Duke Realty
Annual Report 2020

Plain-text annual report

Annual Report ABN 40 119 031 864 For the Year Ended 30 June 2020 Financial Statements Chairman’s Letter Directors' Report Auditor’s Independence Declaration Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors' Declaration Independent Audit Report ASX Additional Information Corporate Governance Statement Corporate Directory Page 3 5 22 23 24 25 26 27 58 59 66 70 74 DREADNOUGHT RESOURCES LIMITED CHAIRMAN’S LETTER Dear Fellow Shareholder, We are pleased to present the 2020 Annual Report for Dreadnought Resources Limited (“Dreadnought”). The past year has been another active year for Dreadnought. At this time last year, I described our goals for 2020 including: Illaara Gold-VMS-Iron Ore Project Deliver maiden drill programs at the Lawrence's, CRA Homestead and Central Illaara camp scale targets and continue evaluating our camp scale targets to generate additional drill targets. These goals were met. We prioritised Metzke’s Find, Longmore’s Find and Black Oak ahead of Central Illaara in terms of drilling. We also identified significant, high quality iron ore potential at Illaara. Illaara will remain a focus for Dreadnought in 2021 as we build on the early stage success at Metzke’s Find and continue to assess the many opportunities that Illaara presents on multiple commodity fronts. Evaluate the VMS potential of Illaara and undertake effective and efficient exploration programs to generate drill targets. An extensive and active VMS system was identified at Illaara and our targeting methods were success in identifying massive sulphides. The results obtained are being used to vector in on possible higher tenor base metals areas of the system. Tarraji-Yampi Project Follow up on down hole EM anomalies at Chianti and use the technical learnings from our successful drilling to generate additional drill targets with the aim of confirming a mineralised VMS camp. In addition, evaluate the remainder of the project area for other prospective VMS horizons. We defined multiple drill targets at the Tarraji-Yampi Project through geophysical and geochemical exploration methods including at the Chianti-Rufina Cu-Zn-Pb-Ag target. Substantial VMS anomalies were identified adjacent to Chianti at Rufina. We now have 7 drill targets defined by EM anomalies with associated gossans and/or magnetic and surface geochemical anomalies. Unfortunately, our activities in the Kimberley were delayed due to Covid-19 access restrictions. Drilling at Chianti-Rufina has been deferred until 2021. Follow up drilling at Grants to test extents with an aim to assess its size and grade potential and use the learnings from Grants to generate additional drill targets with the aim of confirming a mineralised Cu-Au camp. Our geophysical and geochemical exploration methods certainly confirmed a Cu-Au camp including Grants, Fuso and Paul’s Find. Drilling logistics were also impacted by Covid-19 access restrictions. Drill the high priority coincident magnetic and VTEM anomaly within the Ruins Dolerite at the Texas Ni-Cu-PGE Target. This target remains untested as drilling logistics were impacted by the Covid-19 access restrictions. All access and drilling approvals have now been obtained to complete our high priority work at the Tarraji-Yampi Project. Rocky Dam Project Confirm and evaluate CRA-North which has not been followed up since the 1990s. CRA-North was drilled and with encouraging results. The thick shallow oxide mineralisation intersected over ~300m of strike with close proximity to Kalgoorlie, makes CRA-North an attractive target. For 2021, Dreadnought will look to build on the foundations laid in 2020, including: Illaara Gold-VMS-Iron Ore Project Systematically assess and test the numerous high-quality gold opportunities. Commercialise the iron ore potential. Refine and test the VMS targeting methods. Tarraji-Yampi Project Drill the numerous untested targets at the Tarraji-Yampi Project. Rocky Dam Project Refine and test our understanding of the bedrock lode position at Rocky Dam. 3 DREADNOUGHT RESOURCES LIMITED CHAIRMAN’S LETTER In addition, we will continue to evaluate other opportunities for adding to shareholder value. In closing, we would like to thank our stakeholders including the Department of Defence, the Dambimangari Aboriginal Corporation, local communities, employees, joint venture alliance partners, suppliers and other business partners. We also would take this opportunity to thank our fellow shareholders for your ongoing support. Paul Chapman Non-Executive Chairman 4 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT Your directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Dreadnought Resources Limited (referred to hereafter as the Parent Entity or the Company) and the entities it controlled at the end of, or during, the year ended 30 June 2020. DIRECTORS The following persons were directors of the Parent Entity during the whole of the financial year and up to the date of this report, unless otherwise stated: Paul Chapman (Non-executive Chairman) Appointed 9 April 2019 Dean Tuck (Managing Director) Appointed 9 April 2019 Ian Gordon (Non-executive Director) Appointed 21 December 2017 Paul Payne (Non-executive Director) Appointed 21 December 2017 David Chapman (Non-executive Director) Appointed 9 April 2019, Resigned 31 July 2019 PRINCIPAL ACTIVITIES The principal activities of the Group during the financial year were minerals exploration and development. There were no significant changes in the nature of activities of the Group during the year. DIVIDENDS No dividends have been declared or paid during the year (2019: Nil). OPERATING RESULTS AND FINANCIAL POSITION The net result of operations for the financial year was a loss of $1,215,539 (2019: $680,822). The net assets of the Group have increased by $2,540,608 during the financial year from $2,055,644 at 30 June 2019 to $4,596,252 at 30 June 2020. 5 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT REVIEW OF OPERATIONS Corporate Activities The Group is an ASX-listed exploration and development company focussing on gold, nickel and copper projects within the state of Western Australia. The Company’s strategy is to discover major gold, nickel and copper within Western Australia. The highlights and significant changes in state of affairs during the year and to date include: Acquisitions • Finalised the acquisition of the Wombarella Project for 16,000,000 fully paid ordinary shares and $20,000 cash on 14 August 2019. Wombarella is prospective for nickel, copper, zinc, lead, silver and platinum group elements. • • Consolidated a significant land position prospective for Proterozoic Cu-Au, Cu-Zn-Pb-Ag VMS and Magmatic Ni-Cu-PGE massive sulphides in the South Kimberley. The South Kimberley Project contains historic Cu-Au occurrences similar to those seen within the Tarraji-Yampi Project. Finalised the acquisition of the Metzke’s Find Project for 14,500,000 fully paid ordinary shares and $20,000 cash on 6 December 2019. Finalised an option agreement to acquire E29/965 and E30/485 at Illaara in the Yilgarn (VMS potential) for $100,000 cash for a 15-month period to March 2021, with an option to extend for a further 15-months and a $1,000,000 exercise price to acquire both tenements. • • Expanded the land position prospective for gold mineralisation around the Rocky Dam Project. Funding • Completed a placement and issued 165,131,627 shares at an issue price of $0.003 raising $495,395 before costs during July 2019. • Completed a Share Purchase Plan and issued 140,166,663 shares at an issue price of $0.003 raising $420,500 before costs during August 2019. • Completed a placement and issued 269,841,290 shares at an issue price of $0.0063 raising $1,700,000 before costs on 8 December 2019, following shareholder approval for related party involvement. • Completed a placement and issued 125,000,000 shares at an issue price of $0.004 raising $500,000 before costs during May 2020. Administration • Completed a Small Shareholding Sale Facility in August 2019 via which the total number of shareholders in the Company was reduced by ~1,580 to ~750. This will significantly reduce administration costs going forward. • Subsequent to year end, Jessamyn Lyons was appointed Company Secretary in July 2020 with Nicholas Day resigning as a Company Secretary. Field Operations • Defined multiple drill targets at the Tarraji-Yampi Project through geophysical and geochemical exploration methods at the Chianti-Rufina Cu-Zn-Pb-Ag, Texas Ni-Cu-PGE, Grants, Fuso and Paul’s Find Cu-Au Targets. • Obtained all regulatory approvals to commence drilling at the Tarraji-Yampi Project and carried out drilling at the Chianti and Grants Targets. • Defined multiple drill targets at the Illaara Gold-VMS-Iron Ore Project through a series of on ground geophysical and geochemical surveys as well as detailed reviews of historical exploration. • Drill tested the Warspite, Bismarck, Rodney, Reindler’s VMS targets in line with the company’s VMS strategy. • Drill tested Metzke’s Find, Sheoak, Century, CRA Homestead gold targets returning numerous high-grade results from Metzke’s Find. • Re-defined the CRA-North gold prospect at the Rocky Dam Project and carried out multiple drilling programs which produced several thick shallow oxide gold intercepts. 6 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT Key Projects Kimberley Ni-Cu-Au Projects The Group controls the second largest land holding in the highly prospective West Kimberley region of WA. The main project area, Tarraji-Yampi, is located only 85kms from Derby and has been locked up as a Defence reserve since 1978. The area was only recently opened under the Commonwealth Government’s co-existence regime that balances Defence’s needs with the requirements of others including Aboriginal groups, industry, pastoralists and State Governments. the resources Tarraji-Yampi presents a rare first mover opportunity with known outcropping mineralisation and historic workings from the early 1900s which have seen no modern exploration. volcanogenic massive Three styles of mineralisation occur at Tarraji-Yampi including: (“VMS”); Proterozoic Cu-Au (“IOCG”); and magmatic sulphide Ni-Cu- PGE. Numerous high priority nickel, copper and gold drill targets have been identified from recent Versatile time Domain Electromagnetic (“VTEM”) surveys, historical drilling and surface sampling of outcropping mineralisation. sulphide Illaara Gold, VMS & Iron Ore Project Illaara is located 190km northwest of Kalgoorlie in the Yilgarn Craton and covers 75kms of strike along the Illaara Greenstone Belt. Illaara is prospective for typical Archean mesothermal lode gold deposits and base metals VMS mineralisation. The Group has consolidated the Illaara Greenstone Belt mainly through an acquisition from Newmont. Newmont defined several camp-scale targets which were undrilled due to a change in corporate focus. Prior to Newmont, the Illaara Greenstone Belt was predominantly held by iron ore explorers and has seen minimal gold and base metal exploration since the 1990s. Illaara contains several drill ready gold targets. In addition, the Eastern and Western VMS Horizons are expected to produce exciting drill targets with the application of modern exploration technology. Rocky Dam Gold & VMS Project Rocky Dam is located 45kms east of Kalgoorlie in the Eastern Goldfields Superterrane of Western Australia. Rocky Dam is prospective for typical Archean mesothermal lode gold deposits and Cu-Zn VMS mineralisation. Rocky Dam has known gold and VMS occurrences with drill ready gold targets including the recently defined CRA-North gold prospect. Competent Person’s Statement The information in this report that relates to geology and exploration results and planning was compiled by Mr. Dean Tuck, who is a Member of the AIG and a director and shareholder of the Company. Mr. Tuck has sufficient experience which 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. Tuck consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information in the original reports, and that the forma and context in which the Competent Persons findings are presented have not been materially modified from the original reports. 7 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR In July and August 2020, a total of 33,500,000 unlisted options were exercised raising $217,500. In August 2020, the Group completed a share placement of 170,666,673 at $0.009 per share to sophisticated investors. The placement raised $1,536,000 before costs. On 15 August 2020, the Group extended the maturity date of the Convertible Loan Note Deed to 2 July 2021. Other than the events detailed above, there has not arisen in the interval between 1 July 2020 and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Group, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future years. FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGY The Group is focused on delivering significant shareholder returns through the discovery of economic gold, copper and nickel deposits in the tier one jurisdiction of Western Australia. The Group will achieve these goals by: - - Identifying projects with significant unrealised potential Focusing our technical effort and financial investment to effectively and efficiently generate and drill exciting mineralised targets - Maintaining low overheads and keeping the market well informed through continuous activity and news flow The Group currently has three core projects which include the Kimberley Ni-Cu-Au Projects, the Illaara Gold, VMS & Iron Ore Project and the Rocky Dam Gold & VMS Project ENVIRONMENTAL REGULATION The operations of the Group in Australia are subject to environmental regulations under both Commonwealth and State legislation. In the mining industry, many activities are regulated by environmental laws as they may have the potential to cause harm and/or otherwise impact upon the environment. Therefore, the Group conducts its operations under the necessary Commonwealth and State Licences and Works Approvals to carry out ground disturbing activities including the discharge of hazardous waste and materials arising from any exploration or mining activities and development conducted by the Group on any of its tenements. The Group considers it has complied with all relevant environmental obligations. 8 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT INFORMATION ON DIRECTORS Directors have been in office for the entire period unless otherwise stated. PAUL CHAPMAN B.Comm, CA, Grad. Dip. Tax, MAICD, MAusIMM Independent Non-Executive Chairman Experience and Expertise Mr Chapman is a chartered accountant with over thirty years’ experience in the resources sector gained in Australia and the United States. He was a founding shareholder/director of the following ASX listed companies: Black Cat Syndicate, Reliance Mining, Encounter Resources, Rex Minerals, Silver Lake Resources and Avanco Resources. Mr Chapman is the non-executive Chairman of ASX listed gold developer Black Cat Syndicate and copper/gold explorer Encounter Resources. Interests in shares and options 284,130,061 shares and 20,000,000 options Special Responsibilities Chairman of the Board Other current directorships Mr Chapman is a director of Black Cat Syndicate (ASX:BC8) and Encounter Resources (ASX:ENR). Former directorships in the last 3 years Mr Chapman resigned as non-executive director of Brazilian copper/gold producer Avanco Resources (ASX:AVB) on 10 August 2018 following a successful takeover by OZ Minerals. DEAN TUCK B.Sc (Hons), FGAA, MAIG Managing Director Experience and expertise Mr Tuck is an experienced geologist and exploration manager having worked across a wide range of commodities in Australia, Brazil and Southeast Asia from project generation through to resource evaluation. He has held senior level positions at BHP Billiton and ASX listed junior explorers. Mr Tuck has been instrumental in a number of discoveries including the Strickland gold, Mallinda and Mallina LCT pegmatites and Wonmunna iron ore. Interests in shares and options 14,710,317 shares and 39,500,000 options Other current directorships None. Former directorships in the last 3 years None. IAN GORDON B.Comm, MAICD Non-executive Director Experience and Expertise Mr Gordon is a mining executive with extensive experience in transaction generation, project acquisition, mine development and the management of public companies. Mr Gordon was formally an Executive Director and Managing Director of Ramelius Resources for seven years and Managing Director of Flinders Mines for two years. He holds a Bachelor of Commerce degree from Curtin University (WA). 9 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT INFORMATION ON DIRECTORS (CONTINUED) Interests in shares and options 47,325,981 shares Other current directorships None. Former directorships in the last 3 years Mr Gordon resigned as Director of ASX listed company Auteco Minerals (ASX: AUT) on 28 January 2020. PAUL PAYNE B.AppSc Grad Dip Min Ec, FAusIMM Non-executive Director Experience and expertise Mr Payne is a geologist and holds in excess of 30 years’ experience in mining including 10 years independent consulting across a range of commodities and jurisdictions. Mr Payne has extensive technical experience in the evaluation of mineral deposits from early stage exploration to definitive feasibility studies. Recent exploration experience includes implementation and management of gold exploration for Dacian Gold in WA and Rift Valley Resources in Tanzania. Mr Payne has held corporate roles including Technical Director and Managing Director of ASX listed companies including founding Managing Director of Dacian Gold and was instrumental in the Company’s successful IPO and making the major initial gold discovery at its Mount Morgans project. Interests in shares and options 46,428,575 shares Other current directorships Mr Payne is a director of Carnaby Resources Limited (ASX:CNB) (since July 2016). Mr Payne is a director of Essential Metals Limited (ASX:ESS) (since January 2020). Former directorships in the last 3 years Auteco Minerals (ASX:AUT) DAVID CHAPMAN B.Sc (Hons), MAusIMM (Resigned 31 July 2019) Non-executive Director Mr Chapman is a geologist and senior executive with extensive experience in the international resource industry. His diverse experience in senior and corporate roles covers all aspects of the mining industry from exploration, operations and business development, through to feasibility studies, financing and construction across a range of commodities. Other current directorships Mr Chapman is a non-executive director of Tombador Iron Limited (ASX:TI1). Former directorships in the last 3 years Sabre Resources Limited (ASX:SBR) COMPANY SECRETARY JESSAMYN LYONS BComm, AGIA ICSA (Grad Dip Applied Corporate Governance) Appointed 1 July 2020. Experience and expertise Ms Lyons is a Chartered Secretary, an Associate of the Governance Institute of Australia and holds a Bachelor of Commerce from the University of Western Australia with majors in Investment Finance, Corporate Finance and Marketing. Ms Lyons is also a Director of Everest Corporate and company secretary of Doriemus, Southern Hemisphere Mining, RBR Group and Los Cerros. Ms Lyons also has 15 years of experience working in the stockbroking and banking industries and has held various positions with Macquarie Bank, UBS Investment Bank (London) and more recently Patersons Securities. 10 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT INFORMATION ON DIRECTORS (CONTINUED) NICHOLAS DAY BCom; MBA; FFINSIA; ASCPA Appointed 1 July 2019, Resigned 9 July 2020. Experience and expertise Nick Day has over 20 years’ experience as a company director, CFO and company secretary for a broad range of listed and private technology companies and mining and exploration companies. He has extensive experience in Africa and Asia with strategic planning, business development, mergers and acquisitions, bankable feasibility studies, debt raising and project development. KAITLIN SMITH B.Com (Acc); CA Resigned 31 July 2019 Experience and expertise Kaitlin Smith was appointed Company Secretary on 1 September 2015 and resigned on 31 July 2019. Ms Smith provides company secretarial and accounting services to various public and proprietary companies and holds a Bachelor of Commerce (Accounting) and is a Chartered Accountant. Meetings of directors The size of the Company does not warrant separate Audit & Risk, Remuneration and Nomination Committees at this time, accordingly the full Board performs comprises these roles. The numbers of meetings of the Company's board of directors held during the year ended 30 June 2020, and the numbers of meetings attended by each director were as follows: Meetings of directors Paul Chapman David Chapman* Dean Tuck Ian Gordon Paul Payne A = Number of meetings attended B = Number of meetings held during the time the director held office during the year and was eligible to attend. * Resigned on 31 July 2019 A 13 1 13 13 13 B 13 1 13 13 13 Indemnification and insurance of officers The Company has indemnified the directors and officers of the Company for costs incurred, in their capacity as a director or officer, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid a premium in respect of a contract to insure the directors and officers of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Proceedings on behalf of the Group No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237 of the Corporations Act 2001. 11 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT INFORMATION ON DIRECTORS (CONTINUED) Non-audit services The Group may decide to employ the auditor on assignments additional to their statutory duties where the auditors’ expertise and experience with the Group are important. The board of directors is satisfied that the provision of any such 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 services disclosed below did not compromise the external auditor’s independence for the following reasons: • • all non-audit services are reviewed and approved by the board prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants (including Independence Standards) set by the Accounting Professional and Ethical Standards Board. There were no fees for non-audit services paid or payable to the external auditors of the Parent Entity, their related practices or non-related audit firms during the year ended 30 June 2020. Shares under option At the date of this report unissued ordinary shares of the Group under option are: Expiry date Exercise price Number of options Vested Unvested Amount paid/payable by recipient ($) 03/04/2024 25/05/2023 30/06/2024 09/04/2024 17/09/2024 $0.01 $0.006 $0.005 $0.005 $0.008 40,000,000 40,000,000 40,000,000 40,000,000 9,500,000 9,500,000 - - - 30,000,000 7,500,000 22,500,000 10,000,000 10,000,000 - - - - - - Shares issued during or since year end as a result of exercise of options Date granted Exercise price Number of shares issued Date exercise Amount paid for share ($) 04/04/2019 16/08/2019 16/08/2019 16/08/2019 $0.01 $0.005 $0.005 $0.005 10,000,000 17 July 2020 100,000 7,500,000 17 July 2020 1,000,000 5 August 2020 15,000,000 20 August 2020 37,500 5,000 75,000 12 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT INFORMATION ON DIRECTORS (CONTINUED) Remuneration report – audited The remuneration report is set out under the following main headings: A Principles used to determine the nature and amount of remuneration B Details of remuneration C Share-based compensation D Shareholdings E Use of Remuneration Consultants F Relationship between remuneration and Company performance G Key Management Personnel Loan The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. A Principles used to determine the nature and amount of remuneration The Group's policy for determining the nature and amounts of emoluments of board members and senior executive officers of the Group is as follows: The Company's Constitution specifies that the total amount of remuneration of non-executive directors shall be fixed from time to time by a general meeting. The current maximum aggregate remuneration of non-executive directors has been set at $300,000 per annum. Directors may apportion any amount up to this maximum amount amongst the non-executive directors as they determine. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as directors. Non-executive and executive directors’ remuneration is by way of fees and statutory superannuation contributions. The Company’s Incentive Options Plan was approved by shareholders on 16 August 2019. Directors may be eligible to participate in the Incentive Options Plan. The Company's remuneration structure is based on a number of factors including the financial position of the Company and the particular experience and performance of the individual in meeting key objectives of the Company. The Board is responsible for assessing relevant employment market conditions and achieving the overall, long term objective of maximising shareholder benefits, through the retention of high quality personnel. The Company does not presently emphasize payment for results through the provision of cash bonus schemes or other incentive payments based on key performance indicators of the Company given the nature of the Company's business as a mineral exploration entity. However, the Board may approve the payment of cash bonuses from time to time in order to reward individual executive performance in achieving key objectives as considered appropriate by the Board. The Company also has an Employee Incentive Option Plan approved by shareholders on 16 August 2019 that enables the Board to offer eligible employees and directors options to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, options for ordinary fully paid shares may be offered to the Company's eligible employees at no cost or no more than nominal monetary consideration unless otherwise determined by the Board in accordance with the terms and conditions of the Plan. The objective of the Plan is to align the interests of employees and shareholders by providing employees of the Company with the opportunity to participate in the equity of the Company as an incentive to achieve greater success and profitability for the Company and to maximise the long term performance of the Company. 13 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT Remuneration report – audited (continued) Voting and comments made at the Company’s 2019 Annual General Meeting Dreadnought Resources Limited received more than 98% of ‘yes’ votes on its remuneration report for the 2019 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. B Details of remuneration This report details the nature and amount of remuneration for each key management person of the Company. The names and positions held by directors and key management personnel of the Company during the financial year are: • • • • • • • Mr P Chapman – Chairman, non-executive (appointed 9 April 2019) Mr D Tuck – Managing Director (appointed 9 April 2019) Mr I Gordon – Director, non-executive (since 21 December 2017) Mr P Payne – Director, non-executive (since 21 December 2017) Mr D Chapman - Director, non-executive (appointed 9 April 2019, resigned 31 July 2019) Mr N Day – Former Company Secretary and CFO (appointed 1 July 2019, resigned 9 July 2020) Ms K Smith – Former Company Secretary (resigned 31 July 2019) The remuneration policy of the Group has been designed to align directors’ objectives with shareholder and business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with market rates. By providing components of remuneration that are indirectly linked to share price appreciation (in the form of options and/or performance rights), executive, business and shareholder objectives are aligned. The board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best directors to run and manage the Company, as well as create goal congruence between directors and shareholders. The remuneration policy and the relevant terms and conditions has been developed by the full board of directors as the Company does not have a Remuneration Committee due to the size of the Company and the board. In determining competitive remuneration rates, the board reviews trends among comparative companies and industry generally. It examines terms and conditions for employee incentive schemes, benefit plans and share plans. Reviews are performed to confirm that executive remuneration is in line with market practice and is reasonable in the context of Australian executive reward practices. The Company is an exploration entity, and therefore speculative in terms of performance. Consistent with attracting and retaining talented executives, directors and senior executives are paid market rates associated with individuals in similar positions, within the same industry. There were no service or consulting agreements in place with key management personnel, except for Mr D Tuck, as noted below. 14 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT Remuneration report – audited (continued) Details of key management personnel remuneration (a) Non-Executive Remuneration Short-Term Post-employment Long- term Share- based payments TOTAL Total performance related Options as % of total 2020 Salary fees Cash bonus Non- monetary Other Super- annuation Retirement benefits Termination benefits Incentive plans Options P Chapman D Chapman* I Gordon P Payne N Day** K Smith*** Total $ - - - - 80,500 11,213 91,713 $ - - - - - - - $ - - - - - - - $ - - - - - - - $ - - - - - - - $ - - - - - - - $ - - - - - - - $ - - - - - - - $ 36,627 - 36,627 36,627 - - 109,881 $ 36,627 - 36,627 36,627 80,500 11,213 201,594 % - - - - - - - % 100% - 100% 100% - - - *Resigned on 31 July 2019. **Appointed on 31 July 2019; Resigned on 9 July 2020. Mr Day was engaged under a service contract with 133 North Trust to act as Company Secretary and provide accounting and financial reporting services. Of the total invoiced amount to the Group of $80,500, $16,718 relates to payments to contractors engaged by 133 North Trust. ***Ms Smith was engaged under a service contract with AE Administrative Services Pty Ltd to act as Company Secretary. Ms Smith resigned on 31 July 2019. 15 DIRECTORS’ REPORT Short-Term Post-employment Long- term Share- based payments TOTAL Total performance related Options as % of total 2019 Salary fees Cash bonus Non- monetary Other Super- annuation Retirement benefits Termination benefits Incentive plans Options DREADNOUGHT RESOURCES LIMITED P Chapman D Chapman* I Gordon P Payne D Gordon** N Day K Smith*** Total $ - - 27,000 34,438 27,800 - 88,205 177,443 *Resigned on 31 July 2019 ** Resigned on 9 April 2019 ***Ms Smith was engaged under a service contract with AE Administrative Services Pty Ltd to act as Company Secretary. Ms Smith resigned on 31 July 2019. - - 27,000 36,000 27,800 - 88,205 179,005 $ - - - 1,562 - - - 1,562 $ - - - - - - - - $ - - - - - - - - $ - - - - - - - - $ - - - - - - - - $ - - - - - - - - $ - - - - - - - - $ - - - - - - - - $ % - - - - - - - - % - - - - - - - - (b) Executive remuneration – Mr D Tuck (appointed 9 April 2019) Mr Dean Tuck, Managing Director, was employed by the Group in accordance with the terms and conditions outlined within his service agreement dated 9 April 2019. For the year ended 30 June 2020, Mr Tuck received a base salary of $160,000 in short term remuneration (2019: $53,333), with a further $12,000 in post-employment superannuation contributions (2019: $5,067). Both parties may terminate the employment agreement by giving notice of termination to each other on not less than one (1) months’ notice in writing. On 16 August 2019, the Group granted the Managing Director 10,500,000 unlisted incentive options exercisable at $0.005 on or before 30 June 2024 vesting immediately, with a fair value of $51,332 (see note 15(a)). The Group also granted the Managing Director 30,000,000 unlisted incentive options exercisable at $0.005 on or before 9 April 2021 with a fair value of $177,184 (see note 15(a)). Both tranches of incentive options were granted in order to align the long term interests of the Managing Director to that of the Group (together hereafter referred to as the ‘long term incentive options’). 16 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT Remuneration report – audited (continued) (b) Executive remuneration – Mr D Tuck (continued) As per the Group’s Notice of Meeting dated 22 November 2019, it was identified that the issue of the above 30,000,000 incentive options should have been for a 5-year term rather than for the 2-year term granted. At the General Meeting held 23 December 2019, it was approved to cancel these incentive options and issue the Managing Director with new incentive Options. Due to an administrative oversight, the previous long term incentive options vested immediately when they were granted to the Managing Director and the total expense associated with these incentive options has been recognised at 30 June 2020. The Board has approved the revised long term incentive option plan whereby his ability to exercise the 40,500,000 long term incentive options would be subject to the following conditions: 10,500,000 incentive options - Vest immediately may be exercised after grant date - The options expired on 30 June 2024 30,000,000 incentive options 25% may be exercised on or after 30 June 2020 - - A further 25% may be exercised on or after 30 June 2021 - A further 25% may be exercised on or after 30 June 2022 - - The remaining 25% may be exercised on or after 30 June 2023 The options expire on 9 April 2024 The above long term incentive option plan has been put in place in order to demonstrate the Managing Director’s commitment to the Group and its shareholders for a long term scenario, with his ability to exercise a large portion of his incentive options now tied to his continued involvement over the next 4 years within his role. Had the above exercise agreement and relevant conditions been in place as at the time of the incentive options being granted, the relevant expense (non-IFRS) per financial year (as intended at the time of issue) would have been as follows: Financial Year End 30 June 2020 30 June 2021 30 June 2022 30 June 2023 Total ** Non-IFRS measure $** 95,628 44,296 44,296 44,296 228,516 17 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT Remuneration report – audited (continued) C Share based compensation Employee Incentive Options Plan The Company has an Employee Incentive Options Plan approved by shareholders that enables the board to offer eligible employees and directors options to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, options to acquire ordinary fully paid shares may be offered to the Company's eligible employees at no cost unless otherwise determined by the board in accordance with the terms and conditions of the Plan. Options granted as remuneration Incentive options were granted to directors and key management personnel of the Company during the year. The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Name Number of options granted Grant date P Chapman 7,500,000 16 Aug 2019 I Gordon 7,500,000 16 Aug 2019 P Payne 7,500,000 16 Aug 2019 D Tuck D Tuck 10,500,000 16 Aug 2019 30,000,000* 23 Dec 2019 Vesting date and exercisable date Every quarter over 30 June 2020 financial year Every quarter over 30 June 2020 financial year Every quarter over 30 June 2020 financial year Vest immediately Vest over 4 financial years Expiry Date Exercise Price Fair value per option at grant date 30 June 2024 $0.005 $0.005 30 June 2024 $0.005 $0.005 30 June 2024 $0.005 $0.005 30 June 2024 $0.005 $0.005 9 April 2024 $0.005 $0.006 * On 16 August 2019, 30,000,000 options with a 2 year term were issued to D Tuck which were subsequently cancelled and re-issued with a 5 year term on 23 December 2019. Options granted carry no dividend or voting rights. All options were granted over unissued fully paid ordinary shares in the Company. Options vest based on the provision of service over the vesting period whereby the executive becomes beneficially entitled to the option on vesting date. Options are exercisable by the holder as from the vesting date. There has not been any alteration to the terms or conditions of the grant since the grant date. There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their potential exercise. Shares issued on exercise of remuneration options No shares were issued to directors as a result of the exercise of remuneration options during the financial year. 18 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT Remuneration report – audited (continued) Directors' interests in shares and options Directors' relevant interests in shares and options of the Company are disclosed below. Options The number of options held by each key management person of the Group during the financial year is as follows: Balance at beginning of year Granted as remuneration during the year Net change other Balance at year end Total vested 30/06/20 Total exercisable 30/06/20 30 June 2020 Directors P Chapman D Chapman* I Gordon P Payne D Tuck*** Former Company Secretary N Day** 30,000,000 10,000,000 - - - 40,000,000 10,000,000 10,000,000 7,500,000 - 7,500,000 7,500,000 40,500,000 63,000,000 - (10,000,000) - - - (10,000,000) 37,500,000 - 7,500,000 7,500,000 40,500,000 93,000,000 37,500,000 - 7,500,000 7,500,000 10,500,000 63,000,000 37,500,000 - 7,500,000 7,500,000 10,500,000 63,000,000 - - - - 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 *resigned 31 July 2019 **resigned on 15 July 2020 *** Net of 30,000,000 options, issued on 16 August 2019, with a 2 year term which were subsequently cancelled and replaced by a further 30,000,000 options with a 5 year term on 23 December 2019. D Shareholdings The number of ordinary shares held by each key management person of the Group during the financial year is as follows: Balance at beginning of year Granted as remuneration during the year Issued on exercise of options during the year 30 June 2020 Directors P Chapman D Chapman* D Tuck I Gordon P Payne Former Company Secretary N Day** *resigned 31 July 2019 **resigned on 15 July 2020 234,169,743 62,270,555 8,333,333 35,655,345 26,666,670 367,095,646 65,603,889 65,603,889 - - - - - - - - Other changes during the year Balance at end of year - - - - - - - - 32,460,318 (62,270,555) 5,376,984 4,170,636 12,261,905 (8,000,712) 266,630,061 - 13,710,317 39,825,981 38,928,575 359,094,934 - - 65,603,889 65,603,889 19 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT D Shareholdings (Continued) Other transactions with key management personnel and their related parties Transactions with key management personnel and their related parties recognised during the year (excluding re- imbursement of expenses incurred on behalf of the Company) relating to Directors and their Director related entities were as follows: Director Transaction D Gordon D Gordon P Payne D Chapman Payments to a former director related entity for corporate advisory fees Payments to a former director related entity for company secretary and accounting services (ie Adelaide Equity Partners Limited) Payments to a director related entity for consulting services (ie Payne Geological Services Pty Ltd) Payments to a Director related entity for consulting services Consolidated 2020 $ 2019 $ - 60,000 11,213 88,205 - - 10,800 47,091 No amounts were owing to related parties as at 30 June 2020 (2019: $12,550 amount owing to D Gordon in relation to director fees ($9,800) and company secretary and accounting services ($2,750)) E Use of Remuneration Consultants The Board seeks external remuneration advice as required. No such advice was obtained during the financial year ending 30 June 2020. F Relationship between remuneration and Company performance Remuneration for certain individuals is directly linked to the performance of the Group. Details of the earnings and total shareholders return for the last five years. Operating revenue Net profit/(loss) Share price at year end 2020 72,163 (1,215,539) 0.0060 2019 3,474 (688,822) 0.0040 2018 3,993 (324,155) 0.0050 2017 3,892 (382,120) 0.0030 2016 352,251 (3,677,163) 0.0068 G Key Management Personnel Loan There were no loans issued to Key Management Personnel during the financial year (2019: Nil). Remuneration report ends. 20 DREADNOUGHT RESOURCES LIMITED DIRECTORS’ REPORT Rounding of amounts The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. 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 immediately after this directors' report. The Directors’ Report, incorporating the Remuneration Report, is signed in accordance with a resolution of the board of directors. Dean Tuck Managing Director Dated 30 September 2020 21 DREADNOUGHT RESOURCES LIMITED AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF DREADNOUGHT RESOURCES LIMITED In relation to the independent audit for the year ended 30 June 2020, to the best of my knowledge and belief there have been: (i) (ii) No contraventions of the auditor independence requirements of the Corporations Act 2001; and No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence Standards). This declaration is in respect of Dreadnought Resources Limited and the entities it controlled during the year. PITCHER PARTNERS BA&A PTY LTD J C PALMER Executive Director Perth, 30 September 2020 22 Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2020 Other income Grant income Administration expenses Finance expense Exploration expenditure Legal fees Impairment of exploration expenditure Net gain on deregistration of subsidiaries Director and employee benefits expense Loss from continuing operations before income tax Income tax benefit Loss from continuing operations before income tax Other comprehensive loss, net of income tax Equity instruments at fair value though other comprehensive loss Consolidated Note 30 June 2020 $ 30 June 2019 $ 2 3 3 24 3 4 9 2,543 69,620 3,474 - (669,115) (321,487) (78,467) (10,429) - - (62,182) (9,716) (27,928) (253,149) 10,027 - (449,608) (99,944) (1,215,539) (680,822) - - (1,215,539) (688,835) - (8,013) Total comprehensive loss for the year (1,215,539) (688,835) Loss per share for loss attributable to the ordinary equity holders of the Company Cents Basic loss per share (cents) Diluted loss per share (cents) Note Cents 16 16 (0.07) (0.07) (0.09) (0.09) The above consolidated statement of profit or loss and comprehensive income should be read in conjunction with the accompanying notes. 23 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Consolidated Statement of Financial Position As at 30 June 2020 ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other assets Total Current Assets Non-Current Assets Plant and equipment Exploration assets Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables Provisions Other financial liabilities Total Current Liabilities Non-Current Liabilities Other financial liabilities Total Non-Current Liabilities Total Liabilities Net Assets EQUITY Issued capital Reserves Accumulated losses Total Equity Consolidated Note 30 June 2020 $ 30 June 2019 $ 6 7 8 10 11 12 13 13 464,099 51,393 47,027 647,966 18,917 11,527 562,519 678,410 - 5,104,501 2,158 2,130,136 5,104,501 2,132,294 5,667,020 2,810,704 468,158 23,663 578,947 191,503 3,077 - 1,070,768 194,580 - - 560,480 560,480 1,070,768 755,060 4,596,252 2,055,644 14 15 43,389,962 704,020 (39,497,730) 40,263,315 74,520 (38,282,191) 4,596,252 2,055,644 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 24 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Consolidated Statement of Changes in Equity For the Year Ended 30 June 2020 Attributable to shareholders Dreadnought Resources Limited Issued Capital Accumulated Losses Equity Reserve FVOCI Reserve Options Reserve Total $ $ $ $ $ $ Balance at 1 July 2018 38,106,938 (37,568,356) Loss for year Other comprehensive loss Total comprehensive loss for the year Transactions with owners in their capacity as owners Share issues, net of transaction costs and tax Share issues, IronRinger acquisition Equity component of convertible notes (Note 13) Option issues, net of transaction costs and tax - - - (713,835) - (713,835) 376,805 1,779,572 - - - - - - - - - - - - 39,520 - Balance at 30 June 2019 40,263,315 (38,282,191) 39,520 Balance at 1 July 2019 40,263,315 (38,282,191) 39,520 Loss for year Other comprehensive loss Total comprehensive loss for the year Transactions with owners in their capacity as owners Share issues, net of transaction costs and tax (Note 14) Option issues, net of transaction costs and tax (Note 15) - - - (1,215,539) - (1,215,539) 3,126,647 - - - - - - - - Balance at 30 June 2020 43,389,962 (39,497,730) 39,520 (25,000) 33,013 (8,013) 25,000 - - - - - - - - - - - - - - - - - - - 513,582 (688,835) - (688,835) 376,805 1,779,572 39,520 35,000 35,000 35,000 2,055,644 35,000 2,055,644 - - - (1,215,539) - (1,215,539) - 3,126,647 629,500 629,500 664,500 4,596,252 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 25 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Consolidated Statement of Cash Flows For the Year Ended 30 June 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Payments to suppliers and employees Interest received Interest and other costs of finance paid Government grants (not including EIS) Consolidated Note 30 June 2020 $ 30 June 2019 $ (555,160) (429,276) 2,544 3,474 (60,000) 69,620 - - Net cash used in operating activities 25 (542,996) (425,802) CASH FLOWS FROM INVESTING ACTIVITIES: Payments for exploration assets (2,549,285) (269,249) Proceeds from the sale of investments in equity instruments Payment for property, plant and equipment - - 16,987 (2,160) Net cash used in investing activities (2,549,285) (254,422) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issue of shares Capital raising costs Proceeds from convertible notes Net cash provided by financing activities 3,115,895 417,908 (207,481) (40,169) - 600,000 2,908,414 977,739 Net (decrease)/increase in cash and cash equivalents held (183,867) 297,515 Cash and cash equivalents at beginning of year Cash and cash equivalents at end of financial year 647,966 350,451 464,099 647,966 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 26 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies The principal accounting policies adopted in the preparation of these consolidated Financial Statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The Financial Statements are for the consolidated entity consisting of Dreadnought Resources Limited and its subsidiaries. (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 (AASB) and the Corporations Act 2001. Dreadnought Resources Limited is a for profit entity for the purpose of preparing the financial statements. (i) Compliance with IFRS These consolidated financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (ii) Historical cost convention These financial statements have been prepared on an accrual basis, under the historical cost convention, as modified by the revaluation of financial assets through OCI. (iii) Critical accounting estimates The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. (b) Going concern The financial statements have been prepared on a going concern basis which assumes the Company and Group will have sufficient funds to pay its debts, as and when they become payable, for a period of at least 12 months from the date the financial report is authorised for issue. As at 30 June 2020, the Group had net assets of $4,596,252 (2019: $2,055,644) and net current liabilities of $508,249 (2019: net current assets of $483,830). Included in net current liabilities as at 30 June 2020 is $578,947 (at amortised cost), representing a $600,000 convertible note within a redemption date (as at 30 June 2020) within the 12 months of balance date, unless converted by the note holder on or before that date. On 15 August 2020, the Group extended the maturity date of the Convertible Loan Note Deed to 2 July 2021. In addition, during the financial year, the Group had cash outflows from operating activities of $542,996 (2019: $425,802) and cash outflows from investing activities (including payments for exploration) of $2,549,285 (2019: $269,249). The Group’s cash flow forecast out to 30 September 2021 indicates that the Group will need to raise additional funds to meet expenditure commitments, its business plan and its current level of corporate overheads to continue as a going concern. To address the future funding requirements of the Group, the Directors have: • • developed a business plan that provides encouragement for investors to invest; and continued their focus on maintaining an appropriate level of corporate overheads in line with the Group’s available cash resources. Subsequent to year end, 33,500,000 unlisted options were exercised raising $217,500. In August 2020, the Group completed a share placement at $0.009 per share to sophisticated investors. The placement raised $1,536,000 before costs. 27 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies (continued) (b) Going concern (continued) The directors are confident that the Group will be able to complete a fund raising to meet the Group’s funding requirements for the forecast period ending 30 September 2021. The directors therefore believe that it is appropriate to prepare the 30 June 2020 financial statements on a going concern basis. In the event that the Group is not able to successfully complete the fund raising referred to above, material uncertainty would exist as to whether the Company and Group will continue as a going concern and, therefore, whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial statements. The financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts, nor to the amounts and classification of liabilities that might be necessary should the Company and the Group not continue as a going concern. (c) Basis of Consolidation The Group financial statements consolidate those of the Parent and all of its subsidiaries. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. (d) Investments in joint arrangements Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required. Separate joint venture entities providing joint ventures with an interest to net assets are classified as a joint venture and accounted for using the equity method. Joint operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure to each liability of the arrangement. The Group’s interests in assets, liabilities, revenue and expenses of joint operations are included in the respective line items of the consolidated financial statements. Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties’ interests. When the Group makes purchases from a joint operation, it does not recognise its share of the gains and losses from the joint arrangement until it resells those goods/assets to a third party. (e) Comparative Amounts Comparatives are consistent with prior years, unless otherwise stated. Where a change in comparatives has also affected the opening retained earnings previously presented in a comparative period, an opening statement of financial position at the earliest date of the comparative period has been presented. 28 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies (continued) (f) Income Tax The tax expense recognised in the profit or loss and other comprehensive income relates to current income tax expense plus deferred tax expense (being the movement in deferred tax assets and liabilities and unused tax losses during the year). Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for the year and is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is provided on temporary differences which are determined by comparing the carrying amounts of tax bases of assets and liabilities to the carrying amounts in the consolidated financial statements. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax consequences relating to a non-monetary asset carried at fair value are determined using the assumption that the carrying amount of the asset will be recovered through sale. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and losses can be utilised. Current tax assets and liabilities are offset where there is a legally enforceable right to set off the recognised amounts and there is an intention either to settle on a net basis or to realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset where there is a legal right to set off current tax assets against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. Current and deferred tax is recognised as income or an expense and included in profit or loss for the period except where the tax arises from a transaction which is recognised in other comprehensive income or equity, in which case the tax is recognised in other comprehensive income or equity respectively. Dreadnought Resources Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under tax consolidation legislation. Each entity in the group recognises its own current and deferred tax assets and liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are immediately transferred to the head entity. The tax consolidated group has entered into a tax funding arrangement whereby each company in the group contributes to the income tax payable by the group in proportion to their contribution to the group’s taxable income. Differences between the amounts of net tax assets and liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are recognised as either a contribution by, or distribution to the head entity. 29 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies (continued) (g) Leases The Group as lessee At inception of a contract, the Group assesses if the contract contains a lease or is a lease. If there is a lease present, a right-of-use asset and a corresponding lease liability are recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (i.e. a lease with a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expense on a straight-line basis over the term of the lease. Initially the lease liability is measured at the present value of the lease payments still to be paid at the commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate. Lease payments included in the measurement of the lease liability are as follows: • • fixed lease payments less any lease incentives; variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; the amount expected to be payable by the lessee under residual value guarantees; the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; lease payments under extension options, if the lessee is reasonably certain to exercise the options; and payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. • • • • The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease payments made at or before the commencement date and any initial direct costs. The subsequent measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest. Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset. On adoption of AASB 16 Leases at 1 July 2019, and as at 30 June 2020, the Group does is not party to any material leases. (h) Revenue and other income (including government grants) Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the entity and specific criteria relating to the type of revenue as noted below, has been satisfied. Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates. Interest revenue is recognised as interest accrues. Government grants are recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. All revenue is stated net of the amount of goods and services tax (GST). (i) Goods and Services Tax (GST) Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payable are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the statement of financial position. Cash flows in the statement of cash flows are included on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. 30 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies (continued) (j) Property, Plant and Equipment Where the cost model is used, the asset is carried at its cost less any accumulated depreciation and any impairment losses. Costs include purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and restoring the asset, where applicable. Plant and equipment Plant and equipment is measured on a cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets’ employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the assets’ carrying amounts or recognised as separate assets as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial year in which they are incurred. Depreciation The depreciable amount of all property, plant and equipment, except for freehold land is depreciated on a reducing balance method from the date that management determine that the asset is available for use. The depreciation rates used for each class of depreciable assets vary from 25% to 40%. (k) Financial instruments Classification and Measurement Under AASB 9, 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, transaction costs. Under AASB 9, debt financial instruments are subsequently measured at fair value through profit or loss (FVPL), amortised cost, or fair value through other comprehensive income (FVOCI). Classification is based on two criteria: • The Group’s business model for managing the assets; and • Whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding (the ‘SPPI criterion’). The classification and measurement of the Group’s debt financial assets are, as follows: • Debt instruments are amortised cost for financial assets that are held within a business model with the objective to hold the financial assets in order to collect contractual cash flows that meet the SPPI criterion. This category includes the Group’s Trade and other receivables. Other financial assets are classified and subsequently measured, as follows: • Equity instruments at FVOCI, with no recycling of gains or losses to profit or loss on derecognition. This category only includes equity instruments which the Group has irrevocably elected to so classify upon initial recognition or transition. 31 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies (continued) (k) Financial instruments (continued) Impairment The Group applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component. Where applicable, in measuring the expected credit losses, the trade receivables are assessed on a collective basis as they possess shared credit risk characteristics. They are grouped based on the days past due. The expected loss rates are based on the historic payment profile for as well as the corresponding historical credit losses during that period. The historical rates are adjusted to reflect current and forwarding looking macroeconomic factors affecting the customer’s ability to settle the amount outstanding. Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments within 180 days from the invoice date and failure to engage with the Group on alternative payment arrangement amongst others is considered indicators of no reasonable expectation of recovery. Compound financial instruments Compound financial instruments issued by the Group comprise convertible notes that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value. The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured. As the Group does not hold the irrevocable right as at 30 June 2020 to defer settlement of the convertible notes, the liability component has been treated as current. Refer note 13 for details. Interest related to the financial liability is recognised in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognised. (l) Impairment of non-financial assets 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 tested 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 an impairment are reviewed for possible reversal of the impairment at each reporting date. 32 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies (continued) (m) Cash and cash equivalents For the purpose of presentation in the consolidated statement of cash flows, 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 12 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Any bank overdrafts the Group have are shown within borrowings in current liabilities in the consolidated statement of financial position.1 Summary of Significant Accounting Policies (continued) (n) Employee benefits Short-term employee benefits Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. Examples of such benefits include wages and salaries, non-monetary benefits and accumulating sick leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The Group’s liabilities for annual leave and long service leave are included in other long term benefits as they are not expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. They are measured at the present value of the expected future payments to be made to employees. The expected future payments incorporate anticipated future wage and salary levels, experience of employee departures and periods of service, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds (2015: government bonds) that have maturity dates that approximate the timing of the estimated future cash outflows. Any re-measurements arising from experience adjustments and changes in assumptions are recognised in profit or loss in the periods in which the changes occur. The Group presents employee benefit obligations as current liabilities in the statement of financial position if the Group does not have an unconditional right to defer settlement for at least twelve (12) months after the reporting period, irrespective of when the actual settlement is expected to take place. (o) Loss per share Dreadnought Resources Ltd presents basic and diluted loss per share information for its ordinary shares. Basic loss per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share adjusts the 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 additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. (p) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options which vest immediately are recognised as a deduction from equity, net of any tax effects. 33 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies (continued) (q) Share Based Payments Equity-settled and cash-settled share-based compensation benefits are provided to employees and non- employee. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained using a Black Scholes pricing model which incorporates all market vesting conditions. The amount to be expensed is determined by reference to the fair value of the options or shares granted. This expense takes in account any market performance conditions and the impact of any non-vesting conditions but ignores the effect of any service and non-market performance vesting conditions. Non-market vesting conditions are taken into account when considering the number of options expected to vest. At the end of each reporting period, the Group revises its estimate of the number of options which are expected to vest based on the non-market vesting conditions. Revisions to the prior period estimate are recognised in profit or loss and equity. If the Group modifies the terms or conditions of the equity instruments granted in a manner that reduces the total fair value of the share-based payment arrangement, or is not otherwise beneficial to the employee, the Group shall nevertheless continue to account for the services received as consideration for the equity instruments granted as if that modification had not occurred. In addition, the Group recognises the effect of modifications that increase the total fair value of the share-based payment arrangement or are otherwise beneficial to the employee. (r) Exploration and development expenditure Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. As the asset is not available for use it is not depreciated or amortised. Accumulated costs in relation to an abandoned area are impaired in full against profit or loss in the period in which the decision to abandon that area is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. (s) Reserves FVOCI reserves represent financial assets at fair value through other comprehensive income reserve. The reserve records fair value change of equity instruments. Share-based payment reserves represent fair value of the option issued to the IronRinger vendor. The equity reserve represents the equity component (conversion rights) on the issue of unsecured convertible notes. (t) Key estimates The preparation of the consolidated financial statements requires management to make estimates and judgments. These estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: 34 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies (continued) (t) Key estimates (continued) (i) Estimated impairment The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets as noted in note 1(l). Where an impairment trigger exists, the recoverable amount of the asset is determined. (ii) Exploration and evaluation The Group policy for exploration and evaluation is discussed in note 1(r). The application of this policy requires management to make certain assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploration, then the relevant capitalised amount will be written off through the statement of profit or loss. The related carrying amounts are disclosed in note 3. (iii) Compound financial instrument The Group’s policy for compound financial instrument is discussed in Note 1(k). The fair value of the liability component is determined based on the contractual stream of future cash flows which is discounted at the rate of interest (14%) that would apply to an identical financial instrument without the conversion option. The Group uses its judgement to determine the discount rate based on the market interest rates existing at the end of each reporting period. (iv) Estimation of tax losses carried forward the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit Potential future income tax benefits attributable to gross tax losses of $27,992,307 (2019: $26,260,394) carried forward have not been brought to account at 30 June 2020 because the Directors do not believe it is appropriate to regard realisation of the future tax benefit as probable. These benefits will only be obtained if: (i) from the losses and deductions to be released; (ii) (iii) no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses. the Group continues to comply with the conditions for deductibility imposed by the law; and Tax losses carried forward have no expiry date. (v) Joint control The Group’s accounting policy for Joint Arrangements is set out in Note 1(d). AASB 11 Joint Arrangements requires an investor to have contractually agreed the sharing of control when making decisions about the relevant activities (in other words requiring the unanimous consent of the parties sharing control). However, what these activities are is a matter of judgement. As at the reporting date 30 June 2020, the Group does not have any Joint Arrangements as defined in this policy. While there are agreements in place with other parties (for the Group’s 80% interest in certain tenements which form part of it’s Tarraji-Yampi project), there is no joint control over decisions about relevant activities required to progress these projects. For the Tarraji-Yampi project, it is the view of the Group that it controls this project through its 80% interest. (u) Financial report The financial report was authorised for issue on 29 September 2020 by the Board of directors. 35 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 1 Summary of Significant Accounting Policies (continued) (v) Adoption of new and revised accounting standards and interpretations In the year ended 30 June 2020, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current reporting periods beginning on or after 1 July 2020. AASB 16 replaces AASB 117 Leases and sets out the principles for the recognition, measurement, presentation and disclosure of leases. AASB 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligations to make lease payments. A lessee measures right-of-use assets similarly to other nonfinancial assets (such as property, plant and equipment) and lease liabilities similarly to other financial liabilities. As a consequence, a lessee recognises depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows applying AASB 107 Statement of Cash Flows. AASB 16 substantially carries forward the lessor accounting requirements in AASB 117 Leases. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. AASB 16 is effective from annual reporting periods beginning on or after 1 January 2019. A lessee can choose to apply the Standard using a full retrospective or modified retrospective approach. There is no material impact to profit or loss or net assets on the adoption of this new standard in the current or comparative periods as leases were only short term leases and low value leases. (w) New accounting standards and interpretations that are not yet mandatory The following relevant standards and interpretations have been issued by the Australian Accounting Standards Board (AASB) but are not yet effective for the year ending 30 June 2020: AASB 2018-6: Amendments to the Australia Accounting Standards – Definition of a business This standard amends AASB 3 Business Combinations’ (“AASB 3”) definition of a business. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contributes to the ability to create outputs. The new guidance provides a framework to evaluate when an input and a substantive process are present. The revisions to AASB 3 also introduced an optional concentration test. If the concentration test is met, the set of activities and assets acquired is determined not to be a business combination and asset acquisition accounting is applied. The concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. The Group's assessment of the impact of this new amendment is that it is not expected to have a material impact on the Group in the current or future reporting periods. Other standards not yet applicable A number of other standards, amendments to standards and interpretations issued by the AASB which are not materially applicable to the Group have not been applied in preparing these consolidated financial statements. 36 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 2 Other Income Interest received 3 Expenses Consolidated 30 June 2020 $ 30 June 2019 $ 2,543 3,474 Loss before income tax from continuing operations includes the following expenses: Administration expenses Bank fees Compliance and regulatory Computer expenses Consulting fees (a) Insurance Seminar/conference Share registry Travel and accommodation Other (a) Consulting fees Accounting and secretarial services Tenement related Corporate consulting fees Director and employee benefit expenses Director fees Wages and salaries Share based payment (note 15) - Directors - Employees Superannuation Other employee benefit Finance expense 714 113,501 23,750 153 60,514 3,106 382,145 169,598 26,822 5,831 84,246 4,009 28,097 19,066 142 41,683 16,594 10,631 669,115 321,487 120,715 59,106 202,324 91,705 - 77,893 382,145 169,598 - 90,800 29,083 338,396 58,780 2,763 20,586 - - - 6,093 3,051 449,608 99,944 Of the total balance, $60,000 (2019: nil) relates to payment on the convertible loan note interest which were cash in nature. The remaining relates to interest accrued on the convertible loan note of $18,467 (2019: Nil) 37 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 4 Income Tax Expense Income tax expense/(benefit) Current tax Deferred tax Relating to origination and reversal of temporary differences Deferred tax expense (benefit) not recognised Income tax expense (benefit) reported in income statement 2020 $ (1,026,276) 1,026,276 (262,973) 262,973 - 2019 $ (653,665) 653,665 (232,423) 232,423 - Reconciliation of income tax to accounting loss: Prima facie profit/(loss) from ordinary activities Tax at the Australian tax rate of Prima facie tax expenses/(income) on ordinary activities Add: Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Non assessable income Other non allowable items Share based payments Impairment of exploration assets JMEI forgone tax losses Tax effect of temporary differences not brought to account as they do not meet the recognition criteria Consolidated 30 June 2020 $ 30 June 2019 $ (1,215,539) (680,822) 27.5% 27.5% (334,273) (187,226) (17,188) 379 109,224 - 550,000 - - - 69,616 - (308,142) 117,610 - - 38 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 4 Income Tax Expense (continued) Deferred Income Tax Deferred income tax at 30 June relates to the following Deferred tax liabilities Prepayments Plant & equipment Exploration assets Deferred tax assets Accruals Provision for employee entitlements Section 40-880 expenditure Revenue tax losses Capital losses Deferred tax assets not brought to account as realisation is not probable Deferred tax assets STATEMENT OF FINANCIAL POSITION 2020 $ 2019 $ (7,340) - (1,376,979) 12,641 6,507 84,110 7,703,729 466,764 (3,170) - (585,754) 14,859 - 19,052 7,221,608 466,764 (6,889,432) (7,133,359) - - A deferred tax liability of $45,168 (2019: $11,047) was recognised in equity during the financial year. A deferred tax asset (DTA) has not been recognised in respect of temporary differences as they do not meet the recognition criteria per AASB 112 Income Taxes. A DTA has not been recognised in respect of tax losses as realisation of the benefit is not regarded as probable. The Group is part of a tax consolidated group in accordance with the tax consolidation legislation. The Group has unrecognised assessed gross tax losses of $27,992,307 (2019: $26,260,394) that are available indefinitely for offset against future taxable profits of the Group. The tax rates applicable to each potential tax benefit are as follows: Timing differences – 27.5%; Tax losses – 27.5%. The Group has JMEI credits available from the Australian Taxation Office of $600,000 in respect of the year ending 30 June 2020. The JMEI entitles Australian resident investors in eligible minerals exploration companies to obtain either a refundable tax offset or (where the Eligible Investor is a corporate tax entity) franking credits. The maximum amount of credit the Group can create in the 2020 year is the lesser of the following: (a) 2020 greenfield exploration expenditure x 30% tax rate; (b) 2020 tax loss x 30% tax rate; or (c) JMEI credits of $600,000. 39 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 5 Operating Segments The directors have considered the requirements of AASB 8 – Operating Segments and the internal reports that are reviewed by the chief operating decision maker (the board) in allocating resources and have concluded that at this time are no separately identifiable segments. The principal products and services of this operating segment are the mining and exploration operations predominately in Western Australia. 6 Cash and cash equivalents Cash at bank and in hand 7 Trade and other receivables CURRENT GST receivable Other receivables Total current trade and other receivables Consolidated 30 June 2020 $ 30 June 2019 $ 464,099 647,966 464,099 647,966 Consolidated 30 June 2020 $ 30 June 2019 $ 32,930 18,463 18,867 50 51,393 18,917 The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable in the financial statements. As at 30 June 2020 there were no material trade and other receivables that were considered to be past due or impaired (2019: Nil) and therefore there no expected loss credit provision required. 8 Other assets CURRENT Prepayments Total other assets 9 Investment in equity instruments Consolidated 30 June 2020 $ 30 June 2019 $ 47,027 47,027 11,527 11,527 In April 2019, the Company sold 25,000,000 shares in Maximus Resources (ASX: MXR) for $16,987. 40 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 10 Property, plant and equipment PLANT AND EQUIPMENT At cost Accumulated depreciation and impairment Total property, plant and equipment Consolidated 30 June 2020 $ 30 June 2019 $ 4,308 4,308 (4,308) (2,150) - 2,158 Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year: Consolidated Year ended 30 June 2020 Balance at the beginning of year Impairment Balance at the end of the year Consolidated Year ended 30 June 2019 Balance at the beginning of year Acquisition Depreciation expense Balance at the end of the year Computer Equipment $ Computer Software $ Exploration Equipment $ Total $ 1,142 (1,142) - 98 (98) - 918 (918) - 2,158 (2,158) - Computer Equipment $ Computer Software $ Exploration Equipment $ Total $ 27 1,220 (105) 1,142 163 - (65) 98 - 940 (22) 918 190 2,160 (192) 2,158 41 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 11 Exploration and evaluation assets Consolidated 30 June 2020 $ 30 June 2019 5,104,501 5,104,501 Exploration and evaluation Balance at beginning of the year Impairment Expenditure incurred Cash acquisition (i) Equity based acquisition (Note 14 and 26) Balance at end of the year 2019 Balance at beginning of the year Impairment (ii) Expenditure incurred Equity based acquisition (Note 26) Balance at end of the year $ 2,130,136 2,130,136 $ 2,130,136 (27,928) 2,902,293 100,000 180,000 5,104,501 252,521 (253,149) 424,484 1,814,572 2,130,136 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. (i) The Company signed an agreement with Melville Raymond Dalla-Costa (“Dalla-Costa), granting the Company an exclusive license and option to acquire 100% interest in tenement E30/485 and E29/965. The Company has paid an Initial Option Fees of $100,000 on 12 December 2019. The option term may be extended for an additional fifteen (15) months by the Company given an extension notice to Dalla-Costa and paying the option extension fee no less that 30 days prior to the expiry of the Option term. Upon the Company giving an exercise notice, Dalla-Costa agrees to sell and the Company agrees to purchase the tenement free from all encumbrances in consideration for $1 million. (ii) The impairment of the exploration assets in 2018/2019 relates predominantly to the impairment within the Spargoville and Tanami Areas of Interest. During the period there was no field work performed by Ramelius Resources (ASX: RMS) relating to the Tanami Joint Venture. The Group and Ramelius surrendered 7 tenements of the Tanami Joint Venture during the period. Subsequently, the board has resolved to terminate the Tanami Joint Venture Agreement and surrender the remaining tenement. Refer to Note (d) and Note (t)(v) for accounting policies and key estimates respectively. 42 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 12 Trade and other payables CURRENT Unsecured liabilities Trade payables Accrued expenses PAYG and wages payable Superannuation payable Total trade and other payables Consolidated 30 June 2020 $ 30 June 2019 $ 392,453 63,984 1,721 - 64,694 116,556 4,160 6,093 468,158 191,503 All amounts are short term and the carrying values are considered to be a reasonable approximation of fair value. 13 Other financial liabilities Convertible notes – liability component - current (note (i)) Convertible notes – liability component - non current Total financial liabilities Consolidated 30 June 2020 $ 30 June 2019 $ 578,947 - - 560,480 578,947 560,480 Note (i) Convertible note deed related to issuance of 600,000 convertible notes (the “Note Issuance”) was entered between the Company and three subscribers and $600,000 was received from these subscribers in June 2019. The Note Issuance was subsequently approved at a General Meeting of shareholders on 16 August 2019. Each of the Convertible Notes carries a face value of $1.00 with an annual interest rate of 10% and maturity date of 2 July 2021. The holder may elect to convert into shares at $0.0055 per share. Upon the occurrence of default, the lender may require immediate redemption of all outstanding Note together with all interest and other outstanding moneys to be immediately due and payable to the lender. The Convertible Note was determined to be a compound financial instrument, resulting in a split between liability and equity components (Note 1(k)). The fair value of the liability component is determined based on the contractual future cash flows which is discounted at the rate of interest (14%) that would apply to an identical financial instrument without the conversion option. At recognition, $39,520 was attributed to equity component. As the Group did not hold the irrevocable right to defer settlement of the convertible notes as at 30 June 2020, the liability component has been treated as current. 43 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 14 Issued Capital (a) Ordinary Shares Date 01/07/2018 At 1 July 2018 Consolidated 30 June 2020 $ 30 June 2019 $ 43,389,962 40,263,315 43,389,962 40,263,315 No. $ 577,156,607 38,106,938 31/01/2019 Non-renounceable rights issue 65,324,977 195,975 25/02/2019 Issued shares to a Director of the Company 13,333,334 40,000 29/03/2019 Placement 51,666,666 155,000 04/04/2019 Issued to IronRinger vendors (Note 26) 373,333,334 1,493,333 24/04/2019 Placement 02/05/2019 Issued to parties in connection with IronRinger acquisition (Note 26) 28/06/2019 Issued to parties in connection with 100% acquisition of IronRinger (Tarraji) Pty Ltd (Note 26) Less: transaction costs At 30 June 2019 8,666,666 26,000 20,000,000 80,000 51,559,604 206,238 - (40,169) 1,161,041,188 40,263,315 Date No. $ 01/07/2019 At 1 July 2019 1,161,041,188 40,263,315 03/07/2019 Share Placement – Sophisticated and professional investors 165,131,627 495,395 01/08/2019 Share Purchase Plan – Eligible shareholders 140,166,663 420,500 21/11/2019 Share Placement – Sophisticated and professional investors 219,761,918 1,384,500 28/11/2019 Share Placement – Sophisticated and professional investors 23,095,243 145,500 23/12/2019 Director & Management participation in Placement 26,984,129 170,000 16/01/2020 Shares issued in part consideration for the acquisition of the Wombarella and Metzke's Projects (Note 11 and 26) 30,500,000 180,000 19/05/2020 Share Placement - Sophisticated and professional investors 107,500,000 430,000 19/05/2020 Director & Management participation in Placement 17,500,000 70,000 19/05/2020 Less: Transaction costs - (169,248) At 30 June 2020 1,891,680,768 43,389,962 44 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 14 Issued Capital (Continued) Capital Management Management controls the capital of the Group in order to maintain and generate long-term shareholder value and ensure that the Group can fund its operations and continue as a going concern. The Group received a total amount of $600,000 raising from Convertible Notes. The issue of Convertible Notes was approved by shareholders on 16 August 2019. The Convertible Notes each with a face value of $1.00 bear interest at 10% per annum, have a Conversion Price of $0.0055 and mature on 2 July 2021. On 15 August 2020, the Group extended the maturity date of the Convertible Loan Note Deed to 2 July 2021. The Group is not subject to any externally imposed capital requirements. Management effectively manages the Group capital by assessing the Group financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. (b) Options The details of the unlisted options are as follows: Number 50,000,000 33,000,000 30,000,000 10,000,000 40,000,000 163,000,000 Refer Note 15(a) for further information. Exercise Price $ 0.010 0.005 0.005 0.008 0.006 Expiry Date 3-Apr-24 30-Jun-24 9-Apr-24 17-Sep-24 25-May-23 45 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 15 Reserves Options reserve (a) Equity reserve (b) (a) Options Reserve At 1 July 2019 Grant Date 3/4/2019 Options issued – IronRinger vendor (Note 26) At 30 June 2020 At 1 July 2019 Grant Date Consolidated 30 June 2020 $ 30 June 2019 $ 664,500 39,520 35,000 39,520 704,020 74,520 No. $ - - 50,000,000 50,000,000 35,000 35,000 No. $ 50,000,000 35,000 16/08/2019 Options issued – Directors’ options (1) 22,500,000 109,880 16/08/2019 Options issued – Managing Director’s options (2) 40,500,000 51,332 17/09/2019 Options issued – Exploration Manager’s incentive options (3) 10,000,000 58,780 22/11/2019 Options cancelled – Managing Director‘s Options (2) (30,000,000) - 23/12/2019 Options issued – Managing Director’s options (4) 30,000,000 177,184 25/05/2020 Options issued – Broker’s options (5) At 30 June 2020 40,000,000 232,324 163,000,000 664,500 1) On 16 August 2019, the Group granted 22,500,000 unlisted options exercisable at $0.005 on or before 30 June 2024, vesting in four quarterly tranches from 1 July 2019 to 30 June 2020. 2) On 16 August 2019, the Group granted 10,500,000 unlisted incentive options exercisable at $0.005 on or before 30 June 2024, vesting immediately to the Managing Director. The Group also granted 30,000,000 unlisted incentive options exercisable at $0.005 on or before 9 April 2021. As per the Group's Notice of Meeting dated 22 November 2019, it was identified that the issue of the above 30,000,000 incentive options was not consistent with the Managing Director's executive services contract. At the General Meeting held 23 December 2019, it was approved to cancel these options and issue the Managing Director with replacement of long term incentive options in lieu of these instruments (refer to (4) below). 3) On 17 September 2019, the Group granted 10,000,000 unlisted incentive options exercisable at $0.008 on or before 17 September 2024, vesting immediately to the Exploration Manager. 46 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 15 Reserves (continued) (a) Options Reserve (continued) 4) On 23 December 2019, the Group granted 30,000,000 unlisted incentive options exercisable at $0.005 on or before 9 April 2024, vesting annually over 4 financial years to the Managing Director. As detailed above at (2), these options were replacement instruments for the Managing Director. The amount expensed in relation to these instruments is the incremental increase in fair value as a result of the change in terms from an expiry life 9 April 2021 to 9 April 2024. Refer to Remuneration Report for further details. 5) During the year, the Group engaged the services of Shaw and Partners as broker to manage the placement. The Group has agreed to pay the broker a fee of 6% of the funds raised under the placement and 40,000,000 options as part of a 12-month corporate mandate. The options are exercisable at $0.006 on or before 25 May 2023 vesting immediately to the broker. The share options outstanding at the end of the financial year had a weighted average remaining contractual life of 3.87 years (2019: 4.76 years) and weighted average exercise price of $0.01 (2019: $0.01). Fair value of options issued during the year The fair value of options issued during the year ended 30 June 2020 were valued using a Black-Scholes pricing model with the following inputs: (1) The options were deemed to have a fair value of $0.00489 per option. This value was calculated using the Black-Scholes option pricing model applying the following inputs: Share price Exercise price Expected volatility Risk-free interest rate Useful life/term $0.005 $0.005 203.65% 0.68% 5 (2) The options were deemed to have a fair value of $0.00489 per option. This value was calculated using the Black-Scholes option pricing model applying the following inputs: Share price Exercise price Expected volatility Risk-free interest rate Useful life/term $0.005 $0.005 203.65% 0.68% 5 (3) The options were deemed to have a fair value of $0.00588 per option. This value was calculated using the Black-Scholes option pricing model applying the following inputs: Share price Exercise price Expected volatility Risk-free interest rate Useful life/term $0.006 $0.008 211.56% 0.89% 5 47 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 15 Reserves (continued) (a) Options Reserve (continued) (4) The options were deemed to have a fair value of $0.00591 per option. This value was calculated using the Black-Scholes option pricing model applying the following inputs: Share price Exercise price Expected volatility Risk-free interest rate Useful life/term $0.006 $0.005 212.37% 0.98% 5 (5) The options were deemed to have a fair value of $0.00538 per option. This value was calculated using the Black-Scholes option pricing model applying the following inputs: Share price $0.006 Exercise price Expected volatility Risk-free interest rate Useful life/term $0.006 187.7% 0.26% 3 A share based payment expense has been included within the Consolidated Statement of Profit or Loss and Other Comprehensive Income, with the expense recognised over the useful life/term of the options. The total share based payment expense for the year in respect to equity instruments issued was $629,500. Of the total amounts, $232,324 and $397,176 was classified under Consulting Fees (Note 3a) and Director & Employee Benefits in the profit and loss respectively. (b) Equity Reserve Relates to the equity component of the Convertible Note. Refer Note 13 for more details. 16 Loss per Share (a) Basic loss per share Loss attributable to the ordinary equity holders Weighted average number of shares outstanding during the year Basic loss per share (cents) Consolidated year 30 June 2020 $ 30 June 2019 $ (1,215,539) 1,642,562,893 (0.07) (680,822) 717,425,329 (0.09) (b) Dilutive earnings per share In accordance with AASB 133 Earnings per Share, potential ordinary shares in the form of options and convertible notes are antidilutive when their conversion to ordinary shares decrease loss per share from continuing operations. The calculation of diluted earnings/(losses) per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings/(losses) per share. 48 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 17 Capital and Leasing Commitments Exploration expenditure commitments payable: Not later than 12 months Between 12 months and five years Later than five years Consolidated 30 June 2020 $ 30 June 2019 $ 589,394 825,189 - 708,262 550,447 - Total exploration tenement minimum expenditure 1,414,583 1,258,709 The Group can seek deferral of minimum expenditures or relinquish tenements as required. 18 Financial Risk Management The Group is exposed to a variety of financial risks through its use of financial instruments. This note discloses the Group’s objectives, policies and processes for managing and measuring these risks. The Group’s overall risk management plan seeks to minimise potential adverse effects due to the unpredictability of financial markets. The Group does not speculate in financial assets. Specific risks • • • Market risk - currency risk, interest rate risk and equity price risk Credit risk Liquidity risk The principal categories of financial instrument used by the Group are: • • • • • Investments in equity instruments Cash at bank Trade and other receivables Trade and other payables (excluding accruals) Other financial liabilities – convertible notes Objectives, policies and processes Specific information regarding the mitigation of each financial risk to which the Group is exposed is provided below. Liquidity risk Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The Group maintains cash to meet its liquidity requirements for up to 30-day periods. The Group manages its liquidity needs by carefully monitoring long-term financial liabilities as well as cash-outflows due in day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day period are identified monthly. At the reporting date, these reports indicate that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances 49 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 18 Financial Risk Management (continued) Liquidity risk (continued) The Group’s assets and liabilities have contractual maturities which are summarised below: Within 1 year More than 1 year 30 June 2020 $ 30 June 2019 $ 30 June 2020 $ 30 June 2019 $ 464,099 647,966 51,393 18,917 515,492 666,883 394,174 578,947 74,947 - 1,068,158 74,947 - - - - - - - - - - 660,000 560,480 Financial assets Cash and cash equivalents Trade and other receivables Financial Liabilities Trade and other payables Convertible notes – liability component, at amortised cost Market risk (i) Foreign currency sensitivity All of the Group transactions are carried out in Australian Dollars, therefore the Group is not exposed to foreign exchange risk. (ii) Cash flow interest rate sensitivity The Company received shareholders’ approval for the issuance of 600,000 Convertible Notes on 16 August 2019. The Group’s sensitivity to interest rates cash flow are not affected as the Convertible Notes carry fixed interest at a rate of 10% per annum. Interest rate risk on cash and cash equivalents is not considered to be a material risk due to the short term nature of these financial instruments. (iii) Equity price sensitivity The Group’s listed and non-listed equity investments are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group manages the equity price risk through diversification and by placing limits on individual and total equity instruments. The Group’s Board of Directors reviews and approves all equity investment decisions. In April 2019, the Group sold 25,000,000 shares in Maximus Resources Limited (ASX: MXR) for $16,987. Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the Group. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposure to wholesale and retail customers, including outstanding receivables and committed transactions. Management considers that all the financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due. The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. The long term and short term ratings is AA- and A-1+ respectively (Source: S&P Global Ratings). 50 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 18 Financial Risk Management (continued) Net fair values Fair value estimation The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying values as presented in the consolidated statement of financial position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Fair values derived may be based on information that is estimated or subject to judgement, where changes in assumptions may have a material impact on the amounts estimated. Areas of judgement and the assumptions have been detailed below. Where possible, valuation information used to calculate fair value is extracted from the market, with more reliable information available from markets that are actively traded. 30 June 2020 30 June 2019 Net Carrying Value $ Net Fair value $ Net Carrying Value $ Net Fair value $ 464,099 464,099 647,966 647,966 51,393 51,393 18,917 18,917 515,492 515,492 666,883 666,883 Financial assets Cash and cash equivalents Trade and other receivables Total financial assets Financial liabilities Trade and other payables 394,174 394,174 74,947 74,947 Convertible notes – liability component Total financial liabilities 578,947 973,121 578,947 560,480 560,480 973,121 635,427 635,427 19 Dividends There were no dividends paid during the year (2019: nil). 51 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 20 Key Management Personnel Disclosures The totals of remuneration paid to the key management personnel of Dreadnought Resources Ltd during the year are as follows: Short-term employee benefits Post-employment benefits Share based payments Total Remuneration Consolidated year ended 30 June 2020 $ 251,713 12,000 338,396 30 June 2019 $ 230,776 6,629 - 602,109 237,405 The Remuneration Report contained in the Directors' Report contains details of the remuneration paid or payable to each member of the Group’s Key Management Personnel for the years ended 30 June 2020 and 30 June 2019. Other key management personnel transactions For details of other transactions with key management personnel, refer to Note 24: Related Party Transactions. 21 Remuneration of Auditors Remuneration of the auditor, for: Auditing or reviewing the financial report - Grant Thornton (Australia) - JV audit - Pitcher Partners BA&A Pty Ltd (Australia) Pitcher Partners BA&A Pty Ltd (Australia) Consolidated year ended 30 June 2020 $ 30 June 2019 $ - 33,000 5,150 38,150 34,460 - - 34,460 22 Deed of Cross-Guarantee The Parent entity has not entered into any guarantees, in the current or previous financial year, in relation to the debts of its subsidiaries. 52 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 23 Contingent Liabilities The Company signed an agreement with Melville Raymond Dalla-Costa (“Dalla-Costa), granting the Company an exclusive license and option to acquire 100% interest in tenement E30/485 and E29/965. The Company has paid an Initial Option Fees of $100,000 on 12 December 2019. The option term may be extended for an additional fifteen (15) months by the Company given an extension notice to Dalla-Costa and paying the option extension fee no less that 30 days prior to the expiry of the Option term. Upon the Company giving an exercise notice, Dalla-Costa agrees to sell and the Company agrees to purchase the tenement free from all encumbrances in consideration for $1 million. As part of the consideration for the acquisition of tenement E04/2560, E29/1050, E29/957, E29/959, E30/471 and E30/476 from relevant parties, the Company has the obligation to pay royalties, which only become due and payable when and if mining commences. In July 2014, IronRinger (Tarraji) Pty Ltd (IronRinger) (now Dreadnought Kimberley Pty Ltd) and Whitewater Pty Ltd (Whitewater) entered into a Joint Venture Agreement regarding Exploration License E04/2315. The consideration paid by IronRinger was $21,000 being $10,000 in cash and $10,000 in equity (1,000,000 shares @ $0.01) to acquire various rights including an 80% interest in E04/2315. In addition, Whitewater was not required to contribute to expenditure until $20M and completion of a feasibility study. During the year, the Office of State Revenue provided a draft Statement of Grounds valuing the acquisition of E04/2315 at $4,000,000 seeking $200,000 in stamp duty and late payment penalties of $10,000. This valuation is notwithstanding previous valuations of $21,000, $nil and $248,102. The Company has engaged consultants to dispute the Office of State Revenue’s position and valuation. No formal assessment has issued. 24 Related Parties (a) The Group’s main related parties are as follows: (i) Key management personnel: Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity are considered key management personnel. For details of remuneration disclosures relating to key management personnel, refer to the remuneration report in the Directors' Report. The aggregate amounts recognised during the year (excluding re-imbursement of expenses incurred on behalf of the Company) relating to Directors and their Director related entities were as follows: Director Transaction D Gordon D Gordon P Payne D Chapman Payments to a former director related entity for corporate advisory fees Payments to a former director related entity for company secretary and accounting services Payments to a director related entity for consulting services Payments to a Director related entity for consulting services Consolidated 2020 $ 2019 $ - 60,000 11,213 88,205 - - 10,800 47,091 No amounts were outstanding and owing to related parties as at 30 June 2020 (2019: $12,550 amount owing to D Gordon in relation to director fees ($9,800) and company secretary and accounting services ($2,750)) 53 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 24 Related Parties (continued) (ii) Subsidiaries: The consolidated financial statements include the financial statements of Dreadnought Resources Ltd and the following subsidiaries: Name of subsidiary Tychean Tanami Pty Ltd (previously ERO Metals Pty Ltd)* Valley Floor Resources Pty Ltd* Dreadnought Holdings Pty Ltd (previously IronRinger Resources Pty Ltd) Dreadnought Kimberley Pty Ltd (previously IronRinger (Tarraji) Pty Ltd) Dreadnought Yilgarn Pty Ltd (previously IronRinger (Industrial Minerals) Pty Ltd) % ownership interest 2020 % ownership interest 2019 - - 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 * During the month of May 2020, the Group deregistered Valley Floor Resources Pty Ltd and Tychean Tanami Pty Ltd. Upon deregistration, the subsidiaries were de-consolidated from the group, resulting in a net gain of $10,027 on deconsolidation which was recognised within the Group’s Statement of Comprehensive Income or Loss for the 30 June 2020 year end. 25 Cash Flow Information Reconciliation of result of loss for the year to cashflows from operating activities Reconciliation of net income to net cash provided by operating activities: Loss for the year Cash flows excluded from profit attributable to operating activities Non-cash flows in profit: - share based payments - impairment of Property, plant and equipment - impairment loss on exploration assets - interest on convertible notes - exploration expenditure Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries: - (increase)/decrease in trade and other receivables - (increase)/decrease in prepayments - (increase)/decrease in investments - increase/(decrease) in trade and other payables Cashflow outflow from operations Non-cash investing and financing activities Share-based payments expense – share issue costs Non cash assets acquisition Consolidated year ended 30 June 2019 $ 30 June 2020 $ (1,215,539) (680,822) 629,500 2,158 27,928 18,467 10,429 (3,179) (15,162) - 2,402 - 192 253,149 - - (17,397) (4,720) 25,000 (1,204) (542,996) (425,802) 232,324 180,000 - - 54 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 26 Equity based acquisition During the year, the Group purchased Metzke’s Find and the Wombarella Project. The fair value of the total consideration paid was $180,000 (30,500,000 fully paid ordinary shares) based on the fair value of the shares issued to vendor. The purchase consideration was 16,000,000 @ $0.005 and 14,500,000 @ $0.007 for Metzke’s Find and Wombarella Project respectively. In prior year, the Group purchased IronRinger Resources Pty Ltd and its controlled entities for consideration that included shares in the Group for the year ended 30 June 2019. The acquisition was treated as an asset acquisition as it did not meet the definition of a business combination as per AASB 3 Business Combinations given the nature of the assets acquired. The only material assets acquired in the acquisition was the acquiree’s mining tenements and therefore, under the Group’s accounting policies, the consideration paid by the Group has been accounted for under its accounting policies for Exploration and evaluation expenditure (Note 1(r)), resulting in capitalisation of the amounts at the fair value of the consideration paid, allocated over the assets and liabilities acquired. No value was attributed to where tenure was not yet granted as this did not meet the definition of a recognisable asset under AASB 6 Exploration for and Evaluation of Mineral Resources. IronRinger Resources Pty Ltd and controlled entities tenement list Project Tenement Lease Name Location Minerals Status Tarraji-Yampi E04/2315 Tarraji-Yampi E04/2508 Tarraji-Yampi E04/2557 Tarraji-Yampi E04/2572 Tarraji Yampi Yampi Yampi West Kimberley E04/2574 Broome Creek West Kimberley E04/2573 Napier Downs WA WA WA WA WA WA Nickel, Copper, Gold Granted Nickel, Copper, Gold Granted Nickel, Copper, Gold Nickel, Copper, Gold Granted Nickel, Copper, Gold Application Application Nickel, Copper, Gold Application Tarraji-Yampi E04/2608 Robinson River WA Nickel, Copper, Gold Application Rocky Dam E25/533 Rocky Dam WA Copper, Gold, Zinc Granted The fair value of the total consideration paid $1,814,572 is determined based on the fair value of the shares and options issued to the vendor. The fair value of the shares issued to the vendor was calculated by using the share price on the date of acquisition multiplied by the number of shares awarded. The fair value of the share consideration was $1,779,572 through the issuance of 444,892,938 ordinary shares. Purchase consideration (Note 11): - - 444,892,938 ordinary shares @ $0.004 (Note 14) 50,000,000 options @ $0.0007 (Note 15) The fair values of the identifiable assets and liabilities as at date of acquisition were: Assets Cash and cash equivalents Trade and other receivables Exploration assets Liabilities Trade and other payables Borrowings Total identifiable net assets at fair value Excess of consideration over fair value of net assets acquired $ 1,779,572 35,000 1,814,572 Fair value recognised on acquisition $ 1,888 5,591 133,432 140,911 31,909 710 32,619 108,292 1,706,280 55 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 27 Events occurring after the reporting date In July and August 2020, a total of 33,500,000 unlisted options were exercised raising $217,500 respectively. In August 2020, the Group completed a share placement of 170,666,673 at $0.009 per share to sophisticated investors. The placement raised $1,536,000 before costs. On 15 August 2020, the Group extended the maturity date of the Convertible Loan Note Deed to 2 July 2021. Other than the events detailed above, there has not arisen in the interval between 1 July 2020 and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Group, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future years. 28 Parent entity Statement of Financial Position Assets Current assets Non-current assets Total Assets Liabilities Current liabilities Non-current liabilities Total Liabilities Equity Issued capital Retained earnings/ (losses) Reserves Total Equity Statement of Profit or Loss and Other Comprehensive Income Total loss for the year Total comprehensive loss Year ended 30 June 2020 $ 30 June 2019 $ 557,542 5,108,940 671,027 2,149,151 5,666,482 2,820,178 1,070,230 - 192,898 560,480 1,070,230 753,378 43,389,962 (39,497,730) 704,020 40,263,315 (38,271,035) 74,520 4,596,252 2,066,800 (1,226,695) (687,183) (1,226,695) (687,183) 56 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Notes to the Consolidated Financial Statements For the Year Ended 30 June 2020 29 Company Details The registered office of and principal place of business of the Company is: Dreadnought Resources Ltd Suite 5, 16 Nicholson Road Subiaco WA 6008 PO Box 572 Floreat WA 6014 www.dreadnoughtresources.com.au Email: info@DreadnoughtResources.com.au 57 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 Directors’ Declaration For the Year Ended 30 June 2020 In the directors' opinion: ● ● ● ● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements; the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 30 June 2020 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors Director Dean Tuck Dated 30 September 2020 58 DREADNOUGHT RESOURCES LIMITED ABN 40 119 031 864 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DREADNOUGHT RESOURCES LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Dreadnought Resources Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit and loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Group’s financial position as at 30 June 2020 and of • its financial performance for the year then ended; and complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern We draw attention to Note 1(b) to the financial report which indicates that the Group incurred a net loss of $1,215,539 during the year ended 30 June 2020 (2019: loss of $680,822), net current liabilities of $508,249 (2019: net current assets of $483,830) and had cash and cash equivalents of $464,099 (2019: $647,966). These conditions, along with other matters as set forth in Note 1(b), indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 59 Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. DREADNOUGHT RESOURCES LIMITED ABN 40 119 031 864 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DREADNOUGHT RESOURCES LIMITED Key Audit Matter How our audit addressed the key audit matter Capitalisation of exploration and evaluation expenditure Refer to Note 11 to the financial report. As at 30 June 2020, the Group held capitalised exploration and evaluation expenditure of $5,104,501. The carrying value of exploration and evaluation expenditure is assessed for impairment by the Group when facts and circumstances indicate that the capitalised exploration and evaluation expenditure may exceed its recoverable amount. The determination as to whether there are any indicators to require the capitalised exploration and evaluation expenditure to be assessed for impairment involves a number of judgments including but not limited to: • Whether the Group has tenure of the relevant area of interest; • Whether the Group has sufficient funds to meet the relevant area of interest; minimum expenditure requirements; and • Whether there is sufficient information for a decision to be made that the relevant area of interest is not commercially viable. During the year, the Group determined that there had been no indicators of impairment. Given the size of the balance and the judgemental nature of the impairment indicator assessments associated with exploration and evaluation assts, we consider this is a key audit matter. Our procedures included, amongst others: Obtaining an understating of and evaluating the processes and controls associated with the capitalisation of exploration and evaluation expenditure, and those associated with the assessment of impairment indicators. Examining the Group’s right to explore in the relevant area of interest, which included obtaining and assessing supporting documentation. We also considered the status of the exploration licences as it related to tenure. Considering the Group’s intention to carry out significant exploration and evaluation activity in the relevant area of interest, including an assessment of the Group’s cash-flow forecast models, discussions with senior management and directors as to the intentions and strategy of the Group. Reviewing management’s evaluation and judgement as to whether the exploration activities within each relevant area of interest have reached a stage where the commercial viability of extracting the resource could be determined. Assessing the adequacy of the disclosures included within the financial report. 60 DREADNOUGHT RESOURCES LIMITED ABN 40 119 031 864 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DREADNOUGHT RESOURCES LIMITED Our procedures included, amongst others: Obtaining an understanding of the relevant controls associated with the preparation of the valuation model used to assess the fair value of share based payments, including those relating to volatility of the underlying security and the appropriateness of the model used for valuation. Critically evaluating and challenging the methodology and assumptions of management in their preparation of valuation model, including management’s assessment of likelihood of vesting, agreeing inputs to internal and external sources of information as appropriate. Assessing the Group’s accounting policy as set out within Note 21(q) for compliance with the requirements of AASB 2 Share-based Payment. Assessing the adequacy of the disclosures included in the financial report. Share-based payments Refer to Note 19 to the financial report. Share-based payments represent $629,500 of the Group’s expenditure. This amount comprises the issue of 103,000,000 options to key management personnel, employees and consultants. Under Australian Accounting Standards, equity settled awards for employees are measured at fair value on the measurement (grant) date. For transactions with parties other than employees, the measurement date is the date the Group obtains the goods or the counterparty renders the service. Under both, the Group takes into consideration the probability of the vesting conditions (if any) attached. An amount is recognised as an expense either immediately if there are no vesting conditions, or over the vesting period if there are vesting conditions. In calculating the fair value there are a number of judgements management must make, including but not limited to: • estimating the likelihood that the equity instruments will vest; • estimating expected future share price volatility; • expected dividend yield; and risk-free rate of interest. • Due to the significance to the Group’s financial report and the level of judgment involved in determining the valuation of the share-based payments, we consider the Group’s calculation of the share-based payment expense to be a key audit matter. 61 DREADNOUGHT RESOURCES LIMITED ABN 40 119 031 864 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DREADNOUGHT RESOURCES LIMITED Joint control Refer to Note 1(d),1(t)(v) and 11 to the financial report. During the year ended 30 June 2019, through the Group’s acquisition of IronRinger Resources Pty Ltd and its controlled entities, the Group became party to a Joint Venture Agreement with Whitewater Resources Pty Ltd for an 80% interest in an exploration tenement which forms part of its Tarraji-Yampi project area of interest. Previously, management assessed that it had control over the relevant activities required to progress this project. Management is obliged to re-assess as to whether there has been any change in control (i.e. control to joint control) for this Exploration Licence each year. The determination as to whether control or joint control exists, involves a number of judgments including but not limited to: • what are the relevant activities to be assessed; and • whether rights implicit in arrangement agreements represented substantive or protective rights and the impact those rights have on determining control over the relevant activities. Due to potential accounting impact as a result of loss of control, and the judgment involved in determining control, we consider this to be a key audit matter. Our procedures included, amongst others: Obtaining an understating of and evaluating the processes and controls with respect to the accounting treatment of the transaction. Obtaining an understanding of the unincorporated joint venture agreement, including, but not limited, to: • • • • the operating committee composition; voting rights held by both parties; the authority imposed on the operating committee in making day to day decisions about operational, financial and strategic matters; and substantive and protective rights held by both parties. Reviewing operating committee minutes, in conjunction with the above and critically examining whether the Group has; • power over the unincorporated joint venture; • exposure, or rights, to variable returns • from its investment in the joint venture; and the ability to use its power over the unincorporated joint venture to affect the Group’s amount of returns. Assessing the Group’s accounting policy set out within Note 1(c) Basis of Consolidation and management’s judgements set out within Note 1(v) for compliance with the requirements of AASB 10 Consolidated Financial Statements Assessing the adequacy of the disclosures included in the financial report. 62 DREADNOUGHT RESOURCES LIMITED ABN 40 119 031 864 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DREADNOUGHT RESOURCES LIMITED Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2020,but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. 63 DREADNOUGHT RESOURCES LIMITED ABN 40 119 031 864 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DREADNOUGHT RESOURCES LIMITED • 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, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 13 to 20 of the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Dreadnought Resources Limited, for the year ended 30 June 2020, 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. 64 DREADNOUGHT RESOURCES LIMITED ABN 40 119 031 864 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DREADNOUGHT RESOURCES LIMITED PITCHER PARTNERS BA&A PTY LTD J C PALMER Executive Director Perth, 30 September 2020 65 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 ASX Additional Information Additional information required by the ASX Listing Rules is set out below. 1. Shareholdings The issued capital of the Company as at 25 September 2020 is: 2,095,847,441 ordinary fully paid shares All issued ordinary fully paid shares carry one vote per share. 2. Distribution of Equity Securities as at 25 September 2020 Ordinary Shares (ASX Code: DRE) Holding Ranges Holders Total Units % Issued Share Capital 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 Over 70 45 20 637 1,357 21,077 136,282 142,756 39,172,157 2,056,375,169 Totals 2,129 2,095,847,441 0.00 0.01 0.01 1.87 98.12 100.00% 3. Unmarketable parcels There were 156 holders of less than a marketable parcel of ordinary shares. 4. Substantial shareholders as at 25 September 2020 Name Number of Shares % Holding Paul Chapman and associated entities 284,130,061 13.65 5. Restricted Securities Subject to Escrow as at 25 September 2020 There are no shares subject to escrow. 6. On-market buy back There is currently no on-market buyback program for any of the Company’s listed securities. 7. Group cash and assets In accordance with Listing Rule 4.10.19, the Group confirms that it has been using the cash and assets for the year ended 30 June 2020 consistent with its business objective and strategy. 8. Voting Rights All ordinary fully paid shares have one voting right per share. Unlisted options have no voting rights. 66 Holder Name Holding % STONE PONEYS NOMINEES PTY LTD 239,169,743 13.12 DAVID MICHAEL CHAPMAN + MICHELE WOLLENS 63,577,917 3.03 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 ASX Additional Information 9. Top 20 Largest Holders of Listed Securities as at 25 September 2020 1 2 3 4 5 6 7 8 PARETO NOMINEES PTY LTD MR TAO WU RAMELIUS RESOURCES LIMITED PAYNE GEOLOGICAL SERVICES PTY LTD CITICORP NOMINEES PTY LTD MRS BELINDA GORDON + MR IAN GORDON 9 MR PHILIP DAVID CRUTCHFIELD 10 MR DREW GRIFFIN MONEY 11 PHILIP DAVID CRUTCHFIELD 12 MR IAN JAMES GORDON 13 RMK SUPER PTY LTD 14 MR STEPHEN JAMES FOLEY + MS NATALIE CHANTAL MELLONIUS 15 BNP PARIBAS NOMINEES PTY LTD 16 MR NEVRES CRLJENKOVIC 17 CS FOURTH NOMINEES PTY LIMITED 18 BRIKEN NOMINEES PTY LTD 19 WYTHENSHAWE PTY LTD 20 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 54,166,667 45,000,000 42,380,955 38,928,575 29,731,879 27,333,337 25,727,777 21,000,000 20,515,873 19,992,644 18,533,097 18,333,330 17,391,753 17,293,376 16,705,551 15,000,000 15,000,000 14,006,490 2.58 2.15 2.02 1.86 1.42 1.30 1.23 1.00 0.98 0.95 0.88 0.87 0.83 0.83 0.80 0.72 0.72 0.67 Total held by top 20 registered shareholders 781,655,490 37.30 67 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 ASX Additional Information 10. Unquoted securities UNLISTED OPTIONS @ $0.01 EXPIRING 03/04/2024 Holder Name Holding % STONE PONEYS NOMINEES PTY LTD 20,000,000 DAVID MICHAEL CHAPMAN + MICHELE WOLLENS 10,000,000 1 2 3 NICHOLAS FINDLAY DAY Total 50% 25% 25% 10,000,000 40,000,000 100% UNLISTED OPTIONS @ $0.005 EXPIRING 9/04/2024 Holder Name Holding % 1 MR DEAN TUCK & MRS DIANNE MAE TUCK 30,000,000 100% UNLISTED OPTIONS @ $0.005 EXPIRING 30/06/2024 Holder Name Holding % 1 MR DEAN TUCK & MRS DIANNE MAE TUCK 9,500,000 100% UNLISTED OPTIONS @ $0.008 EXPIRING 17/09/2024 Holder Name 1 OLIVER JUDD Holding % 10,000,000 100% UNLISTED OPTIONS @ $0.006 EXPIRING 25/05/2023 Holder Name Holding % 1 MR BLAIR OLIVER CAMPBELL SPAULDING 5,000,000 12.5% 2 3 4 PARETO NOMINEES PTY LTD 10,000,000 25% RAVENHILL FINANCIAL SERVICES PTY LTD SHAW AND PARTNERS LIMITED Total 5,000,000 12.5% 20,000,000 50% 40,000,000 100% 68 Dreadnought Resources Ltd and Controlled Entities ABN: 40 119 031 864 ASX Additional Information Unquoted securities (continued) UNLISTED CONVERTIBLE NOTES CONVERTIBLE @ $0.0055 Holder Name Holding % 1 BUDWORTH CAPITAL PTY LTD 315,000 2 WESTGATE CAPITAL PTY LTD 70,000 3 SEASCAPE CAPITAL PTY LTD 215,000 53% 12% 36% Total 600,000 100.00% 69 DREADNOUGHT RESOURCES LIMITED Corporate Governance Statement The Company’s Corporate Governance Plan, Statement and Appendix 4G can be found on the Company’s website at http://www.dreadnoughtresources.com.au/corporate-governance/ The Board of Directors (“the Board”) is responsible for the corporate governance of the Company. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable. This statement outlines the main Corporate Governance practices in place throughout the financial year, which comply with the 3rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. 70 DREADNOUGHT RESOURCES LIMITED ASX Additional Information – Tenement List Project Tenement Lease Name State Status % Owned by DRE Holders Tarraji-Yampi E04/2315 Tarraji WA Granted Registered and 80% Beneficial as a Joint Venture Whitewater Resources Pty Limited Tarraji-Yampi E04/2508 Yampi WA Granted Tarraji-Yampi E04/2557 Yampi WA Granted Tarraji-Yampi E04/2572 Yampi WA Granted Tarraji-Yampi E04/2608 Yampi WA Granted 100% 100% 100% 100% Dreadnought (Kimberley) Pty Ltd Dreadnought (Kimberley) Pty Ltd Dreadnought (Kimberley) Pty Ltd Dreadnought (Kimberley) Pty Ltd Tarraji-Yampi E04/2675 Yampi WA Application 100% Dreadnought (Kimberley) Pty Ltd Tarraji-Yampi E04/2676 Yampi WA Application 100% Dreadnought (Kimberley) Pty Ltd E04/2560 Wombarella WA Granted 100% Beau Resources Pty Ltd E04/2574 Broome Creek WA Application 100% Dreadnought (Kimberley) Pty Ltd West Kimberley West Kimberley West Kimberley E04/2573 Napier Downs WA Granted Rocky Dam E25/533 Rocky Dam WA Granted Rocky Dam E25/599 Rocky Dam WA Granted 100% 100% 100% Dreadnought (Kimberley) Pty Ltd Dreadnought (Yilgarn) Pty Ltd Dreadnought (Yilgarn) Pty Ltd 71 ASX Additional Information – Tenement List Project Tenement Lease Name State Status % Owned by DRE Holders DREADNOUGHT RESOURCES LIMITED Rocky Dam E27/634 Rocky Dam WA Granted Rocky Dam E28/2988 Rocky Dam WA Granted Illaara E29/957 Illaara WA Granted Illaara E29/959 Illaara WA Granted Illaara E29/1050 Illaara WA Granted Illaara E30/471 Illaara WA Granted Illaara E30/476 Illaara WA Granted Illaara E29/965 Illaara WA Granted Illaara E30/485 Illaara Granted 100% 100% 100% 100% 100% 100% 100% 100% 100% Dreadnought (Yilgarn) Pty Ltd Dreadnought (Yilgarn) Pty Ltd Newmont Goldcorp Exploration Pty Ltd Newmont Goldcorp Exploration Pty Ltd Gianni, Peter Romeo Newmont Goldcorp Exploration Pty Ltd ( Newmont Goldcorp Exploration Pty Ltd Dalla-Costa, Melville Raymond Dalla-Costa, Melville Raymond WA WA WA WA South Kimberley Project South Kimberley Project South Kimberley Project E80/5363 Horseshoe Range E80/5364 Sparke Range Application 100% Dreadnought (Kimberley) Pty Ltd Application 100% Dreadnought (Kimberley) Pty Ltd E80/5365 Lindner Hill Application 100% Dreadnought (Kimberley) Pty Ltd 72 ASX Additional Information – Tenement List Project Tenement Lease Name State Status % Owned by DRE Holders South Kimberley Project E80/5366 Mt Amhurst WA Application 100% Dreadnought (Kimberley) Pty Ltd DREADNOUGHT RESOURCES LIMITED 73 Corporate Directory Directors Paul Chapman (Non-executive Chairman) Dean Tuck (Managing Director) Ian James Gordon (Non-executive Director) Paul Charles Payne (Non-executive Director) Company Secretary Ms Jessamyn Lyons Registered Office Suite 5/16 Nicholson Road Subiaco WA 6008 Telephone: +61 (0) 428 824 343 Website: www.dreadnoughtresources.com.au/ ABN 40 119 031 864 Share Registry Computershare Level 11, 172 St Georges Tce Perth, WA, Australia Telephone: + 61 8 6188 0800 Auditors Pitcher Partners BA&A Pty Ltd (Australia) Level 11/12 – 14 The Esplanade Perth WA 6000 Australia Lawyers Steinepreis Paganin 16 Milligan St Perth WA 6000 Stock Exchange Australian Securities Exchange (Home Exchange: Perth, Western Australia) ASX Code: DRE DREADNOUGHT RESOURCES LIMITED 74 

Continue reading text version or see original annual report in PDF format above