KKORA
AB R
AND C
RESO
CONTR
OURC
ROLLE
CES
ED ENT
LIM
TITIES
D
MITED
ABN 1
17 082 14
40 252
AN
NNUA
AL R
REPO
ORT
FOR
R THE
YEAR
ENDED
D 30 J
UNE 20
019
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
TABLE OF CONTENTS
Corporate Directory ............................................................................................................................................ 3
Directors’ Report ........................................................................................................................................... 4-14
Auditor’s Independence Declaration ................................................................................................................. 15
Consolidated Statement of Profit and Loss and Other Comprehensive Income .............................................. 16
Consolidated Statement of Financial Position .................................................................................................. 17
Consolidated Statement of Cash Flows ........................................................................................................... 18
Consolidated Statement of Changes in Equity ................................................................................................. 19
Notes to the Financial Statements .............................................................................................................. 20-42
Directors’ Declaration ....................................................................................................................................... 43
Independent Auditor’s Report ..................................................................................................................... 44-47
Corporate Governance ............................................................................................................................... 48-51
Additional Shareholder Information ............................................................................................................ 52-56
2
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
CORPORATE DIRECTORY
DIRECTORS
Andrej K. Karpinski (Executive Chairman)
Rodney H.J. Skeet (Non-Executive Director)
Daniel A. Smetana (Non-Executive Director)
Anthony G Wills (Non-Executive Director)
COMPANY SECRETARY
Andrej K. Karpinski
REGISTERED & PRINCIPAL OFFICE
20 Prowse Street
West Perth WA 6005
Telephone: (08) 9474 6166
Facsimile: (08) 9322 6333
E-mail: information@korabresources.com.au
Website: www.korabresources.com.au
AUDITORS
HLB Mann Judd
Level 4
130 Stirling Street
Perth WA 6000
SHARE REGISTRY
Link Market Services Limited
Level 12, QV1 Building
250 St Georges Terrace
Perth, WA 6000
Telephone: 1300 554 474
International Telephone: +61 2 8280 7761
Facsimile: (02) 9287 0303
Email: registrars@linkmarketservices.com.au
SECURITIES EXCHANGE LISTING
Securities of Korab Resources Limited are listed on ASX Limited
(securities code KOR: shares)
3
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
The directors present their report together with the financial report of the consolidated entity, being Korab
Resources Limited (“Korab” or “Company”) and its subsidiaries (“consolidated entity” or “Group”), at the end
of and for the year ended 30 June 2019. Korab Resources Limited is a listed public company incorporated
and domiciled in Australia.
(LOSS) FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT
Annual loss after taxation ($ million)
Basic and diluted loss per share (cents per share)
2019
(0.543)
(0.18)
2018
(0.491)
(0.17)
2017
(0.602)
(0.26)
DIRECTORS
The names and details of the Company’s Directors in office at any time during the financial year and up to
the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.
Andrej K. Karpinski, FAICD, F Fin (Executive Chairman)
Appointed April 1998
Responsibilities:
Mr. Karpinski has responsibilities for business development, all capital raisings,
investor relations, ASX liaison, risk identification and management, strategic direction
and financial management of the Company, performance evaluations and corporate
governance.
Qualifications:
Mr. Karpinski’s background is in mining, investment banking, commodities trading and
funds management. He has held senior positions with Australian and international
companies operating in mining and exploration, oil and gas, corporate finance,
commodities trading and funds management. He brings to the Company his network of
Australian and international contacts within the resources and securities sectors, his
administrative skills and his expertise in project evaluation and sourcing, financial risk
management, treasury management, project financing and resources banking. Mr.
Karpinski is a Fellow of the Australian Institute of Company Directors, a Fellow of the
Financial Services Institute of Australasia and a Professional Member of the Society of
Petroleum Engineers. Mr. Karpinski is the founder of Korab Resources Limited and he
has been its Executive Chairman since March 1998 when the Company was
incorporated.
Other Directorships: During the past three years Mr Karpinski has not held any other listed company
directorships. Mr Karpinski is a Director of unlisted public company Polymetallica
Minerals Limited (formerly Uranium Australia Limited).
Rodney H. J. Skeet (Non-Executive Director)
Appointed November 2002
Responsibilities:
Mr. Skeet contributes his resources financing skills as well as his investment banking
and resources sector contacts.
Qualifications:
Mr. Skeet’s background is in commodities financing and investment banking. During
his career spanning 39 years he has held senior positions with financial institutions in
the UK and USA including Phillip & Lion, IndoSuez, Credit Agricole, Rudolf Wolf and
Brody White, Inc. His most recent position was as vice president with Dean Witter-
Morgan Stanley Group in New York. He brings to the Company his broad network of
international contacts within resources and securities sectors and his expertise in
resources financing.
Other Directorships: During the past three years Mr Skeet has not held any other listed company
directorships. Mr Skeet is a director of unlisted public company Polymetallica Minerals
Limited (formerly Uranium Australia Limited).
4
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
Daniel A. Smetana (Non-Executive Director)
Appointed 28 October 2013
Responsibilities:
Mr. Smetana contributes his corporate governance experience and his strategic
planning expertise.
Qualifications:
Mr. Smetana has been Chairman of ASX listed Joyce Corporation Ltd since 1984.
He is also the Chairman of Bedshed Franchising Pty Ltd. He is a past President
of the Industrial Foundation for Accident Prevention and remains a Director. He is a
Director of St John of God Foundation and Chairman of the St John of God
Comprehensive Cancer Centre Fundraising Committee.
His past board memberships include: Director of Edge Employment Solutions Inc,
Deputy Chairman of Youth Focus Inc (1998 - 2007), Deputy Chairman Western
Power Corporation and Chairman of its Finance Committee until 2003, Chairman
and National Councillor of the Defence Reserves Support Council - WA (1997 -
2006), Director of WA Symphony Orchestra until 2003. Vice President and
Councillor of the WA Federation of Police and Community Youth Centres (Inc.),
Mr Smetana, Dip Comm, is a Fellow of CPA Australia, a Fellow of Australian Institute
of Management and a Fellow of Australian Institute of Company Directors.
His awards include 2003 Centenary Medal for Service to Commerce and Community,
2007 Ian Chisholm Award for Distinguished Service to Occupational Health and
Safety, 1998 WA Business Executive of the Year Award.
Other Directorships: During the past three years Mr Smetana has been Chairman of ASX listed Joyce
Corporation Ltd and a Director of unlisted public company Polymetallica Minerals Ltd
(2008 - 2019).
Anthony G Wills (Non-Executive Director)
Appointed 1 May 2015
Responsibilities:
Mr. Wills brings to the Company experience in strategic planning, operations, security
and risk management, communications, public relations and foreign affairs gained over
his 30-year career.
Qualifications:
Mr. Wills’ background is in defence and finance. Mr Wills has for the last 15 years
been involved in the finance industry. Prior to that he served for 20 years in the
Australian Defence Force, including 10 years in the Specials Forces serving with the
SAS Regiment. Mr. Wills also brings to the Company his extensive network of
Australian and overseas contacts established through his involvement with the United
Nations and its various missions. Mr Wills is a member of the Australian Institute of
Company Directors and a senior associate of the Financials Services Institute of
Australasia. Mr. Wills continues his longstanding involvement with the SAS Regiment
through his ongoing work for the SAS Resources Fund.
Other Directorships: During the past three years Mr Wills has not held any other listed company
directorships.
COMPANY SECRETARY
Mr Andrej K. Karpinski was appointed Company Secretary in March 1998. Mr Karpinski (FAICD, F Fin) has a
number of years’ experience in the position of Company Secretary.
5
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
PRINCIPAL ACTIVITIES
The principal activity of the consolidated entity during the year was mineral exploration and the evaluation of
mineral properties. There were no significant changes in the nature of these activities during the financial
year.
DIVIDENDS PAID OR RECOMMENDED
No dividends were paid during the year and the directors do not recommend payment of a dividend in
respect of the reporting period (2018: Nil).
OPERATING RESULTS
The loss of the consolidated entity after providing for income tax amounted to $543,380 (2018 loss:
$490,813) primarily related to corporate compliance and administration costs of $766,925 (2018: $609,026).
FUTURE DEVELOPMENTS
Likely future developments in the operations of the Company are referred to in the Directors’ Report. The
directors are of the opinion that further information as to likely developments in the operations of the
consolidated entity would prejudice the interests of the consolidated entity and accordingly it has not been
included.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave to the Court to bring proceedings on behalf of the Company or intervene in
any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the
Company for all or any part of those proceedings. The Company was not a party to any such proceedings
during the year.
REVIEW OF OPERATIONS
On 25 July 2018 the Company announced that subsidiaries Australian Copper Pty Ltd and Australian
Copper Holdings Pty Ltd (together “Auscopper”) had executed a term sheet with a third party for the third
party to acquire an option to purchase the Mt. Elephant Project (“Project”) located in Western Australia. The
term sheet is binding upon the parties but is subject to shareholder approval, if required under the ASX
Listing Rules, and the third party being admitted to the official list of the ASX. The third party paid Auscopper
a $50,000 option fee to acquire an option to purchase the Project. The option term was 9 months from 21
July 2018. Upon exercise of the option the consideration for the Project will be $500,000 payable in ordinary
shares of the third party. Australian Copper Holdings Pty Ltd will be responsible for defending the forfeiture
action in respect of one of the Project tenements. Should it be forfeited the third party will have 30 days to
decide if it wants to terminate the option. If the third party so terminates the option, Auscopper will refund the
third party the $50,000 option fee plus 50% of the exploration expenditure, tenement rent, and local
government rates paid for by the third party in respect of the Project.
On 25 July Company announced that its subsidiary Geolsec Phosphate Operations Pty Ltd signed an
agreement with a third party (the “Miner”) for the Miner to sub-lease the Geolsec phosphate deposit located
in the Northern Territory for a fixed monthly fee plus a royalty. The terms of the transaction are as follows:
In exchange to having the rights to quarry the phosphate rock, and explore the Geolsec tenement (the
“Tenement”) for additional phosphate rock, the Miner will pay Geolsec:
1.
2.
3.
Fixed fee of $20,000 per month.
Gross royalty of $2/tonne of phosphate rock removed from the Tenement.
Interim Additional Royalty of $5/tonne of phosphate rock removed from the Tenement.
The term of the agreement is for a period from 21 July 2018 (“Commencement Date”) until the date when the
Tenement expires, or otherwise ceases. Geolsec can terminate the agreement at its discretion if the Miner
6
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
does not achieve the minimum production level of 60,000 tonnes of phosphate rock quarried and removed
from the Tenement in any continuous 2 year period. The Miner will be responsible for all Tenement
maintenance costs including rent, local government rates, statutory reporting, etc. The Miner will also be
responsible for all phosphate quarry permitting, preparation and submission of any mine management plans
in respect of the phosphate rock, obtaining any required authorisations, quarry development, quarry
operations, phosphate rock sales, payment of statutory royalties levied by the Northern Territory
government, phosphate rock marketing and shipping, and the rehabilitation of the Tenement, etc. Geolsec
will retain all property rights in the Tenement and will retain the rights to explore for other commodities within
the Tenement and to develop any discoveries of all minerals other than phosphate rock. If any Gross Royalty
will be payable by the Miner in any particular month, $10,000 of the $20,000 Fixed Fee payable by the Miner
for that particular month will count towards the amount of Gross Royalty due for that month. Any Fixed Fees
paid in other months will not be affected. Interim Additional Royalty will be initially payable by the Miner for a
period of 5 years from the Commencement Date. At the end of the 5 year period Geolsec will advise the
Miner of any amounts that were paid or are payable by Geolsec in respect of any third parties claims (if any)
regarding phosphate rock production, and any surplus amount over and above these claims (if any) will be
split 50-50 between Geolsec and the Miner. If no claims were paid or are payable by Geolsec at the end of
the 5 year initial period, the Miner will no longer be required to pay the Interim Additional Royalty to Geolsec.
On 6 August 2018, the Company reported that it had decided to withdraw the applications for exploration
licences forming the Pilbara project so it can concentrate on the Winchester magnesite project and the
adjacent Batchelor polymetallic project (both located in the Northern Territory).
On 12 September 2018 the Company reported in a report titled “ADDITIONAL INFORMATION -
WINCHESTER MAGNESITE FEASIBILITY STUDY UPDATE”, additional information regarding the earnings
estimates of potential additional revenue streams from production of caustic calcined magnesia (CCM) and
dead burned magnesia (DBM) using output from the Winchester magnesite project as a raw material feed.
The information was based on the update to the previously reported feasibility study and concerned the
additional financial information as regards the potential earnings that would result from diverting a part or the
whole of the raw magnesium carbonate rock to be produced by the Winchester quarry to the toll-treatment
processing into CCM and/or DBM. This update was based on the production target initially reported on 21
March 2018, in a report titled ”WINCHESTER MAGNESITE DIRECT SHIPPING ORE FEASIBILITY STUDY
RESULTS (EARNINGS, NPV, EBITDA, CAPEX, AND OPEX)”.
The Company confirms that all the material assumptions underpinning the production target in the initial
public reports released on 21 March 2018 and 12 September 2018 continue to apply and have not materially
changed. The Company further confirms that all the material assumptions underpinning the forecast financial
information derived from a production target in the initial public reports released on 21 March 2018 and 12
September 2018 continue to apply and have not materially changed.
The reports can be downloaded directly from the ASX website by either following the links below or by
cutting and pasting these links into your browser:
“WINCHESTER MAGNESITE DIRECT SHIPPING ORE FEASIBILITY STUDY RESULTS (EARNINGS,
NPV, EBITDA, CAPEX, AND OPEX)” – 21 March 2018
https://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01964262
”WINCHESTER MAGNESITE DIRECT SHIPPING ORE FEASIBILITY STUDY RESULTS (EARNINGS,
NPV, EBITDA, CAPEX, AND OPEX)” – 12 September 2018
https://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=02021411
On 30 November 2018 and 4 December 2018 Korab reported that it had expanded the agreement with the
operator of Darwin Port to 800,000 tonnes per year to allow for additional volumes of magnesium carbonate
rock to be shipped for toll-processing. This rock will be shipped through Darwin Port in addition to DSO
magnesium carbonate rock.
The agreement envisages exporting of up to 800,000 tonnes per year of magnesium carbonate rock through
Darwin Port East Arm Wharf and includes sub-leasing of the land, access to various port facilities, use of
loaders, and other equipment. The Heads of Agreement provides the basis for the final port agreement
7
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
which will allow for shipping of the magnesium carbonate rock through Darwin port. The costs of, and the
fees for the sub-leasing of the land, access to various port facilities, use of loaders, and other equipment
have not yet been agreed between the Company and Darwin Port. They will be determined in the final port
agreement.
East Arm Wharf is a multi-user facility with 4 berths spaced along 865 metres of quay line. Berth 2 is used for
bulk ore exports and has a rail mounted dry bulk ship loader. The continuous length of wharf facilitates
flexibility in berth allocations to visiting ships. East Arm Wharf can accommodate PANAMAX class bulk
carriers up to 75,000 tonnes.
East Arm Wharf has a rail mounted bulk minerals ship loader with a maximum capacity of 2,000 tonnes per
hour. Bulk minerals, such as iron ore, magnesium carbonate, or manganese, can be delivered to stockpile
areas by haulage trucks, or transferred from rail wagons to the stockpile areas using a dedicated rail dump
and conveyor systems. The minerals are transported by truck from the stockpiles to the ship loader truck
dump for loading onto bulk carriers.
On 17 January 2019 Korab Group reported that it had executed an agreement with ZM Ropczyce SA
(“Ropczyce”) regarding an off-take and co-operation with regards to funding, research and development,
markets expansion, and development of new products. This followed on the series of meetings with the
Ropczyce senior management team and multiple visits by Korab staff to Ropczyce operations in Poland.
Under the agreement, the parties want to develop a long-term strategic relationship. The agreement
envisages Korab supplying up to 20,000 tonnes (depending on market conditions) per year of Dead Burned
Magnesia (“DBM”, or “sintered magnesia”) to Ropczyce, and Ropczyce providing Korab with R&D support
associated with the co-operation under the agreement and also aimed at broadening Ropczyce’s product
range and markets. The parties allow for capital co-operation in respect of the funding required to develop
and expand production of DBM. The terms of the capital co-operation have not been agreed yet. The actual
pricing of DBM will be set six-monthly and will be determined in the formal agreement which will be prepared
in the future. Ropczyce is a producer and supplier of refractories essential to the production of steel, cement,
and glass, as well as in other processes requiring work at high temperatures. Ropczyce is listed on the
Warsaw Securities Exchange (GPW) and has been operating since 1975. For the nine months ending 30
September 2018 it had sales of approximately PLN 275 Mln ($102 Mln). The company provides a full
product range with a wide spectrum of complex services connected with refractory ceramics across the
entire product life cycle, starting from the design and technical advice through the supply of ceramics,
installation, and installation supervision until servicing. It currently supplies end users operating in steel,
cement, foundries, glass, and non-ferrous metals sectors.
On 18 January 2018, Korab reported the strategy regarding the development of the Winchester project. The
overall strategy of Korab is to secure several offtakes for magnesium carbonate rock, CCM, and/or DBM
prior to commencing the operations at Winchester. At this point in time, Korab’s preference is to have the
offtakes being subject to Korab being in a position to quarry the raw material, which means Korab having
secured all required permits and approvals, completing the arrangements with relevant stakeholders, and
completing the construction of the quarry and the related infrastructure. It is Korab’s belief that this approach
will reduce the operational and financial risks for the Company. Notwithstanding the above preference,
should any of the potential buyers be willing to enter into an offtake agreement which would be binding on
the buyer but not on the Korab Group, Korab would be pleased to enter into such an agreement. Magnesium
carbonate, CCM, and DBM markets have undergone significant level of disruption over the last 18 months
due to Chinese government focusing on pollution control and environmental protection which resulted in
many of the older and more polluting magnesium carbonate quarries and kilns located in China being shut
down. This has caused a sharp increase in prices for raw magnesium carbonate rock, CCM, and DBM in the
global markets. Korab Group aims to take advantage of this disruption to enter the market as a new supplier
of magnesium carbonate rock, CCM, and DBM at the time of reduced overall supply and elevated prices.
The Company aimed to have the Winchester project in production in the second half of 2019, although this
goal was subject to the quarry operator (Ausmag Pty Ltd, a wholly owned subsidiary of Korab) securing all
required permits, and approvals, and completing the arrangements with relevant stakeholders.
On 29 January 2019, Korab Group reported that it had unexpectedly received several expressions of interest
to buy up to 60,000 tonnes per year of low grade CCM and low grade DBM which could be produced (using
kilns owned and operated by third parties on toll-processing basis) from the fines resulting from crushing and
screening of raw magnesium carbonate rock and from the other low grade material. The fines resulting from
crushing and screening and the low grade magnesium carbonate rock were considered by us until now to be
a “waste” product. The mining and crushing/screening cost have already been absorbed into the overall
costings of the Winchester project operations reported earlier and the cost of toll-processing of this material
8
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
is relatively low. Therefore the additional revenue stream from processing and sales of what was previously
considered a “waste” product appears attractive. The discussions with interested parties are ongoing but are
incomplete and details are confidential. There can be no certainty that any agreement or agreements can be
reached or that any transaction will eventuate from these discussions. No commercial terms have been
agreed between the parties. Accordingly, no investment decision should be made on the basis of this
information. Korab will advise the market if and when an agreement or agreements have been reached.
On 6 March 2019 the Company announced that two of the Mt Elephant exploration licences had been
extended for a period of 5 years.
On 5 April 2019 the Company provided the results of an update of the feasibility study assessing potential
economic impact of the toll-treatment processing of low grade magnesite material into caustic calcined
magnesia (CCM) and dead burned magnesia (DBM) and their sales (as an additional product stream). The
Company confirms that all the material assumptions underpinning the production target in the initial public
reports released on 21 March 2018, 12 September 2018, and 5 April 2019 continue to apply and have not
materially changed. The Company further confirms that all the material assumptions underpinning the
forecast financial information derived from a production target in the initial public reports released on 21
March 2018, 12 September 2018, and 5 April 2019 continue to apply and have not materially changed.
On 24 April 2019 the Company announced extension of the option over Mt. Elephant project granted to
Great Fingal Mining Company to 21 October 2019 for an option premium of $10,000.
Following the end of the period, on 24 September 2019 the Company provided an update regarding the
Bobrikovo project located in eastern Ukraine.
Batchelor Polymetallic Project
During the year Korab continued exploration of the project within licences listed in the schedule of tenements
on page 52. No material exploration results were generated.
Mt. Elephant Gold and Copper Project
During the year Korab continued exploration of the project within licences listed in the schedule of tenements
on page 53. No material exploration results were generated.
Corporate
On 4 October 2018 the Company issued 3,500,000 shares at 2.9 cents per share to raise $101,500 to
unrelated exempt investors.
On 7 January 2019 the Company issued 2,000,000 shares at 2.5 cents per share to raise $50,000 to
unrelated exempt investors.
On 29 April 2019 the Company issued 2,342,856 shares at 3.5 cents per share to raise $82,000 to unrelated
exempt investors.
On 14 June 2019 the Company issued 600,645 shares at 3.1 cents per share to raise $18,620 to unrelated
exempt investors.
DIRECTORS’ INTERESTS
At the date of this report, the relevant interests of the directors in securities of the Company are as follows:
Name
Ordinary shares Options over ordinary shares
Andrej K. Karpinski
Rodney H.J. Skeet
Daniel A. Smetana
Anthony G Wills
59,734,739
569,238
951,407
-
ENVIRONMENTAL ISSUES
-
-
-
-
The Group has a policy of complying with or exceeding its environmental performance obligations. The
Board believes that the Company has adequate systems in place for the management of its environmental
requirements. The Group aims to ensure the appropriate standard of environmental care is achieved, and in
9
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
doing so, that it is aware of and is in compliance with all environmental legislation. The directors of the
Group are not aware of any breach of environmental legislation for the financial year under review.
IDENTIFICATION OF INDEPENDENT DIRECTORS
The independent directors are identified in the Corporate Governance Statement section of this Financial
Report as set out on pages 48 to 51.
MEETINGS OF DIRECTORS
The number of directors' meetings held during the financial year for each director who held office during the
financial year and the number of meetings attended by each director is as follows:
Director
Andrej K. Karpinski
Anthony G Wills
Rodney H.J. Skeet
Daniel A. Smetana
Number eligible to
attend
19
19
19
19
Meetings
attended
19
19
1
16
SHARE OPTIONS
Shares under option
The following is the movement during the period in options over shares in the Company.
Expiry
date
Exercise
price
Number
01/07/18
-
Issued
-
Expired
-
Exercised
-
Number
30/06/19
-
No options have been granted since the end of the reporting period. There have been no options exercised
since the end of the reporting period. During the reporting period there was no forfeiture or vesting of options
granted in previous periods.
SUBSEQUENT EVENTS
On 11 July 2019 the Company issued 5,000,000 shares at 3.1 cents per share to raise $155,000 to
unrelated exempt investors.
On 18 July 2019 the Company issued 400,000 shares at 3.5 cents per share to raise $14,000 to unrelated
exempt investors.
No other matter or circumstance has arisen since 30 June 2019 that in the opinion of the directors has
significantly affected, or may significantly affect in future financial years the consolidated entity’s operations,
the results of those operations, or the consolidated entity’s state of affairs.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of
Korab support and adhere to the principles of sound corporate governance. The Board considers that Korab
is in compliance with the ASX corporate governance principles and recommendations which are of critical
importance to the commercial operation of a junior listed resources company. The Company’s Corporate
Governance Statement is set out on pages 48 to 51 of this Financial Report.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Other than stated elsewhere in this report there have been no significant changes in the state of affairs of the
consolidated entity during the period under review.
10
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
AUDITORS INDEPENDENCE DECLARATION
The auditor’s independence declaration under Section 307C of the Corporations Act 2001 is set out on page
15.
NON-AUDIT SERVICES
There were no non-audit services provided by the auditors during the current or preceding financial years.
REMUNERATION REPORT
The information provided in this remuneration report has been audited as required by section 308 (3C) of the
Corporations Act 2001.
Principles used to determine the nature and amount of compensation
The Board determines remuneration policies and practices, evaluates the performance of senior
management, and considers remuneration for those senior managers.
The Board assesses the appropriateness of the nature and amount of remuneration on an annual basis by
reference to industry and market conditions, and with regard to the Company’s financial and operating
performance.
Total non-executive directors’ fees are approved by shareholders and the Board is responsible for the
allocation of those fees amongst the individual members of the Board. The value of remuneration is
determined on the basis of cost to the Company and consolidated entity. Remuneration of key management
personnel is referred to as compensation, as defined in Accounting Standard AASB 124.
Compensation levels for key management personnel of the Company and consolidated entity are
competitively set to attract and retain appropriately qualified and experienced directors and senior
executives. The Board obtains, when required, independent advice on the appropriateness of remuneration
packages, given trends in comparative companies both locally and internationally. Compensation
arrangements can include a mix of fixed and performance based compensation however the Company has
not paid bonuses to directors or executives to date. Share-based compensation can be awarded at the
discretion of the Board, subject to shareholder approval when required.
It is the intention of the Board to tailor the remuneration policy to maximise the commonality of goals
between shareholders and key management personnel. The method which is most likely to achieve this aim
is the issue of options to key management personnel to encourage the alignment of personal and
shareholder interests. The directors believe this policy will be the most effective in increasing shareholder
wealth.
Compensation structures take into account the overall level of compensation for each director and executive,
the capability and experience of the directors and senior executives, the executive’s ability to control the
financial performance of the relative business or geographical segment, the consolidated entity’s
performance (including earnings and the growth in share price), and the amount of any incentives within
each executive’s remuneration. Given the consolidated entity’s focus on exploration projects during the year,
the Board did not have regard to the consolidated entity’s financial performance and / or change in
shareholder wealth occurring in the current financial year and previous three financial years in setting
remuneration. No dividends were paid or declared during this period (2018: Nil).
Fixed compensation
Fixed compensation consists of base compensation as well as any employer contributions to superannuation
funds.
11
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
Non-executive directors
Total remuneration for all non-executive directors is not to exceed $120,000 per annum. A non-executive
director’s base fee is currently $26,000 per annum. The Executive Chairman currently does not and has
never in the past received director’s fees. Rheingold Investments Corporation Pty Ltd, a company controlled
by the Executive Chairman receives management fees which are disclosed elsewhere in this report.
Non-executive directors do not receive any performance related remuneration, however they may be paid for
work performed over and above their non-executive duties. Directors’ fees cover all main Board activities
and membership of Board committees. The Company does not have any terms or schemes relating to
retirement benefits for non-executive directors. Non-executive directors receive share-based compensation
at the discretion of the Board, and subject to approval by shareholders. No remuneration consultants were
used during the year.
Service contracts
The contract duration, notice period and termination conditions for key management personnel are:
Andrej K Karpinski, Executive Chairman. In July 2008 the Company entered into an Executive Service
Agreement with Rheingold Investments Corporation Pty Ltd. Under the terms of the agreement Mr Karpinski,
being the director of Rheingold Investments Corporation Pty Ltd, has agreed to provide management
services to the Company at a rate of $327,000 per annum plus GST.
The Agreement may be terminated by the Company at any time by giving Rheingold Investments
Corporation Pty Ltd twelve (12) months' notice. In the event the Company does not require the services
provided under the Executive Service Agreement with Rheingold Investments Corporation Pty Ltd, the
Company shall pay to Rheingold Investments Corporation Pty Ltd an amount of $327,000 plus GST.
Key Management Personnel Remuneration
Details of the nature and amount of each major element of the remuneration of group key management
personnel are set out below. There was no share based or performance based remuneration in either the
current or prior period.
2019
Short-term benefits
2019 year fees
Post-employment benefits
Superannuation contributions
Performance related %
Total
2018
Short-term benefits
2018 year fees
Post-employment benefits
Superannuation contributions
Performance related %
Total
Andrej
Karpinski
$
Rodney
Skeet
$
Daniel
Smetana
$
Anthony
Wills
$
Total
$
327,000
26,000
26,000
26,000
405,000
-
-
327,000
-
-
26,000
2,470
-
28,470
2,470
-
28,470
4,940
-
409,940
Andrej
Karpinski
$
Rodney
Skeet
$
Daniel
Smetana
$
Anthony
Wills
$
Total
$
327,000
26,000
26,000
26,000
405,000
-
-
327,000
-
-
26,000
2,470
-
28,470
2,470
-
28,470
4,940
-
409,940
Loans to and other related transactions with key management personnel
Mr Andrej Karpinski is a director and controlling shareholder of Rheingold Investments Corporation Pty Ltd
(“Rheingold”). Management contract fees form part of the remuneration of directors and have been disclosed
as such in the directors' report.
12
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
DIRECTORS’ REPORT
Fees to Rheingold Investments Corporation Pty Ltd for:
- Management contract fees
Total fees to Rheingold Investments Corporation Pty Ltd
2019
$
2018
$
327,000
327,000
327,000
327,000
During the prior period the directors and Rheingold agreed to suspend payments of the executive services
fees (management contract fees) and directors’ fees. The unpaid fees are being accrued. The balance of
outstanding liabilities to Rheingold, Mr. Karpinski and his related entities at period end for loans to the parent
entity and unpaid fees is $562,939 (2018: $486,694) at an average interest rate of 12.8%. This aggregate
amount consists of loans of $29,291 at an interest rate of 22% (2018: $25,725) and $533,648 at an interest
rate of 12% (2018: $460,969). The loans and unpaid fees are not payable prior to 30 September 2020.
These loans and debt become payable immediately on change of control of Korab. Mr. Karpinski has not
received any directors' fees from Korab or its subsidiaries since the formation of Korab in March 1998.
During the reporting period accrued directors fees and Rheingold management fees were converted to loans
and some of the prior year loans and converted fees were repaid.
The balance of outstanding liabilities to directors, excluding Mr. Karpinski and their related entities at period
end for loans to the parent entity and unpaid fees is $883,208 (2018: $586,928) at an average interest rate
of 12%. The loans and unpaid fees are not payable prior to 30 September 2020.
Mr Andrej Karpinski is a director and significant shareholder of Polymetallica Minerals Limited (formerly
Uranium Australia Ltd). The balance of outstanding receivables from Polymetallica Minerals Limited at period
end is $1,054,861 (2018: $1,012,965) at an interest rate of 8.5%. The receivable is not payable prior to 30
September 2020. The balance of outstanding receivables from Polymetallica Minerals Limited consist of
funds provided by the Company to pay for tenement rents and other project related costs in relation to
projects where the Company and Polymetallica have, or had joint venture arrangements, and/or production
sharing agreements, plus any accrued interest. These joint venture arrangements and/or production sharing
agreements were established when Polymetallica was a subsidiary of the Company prior to Polymetallica
being demerged (spun-off) from the Company. The Company has registered security over all assets of
Polymetallica. During the year Polymetallica paid the Company $44,250 (2018: $58,557) in interest with the
remaining interest of $41,895 (2018: $25,362) accruing.
Share options
The movement during the reporting period in the number of options in Korab Resources Limited held,
directly, indirectly or beneficially, by each key management person, including their related parties, is as
follows:
2019
Director
Andrej Karpinski
Rodney Skeet
Daniel Smetana
Anthony Wills
Held at 1/7/18
-
-
-
-
Issued / (expired)
-
-
-
-
Held at 30/6/19
-
-
-
-
13
KORAB RE
& CONTRO
ESOURCES
OLLED ENTI
LIMITED
ITIES
ANNUAL RE
A
EPORT 2019
DIREC
CTORS’ RE
EPORT
Shares
The movem
held, directl
follows:
ment during
ly, indirectly
2019
Director
Andrej Karp
Rodney Ske
Daniel Sme
Anthony Wi
pinski
eet
etana
ills
the reporting
or beneficial
g period in t
ly, by each k
the number
key manage
of ordinary
ment person
shares in Ko
n, including th
Korab Resou
heir related p
d
rces Limited
s
parties, is as
Held at 1/
59,734
569
951
/7/18
4,739
9,238
,407
-
Net acq
uired
-
-
-
-
Held at
59
t 30/6/19
,734,739
569,238
951,407
-
INDEMNIF
FICATION
AND INSU
URANCE O
F DIRECTO
ORS AND O
OFFICERS
During the f
and its con
defending c
the entity.
financial yea
ntrolled entit
civil or crimin
ar the Comp
ties. The liab
al proceedin
any paid a p
bilities insur
ngs that may
premium to i
red are dam
be brought
nsure the di
mages and le
against the o
rectors and
egal costs t
officers in the
officers of th
that may be
eir capacity a
he Company
y
e incurred in
n
f
as officers of
This report
is signed in a
accordance w
with a resolu
ution of the d
directors.
Andrej K K
Perth, West
27 Septemb
Karpinski, FA
tern Australia
ber 2019
AICD, F Fin,
a,
(Executive
Chairman)
14
1
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Korab Resources Limited for
the year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
27 September 2019
M R Ohm
Partner
15
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
FOR THE YEAR ENDED 30 JUNE 2019
INCOME
Revenue
Finance income
Other income
Finance expense
Corporate compliance and management
Foreign exchange (loss)
Occupancy costs
Conference, travel and public relations
Impairment expense
Share based payments
Contractor expenses capitalised
Loss before income tax
Income tax expense
Loss for the year
Notes
2
8
4
30 June 2019
$
30 June 2018
$
60,000
86,448
30,631
(189,586)
(766,925)
(5,383)
(38,059)
(33,366)
(10,086)
-
322,946
-
83,374
99,651
(153,568)
(609,026)
(9,115)
(39,863)
(45,573)
(145,133)
4,000
324,440
(543,380)
(490,813)
-
-
(543,380)
(490,813)
Other comprehensive income for the year net of
income tax
Items that may be classified to profit or loss
Exchange difference on translation of foreign operations
-
-
Total comprehensive loss for the year
(543,380)
(490,813)
Basic and diluted loss per share (cents per share)
6
(0.18)
(0.17)
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes to the financial statements.
16
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Trade and other financial assets
Exploration and evaluation
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Loans and other borrowings
Total current liabilities
Non-current liabilities
Loans and borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Foreign currency translation reserve
Non-controlling interest contribution reserve
Accumulated losses
Total equity
Notes
30 June 2019
$
30 June 2018
$
7
7
8
9
10
10
14
14
14
14
82,716
59,416
142,132
24,069
46,710
70,779
1,066,756
2,858,610
3,925,366
1,024,861
2,759,630
3,784,491
4,067,498
3,855,270
521,037
118,445
639,482
389,733
135,218
524,951
1,725,004
1,725,004
1,336,047
1,336,047
2,364,486
1,860,998
1,703,012
1,994,272
19,037,575
(997,078)
(1,036,227)
(15,301,258)
1,703,012
18,785,455
(997,078)
(1,036,227)
(14,757,878)
1,994,272
The above consolidated statement of financial position should be read in conjunction with the accompanying
notes to the financial statements.
17
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Interest paid
Net cash flows used in operating activities
Cash flows from investing activities
Exploration and evaluation expenditure
Exploration and evaluation expenditure reimbursed
Net cash flows provided by / (used in) investing
activities
Cash flows from financing activities
Cash received from issue of ordinary shares
Proceeds from borrowings
Option fee received
Repayment of advances to other entities
Cash used for repayments of borrowings
Net cash flows provided by financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial
year
Notes
30 June 2019
$
30 June 2018
$
(262,585)
303
(3,206)
(265,488)
(166,485)
390
(5,465)
(171,560)
13
14(a)
(112,908)
315,371
(281,973)
-
202,463
(281,973)
252,120
172,912
60,000
44,250
(407,610)
121,672
380,500
169,973
-
57,622
(429,540)
178,555
58,647
(274,978)
24,069
299,047
Cash and cash equivalents at the end of the financial
year
13
82,716
24,069
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
to the financial statements.
18
9
1
0
2
T
R
O
P
E
R
L
A
U
N
N
A
i
n
g
e
r
o
F
y
c
n
e
r
r
u
c
-
n
o
N
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
$
l
a
t
o
T
$
$
e
v
r
e
s
e
r
e
v
r
e
s
e
r
$
s
e
s
s
o
l
l
n
o
i
t
a
s
n
a
r
t
n
o
i
t
u
b
i
r
t
n
o
c
d
e
t
a
l
u
m
u
c
c
A
$
n
o
i
t
p
O
e
v
r
e
s
e
R
$
y
t
i
u
q
e
d
e
t
u
b
i
r
t
n
o
C
Y
T
I
U
Q
E
N
I
S
E
G
N
A
H
C
F
O
T
N
E
M
E
T
A
T
S
D
E
T
A
D
I
L
O
S
N
O
C
9
1
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
I
I
D
E
T
M
L
S
E
C
R
U
O
S
E
R
B
A
R
O
K
I
I
S
E
T
T
N
E
D
E
L
L
O
R
T
N
O
C
&
,
9
8
5
4
7
9
1
,
)
8
7
0
7
9
9
(
,
)
7
2
2
,
6
3
0
,
1
(
)
5
6
0
,
7
6
2
,
4
1
(
0
0
0
,
4
9
5
9
,
0
7
2
,
8
1
7
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
)
3
1
8
0
9
4
(
,
)
3
1
8
0
9
4
(
,
0
0
5
0
8
3
,
6
9
9
3
3
1
,
)
0
0
0
4
(
,
-
-
-
-
-
-
-
-
-
-
)
3
1
8
,
0
9
4
(
)
3
1
8
,
0
9
4
(
)
0
0
0
,
4
(
-
-
-
-
-
-
0
0
5
,
0
8
3
6
9
9
,
3
3
1
s
e
r
a
h
s
r
o
f
e
u
d
i
s
e
n
o
m
n
o
i
t
p
i
r
c
s
b
u
s
i
t
s
n
a
g
a
f
f
o
-
t
e
s
t
b
e
D
s
e
r
a
h
s
i
r
o
f
e
u
d
s
e
n
o
m
n
o
i
t
p
i
r
c
s
b
u
s
i
s
a
d
e
v
e
c
e
r
h
s
a
C
:
s
r
e
n
w
o
s
a
y
t
i
c
a
p
a
c
r
i
e
h
t
n
i
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
r
a
e
y
e
h
t
r
o
f
s
s
o
l
i
e
v
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
r
a
e
y
e
h
t
r
o
f
s
s
o
L
,
2
7
2
4
9
9
1
,
)
8
7
0
7
9
9
(
,
)
7
2
2
,
6
3
0
,
1
(
)
8
7
8
,
7
5
7
,
4
1
(
)
0
8
3
3
4
5
(
,
)
0
8
3
3
4
5
(
,
0
2
1
2
5
2
,
-
-
-
-
-
-
-
)
0
8
3
,
3
4
5
(
)
0
8
3
,
3
4
5
(
,
2
1
0
3
0
7
1
,
)
8
7
0
7
9
9
(
,
)
7
2
2
,
6
3
0
,
1
(
)
8
5
2
,
1
0
3
,
5
1
(
-
-
-
-
-
5
5
4
,
5
8
7
,
8
1
8
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
-
-
0
2
1
,
2
5
2
5
7
5
,
7
3
0
,
9
1
:
s
r
e
n
w
o
s
a
y
t
i
c
a
p
a
c
r
i
e
h
t
n
i
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
r
a
e
y
e
h
t
r
o
f
s
s
o
l
i
e
v
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
9
1
0
2
e
n
u
J
0
3
t
a
e
c
n
a
l
a
B
h
s
a
c
r
o
f
d
e
u
s
s
i
s
e
r
a
h
S
r
a
e
y
e
h
t
r
o
f
s
s
o
L
.
s
t
n
e
m
e
t
a
t
s
l
i
a
c
n
a
n
i
f
e
h
t
o
t
i
s
e
t
o
n
g
n
y
n
a
p
m
o
c
c
a
e
h
t
9
1
h
t
i
w
n
o
j
i
t
c
n
u
n
o
c
n
i
d
a
e
r
l
e
b
d
u
o
h
s
y
t
i
u
q
e
n
i
s
e
g
n
a
h
c
f
o
t
n
e
m
e
t
a
t
s
d
e
t
a
d
i
l
o
s
n
o
c
e
v
o
b
a
e
h
T
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these consolidated financial statements are
set out below. These policies have been consistently applied to all the years presented, unless otherwise
stated. The financial statements are for the consolidated entity consisting of Korab Resources Limited and its
subsidiaries.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards (“AASBs”) (including Australian Accounting Interpretations), as adopted by the Australian
Accounting Standards Board (“AASB”), other authoritative pronouncements of the AASB and the
Corporations Act 2001. Australian Accounting Standards include Australian equivalents to International
Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report of Korab
Resources Limited complies with International Financial Reporting Standards as issued by the International
Accounting Standards Board. Comparative information is reclassified where appropriate to enhance
comparability.
The functional and presentation currency of the Company is Australian dollars. The financial report was
authorised for issue by the directors on 27 September 2019. Korab Resources Limited is a company limited
by shares, incorporated and domiciled in Australia.
Basis of measurement
The financial report is prepared on a historical cost basis as modified by the revaluation of financial assets
and liabilities at fair value through profit and loss.
Going concern
The financial report has been prepared on the basis of accounting principles applicable to a going concern,
which assumes the commercial realisation of the future potential of the Group’s assets and the discharge of
its liabilities in the normal course of business. At balance date, the Group had an excess of current liabilities
over current assets of $497,350 (2018: $454,172) and had a net cash outflow from operations for the year
ended 30 June 2019 of $265,488 (2018: $171,560). The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts, or to the amounts and
classification of liabilities that might be necessary should the Group not continue as a going concern.
The Company believes it will need to seek additional funding in the coming year in order to meet its
operating expenditure and planned exploration expenditure for the next twelve months from the date of
signing these financial statements. The directors are confident of being able to obtain additional funding
through increase in debt, raising of additional share capital, or sale of assets. Should this not occur, or not
occur on a sufficiently timely basis, there is a material uncertainty that may cast significant doubt about the
Group’s ability to continue as a going concern and therefore, the Group may be unable to realise its assets
and discharge its liabilities in the normal course of business.
Use of estimates and judgements
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 and
liabilities, income and expenses. Actual results may differ from these estimates. 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 and in any future periods affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year and judgments, apart from those involving
estimations, which have the most significant effect on the amounts recognised in the financial statements,
are as follows:
20
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
(i) Exploration and evaluation assets
Exploration and evaluation expenditure is accumulated in respect of each identifiable area of interest. These
costs are carried forward in respect of an area that has not at balance 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 relating to, the area of interest are continuing.
(ii) Functional currency
Companies in the consolidated entity have to determine their functional currencies based on the primary
economic environment in which each entity operates. In order to do that management has to analyse
several factors, including which currency mainly influences sales prices of product sold by the entity, which
currency influences the main expenses of providing services, in which currency the entity has received
financing, and in which currency it keeps its receipts from operating activities.
(iii) Taxation
A subsidiary, Donetsky Kryazh LLC, operates mainly in the Ukraine and is within that country’s tax
jurisdiction. The Ukrainian tax system is characterised by numerous taxes and laws that change frequently,
can contradict each other, and can be interpreted in various ways. Judgement is required in the
determination of the Company’s tax provisions, however the directors believe that these have been
calculated based on the best information available.
(iv) Recoverability of loan to Polymetallica Minerals Limited
Korab has been advised by Polymetallica that it is in the process of arranging of a debt and equity funding
from third parties to raise funds to repay the loans made by Korab.
(b) Principles of consolidation
Subsidiaries
The consolidated financial report comprises the financial statements of the Company and its controlled
entities. A controlled entity is any entity controlled by the Company whereby the parent entity has the power
to control the financial and operating policies of an entity so as to obtain benefits from its activities. All inter-
company balances and transactions between entities in the consolidated entity, including any unrealised
profits or losses, have been eliminated on consolidation. Where a subsidiary enters or leaves the
consolidated entity during the year, its operating results are included or excluded from the date control was
obtained or until the date control ceased. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with those applied by the parent entity.
(c) Recoverable amount of assets and impairment testing
Assets that have an indefinite useful life are not subject to depreciation and are tested annually for
impairment by estimating their recoverable amount.
Assets that are subject to depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Where such an indicator exists, a
formal assessment of recoverable amount is then made. Where this is less than carrying amount, the asset
is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is the
present value of the future cash flows expected to be derived from the asset or cash generating unit. In
estimating value in use, a pre-tax discount rate is used which reflects the current market assessments of the
time value of money and the risks specific to the asset. Any resulting impairment loss is recognised
immediately in the statement of comprehensive income.
21
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
(d) Receivables
Trade and other receivables are stated at fair value and subsequently measured at amortised cost, less
expected credit losses.
(e) Business combinations
The acquisition method of accounting is used to account for all business combinations, including business
combinations involving entities or business under common control, regardless of whether equity instruments
or other assets are acquired.
The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets
transferred, the liabilities incurred and the equity interests issued by the consolidated entity. The
consideration transferred also includes the fair value of any contingent consideration arrangement and the
fair value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair
values at the acquisition date. On an acquisition-by-acquisition basis, the consolidated entity recognises any
non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate
share of the acquiree’s net identifiable assets.
The excess of the consideration transferred the amount of any non-controlling interest in the acquiree and
the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the
consolidated entity’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts
are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of
all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified as either equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in the statement of
comprehensive income.
(f) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of
interest. These costs are only carried forward to the extent that the consolidated entity’s rights of tenure to
the area are current and that the costs are expected to be recouped through the successful development of
the area or by its sale, or where activities in the area have not yet reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves.
Each area of interest is assessed for impairment to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest. Impairment testing is carried out in accordance with Note
1(d).
Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in
which the decision to abandon the area is made. Once the technical feasibility and commercial viability of the
extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets
attributable to that area of interest are first tested for impairment and then reclassified to mine development
properties.
22
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
(g) Taxes
The charge for current income tax expense is based on the result for the year adjusted for any non-
assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively
enacted by balance date. Deferred tax is accounted for using the statements of financial position liability
method in respect of temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on accounting
or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised
or liability is settled. Deferred tax is recognised in the statement of comprehensive income except where it
relates to items recognised directly in equity, in which case it is recognised in equity. Deferred income 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 tax losses. Deferred tax
assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and
the group intends to settle its current tax assets and liabilities on a net basis.
The amount of benefits brought to account or which may be realised in the future is based on the
assumption that no adverse change will occur in income taxation legislation and the anticipation that the
consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and
comply with the conditions of deductibility imposed by the law. The carrying amount of deferred tax assets is
reviewed at each balance date and only recognised to the extent that sufficient future assessable income is
expected to be obtained.
Tax consolidation
The Company and its wholly-owned Australian resident controlled entities have formed a tax-consolidated
entity and are therefore taxed as a single entity. Korab Resources Limited is the head entity of the tax-
consolidated entity. In future periods the members of the consolidated entity will, if required, enter into a tax
sharing agreement whereby each company in the consolidated entity contributes to the income tax payable
in proportion to their contribution to the net profit before tax of the tax consolidated entity.
(h) Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes
obliged to make future payments in respect of the purchases of these goods and services. Trade and other
payables are represented as current liabilities unless payment is not due within 12 months.
(i) Earnings per share
The consolidated entity presents basic and diluted earnings per share (“EPS”) for its ordinary shares. Basic
EPS is calculated by dividing the result attributable to equity holders of the Company by the weighted
number of shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding for the effects of all potential ordinary shares,
which comprise share options granted.
(j) Share based payments
The fair value of shares and share options granted as compensation is recognised as an expense with a
corresponding increase in equity. Fair value is measured at grant date and recognised over the period during
which the grantees become unconditionally entitled to the shares or share options. The fair value of share
grants at grant date is determined by the share price at that time. The fair value of share options at grant
date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the
term of the option, any vesting and performance criteria, the share price at grant date, the expected price
23
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option.
Upon the exercise of the option, the balance of the share-based payments reserve relating to the option is
transferred to contributed equity.
(k) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-
term, and highly liquid investments with original maturities of three months or less that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value.
(l) Employee benefits
Provision is made for the consolidated entity’s liability for employee benefits and termination indemnities
arising from services rendered by employees to balance date.
(i)Short-term benefits
Employee benefits that are expected to be settled within one year have been measured at the amounts
expected to be paid when the liability is settled, plus related on-costs.
(ii) Long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months
after the end of the period in which the employees render the related service is recognised in the provision
for employee benefits and measured as the present value of expected future payments to be made in
respect of services provided by employees up to the end of the reporting period.
(m) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to an equity transaction are
shown as a deduction from equity, net of any recognised income tax benefit.
(n) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (“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 cash flow statement on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
(o) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial period.
(p) Foreign currency
Functional and presentation currency
The functional currency of each of the consolidated entity’s entities is measured using the currency of the
primary economic environment in which that entity operates (the “functional” currency). The consolidated
financial statements are presented in Australian dollars which is the parent entity’s functional and
presentation currency.
Transactions and balances
24
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at
the date of the transaction. Foreign currency monetary assets and liabilities are translated at the exchange
rate at balance date. Non-monetary items measured at historical cost continue to be carried at the exchange
rate at the date of the transaction.
Exchange differences arising on the translation of monetary items are recognised in the profit and loss,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Foreign operations
The financial performance and position of foreign operations whose functional currency is different from the
consolidated entity’s presentation currency are translated as follows:
•
•
assets and liabilities are translated at exchange rates prevailing at statement of financial
position date.
income and expenses are translated at transaction date or average exchange rates for the
period, whichever is more appropriate.
Exchange differences arising on translation of foreign operations are transferred directly to the consolidated
entity’s foreign currency translation reserve as a separate component of equity. These differences are
recognised in the statement of comprehensive income upon disposal of the foreign operation.
(q) Revenue recognition
Revenue is recognised and measured at the fair value of consideration received or receivable to the extent
that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured.
The following specific recognition criteria must also be met before revenue is recognized:
Interest
Revenue is recognised as interest accrues using the effective interest rate method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant period
using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the net carrying amount of the financial asset.
(r) Borrowing costs
Interest expenses comprise interest expense on borrowings and the unwinding of the discount on provisions.
(s) Parent entity financial information
The financial information for the parent entity, Korab Resources Limited, disclosed in Note 20 has been
prepared on the same basis as the consolidated financial statements, except as set out below.
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial
statements of Korab Resources Limited. Dividends received from associates are recognised in the parent
entity’s profit or loss, rather than being deducted from the carrying amount of these investments.
(t) Financial instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the
cash flows from the financial asset expire, or when the financial asset and substantially all the risks and
25
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or
expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured
at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable). For the purpose of subsequent measurement, financial
assets, other than those designated and effective as hedging instruments, are classified into the following
categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• equity instruments at fair value through other comprehensive income (FVOCI)
• debt instruments at fair value through other comprehensive income (FVOCI).
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
The classification is determined by both:
- the entity’s business model for managing the financial asset, and
- the contractual cash flow characteristics of the financial asset.
Subsequent measurement of financial assets
(i) Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets to collect its
contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents,
trade and most other receivables fall into this category of financial instruments.
(ii) Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect
and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model
financial assets whose contractual cash flows are not solely payments of principal and interest are
accounted for at FVTPL. All derivative financial instruments fall into this category, except for those
designated and effective as hedging instruments, for which the hedge accounting requirements apply. The
category also contains an equity investment. The Group accounts for the investment at FVTPL and did not
make the irrevocable election to account for the investment in unlisted and listed equity securities at fair
value through other comprehensive income (FVOCI). The fair value was determined in line with the
requirements of AASB 9, which does not allow for measurement at cost. Assets in this category are
measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in
this category are determined by reference to active market transactions or using a valuation technique where
no active market exists.
(iii) Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable election at
inception to be measured at FVOCI. Under Equity FVOCI, subsequent movements in fair value are
recognised in other comprehensive income and are never reclassified to profit or loss. Dividend from these
26
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
investments continue to be recorded as other income within the profit or loss unless the dividend clearly
represents return of capital. This category includes unlisted equity securities that were previously classified
as ‘available-for-sale’ under AASB 139. Any gains or losses recognised in other comprehensive income
(OCI) are not recycled upon derecognition of the asset.
(iv) Debt instruments at fair value through other comprehensive income (Debt FVOCI)
Financial assets with contractual cash flows representing solely payments of principal and interest and held
within a business model of collecting the contractual cash flows and selling the assets are accounted for at
debt FVOCI. The Group accounts for financial assets at FVOCI if the assets meet the following conditions:
• they are held under a business model whose objective it is to “hold to collect” the associated cash flows
and sell financial assets; and
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of
the asset.
Impairment of financial assets
AASB 9’s impairment requirements use more forward-looking information to recognise expected credit
losses – the ‘expected credit loss (ECL) model’. This replaced AASB 139’s ‘incurred loss model’. Instruments
within the scope of the new requirements included loans and other debt-type financial assets measured at
amortised cost and FVOCI, trade receivables, contract assets recognised and measured under AASB 15
and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair
value through profit or loss. Recognition of credit losses is no longer dependent on the Group first identifying
a credit loss event. Instead the Group considers a broader range of information when assessing credit risk
and measuring expected credit losses, including past events, current conditions, reasonable and supportable
forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that
have low credit risk (‘Stage 1’) and
• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose
credit risk is not low (‘Stage 2’).
• ‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’
are recognised for the second category. Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the financial instrument.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as
contract assets and records the loss allowance as lifetime expected credit losses. These are the expected
shortfalls in contractual cash flows, considering the potential for default at any point during the life of the
financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-
looking information to calculate the expected credit losses using a provision matrix. The Group assess
impairment of trade receivables on a collective basis as they possess shared credit risk characteristics they
have been grouped based on the days past due.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial
instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for
transaction costs unless the Group designated a financial liability at fair value through profit or loss.
27
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except
for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with
gains or losses recognised in profit or loss (other than derivative financial instruments that are designated
and effective as hedging instruments).
(u) Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset. Leases which
transfer to a lessee substantially all the risks and benefits incidental to ownership of the leased asset are
classified as finance leases. Other lease agreements are treated as operating leases.
Finance leases are capitalised at the inception of the lease at the fair value of the leased assets or, if lower,
at the present value of the minimum lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged directly against income except for borrowing costs
related to the financing of assets constructed for own use (during the construction period). Capitalised
leased assets used in mining operations are expensed on a unit of production basis so as to write off the
costs in proportion to the depletion of the estimated recoverable reserves or over the life of the lease.
Operating lease payments are recognised as an expense in the statement of comprehensive income on a
straight-line basis over the lease term.
(v) Provisions
Provisions are recognised when the consolidated entity 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. Provisions are determined by discounting the expected future cash flows at a pre-tax
discount rate that reflects current market assessments of the time value of money and, where appropriate,
the risks specific to the liability.
Site restoration
Provisions for the cost of site restoration are recognised at the time that an environmental disturbance occurs or
a constructive obligation is determined. Costs included in the provision encompass all closure and rehabilitation
activity expected to occur progressively over the life of the operation and at the time of closure in connection with
disturbances as at the reporting date. Estimated costs included in the determination of the provision reflect the
risks and probabilities of alternative estimates of cash flows required to settle the obligation. The expected
rehabilitation costs are estimated based on the cost of external contractors performing the work or the cost of
performing the work internally depending on management’s intention.
The timing of the actual rehabilitation expenditure is dependent upon a number of factors including the currently
approved life of the mine and changes in local environmental regulations. Expenditures may occur before and
after closure and can continue for an extended period of time depending on rehabilitation requirements. The
expected future cash flows exclude the effect of inflation. The unwinding of the discount is included in finance
costs and results in an increase in the amount of the provision.
The provision is updated each year for the effect of a change in the discount rate and exchange rate, when
applicable, and the change in estimate is added or deducted from the related asset and depreciated
prospectively over the asset’s useful life.
Significant judgments and estimates are involved in forming expectations of future activities and the amount and
timing of the associated cash flows. Those expectations are formed based on existing environmental and
regulatory requirements or, if more stringent, our environmental policies which give rise to a constructive
obligation. When expected cash flows change, the revised cash flows are discounted using the current US dollar
real risk-free pre-tax discount rate and an adjustment is made to the provision.
28
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
When a provision for site restoration is initially recognized, the corresponding cost is capitalized as an asset,
representing part of the cost of acquiring the future economic benefits of the operation. The capitalized cost of
closure and rehabilitation activities is recognized in property, plant and equipment and depreciated over the
expected economic life of the operation to which it relates.
(w) Contingencies
Contingent liabilities are defined as:
possible obligations resulting from past events whose existence depends on future events;
obligations that are not recognised because it is not probable that they will lead to an outflow of
resources;
obligations that cannot be measured with sufficient reliability.
Contingent liabilities are not recognised in the statement of financial position, but are disclosed in the notes
to the financial statements, with the exception of contingent liabilities where the probability of the liability
occurring is remote.
(x) New accounting standards and interpretations
Standards and Interpretations applicable to 30 June 2019
In the period ended 30 June 2019, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Company and effective for the current
reporting periods beginning on or after 1 July 2018. As a result of this review, the Group has initially
applied AASB 9 and AASB 15 from 1 July 2018. Due to the transition methods chosen by the group in
applying AASB 9 and AASB 15, comparative information throughout the interim financial statements has
not been restated to reflect the requirements of the new standards.
AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and makes changes
to a number of areas including classification of financial instruments, measurement, impairment of
financial assets and hedge accounting.
Financial instruments are classified as either held at amortised cost or fair value. Financial instruments
are carried at amortised cost if the business model concept can be satisfied. All equity instruments are
carried at fair value and the cost exemption under AASB 139 which was used where it was not possible
to reliably measure the fair value of an unlisted entity has been removed. Previously classified available-
for-sale investments, now carried at fair value are exempt from impairment testing and gains or loss on
sale are recognised in profit or loss. The AASB 9 impairment model is based on expected loss at day one
rather than needing evidence of an incurred loss, which is likely to cause earlier recognition of bad debt
expenses. Most financial instruments held at fair value are exempt from impairment testing.
The Group has applied AASB 9 retrospectively with the effect of initially applying this standard recognised
at the date of initial application, being 1 July 2018 and has elected not to restate comparative information
Accordingly, the information presented for 30 June 2018 has not been restated. There is no material
impact to profit or loss or net assets on the adoption of this new standard in the current or comparative
years.
AASB 15 Revenue from contracts with Customers
29
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
AASB 15 replaces AASB 118 Revenue and AASB 111 Construction Contracts and related interpretations
and it applies to all revenue arising from contracts with customers, unless those contracts are in the
scope of other standards. AASB 15 establishes a comprehensive framework for determining whether,
how much, and when revenue is recognised, including in respect of multiple element arrangements.
The core principle of AASB 15 is that it requires identification of discrete performance obligations within a
transaction and associated transaction price allocation to these obligations. Revenue is recognised upon
satisfaction of these performance obligations, which occur when control of goods or services is
transferred, rather than on transfer of risks or rewards. Revenue received for a contract that includes a
variable amount is subject to revised conditions for recognition, whereby it must be highly probable that
no significant reversal of the variable component may occur when the uncertainties around its
measurement are removed. There is no material impact to profit or loss or net assets on the adoption of
this new standard in the current or comparative years.
Other than the above, the Directors have determined that there is no material impact of the other new
and revised Standards and Interpretations on the Company and therefore, no material change is
necessary to group accounting policies.
Standards and Interpretations in issue not yet adopted
The directors have also reviewed all new Standards and Interpretations that have been issued but are not
yet effective for the year ended 30 June 2019. As a result of this review the directors have determined that
there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the
Group and, therefore, no change necessary to Group accounting policies.
2.
REVENUE
Option fee - point in time revenue
3.
SEGMENT REPORTING
2019
$
60,000
60,000
2018
$
-
-
AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports
about components of the consolidated entity that are reviewed by the chief operating decision maker in order
to allocate resources to the segment and assess its performance. The Executive Chairman of Korab reviews
internal reports prepared such as consolidated financial statements, and strategic decisions of the
consolidated entity are determined upon analysis of these internal reports. During the year the consolidated
entity operated predominantly in one business segment, being the minerals exploration sector. Accordingly,
under the “management approach” outlined only one operating segment has been identified and no further
disclosure is required in the notes to the consolidated financial statements.
The geographic location of non-current assets and revenue is set out in the table below:
Australia – non-current assets
Australia - revenue
Australia – interest revenue
2019
$
2018
$
3,925,366
60,000
86,448
3,784,491
-
83,374
30
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
4.
INCOME TAX EXPENSE
Numerical reconciliation of income tax expense to prima facie tax
expense:
Loss before income tax expense
Prima facie income tax benefit on pre-tax loss at the Australian income
tax rate of 27.5% (2018: 27.5%)
Tax effect of:
Current year tax benefit not brought to account
Income tax expense
2019
$
(543,380)
2018
$
(490,813)
(149,430)
(134,974)
149,430
-
134,974
-
The consolidated entity has a deferred tax asset in respect of income tax losses. This asset has not been
brought to account in the Statement of Financial Position as realisation is not considered probable.
5.
AUDITORS’ REMUNERATION
Audit and review services:
Auditors of the Company: HLB Mann Judd
6.
BASIC EARNINGS PER SHARE
Loss from operations attributable to ordinary equity holders of Korab
used to calculate basic and diluted earnings per share
Weighted average number of shares
1 July
Shares issued
30 June (basic and diluted)
2019
$
2018
$
52,530
52,530
55,850
55,850
(543,380)
(490,813)
Number of
shares
Number of
shares
303,355,982
3,953,880
307,309,862
228,213,270
6,944,135
295,157,405
All potential ordinary shares, being options to acquire ordinary shares, are not considered dilutive in the
calculation of earnings per share as the exercise of the options would not increase the loss per share.
31
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
7.
TRADE AND OTHER FINANCIAL ASSETS
Current
Other receivables and prepayments: third parties
Non-current
Other financial assets: third parties
2019
$
59,416
59,416
2018
$
46,710
46,710
1,066,756
1,066,756
1,024,861
1,024,861
$1,054,861 (2018: $1,012,965) of the non-current third party loan is an unsecured receivable from
Polymetallica Minerals Limited (formerly Uranium Australia Ltd), a company in which Mr Andrej Karpinski is
Executive Chairman and a significant shareholder. The loan has an interest rate of 8.5% and is not payable
prior to 30 September 2020. The balance of outstanding receivables from Polymetallica Minerals Limited
consist of funds provided by the Company to pay for tenement rents and other project related costs in
relation to projects where the Company and Polymetallica have, or had joint venture arrangements, and/or
production sharing agreements, plus any accrued interest. These joint venture arrangements and/or
production sharing agreements were established when Polymetallica was a subsidiary of the Company prior
to Polymetallica being demerged (spun-off) from the Company. The Company has registered security over
all assets of Polymetallica.
8.
EXPLORATION AND EVALUATION
Areas of interest in the exploration and evaluation phase:
Cost at beginning of the year
Capitalised contractor fees
Other expenditure capitalised during the period
Expenditure reimbursed and reimbursable
Cost at end of the year
Impairment provision
Carrying amount at the end of the year
2019
$
2,904,763
322,946
140,941
(354,821)
3,013,829
(155,219)
2,858,610
2018
$
2,244,703
324,440
335,620
-
2,904,763
(145,133)
2,759,630
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation
phases is dependent on the successful development and commercial exploitation or sale of the respective
areas.
Australian Copper Pty Ltd and Australian Copper Holdings Pty Ltd (together Auscopper) granted an option to
Great Fingall Mining (“GFM”) to acquire the tenements forming Mt. Elephant project for a consideration of
$500,000. Consequently, Auscopper booked an impairment expense of $10,086 in the current period, and
$145,133 in a prior period, to write-down the value of these tenements to $500,000. GFM paid the Company
an option fee of $60,000 in the current period. Under the option agreement, this third party is responsible for
all exploration, overheads, and tenement maintenance costs including the shire rates and tenement rent in
respect of the tenements forming the Mt. Elephant Project. These costs are included in the expenditure
reimbursed and reimbursable.
Australian Copper Holdings Pty Ltd (part of the Group) is responsible for the costs of defence of the
forfeiture application in respect of one of the Mt. Elephant tenements.
The Directors are of the opinion that whilst the tenure of the Bobrikovo project and related operations are not
affected by the current political developments in Ukraine, the uncertainty as to the future direction of the
developments there makes it prudent to be conservative. The exploration and evaluation expenditure
attributable to the Bobrikovo project has been written-off at consolidation level in earlier reporting periods to
reflect this conservative approach.
32
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation
phases is dependent on the successful development and commercial exploitation or sale of the respective
areas.
9. TRADE AND OTHER PAYABLES
Current
Trade payables and accrued expenses (i)
Trade payables - related parties
2019
$
450,813
70,224
521,037
2018
$
370,816
18,917
389,733
(i) Trade payables are non-interest bearing and are normally settled within 45 days.
10. LOANS AND BORROWINGS
Current
Loans payable - related parties – unsecured (i)
Loans payable - third parties – unsecured (ii)
Non-current
Loans payable - related parties – unsecured (i)
Loans payable - third parties – unsecured (ii)
2019
$
56,800
61,645
118,445
1,504,980
220,024
1,725,004
2018
$
30,000
105,218
135,218
1,140,144
195,903
1,336,047
(i)
The terms and conditions of related party loans and borrowings are set out Notes 16 and 17,
Related Party Transactions and Key Management Personnel Disclosures respectively.
(ii)
The third party loans and borrowings are on arms-length terms and conditions.
11. SUBSEQUENT EVENTS
On 11 July 2019 the Company issued 5,000,000 shares at 3.1 cents per share to raise $155,000 to
unrelated exempt investors.
On 18 July 2019 the Company issued 400,000 shares at 3.5 cents per share to raise $14,000 to unrelated
exempt investors.
No other matter or circumstance has arisen since 30 June 2019 that in the opinion of the directors has
significantly affected, or may significantly affect in future financial years the consolidated entity’s operations,
the results of those operations, or the consolidated entity’s state of affairs.
12. SUBSIDIARIES
Held by parent
Lugansk Gold Pty Limited
Geolsec Phosphate Operations Pty Limited
Melrose Gold Mines Pty Limited
Australian Copper Pty Limited
Ausmag Pty Limited
Held by Australian Copper Pty Limited
Country of
incorporation
Class of
shares
Equity holding
2019
2018
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Australia
Australia
Australia
Australia
Australia
33
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
Australian Copper Holdings Pty Limited
Held by Lugansk Gold Pty Limited
LLC “Donetsky Kryazh”
Australia
Ordinary
100%
100%
Ukraine
Ordinary
100%
100%
13. RECONCILIATION OF CASH FLOWS USED IN OPERATING ACTIVITIES
(a) Reconciliation of (loss) after income tax to net cash flow from
operating activities
(Loss) for the year
Non-cash items
Capitalised contactor fees
Management fees set off against loans
Impairment expense
Share based payment
Option fee included in financing activities
Foreign exchange loss
Net interest expense
Change in assets and liabilities
- Decrease / (increase) in trade and other receivables
- Increase in trade and other payables
Net cash outflow from operating activities
(b) Cash and cash equivalents
Cash at bank and at call
2019
$
2018
$
(543,380)
(490,813)
(322,946)
429,900
10,086
-
(60,000)
5,040
100,235
26,744
88,833
(265,488)
(324,440)
429,900
145,133
(4,000)
-
4,550
65,119
(8,698)
11,689
(171,560)
82,716
24,069
Cash balance includes $12,900 term deposit securing a bank guarantee in favour of the Department of
Primary Industry and Resources.
(c) Risk exposure
The consolidated entity’s exposure to interest rate risk is discussed in Note 16. The maximum exposure to
credit risk at the reporting date is the carrying amount of each class of cash and cash equivalents mentioned
above.
(d) Changes in liabilities arising from financing activities
– unsecured borrowings
Balance at 1 July
Net cash used in financing activities
Shares issued as set off against loans payable
Interest accrued
Fees converted to debt
Other
Balance at 30 June
2019
$
1,471,265
(234,698)
-
186,380
429,900
(9,398)
1,843,449
2018
$
1,282,153
(259,567)
(133,996)
148,103
429,900
4,672
1,471,265
34
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
14.
CAPITAL AND RESERVES
(a) Contributed equity:
Movements in ordinary shares on issue
1 July
Issue of shares for cash
Issue of shares in extinguishment of borrowings
30 June
2019
Number
2019
$
2018
Number
2018
$
303,355,982
8,443,501
-
311,799,483
18,785,455
252,120
-
19,037,575
288,213,270 18,270,959
380,500
133,996
303,355,982 18,785,455
10,357,143
4,785,569
Ordinary shares have the right to one vote per share at meetings of the Company, to receive dividends as
declared and, in the event of a winding-up of the Company, to participate in the proceeds from the sale of all
surplus assets in proportion to the number of, and amounts paid up on, shares held.
(b) Accumulated losses
1 July
Loss for the period
30 June
2019
$
2018
$
(14,757,878)
(543,380)
(15,301,258)
(14,267,065)
(490,813)
(14,757,878)
(c) Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange
differences arising from the translation of the financial statements of foreign
operations where their functional currency is different to the presentation
currency of the reporting entity.
1 July
30 June
(d) Option reserve
(997,078)
(997,078)
(997,078)
(997,078)
The option reserve is used to record the value of equity benefits provided
to employees, directors and other parties for goods and services provided
and for proceeds received on the issue of options.
1 July
Option expiry
30 June
-
-
-
4,000
(4,000)
-
The movement in Company options during the reporting period was as follows:
Options outstanding as at 1 July 2018
Options outstanding as at 30 June 2019
Number
-
-
Weighted Average
Exercise Price
-
-
35
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
14.
CAPITAL AND RESERVES (continued)
(e) Non-controlling interest contribution reserve
The non-controlling interest contribution reserve represents the net proceeds from / expenditure on the sale
of / acquisition of minority interests, net of the share of net assets disposed / acquired.
1 July
30 June
15. FINANCIAL RISK MANAGEMENT
General objectives, policies and processes
2019
$
2018
$
(1,036,227)
(1,036,227)
(1,036,227)
(1,036,227)
The consolidated entity’s activities expose it to credit risk, market risk (including interest rate risk, price risk
and currency risk), liquidity risk, and commodity price risk. This note presents qualitative and quantitative
information about the consolidated entity’s exposure to each of the above risks, their objectives, policies and
procedures for managing risk, and the management of capital. The Board of Directors has overall
responsibility for the establishment and oversight of the risk management framework.
The consolidated entity’s overall risk management approach focuses on the unpredictability of financial
markets and seeks to minimise the potential adverse effects on the financial performance of the consolidated
entity. The consolidated entity does not currently use derivative financial instruments to hedge financial risk
exposures and therefore it is exposed to daily movements in commodity prices, interest rates and exchange
rates. The consolidated entity uses various methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rates and ageing analysis for credit risk.
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 consolidated entity’s
development there are no formal targets set for return on capital. There were no changes to the consolidated
entity’s approach to capital management during the year. Neither the Company nor any of its subsidiaries
are subject to externally imposed capital requirements.
(a) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a
financial loss to the consolidated entity. The consolidated entity has no significant concentration of credit
risk. Exposure to credit risk is considered minimal but is monitored on an ongoing basis.
Cash transactions are limited to financial institutions considered to have a suitable credit rating. The
maximum exposure to credit risk is represented by the carrying amount of each financial asset in the
statement of financial position at balance date. The carrying amount of the consolidated entity’s financial
assets represents the maximum credit exposure.
The consolidated entity’s maximum exposure to credit risk at the reporting date was:
Carrying amount:
Cash and cash equivalents
Trade and other receivables
Other financial assets
2018
$
24,069
46,710
1,024,861
1,095,640
2019
$
82,716
59,416
1,066,756
1,208,888
36
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
15. FINANCIAL RISK MANAGEMENT (continued)
(b) Market risk
(i)
Interest rate risk
The significance and management of the risks to the consolidated entity is dependent on a number of factors
including (i) interest rates (current and forward) and the currencies that are held; (ii) level of cash and liquid
investments;(iii) maturity dates of investments; and (iv) proportion of investments that are fixed rate or
floating rate.
The risk is managed by the consolidated entity maintaining an appropriate mix between fixed and floating
rate investments. All cash assets are held in Australian dollars.
The consolidated entity’s exposure to interest rate risk is considered minimal. The effective interest rates of
variable rate income-earning financial assets at the reporting date are as follows.
Variable rate
instruments
at call
2019 ($)
Weighted
average effective
interest rate
2019
Variable rate
instruments
at call
2018 ($)
Weighted
average effective
interest rate
2018
82,716
1.8%
24,069
1.8%
Financial assets
Cash and cash
equivalents
At the reporting date the carrying amount of the consolidated entity’s interest bearing financial assets was:
Variable rate instruments
Fixed rate instruments
2019 ($)
82,716
1,054,681
2018 ($)
24,069
1,012,965
At the reporting date the carrying amount of the consolidated entity’s interest bearing financial liabilities was:
Fixed rate instruments
1,842,716
1,471,948
2019 ($)
2018 ($)
Sensitivity analysis
A 100 basis points increase or decrease in the weighted average year-end interest rate of variable rate
instruments would have increased / (decreased) consolidated profit or loss and equity by the amounts shown
below. This analysis assumes that all other variables remain constant. The analysis is performed on the
same basis for 2018:
30 June 2019 increase
30 June 2019 decrease
30 June 2018 increase
30 June 2018 decrease
(ii) Price risk
Profit and loss ($)
8,271
(8,271)
2,407
(2,407)
The consolidated entity was not exposed to equity securities price risk at 30 June 2019 or 30 June 2018.
37
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
15. FINANCIAL RISK MANAGEMENT (continued)
(b) Market risk (continued)
(iii) Currency risk
The Company is exposed to currency risk on costs which are quoted in currencies (Ukrainian Hryvnias) other
than the functional currency of the Company, being the A$. The consolidated entity does not hedge this risk,
however it continues to monitor the exchange rate so that this currency exposure is maintained at an
acceptable level. The major exchange rates relevant to the consolidated entity were as follows:
A$ / US$
Year ended
30 June 2019
0.720
As at
30 June 2019
0.701
Year ended
30 June 2018
0.775
As at
30 June 2018
0.740
The consolidated entity’s exposure to foreign exchange risk at statement of financial position date was as
follows, based on carrying amounts in A$:
2019
Cash and cash equivalents
Other financial assets
Trade and other receivables
Loans and borrowings
Trade and other payables
2018
Cash and cash equivalents
Other financial assets
Trade and other receivables
Loans and borrowings
Trade and other payables
Sensitivity
A$
82,716
1,066,756
59,416
(1,843,449)
(521,037)
(1,155,598)
A$
24,069
1,024,861
46,710
(1,471,265)
(389,733)
(765,358)
Total
82,716
1,066,756
59,416
(1,843,449)
(521,037)
(1,155,598)
Total
24,069
1,024,861
46,710
(1,471,265)
(389,733)
(765,358)
The consolidated entity had no material exposure from changes in foreign currency exchange rates at 30
June 2019 or 30 June 2018.
38
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
15. FINANCIAL RISK MANAGEMENT (continued)
(c) Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as and
when they fall due. The consolidated entity’s approach to managing this risk is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its liabilities when due under a range of financial conditions.
The following are the contractual maturities of consolidated non-derivative financial liabilities:
2019
Trade and other payables
Loans and borrowings
2018
Trade and other payables
Loans and borrowings
(d) Commodity price risk
Carrying
amount ($)
Contractual
cashflows ($)
6 months
or less ($)
1 to 5
years ($)
521,037
1,843,449
2,364,486
389,733
1,471,265
1,860,998
521,037
1,843,449
2,364,486
389,733
1,471,265
1,860,998
521,037
118,445
639,482
389,733
135,218
524,951
-
1,725,004
1,725,004
-
1,336,047
1,336,047
The consolidated entity is not exposed to commodity price risk at 30 June 2019 or 30 June 2018.
(e) Fair values
The fair values of consolidated financial assets and financial liabilities, together with their carrying amounts
shown in the statement of financial position, are as follows:
Consolidated
Carrying amount
2019 ($)
Fair value Carrying amount
2018 ($)
2019 ($)
Fair value
2018 ($)
Cash and cash equivalents
Other financial assets
Trade and other receivables
Loans and borrowings
Trade and other payables
82,716
1,066,756
59,416
(1,843,449)
(521,037)
(1,155,598)
82,716
1,066,756
59,416
(1,843,449)
(521,037)
(1,155,598)
24,069
1,024,861
46,710
(1,471,265)
(389,733)
(765,358)
24,069
1,024,861
46,710
(1,471,265)
(389,733)
(765,358)
Trade and other receivables / payables carrying amounts are considered to reflect their fair value. The
basis for determining fair values is disclosed in Note 1(t).
16. RELATED PARTY TRANSACTIONS
Korab Resources Limited is the ultimate parent entity. Interests in subsidiaries are disclosed in Note 12 and
details of key management personnel compensation is set out in Note 17. The remuneration of key
management personnel is set out in the Remuneration Report on page 12. Related party payables and loans
and borrowings are disclosed in Notes 9 and 10. Mr Andrej Karpinski is a director and controlling
shareholder of Rheingold Investments Corporation Pty Ltd (“Rheingold”). Management contract fees form
part of the remuneration of directors and have been disclosed as such in the directors' report.
Fees to Rheingold Investments Corporation Pty Ltd for:
- Management contract fees
Total fees to Rheingold Investments Corporation Pty Ltd
39
2019
$
2018
$
327,000
327,000
327,000
327,000
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
16. RELATED PARTY TRANSACTIONS (continued)
During the prior period the directors and Rheingold agreed to suspend payments of the executive services
fees (management contract fees) and directors’ fees. The unpaid fees are being accrued. The balance of
outstanding liabilities to Rheingold, Mr Karpinski and his related entities at period end for loans to the parent
entity and unpaid fees is $562,939 (2018: $486,694) at an average interest rate of 12.8%. This aggregate
amount consists of loans of $29,291 at an interest rate of 22% (2018: $25,725) and $533,648 at an interest
rate of 12% (2018: $460,969). The loans and unpaid fees are not payable prior to 30 September 2020.
These loans and debt become payable immediately on change of control of Korab. Mr. Karpinski has not
received any directors' fees from Korab or its subsidiaries since the formation of Korab in March 1998.
During the reporting period accrued directors’ fees and Rheingold management contract fees were
converted to loans and some of the prior year loans were repaid by Korab.
The balance of outstanding liabilities to Mrs. Karpinski, at period end for loan to the parent entity is
80,753.86 United States Dollars (A$115,633 at the applicable foreign exchange rate) (2018: 71,097 United
States Dollars, or $96,524 at applicable foreign exchange rate) at an interest rate of 12.00%. The loan is not
payable prior to 30 September 2020. This loan becomes payable immediately on change of control of Korab.
The balance of outstanding liabilities to directors, excluding Mr. Karpinski, and their related entities at period
end for loans to the parent entity and unpaid fees is $883,208 (2018: $586,928) at an average interest rate
of 12%. The loans and unpaid fees are not payable prior to 30 September 2020.
Mr Andrej Karpinski is a director and significant shareholder of Polymetallica Minerals Limited (formerly
Uranium Australia Ltd). The balance of outstanding receivables from Polymetallica Minerals Limited at period
end is $1,054,861 (2018: $1,012,965) at an interest rate of 8.5%. The receivable is not payable prior to 30
September 2020. The balance of outstanding receivables from Polymetallica Minerals Limited consist of
funds provided by the Company to pay for tenement rents and other project related costs in relation to
projects where the Company and Polymetallica have, or had joint venture arrangements, and/or production
sharing agreements, plus any accrued interest. These joint venture arrangements and/or production sharing
agreements were established when Polymetallica was a subsidiary of the Company prior to Polymetallica
being demerged (spun-off) from the Company. The Company has registered security over all assets of
Polymetallica. During the year Polymetallica paid the Company $44,250 (2018: $58,557) in interest with the
remaining interest of $41,895 (2018: $25,362) accruing.
17.
KEY MANAGEMENT PERSONNEL DISCLOSURES
Apart from the details disclosed in this note, no director has entered into a material contract with the
consolidated entity since the end of the previous financial year and there were no material contracts
involving directors’ interests existing at year end.
(a) Key management personnel compensation
Names and positions of key management personnel:
Name
Andrej K. Karpinski
Rodney H.J. Skeet
Daniel A. Smetana
Anthony G Wills
Position
Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Key management personnel compensation included in corporate compliance and management costs is as
follows:
Short term benefits
Post-employment
2019 ($)
2018 ($)
405,000
4,940
409,940
405,000
4,940
409,940
40
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
17. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
Information regarding individual directors and executives compensation is provided in the Remuneration
Report. Details of equity instruments held directly, indirectly or beneficially by key management personnel
and their related parties are included in the directors’ report.
(b) Other key management personnel transactions
Amounts payable to key management personnel at reporting date in respect of outstanding fees, expenses
and loans are:
Current
Trade and other payables
Loans and borrowings
Non-current
Loans and borrowings
18.
COMMITMENTS
Lease commitments
2019 ($)
23,857
56,800
2018 ($)
18,917
30,000
1,389,346
1,239,525
Non-cancellable operating leases (office lease)
Within one year
Later than one year but not later than 5 years
2019
$
2018
$
-
-
-
-
-
-
The office lease, which commenced on 11 August 2013, has not been extended and now continues on a
month-by-month basis.
Mining tenements
Annual expenditure commitments to maintain current rights to tenure of
mining tenements
Rehabilitation obligations
2019
$
2018
$
555,334
-
555,334
615,500
-
615,500
The consolidated entity has obligations to perform minimum exploration work and to meet annual payments
in respect of rent and granted tenements. These obligations may be varied from time to time subject to
approval and on this basis they are expected to be fulfilled in the normal course of operations. The Company
can also meet its expenditure obligations by seeking joint venture partners, or by causing other parties to
expend funds on exploration or mining, or by way of sale of all or part of an interest in a tenement, or by
allowing tenements to lapse. Expenditure requirements for applications pending approval are not included.
Mining tenements commitments by Korab Group and third parties
Korab Group annual expenditure commitments
Third parties annual expenditure commitments
19.
CONTINGENT LIABILITIES
2019
$
148,000
407,334
555,334
2018
$
137,500
478,000
615,500
Australian Copper Holdings Pty Ltd is responsible for defending the forfeiture action in respect of one of the
Mt. Elephant Project tenements. Should it be forfeited the Great Fingall Mining Company NL (GFM) which
41
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED 30 JUNE 2019
has an option Mt. Elephant Project will have 30 days to decide if it wants to terminate the option. If GFM so
terminates the option, Auscopper will refund GFM the $60,000 option fee plus 50% of the exploration
expenditure, tenement rent, and local government rates paid for by GFM in respect of the Project.
Other than above in the opinion of the directors there were no material changes in contingent liabilities that
existed as at 30 June 2018.
Key Management Personnel Contracts
Contingent liabilities arising from key management personnel contracts are set out in the Remuneration
Report.
20.
PARENT ENTITY INFORMATION
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of Financial Position
Current assets
Total assets
Current liabilities
Total liabilities
Equity
Contributed equity
Accumulated losses
Loss for the year
2019
$
101,818
3,742,171
358,628
2,039,159
2018
$
58,763
3,573,384
243,064
1,579,112
19,037,575
(17,334,563)
1,703,012
18,785,455
(16,791,183)
1,994,272
(543,380)
(490,813)
Total comprehensive loss for the year
(543,380)
(490,813)
The parent entity has not provided any financial guarantees in respect of subsidiaries, nor did it have any
contingent liabilities as at 30 June 2019 or 30 June 2018.
The Company has obligations to perform minimum exploration work and to meet annual payments in respect
of rent and granted tenements. These obligations may be varied from time to time subject to approval and on
this basis they are expected to be fulfilled in the normal course of operations. The Company can also meet
its expenditure obligations by seeking joint venture partners, or by causing other parties to expend funds on
exploration or mining, or by way of sale of all or part of an interest in a tenement, or by allowing tenements to
lapse. Expenditure requirements for applications pending approval are not included.
42
KORAB RE
& CONTRO
ESOURCES
OLLED ENTI
LIMITED
ITIES
ANNUAL RE
A
EPORT 2019
DIRECTO
OR THE YEA
ORS’ DECL
AR ENDED
FO
ARATION
30 JUNE 20
19
(1) In the
e opinion of t
the directors
of Korab Re
esources Lim
mited:
(a)
(b)
the financia
Corporation
al statements
ns Act 2001,
s and notes s
including:
set out on pa
ages 16 to 42
2 are in acco
ordance with
the
(i)
(ii)
givin
2019
ng a true and
9 and of its p
d fair view of
performance
the consolid
for the finan
ated entity’s
cial year end
financial pos
ded on that d
sition as at 3
date; and
30 June
com
man
plying with A
datory profe
Accounting S
ssional repo
Standards, th
rting require
e Corporatio
ments; and
ons Regulatio
ons 2001, an
nd other
there are re
when they
easonable gr
become due
rounds to be
e and payabl
elieve that the
e.
e Company w
will be able to
to pay its deb
bts as and
(2) This
direct
declaration
tors in accor
has been m
rdance with s
made after
section 295A
receiving th
A of the Corp
he declaratio
orations Act
2001.
ons required
d to be mad
de to the
Note 1(a) co
as issued b
onfirms that
y the Interna
the financial
ational Accou
statements
unting Standa
also comply
ards Board.
with Interna
tional Financ
cial Reportin
s
g Standards
Signed in ac
ccordance w
with a resolut
ion of the dir
rectors.
Andrej K. K
Executive C
Karpinski, F
Chairman
AICD, F Fin
Perth, West
27 Septemb
a
tern Australia
ber 2019
43
4
INDEPENDENT AUDITOR’S REPORT
To the Members of Korab Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Korab Resources Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30
June 2019, the consolidated statement of profit of loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1(a) in the financial report, which indicates that a material uncertainty
exists that may cast significant doubt on the entity’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter described in the Material
Uncertainty Related to Going Concern section, we have determined the matters described below
to be the key audit matters to be communicated in our report.
44
Key Audit Matter
How our audit addressed the key audit
matter
Classification of loans and borrowings
(Refer to Notes 9 and 10)
The operations of the Group are typically funded
through capital raisings and borrowings from
related and external parties.
As at 30 June 2019, Korab Resources Limited
had a total of $1,843,449 in relation to current
and non-current borrowings representing 78%
of total liabilities.
Given the size of the loans and borrowings
balance and the importance for continued
operations, the accounting for the Group’s
borrowings is considered a key audit matter.
Carrying amount of exploration and
evaluation asset
(Refer to Note 8)
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group
capitalises exploration expenditure.
Our audit focused on the Group’s assessment
of the carrying amount of capitalised exploration
and evaluation as this is one of the significant
assets of the Group. There is a risk that the
capitalised expenditure no longer meets the
recognition criteria of the standard.
In addition, we considered it necessary to
facts and circumstances
assess whether
existed to suggest that the carrying amount of
an exploration and evaluation asset may
exceed its recoverable amount.
Recoverability of Polymetallica Minerals
Limited loan receivable
(Refer to Note 7)
As at 30 June 2019, Korab Resources Limited
had a receivable of $1,054,861 in relation to the
non-current loan to Polymetallica Minerals.
The principal asset of Polymetallica
expenditure on areas of
in
exploration and evaluation phase.
interest
is
the
45
Our procedures included but were not limited
to:
- Obtaining confirmations from the material
funders confirming borrowings, including
amounts and interest rates;
the
party
ensured
- Where debt was regarded as non-current,
we
confirmed
unconditional right to defer payment such
that there were no repayments required
within 12 months from the balance date;
- Obtaining details of voluntary repayments
of borrowings made by the entity between
balance date and audit report date and
classified the amount as current; and
- Reviewing the contractual terms of loan
agreements and minutes of Directors’
meetings to ensure loans and borrowings
were complete and accruing appropriate
interest.
Our procedures included but were not limited
to:
- Obtaining an understanding of the key
processes associated with management’s
review of the exploration and evaluation
asset carrying values;
- Considering the Director’s assessment of
potential indicators of impairment;
- Obtaining evidence that the Group has
current rights to tenure of its area of
interest;
- Discussion with management the nature
of planned ongoing activities;
- Determining whether we consider any
impairment indicators under AASB 6 are
present; and
- Examining the disclosures made in the
financial report.
Our procedures included but were not limited
to:
- Reviewing the security interests in place
over Polymetallica’s projects as security
over loan repayment;
We considered this to be a key audit matter
due to its materiality and the significant audit
effort directed towards this area.
- Critically
reviewing an
independent
valuation over the relevant areas of
interest of Polymetallica;
- Considering the skills and experience of
the independent valuer;
- Ensuring Polymetallica’s right to tenure are
current; and
- Obtaining a
Polymetallica.
loan confirmation
from
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s financial report for the year ended 30 June 2019, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
46
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
30 June 2019.
In our opinion, the Remuneration Report of Korab 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
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
27 September 2019
M R Ohm
Partner
47
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Korab Resources Limited is responsible for corporate governance of the
Company. The Board guides and monitors the business and affairs of Korab Resources Limited on behalf of
the shareholders by whom they are elected and to whom they are accountable.
The Parent Company has neither full time nor part time employees. Most of the administration and technical
functions are outsourced to contractors who observe their own diversity and equal opportunity policies.
Subsidiaries that form the Korab Group are encouraged to seek diversification in their employment policies.
For further information on corporate governance policies adopted by Korab Resources Limited, refer to our
website: www.korabresources.com.au.
BOARD OBJECTIVES
The Board will develop strategies for the Company, review strategic objectives, and monitor the performance
against those objectives. The overall goals of the corporate governance process are to:
•
•
•
drive shareholders value;
assure a prudential and ethical base to the Company’s conduct and activities; and
ensure compliance with the Company’s legal and regulatory obligations.
Consistent with these goals, the Board assumes the following responsibilities;
•
•
•
•
•
developing initiatives for profit and assets growth;
reviewing the corporate, commercial and financial performance of the Company on a regular basis;
acting on behalf of, and being accountable to, the Shareholders;
identifying business risks and implementing actions to manage those risks; and
developing and effecting management and corporate systems to assure quality.
The Company is committed to the circulation of relevant materials to directors in a timely manner to facilitate
directors’ participation in Board discussions on a fully informed basis.
STRUCTURE OF THE BOARD
The skills, experience and expertise relevant to the position of director held by each director in office at the
date of the financial report is included in the Directors’ Report.
Election of Board members is substantially the province of the Shareholders in general meeting. However,
the Company commits to the following principles:
•
•
the Board to comprise of directors with a blend of skills, experience and attributes appropriate for the
Company and its business;
the principal criterion for the appointment of new directors being their ability to add value to the
Company and its business.
The Board has adopted the ASX Corporate Governance Councils definition of an independent director
contained
titled “The Principles of Good Corporate Governance and Best Practice
Recommendations”.
their report
The current Board structure is considered to best serve the Company in meeting its objectives, given its
small capitalisation, limited resources and existing operations. The composition of the Board is reviewed on
an annual basis to ensure that the Board has the appropriate mix of expertise and experience.
48
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
CORPORATE GOVERNANCE STATEMENT (Continued)
STATEMENT CONCERNING AVAILABILITY OF INDEPENDENT PROFESSIONAL ADVICE
If a director considers it necessary to obtain independent professional advice to properly discharge the
responsibility of his/her office as a director then, provided the director first obtains approval for incurring such
expense from the Chairman, the Company will pay the reasonable expenses associated with obtaining such
advice.
SKILLS, EXPERIENCE, EXPERTISE AND TERM OF OFFICE OF EACH DIRECTOR
A profile of each director containing the applicable information is set out in the directors' report.
REMUNERATION COMMITTEE AND NOMINATION COMMITTEE
At this time Korab has no remuneration or nomination committee. The board intends to form a remuneration
committee during the current financial year.
NOMINATION ARRANGEMENTS
Where a vacancy is considered to exist, the board will select an appropriate candidate through consultation
with external parties and consideration of the needs of shareholders and the Company. Such appointments
will be referred to shareholders for re-election at the next annual general meeting. All directors, except the
Executive Chairman, are subject to re-election by shareholders at least every three years.
When a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from
the services of a new director with particular skills, the Board will determine the selection criteria for the
position based on the skills deemed necessary for the Board to best carry out its responsibilities. The Board
will then appoint the most suitable candidate (assuming one is available) who must stand for election at the
next annual general meeting.
PERFORMANCE
During the reporting period the entity did not have a formal process for evaluation of directors and executives
due to there only being four in total. The Chairman will undertake an annual assessment of the performance
of the individual directors and meet privately with each director to discuss this assessment.
REMUNERATION ARRANGEMENTS
It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high quality
board by remunerating directors fairly and appropriately with reference to relevant employment market
conditions. To assist in achieving the objective the Board intends to link the nature and amount of executive
directors’ emoluments to the Company’s financial and operational performance. The expected outcomes of
this remuneration structure will be:
•
•
Retention and motivation of directors and executive officers
Performance rewards to allow directors and executive officers to share the rewards of the success of
Korab Resources Limited
The remuneration of the Executive Chairman is decided by the non-executive directors. In determining
competitive remuneration rates the directors review local and international trends among comparative
companies and the industry generally. Directors intend to consider an employee share option plan during the
current financial year.
The maximum remuneration of non-executive directors is the subject of Shareholder resolution in
accordance with the Company’s Constitution, and the Corporations Act as applicable. The duration of non-
executive director’s remuneration within that maximum will be made by the Board having regard to the inputs
and value of the Company of the respective contributions by each non-executive director.
The Board may award additional remuneration to non-executive directors called upon to perform extra
services or make special exertions on behalf of the Company.
49
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
CORPORATE GOVERNANCE STATEMENT (Continued)
There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive
directors. All remuneration paid to directors and executives is valued at the cost to the Company and
expensed.
AUDIT COMMITTEE
The shareholders in general meeting are responsible for the appointment of the external auditors of the
Company, and the Board from time to time will review the scope, performance and fees of those external
auditors. The Board has not yet established an audit committee. It is the Board’s responsibility to ensure that
an effective internal control framework exists within the Company. This includes both internal controls to deal
with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the
maintenance of proper accounting records, and the reliability of financial and non-financial information.
IDENTIFICATION AND MANAGEMENT OF RISK
The Board’s collective experience will enable accurate identification of the principal risks which may affect
the Company’s business. Management of these risks will be discussed by the Board at periodic (at least
annual) strategic planning meetings. In addition, key operational risks and their management, will be
recurring items for deliberation at Board meetings.
ETHICAL STANDARDS
The Board is committed to the establishment and maintenance of appropriate ethical standards to underpin
the Company’s operations and corporate practices.
INDEPENDENT DIRECTORS
The independent directors are Rodney Skeet, Daniel Smetana, and Anthony Wills.
FEMALE EMPLOYEES
As at 30 June 2019 the parent company had no part time or full time employees.
As at 30 June 2019 the proportion of males and females employed by the Korab Group (including local and
overseas subsidiaries) was as follows:
Directors
Other
Total
Male
4
1
5
Female
0
0
0
Total % Female
0%
0%
0%
4
1
5
50
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
CORPORATE GOVERNANCE STATEMENT (Continued)
EXPLANATIONS FOR DEPARTURES FROM BEST PRACTICE RECOMMENDATIONS (NOT
COMPLETE)
From 1 July 2018 to 30 June 2019 (the “Reporting Period”) the Company complied with the Corporate
Governance Principles and the Recommendations as published by the ASX Corporate Governance Council
("ASX Principles and Recommendations"), other than in relation to the matters specified below:
Notification of Departure
Explanation of Departure
2.4
A majority of Board are not
independent directors
2.5
is
The Chairman
an
independent director and acts in
the capacity of chief executive
officer.
not
1.5
The Company does not have a
diversity policy.
The Board consists of an Executive Chairman, and three
independent non-executive directors. The Board does not
consider it is cost effective to increase the size of the board
to meet this recommendation given the size of the
Company.
The Board considers that the Company is currently of a
size and complexity where the Chairman can act in an
executive capacity. If the Company’s activities increase in
size, scope and/or nature the appointment of a non-
executive Chairman will be considered by the Board.
The parent Company does not have either full time or part
time employees. The contractors supplying services to the
Company observe their own diversity and equal opportunity
policies. The Board is confident that Korab Group’s
recruitment practices result in the employment of the most
suitable candidate without discriminating unfairly against
any potential employee on the basis of gender, age,
ethnicity, culture, or on any other basis.
2.1
4.1
8.1
6.3
A separate Nomination Committee
has not been formed
The Board intends to appoint a Nomination Committee
during the 2020 financial year.
The Company does not have an
Audit Committee
The Board intends to appoint an Audit Committee during
the 2020 financial year.
The Company does not have
Remuneration Committee
The Board intends to appoint a Remuneration Committee
during the 2020 financial year.
The Company has not adopted a
policy to encourage participation
at meetings of security holders
The Board considers that shareholders currently receive
both the information and adequate notice to participate at
meetings of security holders.
7.1, 7.2 The Company does not have a
Risk Committee
7.3
The Company does not have an
internal audit function
The Board considers that it was of an effective composition,
its
size and commitment
responsibilities and duties during this period, however no
formal review of the risk management framework occurred
during the period.
to adequately discharge
The Board considers that the Company is not currently of a
size to justify the formation of an internal audit function. The
Board considers that it was of an effective composition,
size and commitment
its
responsibilities and duties during this period.
to adequately discharge
51
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
ADDITIONAL SHAREHOLDER INFORMATION
Additional information required by the ASX Limited (“ASX”) Listing Rules as at 27 September 2019 and not
disclosed elsewhere in this report is set out below.
SUBSTANTIAL SHAREHOLDERS
The following shareholders have lodged substantial shareholder notices with ASX:
Beneficial holder
Andrej K. Karpinski,
Shares
59,734,739
%
19.16
DISTRIBUTION OF SHAREHOLDERS
The distribution of security holders is as follows:
Range of holding
100,001 and over
10,001 – 100,000
5,001 – 10,000
1,001 – 5,000
1 – 1,000
Totals
Shareholders
255
514
150
152
149
1,220
Number Of Ordinary Shares
293,949,643
21,466,169
1,280,955
472,877
29,839
317,199,483
The number of shareholders holding less than a marketable parcel of ordinary shares is 626.
VOTING RIGHTS (ORDINARY SHARES)
The voting rights attaching to Ordinary Shares are governed by the Constitution. On a show of hands every
person present who is a member or representative of a member shall have one vote and on a poll, every
member present in person or by proxy or by attorney or duly authorised representative shall have one vote
for each share held. No options have any voting rights.
SCHEDULE OF MINERAL TENEMENTS
The details of tenements and land leases held by Korab Resources Limited and controlled entities as of 27
September 2019 are as follows:
Winchester, Geolsec, and Batchelor Tenements Located in the Northern Territory
Tenement
Registered
Holder/Applicant
Status Grant Date
EL31341 Korab Resources Limited
Granted
28/11/2016
MLN512
Korab Resources Limited
Granted
19/04/1982
MLN513
Korab Resources Limited
Granted
19/04/1982
MLN514
Korab Resources Limited
Granted
19/04/1982
MLN515
Korab Resources Limited
Granted
19/04/1982
MLN542
Korab Resources Limited
Granted
19/04/1982
MLN543
Korab Resources Limited
Granted
19/04/1982
ML30587 AusMag
Granted
21/10/2015
ML27362 Geolsec Phosphate
Granted
22/04/2010
EL29550 Korab Resources Limited
Granted
1/08/2012
Korab
Group
Share (%)
Expiry Date
Area
Next Annual
Rent
Next Year
Annual
Minimum
Expenditure
27/11/2022
6,500ha
$1,877
$19,000
31/12/2023
31/12/2023
31/12/2023
31/12/2023
31/12/2023
31/12/2023
16ha
16ha
16ha
16ha
15ha
15ha
$600
$600
$600
$600
$580
$580
20/10/2040
349.3ha
21/04/2035
234.3ha
$7,634
$5,400
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
31/07/2020
17,100ha
$12,600
$129,000
$25,671
$148,000
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
52
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
ADDITIONAL SHAREHOLDER INFORMATION (Continued)
SCHEDULE OF MINERAL TENEMENTS (Continued)
Mount Elephant Tenements Located in Western Australia
Tenement
Registered
Holder/Applicant
Status Grant Date
Korab
Group
Share (%)
Expiry Date
Area
Next
Annual
Rent
Next Year
Annual
Minimum
Expenditure
E 08/2757 Australian Copper
Granted
23/02/2017
E 52/2724 Australian Copper Holdings
Granted
18/07/2013
E 08/2307 Australian Copper Holdings
Granted
23/08/2013
E 08/2756 Australian Copper
Granted
9/09/2016
E 08/2115 Australian Copper Holdings
Granted
4/11/2010
100%
100%
100%
100%
100%
22/02/2022
5 Blks
$1,165
$15,000
17/07/2023
70 Blks
$25,242
$93,334
22/08/2023
43 Blks
$12,600
$50,000
8/09/2021
16 Blks
$3,728
$30,000
3/11/2020
73 Blks
$43,873
$219,000
Sub-Total
$86,608
$407,334
Bobrikovo Tenements Located in the Luhansk Region in Eastern Ukraine
Tenement
Registered
Holder/Applicant
Status
Grant Date
BKB169
LLC "Donetsky Kryazh" Granted
30/10/2007
4420381100 LLC "Donetsky Kryazh" Granted
29/07/2009
1589
2730
LLC "Donetsky Kryazh" Granted
29/07/2009
LLC "Donetsky Kryazh" Granted
17/06/2002
Korab
Group
Share
100%
100%
100%
100%
Expiry Date
Area
Next Year
Annual Rent
Next Year
Annual
Minimum
Expenditure
30/10/2037
17/07/2018*
17/06/2018*
17/06/2018*
25ha
8ha
13ha
12ha
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
*On 24 September, the Company reported that it has received notification that on the basis of the
Presidential Executive Order/Decree, all exploration licences, mining permits, and leases held by LLC
“Donetsky Kryazh” whose term would have otherwise expired, have been prolonged until the end of the
hostilities in the Luhansk region.
The consolidated entity has obligations to perform minimum exploration work and to meet annual payments
in respect of rent and granted tenements. These obligations may be varied from time to time subject to
approval and on this basis they are expected to be fulfilled in the normal course of operations. The Company
can also meet its expenditure obligations by seeking joint venture partners, or by causing other parties to
expend funds on exploration or mining, or by way of sale of all or part of an interest in a tenement, or by
allowing tenements to lapse. Expenditure requirements for applications pending approval are not included.
On 25 July 2018, the Company reported that it has leased the Geolsec project (ML27362) to third party, with
the lessee taking on the responsibility for the payments of rent, expenditure commitments, and shire rates.
On 25 July 2018, the Company reported that it has granted to third parties an option to acquire the Mt.
Elephant project (E08/2757, E52/2724, E08/2307, E08/2756, E08/2115). Under the agreement, third parties
are responsible for the rent, shire rates, and the expenditure commitments of the mining tenements forming
Mt. Elephant project.
ON-MARKET BUYBACK
There is no current on-market buyback.
53
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
ADDITIONAL SHAREHOLDER INFORMATION (Continued)
TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest shareholders are as follows:
Rank Name
25 Sep 2019
% IC
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
RHEINGOLD INVESTMENTS CORPORATION PTY LTD
59,734,739
18.83
RIADIS HOLDINGS PTY LTD
CUSTODIAL SERVICES LIMITED
CHANCERY HOLDINGS PTY LTD
SERGIY ANTONENKO
MR NEVILLE JOHN HOLZ & MRS LYNETTE HOLZ
VECTOR NOMINEES PTY LTD
LJM ENTERPRISES (WA) PTY LTD
MR HONG WANG
SELWYN BRUCE HATRICK
SCOTT GILCHRIST
MR SCOTT GORDON
JOHN MORTON HATRICK
MR IAN STUART WATSON & MRS CATHERINE JANE WATSON
MR JIHAD MALAEB
EST DENIS MELVILLE IRWIN
MR ANDREW GORDON MCCREA
MR LEON ISSAEVICH LEONOV
LJM CAPITAL CORPORATION PTY LTD
MR GARY WILLIAM LITTLE
Total
Balance of register
Grand total
16,200,000
14,186,963
13,393,082
8,000,000
8,000,000
6,388,889
5,600,000
5,415,396
5,000,113
5,000,000
5,000,000
4,915,000
4,707,007
4,600,000
4,500,000
4,360,063
3,800,000
2,996,667
2,994,151
184,792,070
132,407,413
317,199,483
5.11
4.47
4.22
2.52
2.52
2.01
1.77
1.71
1.58
1.58
1.58
1.55
1.48
1.45
1.42
1.37
1.20
0.94
0.94
58.26
41.74
100.00
54
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
ADDITIONAL SHAREHOLDER INFORMATION (Continued)
MINERAL RESOURCE ESTIMATES
Korab Resources Ltd holds two projects where mineral resources have been estimated: Winchester Project
and Bobrikovo Project. Korab reviews its mineral resources annually utilising outside consultants, who have
in excess of 5 years’ experience which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which they are undertaking and which is sufficient to qualify them as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’.
Winchester Deposit within the Winchester Project in the Northern Territory
Current estimate of mineral resource at Winchester is shown in the following table:
At 40% MgO Cut-Off
Indicated
Inferred
Total
Mass
‘000 Tonnes
12,200
4,400
16,600
MgO grade
%
43.1
43.6
43.2
MgO Mass
‘000 Tonnes
5,258
1,918
7,177
There has been no change to the Winchester mineral resource estimate since previous year.
The Competent Person is not aware of any new information or data that materially affects the information
included in the Company’s ASX Release - “Acquisition Of The Rum Jungle/Batchelor Project In Northern
Territory” on 16 July 2007 and, in the case of mineral resources that all the material assumptions and
technical parameters underpinning the estimates in the report released on 16 July 2007 continue to apply
and have not materially changed. The form and context in which the findings of the report released on 16
July 2007 are presented have not been materially modified. This information was prepared and first
disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012
on the basis that the information has not materially changed since it was last reported.
Winchester project consists of Mineral Lease ML30587 (100% AusMag Pty Ltd, a wholly owned subsidiary of
Korab Resources Ltd). The project is located near town of Batchelor, some 70 km south of Darwin in the
Northern Territory. The Company is confident that there are reasonable prospects for eventual economic
extraction of the mineral resource.
Competent Person Statement
The information in this Annual Report that relates to Exploration Targets, Exploration Results, Mineral
Resources or Ore Reserves is based on information compiled by the Company and reviewed by Malcolm
Castle, a competent person who is a Member of the Australasian Institute of Mining and Metallurgy
(“AusIMM”). Malcolm Castle is a consultant geologist employed by Agricola Mining Consultants Pty Ltd. Mr
Castle has sufficient experience that is relevant to the style of mineralization and type of deposits under
consideration and to the activity being undertaken 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” (“JORC Code”). Malcolm Castle consents to the inclusion in this Annual Report of the matters
based on his information in the form and context in which it appears.
Bobrikovo Deposit in Ukraine
Current estimate of gold and silver mineral resource at Bobrikovo is shown in the following tables:
CURRENT GOLD MINERAL RESOURCE AT BOBRIKOVO PROJECT (ABOVE 0.5 G/T AU CUT-OFF GRADE)
At 0.5g/t Au Cut-Off
Mass
Au grade
Measured
Indicated
Inferred
Total
Totals may differ due to rounding
‘000 Tonnes
2,317
5,194
98,404
105,916
g/t
1.6
1.4
0.9
1.0
55
Au Mass
‘000 Ounces
121
229
2,953
3,303
KORAB RESOURCES LIMITED
& CONTROLLED ENTITIES
ANNUAL REPORT 2019
ADDITIONAL SHAREHOLDER INFORMATION (Continued)
MINERAL RESOURCE ESTIMATES (Continued)
CURRENT SILVER MINERAL RESOURCE AT BOBRIKOVO PROJECT (ABOVE 5 G/T AG CUT-OFF GRADE)
Ag Mass
At 5g/t Ag Cut-Off
Ag grade
Mass
Measured
Indicated
Inferred
Total
Totals may differ due to rounding
‘000 Tonnes
2,090
5,529
46,533
54,152
g/t
14.0
13.9
8.6
9.4
‘000 Ounces
937
2,467
12,869
16,274
There has been no change to the Bobrikovo mineral resource estimate since previous year.
The Bobrikovo Mineral Resource was first disclosed on 16 July 2013 and is based on information compiled
and reviewed by Andrew Hawker, who is a principal geological consultant for HGS Australia Exploration
Services.
The Competent Person is not aware of any new information or data that materially affects the information
first included in the Company’s ASX Release – “JORC Resource At Bobrikovo Estimated At 3.3 Million Oz.
Au And 16.3 Million Oz. Ag” on 16 July 2013 and, in the case of mineral resources that all the material
assumptions and technical parameters underpinning the estimates in the report released on 16 July 2013
continue to apply and have not materially changed. The form and context in which the findings of the report
released on 16 July 2013 are presented have not been materially modified. This information was prepared
and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC
Code 2012 on the basis that the information has not materially changed since it was last reported.
Bobrikovo project consists of tenements and land leases BKB169, 646545, 2730, 4101 (100% LLc
“Donetsky Kryazh”, a wholly owned subsidiary) and is located 70km south of Luhansk in Ukraine.
Bobrikovo Project is located in eastern part of Ukraine in the Donbas region. This project has been written-
off in full at the consolidation level in Financial Report covering period ending 30 June 2014. For expiry dates
of the tenements forming this project and relevant comments regarding extension of term please refer to the
Schedule of Mineral Tenements on page 53. The Company is confident that there are reasonable prospects
for eventual economic extraction of the mineral resource.
Competent Person Statement
The information in this Annual Report that relates to Exploration Targets, Exploration Results, Mineral
Resources or Ore Reserves is based on information compiled by the Company and reviewed by Malcolm
Castle, a competent person who is a Member of the Australasian Institute of Mining and Metallurgy
(“AusIMM”). Malcolm Castle is a consultant geologist employed by Agricola Mining Consultants Pty Ltd. Mr
Castle has sufficient experience that is relevant to the style of mineralization and type of deposits under
consideration and to the activity being undertaken 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” (“JORC Code”). Malcolm Castle consents to the inclusion in this Annual Report of the matters
based on his information in the form and context in which it appears.
56