 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
This declaration is made in accordance with a resolution of the Directors.
R D Parker
Managing Director
29 September 2017
Crater Gold Mining Limited
50
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Crater Gold Mining Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Crater Gold Mining Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, 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:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year ended on that date; and
(ii)
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 Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We 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.
Material uncertainty related to going concern
We draw attention to Note 4 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
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. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Carrying Value of Exploration and Evaluation Assets
Key audit matter
How the matter was addressed in our audit
Exploration and evaluation assets of $8,953,712
form a significant proportion of the Group’s assets
as shown in note 13.
The recovery of the carrying value of the
exploration and evaluation assets are subject to
successful exploration, exploitation or sale in the
future and as such is subject to management
judgement in accordance with AASB 6 - Exploration
for and Evaluation of Mineral Resources.
Management have relied on the valuations
prepared by third party expert valuers to support
the carrying value of exploration assets at 30 June
2017.
The Group’s exploration and evaluation assets are
also exposed to market, economic, political and
seasonal influences which may affect the value.
Exploration and evaluation expenditure is recorded
in accordance with the accounting policy detailed
in note 1 of the notes to the financial statements.
Our procedures in relation to the carrying value of
exploration and evaluation included, amongst others:
•
•
•
•
•
Assessing the competence, capabilities,
objectivity and independence of the
management experts engaged to value the
assets, and the methodology they adopted;
Analysing the financial and operating
commitments of the licenses to see whether
sufficient expenditure has been included in the
cash flow forecast to ensure expenditure
conditions are met;
Assessing the Group’s rights to tenure over the
relevant exploration areas by obtaining the
license agreements and also considering whether
the Group maintains the tenements in good
standing;
Assessing the ability of the Group to finance any
planned future exploration and evaluation
activity; and
Ascertaining whether management has any plans
to abandon the held tenements.
Mining Assets
Key audit matter
How the matter was addressed in our audit
The mining assets as disclosed in note 14 were
dependent on successful mining operations,
successive years of underperformance to budget
identified that there was a risk of impairment. The
impairment of $6,953,390 required judgement and
estimates from management making this a key
audit matter.
Our procedures in relation to the carrying value of mining
assets included, amongst others:
•
•
Assessing the competence, capabilities,
objectivity and independence of the
management experts engaged to value the
assets, and the methodology they adopted
Determining whether managements forecast
supported the carrying value
•
Assessing the quantum of impairment booked.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In 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 has 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.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in paragraph b of the directors’ report for the year
ended 30 June 2017.
In our opinion, the Remuneration Report of Crater Gold Mining Limited, for the year ended 30 June
2017, 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.
BDO East Coast Partnership
Gareth Few
Partner
Sydney, 29 September 2017
ASX Additional Information
The following information is required to be disclosed under ASX Listing Rule 4:10 and is not disclosed elsewhere in this Report.
This information is correct as at 20 September 2017.
Substantial Shareholders
The following substantial shareholders are recorded in the Company’s register of substantial shareholders.
Name
Freefire Technology Ltd
Voting Rights
Number of shares
160,085,929
% holding
58.83%
Ordinary shares – on a show of hands, are one vote for every registered holder and on a poll, are one vote for each share held by
registered holders. Options holders have no voting rights.
Holders of Each Class of Equity Security
Name
Fully paid ordinary Shares
Unlisted Options (exercisable at $0.25 per option on or before 30 September 2017)
Unlisted Options (exercisable at $0.25 per option on or before 30 September 2017) (ESOP)
Unlisted Options (exercisable at $0.25 per option on or before 27 July 2019)
Unlisted Options (exercisable at $0.25 per option on or before 30 September 2017) (ESOP)
Unlisted Options (exercisable at $0.25 per option on or before 27 July 2019)
Unlisted Options (exercisable at $0.125 per option on or before 12 July 2020)
Code
CGN
CGNO37
CGNO38
CGNO39
CGNO40
CGNO41
CGNO42
Number of
holders
3,278
8
5
6
1
6
10
Top 20 Holders of Ordinary Shares
Name
Freefire Technology Ltd
HSBC Custody Nominees (Australia) Limited
BNP Paribas Nominees Pty Ltd
Mr Graham John Bailey & Mrs Annette Maree Bailey
Mr Paul Thomas McGreal
Mr Norman Colburn Mayne
Graham Bailey Earthmoving Pty Ltd
Mr Joe Holloway
One Managed Investment Funds Limited
Bloom Star Investment Limited
J P Morgan Nominees Australia Limited
Mr Vineet Jindal
Mr Barry Rowland Butler & Mrs Julie Butler
IAE Study In Australia Pty Ltd
Colvic Pty Ltd
Mr Colin Frank West
Mr Trilochana Reddy
Mr Anthony Franco Santalucia
Mr Carlo Battisti
Richard Lewis Johnson
Paynes Hardware Services Pty Ltd
Number of shares
160,085,929
% holding
58.83%
7,447,416
4,816,713
4,375,000
3,700,000
3,329,333
3,125,000
2,643,524
2,410,637
1,775,649
1,661,272
1,253,916
1,126,883
1,040,000
1,000,000
1,000,000
980,940
885,143
800,000
781,250
769,865
2.74%
1.77%
1.61%
1.36%
1.22%
1.15%
0.97%
0.89%
0.65%
0.61%
0.46%
0.41%
0.38%
0.37%
0.37%
0.36%
0.33%
0.29%
0.29%
0.28%
Grand Total
205,008,470
75.34%
Distribution of Equity Securities
Crater Gold Mining Limited
55
ASX Additional Information
Class of Security
Security Code
1 to 1,000
1,001 to
5,000
5,001 to
10,000
10,001 to
100,000
100,001
and Over
Total
Fully paid ordinary Shares
CGN
1,384
812
322
588
172
3,278
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
CGNO37
CGNO38
CGNO39
CGNO40
CGNO41
CGNO42
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
5
6
1
6
10
8
5
6
1
6
10
Number of holders holding less than a marketable parcel of shares
A marketable parcel is defined by the Market Rule Procedures of the ASX as a parcel of securities with a value of not less than $500.
The number of ordinary shareholders holding less than a marketable parcel of shares is 3,010.
On market buy-back
There is no current on market buy-back.
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian Securities Exchange
Limited.
Unquoted Securities
Options over unissued shares:
A total number of 30,100,000 options are on issue. 13,300,000 are on issue to 30 holders of ordinary securities. 16,800,000 options
are on issue to six directors.
Crater Gold Mining Limited
56
Corporate Directory
Directors:
S W S Chan (Non-executive Chairman)
R D Parker (Managing Director)
T M Fermanis (Non-executive Deputy Chairman)
R L Johnson (Technical Director)
L K K Lee (Finance Director)
D T Y Sun (Non-executive Director)
Company Secretary:
H L Roberts
ABN:
75 067 519 779
Registered Office:
Postal Address:
Share Registry:
Auditors:
C/- BDO
Level 11, 1 Margaret Street,
Sydney NSW 2000
Australia
Telephone: +61 8 9226 4500
Email:
info@cratergold.com.au
PO Box 7775
Cloisters Square
PERTH WA 6850
Australia
Link Market Services Limited
Level 15, 324 Queen Street
Brisbane QLD 4000
Australia
Telephone: 1300 554 474
Facsimile: +61 7 3228 4999
BDO East Coast Partnership
Level 11
1 Margaret Street
Sydney NSW 2000
Australia
Telephone: +61 2 9251 4100
ASX Listing:
Crater Gold Mining Limited shares are quoted on the Australian Securities Exchange under
the code “CGN”.
Website address:
www.cratergold.com.au
Crater Gold Mining Limited
57