Annual Report
for the year ended 30 June 2017
De Grey Mining Limited
ABN 65 094 206 292
De Grey Mining Limited
Corporate Information
ABN 65 094 206 292
Directors
Simon Lill (Executive Chairman)
Steven Morris (Non-Executive Director)
Davide Bosio (Non-Executive Director)
Company Secretary
Craig Nelmes
Registered Office and Principal Place of Business
Level 2, Suite 9
389 Oxford Street
MOUNT HAWTHORN WA 6016
Telephone: +61 8 9381 4108
Facsimile: +61 8 9380 6761
Postal Address
PO Box 281
MOUNT HAWTHORN WA 6915
Solicitors
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
PERTH WA 6000
Bankers
National Australia Bank Limited
1232 Hay Street
WEST PERTH WA 6005
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
APPLECROSS WA 6153
Telephone: (08) 9315 2333
Facsimile: (08) 9315 2233
Auditors
Butler Settineri (Audit) Pty Ltd
Unit 16, First Floor Spectrum Offices
100 Railway Road
SUBIACO WA 6008
Internet Address
www.degreymining.com.au
Email Address
admin@degreymining.com.au
Stock Exchange Listing
Australian Securities Exchange (ASX code DEG)
Frankfurt Stock Exchange (FRA code WKN 633879)
1
De Grey Mining Limited
Contents
Executive Chairman’s Report
Operations Report
Directors' Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Audit Report
ASX Additional Information
Annual Mineral Resources Statement
Schedule on Interests in Mining Tenements
3
4
11
20
21
27
28
29
30
31
54
55
59
61
64
2
Executive Chairman’s Report
De Grey Mining Limited
Last year I reported that the year had played out in two halves. I find myself repeating that, with the half way point for this Financial Year
being the execution of the Option Agreement with North West Non Ferrous Australia Mining Limited (“NWII”) on 24 January 2017 to
acquire the neighbouring Indee Gold Project. This Agreement elevated De Grey from a company with a smallish resource and exploration
potential to a gold development story. We started the year with gold resources of 346,000 ounces, and now have a Project inventory of just
over 1.2M ounces.
We are excited about the potential of our tenement holding – we control over 160kms of mineralised shear zone, numerous drill ready
exploration targets, and existing resources able to be increased as most remain open in most directions. Like many junior explorers we have
been frustrated at a lack of market recognition for what we have, and what we have achieved. Fortuitously in recent times the spotlight has
turned on the region through the land grab, market performance and nugget discoveries of Novo Resources of Canada and their JV partner,
Artemis Resources. Novo believe the area to be highly prospective for conglomerate gold mineralisation considered analogous to the
Witwatersrand in South Africa. This has resulted in interest in all regional tenements, of which De Grey now controls a significant package
of around 1,800 km2.
Further we have announced that we have some similar style conglomerate mineralisation within our tenements to that which Novo is chasing,
and have confirmed similar geology through the metal detection of a number of pitted watermelon seed gold nuggets.
As we sign this report we also welcome Kirkland Lake Gold of Canada to our register. Kirkland Lake are a Canadian TSX listed mid-tier
gold producer with a market capitalisation of approximately US$2.7 Billion.
The Operations Review summarises our activities through the last 12 months activities in some detail. A bird’s eye view outlines the following
achievements:
Definition of a high grade lode from surface within the Wingina Well gold deposit together with proving this deposit continues to be
mineralised at depth;
A significant increase in gold resources at Mt Berghaus, with associated resource upgrade across all tenements;
Discovery of a 7km lithium containing pegmatite trend on the tenements which had never previously been identified. As this report is
finalised we are awaiting assay results from the maiden drilling program;
Significant upgrade of Base Metals resources at the Discovery-Orchard Tank Zn-Ag-Pb deposits on our wholly owned tenements;
Entering into an option agreement to acquire the Indee Gold Project, significantly increasing the resource base;
Upgrade of all resources at Indee Gold to JORC 2012, increasing the overall resource base of the Pilbara Gold Project to over 1.2 million
ounces; and
Confirmation of conglomerate style mineralisation hosting gold resulting in an investment in De Grey by Kirkland Lake Gold Ltd, to
be approved by shareholders at the forthcoming Annual General Meeting.
We are proud of the year’s achievements and prouder that this has been achieved with a small hardworking team, allowing more funds to be
spent on Project development. Hence there is only a small number of people to thank! We have come a long way since being advised that the
Turner River Gold Project was being returned to us in February of 2016. Much of this has been driven by Andy Beckwith with the geological
support of Phil Tornatora. We are fortunate to have two such experienced gold geologists on our team who have also consistently supported
the Company through the Capital Raisings undertaken during the year. This is testimony to the quality of the Company’s projects. I thank
them for their efforts to date, though equally knowing that they are enjoying the geological challenges and are looking forward to an exciting
year ahead.
The Company Secretary and CFO, Craig Nelmes has been tireless in his efforts to chase down the minutiae of Project life, and his support to
the team in general and myself personally is unquestioned. I thank him for that support.
I should also note the relationship with our Chinese vendors, whom we view in many ways as partners. They knew when entering the
transaction with a junior gold explorer that it was a big task for us. Their ongoing support has been further demonstrated with agreement
reached to extend the acquisition settlement date out a further twelve (12) months to 24 July 2019. We are also hopeful of their continued
support moving forward.
Finally, to my fellow Board Members, Davide Bosio and Steve Morris. We have enjoyed many vigorous conversations through the highs
and lows of life as a junior but have maintained our humour and support for each other throughout. The Board recognises it is time for a
change and we will be introducing new Board Members to ensure we are more resource orientated in the near future.
In closing we look forward to an exciting year ahead. The Witwatersrand style of mineralisation could be a game changer, but we do know
we have much to do on the more traditional shear zones that we do control. We look forward to providing you, the shareholders with a steady
stream of exciting results – and trust we are rewarded with your support as a result.
Simon Lill
Executive Chairman
Perth, 1 October 2017
3
De Grey Mining Limited
Operations Report
The Pilbara Gold Project
During the year De Grey Mining (“De Grey” or “Company”) entered into an Option Agreement to acquire the neighbouring Indee Gold
Project, thereby amalgamating the Turner River Project with the Indee Gold Project. The combined projects have since been named the
Pilbara Gold Project and now covers over 1,800 km2 some 75 kms to the south west of Port Hedland, in the Pilbara region of Western
Australia.
Locality Map – Pilbara Region – Tenements under De Grey Control following Indee Option Agreement
JORC 2012 Resources
During the year the Company has steadily increased the Pilbara Gold resource base as tabulated below:
ASX Release Date Ore (Mt’s)
2 Jun 2016
28 Oct 2016
6.7
7.1
Grade (g/t)
1.6
1.6
K Oz’s Outcome
346
366
25 Jan 2017
9.69
9 Feb 2017
3 April 2017
Turner River – 9.69
Indee Gold – 6.66
18.84
28 Sep 2017
23.88
1.5
1.5
1.6
1.7
1.6
464
464
345
1,002
1,210
Restate resources for JORC 2012 Compliance
Restatement of Wingina Well resources for high
grade lode
Increase in Mt Berghaus resources following drill
program
Enters option agreement to acquire Indee Gold.
Restatement of Indee JORC 2004 resources
Upgrade Indee to JORC 2012, including drill data
post 2004
Upgrade resources through inclusion of Mallina,
Toweranna and Heap Leach Pad
The company also upgraded resources at its Zn-Pb-Ag Base Metals Project as indicated below:
Discovery Prospect
1.4Mt @ 2.9% Zn, 1.2% Pb, 1.0g/t Au, 118g/t Ag, including massive sulphide zone hosting 0.6Mt @ 5.2% Zn, 2.2% Pb, 1.5g/t Au, 194g/t Ag
Orchard Tank Prospect
2.1Mt @ 3.4% Zn, 1.4% Pb, 0.7g/t Au, 105g/t Ag
4
Operations Report
Pilbara Gold Project – Scoping Study
De Grey Mining Limited
The Company commenced a scoping study during the year which was reported in August 2017. The Study was managed by independent
mining consultants Mintrex, with inputs from Cube Consulting and De Grey.
The scope of the study was that it was to be based only on open pit mining within the existing 1Moz resource base, with treatment via a
new, purpose built 1Mtpa oxide CIL plant with a sulphide flotation and regrind circuit proposed to be added in year 3. Recoveries used for
the sulphide flotation circuit were 80% and between 90-96% for oxide.
The key study outputs for the base case include:
Total resource mined
Resource categories
Gold production
C1 cash cost (LOM)*
AISC cost (LOM)**
Project Capex
4.8Mt at 2.1g/t Au for approximately 325,000oz Au;
38% Measured, 43% Indicated, 19% Inferred;
65% oxide & 35% fresh (sulphide);
~290,000 oz. Au recovered over 5 years;
Ranges from 65,000 oz. in Year 1 to 51,000oz in Year 4;
< A$1,000/oz. (calculated by De Grey);
< A$1,200/oz. (calculated by De Grey); and
$78M for new oxide CIL plant and associated infrastructure + $18M for sulphide circuit
upgrade in year 3, funded from cashflow.
Pit optimisations during the Study showed only 4.8Mt from the Company’s 18.84 Mt inventory (at that time) reporting to the mill. This
resulted in the project life being only 5 years. There will be opportunities to improve the recoverable resources from that inventory as some
of the resources show underground potential. The study has indicated that an increase in mine life would have a significant impact on
project economics.
The Company recognised this and whilst the study was being finalised had already commenced work to increase resources at the Project,
as well as metallurgical work aiming to confirm and improve fresh rock recoveries.
Pilbara Gold Project (Gold resources that are 100% owned by De Grey Group)
The three gold deposits Wingina, Amanda and Mount Berghaus contain an estimated 464,000 ounces of gold at 1.5 g/t (refer to the Annual
Statement of Ore Resources - JORC 2012 on page 61). The resources are located in an infrastructure rich area, 50km south of Port Hedland
in the Pilbara region of Western Australia, with excellent access via dominantly bitumen roads.
Wingina Well
The Wingina Gold deposit is well drilled with high grade gold mineralisation hosted by the Wingina Shear and associated Banded Iron
Formation (BIF) and Chert. Continuous high grade gold mineralisation (>1.8g/t) is hosted in sub-vertical high grade lodes which extend
over a 600m strike length and are currently drill tested to 200 - 250m below surface.
The Wingina Well Mineral Resource estimate was increased during the year by 7% to 5.49Mt at 1.6g/t Au for 288,000 ounces. 173,000oz
(60%) is in the Measured category. Importantly the Company also showed that there exists within the resource an internal high grade lode
comprising 1.1Mt at 4.1g/t Au for 144,000oz. This lode commences at surface and continues to the bottom of the likely open pit. 50% of
Wingina gold is contained in the high grade lodes comprising only 20% of the deposit tonnes. The resource averages over 1,200 ounces
per vertical metre/(“oz/vm”) from surface to 140m depth. The mineralisation remains open at depth and along strike. The remaining
Inferred category relates to generally deeper portions of the deposit which have received less drilling density to date. The Company has
not yet concluded enough work to prove the resource has the potential to provide for underground mining, though the continuance of the
higher grade lode indicates that potential.
Mt Berghaus
Drilling by De Grey during November/December 2016 provided for a significant increase in the Mt. Berghaus deposit (141,000 Oz’s @
1.2 g/t). The Mt Berghaus deposit is controlled by the Mallina Shear Zone and occurs within deformed metasediments of Archean age.
Mineralisation is developed within a NE-SW striking, sub-vertical zone with resource grade mineralisation defined to date in three separate
areas. The Mt Berghaus zone has a strike extent of 1.4km while the North Lode and West Berghaus zones have strike extents of 160m and
350m respectively. All zones have been reported above a depth of 120m.
Gold mineralisation is associated with zones of quartz veining developed as multiple steep zones within metasediments. The deposit has a
typical depth of oxidation of 40m to 60m. Over 50,000oz of the Mineral Resource lies within oxidised and transitional material. The newly
discovered zones highlight the potential for additional mineralisation with 3 kms of strike between West Berghaus and Mt Berghaus
(central) on similar stratigraphy and remains essentially untested.
Amanda
At Amanda, a resource of 35,400 Oz’s at 1.6 g/t has previously been defined. There was no work completed on this resource during the
year, but as it is controlled by the Wingina shear and remains open in all directions, there is significant potential to increase this resource
with further drilling. As indicated above, the intervening 10km strike length has limited deeper RC or diamond drilling that tests this
prospective horizon. Although poorly tested highly encouraging drilling intercepts including 2m @ 43.2g/t, 3m @ 29.3g/t, 4m @ 26.9g/t
and 16m @ 1.57g/t provide incentive to undertake further exploration along this zone.
5
Operations Report
De Grey Mining Limited
Indee Gold Resources (Gold resources subject to Option Agreement with Northwest Non Ferrous Australian Mining Limited
(“NNAM”)
The Indee Project area is dominated by a sequence of Archaean turbidite sediments intruded by a series of granitic plugs. Gold and base
metal mineralisation lies within the east-west trending Mallina Shear Zone that extends for over 70km with an overall width of
approximately 2km.
Gold mineralisation at Indee is associated with quartz veins, quartz-sulphide lodes, disseminated sulphides and associated carbonate
alteration and hosted by altered and poly-deformed folded sediments. The mineralised zones are typically sub-vertical however folding
and deformation of the sequence has resulted in some complexity to the interpreted geometry. Thickness of the mineralisation is typically
5m to 20m wide but in excess of 40m wide in some parts of the Withnell and Calvert deposits.
The weathering profile comprises a veneer of calcrete or transported sands overlying weathered bedrock. Oxidisation of the bedrock ranges
from 10m to 80m in depth and typically averages around 40m depth.
Below is a location plan of the main deposits from Dromedary to Withnell, with resource models shown in red. The deposits occur along
a strong east west trend related to a series of parallel bounding faults over 5km of strike. The plan does not show Calvert which is located
a further 10km due east along the same structural trend. Additional near-term resource potential remains along strike extensions of the
known resources together with other encouraging drill results as indicated along this specific 5km of trend. The Leach Pad is also shown
in the plan and contains just under 20,000 ounces in mined and previously crushed material stacked next to the proposed processing plant.
Aerial Photograph of Resources on Indee Ground
During the year the Company upgraded the resource models of all deposits on the Indee Tenements to JORC 2012 standards, including
the results of recent RC and diamond drilling completed by Indee Gold Pty Ltd over a period of eight years since the earlier resource
estimates were completed by the previous owner. Drill programmes at Mallina and the Heap Leach Pad plus the re-evaluation of past
drilling at Toweranna has resulted in further resource increase which now subsequent to the period total in excess of 1.2 million ounces of
gold
Type
Oxide
Fresh
Total
Measured
Mt
3.53
0.93
4.46
Au g/t Au Oz
200,200
49,400
249,600
1.8
1.7
1.7
Indicated
Mt Au g/t Au Oz
117,600
2.74
223,300
4.42
340,900
7.15
1.3
1.6
1.5
Inferred
Au g/t Au Oz
141,800
477,800
619,600
1.4
1.6
1.6
Mt
3.23
9.03
12.26
Total
Au g/t
1.5
1.6
1.6
Au Oz
459,600
750,400
1,210,000
Mt
9.51
14.37
23.88
De Grey
Total
On 24 January 2017, the Company entered into a Heads of Agreement to acquire the Indee Gold project, the key terms and conditions of
which are that De Grey has:
an exclusive and binding right to acquire all shares in the Australian company Indee Gold, which holds the major gold assets of the
former Indee gold mine and associated mining and exploration leases (“Indee Gold Project”) to the immediate west of the Turner
River Project;
12 month option period (Option Period) to carry out detailed due diligence, including a review of the resources, mining studies,
evaluations and exploration prior to electing to proceed (“Election”). De Grey is able to make an early Election if it so chooses; and
Then a further 6 months from Election in which to settle the transaction through the payment of $15M, less the exclusivity fee of
$100,000 referred to below.
6
Operations Report
De Grey Mining Limited
Within the 18 month time frame to 24 July 2018, De Grey is or was required to:
pay an initial Option Exclusivity Fee of $50,000 on signing (paid) and a further $50,000 within 3 months of signing. These option fee
payments (totalling $100,000) are non-refundable but are deductable from the final acquisition payment.
maintain the tenements by spending a minimum of $600,000 on the Indee Project during the Option Period, 50% of which is to be spent
on in ground exploration activities. The exploration works and budget are to be agreed by both parties, with De Grey managing the
activities.
prepare and finalise a formal Share Sale Agreement with the vendor within the Option Period on terms outlined in the HoA and including
terms normally contained within such agreements.
On 30 September 2017, the Company executed a formal Letter of Extension with NNAM. The extension is granted to De Grey under the
following terms:
Settlement date extended to 24 January 2019, on De Grey paying;
$100,000 extension fee;
$2 Million as a non-refundable payment on or before 24 July 2018;
Settlement can be extended by a further 6 months to 24 July 2019 through the payment of an additional $100,000 to be paid before 24
January 2019;
Each of these payments representing part of the overall sale consideration payable to NMAM;
NNAM to accept $3 Million of shares in De Grey as part of settlement proceeds and those Shares to be issued based on a 10% discount
to the Volume Weighted Average Price (“VWAP”) on the 20 days preceding settlement; and.
The Parties have also agreed to move to execution of a fuller Share Sale Agreement as soon as practical.
Other Strategic acquisitions completed during the Financial year
Option agreement to acquire E45/2983
On 26 October 2016, the Company entered into an option agreement to acquire the southern portion of E45/2983 from Haoma Mining NL
(“Haoma”), thereby securing 9km of underexplored and highly prospective stratigraphy with potential for further gold and base metals
discoveries. Haoma retained all rights to pegmatite related mineralisation and alluvial sand and scree deposits on this area.
The acquisition was achieved through the payment of $290,000 for the right to explore and mine on the identified portion of the tenement,
and the issue of 5000,000 options (post-reconstruction) with an exercise price of $0.058 per share. These options have since been exercised.
Other Strategic acquisitions subsequent to the Reporting Date
The Company has since the 30 June 2017 reporting date, has a strategic tenement application pending, as well as having entered into the
following option agreements to secure additional tenements in close proximity or contiguous to the “Pilbara Gold Project. These are as
follows:
Application (E47/3750)
An additional tenement application E47/3750 has also been made by De Grey to secure 100% of the exploration rights and cover an area
of 25km2. This application is located along the northern boundary of the Indee Project area, and our due diligence suggests that it includes
approximately 10km of prospective strike length where previous third party soil and rock chip sampling has highlighted anomalous gold
zones. These zones correlate with aerial imagery and reports of surface gold nuggets that have been previously reported, similar to many
other areas within the Pilbara Gold Project.
7
Operations Report
De Grey Mining Limited
Farno McMahon option agreement to acquire E45/2502
On 21 August 2017, the Company entered into a 4 year option to acquire 75% of the highly prospective gold tenement E47/2502, which
lies immediately to the south of the Indee tenements and within 15 kms of the proposed plant site.
The key Terms of this option agreement are as follows:
Option Period
Cash payment of $40,000 to the Vendor;
Vendor grants DEG an exclusive right and period to assess the project until 30 September 2017;
De Grey to complete a minimum expenditure of $30,000 during the Option Period; and
De grey may elect to enter into a Joint Venture Earn -in phase.
Joint Venture Earn-in
Stage 1 - DEG to spend a minimum of $1.0M over a period of 3 years to earn 30%;
1st Year expenditure requirement of $100,000
2nd Year expenditure requirement of $300,000
3rd Year expenditure requirement of $600,000
Stage 2 - DEG may spend a further $1.0M expenditure over an additional one year period (4th Year) to earn an additional 45% equity in
the tenement for a total equity of 75%; and
Vendor retains all alluvial rights.
The tenement comprises 226km2, covering large NE trending regional scale structures and numerous partially drill tested gold anomalies,
some with exceptional high-grade drill intercepts, as noted below:
Fir Prospect
1m @ 328.4g/t Au from 7m
1m @ 12.13g/t Au from 38m
Holly Prospect
13m @ 15.15g/t Au from 47m
16m @ 1.40g/t Au (Inc. 1m @ 11.58g/t Au from 5m)
1m @ 13.76g/t Au from 47m
Aspen Prospect
3m @ 3.88g/t Au from 35m
The tenement provides a large landholding with large (> 10 kms) untested gold anomalies and a mineralized system potentially larger than
the Indee Gold Project. The drill testing defined in first pass RAB and air core drilling has only tested shallow gold mineralization to less
than 50m vertical depth.
Vanmaris Option to acquire E47/3399, E47/3428-3430 and P47/1732-1733
On 30 September 2017, An Option Agreement was signed with the owner of the tenements E47/3399, E47/3428-3430, P47/1732-1733,
the key terms of which are:
De Grey may acquire an 80% interest in the tenements, located within 20km of a proposed processing plant (previously discussed);
A 4 year option period;
Consideration consists of $30,000 cash and the issue of 150,000 De Grey shares from the Company’s existing placement capacity
under Listing Rule 7.1:
De Grey are to maintain the tenements in good standing during the option period;
Within the 4 year period may elect to acquire the 80% interest on payment of $500,000 cash. The vendor retains the alluvial and
prospecting rights to the top 3metres depth.
The tenements are considered prospective for structurally controlled gold in the older basement rocks similar to mineralisation defined
with the greater Pilbara Gold Project.
8
Operations Report
De Grey Mining Limited
Tenements under the control of De Grey as at 30 September 2017
9
Operations Report
Beyondie Iron Ore Joint Venture
De Grey Mining Limited
The magnetite iron ore project at Beyondie is managed by joint venture partner Emergent Resources Ltd (ASX: EMG, “Emergent”) with
an 80% interest earned in the project. On 20 July 2017 and subsequent to the reporting date, Emergent advised the ASX that it intended to
seek shareholder approval pursuant to ASX Listing Rule 11.2 for Emergent to dispose of its 80% interest in the iron ore, vanadium and
manganese rights on the Beyondie Project.
Sands Royalty
An agreement exists between De Grey and Mobile Concrete Solutions Pty Ltd (MCS), a Karratha building company, for the excising of a
single graticular block from Exploration Licence 45/3390 for the purpose of extracting sand, shingle and limestone blocks.
The operation generated royalty revenues of $23,030 in the financial year (2016: $13,549).
Capital Raising Activities
During the financial year the Company has raised approximately $3.5 Million through the issue of 56.8 Million shares (with associated
options).
Subsequent to the end of the financial year the Company has:
On 6 September 2017, completed a placement raising a further $2.61 Million through the issue of 52.2 Million shares (and has a
Tranche Two issue to raise a further $400,000 (via the issue of an additional 8 million shares) to be approved by shareholders at a
General Meeting to be held on 26 October 2017; and
On 30 September 2017 the Company executed a subscription agreement with Kirkland Lake Gold Ltd, to raise a further $5 Million
though the planned issue of 33,333,333 shares and 33,333,333 options. This issue of shares and free attaching options are both subject
to shareholder approval and that the Company will seek at its 2017 Annual General Meeting GM to be held in November 2017.
Capital Consolidation
In December 2016, the Company completed, and after receiving shareholder approval, a consolidation of its share capital on a 1 for 20
basis.
Competent Person
The information in this report that relates to exploration results is based on, and fairly represents information and supporting
documentation prepared by Mr. Andrew Beckwith, a Competent Person who is a member of The Australasian Institute of Mining and
Metallurgy. Mr. Beckwith is a consultant to De Grey Mining Limited. Mr. Beckwith has sufficient experience that is relevant to the style
of mineralisation and type of deposit 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 Resource and Ore Reserves”. Mr. Beckwith
consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to the updated Mineral Resources for the Turner River Wingina Well, Mount Berghaus and
Amanda deposits was reported to the ASX on 25 January 2017.
The information in this report that relates to the updated Mineral Resources for the Turner River Discovery and Orchard Tank deposits
was reported to the ASX on 8 November 2016.
10
Directors’ Report
De Grey Mining Limited
Your directors present their report on the consolidated entity comprising De Grey Mining Limited (“De Grey” or “the Company”) and its
controlled entities (“the consolidated entity” or “Group”) for the financial year ended 30 June 2017.
All amounts are expressed in Australian dollars unless otherwise stated.
De Grey is a company limited by shares that is incorporated and domiciled in Australia.
DIRECTORS
The following persons were Directors of the Company during the whole of the financial year and up to the date of this report, except as
otherwise indicated:
Simon Lill
Steven Morris
Davide Bosio
INFORMATION ON DIRECTORS
Simon Lill, BSc MBA
Executive Chairman
Mr. Lill joined De Grey Mining Limited in October 2013 and has a BSc and a Masters of Business Administration, both from The University
of Western Australia. He has over 25 years experience in stockbroking, capital raising, management, business development and analysis for
a range of small and start-up companies, both in the manufacturing and resources industries. In recent times he has specialised in company
restructuring activities.
During the past three years Mr Lill has also served as a Director of the following listed companies:
Company
Mejority Capital Limited
Water Resources Group Limited
Mako Hydrocarbons Limited
Date appointed
18 May 2011
02 September 2013
28 August 2015
Date ceased
-
-
30 August 2015
Interest in shares and options:
3,750,000 ordinary fully paid shares
2,333,333 options over ordinary shares in De Grey Mining Limited
Steven Morris, Dip Fin Mkts
Non-executive Director
Mr. Morris was appointed to the board on 29 October 2014 and has over 20 years of experience at the most senior executive level in a range
of industries including the last 15 years in Financial Markets.
During that time, he has held positions such as Head of Private Clients Australia for Patersons Securities Ltd and Managing Director of
Intersuisse Ltd. He is the Founder of Peloton Shareholder Services offering management of shareholder based capital raising and investor
relations advice to numerous ASX listed companies. He is also General Manager of Agentplus, a provider of software solutions to the
property management industry and a Director of the Melbourne Football Club.
During the past three years Mr Morris has also served as a Director of the following listed companies:
Company
Water Resources Group Limited
Date appointed
2 September 2013
Date ceased
-
Interest in shares and options:
910,000 ordinary fully paid shares
1,000,000 options over ordinary shares in De Grey Mining Limited
11
De Grey Mining Limited
Directors’ Report
Davide Bosio, B Com, GradDipAppFin
Non-executive Director
Mr Bosio was appointed to the board on 18 December 2015.
Mr Davide Bosio has over 10 years experience in the finance industry as an Investment Advisor providing financial product advice and
dealing to wholesale and retail clients. He currently holds the position of managing director of DJ Carmichael, a Perth based broking business.
Mr Bosio is a Fellow Member of the Financial Services Institute of Australia (Finsia) and a Graduate Member of Australian Institute of
Company Directors (GAICD). He holds a Bachelor of Commerce (Marketing) degree and a Graduate Diploma in Applied Finance and
Investment.
During the past three years, Mr. Bosio has not served as a Director on other listed companies.
Interest in shares and options:
1,000,000 options over ordinary shares in De Grey Mining Limited
COMPANY SECRETARY
The following person acted as Company Secretary of the Company during the whole of the financial year and up to the date of this report:
Craig Nelmes B. Bus (Accounting & Finance)
Craig Nelmes joined De Grey Mining Limited in October 2013 and is an Accountant with over 20 years experience in the mining sector in
Australia and overseas, as well as seven years with International Accounting firm Deloitte. Since 2007, Mr. Nelmes has been employed with
Corporate Consultants Pty Ltd, a Company providing accounting, secretarial and administrative services to ASX and TSX listed entities.
PRINCIPAL ACTIVITIES
The principal activity of the consolidated entity during the course of the year was minerals exploration and development activities at the
Pilbara Gold Project in the Pilbara region of Western Australia. The regional tenement package also comprises of existing base metals
resources and Lithium prospects, each with further exploration potential.
FINANCIAL REVIEW
The consolidated loss after tax for the year ended 30 June 2017 was $3,218,897 (2016: $792,657).
EARNINGS PER SHARE
The basic loss per share for the year ended 30 June 2017 was 1.91 cents per share (2016: 0.8¹ cents per share).
¹ Restated for a 20:1 Capital Consolidation completed on receiving shareholder approval at the 2016 Annual General Meeting.
DIVIDENDS
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There have a number of significant changes in the state of affairs of the Company and its controlled entities during the financial year, and
which have been covered in both the Operations Review Section of this Annual Report, as well as the following section “Matters Subsequent
to the end of the Financial year”.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
(i) On 21 August 2017, the Company announced entering into an option agreement to acquire a new prospective tenement area contiguous
to its +1M oz. Pilbara Gold Project. Under the terms of the agreement, De Grey has the right to earn up to 75% equity in E47/2502.
Option Period
o Cash payment of $40,000 to the Vendor;
o Vendor grants DEG an exclusive right and period to assess the project until 30 September 2017;
o DEG to complete a minimum expenditure of $30,000 during the Option Period; and
o DEG may elect to enter Joint Venture Earn -in
12
Directors’ Report
De Grey Mining Limited
Joint Venture Earn-in
o Stage 1 - DEG to spend a minimum of $1.0M over a period of 3 years to earn 30%;
o 1st Year expenditure requirement of $100,000;
o 2nd Year expenditure requirement of $300,000;
o 3rd Year expenditure requirement of $600,000;
o Stage 2 - DEG may spend a further $1.0M expenditure over an additional 1year period (4th Year) to earn an additional 45% equity
in the tenement for a total equity of 75%; and
o Vendor retains all alluvial rights.
(ii) On 7 September 2017, the Company announced that it has completed the issue of the following securities:
o 7,595,324 shares in settlement of supplier’s invoices at an issue price of $0.044 per share, an issue approved by shareholders at a
meeting on 26 June 2017. The shares are escrowed for 6 months from the date of issue;
o 52,210,000 shares raising $2.61 Million (before costs) at an issue price of $0.05 per share further to the Company’s announcement
dated 30 August 2017;
o A Tranche Two issue of 8,000,000 shares at an issue price of $0.05 per share to be approved by shareholders at the General Meeting
to be held on the 26th October 2017; and
o 5,000,000 shares at an issue price of $0.058 per share on the exercise of options, raising an additional $0.29 Million.
(iii) On 30 September 2017, the executed a subscription agreement with Kirkland Lake Gold Ltd, a Canadian TSX listed mid-tier gold
producer with a market capitalisation of approximately US$2.7Billion. where on receipt of shareholder approval (expected to occur
at the 2017 Annual General Meeting to be held in November 2017) the Company has agreed to issue the following securities:
o 33,333,333 shares raising $5 Million (before costs) at an issue price of $0.15 per share; and
o 33,333,333 free attaching unlisted options at an exercise price of $0.20 and expiry date of 30 November 2020.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The objectives of the group are to maximise shareholder value through the discovery and delineation of significant mineral deposits in
Australasia, with specific focus in the Pilbara region of Western Australia.
The Company has a significant tenement holding with respect to its Pilbara Gold Project (consisting of 100% owned tenements and others
under option agreements), as well as contiguous tenements holding the Turner River base metals project and identified Lithium prospects
(the later subject to a drilling program subsequent to balance date with assay results pending at the date of this report).
There are a number of future developments in planning or progress, and the expected results of which cannot be predicted at the date of this
report, and include:
1. Ongoing exploration activities across the Pilbara Gold Project tenements, including new acquisitions during and post the balance date;
2. The Group is seeking to both add to existing JORC resources, accelerating exploration around the gold conglomerate discoveries made
subsequent to balance date, as well as ongoing work around other highly prospective explorations targets;
3. Continuing feasibility studies at the existing Pilbara Gold Project, prior to finalising a decision to acquire 100% of the Indee Gold
Project;
4. Seeking opportunities to further develop the base metals projects; and
5. Continue to carry our exploration activities on King Col Lithium prospect post receiving and assessing recent drilling assay result.
ENVIRONMENTAL REGULATION
The Group is subject to environmental regulation in respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in 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 year under
review.
RISK MANAGEMENT
The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with
the risks and opportunities identified by the board. Given the size and scale of its current operations, the board and key management personnel
as a group periodically assess risks and develop strategies to mitigate the impact of any perceived risks. The board endeavours to identify
potential risks when carrying out strategy planning and budgeting tasks and assessment and monitoring through its board meetings.
13
De Grey Mining Limited
Directors’ Report
REMUNERATION REPORT
The remuneration report is set out under the following main headings:
A. Key Management Personnel
B. Remuneration policy
C. Service agreements
D. Details of Remuneration
E. Securities Based Compensation
F. Other Transactions and Balances with Key Management Personnel
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
A. Key management personnel
Names and positions held of the Company’s key management personnel (“Key Management Personnel”) in office at any time during the
financial year are:
Key Management Personnel
Position
Mr Simon Lill
Mr Steven Morris
Mr Davide Bosio
Mr Craig Nelmes
Executive Chairman
Non-Executive Director
Non-Executive Director
Company Secretary / CFO
Except as noted, the named persons held their current position for the whole of the financial year.
B. Remuneration policy
The remuneration policy of De Grey Mining Limited has been designed by the board. Its objective is to align key management personnel
objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long term incentives
based on key performance areas affecting the Group’s financial results. The board of De Grey Mining Limited believes the remuneration
policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group.
From time to time when reviewing the remuneration, the Company may also source external advice to assist with salary setting and
determination of other benefits, including short term and long term incentive plans.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives and
director and key management personnel performance. Currently, this is facilitated through the issue of options to the majority of key
management personnel to encourage the alignment of personal and shareholder interests. The company believes this policy will be effective
in increasing shareholder wealth.
Fixed remuneration
Fixed remuneration consists of total Directors’ fees, salaries, consulting fees and employer contributions to superannuation funds, excluding
performance pay (cash, shares and options).
Fixed remuneration levels are reviewed annually by the board.
Executive remuneration
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results
delivered. The framework has three components:
Total fixed remuneration - a base salary (which is based on factors such as length of service, performance and experience) and employer
contributions to superannuation.
Short-term performance incentives; and
Long-term incentives through participation in the EOP and as approved by the Board.
As a result of the Company’s current size and scale of activities, the Company does not have an Executive Director. At present all executive
functions are being shared between the board members.
14
Directors’ Report
Non-executive Directors’ remuneration
De Grey Mining Limited
The board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually, based on market
practice, duties and accountability.
Fees for non-executive directors are not linked to the performance of the Group. However, to align Directors’ interests with shareholder
interests, these directors may receive short term performance incentives and longer term performance incentives via the Employee Option
Plan of De Grey Mining Limited (“EOP”)
The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual
General Meeting and is currently $250,000.
The annual remuneration for each non-executive director is $36,000 per annum (from 1 September 2016, the annual rate was increased from
$24,000 p.a.). These fees have been determined by the Board of the Company, taking into consideration factors such as the market rates of
industry peer companies and the current level of activity. Where there is a significant change in the size and scale of Company activities
these annual fees will be reviewed.
Where approved and at the request of the board, any of the Non-Executive Directors may from time to time be required to fulfil certain
executive functions. The commensurate remuneration with be paid at the rate $200 per hour or a fixed fee if so agreed. Mr. Lill has since
February 2016 (coinciding with the return of the Turner River Gold project) been undertaking executive duties on a needs basis.
Use of remuneration consultants
The Board may (from time to time) engage the services of external consultants to advise on the remuneration policy and to benchmark
director and key management personnel remuneration against comparable entities so as to ensure that remuneration packages are consistent
with the market and are appropriate for the organisation. The Group did not employ the services of any remuneration consultants during the
financial year ended 30 June 2017.
Employee Option Plan of De Grey Mining Limited (EOP)
The De Grey Mining Limited EOP was last approved by Shareholders at the 2015 Annual General Meeting held on 25 November 2015 and
Directors and full and part time employees of De Grey Mining Limited are eligible to participate in the Plan. Any issue of Options to
Directors under the Plan will be subject to Shareholder approval pursuant to the provisions of the ASX Listing Rules and the Corporations
Act 2001. The Directors consider that the EOP is an appropriate method to:
Provide long term incentives for participation in the Company’s future growth;
Establish a sense of ownership in the Company for the Directors and employees;
Enhance the relationship between the Company and its employees for the long term mutual benefit of all parties;
Enable the Company to attract high calibre individuals who can bring expertise to the Company;
Reward Directors, Key management personnel and employees for their past performance;
Motivate Directors and generate loyalty from senior employees; and
Assist to retain the services of valuable Directors and employees.
Voting on the Remuneration Report - 2016 Annual General Meeting
The Company received approximately 96.9% of “yes” votes on its remuneration report for the 2016 financial year (2016: 97.6%).
C. Service agreements
The key terms of the service agreements in place for the year ended 30 June 2017 were as set out below:
Simon Lill, Executive Chairman
In accordance with Mr Lill’s existing Directors agreement, Mr. Lill was remunerated $10,000 per month (from 1 January 2017, the monthly
rate was increased from $7,000).
15
Directors’ Report
D. Details of Remuneration
De Grey Mining Limited
Details of the remuneration of the directors, the key management personnel of the Group (as defined in AASB 124 Related Party Disclosures) and specified executives of De Grey Mining Limited and the Group
are set out in the following tables. The key management personnel of the Group are the Directors of De Grey Mining Limited and the Company Secretary/CFO.
Key management personnel of the Group
Short-Term
Post Employment
Share-based Payments
Total
% of remuneration
Salary& Fees
Non-Monetary
Superannuation
$
$
Directors
Simon Lill
2017
2016
Steven Morris
2017
2016
Davide Bosio
2017
2016
Peter Batten (resigned 18 December 2015)
2016
Sub- total Directors
2017
2016
Other Key management personnel
Craig Nelmes (Company Secretary/CFO) ¹
2017¹
2016¹
Total key management personnel compensation
2017
2016
102,000
44,000
34,000
24,000
35,580
11,675
19,200
171,580
98,875
-
-
171,580
98,875
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
3,610
1,225
-
3,610
1,125
-
-
3,610
1,125
Options
$
10,200
-
6,800
-
6,800
-
-
23,800
-
6,800
-
30,600
-
$
112,200
44,000
40,800
24,000
45,990
12,900
19,200
198,990
100,100
6,800
-
205,790
100,100
Options
%
9%
-
17%
-
15%
-
-
-
100%
-
-
¹Mr Nelmes is an employee of Corporate Consultants Pty Ltd, a consulting firm of which Craig Nelmes is an employee and whom provided Company Secretarial, CFO, bookkeeping and corporate administration
services.
16
Directors’ Report
De Grey Mining Limited
Share-holdings of Key Management Personnel
Opening Balance
1 July 2016
No.
Received on
exercise of options
No.
Purchases (disposals)
during the year
No.
Other changes
during the year
No.
Closing Balance
30 June 2017
No.
Directors
Simon Lill
Steven Morris
Davide Bosio
Other executives
Craig Nelmes
Total
3,000,000¹
250,000¹
-
634,811¹
4,384,811
-
-
-
-
-
750,000
660,000
-
227,300
1,137,300
¹ Restated for a 20:1 Capital Consolidation completed on receiving shareholder approval at the 2016 Annual General Meeting.
Option-holdings of Key Management Personnel
Directors
Simon Lill
Steven Morris
Davide Bosio
Other executives
Craig Nelmes
Total
Opening Balance
1 July 2016
No.
acquired
Options
compensation
No.
as
Purchases (disposals)
during the year
No.
Other changes
during the year
No.
750,000¹
-
-
1,009,811¹
1,759,811
1,500,000
1,000,000
1,000,000
1,500,000
5,000,000
83,333
-
-
-
83,333
¹ Restated for a 20:1 Capital Consolidation completed on receiving shareholder approval at the 2016 Annual General Meeting.
-
-
-
-
-
-
-
-
-
-
3,750,000
910,000
-
862,111
5,522,111
2,333,333
1,000,000
1,000,000
2,509,811
6,843,144
Closing Balance
30 June 2017
No.
17
De Grey Mining Limited
Directors’ Report
E. Securities based compensation
The Company has granted 4,500,000 (2016: Nil) options over unissued ordinary shares during the financial year to Directors and other
executives as part of their remuneration, as detailed in the table below:
Grant
Date
Expiry
Date
Exercise
Price
(cents)
Value per
option at
grant date
(cents)
Granted
Number
Exercised
Number
Vesting
Date
Number
Vested at
end of year
6 Dec 2016
30 Nov 2018
6 Dec 2016
30 Nov 2018
6 Dec 2016
30 Nov 2018
6 Dec 2016
30 Nov 2018
10.0
10.0
10.0
10.0
0.68
0.68
0.68
0.68
1,500,000
1,000,000
1,000,000
1,000,000
-
-
-
-
6 Dec 2016
1,500,000
6 Dec 2016
1,000,000
6 Dec 2016
1,000,000
6 Dec 2016
1,000,000
2017
Simon Lill
Steven Morris
Davide Bosio
Craig Nelmes
2016
Nil
On 24 September 2017, and since the end of the financial year, the Company granted a further 2,250,000 options under the De Grey Mining
Limited Employee Option Plan and that issue included 500,000 to Mr. Craig Nelmes.
There are no performance related conditions attached to any of these issued options.
F. Other transactions and balances with Key Management Personnel
There were no other transactions and balances with key management personnel.
End of Audited Remuneration Report
DIRECTORS' MEETINGS
The number of meetings of the Company’s Board of Directors held in the 12 months to 30 June 2017 and the number of meetings attended
by each Director were:
Simon Lill
Steven Morris
Davide Bosio
SHARE OPTIONS
Directors Meetings
Eligible
Attended
13
13
13
13
13
13
At the date of this report there are 59,280,714 unissued ordinary shares in respect of which options are outstanding.
Unlisted options
Listed options
Unlisted options
Unlisted options
Unlisted options
Number
2,125,000
23,621,103
7,350,000
23,934,611
2,250,000
Exercise Price
8 cents
10 cents
10 cents
4 cents
10 cents
Expiry Date
25 November 2017
30 November 2018
30 November 2018
10 June 2019
31 October 2020
During the financial year 35,971,103 options were issued and none were exercised. Since the end of the financial year 2,250,000 options
were issued and 5,000,000 were exercised.
18
Directors’ Report
De Grey Mining Limited
INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, De Grey Mining Limited paid a premium to insure the directors and secretary of the Company. The total amount
of insurance contract premiums paid is confidential under the terms of the insurance policy.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers
in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such
proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper
use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the company.
It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities.
NON AUDIT SERVICES
The following non audit services were provided by the Group’s auditor, Butler Settineri (Audit) Pty Ltd, or associated entities (refer note
18). The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below,
did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the
auditor; and
None of the services undermine the general standard of independence for auditors.
Butler Settineri received or are due to receive the following amounts for the provision of non-audit services:
Tax compliance services
PROCEEDINGS ON BEHALF OF THE COMPANY
2017
$
3,750
2016
$
2,400
As at the date of this report there are no leave applications or proceedings booked on behalf of De Grey Mining Limited under section 237
of the Corporations Act 2001.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 20.
Signed in accordance with a resolution of the directors
Simon Lill
Executive Chairman
Perth, 1 October 2017
19
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of De Grey Mining Limited for the year ended 30
June 2017, I declare that, to the best of my knowledge and belief, there have
been:
a) No contraventions of the auditor independence requirements of the
Corporations Act 2001 in relation to the audit; and
b) No contraventions of any applicable code of professional conduct in relation
to the audit.
The declaration is in respect of De Grey Mining Limited and the entities it controlled
during the year.
BUTLER SETTINERI (AUDIT) PTY LTD
LUCY P GARDNER
Director
Perth
Date: 1 October 2017
Corporate Governance Statement
De Grey Mining Limited
The Board of Directors of De Grey Mining Limited is responsible for the corporate governance of the Company. The Board guides and
monitors the business and affairs of De Grey Mining Limited on behalf of the shareholders by whom they are elected and to whom they are
accountable. The Company’s governance approach aims to achieve exploration, development and financial success while meeting
stakeholders’ expectations of sound corporate governance practices by proactively determining and adopting the most appropriate corporate
governance arrangements.
ASX Listing Rule 4.10.3 requires listed companies to disclose in their Annual Report the extent to which they have complied with the ASX
Best Practice Recommendations of the ASX Corporate Governance Council in the reporting period. A description of the Company’s main
corporate governance practices is set out below. The Corporate Governance Statement is current as at 30 June 2017, and has been approved
by the Board of Directors. All these practices, unless otherwise stated, were in place for the entire year. They comply with the ASX Corporate
Governance Principles and Recommendations (3rd edition).
The Company's directors are fully cognisant of the Corporate Governance Principles and Recommendations published by CGC and have
adopted those recommendations where they are appropriate to the Company's circumstances. However, a number of those principles and
recommendations are directed towards listed companies considerably larger than De Grey Mining Limited, whose circumstances and
requirements accordingly differ markedly from the Company's. For example, the nature of the Company's operations and the size of its staff
mean that a number of the board committees and other governance structures recommended by the CGC are not only unnecessary in the
Company's case, but the effort and expense required to establish and maintain them would, in the directors' view, be an unjustified diversion
of shareholders' funds.
As the Company's activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance
structures will be given further consideration.
The Company’s website at www.degreymining.com.au contains a corporate governance section that includes copies of the Company’s
corporate governance policies.
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1:
Companies should disclose the respective roles and responsibilities of its board and management and those matters expressly reserved to
the Board and those delegated to management and disclose those functions.
The Board’s role is to govern the Company rather than to manage it. In governing the Company, the Directors must act in the best interests
of the Company as a whole. It is the role of the senior management to manage the Company in accordance with the direction and delegations
of the Board and the responsibility of the Board to oversee the activities of management in carrying out these delegated duties.
The Board is responsible for:
overseeing the Company’s commitment to the health and safety of employees and contractors, the environment and sustainable
development;
overseeing the activities of the Company, including its control and accountability systems;
appointing and removing the Managing Director, Company Secretary, and other senior executives, evaluating their performance,
reviewing their remuneration and ensuring an appropriate succession plan;
reviewing, ratifying and monitoring systems of risk management and internal control;
setting the strategic objectives of the Company and monitoring its progress against those objectives;
setting the operational and financial objectives and goals for the Company;
ensuring that there are effective corporate governance policies and practices in place;
approving and monitoring budgets, capital management and acquisitions and divestments;
approving and monitoring all financial reporting to the market;
appointing external auditors and principal professional advisors; and
making formal determinations required by the Company’s constitutional documents or by law or other external regulation.
The Managing Director (MD) is normally responsible for running the affairs of the Company under delegated authority from the Board and
to implement the policies and strategy set by the Board. In carrying out those responsibilities, the Managing Director must report to the Board
in a timely manner and ensure all reports to the Board present a true and fair view of the Company’s financial condition and operational
results. Given the present size and scale of operations, the Company does not have a Managing Director, and as such the board as a whole is
taking responsibility for day to day management of the business, with specific assistance from the CFO/Company Secretary.
21
Corporate Governance Statement
De Grey Mining Limited
Recommendation 1.2:
Companies should undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election,
as a director and provide security holders with all material information in its possession relevant to a decision on whether or not to elect or
re-elect a director.
The Company undertakes checks on any person who is being considered as a director. These checks may include character, experience,
education and financial history and background.
All security holder releases will contain material information about any candidate to enable an informed decision to be made on whether or
not to elect or re-elect a director.
Recommendation 1.3:
Companies should have a written agreement with each director and senior executive setting out the terms of their appointment.
All directors have in place a formal letter of appointment including a director’s interest agreement with respect to disclosure of security
interests.
Recommendation 1.4:
The Company Secretary should be accountable directly to the Board, through the chair, on all matters to do with the proper functioning of
the Board.
The Company Secretary has a direct reporting line to the Board, through the Chair.
Recommendation 1.5:
The Company should establish a policy concerning diversity and disclose the policy or summary of the policy. The policy should include
requirements for the Board to establish measurable objectives for achieving gender diversity and for the Board to assess annually both the
objectives and progress in achieving them.
The Company recognises that a talented and diverse workforce is a key competitive advantage. The Company is committed to developing a
workplace that promotes diversity. The Company’s policy is to recruit and manage on the basis of competence and performance regardless
of age, nationality, race, gender, religious beliefs, sexuality, physical ability or cultural background. The Company has not yet formalised
this policy into a written document. It is the Board’s intention to formalise the policy at a time when the size of the Company and its activities
warrants such a structure.
As at the date of signing this report, the Company has seven staff (with includes directors and the CFO/Company Secretary), and including
two women. There are no women in senior executive positions or on the board.
Recommendation 1.6:
The Company should have and disclose a process for periodically evaluating the performance of the Board, its committees and individual
directors and whether a performance evaluation was undertaken in the reporting period in accordance with that process.
Due to the size of the Board and the nature of its business, it has not been deemed necessary to institute a formal documented performance
review program of individuals. The Chairman conducted an informal review during the financial year whereby the performance of the Board
as a whole and the individual contributions of each director were discussed. The board considers that at this stage of the Company’s
development an informal process is appropriate.
Recommendation 1.7:
The Company should have and disclose a process for periodically evaluating the performance of senior executives and whether a performance
evaluation was undertaken in the reporting period in accordance with that process.
The Board undertakes a review of the senior executives’ performance, at least annually, including setting the goals for the coming year and
reviewing the achievement of these goals.
Performance has been measured to date by the efficiency and effectiveness of the enhancement of the Company’s mineral interest portfolio,
the designing and implementation of the exploration and development programme and the securing of ongoing funding so as to continue its
exploration and development activities. This performance evaluation is not based on specific financial indicators such as earnings or
dividends as the Company is at the exploration stage and during this period is expected to incur operating losses.
Due to the size of the Company and the nature of its business, it has not been deemed necessary to institute a formal documented performance
review program of senior executives. The Non-executive directors conducted an informal review process whereby they discussed with the
Executive Chairman the approach toward meeting the short and long-term objectives of the Company. The board considers that at this stage
of the Company’s development an informal process is appropriate.
22
De Grey Mining Limited
Corporate Governance Statement
Principle 2: Structure the board to add value
Recommendation 2.1:
The Board should establish a Nomination Committee comprising a majority of independent directors (including the Chair).
The Company does not have a nomination committee. The Board considers that the Company is not currently of a size, nor are its affairs of
such complexity, to justify the formation of separate or special committees at this time. The Board as a whole is able to address the governance
aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriate ethical standards. In particular, the full Board
considers those matters that would usually be the responsibility of a nomination committee. The Board considers that no efficiencies or other
benefits would be gained by establishing a separate nomination committee.
Directors are appointed under the terms of the Company’s constitution. Appointments to the Board are based upon merit and against criteria
that serves to maintain an appropriate balance of skills, expertise, and experience of the board. The categories considered necessary for this
purpose are a blend of accounting and finance, business, technical and administration skills. Casual appointments must stand for election at
the next annual general meeting of the Company.
Retirement and rotation of Directors are governed by the Corporations Act 2001 and the Constitution of the Company. All Directors, with
the exception of the Managing Director (if appointed), serve for a period of three years before they are requested to retire and if eligible offer
themselves for re-election.
Recommendation 2.2:
The Company should have and disclose a Board skills matrix setting out the mix of skills and diversity that the Board currently has or is
looking to achieve in its membership.
The Company has a skills or diversity matrix in relation to its Board members which reflects the current size and scope of the Company’s
operations. The Board will adopt a more detailed and comprehensive matrix if and when there is a significant change in the size and scale
of its activities.
Director
Gender
Accounting/
Finance
Communications
/Investor Relations
Corporate
Management
Fund
Raising
Geology
Skills/Qualifications
Experience Based on Skills/Knowledge
Simon Lill
Steve Morris
Male
Male
Finance
BSc and MBA in Business
Admin
Broking & Investor Relations
Diploma Fin Mkts
AAICD
Davide Bosio
Male
BCom & GradDipAppFin
√
√
√
√
√
√
√
√
√
√
√
Recommendation 2.3:
The Company should disclose the names of the directors considered to be independent directors and length of service of each director.
The names, position, appointment date and independence classification are set out in the table below:
Director
Simon Lill
Steve Morris
Davide Bosio
Position
Date Appointed
Independent
Executive Chairman
2 October 2013
Non-executive Director
29 October 2014
Non-executive Director
18 December 2015
No
Yes
No
Recommendation 2.4:
A majority of the Board of the Company should be independent directors.
In assessing whether a director is classified as independent, the Board considers the independence criteria set out in the ASX Corporate
Governance Council Recommendation 2.1 and other facts, information and circumstances deemed by the Board to be relevant. Using the
ASX Best Practice Recommendations on the assessment of the independence of Directors, the Board considers that of a total of three
Directors, only Mr Morris is independent and therefore the Company does not currently have a majority of independent directors.
The Company considers that each of the directors possesses the skills and experience suitable for building the Company. Although the
Company does not currently have a majority of independent directors, the current composition of the Board is considered appropriate in the
circumstances. It is necessary that Mr. Lill will be required from time to time undertake specific executive roles, relevant to their skills and
experience, given the Company’s current size, operations and levels of activity.
It is the Board’s intention to review its composition on a continual basis and in line with any future changes to Company’s size and level of
activities.
23
Corporate Governance Statement
De Grey Mining Limited
Recommendation 2.5:
The Chair of the Board should be an independent director, and should not be the CEO of the Company.
Given the present size and scale of operations, the Company does not have a Managing Director. In addition, the Chairman, Mr. Lill, will
from time from time undertake executive functions specific to his skills and experience, and as such he is not an independent director in
accordance with the criteria for independence as outlined in ASX Recommendation 2.3.
The board believes that Mr. Lill is an appropriate person for the position as Chairman because of his experience in the resources sector and
as a public company director.
Recommendation 2.6:
The Company should have a program for inducting new directors and provide appropriate professional development opportunities for
directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.
The Company does not currently have a formal induction program for new Directors nor does it have a formal professional development
program for existing Directors. The Board does not consider that a formal induction program is necessary given the current size and scope
of the Company’s operations.
All Directors are generally experienced in exploration and mining company operations, and have listed company experience. Some of the
current Directors are also directors of other listed companies. The Board seeks to ensure that all of its members understand the Company’s
operations. Directors also attend, on behalf of the Company and otherwise, technical and commercial seminars and industry conferences
which enable them to maintain their understanding of industry matters and technical advances.
Noting the above, the Board considers that a formal induction program is not necessary given the current size and scope of the Company’s
operations, though the Board may adopt such a program in the future as the Company’s operations grow and evolve.
Principle 3: Act ethically and responsibly
Recommendation 3.1:
Companies should have a Code of Conduct for its directors, senior executives and employees.
The Company has established a Code of Conduct which sets out the Company’s key values and how they should be applied within the
workplace and in dealings with those outside the Company. A copy of the Code is available on the Company’s website.
Principle 4: Safeguard Integrity in Financial Reporting
Recommendation 4.1
The Board should have an Audit Committee.
The Company does not have an audit committee. The Board considers that the Company is not currently of a size, nor are its affairs of such
complexity, to justify the formation of separate or special committees at this time. The Board as a whole is able to address the governance
aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriate ethical standards. In particular, the full Board
considers those matters that would usually be the responsibility of an audit committee. The Board considers that no efficiencies or other
benefits would be gained by establishing a separate audit committee.
The Company requires external auditors to demonstrate quality and independence. The performance of the external auditor is reviewed and
applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of performance,
existing value and tender costs.
The external audit firm partner or an appropriate delegate responsible for the Company audit attends meetings of the board by invitation
Recommendation 4.2
The Board of the Company should, before it approves the Company’s financial statements for a financial period, receive from its CEO and
CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements
comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and
that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
The Company has in place a procedure whereby prior to approval of financial statements by the Board (in addition to any formal management
representation letter to the Company’s auditor) the CEO and CFO provide a declaration in accordance with Sections 286 and 295(3)(b) of
the Corporations Act 2001 (Cth) that financial records have been properly maintained, the financial statements comply with the accounting
standards, and give a true and fair view of the financial position based on sound risk management and internal controls operating effectively.
24
Corporate Governance Statement
De Grey Mining Limited
Recommendation 4.3
The Company should ensure that the external auditor is present at the AGM and be available to answer questions from security holders
relevant to the audit.
The Company invites the auditor or representative of the auditor to the AGM in accordance of the requirements of Section 250RA of the
Corporations Act 2001 (Cth) and is available to answer questions relevant to the audit.
Principle 5 – Make timely and balanced disclosure
Recommendation 5.1:
Companies should have a written policy for complying with its continuous disclosure obligations under the Listing Rules.
The Company has developed an ASX Listing Rules Disclosure Strategy which has been endorsed by the Board. The ASX Listing Rules
Disclosure Strategy ensures compliance with ASX Listing Rules and Corporations Act obligations to keep the market fully informed of
information which may have a material effect on the price or value of its securities and outlines accountability at both the board and (where
and when applicable) senior executive level for that compliance. All ASX announcements are posted to the Company’s website as soon as
possible after confirmation of receipt is received from ASX.
A copy of the continuous disclosure policy is available on the Company’s website.
Principle 6 – Respect the rights of security holders
Recommendation 6.1 and 6.2:
Companies should provide information about itself and its governance to investors via its website.
Companies should design and implement an investor relations program to facilitate two-way communication with investors.
The Company is committed to maintaining a Company website with general information about the Company and its operations, information
about governance and information specifically targeted at keeping the Company’s shareholders informed about all major developments
affecting the Company’s state of affairs.
The Company has a Shareholder Communication Policy which is available on the Company’s website. Through this the Board aims to ensure
that the shareholders are informed of the Company’s governance and all major developments affecting the Company’s state of affairs.
Information is communicated to shareholders through the:
Company website;
ASX Company Announcements platform;
Quarterly Operational and Cash-flow reports;
Half-year Financial Report;
Annual Report;
Investor Presentations;
Shareholder meetings; and
Other correspondence from time to time regarding matters impacting on shareholders.
Recommendations 6.3 and 6.4:
Companies should disclose the policies and processes in place to facilitate and encourage participation at meetings of security holders.
Companies should give security holders the option to receive communications from, and send communications to, the entity and its security
registry electronically.
In accordance with the Company’s Shareholder Communications Policy, the Company supports shareholder participation in general meetings
and seeks to provide appropriate mechanisms for such participation. The Company will use general meetings as a tool to effectively
communicate with shareholders and allow shareholders a reasonable opportunity to ask questions of the Board of Directors and to otherwise
participate in the meeting.
Mechanisms for encouraging and facilitating shareholder participation will be reviewed regularly to encourage the highest level of
shareholder participation.
The Company considers that communicating with shareholders by electronic means is an efficient way to distribute information in a timely
and convenient manner. In accordance with the Shareholder Communication Policy, the Company has, as a matter of practice, provided new
shareholders with the option to receive communications from the Company electronically and the Company encourages them to do so.
Existing shareholders are also encouraged to request communications electronically. All shareholders that have opted to receive
communications electronically are provided with notifications by the Company when an announcement or other communication (including
annual reports, notices of meeting etc.) is uploaded to the ASX announcements platform.
25
De Grey Mining Limited
Corporate Governance Statement
Principle 7 – Recognise and manage risk
Recommendation 7.1:
The Board should have a committee or committees to oversee risk.
The Company does not have a separate risk management committee. The role of the risk management committee is undertaken by the full
Board, which comprises a Chairman and two Non-Executive Directors. The Board considers that, given the current size and scope of the
Company’s operations and that no one Director holds a full time executive position in the Company, efficiencies or other benefits would not
be gained by establishing a separate risk management committee at present.
As the Company’s operations grow and evolve, the Board will reconsider the appropriateness of forming a separate risk management
committee. However, the Board has adopted a Risk Management Policy that sets out a framework for a system of risk management and
internal compliance and control, and this is available on the Company’s website.
Recommendation 7.2:
The Board should review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound and disclose
whether such a review has taken place.
As the Board has responsibility for the monitoring of risk management it has not required a formal report regarding the material risks and
whether those risks are managed effectively. The Board believes that the Consolidated Group is currently effectively communicating its
significant and material risks to the Board and its affairs are not of sufficient complexity to justify the implementation of a more formal
system for identifying, assessing, monitoring and managing risk in the Company.
Recommendation 7.3:
The Company should disclose if it has an internal audit function.
The Company does not have an internal audit function. The Board considers that the Company is not currently of a size, nor are its affairs of
such complexity, to justify the formation of an internal audit function at this time. The Board as a whole continually evaluates and improves
the effectiveness of its risk management and internal control processes, and in doing so is subject to the overall supervision of the board.
Recommendation 7.4:
The Company should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does,
how it manages or intends to manage those risks.
The Company is of the view that it has adequately disclosed the nature of its operations and relevant information on exposure to economic,
environmental and social sustainability risks. Other than general risks associated with the mineral exploration industry, the Company does
not currently have material exposure to environmental and social sustainability risks.
Principle 8 – Remunerate fairly and responsibly
Recommendation 8.1:
The Board should have a Remuneration Committee.
The Company does not have a remuneration committee. The Board considers that the Company is not currently of a size, nor are its affairs
of such complexity to justify the formation of separate or special committees at this time. The Board as a whole is able to address the
governance aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriate ethical standards. In particular,
the full Board considers those matters that would usually be the responsibility of a remuneration committee. The Board considers that no
efficiencies or other benefits would be gained by establishing a separate remuneration committee.
Recommendation 8.2:
Companies should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration
of executive directors and other senior executives.
The Company’s policies and practices regarding the remuneration of Executive and Non-Executive Directors is set out in its Remuneration
Policy which is available on the website.
This information is also set out in the Remuneration Report contained in the Company’s Annual Report for each financial year.
Recommendation 8.3:
A Company which has an equity based remuneration scheme should have a policy on whether participants are permitted to enter into
transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme and disclose
that policy or summary of it.
Recipients of equity-based remuneration (e.g. incentives options) are not permitted to enter into any transactions that would limit the
economic risk of options or other unvested entitlements, so the Company is not affected by this recommendation.
26
Consolidated Statement of Comprehensive Income
De Grey Mining Limited
YEAR ENDED 30 JUNE 2017
Notes
Consolidated
REVENUE
EXPENDITURE
Depreciation expense
Employee benefits expense
Exploration expenditure
Impairment – non-listed investments
Corporate expenses
Occupancy expenses
Consulting expenses
Investor relations and advertising expenses
Administration expenses
Share based payments
Other expenses
2017
$
30,798
(11,276)
(182,147)
(2,323,620)
-
(235,835)
(28,500)
(99,682)
(68,854)
(249,778)
(49,980)
(23)
4
5/26
2016
$
22,289
(8,253)
(92,900)
(304,394)
(75,000)
(144,933)
(8,675)
(1,525)
(45,700)
(133,358)
-
(208)
LOSS BEFORE INCOME TAX
(3,218,897)
(792,657)
INCOME TAX BENEFIT / (EXPENSE)
6
-
-
LOSS FOR THE YEAR
(3,218,897)
(792,657)
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss
Other comprehensive income for the year, net of tax
-
-
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY
HOLDERS OF DE GREY MINING LIMITED
(3,218,897)
(792,657)
Basic and diluted loss per share for loss attributable to the ordinary equity
holders of the company (cents per share)
25
(1.91)
(0.80)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements.
27
Consolidated Statement of Financial Position
De Grey Mining Limited
AT 30 JUNE 2017
Notes
Consolidated
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Available-for-sale financial assets
Deferred exploration & evaluation expenditure
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
2017
$
1,007,029
126,738
11,695
16,040
1,161,502
-
980,397
58,361
1,038,758
2016
$
1,207,561
23,693
-
7,130
1,238,384
-
-
26,019
26,019
2,200,260
1,264,403
1,024,126
1,024,126
1,024,126
189,717
189,717
189,717
1,176,134
1,074,686
49,108,104
170,530
(48,102,500)
1,176,134
45,837,739
120,550
(44,883,603)
1,074,686
7
8
9
10
11
12
13
14
15
16
16
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial Statements.
28
Consolidated Statement of Changes in Equity
De Grey Mining Limited
YEAR ENDED 30 JUNE 2017
Consolidated
Notes
Contributed
Equity
$
Reserves
$
Accumulated
Losses
$
BALANCE AT 30 JUNE 2015
Loss for the year
OTHER COMPREHENSIVE INCOME
16(b)
IN THEIR
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS
CAPACITY AS OWNERS
Shares issued during the year
Share issue costs
Share based payments (capital raising cost)
Transfer of reserve on expiry of options
BALANCE AT 30 JUNE 2016
Loss for the year
OTHER COMPREHENSIVE INCOME
15(b)
15(b)
16(a)
16(a)
16(b)
IN THEIR
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS
CAPACITY AS OWNERS
Shares issued during the year
Share issue costs
Share based payments
Transfer of reserve on expiry of options
44,344,280
234,600
(44,297,496)
-
-
-
-
-
-
1,755,192
(261,733)
-
-
-
-
92,500
(206,550)
(792,657)
-
(792,657)
-
-
206,550
Total
$
281,384
(792,657)
-
(792,657)
1,755,192
(261,733)
92,500
-
45,837,739
120,550
(44,883,603)
1,074,686
-
-
-
-
-
-
(3,218,897)
(3,218,897)
-
(3,218,897)
-
(3,218,897)
15(b)
15(b)
16(a)
16(a)
3,514,063
(243,698)
-
-
-
-
49,980
-
-
-
-
-
3,514,063
(243,698)
49,980
-
BALANCE AT 30 JUNE 2017
49,108,104
170,530
(48,102,500)
1,176,134
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements.
29
Consolidated Statement of Cash Flows
De Grey Mining Limited
YEAR ENDED 30 JUNE 2017
Notes
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Royalties received
Payments to suppliers and employees
Interest received
Payments for exploration and evaluation expenditure
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
24
CASH FLOWS FROM INVESTING ACTIVITIES
Option payments to acquire tenements
Payments for plant and equipment
NET CASH INFLOW / (OUTFLOW) FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares
Payments of share issue transaction costs
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
7
2017
$
19,562
(918,750)
7,268
(2,125,359)
(3,017,279)
(390,000)
(43,618)
(433,618)
3,494,063
(243,698)
3,250,365
(200,532)
1,207,561
1,007,029
2016
$
14,743
(378,532)
8,340
(194,313)
(549,762)
-
(3,607)
(3,607)
1,687,692
(169,234)
1,518,458
965,089
242,472
1,207,561
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements.
30
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the 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
De Grey Mining Limited and its subsidiaries. The financial statements are presented in the Australian currency. De Grey Mining Limited is
a company limited by shares, domiciled and incorporated in Australia. The financial statements were authorised for issue by the directors on
1 October 2017. The directors have the power to amend and reissue the financial statements.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board and the Corporations Act 2001. De Grey Mining Limited is a for-profit entity for the
purpose of preparing the financial statements.
(i) Application of New and Revised Accounting Standards
The group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 July 2016:
AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations
AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation
AASB 2015-1 Amendments to Australian Accounting Standards – Annual improvements to Australian Accounting Standards 2012 – 2014
cycle, and
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure initiative: Amendments to AASB 101.
The adoption of these amendments did not have any impact on the current period or any prior period and is not likely to affect future periods.
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017 reporting periods and
have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below.
Title of Standard
Nature of Change
Impact
AASB 9 Financial Instruments
AASB 9 addresses the classification, measurement and derecognition of financial assets
and financial liabilities, introduces new rules for hedge accounting and a new impairment
model for financial assets.
The financial assets held by the Group had been fully impaired as at balance date (2016:
Nil), and accordingly, the Group does not expect the new guidance to have a significant
impact on the classification and measurement of its financial assets.
There will be no impact on the Group’s accounting for financial liabilities, as the new
requirements only affect the accounting for financial liabilities that are designated at fair
value through profit or loss and the group does not have any such liabilities. The
derecognition rules have been transferred from AASB 139 Financial Instruments:
Recognition and Measurement and have not been changed.
The Group does not partake in hedging activities.
The new impairment model requires the recognition of impairment provisions based on
expected credit losses rather than only incurred credit losses as is the case under AASB
139. It applies to financial assets classified at amortised cost, debt instruments measured
at fair value through other comprehensive income (“FVOCI”), contract assets under
AASB 15 Revenue from Contracts with Customers, lease receivables, loan commitments
and certain financial guarantee contracts. While the Group has not yet undertaken a
detailed assessment of how its impairment provisions would be affected by the new
model, it may result in an earlier recognition of credit losses.
The new standard also introduces expanded disclosure requirements and changes in
presentation. These are expected to change the nature and extent of the Group’s
disclosures about its financial instruments particularly in the year of the adoption of the
new standard.
Mandatory application date
Must be applied for financial years commencing on or after 1 January 2018.
The group does not currently intend to adopt AASB 9 before its mandatory date
31
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Title of Standard
Nature of Change
Impact
AASB 15 Revenue from Contracts with Customers
The AASB has issued a new standard for the recognition of revenue. This will replace
AASB 118 which covers revenue arising from the sale of goods and the rendering of
services and AASB 111 which covers construction contracts. The new standard is based
on the principle that revenue is recognised when control of a good or service transfers to
a customer. The standard permits either a full retrospective or a modified retrospective
approach for the adoption.
Management has begun to assess the potential effects of applying the new standard on the
Group’s financial statements and has identified that the potential impact of the new
standard on revenue recognition is, whereas the Group currently recognises broking
commission revenue on trade date, it may be required to change its revenue recognition
policy to instead be settlement date.
As the difference between trade date and settlement date is only three days, the Group
does not expect any significant impact on its financial results once the new standard is
adopted.
Mandatory application date
Must be applied for financial years commencing on or after 1 January 2018.
Title of Standard
Nature of Change
The group does not currently intend to adopt AASB 15 before its mandatory date.
AASB 16 Leases
AASB 16 was issued in February 2016. It will result in almost all leases being recognised
on the balance sheet, as the distinction between operating and finance leases is removed.
Under the new standard, an asset (the right to use the leased item) and a financial liability
to pay rentals are recognised. The only exceptions are short term and low-value leases.
The accounting for lessors will not significantly change
Impact
The standard will affect primarily the accounting for the group’s operating leases. As at
the reporting date, the group has no non-cancellable operating lease commitments.
Mandatory application date
Must be applied for financial years commencing on or after 1 January 2019.
The group does not currently intend to adopt AASB 16 before its mandatory date.
There are no other standards that are not yet effective and that would be expected to have a material impact on the Group in the current or
future reporting periods and on foreseeable future transactions.
(ii) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale
financial assets, which have been measured at fair value.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of De Grey Mining Limited (“company” or
“parent entity”) as at 30 June 2017 and the results of all subsidiaries for the year then ended. De Grey Mining Limited and its subsidiaries
together are referred to in this financial report as the Group or the consolidated entity.
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent, De Grey Mining Ltd and all of the
subsidiaries (including any structured entities). Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that
control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive
income, statement of changes in equity and statement of financial position respectively.
32
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Investments in subsidiaries are accounted for at cost in the separate financial statements of De Grey Mining Limited.
(ii) Joint ventures
Jointly controlled assets
The proportionate interests in the assets, liabilities and expenses of joint venture activities have been incorporated in the financial statements
under the appropriate headings. Details of the joint ventures are set out in note 23.
(iii) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the
Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests
to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any
consideration paid or received is recognised in a separate reserve within equity attributable to owners of De Grey Mining Limited.
When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value
with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised
in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or
liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a jointly controlled entity or associate is reduced but joint control or significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identified as the full Board of Directors.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian
dollars, which is De Grey Mining Limited's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of
financial position;
income and expenses for each statement of comprehensive income are translated at average exchange rates (unless that is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other
financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is
sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as
part of the gain or loss on sale.
(e) Revenue recognition
Revenue is recognised to the extent that is it probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognised:
Interest Revenue
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.
Royalty Revenue
Royalties revenue is recognised on the basis of actual shipment tonnes and the agreed contractual price per tonne.
33
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
(f) Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax
losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in
the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments
in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that
the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
De Grey Mining Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the
consolidated financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
(g) Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified
as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value
of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-
term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property,
plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.
Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-
line basis over the period of the lease.
(h) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-
generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment
at each reporting date.
34
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
(i) Cash and cash equivalents
For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the statement of financial position.
(j) Trade and other receivables
Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful
debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.
(k) Investments and other financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments
were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as
held-to-maturity, re-evaluates this designation at each reporting date.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as
hedges. Assets in this category are classified as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They
are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-
current assets. Loans and receivables are included in trade and other receivables in the statement of financial position.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets quoted in an active market with fixed or determinable payments and fixed
maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an
insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-
to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date,
which are classified as current assets.
(iv) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in
this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose
of the investment within 12 months of the reporting date. Investments are designated available-for-sale if they do not have fixed maturities
and fixed or determinable payments and management intends to hold them for the medium to long term.
Financial assets - reclassification
The Group may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is no
longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be reclassified
out of the held-for-trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in
the near term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out
of the held-for-trading or available-for-sale categories if the Group has the intention and ability to hold these financial assets for the
foreseeable future or until maturity at the date of reclassification.
Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and
no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial
assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in
estimates of cash flows adjust effective interest rates prospectively.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the
asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit
or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed
to the statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the financial assets
have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the
statement of comprehensive income as gains and losses from investment securities.
35
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through
profit or loss, transactions costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in profit or loss.
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or
losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the
statement of comprehensive income within other income or other expenses in the period in which they arise. Dividend income from
financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of revenue from
continuing operations when the Group’s right to receive payments is established.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between
translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security.
The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount
are recognised in equity. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are
recognised in equity.
Details on how the fair value of financial investments is determined are disclosed in note 1(t).
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets
is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence
of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In
the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its
cost is considered an indicator that the assets are impaired.
(i) Assets carried at amortised cost
For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value
of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original
effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or
held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest
rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value
using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised
impairment loss is recognised in profit or loss.
(ii) Assets classified as available-for-sale
If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss – measured as the difference between
the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is
removed from equity and recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period.
If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or
loss.
36
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
(l) Plant and equipment
All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged
to the statement of comprehensive income during the reporting period in which they are incurred.
Depreciation of plant and equipment is calculated using the reducing balance method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the
shorter lease term. The rates vary between 20% and 40% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount (note 1(h)).
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of
comprehensive income. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of
those assets to retained earnings.
(m) Exploration and evaluation costs
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset
in the year in which the expenditure is incurred where;
(a) The Group has secured tenure, including legal rights to explore an area of interest;
(b) Exploration and evaluation activities in the area of interest have not at the end of the reporting period reached a stage which permits
a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in,
or in relation to, the area of interest are continuing; and
(c) The exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area
of interest, or alternatively, by its sale.
Where the conditions outlined in (a), (b) and/or (c) are not met in relation to specific area(s) of interest, then those exploration and evaluation
costs are expensed as incurred.
Basis for the Change in Accounting Policy
The Group has adopted a more comprehensive accounting policy with respect to the exploration expenditure and specifically when an
exploration and evaluation asset will be recognised in relation to specific area(s) of interest. Exploration and evaluation expenditure
incurred is expensed unless it relates to a specific area of interest in which case it is carried forward to the extent that it is expected to be
recouped through successful development of the area, or by its sale. All expenses capitalised related to the Mt Berghaus, Wingina and
Amanda gold prospects, on the basis that both have been converted to JORC 2012 as well as being included within a Scoping Study for
the overall “Pilbara Gold Project”.
(n) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid.
The amounts are unsecured and are paid on normal commercial terms.
(o) Employee benefits
Wages and salaries, annual leave and long service leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12
months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave
and long service leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented
as payables.
37
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
(p) Share-based payments
The Group provides benefits to employees (including directors) of the Group in the form of share-based payment transactions, whereby
employees render services in exchange for shares or rights over shares (‘equity-settled transactions’), refer to note 26.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted.
The fair value is determined by an internal valuation using a Black-Scholes option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting
date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which
the vesting period has expired and (ii) the number of options that, in the opinion of the directors of the Group, will ultimately vest. This
opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance
conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised
for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement
award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award.
Options over ordinary shares have also been issued as consideration for the acquisition of interests in tenements and other services. These
options have been treated in the same manner as employee options described above, with the expense being included as part of exploration
expenditure.
(q) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as
a deduction, net of tax, from the proceeds.
(r) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the company, excluding any costs of servicing equity
other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(s) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or
payable to, the taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are presented as operating cash flows.
38
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
(t) Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations
of future events, management believes to be reasonable under the circumstances.
Exploration expenditure
Exploration and evaluation costs are assessed on the basis of the revised accounting policy with respect to whether or not it is appropriate
to carry as a Deferred exploration asset – refer to (m) above.
Financial assets – measurement and impairment assessment
The Company is required to classify those all assets and liabilities, measured at fair value, using a three level hierarchy, based on the lowest
level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;
and
Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine what is significant to fair value and
therefore which category the asset or liability is placed in can be subjective. The fair value of assets and liabilities classified as level 3 (if
any) is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require
significant adjustments based on unobservable inputs.
The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets
is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence
of impairment as a result of consideration of all available information with respect to the asset. In the case of non-listed equity investments
classified as available-for-sale, the Company takes into consideration its underlying assets and liabilities, its most recent funding and any
other pertinent information to support its carrying value and/or indicators of asset impairment.
(u) Going concern
The financial report has been prepared on a going concern basis which assumes the commercial realisation of the future potential of the
Group’s assets and discharge of its liabilities in the normal course of business. The group recorded a loss of $3,218,897 (2016: $792,657)
for the year ended 30 June 2017, has a cash and cash equivalents balance of $1,007,029 (2016: 1,207,561).
The Company has annual minimum exploration commitments on its Turner River Project of $577,160 as well additional commitments of
$730,100 under option agreements entered into to acquire other regional tenement packages.
Although the above is indicative of a material uncertainty, the Directors believe that it is appropriate to prepare the financial statements on
the going concern basis for the following reasons:
(i) There has been a continuation in the interest and market sentiment around Australian gold projects and especially those with
existing resources;
(ii) On 6 and 7 September 2017, the Company completed a private placement raising $2.61 million and a further $290,000 from
the exercise of unlisted options respectively;
(iii) On 30 September 2017, the Company has entered into a subscription agreement that, subject to shareholder approval, will lead
to a placement to raise a further $5 million; and
(iv) The Company believes it has the capacity to raise additional funds at an appropriate time in the future to undertake further
exploration work and to also continue its development and feasibility study work programs for the Pilbara Gold project.
The Directors have reviewed the Group’s and Company’s overall position and outlook in respect of the matters identified above and are
of the opinion that the use of the going concern basis is appropriate in the circumstances.
39
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
FINANCIAL RISK MANAGEMENT
2.
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit
risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for all Board members to be involved
in this process. The Board, with the assistance of senior management as required, has responsibility for identifying, assessing, treating and
monitoring risks and reporting to the Board on risk management.
(a) Market risk
(i) Foreign exchange risk
The Group has minimal operations internationally and there are currently limited exposures to foreign exchange risk arising from currency
exposures.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is
not the entity’s functional currency and net investments in foreign operations. The Group has not formalised a foreign currency risk
management policy, however it monitors its foreign currency expenditure in light of exchange rate movements.
All parent entity and Australian subsidiary entity balances are in Australian dollars and all Group balances are in Australian dollars, so the
Group has only minimal exposure to foreign currency risk at the reporting date.
(ii) Price risk
Given the current level of operations, the Group is not exposed to price risk.
(iii) Interest rate risk
The Group is exposed to movements in market interest rates on cash and cash equivalents. The Group policy is to monitor the interest rate
yield curve out to six months to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The entire
balance of cash and cash equivalents for the Group $1,007,029 (2016: $1,207,561) is subject to interest rate risk. The proportional mix of
floating interest rates and fixed rates to a maximum of six months fluctuate during the year depending on current working capital
requirements. The weighted average interest rate received on cash and cash equivalents by the Group was 1.29% (2016: 0.94%).
Sensitivity analysis
At 30 June 2017, if interest rates had changed by -/+ 100 basis points from the weighted average rate for the year with all other variables
held constant, post-tax loss for the Group would have been $5,620 lower/higher (2016: $8,846 lower/higher) as a result of lower/higher
interest income from cash and cash equivalents.
(b) Credit risk
The maximum exposure to credit risk at balance date is the carrying amount (net of provision for impairment) of those assets as disclosed
in the statement of financial position and notes to the financial statements. The only significant concentration of credit risk for the Group
is the cash and cash equivalents held with financial institutions. All material deposits are held with the major Australian banks for which
the Board evaluate credit risk to be minimal.
As the Group does not presently have any trade debtors, lending, significant stock levels or any other credit risk, a formal credit risk
management policy is not maintained.
(c) Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable
securities are available to meet the current and future commitments of the Group. Due to the nature of the Group’s activities, being mineral
exploration, the Group does not have ready access to credit facilities, with the primary source of funding being equity raisings. The Board
of Directors constantly monitor the state of equity markets in conjunction with the Group’s current and future funding requirements, with
a view to initiating appropriate capital raisings as required.
The financial liabilities of the Group are confined to trade and other payables as disclosed in the Statement of financial position. All trade
and other payables are non-interest bearing and due within 12 months of the reporting date.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
All financial assets and financial liabilities of the Group at the balance date are recorded at amounts approximating their carrying amount.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market
price used for financial assets held by the Group is the current bid price.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature.
40
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
3. SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make strategic
decisions. For management purposes, the Group has identified one reportable operating segment being exploration activities undertaken in
one geographical segment being Australasia. These segments include the activities associated with the determination and assessment of the
existence of commercial economic reserves, from the Group’s mineral assets in the sole geographic location.
Segment performance is evaluated based on the operating profit and loss and cash flows and is measured in accordance with the Group’s
accounting policies.
Segment revenue
Reconciliation of segment revenue to total revenue before tax:
Interest revenue
Other revenue
Australasia
Consolidated Total
2017
$
23,030
2016
$
13,549
2017
$
23,030
7,268
500
2016
$
13,549
8,340
400
Segment results
(2,300,589)
(290,847)
(2,300,589)
(290,847)
Reconciliation of segment result to net loss before tax:
Impairment – unlisted investments
Other corporate and administration
Net loss before tax
-
(926,076)
(3,218,897)
(75,000)
(435,550)
(792,657)
Segment operating assets
1,154,526
-
1,154,526
-
Reconciliation of segment operating assets to total assets:
Other corporate and administration assets
Total assets
1,045,734
2,200,260
1,264,403
1,264,403
Segment operating liabilties
972,127
105,797
972,127
105,797
Reconciliation of segment operating
liabilities:
Other corporate and administration liabilities
liabilities
to
total
Total liabilities
51,999
1,024,126
83,920
189,717
41
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
4.
REVENUE
From continuing operations
Royalties- sands
Interest
Other
5.
EXPENSES
Loss before income tax includes the following specific expenses:
Net loss on disposal of plant and equipment
Rental of premises under operating lease
Impairment – unlisted investments
Contributions to superannuation funds
Share based payments
6.
INCOME TAX
(a) Income tax expense
Current tax
Deferred tax
Consolidated
2017
$
23,030
7,268
500
30,798
-
-
-
15,729
49,980
-
-
-
2016
$
13,549
8,340
400
22,289
-
-
75,000
1,255
-
-
-
-
(b) Numerical reconciliation of income tax expense to prima facie tax
payable
Loss from continuing operations before income tax expense
(3,218,897)
(792,657)
Prima facie tax benefit at the Australian tax rate of 27.5% (2016: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Capital raising fees
Other allowable expenditure
Sundry items
Overseas projects income and expenses
Tax effect of current year tax losses for which no deferred tax asset has been
recognised
Income tax expense
(c) Unrecognised deferred tax assets
Unrecognised deferred tax assets
Provisions
Capital raising fees
Carry forward tax losses
Gross deferred tax assets
(885,197)
(237,797)
(40,267)
(269,609)
29,959
-
(1,165,114)
1,165,114
-
(42,906)
-
(2,053)
3,409
(279,347)
279,347
-
99,250
11,827,572
11,926,822
42,906
11,653,402
11,696,308
No deferred tax asset has been recognised for the above balance as at 30 June 2017 as it is not considered probable that future taxable
profits will be available against which it can be utilised.
42
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
(d) Tax consolidation
Effective 1 July 2004, for the purposes of income taxation, De Grey Mining Limited and its 100% owned Australian subsidiaries formed
a tax consolidated group. Members of the group have entered into a tax sharing arrangement in order to allocate income tax between the
entities should the head entity default on its tax payment obligations. At the balance date, the possibility of default is remote. The head
entity of the tax consolidated group is De Grey Mining Limited.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate De Grey Mining
Limited for any current tax payable assumed and are compensated by De Grey Mining Limited for any current tax receivable and deferred
tax assets relating to unused tax losses or unused tax credits that are transferred to De Grey Mining Limited under the tax consolidation
legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which
is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts
to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables.
(e) Franking credits
The company has no franking credits available for use in future years.
7.
CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents as shown in the statement of financial position and
the statement of cash flows
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Consolidated
2017
$
30,926
976,103
2016
$
37,860
1,169,701
1,007,029
1,207,561
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of
the Group, and earn interest at the respective short-term deposit rates.
8.
CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Receivable – sands royalty
GST receivable
Fuel tax credits
Sundry debtors
Sundry debtors are non-interest bearing and have repayment terms between 30 and 90 days.
9.
CURRENT ASSETS - INVENTORIES
Diesel fuel in stock
10. CURRENT ASSETS – OTHER ASSETS
Prepayments
3,469
91,157
31,127
985
126,738
3,989
16,994
-
2,710
23,693
11,695
11,695
-
-
16,040
7,130
43
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
11. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Equity securities – unlisted (i)
Consolidated
2017
$
2016
$
$
$
-
-
-
-
(i) The Company continues to hold a 4% interest in an unlisted mineral exploration entity, whose major asset is an Australian based Zinc
project. The Company has performed an assessment of the investment and considers it appropriate that it remain fully impaired as at
balance date.
12. NON-CURRENT ASSETS – DEFERRED EXPLORATION & EVALUATION
EXPENDITURE
Beginning of financial period
Additions – all areas of interest (i)
Expensed to P&L
-
3,304,017
(2,323,620)
980,397
-
304,394
(304,394)
-
(i)
In accordance with enhanced change in accounting policy (note 1 (m), the Group has capitalised costs associated with two specific
areas of interest, being those that cover the Wingina and Mt. Berghaus gold resources within the Turner River Project.
The recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and
commercial exploitation, or alternatively, sale of the respective areas of interest.
13. NON-CURRENT ASSETS - PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated depreciation
Net book amount
Plant and equipment
Opening net book amount
Additions
Depreciation charge
Closing net book amount
14. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Trade payables
Trade payables to be settled via an equity issue
Other payables and accruals (i)
456,171
(397,810)
58,361
26,019
43,618
(11,276)
58,361
610,214
332,113
81,799
1,024,126
412,553
(386,534)
26,019
30,665
3,607
(8,253)
26,019
141,151
-
48,566
189,717
(i) Trade, other payables and accruals are non-interest bearing and are normally settled on terms of 30-45 days.
44
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
15. CONTRIBUTED EQUITY
(a) Share capital
Ordinary shares fully paid
Total contributed equity
(b) Movements in ordinary share capital
Beginning of the financial year
Issued during the year:
Rights entitlement allotment @ $0.01 cents per share
Rights shortfall allotment at $0.01 cents per share
Placement shares (non-cash) @ $0.002 per share
Placement shares @ $0.0029 per share
Total shares on issue – pre-capital consolidation
Shares on issue – post consolidation
Share purchase plan allotment @ $0.058 per share
Placement @ $0.065 cents per share
Transaction costs
End of the financial year
(c) Share Consolidation
2017
2016
Number of shares
$
Number of shares
$
201,296,240
49,108,104
2,878,652,645
45,837,739
201,296,240
49,108,104
2,878,652,645
45,837,739
2,878,652,645
45,837,739
1,143,461,058
44,344,280
-
-
10,000,000
434,663,155
3,323,315,800
166,166,240
7,130,000
28,000,000
-
201,296,240
-
-
20,000
1,260,523
-
-
413,540
1,820,000
(243,698)
49,108,104
543,485,409
1,171,706,178
20,000,000
-
543,485
1,171,707
40,000
-
-
-
-
2,878,652,645
-
-
(261,733)
45,837,739
De Grey Mining completed its one for twenty (20) share consolidation in December 2016 following approval by shareholders at its 2016
Annual General Meeting, held on 30 November 2016. The share consolidation involved the conversion of every twenty fully paid
ordinary shares on issue into one fully paid ordinary share. Where the share consolidation resulted in a shareholder having a fractional
entitlement to a share, the entitlement was rounded up to the next whole number of shares. Upon the completion of the share
consolidation in December 2016, the number of De Grey Mining shares on issue reduced from 3,323,315,800 shares to 166,166,240
shares as at that date.
(d) Movements in options on issue
Number of options
2016
2017
521,192,212
Beginning of the financial year
Issued / (cancelled or expired) during the year:
Exercisable at 0.2 cents, on or before 10 June 2019¹
Exercisable at 4 cents, on or before 10 June 2019¹
Exercisable at 0.2 cents, on or before 10 June 2019¹
Exercisable at 8 cents, on or before 25 Nov 2017¹
Exercisable at 2.3 cents, on or before 3 Sep 2015
Exercisable at 2.6 cents, on or before 3 Sep 2015
Exercisable at 3.0 cents, on or before 10 Jan 2016
Exercisable at 10 cents, on or before 30 Nov 2018
Exercisable at 10 cents, on or before 30 Nov 2018
Exercisable at 5.8 cents, on or before 6 Sep 2017²
End of the financial year
¹ The options were re-stated after the 20:1 Capital Consolidation completed in December 2016 (Note 15(c))
²The options were exercised on 6 September 2017, being subsequent to year end.
Unlisted
Unlisted
Unlisted
Unlisted
Expired
Expired
Expired
Listed
Unlisted
Unlisted
(478,692,212)
23,934,611
(42,500,000)
2,125,000
-
-
-
23,621,103
7,350,000
5,000,000
62,030,714
58,000,000
-
478,692,212
-
-
-
(6,500,000)
(6,500,000)
(2,500,000)
-
-
-
521,192,212
45
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
15. CONTRIBUTED EQUITY (Continued)
(d) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of
and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is
entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a
limited amount of authorised capital. Neither the Company, nor any of its subsidiaries, holds any shares in the Company at 30 June 2017
(2016: Nil).
(e) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to
provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the
primary source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current working capital
position against the requirements of the Group to meet exploration programmes and corporate overheads. The Group’s strategy is to ensure
appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as
required. The working capital position of the Group at 30 June 2017 and 30 June 2016 are as follows:
Consolidated
2017
$
2016
$
Cash and cash equivalents
Trade and other receivables
Trade and other payables (excluding payables to be settled by an equity issue¹)
Working capital position
¹ There were payables totalling $332,113 (Note 14) settled by an equity issue of ordinary fully paid shares, with allotment approved by
shareholders at a meeting held 26 June 2017 and allotment completed on 6 September 2017 (subsequent to the financial reporting date).
1,007,029
126,738
(692,013)
441,754
1,207,561
23,693
(189,717)
1,041,537
16. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Share-based payments reserve (i)
Movements:
Share-based payments reserve
Balance at beginning of year
Share based payments (options) expense (Directors & EOP issue)
Share based payments (options) expense (Broker option issue)
Transfer to Accumulated Losses on expiry of options
Balance at end of year
(b)Accumulated losses
Balance at beginning of year
Net loss for the year
Transfer from Share-Based Payments Reserve
Balance at end of year
170,530
170,530
120,550
49,980
-
-
170,530
120,550
120,550
234,600
-
92,500
(206,550)
120,550
(44,883,603)
(3,218,897)
-
(48,102,500)
(44,297,496)
(792,657)
206,550
(44,883,603)
(c) Nature and purpose of reserves
(i) Share-based payments reserve
The share-based payments reserve is used to recognise the value of equity benefits provided to either employees or directors as remuneration
or to suppliers as payment for products and services.
46
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
17. DIVIDENDS
No dividends were paid during the financial year.
No recommendation for payment of dividends has been made.
18. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided
by the auditor of the parent entity, its related practices and non-related audit firms:
(a) Audit services
Butler Settineri (Audit) Pty Ltd - audit and review of financial reports
Total remuneration for audit services
(b) Non-audit services
Butler Settineri – tax compliance services
Total remuneration for other services
19. CONTINGENT LIABILITIES
There are no contingent liabilities or contingent assets of the Group at reporting date.
20. COMMITMENTS
(a) Exploration commitments
The Group has certain commitments to meet minimum expenditure
requirements on the mineral exploration assets it has an interest in.
Outstanding exploration commitments are as follows:
Annual commitments for the Turner River Project tenements (100% owned)
Annual commitments for tenements under option agreements – Indee Gold and
Haoma (ii)
Farno McMahon – option agreement entered into 21 August 2017 (subsequent
to balance date)
Annual commitment for the Pilbara assets
Consolidated
2017
$
2016
$
-
-
20,500
20,500
3,750
3,750
17,500
17,500
2,400
2,400
577,160
590,100
140,000
1,307,260
673,000
-
-
673,000
(i) The Turner River Project tenements are owned 100% and have minimum aggregate expenditure requirements of $577,160 p.a. (2016:
$673,000)
(ii) The Indee Gold and Haoma tenements are under option agreements described in Note 23.
The cumulative past expenditures have far exceeded the minimum tenement expenditure obligations for the past five years.
(b) Capital commitments
The Group did not have any capital commitments as at the current or prior balance date.
47
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
21. RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent entity within the Group is De Grey Mining Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 22.
(c) Transactions with related parties
Transactions between related parties are on commercial terms and conditions, no more favourable than those available to other parties
unless otherwise stated.
(d) Loans to related parties
De Grey Mining Limited has provided unsecured, interest free loans to each of its wholly owned Australian subsidiaries and all of which
have been fully impaired.
22. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(b):
Name
Country of Incorporation Class of Shares
Equity Holding¹
Beyondie Gold Pty Ltd
Domain Mining Pty Ltd
Winterwhite Resources Pty Ltd
Last Crusade Pty Ltd
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
¹The proportion of ownership interest is equal to the proportion of voting power held.
2017
%
100
100
100
100
2016
%
100
100
100
100
48
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
23.
INTERESTS IN JOINT VENTURES
(a) Attgold Pty Ltd Retained Pegmatite Rights across E45-2364 (a tenement within the Turner River Project)
In February 2007, De Grey acquired 100% of tenement E45-2364 on exercise of an option. Under the agreement, Attgold retained the
pegmatite related rights on this tenement only. The pegmatite rights give Attgold rights to explore on the tenement for pegmatite minerals,
which in turn are defined as “tin, tantalum, niobium, lithium, cesium and non-gold bearing or base metal bearing aggregate.” This is subject
to various clauses of priority, access and normal statutory requirements. De Grey holds all other mineral rights in this tenement, most
specifically gold and base metals and the joint venture has a carrying value of nil.
(b) Mount Dove Iron Rights
On 22 September 2015, the company entered into a Deed of Termination with the Atlas Iron Group, where they relinquished their iron ore
rights on any of the Turner River Project tenements, the Company shall pay Atlas Iron Limited a one-off payment of $50,000 if it mines iron
ore on its tenements.
(c) Turner River Shingles, River Sand and Limestone Blocks Farm-Out
In October 2012 De Grey, through its wholly owned subsidiary Last Crusade Pty Ltd (“LC”), entered into an agreement with Mobile
Concreting Solutions Pty Ltd (“MCS”) under which LC facilitated the excision of graticule B703 from LC’s Exploration Licence 45/3390.
Under the agreement, MCS applied for a mining licence over the excised graticule to mine for shingles, river sand and limestone blocks. LC
retains the right to explore for all other minerals on the affected ground and MCS pays a royalty of $0.50 per tonne to LC for all material
removed. The sands mining operations commenced in the December 2013 quarter and have continued throughout the current financial year.
(d) Haoma Option – Southern Portion of Tenement E45/2983
In October 2016, De Grey secured an option to acquire 100% of the southern portions of tenement E45/2983, from Haoma Mining NL
(Haoma”), by payment of $10,000 on exercise of such option. Haoma has retained all rights to pegmatite related mineralisation and alluvial
sand and scree deposits on E45/2983; and Haoma obtained the rights to alluvials and screes on part of the De Grey tenement E45/2533 and
the full tenement E45/4751.
(e) Indee Gold Option
In January 2017, De Grey entered into an exclusive and binding Heads of Agreement (“HoA”) with Northwest Nonferrous Australia Mining
Pty Ltd (“NNAM”) and its wholly-owned subsidiary, Indee Gold Pty Ltd (“Indee Gold”). Indee Gold owns the gold assets to the immediate
west of De Grey’s Turner River Project near Port Hedland, Western Australia. The key terms and conditions:
(i) an exclusive and binding right to acquire all shares in the Australian company Indee Gold, which holds the major gold assets of the
former Indee gold mine and associated mining and exploration leases (“Indee Gold Project”) to the immediate west of the Turner River
Project.
(ii) a 12 month option period (Option Period) to carry out detailed due diligence, including a review of the resources, mining studies,
evaluations and exploration prior to electing to proceed (“Election”). De Grey is able to make an early Election if it so chooses; then
(iii) a further 6 months from Election in which to settle the transaction through the payment of $15M, less the exclusivity fee of $100,000
referred to at (iv).
(iv) Within the 18 month time frame, De Grey is required to:
pay an initial Option Exclusivity Fee of $50,000 on signing (paid) and a further $50,000 within 3 months of signing. These option
fee payments (totalling $100,000) are non-refundable but are deductable from the final acquisition payment.
maintain the tenements by spending a minimum of $600,000 on the Indee Project during the Option Period, 50% of which is to be
spent on in ground exploration activities. The exploration works and budget are to be agreed by both parties, with De Grey
managing the activities.
prepare and finalise a formal Share Sale Agreement with the vendor within the Option Period on terms outlined in the HoA and
including terms normally contained within such agreements.
49
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
(e) Indee Gold Option (Continued)
On 30 September 2017, the Company executed a formal Letter of Extension from NNAM. The extension is granted to De Grey under the
following key revisions to the existing terms and conditions:
(v) Settlement date is to be extended to 24 January 2019, on De Grey paying:
$100,000 extension fee; and
$2M as a non-refundable payment on or before 24 July 2018;
(vi) Settlement can also be extended by a further 6 months to 24 July 2019 through the payment of an additional $100,000, to be paid before
24 January 2019;
(vii) NNAM agree to accept $3 Million of shares in De Grey as part of settlement proceeds of the Shares to be issued based on a 10%
discount to the Volume Weighted Average Price (“VWAP”) on the 20 days preceding settlement;
(viii)Each of these payments representing part of the overall sale consideration payable to NMAM;
The Parties have also agreed to move to expedite execution of a Formal Share Sale Agreement as soon as practical.
24. STATEMENT OF CASH FLOWS
Reconciliation of net loss after income tax to net cash outflow from operating
activities
Net loss for the year
Non-Cash Items
Depreciation of non-current assets
Share based payments
Non-cash expenses
Option payments to acquire mineral tenements
Equity settlement of expenses
Impairment – unlisted investments
Exploration & evaluation expenditure capitalised
Change in operating assets and liabilities
(Increase)/decrease in trade, other receivables and assets
(Increase)/decrease in inventories
(Decrease)/increase in trade and other payables
Consolidated
2017
$
2016
$
(3,218,897)
(792,657)
11,276
49,980
390,000
20,000
-
(980,397)
(37,793)
(11,694)
760,246
8,253
-
-
40,000
75,000
-
(9,703)
-
129,345
Net cash outflow from operating activities
(3,017,279)
(549,762)
25. LOSS PER SHARE
(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the company used in calculating basic and diluted
loss per share
(3,218,897)
(792,657)
Number of shares
Number of shares
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating
basic and diluted loss per share
168,820,401
2,061,500,292¹
¹ For the purposes of calculating a comparative Loss per share, the weighted average number of ordinary shares on issue has been
converted as if the 20:1 Capital Consolidation had been completed as at 30 June 2016 (refer to Note 15 (c)) and equates to 103,075,014
shares.
(c) Information on the classification of options
As the Group has made a loss for the year ended 30 June 2017, all options on issue are considered antidilutive and have not been included
in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per share in the future.
50
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
26. SHARE-BASED PAYMENTS
From time to time options are granted to;
(i) eligible employees under the Employee Option Plan of De Grey Mining Limited (“EOP”) to align their interests with that of the
shareholders of the company.
(ii) Directors under rules comparable with the EOP, but subject to shareholder approval pursuant to the provisions of the ASX Listing Rules
and the Corporations Act 2001.
The exercise price and expiry date for all options granted will be determined by the board prior to granting of the options, and in the case of
Director options subject to shareholder approval. The options granted may also be subject to conditions on exercise and usually have a
contractual life of two to three years.
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share in the capital of the
company with full dividend and voting rights.
There were 3,500,000 director granted (shareholder approved at 2016 AGM) and 3,850,000 EOP options¹ granted in the financial year ended
30 June 2017 (2016: Nil) and are all currently outstanding are detailed in the following table:
Grant date
Expiry date
Consolidated – 2017
25 Nov 2014 25 Nov 2017
25 Nov 2014 25 Nov 2017
30 Nov 2016 30 Nov 2018
30 Nov 2016 30 Nov 2018
Consolidated – 2016
3 Sep 2015
3 Sep 2012
3 Sep 2015
3 Sep 2012
10 Jan 2013
10 Jan 2016
25 Nov 2014 25 Nov 2017
Exercise price
Cents
Balance at start of
the year
Number
Granted during the
year
Number
Expired or
other change
during the year
Number
Balance at end of
the year
Number
Vested and
exercisable at end
of the year
Number
0.4
8.0
10.0
10.0
2.3
2.6
3.0
0.4
42,500,000
-
-
-
42,500,000
6,500,000
6,500,000
2,500,000
42,500,000
58,000,000
-
-
-
-
-
-
-
-
-
-
(42,500,000)
2,125,000
3,500,000
3,850,000¹
(33,025,000)
(6,500,000)
(6,500,000)
(2,500,000)
-
(15,500,000)
-
2,125,000
3,500,000
3,850,000¹
9,475,000
-
-
-
42,500,000
42,500,000
-
2,125,000
3,500,000
3,850,000¹
9,475,000
-
-
-
42,500,000
42,500,000
Employee Option Plan of De Grey Mining Limited (“EOP”)¹
Shareholders approved the EOP at the Annual General Meeting held on 25 November 2015. The EOP is designed to attract and retain eligible
employees, provide an incentive to deliver growth and value for the benefit of all Shareholders and facilitate capital management by enabling
the Company to preserve cash reserves for expenditure on principal activities. Participation in the Plan is at the discretion of the Board and
no eligible employee has a contractual right to receive an option under the Plan.
Expenses arising from share-based payment transactions
The weighted average fair value of the options granted during the year was $0.0068 (2016: Nil), with there being no shares based payment
transactions for the year. The price was calculated by using the Black-Scholes European Option Pricing Model applying the following inputs:
2017
2016
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Weighted average risk free interest rate
Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is indicative of future
trends, which may not eventuate.
No assumptions have been made relating to dividends or expected early exercise of the options and there are no other inputs to the model.
The life of the options is based on historical exercise patterns, which may not eventuate in the future.
Total expenses arising from equity settled share-based payment transactions recognised during the period were as follows:
10.0
2.0
$0.04
75%
1.5%
-
-
-
-
-
Options issued to directors and EOP to eligible employees
$
49,980
$
-
51
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
27. EVENTS OCCURRING AFTER THE REPORTING DATE
There has been no matters or circumstances occurring subsequent to the end of the financial year that has significantly affected, or may
significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in future financial years,
other than;
(i) On 21 August 2017, the Company announced entering into an option agreement to acquire a new prospective tenement area contiguous
to its +1M oz. Pilbara Gold Project. Under the terms of the agreement, De Grey has the right to earn up to 75% equity in E47/2502.
Option Period
o Cash payment of $40,000 to the Vendor
o Vendor grants DEG an exclusive right and period to assess the project until 30 September 2017
o DEG to complete a minimum expenditure of $30,000 during the Option Period.
o DEG may elect to enter Joint Venture Earn -in
Joint Venture Earn-in
o Stage 1 - DEG to spend a minimum of $1.0M over a period of 3 years to earn 30%.
o 1st Year expenditure requirement of $100,000
o 2nd Year expenditure requirement of $300,000
o 3rd Year expenditure requirement of $600,000
o Stage 2 - DEG may spend a further $1.0M expenditure over an additional 1year period (4th Year) to earn an additional 45% equity
in the tenement for a total equity of 75%.
o Vendor retains all alluvial rights.
(ii) On 7 September 2017, the Company announced that it had De Grey Mining Limited (ASX: DEG, “Company”) advises that it has
completed the issue of the following securities;
o 7,595,324 shares in settlement of supplier’s invoices at an issue price of $0.044 per share, an issue approved by shareholders at a
meeting on 26 June 2017. The shares are escrowed for 6 months from the date of issue;
o 52,210,000 shares raising $2.61 Million (before costs) at an issue price of $0.05 per share further to the Company’s announcement
dated 30 August 2017; and
o 5,000,000 shares at an issue price of $0.058 per share on the exercise of options, raising an additional $0.29 Million.
(iii) On 30 September 2017 the Company executed a subscription agreement with Kirkland Lake Gold Ltd, to raise a further $5 Million
though the planned issue of 33,333,333 shares and 33,333,333 options. This will be subject to shareholder approval that the Company
will seek at the 2017 AGM to be held in November 2017.
52
De Grey Mining Limited
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2017
28. PARENT ENTITY INFORMATION
The following information relates to the parent entity, De Grey Mining Limited, at 30 June 2017. The information presented here has been
prepared using accounting policies consistent with those presented in Note 1.
Parent Entity
2017
$
2016
$
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Contributed equity
Reserves
Accumulated losses
Total equity
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2017 and 30 June 2016.
Capital commitments
The parent entity had no capital commitments as at 30 June 2017 and 30 June 2016.
1,161,502
1,038,758
2,200,260
1,024,126
1,024,126
49,108,104
170,530
(48,102,500)
1,176,134
(3,218,897)
-
(3,218,897)
1,238,384
26,019
1,264,403
189,717
189,717
45,837,739
120,550
(44,883,603)
1,074,686
(792,657)
-
(792,657)
Accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1.
53
Directors' Declaration
De Grey Mining Limited
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 27 to 53 are in accordance with the Corporations Act 2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
giving a true and fair view of the company’s and the consolidated entity’s financial position as at 30 June 2017 and of their
performance for the financial year ended on that date;
(ii)
(b)
(c)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;
and
a statement that the attached financial statements are in compliance with Australian Accounting Standards has been included in the
notes to the financial statements.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Simon Lill
Executive Chairman
Perth, 1 October 2017
54
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF DE GREY MINING LIMITED
Report on the Financial Report
Opinion
We have audited the financial report of De Grey Mining Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June
2017 the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
i) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year then ended; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We have 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 ethical requirements
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
Without qualifying our opinion above, we wish to draw your attention to Note 1(u) of the financial
statements “Going Concern”. The matters as set forth in Note 1(u) “Going Concern” indicates the
existence of a material uncertainty that may cast significant doubt about the consolidated entity’s
ability to continue as a going concern and therefore, the consolidated entity may be unable to realise
its assets and discharge its liabilities in the normal course of business.
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 while, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
How our audit addressed the key audit matter
Our audit procedures included the following:
• ensuring that the change in accounting policy
has been appropriately reflected in the financial
statements in accordance with the requirements
of the Australian Accounting Standards
• ensuring the Group’s continued right to explore
in the relevant areas of interest including
assessing documentation such as exploration
and mining licences
• enquiring of management and the directors as
to the Group’s intentions and strategies for
future exploration activity and
reviewing
budgets and cash flow forecasts
• assessing the results of recent exploration
activity to determine whether there are any
indicators suggesting a potential impairment of
the carrying value of the asset
• assessing the Group’s ability to finance the
planned exploration and evaluation activity.
Key Audit Matter
exploration
Deferred
expenditure
(refer notes 1(m) and 12)
and
evaluation
The Group operates as an exploration entity
and as such
its primary activities entail
expenditure focussed on the exploration for and
evaluation of economically viable mineral
deposits. These activities are currently limited
to the Pilbara region in Western Australia.
The Group has revised its accounting policy
with regards to the treatment of exploration and
evaluation expenditure and has now opted to
defer costs in relation to three of the Group’s
projects within the Turner River area of interest,
being Wingina, Mt Berghaus and Amanda.
All exploration and evaluation expenditure
incurred on these areas of interest during the
year has been capitalised and recognised as an
asset in the Statement of Financial Position.
The closing value of this asset is $980,397 as
at 30 June 2017.
The carrying value of exploration and
evaluation assets is subjective based on the
Group’s intention, and ability, to continue to
explore the asset. The carrying value may also
be affected by
results of ongoing
exploration activity indicating that the mineral
reserves and
resources may not be
commercially viable for extraction. This creates
a risk that the asset value included within the
financial statements may not be recoverable.
the
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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.
Directors’ Responsibilities 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 the 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 Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Company or to
cease operations, or 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 and auditor’s report that
includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of the 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 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.
• Obtain and 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.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
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
significant in the audit of the financial report of the current period and are therefore 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 public interest benefits of such communication.
Report on the Remuneration Report
Opinion
We have audited the Remuneration Report included on pages 14 to 18 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of De Grey Mining Limited, for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
BUTLER SETTINERI (AUDIT) PTY LTD
LUCY P GARDNER
Director
Perth
Date: 1 October 2017
ASX Additional Information
De Grey Mining Limited
Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information
is current as at 27 September 2017.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Ordinary shares
Listed option class
Number of holders Number of shares Number of holders Number of options
1
1,001
5,001
10,001
100,001
-
-
-
-
1,000
5,000
10,000
100,000
and over
The number of shareholders holding less
than a marketable parcel of shares are:
139
70
179
971
411
1,770
178
27,236
216,808
1,579,334
38,665,521
225,612,665
266,101,564
111,611
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are as follows:
-
-
58
101
63
222
-
-
338,372
4,056,375
19,226,356
23,621,103
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Topham, LJ & PM
Distinct Racing & Breeding Pty Ltd
Troca Enterprises Pty Ltd
Wolpers, R & LA
Eckhof, Klaus
Haoma Mining NL
JP Morgan Nominees Australia Pty Ltd
Troca Enterprises Pty Ltd
Pershing Australia Nominees Pty Ltd
Lill, Simon Richard
BNP Paribas Nominees Pty Ltd
Lynch, Michael
DJ Carmichael Pty Ltd
Penand Pty Ltd
Micjud Pty Ltd (Chester Superfund A/C>
Redtown Enterprises Pty Ltd
Parker, Robert
Tornatora, Lisa Karen
Coulson, Phillip John
Golden Oaks Nominees Pty Ltd (K W Lee Family A/C>
Listed ordinary shares
Number of shares
Percentage of
ordinary shares
7,595,324
7,441,823
6,000,000
5,850,000
5,000,000
5,000,000
4,945,452
4,000,000
4,000,000
3,750,000
3,546,222
3,500,000
3,024,500
2,500,000
2,400,000
2,300,000
2,250,000
2,110,967
2,000,000
2,000,000
9,214,288
2.85%
2.80%
2.25%
2.20%
1.88%
1.88%
1.86%
1.50%
1.50%
1.41%
1.33%
1.32%
1.14%
0.94%
0.94%
0.86%
0.85%
0.79%
0.75%
0.75%
29.8%
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:
Nil.
Number of Shares
Nil
59
De Grey Mining Limited
ASX Additional Information
(d) Twenty largest option holders
The names of the twenty largest holders of quoted options are as follows:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Hunt, Michael Rex
Distinct Racing & Breeding Pty Ltd
Golden Oaks Nominees Pty Ltd (K W Lee Family A/C>
Matchett, SA & MA
Brennan Super WA Pty Ltd
Micjud Pty Ltd (Chester Superfund A/C>
BNP Paribas Nominees Pty Ltd
Ajava Holdings Pty Ltd
Niu, Chinyan
Tornatora, Lisa Karen
McChesney, Alan Ross
Ranchland Holdings Pty Ltd
Wolpers, R & LA
Piggin JS & DJ & GA
Blake, R & EL
MacKinnon, Andrew Ronald
Buttigieg, PA & JL (Buttigieg Superfund A/C>
Jetosea Pty Ltd
Court Security WA Pty Ltd
Blake, Emma Lesley
(e) Unquoted (unlisted) Securities
Listed options
Number of options Percentage of options
5.62%
5.29%
4.23%
3.91%
2.96%
2.96%
2.75%
2.47%
2.40%
2.37%
2.12%
1.98%
1.95%
1.69%
1.69%
1.69%
1.41%
1.31%
1.29%
1.19%
51.28%
1,328,001
1,250,000
1,000,000
923,822
700,000
700,000
650,000
583,333
566,666
559,679
500,000
466,666
460,000
400,000
400,000
400,000
333,333
310,000
303,974
280,759
12,116,243
Holders of 20% or more of the class
Class
Number of
Securities
Number of
Holders
Holder Name
Unlisted $0.08 options, expiry 25 November 2017
2,125,000
2
Unlisted $0.04 options, expiry 10 June 2019
Unlisted $0.10 options, expiry 30 November 2018
23,934,611
7,350,000
Unlisted $0.10 options, expiry 31 October 2020
2,250,000
Peter Batten
Simon Lill
DJ Carmichael Pty Limited
Simon Lill
Andy Beckwith
Andy Beckwith
Phil Tornatora
Craig Nelmes
Number of
Securities
1,000,000
750,000
12,500,000
1,500,000
1,500,000
1,000,000
750,000
500,000
(f) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
The Quoted and unquoted (unlisted) options have no voting rights.
60
De Grey Mining Limited
Annual Mineral Resources Statement (JORC 2012)
AS AT 30 JUNE 2017
Indee Project Mineral Resources - Gold
Measured
Indicated
Au Oz
Mt
Au Oz
Mt
Deposit
Type
Mt
Au g/t
Au Oz
Mt
0.14
3.1
14,000
0.14
0.04
0.00
0.04
0.10
0.10
0.57
0.45
1.02
3.1
2.8
2.5
2.8
2.2
2.2
1.3
1.4
1.3
14,000
3,700
3,700
7,200
7,200
23,300
20,900
44,100
0.43
0.56
0.99
0.26
0.03
0.29
0.05
0.06
0.12
0.03
0.03
0.06
0.22
2.55
2.77
0.02
0.02
Roe
Camel
Calvert
Oxide
Fresh
Total
Oxide
Fresh
Total
Oxide
Fresh
Total
Dromedary Oxide
Fresh
Total
Oxide
Fresh
Total
Oxide
Fresh
Total
Oxide
Fresh
Total
Withnell
Below
-100mRL
Hester
Withnell
above
-100mRL
Au
g/t
1.3
1.3
1.3
3.0
1.7
2.9
2.5
3.4
3.0
1.6
1.6
1.6
1.6
1.7
1.7
4.9
4.9
17,900
23,800
41,700
25,100
1,600
26,700
4,400
7,000
11,300
1,400
1,700
3,200
11,400
142,400
153,800
2,800
2,800
Indee Total Oxide 0.85
Fresh 0.45
1.31
Total
1.8
1.4
1.6
48,100
20,900
69,000
0.99
3.25
4.24
1.9
1.7
1.8
60,200
179,300
239,500
Deposit
Type
Wingina
Mt
Berghaus
Amanda
Turner
River Total
Oxide
Fresh
Total
Oxide
Fresh
Total
Oxide
Fresh
Total
Oxide 2.68
Fresh 0.40
3.08
Total
Turner River Project Mineral Resources - Gold
Measured
Indicated
Mt
Au g/t
Au Oz
Mt
1.76
152,100 0.65
2.68
0.40 1.5949
0.34
20,500
3.08 1.7427 172,700 0.99
Au Oz
Mt
Au
g/t
1.3
1.5
1.4
2.0
1.7
1.8
27,000
16,300
43,300
4,400
7,900
12,300
0.07
0.14
0.21
1.8
1.6
1.7
152,100 0.72
20,500
0.48
172,700 1.20
1.4
1.6
1.4
31,400
24,200
55,600
Inferred
Au
g/t
0.8
1.2
1.2
1.6
1.7
1.7
1.5
2.4
2.0
1.6
1.8
1.7
1.1
1.7
1.6
1,400
9,300
10,700
5,500
11,200
16,700
5,400
8,800
14,200
2,200
4,700
6,900
5,400
52,300
57,800
2.5
2.5
1.6
1.2
1.5
1.4
2.1
2.0
118,900
118,900
3,500
1,300
4,800
23,400
206,600
229,900
0.48
0.79
1.27
0.51
0.23
0.74
0.20
0.18
0.38
0.17
0.12
0.29
0.94
3.96
4.90
1.47
1.47
0.07
0.03
0.10
2.36
6.78
9.15
Inferred
Au
g/t
1.3
1.7
1.6
1.3
1.2
1.2
1.6
1.6
1.6
1.3
1.4
1.4
Au Oz
Mt
14,400
57,400
71,700
3.67
1.82
5.49
50,000
1.30
78,500
128,500
7,600
27,800
35,400
72,000
163,600
235,600
2.21
3.52
0.15
0.54
0.69
5.12
4.57
9.69
0.05
0.23
0.28
0.11
0.20
0.31
0.11
0.11
0.22
0.04
0.08
0.12
0.15
0.96
1.11
1.45
1.45
0.07
0.03
0.10
0.52
3.08
3.60
0.34
1.08
1.42
1.24
2.07
3.30
0.15
0.54
0.69
1.72
3.69
5.41
Total
Au
g/t
1.3
1.3
1.3
2.7
1.7
2.4
2.0
2.8
2.4
1.9
1.7
1.9
1.3
1.7
1.6
2.6
2.6
1.6
1.2
1.5
1.7
1.9
1.8
Total
Au
g/t
1.6
1.6
1.6
1.3
1.2
1.2
1.6
1.6
1.6
1.6
1.4
1.5
Au Oz
19,300
33,100
52,400
44,600
12,800
57,400
13,500
15,800
29,300
10,800
6,400
17,200
40,000
215,600
255,700
121,600
121,600
3,500
1,300
4,800
131,700
406,700
538,400
Au Oz
193,500
94,200
287,700
54,400
86,400
140,800
7,600
27,800
35,400
255,500
208,400
463,900
Total
Au
g/t
1.6
1.7
1.7
Au Oz
387,200
615,100
1,002,300
De Grey Mining Total Mineral Resources - Gold
Measured
Indicated
Deposit
Type
Mt
Au g/t
Au Oz
Mt
De Grey
Total
Oxide 3.53
Fresh 0.85
4.39
Total
1.8
1.5
1.7
200,200 1.71
3.73
41,400
241,700 5.44
Au
g/t
1.7
1.7
1.7
Au Oz
Mt
91,600
203,500
295,100
2.24
6.77
9.01
Inferred
Au
g/t
1.3
1.7
1.6
Au Oz
Mt
95,300
7.48
370,200 11.35
465,500 18.84
All gold deposits are reported at a 0.5g/t Au cut-off grade except Withnell below -100mRL and Wingina below -55mRL where a 1.0g/t Au
cut-off was applied.
61
De Grey Mining Limited
Annual Mineral Resources Statement (JORC 2012)
AS AT 30 JUNE 2017
Deposit
Class
Discovery Massive
Sulphide
Discovery Deposit
Halo
Mineralisation
Discovery Deposit
Total
Orchard Tank
Deposit Total
Indicated
Inferred
Total
Indicated
Inferred
Total
Indicated
Inferred
Total
Indicated
Inferred
Total
Turner River Project Base Metal Mineral Resources
Tonnes
Mt
0.27
0.35
0.61
0.15
0.63
0.78
0.41
0.98
1.39
Zn Pb Cu
% % %
5.2 2.4 0.2
5.2 2.1 0.2
5.2 2.2 0.2
0.9 0.5 0.1
1.1 0.5 0.1
1.0 0.5 0.1
3.7 1.7 0.2
2.6 1.0 0.1
2.9 1.2 0.1
Au
Ag
ppm ppm
192
1.9
196
1.3
194
1.5
47
0.9
60
0.6
57
0.6
140
1.6
108
0.8
118
1.0
Zn
Pb
Cu
Metal Tonnes
13,900
18,200
32,100
1,300
6,900
8,200
15,200
25,100
40,300
6,400
7,100
13,500
700
2,900
3,600
7,100
10,000
17,100
600
600
1,200
100
400
400
700
900
1,700
Au
Oz
16,300
14,100
30,400
4,300
11,700
16,000
20,600
25,800
46,400
Ag
kOz
1,600
2,200
3,800
200
1,200
1,400
1,900
3,400
5,300
2.08
2.08
3.4 1.4 0.1
3.4 1.4 0.1
0.7
0.7
105
105
70,800
70,800
28,900
28,900
2,400
2,400
45,500
45,500
7,000
7,000
Turner River Total Base Metal Mineral Resources
De Grey Total
Class
Indicated
Inferred
Total
Tonnes
Mt
0.41
3.06
3.47
Zn Pb Cu
% % %
3.7 1.7 0.2
3.1 1.3 0.1
3.2 1.3 0.1
Ag
Au
ppm ppm
140
1.6
106
0.7
110
0.8
Zn
Pb
Cu
Metal Tonnes
15,200
95,800
111,000
7,100
39,000
46,100
700
3,400
4,100
Au
Oz
20,600
71,300
91,900
Ag
kOz
1,900
10,400
12,300
Discovery and Orchard Tank deposits are reported at a 0.5% Zn cut-off grade
Review of Material Changes
Material changes have been made to the Company’s Gold Mineral Resource Inventory. Between June 2016 and June 2017, the total inventory
increased from 6.7Mt at 1.6g/t for 345koz to 18.8Mt at 1.7g/t for 1,002koz as shown below. Increases are due to the option to acquire the
Indee Gold Project which was announced in January 2017. Mineral Resource estimates for the various Indee deposits were subsequently
updated and reported to comply with JORC 2012 reporting guidelines. The total Indee Mineral Resource inventory at June 2017 comprised
9.15Mt at 1.8g/t Au for 538koz, none of which was reported at June 2016.
De Grey Mining Limited - Comparison of June 2016 and June 2017 Gold Mineral Resources
Report
Year
2017
2016
Measured
Indicated
Mt
4.39
2.70
Au
g/t
1.7
1.8
Au Oz
Mt
241,700
160,100
5.44
1.10
Au
g/t
1.7
1.3
Au Oz
295,100
45,300
Mt
9.0
2.9
Change
63%
-7%
51%
394% 32%
551%
212%
Inferred
Au
g/t
1.6
1.5
8%
Au Oz
Mt
465,500
18.8
140,100
6.7
Total
Au
g/t
1.7
1.6
Au Oz
1,002,300
345,600
232%
182%
4%
190%
De Grey
Total
At the Turner River Project, a material increase to the Mt Berghaus Mineral Resource resulted from an updated estimate which incorporated
the results of an extensive drilling program completed by De Grey. The Mineral Resource at June 2017 comprised 3.52Mt at 1.2g/t Au for
141koz, an increase of 227% compared to the estimate reported at June 2016.
Re-modelling of the Wingina deposit to include a small number of additional drill holes and a revised geological interpretation has resulted
in an increased resource of 5.49Mt at 1.6g/t Au for 288koz. This is an 8% increase in contained gold compared to June 2016.
There has been no change to the Mineral Resource at the Amanda deposit.
62
Change
2017
2016
Change
2017
2016
Change
Mt
Berghau
s
Amanda
Turner
River
Total
De Grey Mining Limited
Annual Mineral Resources Statement (JORC 2012)
AS AT 30 JUNE 2017
Turner River Project - Comparison of June 2016 and June 2017 Gold Mineral Resources
Measured
Deposit
Report
Year
Mt
Wingina
2017
3.08
Au
g/t
1.7
2016
2.70
1.8
Au Oz
Mt
Indicated
Au
g/t
Au Oz
Inferred
Total
Mt
Au g/t
Au Oz
Mt
Au g/t
Au Oz
172,70
0
160,10
0
0.99
1.4
1.10
1.3
43,30
0
45,30
0
1.42
1.30
14
%
-6%
8%
-10%
7%
-4%
9%
0.21
1.8
12,30
0
3.30
0.90
1.6
1.5
6%
1.2
1.4
128,50
0
43,000
71,700
5.49
61,700
5.10
1.6
1.6
287,70
0
267,20
0
16%
8%
0%
8%
>
>
>
267%
-14%
199%
3.52
0.90
291
%
0.69
0.69
0%
9.69
1.2
1.4
140,80
0
43,000
-11%
227%
1.6
1.6
0%
1.5
35,400
35,400
0%
463,90
0
345,60
0
6.69
1.6
0.69
0.69
0%
5.41
1.6
1.6
0%
1.4
2.89
1.5
35,400
35,400
0%
235,60
0
140,10
0
2017
3.08
1.7
2016
2.70
1.8
172,70
0
160,10
0
1.20
1.4
1.10
1.3
55,60
0
45,30
0
Change
14
%
-6%
8%
9%
12%
23%
87%
-9%
68%
45%
-7%
34%
Revised Mineral Resource estimates for the Turner River base metal deposits were completed in the 2017 financial year. At the Discovery
deposit, a substantial drilling program was competed by De Grey and incorporated into the revised estimate resulting in a 13% increase in
tonnes and 48% increase in zinc metal. At the Orchard Tank deposit, remodelling of the previous drilling resulted in an increase in tonnes
of 23% and a 77% increase in zinc metal.
Turner River Project - Comparison of June 2016 and June 2017 Base Metal Mineral Resources
Deposit
Report Year
Discovery
2017
2016
Tonnes
Mt
1.4
1.2
Zn
%
2.9
2.3
Pb
%
1.2
0.9
Au
ppm
1.0
0.8
Orchard
Tank
Turner
River
Total
Change
13%
23%
31%
25%
2017
2016
2.1
1.7
3.4
2.4
Change
23%
43%
2017
2016
3.5
2.9
3.2
2.4
Change
21%
36%
1.4
1.0
40%
1.32
1.0
38%
0.7
0.5
31%
0.82
0.6
31%
Ag
ppm
118
87
35%
105
79
34%
110
82
34%
Zn
Pb
Metal Tonnes
40,300
29,000
17,100
11,600
39%
48%
70,800
40,066
28,900
16,733
77%
73%
111,100
46,000
69,100
28,300
Au
Oz
46,400
33,100
40%
45,500
28,036
62%
91,900
61,100
61%
63%
50%
Ag
kOz
5,300
3,500
53%
7,000
4,252
65%
12,300
7,800
58%
Governance and Internal Control
The Company’s procedures for the sample techniques and sample preparation are regularly reviewed and audited by independent experts.
Assays are performed by independent internationally accredited laboratories with a QAQC program showing acceptable levels of accuracy
and precision.
The exploration assay results database is maintained and appropriate backed-up internally.
All De Grey Mineral Resource estimates have been undertaken independently by Payne Geological Services Pty Ltd.
COMPETENT PERSON STATEMENT
The information in this Annual Mineral Resources Statement is based on, and fairly represents information and supporting documentation prepared by Mr
Paul Payne, a Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Payne is a full-time employee of Payne Geological
Services. Mr Payne has sufficient experience that is relevant to the style of mineralisation and type of deposit 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”. Mr Payne consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
63
De Grey Mining Limited
Schedule on Interests in Mining Tenements
FOR THE YEAR ENDED 30 JUNE 2017
Project/Location
Country
Tenement
Percentage
held/earning
Beyondie
Turner River
Turner River
Turner River
Turner River
Turner River
Turner River
Turner River
Turner River
Turner River
Turner River
Indee
Indee
Indee
Indee
Indee
Indee
Indee
Indee
Indee
Indee
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
E52/2215
E47/891
E45/2533
E45/2364
E45/2995
E45/3390
E45/3391
E45/3392
P45/3028
P45/3029
E45/2983
E47/2720
E47/3504
M47/473
M47/474
M47/475
M47/476
M47/477
M47/480
L47/164
L47/165
20%¹
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%²
0%³
0%³
0%³
0%³
0%³
0%³
0%³
0%³
0%³
0%³
1De Grey retains 100% rights to all non-iron ore related minerals under a Split Commodity Agreement.
²In October 2016, De Grey entered into an option to acquire 100% of the southern graticulates with Haoma Mining NL and Elazac Mining
Pty Ltd and the latter being the tenement owner (Note 23 (d)).
³In January 2017, De Grey entered into an option agreement to acquire 100% of Indee Gold Pty Ltd – the tenement owner.
64