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
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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