Cognetivity Neurosciences
Annual Report 2019

Plain-text annual report

ANNUAL REPORT For the year ended 30 June 2019 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 Page 2 3 18 19 20 21 22 23 43 44 48 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: Level 2, 22 Mount Street, 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 Level 12 250 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 8 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 2019. 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) 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 near Goroka, Papua New Guinea and in 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 2019. Review of Operations and Results The Group incurred a loss of $6,941,949 for the year ended 30 June 2019 (2018: loss of $5,739,906). Operations Report High Grade Zone (HGZ) project at Crater Mountain, Papua New Guinea During the year the Company produced approximately 205 oz. of gold at an average purity of 97.3% Au. Production came from a composite of high and low grade ore from both the 1930 and 1950 developments. The main focus this year of operations in PNG has been the continued development of the 1930 level and the development of a new adit and drive on the 1950 level. Development of the 1950 level drive is near completion and has intersected all North / South JL & NV structures. Final preparations will soon be made for the commencement of stope mining on this level. 1930 level development continued during this period to allow time for the 1950 level to be safely developed before commencing stoping of 1930 level. A small test rise has now been completed on 1930 level and this material has been processed and then smelted in Guasa to assist management in understanding expected production volumes from stoping of the 1930 when it commences. Significant investment has been made in upgrading machinery on site throughout the year. Additional pneumatic jack hammers have been delivered to provide sufficient units to work on multiple faces over multiple shifts. One of the diesel driven mechanical skid steer loaders ordered was delivered to site and commissioned in the third quarter. Training has been carried out and initial operational trials have shown a significant increase in ROM output, as was expected. During the year operational improvements have been made to the gold recovery process. The processing plant ran at reduced capacity throughout this period as old machinery was overhauled and a new hammermill installed and commissioned. The company is hopeful that once full operational capacity is reached gold production will be significantly ramped up. The drive to reach full mining operations capacity has been hampered by increases in costs from third party service providers, particularly helicopter charter costs, which have more than doubled in the last quarter of this financial year due to the combination of an increase in per hour charter costs and a change in currency billed from A$ to US$. The company purchased three ATVs earlier in the year with the aim of essentially eliminating the reliance on helicopter use in long lining supplies delivered by far cheaper fixed wing flights to the nearby airstrip at Guasa Village up to the camp site at the HGZ. These ATVs are now on site. However, due to unexpected land slips onto the road used to transport goods from Guasa to the camp site, which are yet to be repaired, the Company has not been able to utilise road between the Guasa airstrip and the camp, thus continuing the need for helicopter long lining for longer than expected. Efforts are continuing to repair the road as a matter of priority. Production is continuing at a reduced rate with a reduced workforce to control further costs until such time this issue can be overcome. Crater Gold Mining Limited 3 Directors’ Report HGZ Surface Sampling The Company tested for extensions of gold mineralisation at the HGZ Project and completed a sampling program above the HGZ Mine area. The current HGZ Mine is based on selective mining of narrow high grade veins, commencing downwards from the 1960m RL level. Above this level, the surface contains scree composed of weathered bedrock, waste rock material derived from artisanal workings and boulders and rubble derived from benching work. In addition, tephra covers most of the area, either in part or fully. Check panning of the scree material revealed the presence of visible, fine to very fine, gold grains with occasional small gold nuggets. This is interpreted to have resulted from surface supergene weathering of gold mineralisation. It was therefore decided that the extent and grade of the gold in the surface scree should be investigated as it could potentially offer increased gold production for the HGZ mine. Eleven (11) short horizontal trenches for a total of 173.5m and excavated at 5m intervals upslope from 1960m RL were planned to investigate this possibility. However, due to the presence within the scree of surface boulders, rubble and tephra, combined with the steep topography, much of the potential area could not be accessed for trench sampling. This resulted in the excavation of only 5 trenches for a total length of 44.0m (Figures 3 and 4). Initially 99, 0.5m interval, channel samples were collected but were later composited into 24 samples of mainly 2.0m intervals. FIGURE 1: Scree Sample Trench Locations above the 1960m RL Development Level FIGURE 2: Scree Sample Trenches, Sample Numbers and Gold Assay Results (ppm) Crater Gold Mining Limited 4 Gold assay results (FA50) for the 24 channel samples were encouraging with values ranging from 0.79 g/t Au up to 9.19 g/t Au, indicating that gold is widely spread throughout the scree. Gold grades for the trenches are as follows (Figure 4): Directors’ Report      Trench 1 (1960m RL): 9.5m @ 1.50 g/t Au Trench 2 (1965m RL): 9.0m @ 1.91 g/t Au Trench 3 (1970m RL): 11.0m @ 1.66 g/t Au Trench 4 (1975m RL): 11.0m @ 3.05 g/t Au Trench 5 (1980m RL): 3.5m @ 2.91 g/t Au 17 of the 24 samples were collected from tephra dominant cover material, indicating that the gold mineralised zone can be detected through the tephra cover. Procedures for the recovery of the contained gold are now under investigation. South Artisanal Workings (SAW) Prospect During the period, the Company re-commenced exploration at the South Artisanal Works Prospect (SAW) located approximately 430m southwest of the HGZ project, straddling Mining Lease 510 and Exploration Licence EL1115. A total of three (3) trenches were excavated at 1951.9mRL, 1930mRL and 1910mRL for a total length of 129.5m. Detailed mapping was undertaken with 122 combined rock float + 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. Assay results have revealed widespread gold mineralisation in the trenches excavated over the artisanal workings and anomalous high values from exposed bedrock along the creeks. Considering the thick tephra cover which masks much of the area, the results are considered to be encouraging. Fifty (50) samples returned gold values in the range 0.1-0.5 g/t Au, 3 samples returned values in the range of 0.5-1.0g/t Au and 8 samples returned values >1.0 g/t Au, with a high of 15.6 g/t Au. The mineralisation is hosted by E-W and N-S structures which may be splays from regional structures. The occurrence bears similarities to the HGZ Project area and could be an extension of the latter or another independent high grade gold zone. Sample locations are shown on Figure 3 and gold assays as shown on Figure 9. FIGURE 3: Sample Locations SAW workings area – Trench Samples, T1, T2 and T3 Crater Gold Mining Limited 5 Directors’ Report FIGURE 4: Gold Assay Results SAW workings area – Trench samples T1, T2, T3 Subsequent to the end of the reporting period, the Company were advised that renewals for Exploration Licenses (ELs) 2203, 2249, 2318, 2334 and 2335 in PNG were not approved, primarily due to the non-development of the areas within these licenses. These are peripheral to the main Mining Licence and developed area, and have never been developed, and so hold no real value to the project. The Company has finalised plans to reapply for modified version of several of these ELs to better suit the project requirement as soon as they are available. POLYMETALLIC PROJECT, CROYDON, NORTH QLD Grant of EPM 26749 – Wallabadah extended During the year, the Company announced the grant of EPM 26749 (“Wallabadah Extended”) for a term of 5 years effective 11 April 2019. The Company applied for the 36 sub-block tenement of 115.2 km2 to cover possible extensions of the high priority SGH soil anomalies identified from sampling of the A2 Polymetallic Project Area within the Wallabadah EPM 13775. Several Geochemical anomalies detected by the sampling will be drill tested, as outlined in ASX Announcements dated 26 February 2018, 26 July 2018 and 12 December 2018. The tenement also encompasses residual gravity anomalies G1, G2 and G3 previously identified by the Company which have not yet been fully evaluated. Field work will involve extension of the EPM 13775 SGH soil sampling into EPM 26749. Figure 5 Shows the granted EPM area, the A2 Polymetallic Project area and the location of the high priority drill targets to test the SGH anomalies Crater Gold Mining Limited 6 Directors’ Report GOLDEN GATE GRAPHITE PROJECT, CROYDON, NORTH QLD High graphite recovery and purity obtained from metallurgical test work    Floatation test work by Brisbane Met Labs P/L on a nominal 56 micron composite drill core sample has achieved a 96% recovery of graphite into a floatation concentrate A 2-stage caustic bake on the concentrate successfully removed gangue minerals to achieve a very encouraging total carbon grade of 98.9% Further test work is to be focused on maximisation of graphite grain size and purity On 24 July 2019 the Company announced the results of preliminary metallurgical test work undertaken by Brisbane Met Labs P/L (BML) on graphite recovery from graphite mineralised drill core from the Golden Gate Graphite Project. As previously announced (ASX: 7 February 2018 “Thick Intervals Graphite Mineralisation Intersected at Golden Gate Project, Qld”) two diamond drill holes returned the following results;  GGDDH 1701: 62.7m (29.3 to 92.0m) @ 6.79% GC* at a cut-off of 3.4% GC*  GGDDH 1702: 53.9m (69.1 to 123.0m) @ 6.79% GC* at a cut-off of 3.1% GC* GC* = graphitic carbon Petrological examination on samples of the graphite mineralisation from both holes (as announced ASX: 12 April 2018: “Jumbo and Large Flake Graphite Identified at Golden Gate”) identified the presence of significant graphite flake sizes of 0.05 to 0.50mm, with an average of around 0.25mm. While this was encouraging, it is noted that the petrological work was undertaken on small core samples mainly selected to investigate specific textural features and minerals present and as such these are not necessarily representative of the overall graphite mineralisation. In view of this, it was decided to undertake metallurgical test work on the graphite mineralisation to determine if high recovery of graphite into a floatation concentrate could be achieved which could then be economically upgraded to a graphite product of >95% GC*. For the test work, a composite sample (minus 3.35mm grain size), grading 8.2% total carbon from 29.3 to 45.0m depth in hole GGDDH 1701, was prepared. This represents the top 15.7m of the graphite intersection in that hole, which would perhaps approximate the first two to three benches of an open cut mining operation. The test work was contracted out to Brisbane Met Labs P/L (BML). As total carbon assays in this style of mineralisation closely approximate graphitic carbon assays (essentially within normally expected assay error levels), only total carbon assays have been determined in the test work to minimise laboratory costs that are significantly higher for determining graphitic carbon values. Bench scale graphite concentration floatation test work was undertaken using standard floatation reagents (kerosene and MIBC) on pulverised splits of the composite sample at various grain sizes. The following table summarises the work conducted, and the results obtained. The ensuing discussion is a summary extracted from BML’s report. FLOAT TEST ID GRIND SIZE PURPOSE Float 1 Float 2 Float 3 Float 4 Float 5 Float 6 Float 7 As received minus 3.35mm Assess coarse graphite float 80% passing 300 microns 80% passing 106 microns 80% passing <20 microns 80% passing 56 microns 80% passing 56 microns 80% passing 56 microns Assess a less coarse grind Assess medium grind size Assess ultra fine grind size Assess intermediate size Provide feed to cleaner test Provide feed for caustic bake Encouragement was generated from flotation of a 58 micron sample (Float 6) from which a graphite recovery of 94% was reported into a rougher concentrate. Another nominal 56 micron grain size (P80/56) sample was prepared from the composite sample and subjected to floatation testing. This resulted in recovery of 96% of the graphite to a rougher concentrate at a total carbon grade of 16.9%, with 56% of the sample mass rejected as gangue. When the rougher concentrate was subjected to a two-stage caustic bake, a very encouraging total carbon product grade of 98.9% was achieved. This indicates that the caustic bake has been successful in removing the gangue contaminants (mainly phyllosilicates and other silicates). Based on the objectives of the Company and the results as outlined in the BML report, recommendations for follow-up test work are as follows:  Optimisation of the floatation work – trying varying concentrations of the floatation reagents used (kerosene and MIBC) or introducing sodium silicate or some other dispersant to improve the rejection of gangue.  Optimisation of grind size for achieving maximum graphite flake size.  Optimisation of the caustic bake purification step Crater Gold Mining Limited 7 Directors’ Report Corporate Loan Facilities Upon completion of the Rights Issue on 1 March 2019, $13,207,089 in loans from Freefire Technology Ltd (“Freefire”) were converted to fully paid ordinary shares, with the residual loan of $4,036,484 rolled into a new unsecured loan for three years. The Company later arranged several unsecured, arms-length term loans with Freefire totalling $900,000. Subsequent to the end of the reporting period, the Company arranged a $2.0m unsecured, arms-length term loan to enable it to continue to advance its flagship Crater Mountain gold project and it’s Queensland Polymetallic and Graphite projects. Share Issue On 1 March 2019, the Company issued 913,031,092 shares at an issue price of $0.015 under a Rights Issue. 880,472,610 of these shares were issued to Freefire to reduce the loans owing by $13,207,089. On 21 March 2019, the Company issued 35,000,000 shares, being the shortfall of the Rights Issue. Performance Rights Issue On 25 February 2019, the Company issued 61,238,870 performance rights to Directors and a consultant as per shareholders’ approval obtained at the Company’s AGM on 17 January 2019. At this time, the Company also issued 58,455,285 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 18 February 2019. Matters Subsequent to the End of the Financial Year On 1 July 2019, the Company announced it had arranged a New Loan Facility for $250,000, 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 17 July 2019, the Company announced it had arranged a New Loan Facility for $2,000,000, 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 27 July 2019, 13,600,000 options with an exercise price of $0.25 expired unexercised. Effective 16 August 2019, the address of Link Market Services, the Company’s share registry, changed to Level 12, 250 St Georges Terrace, Perth WA 6000. Subsequent to the end of the reporting period, the Company were advised that renewals for Exploration Licenses (ELs) 2203, 2249, 2318, 2334 and 2335 in PNG were not approved, primarily due to the non-development of the areas within these licenses. These are peripheral to the main Mining Licence and developed area, and have never been developed, and so hold no real value to the project. The Company has finalised plans to reapply for modified version of several of these ELs to better suit the project requirement as soon as they are available. No other matter or circumstance has arisen since 30 June 2019 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 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 yet to generate a positive cash flow for the Company, which has caused delays in the planned re-start of exploration drilling at the Crater Mountain Project. Work is ongoing at the HGZ mine with the aim of generating positive cash flows to support exploration activities and to reduce or eliminate the need for further external funding in the future, to enable the Company to further develop the flagship Crater Mountain project and its other prospects in Queensland, Australia. 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. Crater Gold Mining Limited 8 Directors’ Report Schedule of Tenements Set out below is the schedule of tenements that the Company and its subsidiaries hold as at 30 June 2019. Schedule of Crater Gold Mining Limited tenements: Particulars Project Name EPM 8795 Croydon EPM 13775 Wallabadah EPM 16002 Foote Creek EPM 18616 Black Mountain EPM 26749 Wallabadah Ext. Registered Holder CGN CGN CGN CGN CGN EL 1115 ML 510 Crater Mountain Anomaly Ltd 1 Crater Mountain Anomaly Ltd 1 1 Anomaly Limited is CGN’s 100% owned PNG subsidiary COMPETENT PERSONS STATEMENTS % Owned Status Expiry Area (Km2) 100 100 100 100 100 100 100 Granted Granted Granted Granted Granted 06/09/2020 5/02/2020 30/01/2020 18/06/2023 9.6 16 28.8 57.6 10/04/2024 115.2 Renewal Lodged 25/09/2018 41 Granted 4/11/2019 1.58 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. 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 Crater Gold Mining Limited 9 Directors’ Report 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. Information on Directors and Secretary The Directors and Secretary of the Company in office at the date of this report, unless otherwise stated, and their qualifications, experience and special responsibilities are as follows: S W S Chan BA (Non-Executive Chairman), age 70 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 1,044,953,183 ordinary shares in the Company and 2,300,000 options over ordinary shares in the Company. R D Parker B Eng (Managing Director), age 48 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 785,601 ordinary shares, 2,300,000 options and 25,541,076 Performance Rights in the Company. T M Fermanis F Fin, MSAA (Deputy Chairman), age 55 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 602,471 ordinary shares, 2,300,000 options and 25,541,076 Performance Rights in the Company. Crater Gold Mining Limited 10 Directors’ Report L K K Lee MCom, MAppFin, CPA (Non-executive Director), age 58 Mr Lee has been a Director of the Company since 6 June 2014. 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 10,946,175 Performance Rights in the Company. D T Y Sun (Non-executive Director), age 71 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 10,946,175 Performance Rights in the Company. Andrea Betti CA AGIA ACIS BCom, MBA, GDipAppFin(SecInst), GDipACG Ms Andrea Betti was appointed Company Secretary on 9 October 2017. Directors’ Meetings The Company held 6 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 Board Audit Committee Remuneration and Nomination Committee Eligible to Attend 6 6 6 6 6 Attended 5 6 6 6 6 Eligible to Attend - - 2 - 2 Attended - - 2 - 2 Eligible to Attend - - - - - Attended - - - - - The Eligible to Attend column represents the number of meetings held during the time the Director held office or was a member of the Committee during the year. Crater Gold Mining Limited 11 Directors’ Report Remuneration Report (Audited) The information provided under headings (a) - (d) is provided in accordance with section 300A of the Corporations Act 2001. These disclosures have been audited. a) Principles used to determine the nature and amount of remuneration The Company has a Remuneration and Nomination Committee. The Board has adopted a Remuneration and Nomination Policy which provides advice on remuneration and incentive policies and practices and specific recommendations on remuneration packages and other terms of employment for executive Directors, other senior executives and Non-Executive Directors. The performance of the Company is taken into consideration when the remuneration policies of the Company are assessed by the Committee. The Corporate Governance Statement provides further information on the role of this Committee. Executive Remuneration The remuneration policy ensures that contracts for services are reviewed on a regular basis and properly reflect the duties and responsibilities of the individuals concerned. The executive remuneration structure is based on a number of factors including relevant market conditions, knowledge and experience with the industry, organisational experience, performance of the Company and that the remuneration is competitive in retaining and attracting motivated people. There are no guaranteed pay increases included in the senior executives' contracts. Non-Executive Directors Fees and payments to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors. Non-executive Directors’ fees and payments are reviewed annually by the Board. Additional information The earnings of the Group for the five years to 30 June 2019 are summarised below: Sales revenue EBITDA EBIT Loss after income tax 2019 $‘000 2018 $‘000 328 (5,658) (5,889) (6,942) - (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 $‘000 53 (1,865) (1,871) (2,517) The factors that are considered to affect Total Shareholders Return ('TSR') are summarised below: Share price at financial year end ($) Total dividends per share (cents per share) 2019 0.012 Nil 2018 0.017 Nil 2017 0.01 Nil 2016 0.07 Nil 2015 0.09 Nil Basic earnings per share (cents per share) (1.168) (2.075) (9.503) (5.143) (1.792) 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 2019:  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 2018 Annual General Meeting ('AGM') At the 2018 AGM, 93% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2018. 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 and the following executive officers who have authority and responsibility for the planning, directing and controlling the activities of the Group. Crater Gold Mining Limited 12 Directors’ Report Director / key management person Short-term Short-term Post-employment Share based payments Total Base Fees/salary Other 3 Superannuation Performance Rights 5/ Options % of total 2019 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 Other key management personnel M G O’Kane C Church 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 35,000 35,000 35,000 105,000 168,750 148,402 170,255 299,356 891,763 35,000 35,000 4 35,000 4 105,000 161,583 138,736 14,583 147,336 299,297 866,535 - - - - - - - - - - - - 7,083 7,083 - - - - - - 7,083 - - - - - 12,337 12,337 24,674 - 26.06% 26.06% 35,000 47,337 47,337 129,674 - 14,098 - - - 14,098 - - - - - 14,597 - - - - 14,597 28,785 28,785 14.57% 15.05% 197,535 191,285 28,785 24,198 135,227 14.46% 7.48% 199,040 323,554 1,041,088 - 8,996 8,996 17,992 - 20.45% 17.61% 20,994 20,994 - 11.50% 12.04% - 35,000 43,996 51,079 130,075 182,577 174,327 14,583 20,994 20,994 101,968 12.47% 6.55% 168,330 320,291 990,183 Total 1. Mr O’Kane was appointed on 1 July 2017. 2. Mr Church was appointed on 1 July 2017. 3. Other relates to services provided by Directors. Refer to Note 23 for details. 4. Of this amount, $4,375 was paid via shares, in lieu of directors fees. 5. 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. No other Directors, officers or executives of the Company received any share based payments, other than those shown in the remuneration table above. Base salary and fees are on fixed rates. Refer section (c) of this remuneration report. Performance Rights were issued during the year to directors and key management personnel. Refer section (d) of this reports.. A summary of Director and key management personnel remuneration follows. Remuneration component Short-term Post-employment benefits Share based payments Total 2019 $ 891,763 14,098 135,227 1,041,088 2018 $ 873,618 14,597 101,968 990,183 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: Crater Gold Mining Limited 13 Directors’ Report 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 Commencement date 29 January 2013 Term of agreement No fixed term Base salary and fees $35,000 pa 12 March 2013 No fixed term $162,000 pa Superannuation Period of notice - - 4 weeks 4 weeks 2 November 2009 No fixed term $142,466 pa $13,534 pa 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 d) Equity based compensation Securities granted as part of remuneration for the year ended 30 June 2019 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 2019 No shares were issued to Directors and other key management personnel as part of compensation during the year ended 30 June 2019 (2018: nil). No options were issued to Directors and other key management personnel as part of compensation during the year ended 30 June 2019 (2018: NIL). 91,858,309 Performance Rights were issued to Directors and other key management personnel as part of compensation during the year ended 30 June 2019 (2018: 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 2019 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 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 - - - - - - - - - - - - - - - - - - - - - - - 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: Crater Gold Mining Limited 14 Directors’ Report Name 2019 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 - 19,485,096 8,350,755 19,485,096 8,350,755 6,055,980 6,055,980 19,485,096 16,701,511 - - - - - - - - - - - - - - - 25,541,076 10,946,175 25,541,076 10,946,175 25,541,076 22,757,491 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 2019 are set out below: Name 2019 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 % - 241,058 103,311 241,058 103,311 241,058 204,872 - - - - - - - - 28,785 12,337 28,785 12,337 28,785 24,198 - 15.05% 26.06% 14.57% 26.06% 14.46% 7.48% The fair value of the performance rights granted to key management personal during the financial year was $1,480,788. 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 2019 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 160,762,028 602,471 1,750,000 257,403 1,750,000 100,000 - - - - - - - - 884,191,1551 - - 528,1982 - - - - - - - - - - 1,044,953,183 602,471 1,750,000 785,601 1,750,000 100,000 - 1. 884,191,155 shares were issued Freefire Technology Ltd, of which Mr Chan is the director and controller. The shares were issued pursuant to the completed Entitlement Issue on 26 February 2019. 2. Mr Parker participated in the Entitlement Issue and received 528,198 shares. Crater Gold Mining Limited 15 Directors’ Report Other transactions with key management personnel and their related parties Mr S W S Chan is a Director and the controller of Freefire Technology Limited (“Freefire”), the major shareholder in the Company. During the year loan interest and fees amounting to $1,010,663 (2018: $747,513) was paid or payable to Freefire and interest on convertible notes was nil (2018: $35,703). 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 in the prior year on which they earned $52 in interest. Mr T Fermanis held 40 convertible notes of the Company in the prior year on which he earned $64 in interest. This concludes the Remuneration Report, which has been audited. Shares under Option Unissued ordinary shares of the Company under option at the date of this report are as follows: Grant date 12 July 2016 Expiry date 12 July 2020 Exercise price ($) $0.125 Number of shares under option 9,000,000 Type 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 (2018: nil) or subsequent to year end. Indemnification and Insurance of Directors During the year, the Company paid premiums of $21,206 (2018: $9,630) 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 $32,550 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 2018 Annual General Meeting on 29 November 2018 were passed. Crater Gold Mining Limited 16 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 18. 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 2019 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 2019 T M Fermanis Deputy Chairman Crater Gold Mining Limited 17 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 2019, 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 2019 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 2019 Continuing Operations Revenue Cost of sales Gross (loss) from gold production Interest income Reversal of bad debt Gross (loss) / profit from continuing activities Expenses Administration expense Corporate compliance expense Depreciation expense Exploration and evaluation and operating costs Share based payments Financing expense Loss before income tax expenses from continuing operations Income tax expense Loss for the year after income tax expense Other comprehensive income Items that will be reclassified subsequently to profit or loss when specific conditions are met: Notes 5 5 5 6 6 6 6 6 7 June 2019 $ 328,099 (1,302,644) (974,545) 103 - (974,442) June 2018 $ - - - 205 88,543 88,748 (2,950,543) (2,596,830) (109,667) (180,975) (231,638) (218,616) (1,440,514) (1,848,903) (182,419) (122,310) (1,052,726) (861,020) (6,941,949) (5,739,906) - - (6,941,949) (5,739,906) Exchange differences on translating foreign operations (net of tax) 19 224,201 (80,870) Total comprehensive income for the year (6,717,748) (5,820,776) 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 (1.168) (1.168) (2.075) (2.075) 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 19 Consolidated Statement of Financial Position As at 30 June 2019 Notes June 2019 $ June 2018 $ 10 11 12 13 14 15 16 17 18 19 19 130,016 156,381 286,397 265,155 102,341 367,496 65,122 65,796 9,197,097 9,014,465 648,051 687,384 9,910,270 9,767,645 10,196,667 10,135,141 1,845,870 1,685,558 1,118,773 873,587 5,849,782 13,679,324 8,814,425 16,238,469 - - 8,814,425 16,238,469 1,382,242 (6,103,328) 75,036,554 61,015,655 (1,594,541) (2,001,161) (72,059,771) (65,117,822) 1,382,242 (6,103,328) 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 Assets / (Liabilities) EQUITY Contributed equity 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 20 Balance at 1 July 2018 Share based payments Issue of share capital Transaction costs Transactions with owners Loss for the year Other comprehensive income Consolidated Statement of Changes in Equity For the Financial Year ended 30 June 2019 Contributed equity Convertible note reserve Reserves Accumulated losses Note s 19 18 18 $ 61,015,655 - 14,220,466 (199,567) 14,020,899 - - - $ $ Total $ (2,001,161) (65,117,822) (6,103,328) 182,419 - - 182,419 - - - - 182,419 14,220,466 (199,567) 14,203,318 - (6,941,949) (6,941,949) 224,201 - 224,201 224,201 (6,941,949) (6,717,748) (1,594,541) (72,059,771) 1,382,242 $ - - - - - - - - - Exchange differences on translating foreign operations 19 Total comprehensive income for the year Balance at 30 June 2019 75,036,554 Balance at 1 July 2017 Share based payments Issue of share capital Transaction costs Transactions with owners Loss for the year Other comprehensive income 19 18 18 Exchange differences on translating foreign operations 19 Total comprehensive income for the year 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) Transfer of reserves to accumulated losses 19 - (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) The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. Crater Gold Mining Limited 21 Consolidated Statement of Cash Flows For the Financial Year ended 30 June 2019 June 2019 $ June 2018 $ Notes 328,099 - (5,169,909) (2,036,105) 103 261 (42,063) (109,228) Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Net cash used in operating activities 27 (4,883,770) (2,145,072) 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 (153,726) (146,099) (308,778) (3,219,967) - (1,000) (462,504) (3,367,066) 976,627 (126,277) - (3,677) 4,367,000 6,362,481 - (920,466) 5,217,350 5,438,338 (128,924) 265,155 (6,215) 130,016 (73,800) 296,185 42,770 265,155 10 10 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. Crater Gold Mining Limited 22 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 2019. 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). 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 26. 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 2019 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. 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. Crater Gold Mining Limited 23 Notes to the Financial Statements 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 Sale of gold and other metals Sale of gold and other metals is recognised at the point of sale, which is where the customer has taken delivery of the goods, the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns and trade discounts. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. 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 Crater Gold Mining Limited 24 Notes to the Financial Statements 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. 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 allowances for expected credit losses. The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Trade and other receivables are generally due for settlement within 120 days. 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 both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided. 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. When there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such assets will be 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 a derivative; or (ii) designated as such upon initial recognition, where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group’s assessment at the end of each reporting period as to whether the financial instrument’s credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. Crater Gold Mining Limited 25 Notes to the Financial Statements Property, plant and equipment 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 plant and equipment 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. An item of 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 From 1 July 2017, the Group revised its accounting policy to expense all costs incurred in respect to the treatment of exploration and evaluation expenditure. Prior to 30 June 2017, the Group would capitalise all exploration and evaluation expenditure and recognise this as an exploration and evaluation asset in the statement of financial position on the basis that exploration activities are continuing in an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. The Group has determined that it is now more appropriate to account for exploration and evaluation expenditure as an expense in the statement of profit or loss and other comprehensive income. An independent valuation of the exploration and evaluation assets was previously undertaken. 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. 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 and included in shareholders equity as a Crater Gold Mining Limited 26 Notes to the Financial Statements convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not remeasured in 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. 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 Crater Gold Mining Limited 27 Notes to the Financial Statements 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. 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 2019. 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 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. Crater Gold Mining Limited 28 Notes to the Financial Statements 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 The Group assesses impairment of non-financial 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. 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 20). Crater Gold Mining Limited 29 Notes to the Financial Statements d. Cash flow interest rate risk Consolidated Notes Floating interest rate Fixed interest rate Non-interest bearing 2019 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 Weighted average interest rate Net financial assets/(liabilities) 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 Weighted average interest rate Net financial assets/(liabilities) 10 11 12 15 16 17 10 11 12 15 16 17 Total 130,016 156,381 65,122 351,519 1,845,870 1,118,773 5,849,782 8,814,425 13,679 - - 13,679 0.14% - - - - - - - - - - 5,849,782 5,849,782 8.40% 116,337 156,381 65,122 337,840 1,845,870 1,118,773 - 2,964,643 13,679 (5,849,782) (2,626,803) (8,462,906) 101,295 - - 101,295 0.15% - - - - - - - - - - 13,679,324 13,679,324 8.33% 163,860 102,341 65,796 331,997 1,685,558 873,587 - 2,559,145 265,155 102,341 65,796 433,292 1,685,558 873,587 13,679,324 16,238,469 101,295 (13,679,324) (2,227,148) (15,805,177) 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 $5,049,782 (2018: $12,879,324) from its major shareholder, Freefire Technology Limited (“Freefire”). • The loan funds are to be used by the Company principally for the purpose of developing the High Grade Zone at the Company’s Crater Mountain, PNG project and for general working capital. Interest on the Principal Sums is payable by the Company to Freefire at the rate of 8% (2018: 8%) per annum. • • The loans have various terms from three months to three years. 1 ICBC Loan Facility The Company has a loan facility of up to $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 2.1% per annum. 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. Crater Gold Mining Limited 30 Notes to the Financial Statements 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. 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 2019, 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 $ 167,798 Change in equity $ 2,066,957 PKG by - 5% (167,798) (2,066,957) 4 Going Concern These financial statements are prepared on a going concern basis. The Group has incurred a net loss after tax of $6,941,949 for the year ended 30 June 2019 with total cash outflows from operating and investing activities of $5,346,274. As at 30 June 2019, the Group had net current liabilities of $8,528,028. 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) the Company announced on 17 July 2019 that it had executed a new loan agreement for $2 million, the funding will be provided by way of an unsecured loan facility from the Company’s major shareholder, Freefire Technology Ltd. As at the date of this report the undrawn balance is $1,016,000 the Group’s key area of expenditure is the Crater Mountain Project in Papua New Guinea. Whilst mining operations have not yet produced positive cash flows, the mining activities on site will soon move from primarily development mining, into stoping operations. Stoping will produce significantly higher quantities of high grade ore, and development mining of barren waste rock will greatly reduce at the same time. It is hoped that this will lead to better financial performance 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 2020 and d) The directors of the Company expect that major shareholders of the Group will support fundraising activities and reasonably believe the Company will continue to receive financial support from Freefire Technology Limited, and remaining debt owed will not be called back for a period of at least 12 months from the date of this report. 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. Note 5 Income from continuing operations Revenue from gold sales Interest received Reversal of bad debts June 2019 $ June 2018 $ 328,099 103 - - 205 88,543 Sale of gold is recognised at the point of sale, which is where the customer has taken delivery of the goods, the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns and trade discounts. In April 2019 Anomaly Ltd in Papua New Guinea, a fully owned subsidiary of Crater Gold, sold 205 oz. of gold to one customer. The sale was a composite of low and high grade gold material produced from the HGZ Gold mine. Crater Gold Mining Limited 31 Notes to the Financial Statements 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 and operating costs General administration expenses - Insurance - Directors & officers indemnity insurance - Insurance – Other Total insurance Legal Fees Marketing and promotion expenses Minimum lease payments Share based payments Share registry, meeting costs and other compliance costs Telephone/internet Travel 23 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 June 2019 $ June 2018 $ 89,892 138,409 571,445 471,241 231,638 69,120 1,440,514 150,485 21,206 4,007 25,213 44,897 - 126,890 182,419 109,667 97,808 506,366 69,847 120,346 547,700 373,108 218,616 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 (6,961,949) (2,088,585) (5,739,906) (1,721,972) 54,726 1,328,212 705,647 - - - - 36,693 111,127 1,574,152 - - - - 30,919,104 2,997,079 33,916,183 10,174,855 29,124,084 1,795,020 30,919,104 9,275,731 Basic loss per share a. Loss from continuing operations attributable to the ordinary equity holders of Crater Gold Mining Limited (cents per share) (1.168) (2.075) b. Diluted loss per share Loss from continuing operations attributable to the ordinary equity holders of Crater (2.075) Gold Mining Limited (cents per share) The calculation of basic earnings per share at 30 June 2019 was based on the loss from continuing operations attributable to ordinary shareholders of $6,941,949 (2018 loss: $5,739,906) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2019 of 594,423,113 (2018: 276,655,291), calculated as follows: (1.168) Crater Gold Mining Limited 32 Notes to the Financial Statements c. Weighted average number of shares used as a denominator Basic loss per share Diluted loss per share 2019 Shares 2018 Shares 594,423,113 276,655,291 594,423,113 276,655,291 At the year end, the Group had 22,600,000 options on issue (2018: 22,600,000), representing:  9 22,600,000 unlisted options with weighted average exercise price of $0.20 (2018: 22,600,000 at average $0.20) Operating Segments Croydon $ Crater Mountain $ Australian Head Office $ Intersegment eliminations $ Consolidated $ Full-year to 30 June 2019 Gold sales revenue Cost of sales Other revenue Assets written down/impaired Other expenses Segment loss Segment assets Segment liabilities 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 - - - - 328,099 (1,302,644) - - - - 103 - (3,430,119) (2,492,022) (4,404,664) (2,491,919) 9,115,372 50,377,357 32,027,784 7,743,675 (31,934,309) (49,306,607) - - 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) (45,366) (45,366) 987,819 - - - - - - - - - - - - - - - - - - - 328,099 (1,302,644) 103 - (5,967,507) (6,941,949) 10,196,666 8,814,425 - - 88,748 - - (5,828,654) (5,739,906) 10,135,141 16,238,469 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. 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. Crater Gold Mining Limited 33 Notes to the Financial Statements 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 2019 $ 2018 $ Geographical non-current assets 2019 $ 2018 $ Australia Papua New Guinea - 328,099 328,099 - - - 1,016,319 8,893,950 1,141,470 8,626,175 9,910,269 9,767,645 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 Cash Equivalents June 2019 $ June 2018 $ Cash at bank and on hand 130,016 265,155 The effective (weighted average) interest rate on short term bank deposit was 0.14% (2018: 0.15%). 11 Current Assets - Trade and Other Receivables GST receivable Other Allowance for expected credit losses No expected credit losses have been recognised for the year ended 30 June 2019. 12 Non-Current Assets - Other Financial Assets Security deposits 13 Non-Current Assets - Exploration and Evaluation Opening net book value Expenditure capitalised Exploration costs impaired Effect of movement in exchange rates Closing net book value 80,533 75,848 156,381 49,528 52,813 102,341 June 2019 $ June 2018 $ 65,122 65,122 65,796 65,796 9,014,465 - - 182,632 9,197,097 8,953,712 - - 60,753 9,014,465 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. Some uncertainty exists as to the Group’s tenure at Crater Mountain. In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources an indication of impairment may exist if the right to explore in the specific area has expired during the period and is not expected to be renewed. The Group has been engaged in discussions with the Papua New Guinea Government and has made a renewal licence submission for EL 1115 and ML 510. To date, the Group has received no formal correspondence or notification from the Government of Papua New Guinea. Crater Gold Mining Limited 34 Notes to the Financial Statements June 2019 $ June 2018 $ 2,192,116 (1,544,065) 648,051 1,945,591 (1,258,207) 687,384 14 Non-Current Assets – Plant and Equipment Plant and equipment Cost Accumulated depreciation Net book value A reconciliation of the carrying amounts of each class of 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 2017 Additions Disposals Depreciation expense Effect of movements in exchange rates Carrying amount as at 30 June 2018 Additions Disposals Depreciation expense Effect of movements in exchange rates Carrying amount as at 30 June 2019 Note 15 Current Liabilities – Trade and Other Payables Trade payables Accruals Other payables 16 Related Party Payables S W S Chan T M Fermanis L K K Lee R D Parker D T Y Sun J S Spence (Director for Anomaly Ltd – PNG subsidiary) C Church 17 Current Liabilities Interest-Bearing Liabilities ICBC loan Freefire Technology Limited loan Refer to Note 3(d) for detailed information on financial instruments. Plant and equipment 641,347 194,397 - (218,616) 70,256 687,384 179,560 - (231,638) 12,745 648,051 June 2019 $ June 2018 $ 777,122 230,850 837,898 1,845,870 101,485 284,583 187,289 336,048 78,750 130,618 - 1,118,773 867,614 41,906 776,038 1,685,558 66,485 200,201 152,289 261,814 43,750 93,106 55,942 873,587 800,000 5,049,782 5,849,782 800,000 12,879,324 13,679,324 Crater Gold Mining Limited 35 18 Contributed Equity a. Share Capital Equity Securities Issued For the financial year ended 30 June 2019 As at 1 July 2018 Shares issued As at 30 June 2019 For the financial year ended 30 June 2018 As at 1 July 2017 Shares issued As at 30 June 2018 b. Ordinary Shares Notes to the Financial Statements No. of ordinary shares Total $ 279,464,775 948,031,092 1,227,495,867 61,015,655 14,020,899 75,036,554 272,118,621 7,346,154 279,464,775 60,934,332 81,323 61,015,655 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 is 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 2018 Annual Report. 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 23b. d. Movements in Share Capital Date Details For the financial year ended 30 June 2019 01-Jul-18 01-Mar-19 21-Mar-19 Balance 1 July - Ordinary Shares Rights issue Rights issue shortfall Less: Transaction costs arising on share issues For the financial year ended 30 June 2018 1 Jul 2017 9 Oct 2017 29 Dec 2017 Balance 1 July - Ordinary Shares Lennard Drilling Issued to Directors in lieu of fees Less: Transaction costs arising on share issues No. of shares 279,464,775 913,031,092 35,000,000 1,227,495,867 272,118,621 3,846,154 3,500,000 279,464,775 Value $ 61,015,655 13,695,466 525,000 (199,567) 75,036,554 60,934,332 50,000 35,000 (3,677) 61,015,655 Crater Gold Mining Limited 36 e. Movement in options Date Details For the financial year ended 30 June 2019 1 Jul 2018 Opening Balance For the financial year ended 30 June 2018 1 Jul 2017 30 2017 Sept Opening Balance Expired Options Notes to the Financial Statements Class of options Listed Unlisted Total - - - - - 22,600,000 22,600,000 22,600,000 22,600,000 30,100,000 30,100,000 (7,500,000) (7,500,000) 22,600,000 22,600,000 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 A B C D E F Total Class of performance rights For the financial year ended 30 June 2019 1 Jul 2018 Opening Balance 12,400,340 6,200,170 6,200,170 6,200,170 6,200,170 - 37,201,020 Issued under EEIP 34,198,334 17,099,165 17,099,165 17,099,165 17,099,165 17,099,165 119,694,159 46,598,674 23,299,335 23,299,335 23,299,335 23,299,335 17,099,165 156,895,179 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, with cut-off grade of 0.5g/t Au.  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$5,000.  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$5,000.  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$5,000.  Class F Performance Rights – achievement of a 20m+ drill intersection averaging an accredited laboratory assay of 5% Zn, or Zn with a polymetallic combination of Zn, Cu, Pb, Ag, Sn metal values that give a 5% Zn equivalent to be calculated and reported in compliance with clause 50 of the 2012 JORC Code; or achievement of a 20m+ drill intersection averaging an accredited laboratory assay of 3.0 g/t Au, or Au with a polymetallic combination of Zn, Cu, Pb, Ag, Sn metal values that give a 3.0 g/t Au equivalent to be calculated and reported in compliance with clause 50 of the 2012 JORC Code. Crater Gold Mining Limited 37 Notes to the Financial Statements June 2019 $ June 2018 $ 527,178 (2,121,719) (1,594,541) 344,759 (2,345,920) (2,001,161) 344,759 - 182,419 527,178 2,008,406 (1,785,957) 122,310 344,759 (2,345,920) 224,201 (2,121,719) (2,265,050) (80,870) (2,345,920) (65,117,822) (6,941,949) - (61,534,380) (5,739,906) 2,156,464 (72,059,771) (65,117,822) Note 19 Reserves and Accumulated Losses Reserves Share based payment reserve Foreign currency translation reserve Movements Share based payments reserve Balance 1 July 2018 Transfer to accumulated losses (options expired) Share based payments expense for year Balance 30 June 2019 Foreign currency translation reserve Balance 1 July 2018 Currency translation differences Balance 30 June 2019 Accumulated losses Movements in accumulated losses were as follows: Balance 1 July 2018 Loss for the year Transfer from reserves Balance 30 June 2019 Nature and purpose of reserves Share based payments reserve 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. 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 20 Commitments 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 21 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 June 2019 $ June 2018 $ 475,000 1,110,000 1,585,000 310,000 1,045,000 1,355,000 28,500 6,284 30,338 65,122 28,500 7,160 30,136 65,796 Crater Gold Mining Limited 38 Notes to the Financial Statements 22 Related Party Transaction a. Parent Entity Crater Gold Mining Limited is the Parent Entity. b. Key Management Personnel 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 2019 $ 891,763 14,098 135,227 1,041,088 2018 $ 873,618 14,597 101,968 990,183 c. Transactions with Related Parties Mr S W S Chan is a Director and the controller of Freefire Technology Limited (“Freefire”), the major shareholder in the Company. During the year the Company paid Freefire $1,010,623 in loan interest and fees (2018: $747,513) and $nil in interest on convertible notes (2018: $35,703). During the course of the year, Freefire made a number of short-term loans to the Company at an annual interest rate of 8% (see Note 3d for further information on the loan). Mr S W S Chan also provided a 125% security deposit for the ICBC loan of $800,000. Amounts paid or payable for Mr R D Parker’s role as Managing Director were $168,750 (2018: $161,563). Mr R D Parker’s close family members held a total of 77 convertible notes of the Company in the prior year on which they earned $52 in interest. Amounts paid or payable for Mr T Fermanis’ role as Executive Deputy Chairman were $162,500 (2018: $153,333). Mr T Fermanis held 40 convertible notes of the Company in the prior year on which he earned $64 in interest. In the prior year, Mr L K K Lee was paid fees for his role as Finance Director totalling $7,083. All transactions with related parties are made at arms-length. d. Receivable from and payable to Related Parties Details can be found at Note 16. e. Subsidiaries For details relating to subsidiaries, refer to Note 25. Transactions and balances between subsidiaries and the parent have been eliminated on consolidation of the Group. 23 Share Based Payments 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 2019 $ June 2018 $ 182,419 182,419 122,310 122,310 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. Crater Gold Mining Limited 39 Notes to the Financial Statements Expiry Date 27/07/2019 27/07/2019 12/07/2020 Exercise price $0.25 $0.25 $0.125 Balance at start of the year 7,800,000 5,800,000 9,000,000 22,600,000 Granted Exercised Forfeited/expired - - - - - - - - - - - - Balance at end of the year 7,800,000 5,800,000 9,000,000 22,600,000 During the period, the Group issued to Directors, key management personnel and employees 119,694,159 Performance Rights as part of its long-term incentive program under the Group’s Employee Equity Incentive Plan (EEIP). Date Details A B C D E 1 Jul 19 Opening Balance 12,400,340 6,200,170 6,200,170 6,200,170 6,200,170 F - Total 37,201,020 25 Feb 19 Issued under EEIP 34,198,334 17,099,165 17,099,165 17,099,165 17,099,165 17,099,165 119,694,159 46,598,674 23,299,335 23,299,335 23,299,335 23,299,335 17,099,165 156,895,179 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, with a cut-off grade of 0.5g/t Au. 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$5,000. 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$5,000. 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$5,000. Class F Performance Rights – achievement of a 20m+ drill intersection averaging an accredited laboratory assay of 5% Zn, or Zn with a polymetallic combination of Zn, Cu, Pb, Ag, Sn metal values that give a 5% Zn equivalent to be calculated and reported in compliance with clause 50 of the 2012 JORC Code; or achievement of a 20m+ drill intersection averaging an accredited laboratory assay of 3.0 g/t Au, or Au with a polymetallic combination of Zn, Cu, Pb, Ag, Sn metal values that give a 3.0 g/t Au equivalent to be calculated and reported in compliance with clause 50 of the 2012 JORC Code.      The fair value of the performance rights granted during the financial year was $1,480,788. This figure represents the fair value at grant date before the best available estimates of the number of performance rights that are expected to vest are considered. After taking into account the probabilities of vesting criteria being met, the value of performance rights expensed during the year was $182,419 with the remaining amount to be expensed over the vesting period. The expense realised in respect to performance rights is intended to reflect the best available estimate of the number of performance rights expected to vest. Total amount expensed was split between $135,227 for key management personnel and $47,192 for employees. Where performance rights do not have market-based vesting conditions the values were calculated using the share price at the grant date, multiplied by the number of performance rights granted (Class A, B and F Performance Rights). Where performance rights have market-based vesting conditions these were valued using the ESO5 Barrier model. 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 valuations for Classes C, D and E performance rights applied the following inputs in the ESO5 Barrier model: Grant Date Expiry Date Share Price at Grant Date 25 Feb 19 31 Jan 2022 $0.013 Exercise Price n/a Expected volatility 107.76% Dividend Yield Risk Free Rate Fair value at grant date n/a 1.66% 591,631 The weighted average fair value of performance rights granted during the year was $0.012. c. Share Option Based Payments made to Unrelated Party The Company did not issue any options over ordinary shares to extinguish its liabilities (2018: Nil). d. Option Based Payments The Company did not issue any options over ordinary shares to extinguish its liabilities (2018: Nil). Crater Gold Mining Limited 40 Notes to the Financial Statements Note 24 Remuneration of Auditors During the year, the following fees were paid or payable for services provided by RSM Australia, the auditor of the parent entity, its related practices and unrelated firms. RSM - Audit and review of financial reports Non-audit services – RSM BDO Papua New Guinea (Auditors of Anomaly Limited) Audit and review of financial reports 25 Subsidiaries a. Ultimate Controlling Entity Crater Gold Mining Limited is the ultimate controlling entity for the Group. b. Subsidiaries June 2019 $ June 2018 $ 65,064 32,550 97,614 24,829 24,829 50,000 12,000 62,000 19,847 19,847 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 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. 2019 % 100 100 June 2019 $ 2018 % 100 100 June 2018 $ (6,847,418) (6,847,418) (2,553,202) (2,553,202) 64,974 1,158,444 7,743,675 7,743,675 133,560 1,275,029 15,216,160 15,216,160 97,324,638 83,303,739 1,734,382 1,551,963 (105,644,251) (98,796,833) (6,585,231) (13,941,131) Note 26 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 Reserves Accumulated losses Total Equity Contingent liabilities The Parent Entity had no contingent liabilities as at 30 June 2019 (2018: nil). Capital commitments - Property, plant and equipment The Parent Entity had no capital commitments for property, plant and equipment as at 30 June 2019 (2018: 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. Crater Gold Mining Limited 41 Notes to the Financial Statements Note Reconciliation of loss for the period from continuing operations to net cash 27 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 Change in operating assets and liabilities: Movements in trade and other receivables Movements in trade creditors and accruals Net cash outflow from operating activities 28 Post Reporting Date Events June 2019 $ June 2018 $ (6,941,949) (5,739,906) 231,638 1,010,663 223,252 - 182,419 218,616 751,791 1,848,903 (88,543) 122,310 (28,910) 439,117 34,966 706,791 (4,883,770) (2,145,072) On 1 July 2019, the Company announced it had arranged a New Loan Facility for $250,000, 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 17 July 2019, the Company announced it had arranged a New Loan Facility for $2,000,000, 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 27 July 2019, 13,600,000 options with an exercise price of $0.25 expired unexercised. Effective 16 August 2019, the address of Link Market Services, the Company’s share registry, changed to Level 12, 250 St Georges Terrace, Perth WA 6000. Subsequent to the end of the reporting period, the Company were advised that renewals for Exploration Licenses (ELs) 2203, 2249, 2318, 2334 and 2335 in PNG were not approved, primarily due to the non-development of the areas within these licenses. These are peripheral to the main Mining Licence and developed area, and have never been developed, and so hold no real value to the project. The Company has finalised plans to reapply for modified version of several of these ELs to better suit the project requirement as soon as they are available. No other matter or circumstance has arisen since 30 June 2019 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. 29 Contingent Liabilities The Group does not have any contingent liabilities (2018: nil). Crater Gold Mining Limited 42 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 2019 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 2019 Crater Gold Mining Limited 43 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 2019, 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 2019 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. Emphasis of Matter We draw attention to Note 13 to the financial statements, which describes the uncertainty relating to the outcome of the renewal application of the mining and exploration licences in Papua New Guinea. Our opinion is not modified in respect of this matter. 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 $6,941,949 and had total net cash outflows from operating activities and investing activities of $5,346,274 for the year ended 30 June 2019. As at that date, the Group had net current liabilities of $8,528,028. 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 Exploration and evaluation Refer to Note 13 in the financial statements The Group has capitalised exploration and evaluation expenditure with a carrying value of $9,197,097 as at 30 June 2019. We considered this to be a key audit matter due to the significant management judgments involved in assessing the carrying value of the asset including: the basis on which • 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 recoverable existence of an economically mineral reserve may be assessed; and • Assessing whether any indicators of impairment are present, and if so, judgments applied to determine and quantify any impairment loss. Share based payments Refer to Note 23 in the financial statements During the year, the Group issued 119,694,159 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. How our audit addressed this matter Our audit procedures included: • Obtaining evidence that the Group has valid rights to explore in the specific area of interest; • Reviewing and enquiring with management the basis on which they have determined that the exploration and evaluation of mineral resources has not yet reached the stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves; reviewing budgets and other documentation as evidence that active and significant operations in, or relation to, the area of interest will be continued in the future; and • Enquiring with management and • Critically assessing and evaluating management’s assessment that no indicators of impairment existed. Our audit procedures 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 2019, 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 2019. In our opinion, the Remuneration Report of Crater Gold Mining Limited, for the year ended 30 June 2019, 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 2019 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 20 September 2019. 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 1,044,953,183 % holding 87.63% 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 Code CGN Number of holders 2,974 Unlisted Options (exercisable at $0.125 per option on or before 12 July 2020) CGNO42 10 Top 20 Holders of Ordinary Shares Name Freefire Technology Ltd China New Economy Fund Ltd HSBC Custody Nominees (Australia) Limited Mr Paul Thomas McGreal Mr Norman Colburn Mayne BNP Paribas Nominees Pty Ltd Mr Graham John Bailey & Mrs Annette Maree Bailey Graham Bailey Earthmoving Pty Ltd Mr Fouad Abdo Lennard Drilling Pty Ltd J P Morgan Nominees Australia Limited Mr Joe Holloway Mr David Mingorance One Managed Investment Funds Limited Mr Stephen Charles Lindsay Bloom Star Investment Limited Desmond Tak Yan Sun Kin Keung Lee Mr Brad Anthony Vaughan Mr Kenneth Walter Limby Mr Carlo Battisti Grand Total Number of shares 1,040,558,539 % holding 84.77% 35,000,000 20,712,015 10,250,000 5,500,000 4,567,574 4,375,000 3,125,000 2,937,941 2,753,337 2,738,146 2,643,524 2,215,390 2,160,637 2,037,366 1,775,649 1,750,000 1,750,000 1,687,290 1,500,000 1,351,765 2.85% 1.69% 0.84% 0.45% 0.37% 0.36% 0.25% 0.24% 0.22% 0.22% 0.22% 0.18% 0.18% 0.17% 0.14% 0.14% 0.14% 0.14% 0.12% 0.11% 1,151,389,173 93.80% Crater Gold Mining Limited 48 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 1,288 705 268 519 194 2,974 Unlisted Options CGNO42 - - - - 10 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 2,511. 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 9,000,000 options are on issue. 4,000,000 are on issue to 5 holders of ordinary securities. 5,000,000 options are on issue to five Directors. Performance Rights A total number of 156,895,179 Performance Rights are on issue to directors, employees and consultants of the Company. Crater Gold Mining Limited 49 

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