ANNUAL REPORT
For the year ended 30 June 2018
Crater Gold Mining Limited (ASX: CGN) ABN 75 067 519 779
Contents
Corporate Directory
Directors' Report
Auditor's Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor's Report
ASX Additional Information
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Corporate Directory
Directors:
S W S Chan (Non-executive Chairman)
R D Parker (Managing Director)
T M Fermanis (Deputy Chairman)
L K K Lee (Non-executive Director)
D T Y Sun (Non-executive Director)
Company Secretary:
A S Betti
ABN:
75 067 519 779
Registered Office and
Principal place of business: 22 Mount Street,
Level 2,
Perth WA 6000
Australia
Telephone: +61 8 6188 8181
Email:
info@cratergold.com.au
Postal Address:
Share Registry:
Auditors:
Bankers
PO Box 7054
Cloisters Square
PERTH WA 6850
Australia
Link Market Services Limited
178 St Georges Terrace
Perth WA 6000
Australia
Telephone: 1300 554 474
RSM Australia Partners
Level 32
2 The Esplanade
Perth WA 6000
Australia
Telephone: +61 3 9261 9100
National Australia Bank Ltd
100 St Georges Terrace
PERTH WA 6000
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
2
Directors’ Report
The Directors present their report, together with the financial statements, on the Group (referred to hereafter as the 'the Group')
consisting of Crater Gold Mining Limited (referred to hereafter as the 'Company' or 'Parent Entity') and the entities it controlled at
the end of, or during, the year ended 30 June 2018.
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 (Deputy Chairman)
L K K Lee (Non-executive Director)
D T Y Sun (Non-executive Director)
R Johnson (Technical Director, resigned 6 December 2017)
Principal Activities
The principal activities of the Group consist of the exploration, evaluation and exploitation of potential world-class gold and other
base metal projects at the Group’s mining tenements predominately situated in Goroka, Papua New Guinea and Queensland,
Australia.
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 2018.
Review of Operations and Results
The Group incurred a loss of $5,739,906 for the year ended 30 June 2018 (2017: loss of $25,284,741).
Operations Report
Company Focus – High Grade Zone project at Crater Mountain, Papua New Guinea
The year ended 30 June 2018 was one of continued progress working towards gold mining at the High Grade Zone (HGZ), Crater
Mountain. The Company carried out a number of technical reviews of the HGZ Gold Mine, including reviews by Mr. Robert Usher,
mining engineer and former Executive General Manager of PanAust Asia along with a high-level geological review by experienced
geologist Mr. Dorian L. (Dusty) Nicol.
Mining Associates Limited (MA) were retained to assist in the preparation of various mine plan parameters, in particular in identifying
stoping blocks with gold grades in excess of 10g/t between the 1930 level up to the 1960 level. MA also assisted with confirmation
of the Company’s intended mining method to efficiently extract the targeted gold-bearing ore.
Minmet Services Pty Ltd (Minmet) were engaged to carry out a review of the processing plant and to recommend upgrades for
implementation before the recommencement of operations to improve gold recovery. Minmet’s scope of work also included
metallurgical test work and analysis to confirm operating plans with early batch plant run representative ore data being collected to
ensure laboratory test works were aligned with actual plant operating conditions.
The primary focus for management during the year was on developing plans from the results of the aforementioned studies in
readiness for the restart of gold mining and exploration activities at Crater Mountain.
While working towards the resumption of mining, a thorough repair and maintenance program of the site and all equipment was
carried out and a comprehensive preventative maintenance schedule produced.
As previously reported, in line with the Company’s strategy to restart exploration, an Atlas Copco Diamec 252 drill rig was purchased
along with additional ancillary equipment. The rig is a very compact drill rig, estimated to be able to drill diamond core holes of up
to approximately 300m in length.
Personnel appointments were made to strengthen the on-site management team including the appointment of Brett Collins as
General Manager, PNG. Mr. Collins’ background is primarily in ore processing, security and safety. He brings a wealth of experience
and will contribute to further improving the processing plant functionality and the overall recovery of gold. Amongst these
appointments was a specialist Community Relations Officer which has led to improved relationships with the community at large.
The Company has also made significant progress on development of the Memorandum Of Agreement between the Company, the
community and the local and national government. We expect to finalise this agreement in the coming months.
A high-level 12 months mining plan for a longhole stope mining scenario was also completed and presented to the MRA, and
approved, as part of the process of working towards the re-commencement of mining operations.
Crater Gold Mining Limited
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Directors’ Report
In March 2018, the Company received approval from the MRA for a conditional restart of mining operations at the HGZ.
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.
The HGZ is a high-grade, high-sulphidation, epithermal quartz-pyrite-gold mineralised zone, extending from surface to possibly
several hundred metres depth (possibly in excess of 500m); local artisanal miners produced an estimated 15,000 ounces of gold from
a small area of shallow workings (maximum 50m depth as encountered by the Company) in the base of a mineralised spur in the
period from 2005 to 2011.
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 that resource estimate continue to apply and have not materially changed.
Further to year end the 1930 development adit has been completed and the development mining has reached the mineralised
veins. Steeply dipping N-S extensions of the JL and JL01 have been encountered. Extensions of veins NV01, NV02 and LNK01 have
also been identified and encouragingly their defining structures are progressively widening with depth from the 1960 level to the
1930 level. Mining of ore has recently commenced. Initial gold sales are expected in the coming months. Further investment has
been, and is continuing to be, made into machinery to improve the efficiency of mining and increase the processing recovery rate.
High Grade Zone gold mine (HGZ), Crater Mountain, Papua New Guinea (100%)
HGZ Gold Mine
Crater Gold Mining Limited announced on March 8th 2018, that it had received approval from the Mineral Resources Authority (MRA)
of Papua New Guinea to recommence operations on its HGZ gold mine at the Crater Mountain Project.
Following many months of work by the new in-country management team, headed up by Country Manager Curtis Church, a new
mine plan was approved by the Chief Inspector of Mines and a new Registered Mine Manager was appointed. Two inspections of the
site, the associated facilities and the mining plant were carried out by the Mines Safety Branch inspection team. A schedule of on-
going improvements was agreed with the Inspectorate and development operations resumed.
Brett Collins joined the Company in February as General Manager, PNG. Mr Collins has considerable expertise in ore processing,
safety and security. Mr Collins has been working to improve the processing plant functionality and the overall recovery of gold.
Selective mining of the 1960 level was carried out to provide material to test the processing plant.
Mr Jessy Robin was appointed as the Registered Mine Manager by the MRA and brings with him a wealth of underground engineering
and operational experience, much of this experience having been gained operating mines in PNG.
The mining development on the 1930 level adit exposed gold bearing veinlets and splays and reached the southern extension of the
JL vein. An exploration drive will be developed along the JL vein and this will further serve as the main access to the planned stoping
faces of the NV1 vein. Current development is approximately 34m from the NV1 vein and 55m from NV5. Planned progress was
slowed when altered sections containing non-competent rock were encountered. Development has now passed through those zones
and entered into more competent volcanic rock.
The area between 1930 level and 1960 level has not been exploited by artisanal miners, unlike the area between 1960 level and
surface where artisanal workings were frequently encountered and thus the Company fully believes this will result in higher gold
production than the 1960 level.
During the year, the Company’s most important PNG Exploration License, EL 1115 was renewed. EL 1115 contains the Company’s
Mixing Zone & High Grade Zone projects.
The Company tested for extensions of gold mineralisation close to the mining area at the HGZ Project and completed a sampling
program above the HGZ area. Benches totalling 173.5m were developed and sampled with 11 short horizontal trenches dug at
increasing elevations of 5m intervals from 1960mRL. 99 combined rock float and rock chip samples were collected for gold fire assay
testing.
The Company re-commenced exploration at the South Artisanal Works Prospect (SAW) located approximately 430m southwest of
the HGZ project. A total of three (3) trenches were excavated at 1951.9mRL, 1930mRL and 1910mRL for a total of 129.5m. Detailed
mapping was undertaken with 122 combined rock float and rock chip samples collected for fire assay testing. Surveying and mapping
of three (3) creeks for a total distance of 365.7m was also undertaken with a total of 30 rock chip samples collected for gold fire assay
testing.
The Company has been developing planning for a drilling programme to further explore the Mixing Zone Project as well as further
prove the HGZ to depth. Details will be announced when planning is completed.
Crater Gold Mining Limited
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Directors’ Report
Figure 1- 1930 Adit level development
CROYDON PROJECTS: QLD, AUSTRALIA
High priority polymetallic, silver and copper targets identified for drill testing
Based on the encouraging results, the Company has applied for EPMA 26749, which will cover possible extensions outside
of the current EPM 13775 tenement area.
A2 Polymetallic Project SGH Soil Sampling Program
The Company completed a grid based SGH soil sampling program at the A2 Polymetallic project. The program involved the collection
of B-Horizon soil samples from 361 sites together with 16 selected duplicates for a total of 377 samples.
The SGH sampling technique is a cost effective, deep penetrating geochemical technique, which has been successful at other
prospects worldwide in being able to detect geochemical anomalism for metals from depths of up to 900 metres.
The grid-based sampling program covered the previously drilled mineralised holes at the A2 Polymetallic project site (a zone 1,250m
long by 600m wide) and the entire aeromagnetic anomaly, most of which was untested. It was anticipated that the SGH technique
would collaborate the previously intersected mineralisation identified by the drilling, and further identify extensions of the known
mineralisation
Priority targets identified will be tested by drilling later this year.
The SGH analysis and interpretation has led to the identification of the following high priority targets;
Polymetallic Anomalies
Three (3) identified polymetallic anomalies (P1, P2 and P3 – Figure 2) associated with Redox-cell are high priority drill targets to which
Actlabs has allocated a high confidence rating of 5.5. Actlabs use a maximum rating score of 6.0, with a rating in excess of 4.0
considered to be significant.
Anomaly P1:
This anomaly provides important credibility for the SGH technique in that it has detected the broad polymetallic
stock-work vein mineralisation previously intersected in drilling by the Company. Eight of the previous nine drill
holes tested the 500m western half of this anomaly, with only one hole drilled in the 500m eastern half. Further
drill testing in the eastern half is warranted.
Anomaly P2:
This much larger polymetallic anomaly is located along the margin of the R1 Redox-cell to the north of the A2
project drilled area and persists for at least 500m N-S and 2,800m E-W. High priority targets have been identified
for drill testing.
Anomaly P3:
This small anomaly is located along the southern boundary of the R1 Redox-cell, just inside the southern
tenement boundary. A high priority target has been identified for drill testing.
Crater Gold Mining Limited
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Directors’ Report
Figure 2- Polymetallic targets P1, P2, P3
Copper and Silver Anomalies
These large high priority anomalies are located in the NW corner of the EPM (Figures 3 & 4). While they have actually been identified
as separate silver (500m wide E-W and 1,600m N-S) and copper (250m wide E-W and 1,800m N-S) anomalies, they may also indicate
the presence of combined copper-silver anomalism. Actlabs interpret that mineralisation is likely to be located vertically beneath
the anomalies and these offer high priority drill targets. Actlabs has allocated a high confidence rating of 5.0 out of a maximum 6.0
for these anomalies.
Figure 3- Silver target area
Crater Gold Mining Limited
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Directors’ Report
Figure 4- Copper target area
Actlab’s interpretation of Redox-cells is that the centre of the cell halo is expected to be the original location of the upwelling of
mineralising fluids from depth and that the outer segments along the rims of the cells may represent the lateral extent of
mineralisation. Their interpretation of the A2 SGH soil sample results has identified a number of nested-segmented Redox-cells in
the survey area.
New License Extension Applied for
Based on the encouraging results, the Company applied for EPMA 26749, which will cover possible extensions outside of the
current tenement area. The extension area is shown in Figure 5 below.
Figure 5- EPMA 26749
Crater Gold Mining Limited
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Directors’ Report
A5 Anomaly Prospect, QLD
Encouraging co-incident gold and silver-copper-polymetallic anomalism obtained from SGH soil sampling at the A5
Anomaly Prospect.
The A5 Anomaly Prospect area has similar aeromagnetic features to the A2 Project area located 16 km to the SE.
The Company announced that it received Actlab’s interpretation report on the analytical results of a trial Spatiotemporal Geochemical
Hydrocarbon (SGH) soil sampling program undertaken in the A5 Anomaly Prospect area at Croydon in North Queensland within EPM
16002.
The A5 Anomaly Prospect area bears broad similarities to the A2 Polymetallic Project. A total of 74 B-horizon soil samples were
collected at the end of 2017 at 100m spacings along three, 2.4km long, 100m spaced, N-S lines (Figure 6). Samples were placed in
storage with the intention of submitting them for SGH analysis if the results of the A2 Anomaly Project sampling program provided
encouragement. Upon confirmation of positive results from the testing of samples submitted from the A2 Polymetallic Project, the
samples for the A5 prospect were submitted for assay in early 2018.
The SGH testing of samples from the A5 prospect detected anomalies associated with gold, silver, copper and polymetallic
mineralisation (Figures 7). The copper, silver and polymetallic anomalism is essentially co-incident (Figure 7). Gold anomalism partly
overlaps the co-incident anomalism as shown on Figure 7. All of the anomalism defined by the soil sampling undertaken to date
closely overlies the central zone of the aeromagnetic anomaly low as shown on Figure 7.
Although the trial SGH soil sampling program for the A5 prospect only covered a narrow area 2,400m long by 200m wide, Actlabs
were able to identify the presence of a Redox Cell defined by a “rabbit ear” feature they consider to be part of a halo anomaly that
would become more evident if the survey area was wider (identified circular Redox Cell shown on Figure 7).
Figure 6- Soil sampling grid – A5 anomaly prospect, EPM 16002
Crater Gold Mining Limited
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Directors’ Report
Figure 7- Co-incident Cu-Ag-Polymetallic SGH soil anomaly and partly overlaping Au anomaly draped over an aeromagnetic base
Although acknowledging that expansion of the sampled area needs to be undertaken to formerly confirm this, Actlabs allocated their
interpretation of the SGH test results for A5 a high confidence rating of 4.0 out of a possible maximum 6.0 for the silver-copper-
polymetallic anomalies indicated. Actlabs gave a higher confidence rating of 4.5 out a maximum 6.0 for the gold anomaly indicated.
Anomalism associated with gold, silver, copper and polymetallic has been identified by Actlabs around the margin of the Redox Cell.
Based on the encouraging trial results, extension of the area sampled will be undertaken to define extensions and any further
anomalous zones to prioritise targets for drill testing.
Golden Gate Graphite Project
Thick Intervals of Graphite Mineralisation Intersected
o GGDDH 1701: 62.7m @ 6.79% GC* from 29.3m (cut-off 3.4% GC*)
o GGDDH 1702: 53.9m @ 6.79%GC* from 69.1m (cut-off 3.1% GC*)
GC* = Graphitic Carbon
The Company announced that it intersected thick graphite mineralisation in two diamond core holes (GGDDH 1701 and GGDDH 1702)
drilled in the Golden Gate Project area at Croydon. Hole GGDDH 1701 confirmed the intersection (in terms of both intersected interval
and grade) reported from near-by historical holes GGRC 2005 and GGDH2 (25m to the NE) drilled by previous exploration Company
Central Coast Exploration (CCE). Hole GGDDH 1702 confirms the down-dip extrapolated extension of GGRC 2003 (95m to the SW)
drilled by CCE.
The thick graphite mineralisation intersected in both of the holes is of similar grade and is hosted in intensely hydrothermally altered
(sericitic) granite. Graphite occurs in narrow veins, “clots” and commonly forms rims around xenolithic fragments. While some
previous interpretations have considered the graphite to have formed from the assimilation of carbonaceous sediments within the
granite during its emplacement, little evidence for this was noted in the core and a hydrothermal origin is favoured. No graphite
mineralisation was observed within the Croydon Volcanics (overlying the granite) as historically reported from some previous
exploration Company activities.
Samples were selected for petrological and mineralogical examination, QEMSCANS (Quantitative Evaluation of Minerals via Scanning
Electron Microscope by SGS) and MLA (Mineral Liberation Analysis scans by ALS Laboratory Services), designed to determine if
deleterious minerals are associated with the graphite and to determine the graphite grain size characteristics. Based on the results
of these procedures, a composite sample was selected for detailed metallurgical test work to determine graphite quality and potential
recoveries.
Crater Gold Mining Limited
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Directors’ Report
Previous Graphite Evaluation Work
Metallurgical test work by previous explorers at Golden Gate has not been conclusive. Test work that was previously undertaken by
the Company on drill core and surface grab chip samples provided contrary results that indicated that some of the graphite samples
may have been of amorphous quality. However, mineralogical examination of the drill core test samples suggested that the material
may well have been flake graphite that had been pulverised by the action of the RC drilling bit used. Also, the surface grab chip
samples were oxidised and not ideal for metallurgical testing.
Figure 8- Graphite mineralisation from approximately 29.3m from the 1st drill hole
JUMBO AND LARGE FLAKE GRAPHITE IDENTIFIED
Petrological examination of graphite mineralisation from the Golden Gate Project identified jumbo graphite flake (0.30-
0.50 mm), large graphite flake (0.18-0.30 mm) and fine graphite flake (<0.18 mm).
Average size of graphite flakes is large at around 0.25 mm.
The Company announced that it received the final report for the petrological examination undertaken on eight (8) polished sections
of graphite mineralised core samples from the Golden Gate Graphite Project undertaken by Pterosaur Petrology, Townsville,
Queensland. These core samples were from the two diamond core holes drilled by the Company late last year.
This work identified the presence of significant graphite flake sizes of 0.05 to 0.50mm, with an average of around 0.25mm. Most of
the large graphite flakes (0.18 to 0.30mm) and jumbo graphite flakes (0.30 to 0.50mm) appear to be largely independent from other
mineral grains, which may render them relatively easy to liberate during processing (see polished section photographs). It should be
noted, however, that the relative percentages of the flake sizes present cannot be determined at this stage as the petrological work
has been undertaken on small samples which have been selected to investigate specific textural features and minerals present and
as such are unlikely to be representative of the graphite mineralisation overall. More detailed investigation will be undertaken by the
metallurgical scoping test work that is currently in progress on a representative composited sample.
Crater Gold Mining Limited
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Directors’ Report
Figure 9 -Polished Section 2- Reflected light [25x Mag. F.O.V. 4.8 mm] - Coarse graphite flake - (Brown in colour)
Corporate
Cancelled Rights Issues
On 24th July 2017, the Company announced an 11:2 renounceable rights issue (rights issue) to raise approximately $15million as part
of a broader corporate transformation that would see the Company recapitalised, cleared of debt and funded for an active
programme to develop its operations in PNG. The transformation also included a significant re-structure of the Company’s
management and a proposed renaming to Paradise Gold Mining Ltd.
The rights issue, which was partially and conditionally underwritten by Patersons Securities Limited (Patersons) launched on 26th July
2017 and was twice extended. At the close of the issue there had been insufficient take-up of rights by existing shareholders to trigger
Patersons’ underwriting obligations and, as a result, the rights issue was terminated. The Company at that time also advised that
some of the proposed new management would not eventuate and the Company name would also not change. All application funds
received were refunded to applicants.
Subsequent to the terminated rights issue the Company announced that a fresh rights Issue (the ‘fresh rights issue’) would be
launched. Since that announcement it has been determined that it is not possible to launch the Fresh Rights issue in the time frame
expected given the structure that was proposed.
Loan Facilities
In order to meet the Company’s creditor obligations whilst a longer-term financing solution was put in place, Freefire agreed to
advance an unsecured, arms-length-terms loan to the Company in the amount of $A2.0 million (the ‘Freefire Interim Loan’).
The Company later arranged a $A4.0 million unsecured loan facility, enabling it to continue to advance its flagship Crater Mountain
gold project and it’s Queensland Polymetallic and Graphite projects. This was made by way of an unsecured loan facility from the
Company’s major shareholder, Freefire Technology Ltd (“Freefire”). The first $A1 million in funding is available at the option of the
Company, with the balance of $A3 million requiring the consent of Freefire prior to a draw down request being executed.
Convertible Notes Redemption
During the year the Company’s 138,190 listed convertible notes, trading under the ASX code CGNG expired and were fully redeemed
to note holders.
Share Issue
On 29 December 2017, the Company issued 3,500,000 shares at a deemed issued price of $0.01 to two Directors in lieu of Directors
fees as per shareholders’ approval obtained at the Company’s AGM on 29 November 2017.
Crater Gold Mining Limited
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Directors’ Report
Performance Rights Issue
On 29 December 2017, the Company issued 19,033,080 performance rights to Directors and a consultant as per shareholders’
approval obtained at the Company’s AGM on 29 November 2017. At this time, the Company also issued 12,111,960 performance
rights to employees and consultants under the Company’s employee equity incentive plan. The terms and conditions for the
Performance Rights are detailed in Appendix 3B lodged with ASX on 29 December 2017.
On 16 April 2018, the Company issued 6,055,980 performance rights to an employee under the Company’s employee equity incentive
plan. The terms and conditions for the Performance Rights are detailed in Appendix 3B lodged with ASX on 16 April 2018.
Purchase of Drill Rig for Crater Mountain Gold project:
In line with its strategy to restart drilling at its flagship Crater Mountain Gold Project, the Company entered into an agreement to
acquire a drill rig to facilitate recommencement of drilling in the near term.
The Company purchased an Atlas Copco Diamec 252 drill rig (“Diamec 252 Drill Rig”) together with additional ancillary equipment,
including: (a) a 415 volt 45 kilowatt electric over hydraulic power pack; (b) a 1,000 volt 45 kilowatt electric over hydraulic power
pack; (c) an air over 22 kilowatt hydraulic power pack; (d) Bob Cat mounting accessories; (e) and feed frames and positioners, skid
mounted and (f) hydraulic motors and pumps.
Company Secretary Resignation/Appointment and Resignation of Director Richard Johnson
The Company announced that Ms Andrea Betti joined Crater Gold Mining Ltd as Company Secretary, effective Monday 9th October
2017. Ms Betti is an accounting and corporate governance professional with over 20 years’ experience in accounting, corporate
governance, finance and corporate banking. She has a Bachelor of Commerce, Graduate Diploma in Corporate Governance,
Graduate Diploma in Applied Finance and Investment and a Masters of Business Administration. Ms Betti has acted as Chief Financial
Officer and Company Secretary for companies in the private and public sector, as well as senior executive roles in the banking and
finance industry. Mr Heath Roberts has resigned as Company Secretary, effective 9th October 2017, and the Company thanks him
for his many years of service and dedication.
Mr Richard Johnson resigned as a Director of the Company on the 6th of December 2017.
Change of Address:
On 9 October 2017, the Company changed its Registered Office address and Principal Place of Business address to:
Level 3
216 St Georges Terrace
PERTH WA 6000
Its postal address was changed to:
P.O. Box 7054
CLOISTERS SQUARE PERTH WA 6850
Subsequent to year end, on 15 August 2018, the Company advised it had further changed its Registered Office address and
Principal Place of Business address to:
Level 2
22 Mount Street
PERTH WA 6000
Its postal address remained the same.
Matters Subsequent to the End of the Financial Year
On 2 August 2018, the Company announced it had arranged a New Loan Facility for $1.5M, with an interest rate of 8% p.a. with the
funding to be provided by way of an unsecured loan facility from Company’s major shareholder, Freefire Technology Ltd.
On 31 August 2018, the Company announced a proposal for the conversion of $12.0 million of debt due to Freefire Technology
Limited (“Freefire”) (a Company associated with the CGN’s Chairman, Mr Sam Chan) into 12.0 million non – voting redeemable
convertible preference shares issued at $1.00 each. The shares will not be listed.
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the Group's
operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely Developments, Expected Results of Operations and Future Strategy
The Group intends to continue its exploration, development and production activities on its existing projects with the Group’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 Queensland, Australia.
Crater Gold Mining Limited
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Directors’ Report
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.
Schedule of Tenements
Set out below is the schedule of tenements that the Company and its subsidiaries hold as at 30 June 2018.
Schedule of Crater Gold Mining Limited tenements:
Particulars
Project Name
EPM 8795
Croydon
EPM 13775
Wallabadah
EPM 16002
Foote Creek
Registered
Holder
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
ML 510
Crater Mountain
1 Anomaly Limited is CGN’s 100% owned PNG subsidiary
Anomaly Ltd 1
% Owned
Status
Expiry
Area (Km2)
100
100
Renewal Lodged
6/09/2018
Granted
5/03/2020
9.6
16
100
Granted
30/01/2021
28.8
100
100
100
100
100
100
100
100
Granted
18/06/2013
57.6
Renewal Lodged
25/09/2018
Renewal lodged
10/09/2017
Renewal lodged
10/11/2017
Renewal lodged
10/09/2017
Renewal lodged
21/05/2017
Renewal lodged
22/05/2017
41
88
10
20
68
78
Granted
4/11/2019
1.58
COMPETENT PERSONS STATEMENTS
The information contained in this report relating to exploration activities at the Crater Mountain Gold Project is based on and fairly
represents information and supporting documentation prepared by appropriately qualified Company personnel and reviewed by Ken
Chapple, who is an Associate Member of The Australasian Institute of Mining and Metallurgy and a Fellow of the Australian Institute
of Geoscientists. Mr Chapple has sufficient experience relevant to the style of mineralisation and type of deposit involved to qualify as
a Competent Person as defined in the 2012 JORC Code. Mr Chapple is an independent principal geological consultant with KCICD Pty
Ltd and consents to the inclusion in the report of matters based on his information in the form and context in which it appears.
The information contained in this report that relates to Exploration Results at the Golden Gate Graphite and the A2 Polymetallic
Projects near Croydon, Queensland, is based on information compiled by Ken Chapple, or prepared by appropriately qualified external
technical experts and reviewed by him. Mr Chapple is an Associate Member of The Australasian Institute of Mining and Metallurgy
and a Fellow of the Australian Institute of Geoscientists. Mr Chapple has been assisting the Company as a technical consultant relating
to his areas of expertise. Mr Chapple has sufficient experience relevant to the style of mineralisation and type of deposit involved to
qualify as a Competent Person as defined in the 2012 JORC Code. Mr Chapple is an independent principal geological consultant with
KCICD Pty Ltd and consents to the inclusion in the report of matters based on his information in the form and context in which it
appears.
Forward Looking Statements
This Announcement may contain forward looking statements. The words 'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate',
'likely', 'intend', 'should', 'could', 'may', 'target', 'plan‘ and other similar expressions are intended to identify forward- looking
statements. Forward-looking statements are subject to risk factors associated with the Company’s business, many of which are
beyond the control of the Company. It is believed that the expectations reflected in these statements are reasonable at the time made
but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends
to differ materially from those expressed or implied in such statements. You should therefore not place undue reliance on forward-
looking statements.
Crater Gold Mining Limited
13
Directors’ Report
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 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
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.
Crater Gold Mining Limited
14
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:
Directors’ Report
S W S Chan BA (Non-Executive Chairman), age 69
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 a beneficial interest of 160,649,929 ordinary
shares in the Company and 2,300,000 options over ordinary shares in the Company.
R D Parker B Eng (Managing Director), age 47
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,
2,300,000 options and 6,055,980 Performance Rights in the Company.
T M Fermanis F Fin, MSAA (Deputy Chairman), age 54
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.
As at the date of this report, Mr Fermanis has an interest in 602,311 ordinary shares,
2,300,000 options and 6,055,980 Performance Rights in the Company.
L K K Lee MCom, MAppFin, CPA (Non-executive Director), age 57
Mr Lee has been a Director of the Company since 6 June 2014 and was appointed
Finance Director on 1 April 2015. Mr Lee transitioned to Non-executive Director during
the year.
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 1,750,000 ordinary shares,
2,300,000 options and 2,595,420 Performance Rights in the Company.
Crater Gold Mining Limited
15
Directors’ Report
D T Y Sun (Non-executive Director), age 70
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 1,750,000 ordinary shares,
2,300,000 options and 2,595,420 Performance Rights in the Company.
R L Johnson BSc Eng Mining, FAusIMM (Technical Director), age 66
Mr Johnson was appointed as Technical Director on 19 July 2016 and resigned on 6
December 2017.
Andrea Betti AGIA ACIS BCom, MBA, GDipAppFin(SecInst), GDipACG
Ms Andrea Betti was appointed Company Secretary on 9 October 2017.
Heath Roberts Dip Law (SAB), Grad. Dip Legal Practice (UTS) (Company Secretary)
Mr Heath Roberts was appointed Company Secretary on 14 August 2015 and resigned on 9 October 2017.
Directors’ Meetings
The Company held 3 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
D T Y Sun
R L Johnson
Board
Audit Committee
Remuneration and Nomination
Committee
Eligible to
Attend
3
3
3
3
3
1
Attended
3
3
3
3
3
0
Eligible to
Attend
-
-
2
-
2
-
Attended
-
-
2
-
2
-
Eligible to
Attend
-
1
1
-
1
-
Attended
-
1
1
-
1
-
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.
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.
Crater Gold Mining Limited
16
Directors’ Report
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 Group for the five years to 30 June 2018 are summarised below:
Sales revenue
EBITDA
EBIT
Loss after income tax
2018
$‘000
-
(4,660)
(4,879)
(5,740)
2017
$‘000
225
(17,417)
(24,561)
(25,285)
2016
$‘000
385
(10,061)
(10,259)
(10,887)
2015
$‘000
2014
$‘000
53
(1,865)
(1,871)
(2,517)
Nil
(2,249)
(2,236)
(2,236)
The factors that are considered to affect Total Shareholders Return ('TSR') are summarised below:
Share price at financial year end ($)
Total dividends per share (cents per share)
2018
0.017
Nil
2017
0.01
Nil
2016
0.07
Nil
2015
0.09
Nil
2014
0.08
Nil
Basic earnings per share (cents per share)
(2.075)
(9.503)
(5.143)
(1.792)
(1.806)
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 2018:
Non-Executive Director’s base fee - $35,000 per annum;
The Managing Director and Deputy Chairman are paid a salary separate to the above;
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.
Voting and comments made at the company's 2017 Annual General Meeting ('AGM')
At the 2017 AGM, 92% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2017.
The company did not receive any specific feedback at the AGM regarding its remuneration practices.
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 15
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
Performance
Rights 7/Options
% of
total
2018
Non-executive Directors
S W S Chan
D T Y Sun
L K K Lee
Subtotal
Executive Directors
R D Parker, Managing Director
T M Fermanis, Deputy Chair
R L Johnson, Technical Director
Other key management personnel
M G O’Kane 1
C Church 2
Total
35,000
35,000 6
35,000 6
105,000
161,583
138,736
14,583
147,336
299,297
866,535
-
-
7,083
7,083
-
-
-
-
-
-
7,083
-
-
-
-
-
14,597
-
-
-
-
14,597
-
8,996
8,996
17,992
-
20.45%
17.61%
35,000
43,996
51,079
130,075
20,994
20,994
-
11.50%
12.04%
-
182,577
174,327
14,583
20,994
20,994
101,968
12.47%
6.55%
168,330
320,291
990,183
Crater Gold Mining Limited
17
Directors’ Report
2017
Non-executive Directors
S W S Chan
D T Y Sun
Subtotal
Executive Directors
35,000
35,000 6
70,000
-
-
-
-
-
-
12,832
12,832
25,664
26.8%
26.8%
47,832
47,832
95,664
-
-
R D Parker, Managing Director
-
200,000
12,832
6.0%
212,832
-
7.3%
9.7%
6.7%
12,832
12,832
12,832
-
35,000 6
35,000
163,332
120,000
144,000
-
-
-
627,332
R L Johnson, Technical Director
L K K Lee, Finance Director
T M Fermanis, Executive Deputy Chair
Other key management personnel
G R Boyce 4
H L Roberts 3
Total
1. Mr O’Kane was appointed on 1 July 2017.
2. Mr Church was appointed on 1 July 2017.
3. Mr Roberts acts in a part time capacity. Mr Roberts was appointed Company Secretary on 14 August 2015 and resigned 9 October 2017.
4. Mr Boyce resigned on 31 July 2017.
5. Other relates to services provided by Directors. Refer to Note 24 for details.
6. Of this amount, $4,375 (2017: $13,125) was paid via shares, in lieu of directors fees.
7. In accordance with the requirement of AASB2 Share based payments, the value disclosed is the portion of the fair value of the performance rights
recognised as an expense in the reporting period. The amount included as remuneration is not related to nor indicative of the benefit (if any) that
may ultimately be realised should the performance rights vest.
126,678
95,516
1,031,518
176,164
132,832
191,832
117,054
89,100
346,154
9,624
6,416
93,032
7.6%
6.7%
-
-
-
-
No other Directors, officers or executives of the Company received any share based payments, other than those shown in the
remuneration table above.
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.
Remuneration component
Short term
Post-employment benefits
Share based payments
Total
2018
$
873,618
14,597
101,968
990,183
2017
$
938,486
-
93,032
1,031,518
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
S W S Chan
Chairman
R Parker
Managing Director
T M Fermanis
Deputy Chairman
D T Y Sun
Non-Executive Director
L K K Lee
Non-Executive Director
M G O’Kane
Chief Financial Officer
C Curtis
Chief Operations Officer
1.
Commencement
date
29 January 2013
Term of
agreement
No fixed term
Base salary and
fees
$35,000 pa
12 March 2013
No fixed term
$81,000 pa 1
Superannuation
Period of notice
-
-
4 weeks
4 weeks
2 November 2009
No fixed term
$71,233 pa 1
6,767 pa 1
4 weeks
29 January 2013
No fixed term
$35,000 pa
1 April 2015
No fixed term
$35,000 pa
1 July 2017
No fixed term US$120,000 pa
1 July 2017
No fixed term US$210,000 pa
-
-
-
-
4 weeks
4 weeks
3 months
3 months
Base salary, fees and superannuation were amended during the financial year.
Crater Gold Mining Limited
18
Directors’ Report
d) Equity based compensation
Securities granted as part of remuneration for the year ended 30 June 2018
The Employee Equity Incentive 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.
Share based compensation for the year ended 30 June 2018
No shares were issued to Directors and other key management personnel as part of compensation during the year ended 30 June
2018 (2017: nil).
No options were issued to Directors and other key management personnel as part of compensation during the year ended 30 June
2018 (2017: NIL).
29,414,760 Performance Rights were issued to Directors and other key management personnel as part of compensation during the
year ended 30 June 2018 (2017: nil).
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. Options granted carry no dividend or voting
rights.
Name
2018
Directors
S W S Chan
T M Fermanis
L K K Lee
R D Parker
D T Y Sun
Key management personnel
M G O’Kane
C Church
Performance Rights
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
2,800,000
2,800,000
2,800,000
2,800,000
2,800,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(500,000)
(500,000)
(500,000)
(500,000)
(500,000)
-
-
2,300,000
2,300,000
2,300,000
2,300,000
2,300,000
-
-
Performance Rights convert into fully paid ordinary share in the Company upon the achievement of specific hurdles within a specific
time frame. For full details on the terms and conditions of the Performance Rights granted during the financial period, refer to ASX
announcement dated 29 December 2018. Performance Rights granted carry no dividend or voting rights. The number of
Performance Rights 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
2018
Directors
S W S Chan
T M Fermanis
L K K Lee
R D Parker
D T Y Sun
Key management personnel
M G O’Kane
C Church
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
-
-
-
-
-
-
-
-
6,055,980
2,595,420
6,055,980
2,595,420
6,055,980
6,055,980
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,055,980
2,595,420
6,055,980
2,595,420
6,055,980
6,055,980
Crater Gold Mining Limited
19
Directors’ Report
The value of Performance Rights granted, exercised and lapsed for Directors and other key management personnel as part of
compensation during the year ended 30 June 2018 are set out below:
Name
2018
Directors
S W S Chan
T M Fermanis
L K K Lee
R D Parker
D T Y Sun
Key management personnel
M G O’Kane
C Church
Value of
Performance Rights
granted
$
Value of Performance
Rights lapsed/converted
during the year
$
Value of
Performance
Rights expensed
during the year
$
Remuneration
consisting of
Performance
Rights for the year
%
-
114,256
48,967
114,256
48,967
114,256
114,256
-
-
-
-
-
-
-
-
20,994
8,996
20,994
8,996
20,994
20,994
-
12.04%
17.61%
11.50%
20.45%
12.47%
6.55%
The fair value of the performance rights granted to key management personal during the financial year was $554,958. Share based
payment expense is recognised on a straight-line basis over the vesting period.
The value disclosed in the remuneration of key management personnel is the portion of the fair value of the share based payment
recognised as expense in each reporting period in accordance with the requirement of AASB 2.
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
Balance at the
start of the year
Granted during
the year as
compensation
Additions
Disposals /
Other changes
Balance at the
end of the year
2018
Directors
S W S Chan
T M Fermanis
R Johnson
L K K Lee
R D Parker
D T Y Sun
Key management personnel
M G O’Kane
C Church
160,649,929
602,471
781,250
-
257,403
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,750,000 1
-
1,750,000 1
-
-
-
-
-
-
-
-
-
-
160,649,929
602,471
781,250
1,750,000
257,403
1,750,000
-
-
1.
Addition consists of 437,500 shares granted in lieu of directors fees for FY18 and 1,312,500 shares granted in lieu of directors fees for FY17.
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 $747,513 in loan interest and fees (2017: $119,852) and $35,703 in interest on convertible
notes (2017: $250,603). During the course of the year, Freefire made a number of short-term loans to the Company (see Note 3d for
further information on the loan).
Mr R D Parker’s close family members held a total of 77 convertible notes of the Company on which they earned $52 in interest
(2017: $193).
Mr T Fermanis held 40 convertible notes of the Company on which he earned $64 in interest (2017: $100).
This concludes the Remuneration Report, which has been audited.
Crater Gold Mining Limited
20
Directors’ Report
Shares under Option
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Grant date
28 July 2015
9 September 2015
12 July 2016
Expiry date
27 July 2019
27 July 2019
12 July 2020
Exercise price ($)
$0.25
$0.25
$0.125
Number of shares
under option
7,800,000
5,800,000
9,000,000
Type
Unlisted
Unlisted
Unlisted
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 (2017: Nil) or subsequent to year end.
Indemnification and Insurance of Directors
During the year, the Company paid premiums of $9,630 (2017: $20,127) 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.
Non-Audit Services
The Group paid $12,000 to RSM for non-audit services, relating to an independent expert report, during the year. The Directors are
satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's
behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed above do not compromise the external auditor's independence
requirements of the Corporations Act 2001 for the following reasons:
-
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the
auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing
the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the
Company or jointly sharing economic risks and rewards.
-
Annual General Meeting
All resolutions at the Company’s 2017 Annual General Meeting on 29 November 2017 were passed.
Crater Gold Mining Limited
21
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 23.
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 2018 year end. As a result, the Group has chosen to publish its Corporate Governance Statement on its website rather than in
this Annual Report.
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.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
R D Parker
Managing Director
30 September 2018
T M Fermanis
Deputy Chairman
Crater Gold Mining Limited
22
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Crater Gold Mining Limited for the year ended 30 June 2018,
I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 September 2018
TUTU PHONG
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Financial Year ended 30 June 2018
Continuing Operations
Revenue
Cost of sales
Gross (loss) from gold production
(Loss) on disposal of fixed assets
Interest income
Reversal of bad debt
Gross profit / (loss) from continuing activities
Expenses
Administration expense
Corporate compliance expense
Depreciation expense
Exploration and evaluation costs
Exploration and evaluation costs impaired
Share based payments
Financing expense
Impairment of mining asset
June
2018
$
-
-
-
-
205
88,543
June
2017
$
225,288
(823,178)
(597,890)
7,273
826
-
88,748
(589,791)
(2,596,830)
(1,559,307)
(180,975)
(104,018)
(218,616)
(191,139)
(1,848,903)
-
-
(15,049,107)
(122,310)
(115,488)
(861,020)
(722,501)
-
(6,953,390)
Notes
5
5
5
5
6
6
6
6
6, 13
6
6, 14
Loss before income tax expenses from continuing operations
(5,739,906)
(25,284,741)
Income tax expense
7
-
-
Loss for the year after income tax expense
(5,739,906)
(25,284,741)
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)
20
(80,870)
(616,932)
Total comprehensive income for the year
(5,820,776)
(25,901,673)
Loss per share from continuing operations attributable to the ordinary equity holders of Crater Gold Mining Limited:
Basic loss - cents per share
Diluted loss - cents per share
8
8
(2.075)
(2.075)
(9.503)
(9.503)
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
24
Consolidated Statement of Financial Position
As at 30 June 2018
Notes
June
2018
$
June
2017
$
10
11
12
13
15
16
17
18
19
20
20
265,155
102,341
367,496
296,185
137,307
433,492
65,796
66,967
9,014,465
8,953,712
687,384
641,347
9,767,645
9,662,026
10,135,141
10,095,518
1,685,558
2,269,452
873,587
1,203,078
13,679,324
7,109,173
16,238,469
10,581,703
-
-
16,238,469
10,581,703
(6,103,328)
(486,185)
61,015,655
60,934,332
-
340,507
(2,001,161)
(226,644)
(65,117,822)
(61,534,380)
(6,103,328)
(486,185)
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Other financial assets
Exploration and evaluation
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
Total non-current liabilities
Total liabilities
Net 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
25
Consolidated Statement of Changes in Equity
For the Financial Year ended 30 June 2018
Note
s
20
19
19
Balance at 1 July 2017
Share based payments
Issue of share capital
Transaction costs
Transactions with owners
Loss for the year
Other comprehensive income
Exchange differences on translating foreign operations
20
Total comprehensive income for the year
Transfer of reserves to accumulated losses
20
Contributed
equity
Convertible
note reserve
Reserves
Accumulated
losses
$
$
$
$
Total
$
60,934,332
340,507
(226,644)
(61,534,380)
(486,185)
-
85,000
(3,677)
81,323
-
-
-
-
-
-
-
-
-
122,310
-
-
122,310
-
-
-
-
122,310
85,000
(3,677)
203,633
(5,739,906)
(5,739,906)
(80,870)
-
(80,870)
(80,870)
(5,739,906)
(5,820,776)
(340,507)
(1,815,957)
2,156,464
-
Balance at 30 June 2018
61,015,655
-
(2,001,161)
(65,117,822)
(6,103,328)
Balance at 1 July 2016
Share based payments
Issue of share capital
Transaction costs
Transactions with owners
Loss for the year
Other comprehensive income
59,089,123
340,507
274,800
(36,249,639)
23,454,791
20
19
19
-
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)
Exchange differences on translating foreign operations
20
Total comprehensive income for the year
-
-
Balance at 30 June 2017
60,934,332
340,507
(226,644)
(61,534,380)
(486,185)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Crater Gold Mining Limited
26
Consolidated Statement of Cash Flows
For the Financial Year ended 30 June 2018
June
2018
$
June
2017
$
Notes
-
225,288
(2,036,105)
(2,174,822)
261
826
(109,228)
(108,681)
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Net cash used in operating activities
28
(2,145,072)
(2,057,389)
Cash flows from investing activities
Purchases of property, plant and equipment
Payments for exploration and evaluation
(Payments for)/proceeds from 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 (decrease)/increase 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
(146,099)
(28,333)
(3,219,967)
(1,743,041)
(1,000)
1,614
(3,367,066)
(1,769,760)
-
2,076,423
(3,677)
(261,214)
6,362,481
3,780,000
(920,466)
(1,618,878)
5,438,338
3,976,331
(73,800)
296,185
42,770
149,182
95,239
51,764
265,155
296,185
10
10
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Crater Gold Mining Limited
27
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.
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 30 September 2018. The
Directors have the power to amend and reissue the financial statements.
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian Accounting Standards, 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).
Change in Accounting Policy
Effective 1 July 2017, the Group has revised its accounting policy to expense all costs incurred in respect to the treatment of
exploration and evaluation expenditure. In prior periods, the Group would capitalise all exploration and evaluation expenditure and
recognise this as an exploration and evaluation asset in the Statement of Financial Position pursuant to AASB 6. The Group has
determined that it is now more appropriate to treat these items as expenditure in the Statement of Profit or Loss and Other
Comprehensive Income. An independent valuation of the exploration and evaluation assets was undertaken in the previous period
and the Group has determined it is best to hold the value of the assets at the level of the valuation until such time that new
information is available which would indicate a material change to the independent valuation.
New, revised or amending Accounting Standards and Interpretations adopted
The Group 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 statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of
available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain
classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary
information about the parent entity is disclosed in Note 27.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Crater Gold Mining Limited
(‘Company' or 'Parent Entity') as at 30 June 2018 and the results of all subsidiaries for the year then ended. Crater Gold Mining Limited
and its subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to
direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
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 Group. Losses incurred by the
Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Crater Gold Mining Limited
28
Notes to the Financial Statements
Where the Group 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 Group 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.
Operating Segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis as the
internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources
to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Crater Gold Mining Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars 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
financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date.
The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which
approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in
other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received or receivable.
Income Tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income
tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences,
unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets
are recovered, or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing
of the reversal can be controlled, and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount
to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future
taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current
tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same
taxable entity or different taxable entities which intend to settle simultaneously.
Crater Gold Mining Limited (the 'Parent Entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated
group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for
their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach
in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the
deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable
from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge
equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head
entity to the subsidiaries nor a distribution by the subsidiaries to the Parent Entity.
Crater Gold Mining Limited
29
Notes to the Financial Statements
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group’s normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting
period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months
after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for
the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer
the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
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. For the statement of cash flows presentation purposes, cash and cash equivalents
also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by
reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that
the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties
of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments
(more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment
allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at
the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is
immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. They are subsequently measured at either amortised
cost or fair value depending on their classification. Classification is determined based on the purpose of the acquisition and
subsequent reclassification to other categories is restricted.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the risks and rewards of ownership.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are either: (i) held for trading, where they are acquired for the purpose of selling
in the short-term with an intention of making a profit; or (ii) designated as such upon initial recognition, where they are managed on
a fair value basis or to eliminate or significantly reduce an accounting mismatch. Except for effective hedging instruments, derivatives
are also categorised as fair value through profit or loss. Fair value movements are recognised in profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets, principally equity securities, that are either designated as
available-for-sale or not classified as any other category. After initial recognition, fair value movements are recognised in other
comprehensive income through the available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-
for-sale reserve is recognised in profit or loss when the asset is derecognised or impaired.
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of
financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract
such as default or delinquency in payments; the lender granting to a borrower concessions due to economic or legal reasons that the
lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; the
disappearance of an active market for the financial asset; or observable data indicating that there is a measurable decrease in
estimated future cash flows.
The amount of the impairment allowance for financial assets carried at cost is the difference between the asset's carrying amount
and the present value of estimated future cash flows, discounted at the current market rate of return for similar financial assets.
Available-for-sale financial assets are considered impaired when there has been a significant or prolonged decline in value below
initial cost. Subsequent increments in value are recognised in other comprehensive income through the available-for-sale reserve.
Crater Gold Mining Limited
30
Notes to the Financial Statements
Property, plant and equipment
Land and buildings are shown at fair value, based on periodic, at least every 3 years, valuations by external independent valuers, less
subsequent depreciation and impairment for buildings. The valuations are undertaken more frequently if there is a material change
in the fair value relative to the carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the
gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Increases in the carrying
amounts arising on revaluation of land and buildings are credited in other comprehensive income through to the revaluation surplus
reserve in equity. Any revaluation decrements are initially taken in other comprehensive income through to the revaluation surplus
reserve to the extent of any previous revaluation surplus of the same asset. Thereafter the decrements are taken to profit or loss.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding
land) over their expected useful lives as follows:
Plant and equipment
3-7 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the
estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group.
Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve
relating to the item disposed of is transferred directly to retained profits.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and
benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially
all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present
value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the
finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life
and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.
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.
Exploration and evaluation assets
Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current have previously
been carried forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered
through the successful development and exploitation of an area of interest, or by its sale. As disclosed above under “changes to
accounting policies” from 1 July 2017, the Group has revised its accounting policy to expense all costs incurred in respect to the
treatment of exploration and evaluation expenditure. In prior periods the Group would capitalise all exploration and evaluation
expenditure and recognise this as an exploration and evaluation asset in the Statement of Financial Position pursuant to AASB 6. The
Group has determined that it is now more appropriate to treat these items as expenditure in the Statement of Profit or Loss and
Other Comprehensive Income. An independent valuation of the exploration and evaluation assets was undertaken in the previous
period and the Group has determined it is best to hold the value of the assets at the level of the valuation until such time that new
information is available which would indicate a material change to the independent valuation.
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.
Crater Gold Mining Limited
31
Notes to the Financial Statements
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value
of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to
which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are
unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured
and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective interest method.
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.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period
in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is probable
the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount
recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date,
taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are
discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is
recognised as a finance cost
Employee benefits
Share based payments
Equity-settled and cash-settled share based compensation benefits are provided to Directors and employees.
Equity-settled transactions are awards of shares, performance rights or options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount
of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using an
appropriate valuation model that takes into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the
term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle
the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period.
The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number
of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period
is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined using an appropriate valuation
model, taking into consideration the terms and conditions on which the award was granted. The cumulative charge to profit or loss
until settlement of the liability is calculated as follows:
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting
date.
Crater Gold Mining Limited
32
Notes to the Financial Statements
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the
liability.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are
considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional
expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share based
compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any
remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is
recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated
as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is
based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the
absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they
act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use.
Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are
used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance
of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are
determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available
or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where
there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes
a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
Issued capital
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 tax, from the
proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Crater Gold Mining Limited, 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 financial 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.
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 tax authority. In this case it is recognised as part of the cost of the 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 tax authority is included in other receivables or other 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 tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Crater Gold Mining Limited
33
Notes to the Financial Statements
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 Group for the annual reporting period ended 30 June 2018. The Group's assessment of the impact of
these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous
versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. AASB 9
introduces new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost, if
it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, which arise on specified
dates and solely principal and interest. All other financial instrument assets are to be classified and measured at fair value through
profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments
(that are not held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the
change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch).
New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management
activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance.
Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly
since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The
Group will adopt this standard from 1 July 2018 and the impact of its adoption is expected to be not material on the Group.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases'
and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset
will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to
be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as
personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is
recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be
recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future
restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation
charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance
costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to
lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be
improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification
within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either
operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts
for leases. The Group will adopt this standard from 1 July 2019 and the impact of its adoption is expected to be not material on the
Group.
2
Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical
experience and on other various factors, including expectations of future events, management believes to be reasonable under the
circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities (refer to the respective notes) within the next financial year are discussed below.
Share based payment transactions
The Group 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 the ESO5 Barrier 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.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group 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 Group 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 metal 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
34
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 on future gold sales. 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 Error! Reference source not found.).
d.
Cash flow interest rate risk
Consolidated
Notes
Floating
interest rate
Fixed interest
rate
Non-interest
bearing
2018
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
bearing
Interest
convertible notes 2
liabilities
–
Weighted average interest rate
Net financial assets/(liabilities)
10
11
12
16
17
18
18
Total
265,155
102,341
65,796
433,292
101,295
-
-
101,295
0.15%
-
-
-
-
163,860
102,341
65,796
331,997
-
-
-
-
-
-
-
-
13,679,324
-
13,679,324
8.33%
1,685,558
873,587
-
1,685,558
873,587
13,679,324
-
-
2,559,145
16,238,469
-
-
101,295
(13,679,324)
(2,227,148)
(15,805,177)
Crater Gold Mining Limited
35
Notes to the Financial Statements
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
bearing
Interest
convertible notes 2
liabilities
–
Weighted average interest rate
Net financial assets/(liabilities)
10
11
12
16
17
18
18
182,184
-
-
182,184
0.59%
-
-
-
-
-
0.00%
-
-
-
-
-
-
7,109,173
-
7,109,173
9.99%
114,001
137,307
66,967
318,275
2,269,452
1,203,078
-
296,185
137,307
66,967
500,459
2,269,452
1,203,078
7,109,173
-
-
3,472,530
10,581,703
-
-
182,184
(7,109,173)
(3,154,255)
(10,081,244)
The convertible notes were repaid 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 $12,879,324 (2017: $2,893,698) 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 majority of the Principal Sums is payable by the Company to Freefire at the rate of 8% (2017: 8%) per annum, with
the most recent loan of $4m provided in December 2017 at 12% p.a. (drawn to $3.1m at 30 June 2018).
• The loans are repayable by the Company to Freefire upon written demand by Freefire.
1 ICBC Loan Facility
In the previous financial period, 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 current interest rate is 3.40% per annum.
2 Convertible notes
On 22 August 2014, the Group issued 138,190, 10% unsecured convertible notes, with a face value of $25 each, for total proceeds of
$3,454,750. On 22 August 2017, the convertible notes expired. All convertible notes and accrued interest were paid out by early
September 2017.
e.
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
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices).
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.
Crater Gold Mining Limited
36
Notes to the Financial Statements
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 2018, the effect on profit
and equity of the Group as a result of changes in the value of the PKG to the Australian Dollar, with all other variables remaining
constant, is as follows:
Movement to
AUD
PKG by + 5%
Change in profit
$
143,205
Change in equity
$
1,855,148
PKG by - 5%
(143,205)
(1,855,148)
4
Going Concern
These financial statements are prepared on a going concern basis. The Group has incurred a net loss after tax of $5,739,906 for the
year ended 30 June 2018 with total cash outflows from operating and investing activities of $5,512,138. As at 30 June 2018, the
Group had net current liabilities of $15,870,973 and net liabilities of $6,103,328.
Whilst the above conditions indicate a material uncertainty which may cast significant doubt over the Group’s ability to continue as
a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at
the amounts stated in the financial report, the Directors believe that there are reasonable grounds to believe that the Group will be
able to continue as a going concern, after consideration of the following factors:
a)
b)
c)
d)
the Company announced on 2 August 2018 that it had executed a new loan agreement for $1.5M, the funding will be provided
by way of an unsecured loan facility from Company’s major shareholder, Freefire Technology Ltd. As at the date of this report
the undrawn balance is $250,000.
the Company announced on 31 August 2018 a proposal for the conversion of $12.0 million of debt due to Freefire Technology
Limited into 12.0 million non–voting redeemable convertible preference shares issued at $1.00 each.
the Group’s key area of expenditure is the Crater Mountain Project in Papua New Guinea. Whilst processing of ore has only
recently re-commenced, the Group anticipates that there will be production output in the near future that will generate income
from mining operations.
in accordance with the Corporations Act 2001, the Group has plans to raise further working capital through the issue of equity
during the financial year end 30 June 2019.
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.
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.
5
Income from continuing operations
Revenue from gold sales
Interest received
Reversal of bad debts
Profit from sale of property, plant and equipment
June
2018
$
June
2017
$
Note
-
205
88,543
-
225,288
826
-
7,273
Crater Gold Mining Limited
37
Notes to the Financial Statements
June
2018
$
June
2017
$
Note
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
Directors’ fees
Depreciation and amortisation expense
Employee benefits expense
Exploration and evaluation costs
Exploration costs written off or impaired
General administration expenses
- Insurance - Directors & officers indemnity insurance
- Insurance - Other
Total insurance
Legal Fees
Marketing and promotion expenses
Minimum lease payments
Mining asset impairment
Share based payments
Share registry, meeting costs and other compliance costs
Telephone/internet
Travel
13
14
24
7
a.
Income Tax
Numerical reconciliation of income tax revenue to prima facie tax receivable
Loss before income tax
Tax at the Australian tax rate of 30%
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible share based payments
Non-deductible expenses
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
Unused tax losses for which no deferred tax asset has been recognised
Opening balance
Taxable loss for the year
Closing balance
Potential tax benefits @ 30%
8
Earnings per Share
69,847
120,346
1,264,894
373,108
218,616
41,243
1,848,903
-
163,238
7,343
2,287
9,630
206,058
161
80,474
-
122,310
180,975
54,777
213,054
129,277
11,558
717,943
133,664
191,139
34,831
-
15,049,107
397,024
21,060
1,101
22,161
37,912
17,905
21,732
6,953,390
115,488
104,018
605
34,695
(5,739,906)
(1,721,972)
(25,284,741)
(7,585,422)
36,693
111,127
1,574,152
-
-
-
-
34,646
6,966,016
575,603
9,157
-
-
-
46,673,952
1,795,020
44,356,102
2,317,850
48,468,972
46,673,952
14,540,692
14,002,186
Basic loss per share
a.
Loss from continuing operations attributable to the ordinary equity holders of Crater
Gold Mining Limited (cents per share)
(2.075)
(9.503)
b.
Diluted loss per share
Loss from continuing operations attributable to the ordinary equity holders of Crater
Gold Mining Limited (cents per share)
(2.075)
(9.503)
Crater Gold Mining Limited
38
Notes to the Financial Statements
The calculation of basic earnings per share at 30 June 2018 was based on the loss from continuing operations attributable to
ordinary shareholders of $5,739,906 (2017 loss: $25,284,741) and a weighted average number of ordinary shares outstanding
during the financial year ended 30 June 2018 of 276,655,291 (2017: 266,080,056), calculated as follows:
c.
Weighted average number of shares used as a denominator
Basic loss per share
Diluted loss per share
2018
Shares
2017
Shares
276,655,291
266,080,056
276,655,291
266,080,056
At the year end, the Group had 22,600,000 options on issue (2017: 30,100,000), representing:
22,600,000 unlisted options with weighted average exercise price of $0.20 (2017: 30,100,000 at average $0.21)
9
Operating Segments
Full-year to 30 June 2018
Gold sales revenue
Cost of sales
Other revenue
Profit on disposal of assets
Assets written down/impaired
Other expenses
Segment loss
Segment assets
Segment liabilities
Full-year to 30 June 2017
Gold sales revenue
Other revenue
Loss on disposal of assets
Assets written down/impaired
Assets impaired
Other expenses
Segment loss
Segment assets
Segment liabilities
Croydon
$
Crater
Mountain
$
Australian
Head Office
$
Intersegment
eliminations
$
Consolidated
$
-
-
-
-
-
-
-
88,543
-
-
-
-
205
-
-
(210,772)
(2,788,658)
(2,829,224)
(210,772)
(2,700,115)
(2,829,019)
-
-
-
-
-
-
-
987,819
-
8,861,020
46,012,109
14,189,307
15,216,160
(13,903,005)
(44,989,800)
-
-
-
-
-
-
-
225,288
(823,178)
-
-
(22,002,497)
-
-
826
7,273
-
(549,934)
(2,142,519)
(23,150,321)
(2,134,420)
-
-
-
-
-
-
-
987,819
-
8,880,556
42,774,282
9,998,285
8,674,687
(9,771,142)
(40,867,266)
-
-
88,748
-
-
(5,828,654)
(5,739,906)
10,135,141
16,238,469
225,288
(823,178)
826
7,273
(22,002,497)
(2,692,453)
(25,284,741)
10,095,518
10,581,703
Segment information is presented using a “management approach”, that is 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.
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 Group.
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.
Crater Gold Mining Limited
39
Notes to the Financial Statements
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 Group 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.
Head Office Perth
These are the overhead and administrative costs for the parent entity.
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
2018
$
2017
$
Geographical non-current
assets
2018
$
2017
$
Australia
Papua New Guinea
-
-
-
-
225,288
225,288
1,141,470
8,626,175
1,015,319
8,646,707
9,767,645
9,662,026
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.
Note
10
Current Assets - Cash and Equivalents
June
2018
$
June
2017
$
Cash at bank and on hand
265,155
296,185
The effective (weighted average) interest rate on short term bank deposit was 0.15%
(2017: 0.41%).
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
49,528
52,813
102,341
17,458
119,849
137,307
65,796
65,796
66,967
66,967
8,953,712
-
-
60,753
9,014,465
22,664,481
1,843,909
(15,049,107)
(505,571)
8,953,712
The above impairments/write downs were recognised in the previous period.
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.
Crater Gold Mining Limited
40
Notes to the Financial Statements
Note
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
During the previous period, the Group fully impaired the mining assets.
15
Non-Current Assets – Plant and Equipment
Plant and equipment
Cost
Accumulated depreciation
Net book value
June
2018
$
June
2017
$
-
-
-
-
-
-
-
7,105,002
-
-
(19,356)
(6,953,390)
(132,256)
-
1,945,591
(1,258,207)
687,384
1,680,938
(1,039,591)
641,347
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 2016
Additions
Disposals
Depreciation expense
Depreciation capitalised
Effect of movements in exchange rates
Carrying amount as at 30 June 2017
Additions
Disposals
Depreciation expense
Effect of movements in exchange rates
Carrying amount as at 30 June 2018
Note
16
Current Liabilities – Trade and Other Payables
Trade payables
Accruals
Other payables
Plant and
equipment
916,534
28,333
-
(171,783)
(100,867)
(30,870)
641,347
194,397
-
(218,616)
70,256
687,384
June
2018
$
June
2017
$
867,614
41,906
776,038
1,685,558
194,589
829,371
1,245,492
2,269,452
Crater Gold Mining Limited
41
Notes to the Financial Statements
Note
17
Related Party Payables
G R Boyce (CFO, resigned 31st July 2017)
S W S Chan
T M Fermanis
Freefire Technology Ltd (accrued interest)
R Johnson (Technical Director, resigned 6th December 2017)
L K K Lee
R D Parker
D T Y Sun
J S Spence (Director for Anomaly Ltd – PNG subsidiary)
H Roberts (Company Secretary, resigned 9th October 2017)
C Church
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
a.
Contributed Equity
Share Capital
Equity Securities Issued
For the financial year ended 30 June 2018
As at 1 July 2017
Shares issued
As at 30 June 2018
For the financial year ended 30 June 2017
As at 1 July 2016
Shares issued
As at 30 June 2017
b. Ordinary Shares
June
2018
$
June
2017
$
-
66,485
200,201
-
-
152,289
261,814
43,750
93,106
-
55,942
873,587
-
800,000
12,879,324
13,679,324
13,613
40,235
215,000
225,524
179,998
157,706
271,180
35,000
58,057
6,765
-
1,203,078
3,415,475
800,000
2,893,698
7,109,173
No. of ordinary
shares
Total
$
272,118,621
7,346,154
279,464,775
60,934,332
81,323
61,015,655
242,026,860
30,091,761
272,118,621
59,089,123
1,845,209
60,934,332
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 held. The fully paid ordinary share have no par value and the Company does
not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
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.
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 Group 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 2017 Annual Report.
Crater Gold Mining Limited
42
Notes to the Financial Statements
c.
Employee Equity Incentive Plan (previously Employee Share Option Plan (ESOP))
Information relating to the Employee Equity Incentive Plan (EEIP), including details of options and performance rights issued,
exercised, lapsed and outstanding during the financial year is set out in Note 24b.
d. Movements in Share Capital
Date
Details
For the financial year ended 30 June 2018
01-Jul-17
9-Octl-17
29-Dec-17
Balance 1 July - Ordinary Shares
Lennard Drilling
Issued to Directors in lieu of fees
Less: Transaction costs arising on share issues
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
e. Movement in options
Date
Details
For the financial year ended 30 June 2018
01-Jul-17
Opening Balance
12-Jul-16
Expired Options
For the financial year ended 30 June 2017
01-Jul-16
Opening Balance
12-Jul-16
ESOP
No. of shares
272,118,621
3,846,154
3,500,000
279,464,775
242,026,860
428,571
29,663,190
272,118,621
Value
$
60,934,332
50,000
35,000
(3,677)
61,015,655
59,089,123
30,000
2,076,423
(261,214)
60,934,332
Class of options
Listed
Unlisted
Total
-
-
-
-
-
-
30,100,000
30,100,000
(7,500,000)
(7,500,000)
22,600,000
22,600,000
21,100,000
21,100,000
9,000,000
9,000,000
30,100,000
30,100,000
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.
f. Movements in performance rights
During the period, the Group issued to Directors and employees Performance Rights as part of its long-term incentive program under
the Group’s Employee Equity Incentive Plan (EEIP).
Date
Details
For the financial year ended 30 June 2018
01-Jul-17
Opening Balance
Class of performance rights
A
-
B
-
C
-
D
-
E
-
Total
-
Issued under EEIP
12,400,340
6,200,170
6,200,170
6,200,170
6,200,170 37,201,020
12,400,340
6,200,170
6,200,170
6,200,170
6,200,170 37,201,020
Details on the Terms and Conditions of the individual classes of Performance Rights:
Class A Performance Rights – achievement of successful commercial gold production at the Crater Mountain Project, with
successful commercial gold production defined as attaining positive operating cash flow from mining operations (i.e. revenue
less: direct variable cash mining and processing costs; 50% of fixed overhead costs incurred at the Nevera Gold Mine; 50% of the
Chief Operating Officer’s employment expense; and the cost of any landowner compensation payments that relate to mining
activities) for three consecutive months.
Class B Performance Rights – On expansion of the Crater Mountain Project total Resource (ie, adding all categories of Measured,
Indicated and Inferred together) to 1,112,500 contained ounces of gold or more.
Crater Gold Mining Limited
43
Notes to the Financial Statements
Class C Performance Rights – if at any time the share price remains at or above A$0.020 per share for 20 consecutive trading days
with an average daily trading liquidity for those trading days at or above A$20,000.
Class D Performance Rights – if at any time the share price remains at or above A$0.030 per share for 20 consecutive trading days
with an average daily trading liquidity for those trading days at or above A$20,000.
Class E Performance Rights – if at any time the share price remains at or above A$0.040 per share for 20 consecutive trading days
with an average daily trading liquidity for those trading days at or above A$20,000.
Note
20
Reserves and Accumulated Losses
Reserves
Share based payment reserve
Share cancellation reserve
Foreign currency translation reserve
Movements
Share based payments reserve
Balance 1 July 2017
Transfer to accumulated losses (options expired)
Share based payments expense for year
Balance 30 June 2018
Share cancellation reserve
Balance 1 July 2017
Transfer to accumulated losses
Balance 30 June 2018
Foreign currency translation reserve
Balance 1 July 2017
Currency translation differences
Balance 30 June 2018
Convertible note equity reserve
Balance 1 July 2017
Transfer to accumulated losses
Balance 30 June 2018
Accumulated losses
Movements in accumulated losses were as follows:
Balance 1 July 2017
Loss for the year
Transfer from reserves
Balance 30 June 2018
Nature and purpose of reserves
Share based payments reserve
June
2018
$
June
2017
$
344,759
-
(2,345,920)
(2,001,161)
2,008,406
30,000
(2,265,050)
(226,644)
2,008,406
(1,785,957)
122,310
344,759
1,892,918
-
115,488
2,008,406
30,000
(30,000)
-
30,000
-
30,000
(2,265,050)
(80,870)
(2,345,920)
(1,648,118)
(616,932)
(2,265,050)
340,507
(340,507)
-
340,507
-
340,507
(61,534,380)
(5,739,906)
2,156,464
(36,249,639)
(25,284,741)
-
(65,117,822)
(61,534,380)
The share based payments reserve is used to recognise:
The fair value of options and performance rights issued to employees and Directors; and
The fair value of options and performance rights issued as consideration for goods or services rendered.
Share cancellation reserve
The cancellation of shares in 2010 was realised within the share cancellation reserve, transferred to accumulated losses in current
year.
Crater Gold Mining Limited
44
Notes to the Financial Statements
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.
Note
21
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
Exploration 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
22
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
23
Related Party Transaction
a. Parent Entity
Crater Gold Mining Limited is the Parent Entity.
b. Key Management Personnel
June
2018
$
June
2017
$
-
-
-
310,000
1,045,000
1,355,000
28,500
7,160
30,136
65,796
16,890
-
16,890
310,000
120,000
430,000
27,500
7,575
31,891
66,966
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 Group is set out below:
Remuneration component
Short term
Post-employment benefits
Share based payments
Total
c.
Transactions with Related Parties
2018
$
873,618
14,597
101,968
990,183
2017
$
938,486
-
93,032
1,031,518
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 $747,513 in loan interest and fees (2017: $119,852) and $35,703 in interest on convertible
notes (2017: $250,603). During the course of the year, Freefire made a number of short-term loans to the Company at an annual
interest rate of 8% for loans received up to 30 November 2017 and at an annual interest rate of 12% for the $4 million loan received
after 30 November 2017 (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 held a total of 77 convertible notes of the Company on which they earned $52 in interest
(2017: $193). Mr R D Parker is paid fees for his role as Managing Director totalling $161,563 (2017: $200,000).
Mr T Fermanis held 40 convertible notes of the Company on which he earned $64 in interest (2017: $100). Mr T Fermanis is paid fees
for his role as Executive Deputy Chairman/Investor Relations totalling $153,333 (2017: $144,000).
Mr L K K Lee is paid fees for his role as Finance Director totalling $7,083 (2017: $120,000).
Crater Gold Mining Limited
45
Notes to the Financial Statements
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 26. Transactions and balances between subsidiaries and the parent have been
eliminated on consolidation of the Group.
Share Based Payments
24
a. Recognised Share Based Payment Expenses
The expense recognised for share options and performance rights granted to Directors, key management personnel and employees
during the year is shown in the table below:
Expense arising from equity settled share based payment transactions
June
2018
$
June
2017
$
122,310
122,310
115,488
115,488
b. Employee Equity Incentive Plan
The establishment of the Crater Gold Mining Employee Equity Incentive Plan (“the Plan”) was approved by shareholders on 29
November 2017. 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 securities granted under the Employee Equity Incentive Plan (previously Employee Share Option Plan)
There were no options issued pursuant to the Employee Equity Incentive Plan 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
9,000,000
30,100,000
Granted
Exercised
Forfeited/expired
Balance at
end of the
year
-
-
7,800,000
5,800,000
-
4,600,000
2,100,000
-
-
800,000
-
9,000,000
7,500,000
22,600,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
During the period, the Group issued to Directors, key management personnel and employees 37,201,020 Performance Rights as part
of its long-term incentive program under the Group’s Employee Equity Incentive Plan (EEIP).
Date
Details
01-Jul-17
Opening Balance
A
-
B
-
C
-
D
-
E
-
Total
-
29-Dec-17
Issued under EEIP
10,381,680
5,190,840
5,190,840
5,190,840
5,190,840 31,145,040
12-Jul-16
Issued under EEIP
2,018,660
1,009,330
1,009,330
1,009,330
1,009,330
6,055,980
12,400,340
6,200,170
6,200,170
6,200,170
6,200,170 37,201,020
Class of performance rights
Details on the Terms and Conditions of the individual classes of Performance Rights:
Class A Performance Rights – achievement of successful commercial gold production at the Crater Mountain Project, with
successful commercial gold production defined as attaining positive operating cash flow from mining operations (i.e. revenue
less: direct variable cash mining and processing costs; 50% of fixed overhead costs incurred at the Nevera Gold Mine; 50% of
the Chief Operating Officer’s employment expense; and the cost of any landowner compensation payments that relate to
mining activities) for three consecutive months.
Class B Performance Rights – On expansion of the Crater Mountain Project total Resource (ie, adding all categories of Measured,
Indicated and Inferred together) to 1,112,500 contained ounces of gold or more.
Class C Performance Rights – if at any time the share price remains at or above A$0.020 per share for 20 consecutive trading
days with an average daily trading liquidity for those trading days at or above A$20,000.
Crater Gold Mining Limited
46
Notes to the Financial Statements
Class D Performance Rights – if at any time the share price remains at or above A$0.030 per share for 20 consecutive trading
days with an average daily trading liquidity for those trading days at or above A$20,000.
Class E Performance Rights – if at any time the share price remains at or above A$0.040 per share for 20 consecutive trading
days with an average daily trading liquidity for those trading days at or above A$20,000.
The fair value of the performance rights granted during the financial year was $694,262. The value of performance rights expensed
during the year was $122,310 with the remaining amount to be expensed over the vesting period. Total amount expensed was split
between key management personnel ($101,968) and employees ($20,342).
Performance rights are valued using the ESO5 Barrier model where performance rights have market-based vesting conditions. The
expected life is based on management’s best estimate at the time of valuation of vesting criteria being achieved, (Group used the
expiry date). The weighted average fair value of performance rights granted during the year was $0.02.
Where performance rights have do not have market-based vesting conditions the values were calculated using the share price at the
grant date, multiplied by the amount performance rights granted (Class A and B Performance Rights) and ESO5 Barrier model (for
market vesting conditions – Class C, D and E Performance Rights) applying the following inputs:
Grant Date
Expiry Date
27-Nov-2017
31-Dec-2020
15-Mar-2018
31-Dec 2020
Share Price at
Grant Date
Exercise
Price
$0.02
$0.019
n/a
n/a
Expected
volatility
73.78%
73.78%
Dividend
Yield
Risk Free
Rate
Fair value at
grant date
n/a
n/a
2.05%
2.05%
587,603
106,659
c.
Share Option Based Payments made to Unrelated Party
The Company did not issue any options over ordinary shares to extinguish its liabilities (2017: Nil).
d. Option Based Payments
The Company did not issue any options over ordinary shares to extinguish its liabilities (2017: Nil).
Note
25
Remuneration of Auditors
During the year, the following fees were paid or payable for services provided by RSM
Australia (2017: BDO), the auditor of the parent entity, its related practices and
unrelated firms.
RSM - Audit and review of financial reports
Non-audit services – RSM
BDO - Audit and review of financial reports
BDO Papua New Guinea
(Auditors of Anomaly Limited)
Audit and review of financial reports
26
Subsidiaries
a. Ultimate Controlling Entity
Crater Gold Mining Limited is the ultimate controlling entity for the Group.
b. Subsidiaries
June
2018
$
June
2017
$
50,000
12,000
-
62,000
19,847
19,847
-
-
114,250
114,250
15,027
15,027
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
2018
%
100
100
2017
%
100
100
The proportion of ownership interest is equal to the proportion of voting power held.
There are no significant restrictions over the Group’s ability to access or use assets and settle liabilities.
Crater Gold Mining Limited
47
Notes to the Financial Statements
June
2018
$
June
2017
$
(2,553,202)
(48,581,386)
(2,553,202)
(48,581,386)
133,560
1,275,029
15,216,160
15,216,160
182,184
1,197,503
5,241,753
8,657,228
83,303,739
83,222,415
-
1,551,963
340,507
3,215,611
(98,796,833)
(94,238,258)
(13,941,131)
(7,459,725)
Note
27
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
Contingent liabilities
The Parent Entity had no contingent liabilities as at 30 June 2018 (2017: nil).
Capital commitments - Property, plant and equipment
The Parent Entity had no capital commitments for property, plant and equipment as at 30 June 2018 (2017: nil).
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 1, except for the following:
Investments in subsidiaries are accounted for at cost, less any impairment, in the Parent Entity.
Note
Reconciliation of loss for the period from continuing operations to net cash
28
outflow from operating activities
Loss for the period from continuing operations
Adjustments for non-cash income and expense items:
Depreciation and amortisation/impairment
Non-cash interest transactions
Exploration expenses/impairment
Reversal of bad debt
Share based payment expenses
Payables settled by equity payments
Change in operating assets and liabilities:
Movements in trade and other receivables
Movements in trade creditors and accruals
Net cash outflow from operating activities
June
2018
$
June
2017
$
(5,739,906)
(25,284,741)
218,616
751,791
7,144,529
464,003
1,848,903
15,049,107
(88,543)
122,310
-
-
-
145,488
34,966
706,791
66,359
357,865
(2,145,072)
(2,057,389)
Crater Gold Mining Limited
48
Notes to the Financial Statements
29
Post Reporting Date Events
On 2 August 2018, the Company announced it had arranged a New Loan Facility for $1.5 million, with an interest rate of 8% p.a. with
the funding to be provided by way of an unsecured loan facility from Company’s major shareholder, Freefire Technology Ltd.
On 31 August 2018, the Company announced a proposal for the conversion of $12.0 million of debt due to Freefire Technology
Limited (“Freefire”) (a Company associated with the CGN’s Chairman, Mr Sam Chan) into 12.0 million non – voting redeemable
convertible preference shares issued at $1.00 each. The shares will not be listed.
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the Group's
operations, the results of those operations, or the Group's state of affairs in future financial years.
30
Contingent Liabilities
The Group does not have any contingent liabilities (2017: nil).
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 Group's financial position as at 30 June 2018
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
R D Parker
Managing Director
30 September 2018
Crater Gold Mining Limited
50
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
CRATER GOLD MINING LIMITED
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 2018, the consolidated statement
of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and the directors' declaration.
In our opinion, 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 2018 and of its financial
performance for the year then ended; 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 auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We 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.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Material Uncertainty Related to Going Concern
We draw attention to Note 4 in the financial statements, which indicates that the Group incurred a net loss of
$5,739,906 and had total net cash outflows from operating activities and investing activities of $5,512,138 for the
year ended 30 June 2018 and, as of that date, the Group had net current liabilities of $15,870,973 and net liabilities
of $6,103,328. These conditions, along with other matters as set forth in Note 4, indicate that a material
uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion
is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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.
Key Audit Matter
Carrying value of exploration and evaluation expenditure
Refer to Note 13 in the financial statements
The Group has capitalised exploration and
evaluation expenditure with a carrying value of
$9,014,465 as at 30 June 2018.
How our audit addressed this matter
Our audit procedures in relation to the carrying value of
the exploration and evaluation asset included:
Obtaining evidence that the Group has valid rights
We determined this to be a key audit matter due to
the significant management judgments involved in
assessing the carrying value in accordance with
Australian Accounting Standards, including:
Determination of whether the expenditure can
be associated with finding specific mineral
resources, and
that
expenditure is allocated to an area of interest;
Determination of whether exploration activities
have progressed to the stage at which the
existence of an economically
recoverable
mineral reserve may be assessed; and
the basis on which
Assess whether any indicators of impairment
are present, and if so, judgments applied to
determine and quantify any impairment loss.
to explore in the specific area;
Enquiring with and assessing management’s
basis on which they have determined that the
exploration and evaluation of mineral resources
has not yet reached the stage where it can be
concluded that no commercially viable quantities
of mineral resources exists;
Enquiring with management and
reviewing
budgets and plans to test that the Group will incur
substantive expenditure on further exploration for
and evaluation of mineral resources in the specific
area; and
Critically assessing and evaluating management’s
assessment that no indicators of impairment
existed.
Valuation of share based payments – performance rights
Refer to Note 24 in the financial statements
During the year, the Group issued 37,201,020
performance rights.
Management was required to assess the probability
of achieving the performance conditions attached to
the performance rights and estimate the length of the
expected vesting period. The Group used a valuation
model to value the performance rights.
We determined this to be a key audit matter due to
the significant judgements involved in assessing the
fair value of these performance rights issued during
the year.
Our audit procedures in relation to the valuation of
performance rights issued included:
Obtaining the Group’s model and assessing
whether the model was appropriate for valuing the
performance rights issued during the year; and
Checked
the mathematical accuracy of
the
calculations and reviewed the assumptions used
in the model to calculate the fair value of the
performance rights; and
Reviewing management’s assessment of the
the performance
the
length of
probability of achieving
conditions and
expected vesting period; and
the estimated
Assessing the adequacy of the disclosures in the
financial report.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2018, 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 accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: 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 within the directors' report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of Crater Gold Mining Limited, for the year ended 30 June 2018, 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.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 September 2018
TUTU PHONG
Partner
Shareholder 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 21 September 2018.
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 27 July 2019)
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)
Top 20 Holders of Ordinary Shares
Name
Freefire Technology Ltd
HSBC Custody Nominees (Australia) Limited
Mr Paul Thomas McGreal
BNP Paribas Nominees Pty Ltd
Mr Graham John Bailey & Mrs Annette Maree Bailey
Mr Norman Colburn Mayne
Lennard Drilling Pty Ltd
Graham Bailey Earthmoving Pty Ltd
Mr Fouad Abdo
Mr Joe Holloway
J P Morgan Nominees Australia Limited
One Managed Investment Funds Limited
Bloom Star Investment Limited
Desmond Tak Yan Sun
Kin Keung Lee
Mr David Mingorance
Mr Barry Rowland Butler & Mrs Julie Butler
IAE Study In Australia Pty Ltd
Mr Colin Frank West
Mr Carlo Battisti
Richard Lewis Johnson
James Sinton Spence
J & C Brennan Superannuation Fund Pty Ltd
Code
CGN
CGNO39
CGNO41
CGNO42
Number of
holders
3,126
6
6
10
Number of shares
160,085,929
% holding
57.28%
8,107,901
5,800,000
4,703,528
4,375,000
4,200,000
3,846,154
3,125,000
2,937,941
2,643,524
2,177,833
2,160,637
1,775,649
1,750,000
1,750,000
1,220,000
1,162,107
1,000,000
1,000,000
1,000,000
781,250
767,100
750,000
2.90%
2.08%
1.68%
1.57%
1.50%
1.38%
1.12%
1.05%
0.95%
0.78%
0.77%
0.64%
0.63%
0.63%
0.44%
0.42%
0.36%
0.36%
0.36%
0.28%
0.27%
0.27%
Grand Total
217,119,553
77.69%
Crater Gold Mining Limited
55
Shareholder Information
Distribution of Equity Securities
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
1,349
767
298
543
169
3,278
Unlisted Options
Unlisted Options
Unlisted Options
CGNO39
CGNO41
CGNO42
-
-
-
-
-
-
-
-
-
-
-
-
6
6
10
6
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 2,686.
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 22,600,000 options are on issue. 13,300,000 are on issue to 16 holders of ordinary securities. 9,300,000 options
are on issue to six Directors.
Crater Gold Mining Limited
56