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2023 Report Constellation Resources Limited Annual Report 2019Level 9, BGC Centre, 28 The Esplanade, Perth WA 6000constellationresources.com.au DIRECTORS’ REPORT
The Directors of Constellation Resources Limited present their report on the Company (the “Company” or
“Constellation Resources”) for the year ended 30 June 2019.
DIRECTORS
The names and details of the Company's directors in office at any time during, or since the end of, the financial year
are:
Current Directors
Mr Ian Middlemas
Mr Peter Woodman
Mr Robert Behets
Mr Mark Pearce
Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Unless otherwise stated, Directors held their office from 1 July 2018 until the date of this report.
CURRENT DIRECTORS AND OFFICERS
Mr Ian Middlemas B.Com, CA
Chairman
Mr Middlemas is a Chartered Accountant, a member of the Financial Services Institute of Australasia and holds a
Bachelor of Commerce degree. He worked for a large international Chartered Accounting firm before joining the
Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive
corporate and management experience, and is currently a director with a number of publicly listed companies in the
resources sector.
Mr Middlemas was appointed a Director of the Company on 17 November 2017. During the three year period to
the end of the financial year, Mr Middlemas has held directorships in Apollo Minerals Limited (July 2016 – present),
Paringa Resources Limited (October 2013 – present), Berkeley Energia Limited (April 2012 – present), Prairie
Mining Limited (August 2011 – present), Salt Lake Potash Limited (January 2010 – present), Equatorial Resources
Limited (November 2009 – present), Piedmont Lithium Limited (September 2009 – present), Sovereign Metals
Limited (July 2006 – present), Odyssey Energy Limited (September 2005 – present), Cradle Resources Limited
(May 2016 – July 2019) and Syntonic Limited (April 2010 – June 2017).
Mr Peter Woodman B.Sc. (Geology), MAusIMM
Managing Director
Mr Woodman is a geologist with over 25 years’ experience in exploration, development and operations in the
resource sector. He is a graduate of the Australian National University and is a corporate member of the Australian
Institute of Mining and Metallurgy. Mr Woodman has worked for a number of mining companies during his extensive
career in the resources sector and has been influential in major project acquisition and discovery. He has a strong
background in management, exploration planning and execution, resource development and mining operations
both in Australia and overseas.
Mr Woodman most recently held the position of Chief Geologist at Regis Resources Limited where he oversaw
exploration and resource development activities for its WA and NSW Projects. Prior to his role with Regis Resources
Limited, he held positions with Papillon Resources Limited, Sovereign Metals Limited, WCP Resources Limited
(now named Piedmont Lithium Limited), Samantha Gold NL, Ranger Minerals NL, Hellman & Schofield Pty Ltd,
Centamin Egypt Limited and Kingsgate Consolidated Limited.
Mr Woodman was appointed as Managing Director of the Company on 9 April 2018.
Constellation Resources Limited ANNUAL REPORT 2019 1
DIRECTORS’ REPORT
(Continued)
Mr Robert Behets B.Sc(Hons), FAusIMM, MAIG
Non-Executive Director
Mr Behets is a geologist with 30 years’ experience in the mineral exploration and mining industry in Australia and
internationally. He has had extensive corporate and management experience and has been Director of a number
of ASX-listed companies in the resources sector including Mantra Resources Limited (“Mantra”), Papillon
Resources Limited, and Berkeley Energia Limited. Mr Behets was instrumental in the founding, growth and
development of Mantra, an African-focussed uranium company, through to its acquisition by ARMZ for
approximately A$1 billion in 2011. Prior to Mantra, he held various senior management positions during a long
career with WMC Resources Limited.
Mr Behets has a strong combination of technical, commercial and managerial skills and extensive experience in
exploration, mineral resource and ore reserve estimation, feasibility studies and operations across a range of
commodities, including uranium, gold and base metals. He is a Fellow of The Australasian Institute of Mining and
Metallurgy, a Member of the Australian Institute of Geoscientists and was previously a member of the Australasian
Joint Ore Reserve Committee (“JORC”).
Mr Behets was appointed a Director of the Company on 30 June 2017. During the three year period to the end of
the financial year, Mr Behets has held directorships in Apollo Minerals Limited (October 2016 – present), Equatorial
Resources Limited (February 2016 – present), Berkeley Energia Limited (April 2012 - present), Piedmont Lithium
Limited (February 2016 – May 2018) and Cradle Resources Limited (May 2016 – July 2017).
Mr Mark Pearce B.Bus, CA, FCIS, FFin
Non-Executive Director
Mr Pearce is a Chartered Accountant and is currently a director of several listed companies that operate in the
resources sector. He has had considerable experience in the formation and development of listed resource
companies and has worked for several large international Chartered Accounting firms. Mr Pearce is also a Fellow
of the Governance Institute of Australia and a Fellow of the Financial Services Institute of Australasia.
Mr Pearce was appointed a Director of the Company on 29 July 2016. During the three year period to the end of
the financial year, Mr Pearce has held directorships in Apollo Minerals Limited (July 2016 – present), Salt Lake
Potash Limited (August 2014 – present), Prairie Mining Limited (August 2011 – present), Equatorial Resources
Limited (November 2009 – present), Sovereign Metals Limited (July 2006 – present), Odyssey Energy Limited
(September 2005 – present), Piedmont Lithium Limited (September 2009 – August 2018) and Syntonic Limited
(April 2010 – October 2016).
Mr Lachlan Lynch B.Com, CA
Company Secretary
Mr Lynch is a Chartered Accountant who commenced his career at a large international Chartered Accounting firm
and is currently a Financial Controller for the Apollo Group which is involved in a number of listed companies that
operate in the resources sector.
Mr Lynch was appointed as Company Secretary of Constellation Resources Limited on 24 October 2018.
Constellation Resources Limited ANNUAL REPORT 2019 2
DIRECTORS’ REPORT
(Continued)
PRINCIPAL ACTIVITIES
The principal activity of the Company during the year consisted of the exploration for minerals, including the
Orpheus Project.
OPERATING AND FINANCIAL REVIEW
Corporate
On 4 May 2018, the Company lodged a Prospectus with the Australian Securities and Investment Commission and
the Australian Securities Exchange for the offer of up to 35,000,000 shares at an issue price of $0.20 each, together
with one free attaching listed option for every three shares, to raise up to $7,000,000 before costs.
On 18 July 2018, the Company issued 35,000,000 ordinary shares at $0.20 and 11,666,402 listed options
exercisable at $0.20 each on or before 31 July 2021 raising $7,000,000 prior to costs pursuant to the Prospectus.
On 26 July 2018, the Company was granted admission to the Australian Securities Exchange with official quotation
occurring on 30 July 2018. The $7,000,000 raised (before costs) is being directed towards the Company’s
exploration programs planned to evaluate the potential of the Orpheus Project in the Fraser Range.
With effect from 24 October 2018, Mr Lachlan Lynch was appointed Company Secretary of the Company following
the resignation of Mr Clint McGhie.
Operations
Orpheus Project – Fraser Range
Constellation Resources holds the Orpheus Project (the “Project”), which comprises five tenements covering
approximately 552km² in a prospective portion of the Fraser Range province of south eastern Western Australia
(Figure 1). The Orpheus Project includes a 70% interest in three mineral exploration licences and one mineral
exploration licence application, and a 100% interest in a further mineral exploration licence. The three exploration
licences form part of a joint venture between Constellation Resources (70%) and Enterprise Metals Limited (30%,
ASX: ENT).
The Fraser Range province is considered prospective for nickel, copper and gold, and has attracted significant
exploration since the discovery of Independence Group NL’s (ASX: IGO) Nova-Bollinger nickel and copper deposit
in 2012. The bulk of the Project is strategically located along strike and mid-way between the Nova deposit to the
northeast and Independence Company’s Crux nickel prospect to the southwest. Recent work has confirmed a
number of targets within the Orpheus Project tenements and Constellation Resources is undertaking systematic
exploration to assess these targets.
Figure 1: Tenement Plan – Orpheus Project
Constellation Resources Limited ANNUAL REPORT 2019 3
DIRECTORS’ REPORT
(Continued)
OPERATING AND FINANCIAL REVIEW (Continued)
E63/1282 - Gold
A RC drilling program has been completed at the Orpheus Project in the Fraser Range during May and June 2019
over a gold target within tenement E63/1282. No significant assays were returned.
The drilling was aimed at testing a 3km long low-level gold in soil anomaly with a peak value of 27ppb Au coincident
with NE-SW trending magnetics. The majority of the RC drilling was focussed over a coherent 350 metre x 150
metre gold in soil geochemical anomaly.
A total of 25 RC drill holes were drilled for 2,370 metres to test the gold in soil gold anomalies. Drilling was completed
on lines spaced 100-200 metres along strike with drill holes spaced at 30 metre intervals across strike (on some
lines up to 60 metres apart). Drill holes ranged in depth from 60 to 108 metres to ensure fresh rock was encountered.
Samples were collected via cone splitter on a 1 metre basis and 4 metre composites were analysed at Min Analytical
laboratories for a multi-element suite comprising Ag, As, Au, Bi, Co, Cu, Mo, Ni, Pb, Sb, Te, W and Zn.
RC drilling has shown that the gold in soil geochemical anomaly area geology comprises up to 20 metres of
transported clays and gravels and deep weathering to an average depth of 50 metres. The bedrock lithological
package is dominated by an intercalated quartz-bioitite/mica garnet gneiss and chlorite-magnetite amphibolite. In
addition, occasional chert and BIF lithologies were logged. The amphibolite unit is extremely chloritic and has weak
to strong magnetite content. The gneiss can be massive to banded with quartz rich augens and in places displays
silica alteration.
The target is believed to have been adequately tested and no further work is currently planned here.
E63/1281 - Nickel
During the year ended 30 June 2019, a second-phase moving-loop transient electromagnetic (MLTEM) survey was
completed over the Mag2 and Plato South prospects (Figure 2) and results received. The surveyed lines were
designed to test for potential conductive anomalies at a number of targets.
Figure 2: Location of all MLTEM surveys completed during August–September 2018 to February 2019 on
E63/1281. Background image is HeliTEM Ch20Z B-field image.
The 2019 EM surveys were completed by GEM Geophysics during February 2019 using their 60-80A transmitter
and Jessy Deeps high-temperature SQUID B-field sensor. A total of 450 stations were recorded over 33 lines for a
total of 31.05 line-km.
Constellation Resources Limited ANNUAL REPORT 2019 4
DIRECTORS’ REPORT
(Continued)
The most interesting anomaly to come out of the program was a weak anomaly in the north western part of the Mag
2 area. The model for this anomaly is a relatively weak conductor, and appears to be related to a SSW–NNE
structure.
The Slingram follow-up of the subtle in-loop anomaly at Plato South has confirmed a possible weak conductor in
this area, but modelling suggests it is relatively low conductance and could be at significant depth.
A weak anomaly at the northern edge of the survey is of potential interest. Modelling suggests the potential source
could be a SSW–NNE striking, steep-dipping low level conductor (Conductance: 210S) at a depth of around 150
metres. The modelled plate size is 300 metre x 300 metre dipping steeply to the southeast.
The modelling of the MLTEM data suggests the response is from depth, rather than being a surficial response from
the palaeochannel sediments, but the source of the anomalism is ambiguous. This weak response could be
representing a number of sources including remobilised sulphides or graphite, locally more intense alteration along
the fault plane, and/or locally more ground water within this complex fault zone.
The local MLTEM anomaly is located on a discontinuity along a SSW–NNE mid time HeliTEM. There also appears
to be some truncation of magnetic features in this area that suggest this is a site of an east–west structure. The
MLTEM anomaly looks to be located at the junction of two fault trends.
The anomaly is considered interesting enough to warrant a targeted drilling program to determine the cause of the
conductive anomaly beneath cover. Planning for the drilling program is underway.
E63/1282 - Nickel
During the 2017 review, several HeliTEM targets were identified on E63/1282 for ground EM follow-up. All targets
are under shallow cover and any sub crop found was weathered and leached. Ground EM surveys completed over
these targets during the year ended 30 June 2019 did not return any anomalism.
E28/2403 - Nickel
On E28/2403 three conceptual magnetic targets were covered by a gravity survey on a 400 metre x 400 metre grid
in 2017. This was subsequently followed up by an infill gravity survey on a 200 metre x 200 metre spacing over two
anomalies of interest.
Four regional moving loop electromagnetic (“MLTEM”) test lines were completed during the year ended 30 June
2019 to cover the strongest parts of the gravity anomalies. Although these test lines did not return any significant
anomalism, they did indicate that ground EM was effective in “seeing” to basement and therefore can be used for
direct drill targeting for massive nickel sulphides.
Business Development
Several opportunities have been reviewed during the year, and the Company will continue in its efforts to identify
and acquire suitable new business opportunities in the resources sector, both domestically and overseas. However,
no agreements have been reached or licences granted and the Directors are not able to assess the likelihood or
timing of a successful acquisition or grant of any opportunities.
Results of Operations
The net loss of the Company for the year ended 30 June 2019 was $1,033,996 (2018: $417,066). This loss is
predominately comprised of exploration and evaluation expenditure and is attributable to the Company’s accounting
policy of expensing exploration and evaluation expenditure (other than expenditures incurred in the acquisition of
the rights to explore) incurred by the Company. In the current financial year, the net loss also includes share based
payments expenses totalling $50,667 (2018: $43,385) relating to the grant of incentive options. The fair value of the
incentive options is recognised over the vesting period of the option.
Constellation Resources Limited ANNUAL REPORT 2019 5
DIRECTORS’ REPORT
(Continued)
Financial Position
As at 30 June 2019, the Company had a net current asset surplus of $5,529,179 (2018: net current asset deficiency
of $114,895). At 30 June 2019, the Company had cash reserves of $5,589,116 (2018: $33,189) and borrowings of
nil (2018: $100,000). At 30 June 2019, the Company had net assets of $5,881,344 (2018: $238,968).
Dividends
No dividends were paid or declared since the start of the financial year. No recommendation for payment of
dividends has been made.
Business Strategies and Prospects for Future Financial Years
The objective of the Company is to create long-term shareholder value through the discovery, development and
acquisition of technically and economically viable mineral deposits.
To date, the Company has not commenced production of any minerals, nor has it identified a Mineral Resource in
accordance with the JORC Code. To achieve its objective, the Company currently intends over the medium term to
conduct further exploration activities including field work to follow up targets identified at the Orpheus Project.
These activities are inherently risky and the Board is unable to provide certainty of the expected results of these
activities, or that any or all of these likely developments will be achieved. The material business risks faced by the
Company that could have an effect on the Company’s future prospects, and how the Company manages these
risks include:
•
•
•
•
The Company’s exploration programmes may not identify an economic deposit - The Orpheus Project
Tenements are at an early stage of exploration and current/potential investors should understand that
mineral exploration, development and mining are high-risk enterprises, only occasionally providing high
rewards. The success of the Company depends, among other things, on successful exploration and/or
acquisition of reserves, securing and maintaining title to tenements and consents, successful design,
construction, commissioning and operating of mining and processing facilities, successful development and
production in accordance with forecasts and successful management of the operations. Exploration and
mining activities may also be hampered by force majeure circumstances, land claims and unforeseen mining
problems. There is no assurance that exploration and development of the mineral interests owned by the
Company, or any other projects that may be acquired in the future, will result in the discovery of mineral
deposits which are capable of being exploited economically. Even if an apparently viable deposit is
identified, there is no guarantee that it can be profitably exploited. If such commercial viability is never
attained, the Company may seek to transfer its property interests or otherwise realise value, or the Company
may even be required to abandon its business and fail as a “going concern”;
The Company’s activities will require further capital – the exploration and any development of the
Company’s exploration properties will require substantial additional financing. Failure to obtain sufficient
financing may result in delaying, or the indefinite postponement of, exploration and any development of the
Company’s properties or even a loss of property interest. There can be no assurance that additional capital
or other types of financing will be available if needed or that, if available, the terms of such financing will be
favourable to the Company;
The Company may be adversely affected by fluctuations in commodity prices – the price of
commodities fluctuate widely and are affected by numerous factors beyond the control of the Company.
Future production, if any, from the Company’s mineral properties will be dependent upon the price of
commodities being adequate to make these properties economic. The Company currently does not engage
in any hedging or derivative transactions to manage commodity price risk. As the Company’s operations
change, this policy will be reviewed periodically going forward; and
Global financial conditions may adversely affect the Company’s growth and profitability – many
industries, including the mineral resource industry, are impacted by these market conditions. Some of the
key impacts include contraction in credit markets resulting in a widening of credit risk, devaluations and high
volatility in global equity, commodity, foreign exchange and precious metal markets, and a lack of market
liquidity. Due to the current nature of the Company’s activities, a slowdown in the financial markets or other
economic conditions may adversely affect the Company’s growth and ability to finance its activities.
Constellation Resources Limited ANNUAL REPORT 2019 6
DIRECTORS’ REPORT
(Continued)
EARNINGS PER SHARE
Basic and diluted loss per share
2019
$
2018
$
(0.03)
(4,171)
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Company's operations are subject to various environmental laws and regulations under the relevant
government's legislation. Full compliance with these laws and regulations is regarded as a minimum standard for
all operations to achieve.
Instances of environmental non-compliance by an operation are identified either by external compliance audits or
inspections by relevant government authorities. There have been no known breaches of environmental laws and
regulations by the Company during the financial year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 18 July 2018, the Company issued 35,000,000 ordinary shares at $0.20 and 11,666,402 listed options
exercisable at $0.20 each on or before 31 July 2021 raising $7,000,000 prior to costs pursuant to a Prospectus.
On 26 July 2018, the Company was granted admission to the Australian Securities Exchange with official quotation
occurring on 30 July 2018. The $7,000,000 raised (before costs) is being directed towards the Company’s
exploration programs planned to evaluate the potential of the Orpheus Project in the Fraser Range.
There were no other significant changes in the state of affairs of the Company during the year ended 30 June 2019
not otherwise disclosed.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
As at the date of this report, there are no matters or circumstances which have arisen since 30 June 2019 that have
significantly affected or may significantly affect:
•
•
•
the operations, in financial years subsequent to 30 June 2019, of the Company;
the results of those operations, in financial years subsequent to 30 June 2019, of the Company; or
the state of affairs, in financial years subsequent to 30 June 2019, of the Company.
DIRECTORS' INTERESTS
As at the date of this report, the Directors' interests in the securities of the Company are as follows:
Ian Middlemas
Robert Behets
Mark Pearce
Peter Woodman
Shares1
2,400,000
600,000
1,000,000
500,000
Listed Options2
Unlisted Options3
800,000
199,999
333,331
166,666
-
-
-
1,000,000
Notes:
1 ‘Shares’ means fully paid ordinary shares in the capital of the Company.
2 ‘Listed Options’ means a listed option to subscribe for one Share in the capital of the Company.
3 ‘Unlisted Options’ means an unlisted option to subscribe for one Share in the capital of the Company.
Constellation Resources Limited ANNUAL REPORT 2019 7
DIRECTORS’ REPORT
(Continued)
SHARE OPTIONS
At the date of this report the following options have been issued over unissued Ordinary Shares of the Company:
•
•
•
•
•
11,666,402 Listed Options exercisable at $0.20 each on or before 31 July 2021;
3,000,000 Unlisted Options exercisable at $0.20 each on or before 31 July 2021;
300,000 Unlisted Options exercisable at $0.25 each on or before 9 April 2021;
300,000 Unlisted Options exercisable at $0.30 each on or before 9 October 2021; and
400,000 Unlisted Options exercisable at 0.40 each on or before 9 April 2022.
During the year ended 30 June 2019, no Ordinary Shares were issued as a result of the exercise of Listed or
Unlisted Options. Subsequent to year end and until the date of this report, no Ordinary Shares have been issued
as a result of the exercise of Listed or Unlisted Options.
MEETINGS OF DIRECTORS
The number of meetings of Directors held during the year and the number of meetings attended by each Director
was as follows:
Current Directors
Mr Ian Middlemas
Mr Robert Behets
Mr Mark Pearce
Mr Peter Woodman
Board Meetings
Number Eligible to Attend
Board Meetings
Number Attended
2
2
2
2
2
2
2
2
There were no Board committees during the financial year. The Board as a whole currently performs the functions
of an Audit Committee, Risk Committee, Nomination Committee, and Remuneration Committee, however this will
be reviewed should the size and nature of the Company’s activities change.
Constellation Resources Limited ANNUAL REPORT 2019 8
DIRECTORS’ REPORT
(Continued)
REMUNERATION REPORT - AUDITED
This Remuneration Report, which forms part of the Directors' Report, sets out information about the remuneration
of Key Management Personnel (“KMP”) of the Company.
Details of Key Management Personnel
The KMP of the Company during or since the end of the financial year were as follows:
Directors
Mr Ian Middlemas
Mr Peter Woodman
Mr Robert Behets
Mr Mark Pearce
Other KMP
Mr Lachlan Lynch
Mr Clint McGhie
Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Company Secretary (appointed 24 October 2018)
Company Secretary (resigned 24 October 2018)
Unless otherwise disclosed, the KMP held their position from 1 July 2018 until the date of this report.
Remuneration Policy
The Company’s remuneration policy for its KMP has been developed by the Board taking into account the size of
the Company, the size of the management team for the Company, the nature and stage of development of the
Company’s current operations, and market conditions and comparable salary levels for companies of a similar size
and operating in similar sectors. In addition to considering the above general factors, the Board has also placed
emphasis on the following specific issues in determining the remuneration policy for KMP:
(a)
the Company is currently focussed on undertaking exploration, appraisal and development activities;
(b)
risks associated with small cap resource companies whilst exploring and developing projects; and
(c) other than profit which may be generated from asset sales, the Company does not expect to be undertaking
profitable operations until sometime after the commencement of commercial production of the project.
Remuneration Policy for Executives
The Company’s remuneration policy is to provide a fixed remuneration component and a performance based
component (short term incentive and long term incentive). The Board believes that this remuneration policy is
appropriate given the considerations discussed in the section above and is appropriate in aligning executives’
objectives with shareholder and business objectives.
Fixed Remuneration
Fixed remuneration consists of base salary, as well as employer contributions to superannuation funds and other
non-cash benefits.
Fixed remuneration is reviewed annually by the Board. The process consists of a review of Company and individual
performance, relevant comparative remuneration externally and internally and, where appropriate, external advice
on policies and practices.
Performance Based Remuneration – Short Term Incentive
Some executives are entitled to an annual cash incentive payment upon achieving various key performance
indicators (“KPI’s”), as set by the Board. Having regard to the current size, nature and opportunities of the Company,
the Board has determined that these KPI’s will include measures such as successful commencement and/or
completion of exploration activities (e.g. commencement/completion of exploration programs within budgeted
timeframes and costs), establishment of government relationships (e.g. establish and maintain sound working
relationships with government and officialdom), development activities (e.g. completion of infrastructure studies and
Constellation Resources Limited ANNUAL REPORT 2019 9
DIRECTORS’ REPORT
(Continued)
commercial agreements), corporate activities (e.g. recruitment of key personnel and representation of the company
at international conferences) and business development activities (e.g. corporate transactions and capital raisings).
These measures were chosen as the Board believes they represent the key drivers in the short and medium term
success of the Project’s development. On an annual basis, subsequent to year end, the Board assesses
performance against each individual executive’s KPI criteria. During the 2019 financial year, $30,000 in bonuses
were approved, paid, or are payable which represents 50% of the Managing Director’s total discretionary bonus.
Performance Based Remuneration – Long Term Incentive
The Board has or may issue incentive securities to some executives (if applicable) as a key component of the
incentive portion of their remuneration, in order to attract and retain the services of any executives and to provide
an incentive linked to the performance of the Company. The Board considers that for each executive who has or
may receive securities in the future, their experience in the resources industry will greatly assist the Company in
progressing its projects to the next stage of development and the identification of new projects. As such, the Board
believes that the number of incentive securities to be granted to any executives will be commensurate to their value
to the Company.
The Board has a policy of granting incentive securities to executives (if applicable) with exercise prices at and/or
above market share price (at the time of agreement). As such, incentive securities granted to executives will
generally only be of benefit if the executives perform to the level whereby the value of the Company increases
sufficiently to warrant exercising the incentive securities granted.
Other than service-based vesting conditions, there are not expected to be additional performance criteria if incentive
securities are granted to executives, as given the speculative nature of the Company’s activities and the small
management team responsible for its running, it is considered the performance of the executives and the
performance and value of the Company are closely related. If other forms of incentive securities are issued, then
performance milestones may be applied.
During the year ended 30 June 2019, the Company did not issue incentive options to key management personnel.
The Company’s Securities Trading Policy prohibits KMP’s from entering into arrangements to limit their exposure
to Incentive Securities granted as part of their remuneration package.
Remuneration Policy for Non-Executive Directors
The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time,
commitment and responsibilities. Given the current size, nature and risks of the Company, incentive securities may
be used to attract and retain Non-Executive Directors. The Board determines payments to the Non-Executive
Directors and reviews their remuneration annually, based on market practice, duties and accountability.
Independent external advice is sought when required.
The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by
shareholders at a General Meeting. Total Directors' fees paid to all Non-Executive Directors are not to exceed
$250,000 per annum. Director's fees paid to Non-Executive Directors accrue on a daily basis. Fees for Non-
Executive Directors are not linked to the performance of the entity. However, to align Directors' interests with
shareholder interests, the Directors are encouraged to hold shares in the Company and Non-Executive Directors
may in limited circumstances receive incentive securities in order to secure their services.
Fees for the Chairman are presently $36,000 and fees for other Non-Executive Directors are $20,000 per annum
plus superannuation. These fees cover main board activities only. Non-Executive Directors may receive additional
remuneration for other services provided to the Company.
Relationship between Remuneration of KMP and Shareholder Wealth
During the Company’s project identification, acquisition, exploration and development phases of its business, the
Board anticipates that the Company will retain earnings (if any) and other cash resources for the exploration and
development of its resource projects. Accordingly the Company does not currently have a policy with respect to
Constellation Resources Limited ANNUAL REPORT 2019 10
DIRECTORS’ REPORT
(Continued)
REMUNERATION REPORT – AUDITED (CONTINUED)
the payment of dividends and returns of capital. Therefore there is no relationship between the Board’s policy for
determining the nature and amount of remuneration of KMP and dividends paid and returns of capital by the
Company during the current and previous financial years.
The Board did not determine the nature and amount of remuneration of the KMP by reference to changes in the
price at which shares in the Company traded between the beginning and end of the current financial year.
Discretionary annual cash bonuses, when applicable, will be based on achieving various non-financial key
performance indicators to be determined by the Board. However, as noted above, KMP’s may receive Incentive
Securities which generally will only be of value should the value of the Company’s shares increase sufficiently to
warrant exercising the Incentive Securities.
Relationship between Remuneration of KMP and Earnings
As discussed above, the Company is currently undertaking new project acquisition, exploration and development
activities, and does not expect to be undertaking profitable operations (other than by way of material asset sales,
none of which are currently planned) until sometime after the successful commercialisation, production and sales
of commodities from one or more of its projects. Accordingly the Board does not consider earnings during the
current and previous financial years when determining the nature and amount of remuneration of KMP.
In addition to a focus on operating activities, the Board is also focussed on finding and completing new business
and other corporate opportunities. The Board considers that the prospects of the Company and resulting impact on
shareholder wealth will be enhanced by this approach. Accordingly, a bonus may be paid upon the successful
completion of a new business or corporate transaction.
A $30,000 bonus was payable in respect to the current financial year to the Managing Director.
Where required, KMP receive superannuation contributions, currently equal to 9.5% of their salary, and do not
receive any other retirement benefit.
All remuneration provided to KMP is valued at cost to the company and expensed. Incentive securities are valued
using the Black Scholes option or Binomial valuation methodology. The value of these incentive securities is
expensed over the vesting period.
Remuneration of Key Management Personnel
Details of the nature and amount of each element of the remuneration of each director and KMP of the Company
for the years ended 30 June 2019 and 30 June 2018 are as follows:
Short-term
Post-
employment
Share based
Payments
Total
Performance
Related
Salary &
Fees
Other
Super-
annuation
benefits
Value of
Unlisted
Securities
$
33,000
240,000
18,487
18,487
-
-
$
-
30,0005
-
-
-
-
$
-
22,800
1,756
1,756
-
-
$
-
$
33,000
50,667
343,467
-
-
-
-
20,243
20,243
-
-
%
-
23
-
-
-
-
2019
Directors
Mr Ian Middlemas1
Mr Peter Woodman
Mr Robert Behets2
Mr Mark Pearce3
Other KMP
Mr Lachlan Lynch4
Mr Clint McGhie4
Total
309,974
30,000
26,312
50,667
416,953
23
Constellation Resources Limited ANNUAL REPORT 2019 11
DIRECTORS’ REPORT
(Continued)
Short-term
Post-
employment
Share based
Payments
Total
Performance
Related
Salary &
Fees
Other
Super-
annuation
benefits
Value of
Unlisted
Securities
$
-
54,796
-
-
-
54,796
$
-
-
-
-
-
-
$
-
$
-
$
-
5,203
43,385
103,384
-
-
-
-
-
-
-
-
-
5,203
43,385
103,384
%
-
42
-
-
-
42
2018
Directors
Mr Ian Middlemas1
Mr Peter Woodman
Mr Robert Behets2
Mr Mark Pearce3
Other KMP
Mr Clint McGhie4
Total
Notes:
1 Mr Middlemas’ fees were effective from 30 July 2018 upon listing of the Company on the Australian Securities Exchange.
2 Mr Behets’ fees were effective from 30 July 2018 upon listing of the Company on the Australian Securities Exchange.
3 Mr Pearce’s fees were effective from 30 July 2018 upon listing of the Company on the Australian Securities Exchange.
4 Mr Lynch provides and Mr McGhie provided services as the Company Secretary through a services agreement with Apollo Group Pty Ltd (‘Apollo’).
Apollo is paid A$180,000 per annum for the provision of serviced office facilities and administrative, accounting and company secretarial services
to the Company. The fee commenced from 1 August 2018. Mr Lynch was appointed, and Mr McGhie resigned, as Company Secretary effective
24 October 2018.
5 Represents 50% of total discretionary bonus.
Ordinary Shareholdings of Key Management Personnel
Details of the ordinary shares held by each director and KMP of the Company for the year ended 30 June 2019 are
as follows:
Held at
1 July 2018
Granted as
Remuneration
Purchases
Net Change
Other
(#)
(#)
(#)
(#)
Held at
30 June 2019
(#)
-
-
-
-
25,0001
-
25,000
-
-
-
-
-
-
-
2,400,000
500,000
600,000
1,000,000
-
328,500
4,828,500
-
-
-
-
-
-
-
2,400,000
500,000
600,000
1,000,000
25,000
328,5002
4,853,500
2019
Directors
Mr Ian Middlemas
Mr Peter Woodman
Mr Robert Behets
Mr Mark Pearce
Other KMP
Mr Lachlan Lynch
Mr Clint McGhie
Total
Notes:
1 As at date of appointment.
2 As at date of resignation.
Constellation Resources Limited ANNUAL REPORT 2019 12
DIRECTORS’ REPORT
(Continued)
REMUNERATION REPORT – AUDITED (CONTINUED)
Listed Option Holdings of Key Management Personnel
Details of the listed options held by each director and KMP of the Company for the year ended 30 June 2019 are
as follows:
Held at
1 July 2018
Granted as
Remuneration
Purchases
Net Change
Other
(#)
(#)
(#)
(#)
Held at
30 June 2019
(#)
-
-
-
-
8,3331
-
8,333
-
-
-
-
-
-
-
800,000
166,666
199,999
333,331
-
109,499
1,609,495
-
-
-
-
-
-
-
800,000
166,666
199,999
333,331
8,333
109,4992
1,617,828
2019
Directors
Mr Ian Middlemas
Mr Peter Woodman
Mr Robert Behets
Mr Mark Pearce
Other KMP
Mr Lachlan Lynch
Mr Clint McGhie
Total
Notes:
1 As at date of appointment.
2 As at date of resignation.
Unlisted Option Holdings and Incentive Securities of Key Management Personnel
Details of the relevant incentive securities granted to or held by each director and KMP of the Company for the year
ended 30 June 2019 are as follows:
Held at
1 July
2018
(#)
Granted as
Remuneration
Options
exercised
Options
forfeited
Net Change
Other
Held at
30 June
2019
Vested and
exercisable
(#)
(#)
(#)
(#)
(#)
(#)
2019
Directors
Mr Ian Middlemas
-
Mr Peter Woodman
1,000,000
Mr Robert Behets
Mr Mark Pearce
Other KMP
Mr Lachlan Lynch
Mr Clint McGhie
-
-
-1
-
1,000,000
Notes:
1 As at date of appointment.
2 As at date of resignation.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
300,000
-
-
-
-2
-
-
-
-
1,000,000
300,000
Constellation Resources Limited ANNUAL REPORT 2019 13
DIRECTORS’ REPORT
(Continued)
Options Granted to Key Management Personnel
Details of the values of Incentive Options granted, exercised or lapsed for each KMP during the 2019 financial year
are as follows:
Value of Options
Granted during the
Year
$
Value of Options
exercised during the
year
$
Value of Options
included in
remuneration for the
year
$
Remuneration for the
year that consists of
Options
%
-
-
-
-
50,667
50,667
15%
15%
2019
Directors
Mr Peter Woodman
Total
Details of Incentive Options granted by the Company to each KMP during the current and previous financial year
are as follows:
2019
Director
Mr Peter
Woodman
Options
Granted
Grant
Date
Vesting
Date
Expiry
Date
Grant
Exercise
Price
$
Date Fair
Value1
$
No. Vested
as at 30
June 2019
% vested
in year
% forfeited
in year
300,000
09/04/2018
09/04/2018
09/04/2021
$0.25
$0.1113
300,000
300,000
09/04/2018
09/10/2019
09/10/2021
$0.30
$0.1126
400,000
09/04/2018
09/04/2020
09/04/2022
$0.40
$0.1098
-
-
-
-
-
-
-
-
Notes:
1 For details on the valuation of Incentive Options and Performance Rights, including models and assumptions used, please refer to Note 17 of the
financial statements.
There were no incentive securities that lapsed for any KMP of the Company during the 2019 and 2018 financial
years.
Employment Contracts with Key Management Personnel
Mr Ian Middlemas, Non-Executive Chairman, has a letter of appointment confirming the terms and conditions of his
appointment as a non-executive director and chairman of the Company. Mr Middlemas receives a fee of $36,000
per annum.
Mr Peter Woodman, Managing Director, has a letter of appointment confirming the terms and conditions of his
appointment as managing director dated 9 April 2018. Mr Woodman receives a salary of $240,000 per annum plus
superannuation. Mr Woodman’s appointment is on a rolling annual basis and can be terminated by the Company
by giving notice no less than 3 months prior to the end of each annual period. In the event of termination by the
Company, Mr Woodman is entitled to receive his salary and benefits for a maximum period of 3 months. Subject to
the satisfaction of key performance indicators set by the Board, Mr Woodman will be entitled to a cash bonus of up
to $60,000 per annum. Given the current nature, size and opportunities of the Company, these key performance
indicators may include measures such as successful completion of exploration activities (i.e. within budgeted
timeframes and costs), development activities (such as completion of technical assessments and technical studies),
corporate activities and business development activities.
Mr Robert Behets, Non-Executive Director, has a letter of appointment confirming the terms and conditions of his
appointment as a non-executive director of the Company. Mr Behets receives a fee of $20,000 per annum plus
superannuation.
Mr Mark Pearce, Non-Executive Director, has a letter of appointment confirming the terms and conditions of his
appointment as a non-executive director of the Company. Mr Pearce receives a fee of $20,000 per annum plus
superannuation.
Constellation Resources Limited ANNUAL REPORT 2019 14
DIRECTORS’ REPORT
(Continued)
REMUNERATION REPORT – AUDITED (CONTINUED)
Other Transactions
Apollo Group Pty Ltd (“Apollo Group”), a Company of which Mr Mark Pearce is a director and beneficial shareholder,
provides corporate, administration and company secretarial services and serviced office facilities to the Company
under a services agreement effective from 1 August 2018. Either party can terminate the services agreement at
any time for any reason by giving one month’s written notice. Apollo Group received a monthly retainer of $15,000
(exclusive of GST) for the provision of these services. The monthly retainer is reviewed every six to twelve months
and is based on Apollo Group’s budgeted cost of providing the services to the Company (and other companies
utilising same or similar services from Apollo Group) for the next six to twelve month period, with minimal mark-up.
From time to time, Apollo Group may also receive additional fees (as agreed with the Company) in respect of
services provided by Apollo Group to the Company that are not included in the agreed services covered by the
monthly retainer. During the year ended 30 June 2019, Apollo Group was paid $25,000 (2018: $nil) additional fees
for services in relation to the Company’s listing on the Australian Securities Exchange.
Loans from Key Management Personnel
No loans were provided to or received from Key Management Personnel during the year ended 30 June 2019 (2018:
Nil).
End of the audited Remuneration Report.
INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS
The Company has entered into Deeds of Indemnity with the Directors indemnifying them against certain liabilities
and costs to the extent permitted by law.
The Company has paid, or agreed to pay, premiums totalling $5,778 in respect of Directors’ and Officers’ Liability
Insurance and Company Reimbursement policies for the 12 months ended 30 June 2019 (2018: $nil), which cover
all Directors and officers of the Company against liabilities to the extent permitted by the Corporations Act 2001.
The policy conditions preclude the Company from any detailed disclosures.
To the extent permitted by law, the Company has agreed to indemnify its auditors, William Buck Audit (WA) Pty Ltd
(“William Buck”), as part of the terms of its audit engagement agreement against claims by third parties arising from
the audit (for an unspecified amount). No payment has been made to indemnify William Buck during or since the
end of the financial year.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a part for the purpose of taking responsibility on behalf of the Company for
all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
TENEMENT SCHEDULE
Tenements held as at the date of the Directors’ Report are listed in the table below:
Reference
Project
State
E28/2403
Orpheus Project Western Australia
E63/1281
Orpheus Project Western Australia
E63/1282
Orpheus Project Western Australia
E28/2738
Orpheus Project Western Australia
Status
Granted
Granted
Granted
Granted
E63/1695
Orpheus Project Western Australia
Application
Interest
70%
70%
70%
100%
70%
Constellation Resources Limited ANNUAL REPORT 2019 15
DIRECTORS’ REPORT
(Continued)
NON-AUDIT SERVICES
Non-audit services provided by our auditors William Buck and related entities for the financial year ended 30 June
2019 amounted to $1,000 (2018: $6,000).
The Directors are satisfied that the provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act. The nature and scope of the non-audit services
provided means that auditor independence was not compromised.
AUDITOR'S INDEPENDENCE DECLARATION
The lead auditor's independence declaration for the year ended 30 June 2019 has been received and can be found
on page 17 of the Directors' Report.
This report is made in accordance with a resolution of the Directors made pursuant to section 298(2) of the
Corporations Act 2001.
For and on behalf of the Directors
PETER WOODMAN
Managing Director
23 August 2019
Competent Person Statement
The information in this report that related to Exploration Results is based on, and fairly represents, information compiled by Mr Peter
Woodman, a Competent Person who is a Member of the Australian Institute of Mining and Metallurgy. Mr Woodman is a holder of
shares and options in, and is the Managing Director of, Constellation Resources Limited. Mr Woodman has sufficient experience
which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Woodman consents to the inclusion in the report of the matters based on his information in the
form and context in which it appears.
Constellation Resources Limited ANNUAL REPORT 2019 16
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF CONSTELLATION
RESOURCES LIMITED
I declare that, to the best of my knowledge and belief during the year ended 30 June 2019
there have been:
— no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the
audit.
William Buck Audit (WA) Pty Ltd
ABN 67 125 012 124
Conley Manifis
Director
Dated this 23rd day of August 2019
Constellation Resources Limited ANNUAL REPORT 2019 17
STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Interest income
Exploration and evaluation expenses
Administration expenses
Notes
2
2
Share based payments expenses
2,17
(50,667)
Impairment expenses
Loss before income tax
Income tax expense
Loss for the year
8
6
2019
$
137,663
2018
$
-
(635,292)
(257,420)
(485,700)
-
(66,261)
(43,385)
(50,000)
(1,033,996)
(417,066)
-
-
(1,033,996)
(417,066)
Loss attributable to members of Constellation Resources
Limited
(1,033,996)
(417,066)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss for the year
(1,033,996)
(417,066)
Total comprehensive loss attributable to members of
Constellation Resources Limited
Basic and diluted loss per share attributable to the ordinary
equity holders of the company ($ per share)
(1,033,996)
(417,066)
16
(0.03)
(4,171)
The accompanying notes form part of these financial statements.
Constellation Resources Limited ANNUAL REPORT 2019 18
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Notes
2019
$
2018
$
ASSETS
Current Assets
Cash and cash equivalents
Other receivables
Prepayments
Total Current Assets
Non-Current Assets
Property, plant and equipment
Exploration and evaluation assets
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Borrowings
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
3
4
5
7
8
9
10
11
12
13
14
5,589,116
44,519
-
5,633,635
2,165
350,000
352,165
33,189
3,614
252,435
289,238
3,863
350,000
353,863
5,985,800
643,101
100,925
3,531
-
104,456
304,133
-
100,000
404,133
104,456
404,133
5,881,344
238,968
6,625,805
1,294,200
100
1,243,533
(2,038,661)
(1,004,665)
5,881,344
238,968
The accompanying notes form part of these financial statements.
Constellation Resources Limited ANNUAL REPORT 2019 19
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
2019
Balance at 1 July 2018
Net loss for the year
Total comprehensive
income/(loss) for the year
Transactions with owners
recorded directly in equity
Issue of ordinary shares
Share issue costs
Share based payment expense
Balance at 30 June 2019
2018
Balance at 1 July 2017
Net loss for the year
Total comprehensive
income/(loss) for the year
Transactions with owners
recorded directly in equity
Share based payment expense
Debt forgiveness (refer note 13(d))
Balance at 30 June 2018
Contributed
Equity
$
Accumulated
Losses
$
Share Based
Payment
Reserve
$
Other
Equity
Reserve
$
Total
Equity
$
100
-
(1,004,665)
(1,033,996)
43,385
-
1,200,148
-
238,968
(1,033,996)
-
(1,033,996)
7,000,000
(374,295)
-
6,625,805
-
-
-
(2,038,661)
-
-
-
50,667
94,052
1,200,148
-
(1,033,996)
-
-
-
7,000,000
(374,295)
50,667
5,881,344
100
-
(587,599)
(417,066)
-
(417,066)
-
-
-
-
-
-
(587,499)
(417,066)
(417,066)
-
-
100
-
-
(1,004,665)
43,385
-
43,385
-
1,200,148
1,200,148
43,385
1,200,148
238,968
The accompanying notes form part of these financial statements.
Constellation Resources Limited ANNUAL REPORT 2019 20
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Operating activities
Interest received from third parties
Payments to employees and suppliers
Notes
2019
$
2018
$
119,537
-
(1,089,315)
(287,716)
Net cash flows used in operating activities
15(a)
(969,778)
(287,716)
Investing activities
Payment for property, plant and equipment
Net cash flows used in investing activities
Financing activities
Proceeds from issue of ordinary shares
Share issue costs
Repayment of working capital facility
Proceeds from working capital facility
Payments financed through loan from Apollo Minerals Limited
-
-
(4,244)
(4,244)
12
12
11
11
7,000,000
(374,295)
(100,000)
-
-
-
-
-
100,000
225,149
Net cash flows from financing activities
6,525,705
325,149
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
5,555,927
33,189
33,189
-
Cash and cash equivalents at the end of the year
15(b)
5,589,116
33,189
The accompanying notes form part of these financial statements.
Constellation Resources Limited ANNUAL REPORT 2019 21
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in preparing the financial report of Constellation Resources Limited
(“Constellation Resources” or “Company”) for the year ended 30 June 2019 are stated to assist in a general
understanding of the financial report.
Constellation Resources is a Company limited by shares, incorporated and domiciled in Australia.
The financial report of the Company for the year ended 30 June 2019 was authorised for issue in accordance with
a resolution of the Directors on 23 August 2019.
(a) Basis of Preparation
The financial report is a general purpose financial report which has been prepared in accordance with Australian
Accounting Standards (“AASBs”) and interpretations adopted by the Australian Accounting Standards Board
(“AASB”) and the Corporations Act 2001. The financial statements comprise the financial statements of the
Company. For the purposes of preparing the financial statements, the Company is a for-profit entity.
The financial report has also been prepared on a historical cost basis.
The financial report is presented in Australian dollars.
(b) Statement of Compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board.
In the current year, the Company has adopted all of the new and revised Standards and Interpretations issued by
the AASB that are relevant to its operations and effective for the current annual reporting period. New and revised
standards and amendments thereof and interpretations effective for the current reporting period that are relevant to
the Company include:
•
•
•
•
AASB 9 Financial Instruments, and relevant amending standards
AASB 15 Revenue
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-
based Payment Transactions
AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration
The adoption of the aforementioned standards has resulted in an immaterial impact on the financial statements of
the Company as at 30 June 2019. A discussion on the impact of the adoption of AASB 9 is included below.
Impact of Changes – AASB 9 Financial Instruments
The Company has adopted AASB 9 from 1 July 2018 which has resulted in changes to accounting policies and the
analysis for possible adjustments to amounts recognised in the Financial Statements. In accordance with the
transitional provisions in AASB 9, the reclassifications and adjustments are not reflected in the statement of financial
position as at 30 June 2018 but recognised in the opening balance sheet as at 1 July 2018. The Company has not
recognised a loss allowance on trade and other receivables following assessment of the impact of the new
impairment model introduced by AASB 9.
Classification and Measurement
On 1 July 2018, the Company has assessed which business models apply to the financial instruments held by the
Company and have classified them into the appropriate AASB 9 categories. The main effects resulting from this
reclassification are shown in the table below.
On adoption of AASB 9, the Company classified financial assets and liabilities as measured at either amortised cost
or fair value, depending on the business model for those assets and on the asset’s contractual cash flow
characteristics. There were no changes in the measurement of the Company’s financial instruments.
Constellation Resources Limited ANNUAL REPORT 2019 22
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
There was no impact on the statement of comprehensive income or the statement of changes in equity on adoption
of AASB 9 in relation to classification and measurement of financial assets and liabilities.
The following table summarises the impact on the classification and measurement of the Company’s financial
instruments at 1 July 2018:
Presented in statement of financial
position
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Financial
Asset
Bank
deposits
Loans and
receivables
Loans and
receivables
AASB 139
Loans and
receivables
Loans and
receivables
Amortised
Cost
AASB 9
Amortised
Cost
Amortised
Cost
Amortised
Cost
Reported $
No change
Restated $
No change
No change
No change
No change
No change
The Company does not currently enter into any hedge accounting and therefore there is no impact to the Company’s
Financial Statements.
Impairment
AASB 9 introduces a new expected credit loss (“ECL”) impairment model that requires the Company to adopt an
ECL position across the Company’s financial assets from 1 July 2018. The Company’s receivables balance consists
of GST refunds from the Australian Tax Office and interest receivables from recognised Australian banking
institutions. While cash and cash equivalents are also subject to the impairment requirements of AASB 9, an
impairment loss would be considered immaterial.
The loss allowances for financial assets are based on the assumptions about risk of default and expected loss rates.
The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation,
based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of
each reporting period. Given the Company’s receivables are from the Australian Tax Office and recognised
Australian banking institutions, the Company has assessed that the risk of default is minimal and as such, no
impairment loss has been recognised against these receivables as at 30 June 2019.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective have not been adopted by the Company for the annual reporting period ended 30 June 2019. Those which
may be relevant to the Company are set out in the table below, but these are not expected to have any significant
impact on the Company's financial statements:
Standard/Interpretation
AASB 16 Leases
Interpretation 23 Uncertainty over Income Tax Treatments
AASB 2017-7 Amendments – Long-term Interests in Associates and Joint Venture
Amendments to IAS 28 and Illustrative Example – Long-term Interests in Associates
and Joint Ventures
AASB 2018-1 Amendments – Annual Improvements 2015-2017 Cycle
Application
Date of
Standard
Application
Date for
Company
1 January 2019
1 July 2019
1 January 2019
1 July 2019
1 January 2019
1 July 2019
1 January 2019
1 July 2019
AASB 2018-2 Amendments – Plan Amendment, Curtailment or Settlement (AASB
119)
1 January 2019
1 July 2019
Constellation Resources Limited ANNUAL REPORT 2019 23
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
AASB 16 Leases
AASB 16 Leases will replace existing accounting requirements for leases under AASB 117 Leases. Under current
requirements, leases are classified based on their nature as either finance leases which are recognised on the
Statement of Financial Position, or operating leases, which are not recognised on the Statement of Financial
Position.
Under AASB 16 Leases, the Company’s accounting for operating leases as a lessee will result in the recognition of
a right-of-use (ROU) asset and an associated lease liability on the Statement of Financial Position. The lease liability
represents the present value of future lease payments, with the exception of short-term and low value leases. An
interest expense will be recognised on the lease liabilities and a depreciation charge will be recognised for the ROU
assets. There will also be additional disclosure requirements under the new standard.
Based on the Company’s assessment to date, the adoption of AASB 16 is expected to have an immaterial impact
on the financial statements of the Company due to the minimal number, if any, of non-cancellable leases currently
entered into by the Company which would not fall under a short-term or low value exception.
Transition
The Company will initially apply AASB 16 on 1 July 2019, using the modified retrospective approach. Therefore, the
cumulative effect of adopting AASB 16 will be recognised as an adjustment to the opening balance of retained
earnings at 1 July 2019, with no restatement of comparative information.
When applying the modified retrospective approach to leases previously classified as operating leases under AASB
117, the Company can elect, on a lease-by-lease basis, whether to apply a number of practical expedients on
transition. The Company is assessing the potential impact of using these practical expedients.
Based on the current assessment and conditions of the Company, it is expected that the adoption of AASB 16 will
have minimal impact if any on the financial statements of the Company. The actual impact of applying AASB 16 on
the financial statements in the period of initial application will depend however on future economic conditions,
including the Company’s borrowing rate, the composition of the Company’s lease portfolio, the extent to which the
Company elects to use practical expedients and recognition exemptions, and the new accounting policies, which
are subject to change until the Company presents its first financial statements that include the date of initial
application.
(c) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of 3 months or less.
(d) Interests in Joint Operations
The Company's share of the assets, liabilities, revenue and expenses of joint venture operations are included in the
appropriate items of the financial statements. Details of the Company's interests in joint operations are shown at
Note 20.
(e) Trade and Other Receivables
Trade receivables are recognised and carried at original invoice amount less an expected credit loss provision. An
estimate for the expected credit loss is made based on the historical risk of default and expected loss rates at the
inception of the transaction. Inputs are selected for the expected credit loss impairment calculation based on the
Company’s past history, existing market conditions as well as forward looking estimates.
(f) Revenue Recognition
Revenues are recognised at the fair value of the consideration received net of the amount of goods and services
tax (GST) payable to the taxation authority. Interest revenue is recognised as it accrues, taking into account the
effective yield on the financial asset.
Constellation Resources Limited ANNUAL REPORT 2019 24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Exploration and Evaluation Expenditure
Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest' method and
with AASB 6 Exploration for and Evaluation of Mineral Resources, which is the Australian equivalent of IFRS 6.
Exploration and evaluation expenditure encompasses expenditures incurred by the Company in connection with
the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of
extracting a mineral resource are demonstrable.
For each area of interest, expenditure incurred in the acquisition of rights to explore is capitalised, classified as
tangible or intangible, and recognised as an exploration and evaluation asset. Exploration and evaluation assets
are measured at cost at recognition and are recorded as an asset if:
(i)
the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions is also met:
•
the exploration and evaluation expenditures are expected to be recouped through successful development
and exploitation of the area of interest, or alternatively, by its sale; and
• exploration and evaluation activities in the area of interest have not at the reporting date reached a stage
which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves,
and active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation expenditure incurred by the Company subsequent to the acquisition of the rights to
explore is expensed as incurred, up until the technical feasibility and commercial viability of the project has been
demonstrated with a bankable feasibility study.
Capitalised exploration costs are reviewed at each reporting date to establish whether an indication of impairment
exists. If any such indication exists, the recoverable amount of the capitalised exploration costs is estimated to
determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the
increased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset in previous years.
Where a decision is made to proceed with development, accumulated expenditure is tested for impairment and
transferred to development properties, and then amortised over the life of the reserves associated with the area of
interest once mining operations have commenced.
Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful
development and commercial exploitation, or alternatively, sale of the respective areas of interest.
(h) Payables
Liabilities are recognised for amounts to be paid in the future for goods and services received. Trade accounts
payable are normally settled within 60 days.
(i) Provisions
Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
(j) Earnings per Share
Basic earnings per share (“EPS”) is calculated by dividing the net profit attributable to members of the Company for
the reporting period, after excluding any costs of servicing equity, by the weighted average number of ordinary
shares of the Company.
Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs
associated with dilutive potential Ordinary Shares and the effect on revenues and expenses of conversion to
Ordinary Shares associated with dilutive potential Ordinary Shares, by the weighted average number of Ordinary
Shares and dilutive Ordinary Shares.
Constellation Resources Limited ANNUAL REPORT 2019 25
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
(k) Income Tax
The income tax expense for the period is the tax payable on the current period's taxable income based on the
notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively
enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised
in relation to these temporary differences if they arose on goodwill or in a transaction, other than a business
combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
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 deferred income tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against tax liabilities and the deferred tax liabilities relate to the same taxable entity and the same taxation
authority.
(l) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of
the cost of acquisition of the asset or as part of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
(m) Use and Revision of Accounting Estimates
The preparation of the financial report requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if
the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amounts recognised in the financial statements are
described Note 1(u).
(n) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the Company, on or before the end of the year but not distributed at reporting date.
Constellation Resources Limited ANNUAL REPORT 2019 26
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(o) Operating Segments
An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses relating to transactions with other components of
the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to
make decisions about resources to be allocated to the segment and assess its performance and for which discrete
financial information is available. The chief operating decision maker has been identified as the Board of Directors,
taken as a whole. This includes start up operations which are yet to earn revenues. Management will also consider
other factors in determining operating segments such as the existence of a line manager and the level of segment
information presented to the board of directors.
Operating segments have been identified based on the information provided to the Board of Directors.
The Company aggregates two or more operating segments when they have similar economic characteristics.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However,
an operating segment that does not meet the quantitative criteria is still reported separately where information about
the segment would be useful to users of the financial statements.
Information about other business activities and operating segments that are below the quantitative criteria are
combined and disclosed in a separate category for “all other segments”.
(p) Impairment of Assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate
of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to sell
and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets and the asset's value in use cannot be
estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating
unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In
assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(q) Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used
for financial assets held by the Company is the current bid price; the appropriate quoted market price for financial
liabilities is the current ask price.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate
their fair values. 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 Company for similar financial
instruments.
(r) Issued Capital
Ordinary Shares are classified as equity. Issued and paid up capital is recognised at the fair value of the
consideration received by the Company.
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.
Constellation Resources Limited ANNUAL REPORT 2019 27
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
(s) Share-Based Payments
Equity-settled share-based payments are provided to officers, employees, consultants and other advisors. These
share-based payments are measured at the fair value of the equity instrument at the grant date. Fair value is
determined using the Black Scholes option pricing model.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on
the Company's estimate of equity instruments that will eventually vest. At each reporting date, the Company revises
its estimate of the number of equity instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment
to the share based payments reserve.
Equity-settled share-based payments may also be provided as consideration for the acquisition of assets. Where
ordinary shares are issued, the transaction is recorded at fair value based on the quoted price of the ordinary shares
at the date of issue. The acquisition is then recorded as an asset or expensed in accordance with accounting
standards.
(t) Plant and Equipment
(i)
Cost and valuation
All classes of plant and equipment are measured at cost.
Where assets have been revalued, the potential effect of the capital gains tax on disposal has not been
taken into account in the determination of the revalued carrying amount. Where it is expected that a liability
for capital gains tax will arise, this expected amount is disclosed by way of note.
(ii)
Depreciation
Depreciation is provided on a straight-line basis on all property, plant and equipment.
Major depreciation periods are:
Computer Equipment
2019
2018
3 years
3 years
(u) Significant judgements and key assumptions
The directors evaluate estimates and judgements incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and within the Company.
(i)
Key judgements
The Company capitalises expenditure incurred in the acquisition of rights to explore and records this as an asset
where it is considered likely to be recoverable or where the activities have not reached a stage which permits a
reasonable assessment of the existence of reserves (Note 1(g)). There are areas of interest from which no reserves
have been extracted, but the directors are of the continued belief that such expenditure should not be written off
since the activities have not reached a stage which permits a reasonable assessment of the existence of reserves.
The Company recognises share based payments in accordance with the policy at Note 1(s).
Constellation Resources Limited ANNUAL REPORT 2019 28
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
2. EXPENSES
Employee benefits expense included in profit or loss
Wages, salaries and fees
Defined contribution plans
Share based payment expenses (note 17)
3. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Deposits at call
4. OTHER RECEIVABLES
Interest receivable
GST receivable
5. PREPAYMENTS
Prepaid Initial Public Offering Costs
2019
$
339,974
26,312
50,667
2018
$
54,796
5,203
43,385
416,953
103,384
2019
$
589,116
5,000,000
5,589,116
2019
$
18,126
26,393
44,519
2019
$
-
-
2018
$
33,189
-
33,189
2018
$
-
3,614
3,614
2018
$
252,435
252,435
The balance of Prepayments as at 30 June 2018 was transferred to equity as share issue costs upon the issue of
shares in the Company’s initial public offering on 18 July 2018.
Constellation Resources Limited ANNUAL REPORT 2019 29
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
6.
INCOME TAX
2019
$
2018
$
(a) Recognised in the Statement of Comprehensive Income
Deferred income tax
Origination and reversal of temporary differences
(290,820)
(89,012)
Adjustments in respect of income tax of previous years
Deferred tax assets not brought to account
Income tax expense reported in the statement of comprehensive income
(69,420)
360,240
-
2,694
86,318
-
(b) Reconciliation Between Tax Expense and Accounting Loss
Before Income Tax
Accounting loss before income tax
(1,033,996)
(417,066)
At the domestic income tax rate of 27.5% (2018: 27.5%)
(284,349)
(114,693)
Expenditure not allowable for income tax purposes
Capital allowances
Adjustments in respect of income tax of previous years
Deferred tax assets not brought to account
Income tax expense attributable to loss
(c) Deferred Tax Assets and Liabilities
Deferred income tax at 30 June relates to the following:
Deferred Tax Liabilities
Accrued interest
Deferred tax assets used to offset deferred tax liabilities
Deferred Tax Assets
Accrued expenditure
Provisions
Capital allowances
Tax losses available to offset against future taxable income
Deferred tax assets used to offset deferred tax liabilities
Deferred tax assets not brought to account
14,114
(20,585)
(69,420)
360,240
-
25,681
-
2,694
86,318
-
4,985
(4,985)
-
7,412
971
68,461
549,213
(4,985)
-
-
-
7,425
-
-
240,482
-
(621,072)
(247,907)
-
-
The benefit of deferred tax assets not brought to account will only be brought to account if:
•
•
•
future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be
realised;
the conditions for deductibility imposed by tax legislation continue to be complied with; and
no changes in tax legislation adversely affect the Company in realising the benefit.
Constellation Resources Limited ANNUAL REPORT 2019 30
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
7. PROPERTY, PLANT AND EQUIPMENT
Computer Equipment
At cost
Accumulated depreciation
Carrying amount at 30 June
Reconciliation
Carrying amount at 1 July
Additions
Depreciation
Carrying amount at 30 June
2019
$
4,244
(2,079)
2,165
3,863
-
(1,698)
2,165
2018
$
4,244
(381)
3,863
-
4,244
(381)
3,863
8. EXPLORATION AND EVALUATION ASSETS
Notes
2019
$
2018
$
(a)
Exploration and evaluation assets by area
of interest
Orpheus Project (Fraser Range - Western Australia)
8(b)
Total exploration and evaluation assets
350,000
350,000
350,000
350,000
(b) Reconciliation of carrying amount:
Carrying amount at beginning of year
Impairment of carrying value(2)
Balance at end of financial year(1)
350,000
-
350,000
400,000
(50,000)
350,000
Notes:
1
2
The ultimate recoupment of costs carried forward for exploration and evaluation expenditure is dependent on the
successful development and commercial exploitation or sale of the respective areas of interest.
During the financial year ended 30 June 2018, impairment of the exploration and evaluation asset of $50,000 was
recognised to record the asset at its recoverable amount based on an independent valuation obtained by Apollo Minerals
Limited (former parent entity of the Company).
9. TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
2019
$
43,972
56,953
100,925
2018
$
21,044
283,089
304,133
Constellation Resources Limited ANNUAL REPORT 2019 31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
10. PROVISIONS (CURRENT)
Employee Benefits – Annual Leave Provision
11. BORROWINGS (CURRENT)
Working capital facility
2019
$
3,531
3,531
2019
$
-
-
2018
$
-
-
2018
$
100,000
100,000
On 30 April 2018, the Company entered into a working capital facility agreement with Apollo Minerals Limited
(“Apollo Minerals”) (parent entity at the time of the transaction). Under the terms of the agreement, Apollo Minerals
advanced $100,000 to the Company to enable the Company to meet certain operating expenses. The Company
repaid the balance to Apollo Minerals during the financial year ended 30 June 2019.
12. CONTRIBUTED EQUITY
Issued Capital
(a)
35,000,100 (2018: 100) Ordinary Shares
Notes
12(b)
2019
$
6,625,805
6,625,805
2018
$
100
100
On 4 May 2018, the Company lodged a Prospectus with the Australian Securities and Investment Commission and
the Australian Securities Exchange for the offer of up to 35,000,000 shares at an issue price of $0.20 each, together
with one free attaching listed option for every three shares, to raise up to $7,000,000 before costs.
On 18 July 2018, the Company issued 35,000,000 ordinary shares at $0.20 and 11,666,402 listed options
exercisable at $0.20 each on or before 31 July 2021 raising $7,000,000 prior to costs pursuant to the Prospectus.
On 26 July 2018, the Company was granted admission to the Australian Securities Exchange with official quotation
occurring on 30 July 2018. The $7,000,000 raised (before costs) is being directed towards the Company’s
exploration programs planned to evaluate the potential of the Orpheus Project in the Fraser Range.
(b) Movements in Ordinary Shares During the Past Two Years Were as Follows:
Date
2018
Details
1-Jul-17
Opening balance
30-Jun-18
Closing balance
2019
01-Jul-18
Opening balance
Number of
Ordinary
Shares
Issue Price
$
100
100
100
-
-
-
$
100
100
100
18-Jul-18
Issue of ordinary shares
35,000,000
0.20
7,000,000
30-Jun-19
Share issue costs
30-Jun-19
Closing balance
-
35,000,100
-
-
(374,295)
6,625,805
Constellation Resources Limited ANNUAL REPORT 2019 32
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
12. CONTRIBUTED EQUITY (CONTINUED)
(c) Rights Attaching to Ordinary Shares
The rights attaching to fully paid ordinary shares (“Ordinary Shares”) arise from a combination of the Company's
Constitution, statute and general law.
Copies of the Company's Constitution are available for inspection during business hours at the Company's
registered office. The clauses of the Constitution contain the internal rules of the Company and define matters such
as the rights, duties and powers of its shareholders and directors, including provisions to the following effect (when
read in conjunction with the Corporations Act 2001 or Listing Rules).
Shares
(i)
The issue of shares in the capital of the Company and options over unissued shares by the Company is
under the control of the directors, subject to the Corporations Act 2001 and any rights attached to any special
class of shares.
Meetings of Members
(ii)
Directors may call a meeting of members whenever they think fit. Members may call a meeting as provided
by the Corporations Act 2001. The Constitution contains provisions prescribing the content requirements of
notices of meetings of members and all members are entitled to a notice of meeting. A meeting may be held
in two or more places linked together by audio-visual communication devices. A quorum for a meeting of
members is 2 shareholders.
Voting
(iii)
Subject to any rights or restrictions at the time being attached to any shares or class of shares of the
Company, each member of the Company is entitled to receive notice of, attend and vote at a general
meeting. Resolutions of members will be decided by a show of hands unless a poll is demanded. On a
show of hands each eligible voter present has one vote. However, where a person present at a general
meeting represents personally or by proxy, attorney or representative more than one member, on a show of
hands the person is entitled to one vote only despite the number of members the person represents. On a
poll each eligible member has one vote for each fully paid share held and a fraction of a vote for each partly
paid share determined by the amount paid up on that share.
Changes to the Constitution
(iv)
The Company's Constitution can only be amended by a special resolution passed by at least three quarters
of the members present and voting at a general meeting of the Company. At least 28 days' written notice
specifying the intention to propose the resolution as a special resolution must be given.
13. RESERVES
Share-based payments reserve
Other equity reserve
Note
13(b)
13(d)
2019
$
94,052
1,200,148
1,294,200
2018
$
43,385
1,200,148
1,243,533
(a) Nature and Purpose of Reserves
(i)
Share-based payments reserve
The share-based payments reserve is used to record the fair value of Unlisted Options issued by the Company.
(ii)
Other equity reserve
Refer to note 13(d).
Constellation Resources Limited ANNUAL REPORT 2019 33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
(b) Movements in the share-based payments reserve during the past two years were as
follows:
Date
1 Jul 2017
9 Apr 2018
Details
Opening balance
Grant of Incentive Options
30 Jun 2018
Share-based payment expense
30 Jun 2018
Closing balance
1 Jul 2018
30 Jun 2019
Opening balance
Share-based payment expense
30 Jun 2019
Closing balance
Number of
Incentive
Options
-
1,000,000
-
1,000,000
1,000,000
-
1,000,000
$
-
-
43,385
43,385
43,385
50,667
94,052
(c)
Terms and Conditions of Unlisted Incentive Options
The Unlisted Options are granted based upon the following terms and conditions:
• Each Unlisted Option entitles the holder to the right to subscribe for one Ordinary Share upon the exercise of
each Unlisted Option;
•
The Unlisted Options outstanding at the end of the financial year have the following exercise prices and expiry
dates:
• 300,000 Unlisted Options exercisable at $0.25 each on or before 9 April 2021 (vesting immediately);
• 300,000 Unlisted Options exercisable at $0.30 each on or before 9 October 2021 (vesting 9 October 2019); and
• 400,000 Unlisted Options exercisable at $0.40 each on or before 9 April 2022 (vesting 9 April 2020).
•
The Unlisted Options are exercisable at any time prior to the Expiry Date, subject to vesting conditions being
satisfied (if applicable);
• Ordinary Shares issued on exercise of the Unlisted Options rank equally with the then Ordinary Shares of the
Company;
• Application will be made by the Company to ASX for official quotation of the Ordinary Shares issued upon the
exercise of the Unlisted Options;
•
If there is any reconstruction of the issued share capital of the Company, the rights of the Unlisted Option
holders may be varied to comply with the ASX Listing Rules which apply to the reconstruction at the time of
the reconstruction; and
• No application for quotation of the Unlisted Options will be made by the Company.
An additional 3,000,000 Unlisted Options exercisable at $0.20 each on or before 31 July 2021 are held by Apollo
Minerals Limited. The options are held in escrow for a period of two years from the Company’s listing date at which
point in time application will be made by the Company to the Australian Securities Exchange for official quotation.
(d) Other Equity Reserve
On 30 April 2018, the Company entered into a Debt for Equity Subscription Agreement with its parent entity Apollo
Minerals Limited (“Apollo Minerals”). Under the terms of the agreement, Apollo Minerals agreed to forgive all loan
advances made to the Company in relation to exploration activities at the Orpheus Project. The balance of the loan
as at the date of forgiveness was $1,200,148. As the transaction was between a parent entity and subsidiary, the
forgiven amount has been recognised directly in equity.
Constellation Resources Limited ANNUAL REPORT 2019 34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
14. ACCUMULATED LOSSES
Balance at 1 July
Net loss for the year
Balance at 30 June
15. STATEMENT OF CASH FLOWS RECONCILIATION
(a) Reconciliation of the Net Loss After Tax to the Net Cash
Flows from Operations
Loss for the year
Adjustment for non-cash income and expense items
Depreciation of plant and equipment
Share based payment expense
Impairment losses
Change in operating assets and liabilities
(Increase) in trade and other receivables
Decrease/(Increase) in prepayments
(Decrease)/Increase in trade and other payables
Increase in provisions
Net cash outflow from operating activities
(b) Reconciliation of Cash
Cash at bank and on hand
Balance at 30 June
(c) Non-cash financing and investing activities
2019
$
2018
$
(1,004,665)
(1,033,996)
(587,599)
(417,066)
(2,038,661)
(1,004,665)
2019
$
2018
$
(1,033,996)
(417,066)
1,698
50,667
-
381
43,385
50,000
(40,905)
252,435
(203,208)
3,531
(969,778)
(3,614)
(252,435)
291,633
-
(287,716)
5,589,116
5,589,116
33,189
33,189
There were no non-cash financing or investing activities during the year ended 30 June 2019.
All expenditure incurred by the Company until 30 April 2018 was settled by the Company’s former parent entity
(Apollo Minerals Limited) and recorded through a loan account. As at 30 April 2018, the balance of the borrowing
to Apollo Minerals Limited was $1,200,148 at which point the parties entered into a Debt for Equity Subscription
Agreement and the amount was forgiven. Refer to note 13(d) for further details.
Constellation Resources Limited ANNUAL REPORT 2019 35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
16. EARNINGS PER SHARE
The following reflects the income and share data used in the calculations of basic and diluted earnings per share:
Basic and diluted loss per share
2019
$
(0.03)
(0.03)
2019
$
2018
$
(4,171)
(4,171)
2018
$
Net loss attributable to members of the parent used in calculating basic
and diluted earnings per share:
Earnings used in calculating basic and dilutive earnings per share
(1,033,996)
(1,033,996)
(417,066)
(417,066)
Number of
Ordinary Shares
2019
Number of
Ordinary Shares
2018
Weighted average number of Ordinary Shares used in calculating basic
and dilutive earnings per share
33,369,963
100
(a) Non-Dilutive Securities
As at reporting date, 11,666,402 Listed Options and 4,000,000 Unlisted Options (which represent 15,666,402
potential Ordinary Shares) were considered non-dilutive as they would decrease the loss per share.
(b) Conversions, Calls, Subscriptions or Issues after 30 June 2019
There have been no other conversions to, calls of, or subscriptions for Ordinary Shares or issues of potential
Ordinary Shares since the reporting date and before the completion of this financial report.
17. SHARE BASED PAYMENTS
(a) Recognised Share-based Payment Expense
From time to time, the Company provides incentive options to officers, employees, consultants and other key
advisors as part of remuneration and incentive arrangements. The number of options granted, and the terms of the
options granted are determined by the Board. Shareholder approval is sought where required.
During the past two years, the following equity-settled share-based payments have been recognised:
Expense arising from equity-settled share-based payment transactions
2019
$
50,667
2018
$
43,385
(b) Summary of Unlisted Options Granted as Share-based Payments
The following Incentive options were granted as share-based payments during the past two financial years:
Series
Series 1
Series 2
Series 3
Security
Type
Options
Options
Options
Number
300,000
300,000
400,000
Grant
Date
9-Apr-18
9-Apr-18
9-Apr-18
Expiry
Date
9-Apr-21
9-Oct-21
9-Apr-22
Vesting
Date
9-Apr-18
9-Oct-19
9-Apr-20
Exercise
Price
$
$0.25
$0.30
$0.40
Fair
Value
$
$0.1113
$0.1126
$0.1098
Constellation Resources Limited ANNUAL REPORT 2019 36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
17. SHARE BASED PAYMENTS (CONTINUED)
The following table illustrates the number and weighted average exercise prices (WAEP) of Unlisted Options
granted as share-based payments at the beginning and end of the financial year:
2019
Number
Outstanding at beginning of year
1,000,000
Granted during the year
-
Outstanding at end of year
1,000,000
2019
WAEP
$0.33
-
$0.33
2018
Number
-
1,000,000
1,000,000
2018
WAEP
-
$0.33
$0.33
The outstanding balance of options issued as share based payments as at 30 June 2019 is represented by:
•
•
•
300,000 Unlisted Options exercisable at $0.25 each on or before 9 April 2021;
300,000 Unlisted Options exercisable at $0.30 each on or before 9 October 2021; and
400,000 Unlisted Options exercisable at $0.40 each on or before 9 April 2022.
(c) Weighted Average Remaining Contractual Life
At 30 June 2019, the weighted average remaining contractual life of Unlisted Options on issue that had been granted
as share-based payments was 2.3 years (2018: 3.3 years).
(d) Range of Exercise Prices
At 30 June 2019, the range of exercise prices of Unlisted Options on issue that had been granted as share-based
payments was $0.25 to $0.40 (2018: $0.25 to $0.40).
(e) Weighted Average Fair Value
No Incentive Options were granted during the year ended 30 June 2019. During the year ended 30 June 2018, the
weighted average fair value of Incentive Options that had been granted as share-based payments by the Company
was $0.1111.
(f)
Option Pricing Models
The fair value of Incentive Options granted is estimated as at the date of grant using the Black Scholes option
valuation model taking into account the terms and conditions upon which the Incentive Options were granted. The
table below lists the inputs to the valuation model used for share options granted by the Company during the last
two years:
Inputs
Exercise price
Grant date share price
Dividend yield1
Volatility
Risk-free interest rate
Grant date
Vesting date
Expiry date
Series 1
Series 2
Series 3
A$0.25
A$0.20
-
95%
2.16%
9-Apr-18
9-Apr-18
9-Apr-21
A$0.30
A$0.20
-
95%
2.22%
9-Apr-18
9-Oct-19
9-Oct-21
A$0.40
A$0.20
-
95%
2.22%
9-Apr-18
9-Apr-20
9-Apr-22
Expected life of option
3.00 years
3.50 years
4.00 years
Fair value at grant date
A$0.1113
A$0.1126
A$0.1098
Notes:
1 The dividend yield reflects the assumption that the current dividend payout will remain unchanged.
Constellation Resources Limited ANNUAL REPORT 2019 37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
18. RELATED PARTIES
(a) Key Management Personnel
Transactions with Key Management Personnel are included at Note 19.
(b)
Transactions with Related Parties
On 30 April 2018, the Company entered into a working capital facility agreement with Apollo Minerals Limited
(“Apollo Minerals”) (parent entity at the time of the transaction). Under the terms of the agreement, Apollo Minerals
advanced $100,000 to the Company to enable the Company to meet certain operating expenses. The Company
repaid the balance to Apollo Minerals during the financial year ended 30 June 2019.
19. KEY MANAGEMENT PERSONNEL
(a) Details of Key Management Personnel
The KMP of the Company during or since the end of the financial year were as follows:
Current Directors
Mr Ian Middlemas
Mr Peter Woodman
Mr Robert Behets
Mr Mark Pearce
Other KMP
Mr Lachlan Lynch
Mr Clint McGhie
Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Company Secretary (appointed 24 October 2018)
Company Secretary (resigned 24 October 2018)
Unless otherwise disclosed, KMP held their position from 1 July 2018 until 30 June 2019.
(b) Remuneration of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
2019
$
339,974
26,312
50,667
416,953
2018
$
54,796
5,203
43,385
103,384
(c)
Loans from Key Management Personnel
No loans were provided to or received from Key Management Personnel during the year ended 30 June 2019 (2018:
Nil).
(d) Other Transactions
Apollo Group Pty Ltd (“Apollo Group”), a Company of which Mr Mark Pearce is a director and beneficial shareholder,
provides corporate, administration and company secretarial services and serviced office facilities to the Company
under a services agreement effective from 1 August 2018. Either party can terminate the services agreement at
any time for any reason by giving one months’ written notice. Apollo Group received a monthly retainer of $15,000
(exclusive of GST) for the provision of these services. The monthly retainer is reviewed every six to twelve months
and is based on Apollo Group’s budgeted cost of providing the services to the Company (and other companies
utilising same or similar services from Apollo Group) for the next six to twelve month period, with minimal mark-up.
From time to time, Apollo Group may also receive additional fees (as agreed with the Company) in respect of
services provided by Apollo Group to the Company that are not included in the agreed services covered by the
monthly retainer. During the year ended 30 June 2019, Apollo Group was paid $25,000 (2018: $nil) additional fees
for services in relation to the Company’s listing on the Australian Securities Exchange.
Constellation Resources Limited ANNUAL REPORT 2019 38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
20. INTERESTS IN JOINT OPERATIONS
The Company has interests in the following joint operations:
Principal Activities
Country
Interest
Carrying Amount
2019
%
2018
%
2019
$
2018
$
Exploration for nickel, copper and
gold in the Fraser Range
Australia
70
70
350,000
350,000
Name
Orpheus
Project
Orpheus Project
Constellation Resources has a 70% interest in the unincorporated Orpheus Joint Venture with Enterprise Metals
Limited (30% interest). The Orpheus Joint Venture area consists of four tenements (E28/2403, E63/1281, E63,1282
and E63/1695) in the prospective Fraser Range province.
Constellation Resources is required to sole fund all joint operation activities until the date it delivers a Bankable
Feasibility Study for a Mining Area to Enterprise Metals Limited.
21. SEGMENT INFORMATION
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the
Company that are regularly reviewed by the chief operating decision maker in order to allocate resources to the
segment and to assess its performance.
The Company operates in one segment, being exploration for mineral resources and in one geographical location
being Australia. This is the basis on which internal reports are provided to the Directors for assessing performance
and determining the allocation of resources within the Company.
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Overview
The Company's principal financial instruments comprise cash and cash equivalents, trade and other receivables,
trade and other payables and borrowings. The main risk arising from the Company's financial instruments is liquidity
risk.
This note presents information about the Company's exposure to the above risk, its objectives, policies and
processes for measuring and managing risk, and the management of capital. Other than as disclosed, there have
been no significant changes since the previous financial year to the exposure or management of these risks.
The Company manages its exposure to key financial risks in accordance with the Company's financial risk
management policy. Key risks are monitored and reviewed as circumstances change (e.g. acquisition of a new
project) and policies are revised as required. The overall objective of the Company's financial risk management
policy is to support the delivery of the Company's financial targets whilst protecting future financial security.
Given the nature and size of the business and uncertainty as to the timing and amount of cash inflows and outflows,
the Company does not enter into derivative transactions to mitigate the financial risks. In addition, the Company's
policy is that no trading in financial instruments shall be undertaken for the purposes of making speculative gains.
As the Company's operations change, the Directors will review this policy periodically going forward.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. The Board reviews and agrees policies for managing the Company's financial risks as summarised
below.
Constellation Resources Limited ANNUAL REPORT 2019 39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
(a) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The
Board's approach to managing liquidity is to ensure, as far as possible, that the Company will always have sufficient
liquidity to meet its liabilities when due.
The contractual maturities of financial liabilities, including estimated interest payments, are provided below. There
are no netting arrangements in respect of financial liabilities.
2019
Financial Liabilities
Trade and other payables
2018
Financial Liabilities
Trade and other payables
Borrowings
(b) Commodity Price Risk
≤6 Months
A$
6-12
Months
A$
1-5 Years
A$
≥5 Years
A$
Total
A$
100,925
100,925
-
-
-
-
-
-
100,925
100,925
≤6 Months
A$
6-12
Months
A$
1-5 Years
A$
≥5 Years
A$
Total
A$
304,133
100,000
404,133
-
-
-
-
-
-
-
-
-
304,133
100,000
404,133
The Company is exposed to commodity price risk. These commodity prices can be volatile and are influenced by
factors beyond the Company's control. As the Company is currently engaged in exploration and business
development activities, no sales of commodities are forecast for the next 12 months, and accordingly, no hedging
or derivative transactions have been used to manage commodity price risk.
(c) Capital Management
The Company manages its capital to ensure that it will be able to continue as a going concern while financing the
development of its projects through primarily equity based financing. The Board's policy is to maintain a strong
capital base so as to maintain investor, creditor and market confidence and to sustain future development of the
business. Given the stage of the Company, the Board's objective is to minimise debt and to raise funds as required
through the issue of new shares.
The Company is not subject to externally imposed capital requirements.
There were no changes in the Company's approach to capital management during the year. During the next 12
months, the Company will continue to explore financing opportunities, primarily consisting of additional issues of
equity should it be required.
(d) Fair Value
The Company uses various methods in estimating the fair value of a financial instrument. The methods comprise:
•
•
•
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable
market data.
The net fair value of financial assets and financial liabilities approximates their carrying value as at 30 June 2019
and 30 June 2018. The methods for estimating fair value are outlined in the relevant notes to the financial
statements. The quoted market price represents the fair value determined based on quoted prices on active
markets as at the reporting date without any deduction for transaction costs.
Constellation Resources Limited ANNUAL REPORT 2019 40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
(e)
Interest Rate Risk
The Company's exposure to the risk of changes in market interest rates relates primarily to the cash and short-term
deposits with a floating interest rate.
These financial assets with variable rates expose the Company to cash flow interest rate risk. All other financial
assets and liabilities, in the form of receivables and payables are non-interest bearing.
At the reporting date, the interest rate profile of the Company's interest-bearing financial instruments was:
Interest-bearing financial instruments
Cash and cash equivalents
2019
$
5,589,116
5,589,116
2018
$
33,189
33,189
The Company’s cash at bank and on hand had a weighted average floating interest rate at year end of 2.22% (2018:
0.00%). The Company currently does not engage in any hedging or derivative transactions to manage interest rate
risk.
Interest rate sensitivity
A sensitivity of 20 basis points has been selected as this is considered reasonable given the current level of both
short term and long term interest rates. A 20 basis point movement in interest rates at the reporting date would
have increased (decreased) equity and profit and loss by the amounts shown below. This analysis assumes that
all other variables, remain constant. The analysis is performed for the current period as cash reserves were not
held in the prior year for a significant period.
Profit or loss
Other Comprehensive
Income
20bp
Increase
20bp
Decrease
20bp
Increase
20bp
Decrease
2019
Cash and cash equivalents
24,775
(24,775)
24,775
(24,775)
(f) Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. This arises principally from cash and cash equivalents and trade and other
receivables.
There are no significant concentrations of credit risk within the Company. The carrying amount of the Company's
financial assets represents the maximum credit risk exposure, as represented below:
Financial assets
Cash and cash equivalents
Other receivables
2019
$
2018
$
5,589,116
33,189
44,519
3,614
5,633,635
36,803
Constellation Resources Limited ANNUAL REPORT 2019 41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(Continued)
The Company does not have any customers and accordingly does not have any significant exposure to credit
losses. Other receivables comprise primarily GST refunds and interest receivable. At 30 June 2019, none (2018:
none) of the Company's receivables are past due. No impairment losses on receivables have been recognised.
With respect to credit risk arising from cash and cash equivalents, the Company's exposure to credit risk arises
from historical default of the counter party, with a maximum exposure equal to the carrying amount of these
instruments.
23. COMMITMENTS
As a condition of retaining the current rights to tenure to exploration tenements, the Company is required to pay an
annual rental charge and meet minimum expenditure requirements for each tenement. These obligations are not
provided for in the financial statements and are at the sole discretion of the Company:
Commitments for exploration expenditure:
Not longer than 1 year
Longer than 1 year and shorter than 5 years
24. CONTINGENT ASSETS AND LIABILITIES
2019
$
2018
$
273,500
373,201
86,149
313,289
359,649
686,490
As at the date of this report, no material contingent assets or liabilities had been identified as at 30 June 2019 (2018:
nil).
25. AUDITORS' REMUNERATION
Amounts received or due and receivable by William Buck for:
an audit or review of the financial report of the Company
other services in relation to the Company
2019
$
15,300
1,000
16,300
2018
$
13,000
6,000
19,000
In the current year, other services provided by William Buck relate to a Form 5 tenement expenditure audit whilst in
the prior year, the other services relate to the Investigating Accountant’s report undertaken as part of the Company’s
Prospectus.
26. EVENTS SUBSEQUENT TO REPORTING DATE
As at the date of this report, there are no matters or circumstances which have arisen since 30 June 2019 that have
significantly affected or may significantly affect:
•
•
•
the operations, in financial years subsequent to 30 June 2019, of the Company;
the results of those operations, in financial years subsequent to 30 June 2019, of the Company; or
the state of affairs, in financial years subsequent to 30 June 2019, of the Company.
Constellation Resources Limited ANNUAL REPORT 2019 42
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Constellation Resources Limited:
1.
In the opinion of the directors:
(a)
the attached financial statements, notes and the additional disclosures included in the directors' report
designated as audited, are in accordance with the Corporations Act 2001, including:
(i)
section 296 (compliance with accounting standards and Corporations Regulations 2001); and
(ii)
section 297 (gives a true and fair view of the financial position as at 30 June 2019 and of the
performance for the year ended on that date of the Company); and
(b)
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 attached financial statements and notes thereto are in compliance with International Financial Reporting
Standards, as stated in Note 1 to the financial statements.
The Directors have been given a declaration required by section 295A of the Corporations Act 2001 for the
financial year ended 30 June 2019.
2.
3.
On behalf of the Board
PETER WOODMAN
Managing Director
23 August 2019
Constellation Resources Limited ANNUAL REPORT 2019 43
INDEPENDENT AUDITOR’S REPORT
Constellation Resources Limited
Independent auditor’s report to members
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Constellation Resources Limited (the Company),
which comprises the statement of financial position as at 30 June 2019, the statement
of profit or loss and other comprehensive income, the statement of changes in equity
and the statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other
explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Company, is in accordance with
the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s financial position as at 30 June 2019
and of its financial performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Company 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.
Constellation Resources Limited ANNUAL REPORT 2019 44
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
THE YEAR ENDED 30 JUNE 2017
THE YEAR ENDED 30 JUNE 2017
(Continued)
(Continued)
Constellation Resources Limited
Independent auditor’s report to members
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Key Audit Matter
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. The key audit
matter was 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 this matter.
CARRYING VALUE OF EXPLORATION COST
Area of focus
Refer also to notes 1(g) and 8
How our audit addressed it
Our audit procedures included:
— A review of the directors’ assessment
of the criteria for the capitalisation of
exploration expenditure and
evaluation of whether there are any
indicators of impairment to
capitalised costs.
— Assessing the viability of the
tenements and whether there were
any indicators of impairment to those
costs capitalised in the current
period.
— We assessed the adequacy of the
Company’s disclosures in respect of
the transactions.
The Company has capitalised
exploration costs relating to the Orpheus
Project located in the Fraser Range area.
There is a risk that accounting criteria
associated with the capitalisation of
exploration and evaluation expenditure
may no longer be appropriate and that
capitalised costs exceed the value in
use.
An impairment review is only required if
an impairment trigger is identified. Due to
the nature of the mining industry,
indicators of impairment applying the
value in use model include:
— Significant decrease seen in global
mineral prices
— Changes to exploration plans
— Loss of rights to tenements
— Changes to reserve estimates
— Costs of extraction and production
Constellation Resources Limited ANNUAL REPORT 2019 45
Constellation Resources Limited ANNUAL REPORT 2019 45
NOTES TO THE FINANCIAL STATEMENTS
THE YEAR ENDED 30 JUNE 2017
(Continued)
Constellation Resources Limited
Independent auditor’s report to members
Other Information
The directors are responsible for the other information. The other information comprises
the information in the Company’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 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 Company 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 Company or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as
a whole is free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
Constellation Resources Limited ANNUAL REPORT 2019 46
NOTES TO THE FINANCIAL STATEMENTS
THE YEAR ENDED 30 JUNE 2017
(Continued)
Constellation Resources Limited
Independent auditor’s report to members
A further description of our responsibilities for the audit of these financial statements is
located at the Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 9 to 15 of the directors’
report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Constellation Resources 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.
William Buck Audit (WA) Pty Ltd
ABN 67 125 012 124
Conley Manifis
Director
Dated this 23rd day of August 2019
Constellation Resources Limited ANNUAL REPORT 2019 47
CORPORATE GOVERNANCE STATEMENT
NOTES TO THE FINANCIAL STATEMENTS
THE YEAR ENDED 30 JUNE 2017
(Continued)
Constellation Resources Limited (“Constellation Resources” or “Company”) believes corporate governance is
important for the Company in conducting its business activities.
The Board of the Company has adopted a suite of charters and key corporate governance documents which
articulate the policies and procedures followed by the Company.
These documents are available
the Company’s website,
www.constellationresources.com.au. These documents are reviewed annually to address any changes in
governance practices and the law.
the Corporate Governance section of
in
The Company’s Corporate Governance Statement 2019, which explains how Constellation Resources complies
with the ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations – 3rd
Edition’ in relation to the year ended 30 June 2019, is available in the Corporate Governance section of the
Company’s website, www.constellationresources.com.au and will be lodged with ASX together with an Appendix
4G at the same time that this Annual Report is lodged with ASX.
In addition to the ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations
– 3rd Edition’ the Board has taken into account a number of important factors in determining its corporate
governance policies and procedures, including the:
•
relatively simple operations of the Company, which currently only undertakes mineral exploration and
development activities;
cost verses benefit of additional corporate governance requirements or processes;
size of the Board;
•
•
• Board’s experience in the resources sector;
•
•
•
•
organisational reporting structure and number of reporting functions, operational divisions and employees;
relatively simple financial affairs with limited complexity and quantum;
relatively small market capitalisation and economic value of the entity; and
direct shareholder feedback.
Constellation Resources Limited ANNUAL REPORT 2019 48
ASX ADDITIONAL INFORMATION
NOTES TO THE FINANCIAL STATEMENTS
THE YEAR ENDED 30 JUNE 2017
(Continued)
The shareholder information set out below was applicable as at 31 July 2019.
1.
TWENTY LARGEST HOLDERS OF LISTED SECURITIES (ORDINARY SHARES)
The names of the twenty largest holders of listed securities are listed below:
Name
Arredo Pty Ltd
Bennelong Resource Capital Pty Ltd
Zero Nominees Pty Ltd
Croseus Mining Pty Ltd
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