DUKETON MINING LIMITED
ANNUAL REPORT
2017
Corporate Information
DUKETON MINING LIMITED
ABN 76 159 084 107
Directors
Seamus Cornelius (Non-Executive Chairman)
Stuart Fogarty (Managing Director)
Heath Hellewell (Non-Executive Director)
Company Secretary
Dennis Wilkins
Registered Office
Suite 2, 11 Ventnor Avenue
WEST PERTH WA 6005
Principal Place of Business
Level 2, 45 Richardson Street
WEST PERTH WA 6005
Telephone: +61 8 6315 1490
Facsimile: +61 8 9486 7093
Solicitors
House Legal
86 First Avenue
MT LAWLEY WA 6050
Bankers
National Australia Bank Limited
1232 Hay Street
WEST PERTH WA 6005
Share Registry
Security Transfer Australia Pty Ltd
770 Canning Highway
APPLECROSS WA 6153
Telephone: 1300 992 916
Facsimile: (08) 6365 4086
Auditors
Rothsay Chartered Accountants
Level 1, Lincoln House
4 Ventnor Avenue
WEST PERTH WA 6005
Internet Address
www.duketonmining.com.au
Stock Exchange Listing
Duketon Mining Limited shares are listed on the Australian Securities Exchange (ASX code: DKM)
2
Contents
Letter from the Chairman
Review of Operations
Directors' Report
Auditor’s Independence Declaration
Corporate Governance Statement
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
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5
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27
28
29
30
31
32
33
48
49
52
3
Letter from the Chairman
Dear fellow shareholders,
On behalf of the board, management and staff of Duketon Mining Limited I thank all shareholders for their continued support.
Despite capital market conditions continuing to be challenging for junior resource companies, your Company has maintained
a strong balance sheet and continued to advance its enviable tenement position in the Duketon belt.
A robust approach to joint venture arrangements has seen significant and valuable work completed on our tenure which has
significantly de-risked future expenditure. The coming year will see critical decision points reached in one of the Company’s
significant joint venture arrangements with Regis Resources Limited. Multiple options have emerged should Regis decide not
to proceed with the JV. The nature of the arrangements with Regis will see the tenure revert 100% to Duketon, thereby
fulfilling a key commercial philosophy, avoid fragmented ownership and to retain control and a strong commercial negotiating
position. With the significant interest, from quality and proven operators, that has emerged over the first half of 2017, the
outlook is exciting and I look forward to bringing you updates as they occur.
As mentioned above, your company retains a strong balance sheet underpinned by its enviable cash position. These cash
resources have been, and will continue to be, husbanded very closely. A careful assessment of the exploration risk reward
metric is balanced with the Directors very firm parameters on negotiations with third parties. Your directors hold the very clear
recognition that patience, retaining a strong balance sheet and the integrity of its tenement ownership position is the best
foundation to deliver a solid return for all shareholders.
I hope you will be able to join me at this year’s AGM to thank the management, staff and all consultants for their diligent effort
over the past year.
I look forward to an exciting year ahead for your Company.
Yours sincerely
Seamus Cornelius
Chairman
4
Review of Operations
1.
Review of Operations
1.1
Strategy and Objectives
The Company’s primary objective continues to be achieving returns for shareholders through focused proactive exploration in
the Duketon Belt (see figure 1) whilst maintaining a watch over potential acquisitions outside of this area.
We have 4 pillars of growth within our strategy:
1. Discovering new gold deposits on 100% owned Duketon tenure;
2. Joint venturing specific tenements for gold;
3. Expanding our known nickel deposits through adding extensions to Rosie, C2 and Nariz; and
4. Discovering new nickel deposits around the Bulge area and other new belts.
We are uniquely de-risked technically with respect to both gold and nickel.
The Company’s tenements are intercalated with Regis Resources Limited’s (ASX: RRL) tenements which host up to 8Moz of
gold (see figure 2). The Company believes that there is considerable upside in the Duketon tenements and continues to review
the tenements to further understand the geological potential and mineralising controls to unlock additional value from within
the Company’s current asset base.
Drilling on 100% owned tenure during the year focused primarily on gold and mainly at Lancefield North and Davies Bore
project locations. Numerous other early stage projects also attracted significant attantion. Drilling also focused on numerous
projects within the tenements subject to joint venture with Regis Resources.
Economic nickel sulphides have already been found in the area at Rosie and C2, and the Nariz discovery shows the further
upside potential of the tenement package that the Company controls. The total Mineral Resource for the Duketon project,
comprising C2 and the Rosie deposit (see below), is now 71,000t of nickel plus associated copper, platinum and
palladium.
5
Review of Operations (Cont’d)
Figure 1: Location of the Duketon Project
6
Review of Operations (Cont’d)
Figure 2: DKM Tenements showing location of Gold Prospects
7
Review of Operations (Cont’d)
1.2
Exploration
1.2.1 Lancefield North
The Lancefield North Prospect is located approximately 12km north of Laverton and approximately 5km north of the historical
Lancefield Gold Mine (approx. 2Moz pre-mined). A significant area of mineralisation has been identified using both recent and
historical drilling.
Assay results from RC and Diamond drilling include 16m @ 12.0 g/t Au including 8m @ 23.8 g/t Au, 14m @ 4.0 g/t Au including
8m @ 6.9 g/t Au, 23m @ 1.6 g/t Au including 9m @ 2.5 g/t Au, 10m @ 1.3 g/t Au including 2m @ 5.7 g/t Au, 4m @ 2.6 g/t Au
including 2m @ 4.9 g/t Au, 4m @ 2.8 g/t Au, 3m @ 2.1 g/t Au, including 2m @ 3.1 g/t Au, 4m @ 2.6 g/t Au 11m @ 1.8 g/t Au
including 4m @ 4.4 g/t Au and 6m @ 1.6 g/t Au (see ASX announcements1, 8 February and 15 June 2017). Some of the
intersections begin within 37m from surface.
Gold mineralisation is associated with a series of stacked shears within a package of meta-basalts with minor sediment layers.
Quartz-carbonate-sulphide veining and intense alteration is associated with these shear zones.
Figure 3: Plan of Lancefield North Prospect
8
Review of Operations (Cont’d)
Figure 4: Lancefield North Cross Section 6846350mN
1.2.2 Davies Bore
Figure 5: Lancefield North Cross Section 6846400mN
The Davies Bore Prospect is located 5km west of Regis Resources Ltd owned Rosemont Mine and approximately 5km north
west of King John Resource (RRL).
9
Review of Operations (Cont’d)
Figure 6: Davies Bore Prospect showing Max Au in aircore holes over magnetics
A significant zone of mineralisation has been identified at Davies Bore and extends over 1.2km long and identified across
multiple drilllines (aircore and RC) spaced between 100m and 200m apart. Assay results from RC drilling during the year
include 28m @ 1.0 g/t Au, including 9m @ 1.3 g/t Au, 8m @ 1.6 g/t Au, 16m @ 1.1 g/t Au, including 4m @ 1.4 g/t Au, 4m @
2.2 g/t Au, 6m @ 1.1 g/t Au, including 2m @ 3.0 g/t Au (see ASX announcement 19 July 2017). Some of the thicker
intersections begin within 36m from surface.
Gold mineralisation is hosted within a package of sheared and altered felsic to mafic meta-volcanics and meta-sediments with
intense alteration, sulphides and quartz veining.
10
Review of Operations (Cont’d)
1.2.3 Henrys Bore
Assay results from aircore drill holes during the year include 8m @ 2.3 g/t Au including 4m @ 4.0 g/t Au, 16m @ 1.2 g/t Au
including 4m @ 4.0 g/t Au, 8m @ 1.0 g/t Au including 4m @ 1.3 g/t Au and 4m @ 1.4 g/t Au (see ASX announcement 19 July
2017). Mineralisation in the recent drilling commences at approximately 47m below the surface. These results extend the
anomalism at Henrys Bore 300m further to the north.
Henrys Bore is hosted within a package of sheared and altered felsic to mafic meta-volcanics and meta-sediments.
The Henry’s Bore Prospect is located 8km west northwest of RRL owned Rosemont Mine and approximately 3km north west
of DKMs Davies Bore prospect (Figure 2).
Figure 7: Henrys Bore Prospect showing Max Au in aircore holes over magnetics
11
Review of Operations (Cont’d)
1.2.4 Gold JV (RRL earning 75%)
A formal joint venture between the Company and Regis Resources Limited has been formed to explore for gold over 4 of
Duketon Mining’s tenements as announced to the ASX on 14 July 2015.
The joint venture tenure covers approximately 373 square kilometres and hosts a number of shear zones prospective for gold
(see Figure 2). These include the northern strike continuation of the shear zone hosting Regis’ Petra gold deposit and part of
the shear zone extending north of the Garden Well gold deposit.
The Joint venture is structured as follows:
• RRL can earn a 75% interest on specific project areas upon achieving the following:
➢ An up-front initial payment of $100,000;
➢ $1 million minimum expenditure (within the 2 year term);
➢ Tenements to be kept in good standing at Regis’ expense; and
➢ Confirming to Duketon a decision to mine;
• On decision to mine, Duketon may contribute (in respect of its 25% interest) to the mining project, sell its 25% interest for
$850,000 or convert its 25% interest to a 2% net smelter royalty on all gold produced from the mining project; and
• RRL to fund 100% of the initial $4 million of capital on each project where Duketon elects to contribute.
All non-gold mineral rights remain with Duketon. If Regis does not confirm a decision to mine within 2 years, gold rights revert
back to Duketon.
DKM believes that this joint venture is a sensible collaboration in the Duketon district given the proximity of these areas to
Regis’ Moolart Well gold processing plant and the higher prospectivity of this part of Duketon’s extensive tenure holdings for
gold rather than nickel. This allows Duketon to continue its focus on its core nickel and gold exploration efforts over 100%
owned tenements whilst Regis explores the joint venture area for gold.
Commonwealth
The Commonwealth project is located immediately 7 kilometres north of the Petra North Prospect. Lag sampling defined a 3
kilometre long (north-south) x 1.5 kilometre wide, +75ppb gold anomaly with peak values of +1ppm Au.
A wide spaced (circa 400m by 160m) first pass air core drill programme was designed to test the anomaly. 101 AC holes have
been completed for 9,674 metres. Gold results received from this drilling programme to date included 4m @ 4.07g/t Au, 4m
@ 2.08g/t Au, 8m @ 1.12g/t Au and 4m @ 2.65g/t Au (see ASX announcement 14 October 2016).
A follow up RC drill programme of 3 holes for 708m was completed. Results included 3m @ 1.03g/t Au, 1m @ 2.66g/t Au, 1m
@ 2.40g/t Au, 1m @ 1.74g/t Au, 1m @ 1.54g/t Au, 1m @ 1.31g/t Au and 1m @ 1.06g/t Au (see ASX announcement 23
January 2017).
Petra North
Gold results received from this drilling programme included 3m @ 6.12g/t Au, 3m @ 11.72g/t Au and 2m @ 11.03g/t.
Mineralisation extends north from the tenement boundary across all 6 lines over a strike distance of approximately 750m.
Better intersections from the recent holes include; 3m @ 8.77 g/t Au from 21m, 2m @ 7.00 g/t Au from 30m, 4m @ 6.00 g/t
Au from 56m, 4m @ 2.66 g/t Au from 40m, 4m @ 2.49 g/t Au from 46m, 1m @ 8.56 g/t Au from 54m, 1m @ 8.08 g/t Au from
69m, 1m @ 4.48 g/t Au from 44m. The shallowest intersection is less than 20 vertical meters below surface. The mineralisation
remains open at depth and to the north (refer ASX announcement 12 July 2016).
The Petra North Prospect is located northwest of Regis Resources Ltd owned Petra Resource and approximately 12km south
west of Regis Resources Moolart Well Mine.
Bella Well
The Bella Well project is located 3km to the South East from Regis’ 100% owned Gloster Gold Mine. Lag sampling has defined
a 1km long north-west trending gold anomaly. Mineralisation at Bella Well appears to consist of supergene enriched gold,
interpreted to be the result of complex weathering fronts around the hypogene ore.
A first pass air core drill programme was designed to test the lag anomaly. One hole returned 8m @ 4.21g/t Au including 4m
@ 7.75g/t Au (see ASX announcement 23 January 2017).
Bandya
The Bandya project is located 5km to the South West from Regis’ 100% owned Petra Gold Project. The target is a NNW
trending epidote altered dolerite – felsic volcanic contact over 1 kilometre of strike where historical gold workings occur.
12
Review of Operations (Cont’d)
A first pass RC drill programme was designed to test the anomaly. One hole returned 8m @ 1.35g/t including 4m @ 2.20g/t
Au from 80m (see ASX announcement 23 January 2017).
Mourillian
The Mourillian project is located 4km to the East from Regis’ 100% owned Gloster Gold Mine. Lag sampling defined a 1km
long north-west trending lag gold anomaly with peak values of +1g/t Au between historical workings.
A first pass AC drill programme was designed to test the anomaly. One hole returned 8m @ 1.28g/t Au including 4m @ 2.10g/t
(see ASX announcement 23 January 2017).
1.2.5 Rosie (DKM 100%)
The Rosie deposit is situated approximately 110km north of Laverton, Western Australia. The project can be accessed via
sealed and formed gravel roads from either Leonora or Laverton.
Mineralisation at Rosie consists of disseminated, matrix, stringer and brecciated massive Ni-Cu-PGE sulphides at, or adjacent
to the contact of the Bulge ultramafic complex interpreted to be a classic komatiitic lava channel style nickel sulphide
mineralisation.
There was no drilling completed at Rosie during the year.
Figure 8: Location Plan of C2, Rosie, Nariz and Thompsons Bore
13
Review of Operations (Cont’d)
Rosie Nickel Resource >1.0%Ni
Classification
Oxidation
Inferred
Indicated
Fresh
Transitional
Sub-Total
Fresh
Transitional
Sub-Total
Total (as at 30 June 2016)
Total (as at 30 June 2015)
Tonnes
1,380,000
30,000
1,410,000
520,000
10,000
530,000
1,940,000
1,940,000
Ni (%)
1.7
1.2
1.7
1.6
1.3
1.6
1.7
1.7
Ni (t)
23,700
400
24,100
8,400
200
8,600
32,700
32,700
Table 1: Rosie Nickel Resource > 1.0% Ni
Rosie Nickel Resource >1.0%Ni
Oxidation
Tonnes
Ni%
Classificati
on
Indicated
Inferred
Fresh
Transitional
1,380,000
30,000
Sub-Total
1,410,000
Fresh
Transitional
Sub-Total
520,00
10,000
530,000
Ni
tonnes
23,700
400
24,100
8,400
200
8,600
32,700
1.7
1.2
1.7
1.6
1.3
1.6
1.7
Cu%
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
Pt
(g/t)
0.8
0.7
0.8
0.9
0.7
0.9
0.8
0.8
Pd
(g/t)
1.0
0.9
Pt+Pd
(g/t)
1.8
1.6
1.0
1.3
1.1
1.3
1.1
1.1
1.8
2.2
1.8
2.2
1.9
1.9
Total (as at 30 June 2016)
1,940,000
Total (as at 30 June 2015)
1,940,000
1.7
32,700
Table 2: Rosie Nickel Resource > 1.0% Ni with Auxiliary Attributes
Figure 9: Long section of Rosie looking toward the east showing significant intercepts and relevant DHEM plates
14
Review of Operations (Cont’d)
1.2.6 C2 (DKM 100%)
The C2 deposit is situated approximately 2km to the north of Rosie and is a komatiite-hosted nickel sulphide deposit. The
mineralisation is characterised by accumulations of massive, matrix, breccia and disseminated nickel, copper magmatic
sulphides and platinum group elements at the basal contact of a komatiite ultramafic rock, overlying a mafic pillow basalt
footwall with some fine-grained siltstone sediments which may also contain sulphides.
During 2015 DKM published the initial mineral resource estimate for the C2 resource. This Inferred Mineral Resource estimate
at C2 is 5.7 million tonnes averaging 0.7% nickel, 0.04% copper and 0.14g/t platinum and palladium for a contained 38,000
tonnes of nickel and associated copper, platinum and palladium (see Table 3 and 4). This represents the in-situ undiluted
Mineral Resource at 0.5% nickel cut-off (see Table 5 and Figure 7). Nickel mineralisation is robust and continuous.
The total Mineral Resource for the Duketon project, comprising C2 and the Rosie deposit (see ASX Announcements 1 & 12
August 2014), is now 71,000t of nickel and associated copper, platinum and palladium.
There was no drilling during the 2017 year at C2.
C2 Nickel Resource >0.5%Ni
Classification
Oxidation
Inferred
Fresh
Transitional
Total (as at 30 June 2016)
Total (as at 30 June 2015)
Tonnes
5,100,000
600,000
5,700,000
5,700,000
Ni (%)
0.7
0.6
0.7
0.7
Ni (t)
34,200
3,800
38,000
38,000
Table 3: C2 Nickel Resource > 0.5% Ni
C2 Nickel Resource >0.5%Ni (as at 30 June 2015)
Classification
Oxidation
Tonnes
Ni (%)
Cu (%)
Pt (ppb)
Pd (ppb)
S (%)
Inferred
Fresh
5,100,000
Transitional
600,000
Total (as at 30 June 2016)
5,700,000
Total (as at 30 June 2015)
5,700,000
0.7
0.6
0.7
0.7
0.04
0.04
0.04
0.04
60
72
61
61
79
105
82
82
3.3
0.9
3.1
3.1
Table 4: C2 Resource > 0.5% Ni with Auxiliary Attributes
Cut-Off (Ni %)
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
Tonnes
18,775,665
10,776,805
5,721,787
3,008,201
2,019,653
1,018,985
641,066
148,053
62,461
Grade (Ni %)
0.5
0.6
0.7
0.8
0.8
0.9
1.0
1.1
1.1
Table 5: C2 Deposit Grade Tonnage Table for different Ni cut-offs
Ni (t)
88,902
60,356
37,967
23,249
16,940
9,503
6,265
1,577
694
15
Review of Operations (Cont’d)
Figure 10: C2 Cross Section
C2 - Grade Tonnage Curve for Fresh and Transitional Material
Tonnes
Grade
20000000
18000000
16000000
14000000
12000000
s
e
n
10000000
n
o
T
8000000
6000000
4000000
2000000
0
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
Cut off
Figure 11: Grade Tonnage Curve at Ni cut-offs
16
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
f
f
o
-
t
u
c
e
v
o
b
a
e
d
a
r
G
Review of Operations (Cont’d)
1.2.7 Nariz (DKM 100%)
Nariz is situated approximately 500m to the south east of Rosie and is a komatiite-hosted nickel sulphide deposit. The
mineralisation is characterised by accumulations of massive, matrix, breccia and blebby to disseminated nickel, copper
magmatic sulphides and platinum group elements. These are predominantly located at the basal contact of a komatiite
ultramafic rock, overlying a mafic pillow basalt footwall with some fine-grained siltstone sediments which can also contain
sulphides.
The Nariz prospect was last drilled during 2015 and is highlighted by the discovery hole DKMDD005. That returned grades of
7.09% nickel, 0.50% copper and 3.76g/t combined platinum and palladium over 5.65m from 438.41 metres, within a broader
zone of massive and stringer mineralisation of 9.22m @ 4.96% nickel, 0.41% copper and 2.41g/t combined platinum and
palladium (see Figure 12 and ASX announcement 2 December 2014).
Figure 12: Photo of massive sulphide zone from hole DKMDD005
17
Review of Operations (Cont’d)
1.2.8 Regional Exploration (DKM 100%)
Figure 13: Longsection of Nariz
Regional exploration has been ongoing throughout the year. Multiple new targets in both nickel and gold have been generated
creating a significant and robust pipeline of organic opportunities.
2.
Corporate
2.1 Montezuma Mining Company Limited
The Company has held an equity position in Montezuma Mining Company Limited as part of the original assets in the IPO.
This holding has not changed during the year.
For further details, please refer to the Montezuma Mining Company Limited website at www.montezumamining.com.au.
2.2
Buxton Resources Limited
The Company has held an equity position in Buxton Resources Limited as part of the original assets in the IPO. This holding
has not changed during the year.
For further details, please refer to the Buxton Resources Limited website at www.buxtonresources.com.au.
2.3 Other Equities
The Company continues to hold some minor equity positions in a number of other listed and unlisted companies that were all
part of the assets in the original IPO. None of these holdings have changed during the year.
For further details, please refer to the Company website.
18
Review of Operations (Cont’d)
Appendix 1 – Summary of JORC Resources
Table 1: Total Mineral Resources as at 30 June 2017
Table 2: Total Mineral Resources as at 30 June 2016
Mineral Resources
Attached as Appendix 1 are two tables comparing the Company’s Mineral Resources as at 30 June 2017 (Table 1) against
those at 30 June 2016 (Table 2). No ore reserves have been estimated.
Review of material changes
During the year, there have been no changes to the Company’s Mineral Resources. The Company confirms that it is not
aware of any new information or data that materially affects the information included in the original announcements and that
all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially
changed.
Governance controls
All Mineral Resource estimates are prepared by qualified professionals following JORC Code compliant procedures and follow
standard industry methodology for drilling, sampling, assaying, geological interpretation, 3-dimensional modelling and grade
interpolation techniques.
The Mineral Resource estimates have been calculated by a suitably qualified consultant and overseen by suitably qualified
Duketon Mining Limited employee and/or consultant.
Competent Persons Statements
The information in this report that relates to exploration results is based on information compiled by Mr Stuart Fogarty, Member of the
Australian Institute of Mining and Metallurgy (“AUSIMM”) and an employee of Duketon Mining Limited. Mr Fogarty has sufficient experience
which is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being undertaken to qualify
as a competent person as defined in the JORC Code 2012. Mr Fogarty consents to the inclusion in the report of the matters based on the
information in the form and context in which it appears.
The information in the announcement that relates to Mineral Resources for Rosie is extracted from the report entitled “Duketon Mining
Prospectus” dated 19 June 2014 and is available to view on the Company’s website (www.duketonmining.com.au). The information in the
announcement that relates to Mineral Resources for C2 is extracted from ASX announcement 29 January 2015. The company confirms that
it is not aware of any new information or data that materially affects the information included in the original market announcements and that
all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and
have not materially changed. The company confirms that the form and context in which the Competent Person’s findings are presented have
not been materially modified from the original market announcement.
19
Tonnes ('000)Ni (%)Ni TonnesTonnes ('000)Ni (%)Ni TonnesTonnes ('000)Ni (%)Ni TonnesTonnes ('000)Ni (%)Ni TonnesRosie1,4101.724,1005301.68,6001,9401.732,700C25,7000.738,0005,7000.738,000TOTAL1,4101.724,1006,2301.346,6007,6401.0870,700ProjectMeasuredIndicatedInferredTotalTonnes ('000)Ni (%)Ni TonnesTonnes ('000)Ni (%)Ni TonnesTonnes ('000)Ni (%)Ni TonnesTonnes ('000)Ni (%)Ni TonnesRosie1,4101.724,1005301.68,6001,9401.732,700C25,7000.738,0005,7000.738,000TOTAL1,4101.724,1006,2301.346,6007,6401.0870,700ProjectMeasuredIndicatedInferredTotal
Directors’ Report
The directors present their report together with the financial report of Duketon Mining Limited (“Duketon” or “the Company”)
for the year ended 30 June 2017.
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the date of this report are as
follows. Where applicable, all current and former directorships held in listed public companies over the last three years have
been detailed below. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Seamus Cornelius
Non-Executive Chairman, LLB, LLM (Age 51)
Mr Cornelius is a corporate lawyer and former partner of one of Australia’s leading international law firms. He specialised in
cross-border transactions, particularly in the resources sector.
Mr Cornelius has been based in Shanghai and Beijing since 1993 and brings more than 20 years of corporate experience in
legal and commercial negotiations. He has also advised global companies on their investments in China and in recent years
advised Chinese State-owned entities on their investments in overseas resource projects.
Mr Cornelius is currently the Chairman of Buxton Resources Ltd since 29 November 2010, Montezuma Mining Company Ltd
since 30 June 2011 and Danakali Ltd since 15 July 2014.
Stuart Fogarty
Managing Director B.Sc (Geology) (Hons) (Age 45)
Mr Fogarty has over 20 years of exploration experience with BHP Billiton and Western Mining Corporation. Until recently, he
was BHP’s Senior Exploration Manager for North and South America. Mr Fogarty has a very strong background in nickel and
gold exploration, having commenced his career at Kambalda Nickel Operations in 1994. He has held senior roles with BHP
including Senior Geoscientist for nickel exploration in the Leinster and Mt Keith region, Project Manager WA Nickel Brownfields
and Regional Manager Australia – Asia where he was responsible for a $100 million per annum exploration budget.
Mr Fogarty is currently a non-executive director of Buxton Resources Ltd since 15 March 2017, and also a former non-
executive director for the period 11 July 2013 to 30 June 2015. Mr Fogarty is a former non-executive director of Windward
Resources Ltd, resigning 30 November 2016.
Heath Hellewell
B.Sc (Hons), MAIG (Age 47)
Mr Hellewell is an exploration geologist with over 20 years of experience in gold, base metals and diamond exploration
predominantly in Australia and West Africa. Most recently, Mr Hellewell was the co-founding Executive Director of Doray
Minerals Ltd (Doray), where he was responsible for the company’s exploration and new business activities. Following the
discovery of its Andy Well gold deposits in 2010, Doray was named “Gold Explorer of the Year” in 2011 by The Gold Mining
Journal. In 2014 Mr Hellewell was the co-winner of the prestigious “Prospector of the Year” award, presented by the
Association of Mining and Exploration Companies.
Mr Hellewell was also part of the Independence Group NL team that identified and acquired the Tropicana project area,
eventually leading to the discovery of the Tropicana and Havana gold deposits.
Mr Hellewell is currently an independent Non-Executive Director of Core Exploration Ltd since 15 September 2014 and
Capricorn Metals Ltd since 3 February 2016.
COMPANY SECRETARY
Dennis Wilkins
B.Bus, MAICD, ACIS (Age 54)
Mr Wilkins is the founder and principal of DWCorporate Pty Ltd a leading privately held corporate advisory firm servicing the
natural resources industry. Since 1994 he has been a director of, and involved in the executive management of, several
publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. From 1995 to 2001 he was the
Finance Director of Lynas Corporation Ltd during the period when the Mt Weld Rare Earths project was acquired by the group.
He was also founding director and advisor to Atlas Iron Ltd at the time of Atlas’ initial public offering in 2006.
20
Directors’ Report (Cont’d)
Since July 2001 Mr Wilkins has been running DWCorporate Pty Ltd where he advises on the formation of, and capital raising
for, emerging companies in the Australian resources sector. Mr Wilkins is currently a non-executive director of Key Petroleum
Ltd since 5 July 2006, and an alternate director of Middle Island Resources Ltd since 1 May 2010. Within the last three years,
Mr Wilkins has been a former director of ASX listed companies Duketon Mining Limited (resigned 18 November 2014), A1
Consolidated Gold Ltd (resigned 11 May 2015) and Shaw River Manganese Ltd (resigned 18 December 2015).
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of Duketon Mining Limited were:
Seamus Cornelius
Stuart Fogarty
Heath Hellewell
Ordinary
Shares
3,617,850
460,000
100,000
Options over
Ordinary
Shares
3,750,000
8,050,000
1,500,000
PRINCIPAL ACTIVITIES
The principal activities of the Company during the year consisted of exploration and evaluation of mineral resources. There
was no significant change in the nature of the Company’s activities during the year.
DIVIDENDS
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
FINANCE REVIEW
The Company began the year with cash reserves of $3,694,142 and listed equity investments with a market value of
$1,329,445. During the year the Company completed a placement of 20,631,200 ordinary shares to raise gross funds of
$4,848,332. Funds were used for exploration activities on the gold and nickel targets within the Duketon Project and working
capital purposes.
The Company recorded a net loss after tax of $4,470,221 (2016: $1,614,947) for the financial year ended 30 June 2017 and
included in the loss for the year was exploration expenditure of $3,648,685 (2016: $1,235,088). In line with the Company’s
accounting policies, all exploration expenditure is expensed as it is incurred. The Company had total cash on hand at the end
of the year of $4,244,963, and listed equity investments with a market value of $956,246.
Operating Results for the Year
Summarised operating results are as follows:
Revenues and loss from ordinary activities before income tax expense
Shareholder Returns
Basic loss per share (cents)
2017
Revenues
$
Results
$
114,094
(4,470,221)
2017
(4.5)
2016
(2.0)
Risk Management
The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are
aligned with the risks and opportunities identified by the board.
The Company believes that it is crucial for all board members to be a part of this process, and as such the board has not
established a separate risk management committee.
The board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the
risks identified by the board. These include the following:
• Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders’ needs and
manage business risk.
Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets.
•
21
Directors’ Report (Cont’d)
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as disclosed in this Report, no significant changes in the state of affairs of the Company occurred during the
financial year.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
No matters or circumstances, besides those disclosed at note 19, have arisen since the end of the year which significantly
affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the
Company in future financial periods.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Details of important developments occurring in this financial year have been covered in the Review of Operations section of
the Directors’ Report. The Company will continue activities in the exploration, evaluation and development of the Duketon
Project and mineral tenements with the objective of developing a significant mining operation and any significant information
or data will be released to the market and the shareholders pursuant to the Continuous Disclosure rules as and when they
come to hand.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Company is subject to significant environmental regulation in respect to its exploration activities. The Company aims to
ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance
with all environmental legislation. The directors of the Company are not aware of any breach of environmental legislation for
the year under review.
REMUNERATION REPORT
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act
2001.
Principles used to determine the nature and amount of remuneration
Remuneration Policy
The remuneration policy of Duketon Mining Limited has been designed to align key management personnel objectives with
shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives
based on key performance areas affecting the Company’s financial results. The board of Duketon Mining Limited believes the
remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to
run and manage the Company.
The board’s policy for determining the nature and amount of remuneration for board members and senior executives (if any)
of the Company is as follows:
The remuneration policy, setting the terms and conditions for the executive directors, was developed by the board. All
executives receive a base salary (which is based on factors such as length of service, performance and experience) and
superannuation. The board reviews executive packages annually by reference to the Company’s performance, executive
performance and comparable information from industry sectors and other listed companies in similar industries.
The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract
and retain the highest calibre of executives and reward them for performance that results in long-term growth in shareholder
wealth.
The directors and executives (if any) receive a superannuation guarantee contribution required by the government, which was
9.5% for the 2017 financial year. Some individuals may choose to sacrifice part of their salary to increase payments towards
superannuation.
All remuneration paid to key management personnel is valued at the cost to the company and expensed. Options are valued
using the Black-Scholes methodology.
The board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment
and responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually,
based on market practice, duties and accountability. Independent external advice is sought when required. The maximum
aggregate amount of fees that can be paid to non-executive directors is (currently $300,000) and set in accordance with the
constitution of the Company. Fees for non-executive directors are not linked to the performance of the Company. However, to
align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company.
Performance based remuneration
The Company currently has no performance based remuneration component built into key management personnel
remuneration packages.
22
Directors’ Report (Cont’d)
Company performance, shareholder wealth and key management personnel remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment
objectives and key management personnel performance. Currently, this is facilitated through the issue of options to the majority
of key management personnel to encourage the alignment of personal and shareholder interests. The Company believes this
policy will be effective in increasing shareholder wealth. At commencement of mine production, performance based bonuses
based on key performance indicators are expected to be introduced. For details of key management personnel interests in
options at year end, refer to the ‘Option holdings’ section later in the Remuneration Report.
Use of remuneration consultants
The Company did not employ the services of any remuneration consultants during the financial year ended 30 June 2017.
Voting and comments made at the Company’s 2016 Annual General Meeting
The Company received approximately 99.7% of “yes” votes on its remuneration report for the 2016 financial year. The
Company did not receive any specific feedback at the Annual General Meeting or throughout the year on its remuneration
practices.
Details of remuneration
Details of the remuneration of the key management personnel of the Company are set out in the following table.
The key management personnel of the Company include the directors as per page 20 above.
Key management personnel of the Company
Short-Term
Salary
& Fees
$
Non-
Monetary
$
Post Employment
Super-
annuation
$
Retirement
benefits
$
Share-based
Payments
Total
Options
$
$
Directors
Seamus Cornelius
2017
2016
Stuart Fogarty
2017
2016
Heath Hellewell
2017
2016
50,000
50,000
235,000
235,000
30,000
36,880(1)
Total key management personnel compensation
2017
2016
315,000
321,880
-
-
-
-
-
-
-
-
-
-
22,325
22,325
-
-
22,325
22,325
-
-
-
-
-
-
-
-
37,950
13,200
50,600
26,400
25,300
13,200
87,950
63,200
307,925
283,725
55,300
50,080
113,850
52,800
451,175
397,005
(1)
Included within Mr Hellewell’s salary and fees for the 2016 financial year is an amount of $6,880 for consulting
geological services provided by Mr Hellewell to the Company. The amounts paid were at usual commercial rates with
fees charged on an hourly basis.
Service agreements
Stuart Fogarty, Managing Director:
• Annual salary of $257,325 (including statutory superannuation).
• The Company or the Executive may terminate, without cause, the Executive’s employment at any time by giving three
•
calendar months’ written notice.
In the event the Managing Director is terminated as result of one of the following circumstances the Company will make a
twelve calendar months Redundancy Payment to the Executive at the base salary:
o
o
o
the Executive’s position is made redundant by the Board;
there is a material diminution in the responsibilities or powers assigned to the Executive by the Board; or
there is a material reduction in the remuneration payable to the Executive as determined by the Board.
23
Directors’ Report (Cont’d)
Share-based compensation
Options are issued at no cost to key management personnel as part of their remuneration. The options are not issued based
on performance criteria, but are issued to the key management personnel of Duketon Mining Limited to increase goal
congruence between key management personnel and shareholders. The following options over ordinary shares of the
Company were granted to or vesting with key management personnel during the year:
Grant
Date
Granted
Number
Vesting
Date
Expiry
Date
Value per
Option at
Grant
Date
(cents)
Exercise
Price
(cents)
Exercised
Number
% of
Remuner-
ation
Directors
Seamus Cornelius 01/12/2016 750,000
Stuart Fogarty
Heath Hellewell
01/12/2016 24/11/2021
01/12/2016 1,000,000 01/12/2016 24/11/2021
01/12/2016 24/11/2021
01/12/2016 500,000
30.0
30.0
30.0
5.1
5.1
5.1
-
-
-
43.1
16.4
45.8
In respect of share options granted, the (theoretical) fair value is recognised over the vesting period as an employee benefit
expense with a corresponding increase in equity. The theoretical fair value of the options is calculated at the date of grant
taking into account the terms and conditions upon which the options were granted, the effects of non-transferability, exercise
restrictions and behavioural considerations. Upon the exercise of options, the balance of the share-based payments reserve
relating to those options is transferred to share capital.
The Directors do not consider the resultant value as determined by the Black-Scholes Option Pricing Model is in anyway
representative of the market value of the share options issued, however, in the absence of reliable measure of the goods or
services received, AASB 2: Share-based Payment prescribes the measurement of the fair value of the equity instruments
granted. The Black-Scholes European Option Pricing Model is an industry accepted method of valuing equity instruments, at
the date of grant.
Equity instruments held by key management personnel
Share holdings
The numbers of shares in the Company held during the financial year by each director of Duketon Mining Limited and other
key management personnel of the Company, including their personally related parties, are set out below. There were no
shares granted during the reporting period as compensation.
2017
Received
during the
year on the
exercise of
options
Balance at
start of the
year
Other
changes
during the
year
Balance at
end of the
year
Directors of Duketon Mining Limited
Ordinary shares
Seamus Cornelius
Stuart Fogarty
Heath Hellewell
3,557,850
400,000
100,000
-
-
-
60,000
60,000
-
3,617,850
460,000
100,000
Option holdings
The numbers of options over ordinary shares in the Company held during the financial year by each director of Duketon Mining
Limited and other key management personnel of the Company, including their personally related parties, are set out below:
2017
Balance at
start of the
year
Granted as
compen-
sation
Other
changes
Balance at
end of the
year
Vested and
exercisable Unvested
Directors of Duketon Mining Limited
Seamus Cornelius
Stuart Fogarty
Heath Hellewell
3,000,000
7,050,000
1,000,000
750,000
1,000,000
500,000
-
-
-
3,750,000
8,050,000
1,500,000
3,750,000
8,050,000
1,500,000
-
-
-
Exercised
-
-
-
24
Directors’ Report (Cont’d)
Loans to key management personnel
There were no loans to key management personnel during the year.
End of audited Remuneration Report
DIRECTORS’ MEETINGS
The number of meetings of the Company’s Board of Directors held during the year ended 30 June 2017 and the number of
meetings attended by each Director were:
Directors Meetings
Audit Committee
Meetings
Total
Available
Attended
Total
Available
Attended
Remuneration
Committee Meetings
Attended
Total
Available
Seamus Cornelius
Stuart Fogarty
Heath Hellewell
3
3
3
3
3
3
1
1
1
1
1
1
-
-
-
-
-
-
SHARES UNDER OPTION
Unissued ordinary shares of Duketon Mining Limited under option at the date of this report are as follows:
Date options issued
Expiry date
Exercise price (cents)
Number of options
14 May 2013
1 August 2013
17 March 2014
17 March 2014
17 March 2014
17 March 2014
4 August 2014
18 November 2014
17 February 2015
15 December 2015
1 December 2016
31 January 2017
14 May 2019
1 August 2019
31 March 2019
31 March 2019
31 March 2019
31 March 2019
4 August 2017
18 November 2019
31 January 2018
30 November 2020
24 November 2021
31 January 2022
Total number of options outstanding at the date of this report
35.0
20.0
20.0
25.0
30.0
35.0
35.0
20.2
30.0
20.0
30.0
25.0
8,250,000
15,000,000
3,000,000
1,500,000
1,000,000
1,550,000
3,000,000
2,250,000
300,000
2,800,000
2,500,000
250,000
41,400,000
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility
on behalf of the company for all or any part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of
the Corporations Act 2001.
INSURANCE OF DIRECTORS AND OFFICERS
During the year, the Company has paid a premium in respect of Directors’ and Executive Officers’ insurance. The contract
contains a prohibition on disclosure of the amount of the premium and the nature of the liabilities under the policy. The liabilities
insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers
in their capacity as officers of the Company and any other payments arising from liabilities incurred by the officers in connection
with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the
officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone
else or to cause detriment to the Company.
25
Directors’ Report (Cont’d)
NON-AUDIT SERVICES
The following non-audit services were provided by the entity's auditor, Rothsay Chartered Accountants or associated entities.
The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the
auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the
following reasons:
All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and
objectivity of the auditor;
None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants.
Rothsay Chartered Accountants received or are due to receive the following amounts for the provision of non-audit services:
Tax compliance services
2017
$
800
2016
$
750
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 27.
Signed in accordance with a resolution of the directors.
Stuart Fogarty
Managing Director
Perth, 27 September 2017
26
Corporate Governance Statement
Duketon Mining Limited and the Board are committed to achieving and demonstrating the highest standards of corporate
governance. Duketon Mining Limited has reviewed its corporate governance practices against the Corporate Governance
Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council.
The 2017 Corporate Governance Statement was approved by the Board on 27 September 2017 and is current as at 27
September 2017. A description of the Group’s current corporate governance practices is set out in the Group’s Corporate
Governance Statement which can be viewed at www.duketonmining.com.au.
28
Statement of Profit or Loss and Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2017
Notes
Company
REVENUE
Interest
Other income
EXPENDITURE
Administration expenses
Depreciation expense
Employee benefits expenses
Exploration expenditure
Fair value loss on financial assets at fair value through the profit or loss
Share based payment expense
LOSS BEFORE INCOME TAX
INCOME TAX
2017
$
2016
$
4(a)
4(b)
114,094
-
127,428
100,000
(305,970)
(3,198)
(116,834)
(3,648,685)
(372,878)
(136,750)
(320,522)
(1,572)
(119,413)
(1,235,088)
(91,860)
(73,920)
(4,470,221)
(1,614,947)
-
-
22
6
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE
TO THE OWNERS OF DUKETON MINING LIMITED
(4,470,221)
(1,614,947)
Basic and diluted earnings per share (cents per share)
21
(4.5)
(2.0)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
29
Statement of Financial Position
AS AT 30 JUNE 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Notes
Company
2017
$
2016
$
7
8
9
10
11
4,244,963
120,721
956,246
5,321,930
3,694,142
57,346
1,329,445
5,080,933
60,104
60,104
1,302
1,302
5,382,034
5,082,235
277,098
277,098
203,260
203,260
277,098
203,260
5,104,936
4,878,975
12
13(a)
13(b)
18,877,067
1,287,835
(15,059,966)
5,104,936
14,317,635
1,151,085
(10,589,745)
4,878,975
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
30
Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2017
Notes
Contributed
Equity
$
Options
Reserve
$
Accumulated
Losses
$
Total
$
BALANCE AT 1 JULY 2015
Loss for the year
TOTAL COMPREHENSIVE LOSS
14,317,635
-
-
1,077,165
-
-
(8,974,798)
(1,614,947)
(1,614,947)
6,420,002
(1,614,947)
(1,614,947)
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Employee and consultant options
13(a)
-
73,920
-
73,920
BALANCE AT 30 JUNE 2016
Loss for the year
TOTAL COMPREHENSIVE LOSS
14,317,635
1,151,085
(10,589,745)
4,878,975
-
-
-
-
(4,470,221)
(4,470,221)
(4,470,221)
(4,470,221)
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the year
Share issue transaction costs
Employee and consultant options
12
12
13(a)
4,848,332
(288,900)
-
-
-
136,750
-
-
-
4,848,332
(288,900)
136,750
BALANCE AT 30 JUNE 2017
18,877,067
1,287,835
(15,059,966)
5,104,936
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
31
Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2017
Notes
Company
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers and employees
Expenditure on mining interests
Proceeds on sale of mining interests
Proceeds from disposal of financial assets at fair value through profit or
loss
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
20
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payments for share issue transaction costs
Payments for small parcel roundup
NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
CASH AND CASH EQUIVALENTS AT THE END OF THE
FINANCIAL YEAR
2017
$
2016
$
112,929
(420,275)
(3,638,354)
-
321
(3,945,379)
(62,000)
(62,000)
4,848,332
(288,900)
(1,232)
4,558,200
550,821
3,694,142
131,659
(428,018)
(1,466,124)
100,000
-
(1,662,483)
-
-
-
-
(2,894)
(2,894)
(1,665,377)
5,359,519
7
4,244,963
3,694,142
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
32
Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Company
consisting of Duketon Mining Limited. The financial statements are presented in the Australian currency. Duketon Mining
Limited is a company limited by shares, domiciled and incorporated in Australia. The financial statements were authorised for
issue by the directors on 27 September 2017. The directors have the power to amend and reissue the financial statements.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the
Corporations Act 2001.
(i) Compliance with IFRS
The financial statements of Duketon Mining Limited comply with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the Company
The Company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the AASB
that are relevant to its operations and effective for the current annual reporting period. The adoption of these Accounting
Standards and Interpretations did not have any significant impact on the financial performance or position of the Company
during the financial year.
(iii) Early adoption of standards
The Company has not elected to apply any pronouncements before their operative date in the annual reporting period
beginning 1 July 2016.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial
assets at fair value through profit or loss.
(b) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the full Board of Directors.
(c) Revenue recognition
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.
(d) Income tax
The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company’s subsidiaries and associated operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is
not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using
tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when
the related deferred income tax asset is realised or the deferred income tax liability is settled.
33
Notes to the Financial Statements (Cont’d)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle
the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly
in equity, respectively.
(e) Leases
Leases where a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are
classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are
charged to profit or loss on a straight-line basis over the period of the lease.
(f) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets
that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
(g) Cash and cash equivalents
For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call
with financial institutions, other short-term highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank
overdrafts.
(h) Trade and other receivables
Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for
doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.
(i) Investments and other financial assets
Classification
The Company classifies its investments in the following categories: financial assets at fair value through profit or loss, and
loans and receivables. The classification depends on the purpose for which the investments were acquired. Management
determines the classification of its investments at initial recognition.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless
they are designated as hedges. Assets in this category are classified as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date
which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the statement
of financial position.
34
Notes to the Financial Statements (Cont’d)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Company commits to
purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not
carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at
fair value and transaction costs are expensed to the statement of comprehensive income. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has
transferred substantially all the risks and rewards of ownership.
Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes
in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the statement of
comprehensive income within revenue from continuing operations or other expenses in the period in which they arise. Dividend
income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as
part of revenue from continuing operations when the Company’s right to receive payments is established.
Details on how the fair value of financial investments is determined are disclosed in note 2.
Impairment
The Company assesses at each balance date whether there is objective evidence that a financial asset is impaired.
If there is evidence of impairment for any of the Company’s financial assets carried at amortised cost, the loss is measured as
the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future
credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective interest rate.
The loss is recognised in the statement of comprehensive income.
(j) Plant and equipment
All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be
measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced.
All other repairs and maintenance are charged to the statement of comprehensive income during the reporting period in which
they are incurred.
Depreciation of plant and equipment is calculated using the straight-line method to allocate their cost or revalued amounts,
net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant
and equipment, the shorter lease term. The rate used was 33% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (note 1(f)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
statement of comprehensive income. When revalued assets are sold, it is Company’s policy to transfer the amounts included
in other reserves in respect of those assets to retained earnings.
(k) Exploration and evaluation costs
Exploration and evaluation costs are expensed as they are incurred.
(l) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which
are unpaid. The amounts are unsecured, non-interest bearing and are paid on normal commercial terms.
(m) Employee benefits
(i) Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12 months
of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are
measured at the amounts expected to be paid when the liabilities are settled.
35
Notes to the Financial Statements (Cont’d)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(ii) Share-based payments
The Company provides benefits to employees (including directors) of the Company in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’).
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which
they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award
(‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the
extent to which the vesting period has expired and (ii) the number of options that, in the opinion of the directors of the Company,
will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for
the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of
fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market
condition.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not
yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and
designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a
modification of the original award.
(n) Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or
options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.
(o) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(p) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(q) New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017 reporting
periods and have not been early adopted by the Company. The Company’s assessment of the impact of these new standards
and interpretations is set out below. New standards and interpretations not mentioned are considered unlikely to impact on
the financial reporting of the Company.
36
Notes to the Financial Statements (Cont’d)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
AASB 9 Financial Instruments (applicable for annual reporting periods commencing on or after 1 January 2018).
AASB 9 (December 2014) is a new Principal standard which replaces AASB 139. This new Principal version supersedes AASB
9 issued in December 2009 (as amended) and AASB 9 (issued in December 2010) and includes a model for classification and
measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge
accounting.
AASB 9 is effective for annual reporting periods beginning on or after 1 January 2018. However, the Standard is available for
early adoption. The own credit changes can be early applied in isolation without otherwise changing the accounting for financial
instruments.
The final version of AASB 9 introduces a new expected-loss impairment model that will require more timely recognition of
expected credit losses. Specifically, the new Standard requires entities to account for expected credit losses from when
financial instruments are first recognised and to recognise full lifetime expected losses on a timelier basis.
Amendments to AASB 9 (December 2009 & 2010 editions) (AASB 2013-9) issued in December 2013 included the new hedge
accounting requirements, including changes to hedge effectiveness testing, treatment of hedging costs, risk components that
can be hedged and disclosures.
AASB 9 includes requirements for a simpler approach for classification and measurement of financial assets compared with
the requirements of AASB 139.
The main changes are described below.
(a)
(b)
(c)
Financial assets that are debt instruments will be classified based on (1) the objective of the entity’s business model
for managing the financial assets; (2) the characteristics of the contractual cash flows.
Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments
that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a
return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the
instrument.
Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so
eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and losses on them, on different bases.
(d)
Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows:
•
•
The change attributable to changes in credit risk are presented in other comprehensive income (OCI)
The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that was caused by changes in the credit risk of liabilities elected to be
measured at fair value. This change in accounting means that gains caused by the deterioration of an entity’s own credit risk
on such liabilities are no longer recognised in profit or loss.
Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and
superseded by AASB 2010-7, AASB 2010-10 and AASB 2014-1 – Part E.
AASB 2014-7 incorporates the consequential amendments arising from the issuance of AASB 9 in December 2014.
AASB 2014-8 limits the application of the existing versions of AASB 9 (AASB 9 (December 2009) and AASB 9 (December
2010)) from 1 February 2015 and applies to annual reporting periods beginning on or after 1 January 2015.
Based on the financial assets and liabilities currently held, the Company does not anticipate any impact on the financial
statements upon adoption of this standard. The Company does not presently engage in hedge accounting.
AASB 15 Revenue from Contracts with Customers (applicable for annual reporting periods commencing on or after
1 January 2017).
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, which replaces IAS 11 Construction
Contracts, IAS 18 Revenue and related interpretations (IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for
the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC-31 Revenue-Barter Transactions
Involving Advertising Services). The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the
following steps:
37
Notes to the Financial Statements (Cont’d)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
a) Step 1: Identify the contract(s) with a customer
b) Step 2: Identify the performance obligations in the contract
c) Step 3: Determine the transaction price
d) Step 4: Allocate the transaction price to the performance obligations in the contract
e) Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Early application of this standard is permitted. AASB 2014-5 incorporates the consequential amendments to a number of
Australian Accounting Standards (including Interpretations) arising from the issuance of AASB 15.
There will be no impact on the Company’s financial position or performance.
AASB 16 Leases (applicable for annual reporting periods commencing on or after 1 January 2019).
The key features of AASB 16 are as follows:
Lessee accounting
•
•
•
Lessees are required 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 measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to other financial
liabilities.
Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement includes
non-cancellable lease payments (including inflation-linked payments), and also includes payments to be made in optional
periods if the lessee is reasonable certain to exercise an option to extend the lease, or not to exercise an option to
terminate the lease.
•
IFRS 16 contains disclosure requirements for lessees.
Lessor accounting
•
•
AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. 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 also requires enhanced disclosures to be provided by lessors that will improve information disclosed about a
lessor’s risk exposure, particularly to residual value risk.
The new standard will be effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted,
provided the new revenue standard, AASB 15 Revenue from Contracts with Customers, has been applied, or is applied at the
same date as AASB 16.
The effect of this amendment on the Company’s financial statements has yet to be determined.
(r) Critical accounting judgements, estimates and assumptions
The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements are:
Environmental Issues
Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental
legislation, and the directors understanding thereof. At the current stage of the Company’s development and its current
environmental impact the directors believe such treatment is reasonable and appropriate.
Taxation
Balances disclosed in the financial statements and the notes thereto related to taxation are based on the best estimates of the
directors. These estimates take into account both the financial performance and position of the Company as they pertain to
current income taxation legislation, and the directors understanding thereof. No adjustment has been made for pending or
future taxation legislation. The current income tax position represents that directors’ best estimate, pending an assessment by
the Australian Taxation Office.
38
Notes to the Financial Statements (Cont’d)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Share based payment transactions
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes
option pricing model.
2. FINANCIAL RISK MANAGEMENT
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price
risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Company.
Risk management is carried out by the full Board of Directors as the Company believes that it is crucial for all board members
to be involved in this process. Senior management, as required, has responsibility for identifying, assessing, treating and
monitoring risks and reporting to the board on risk management.
(a) Market risk
(i) Foreign exchange risk
As all operations are currently within Australia, the Company is not exposed to any material foreign exchange risk.
(ii) Price risk
The Company is exposed to equity securities price risk. This arises from investments held by the Company and classified in
the statement of financial position at fair value through the profit and loss. The Company is not exposed to commodity price
risk. At the reporting date, the Company has investments in ASX listed equity securities.
Sensitivity analysis
The Company’s equity investments are listed on the Australian Stock Exchange (ASX) and are all classified at fair value
through the profit or loss. At 30 June 2017, if the value of the equity investments held had increased/decreased by 15% with
all other variables held constant, post tax loss for the Company would have been $143,437 lower/higher (2016: $199,417
lower/higher) as a result of gains/losses on the fair value of the financial assets.
(iii) Interest rate risk
The Company is exposed to movements in market interest rates on cash and cash equivalents. The Company’s policy is to
monitor the interest rate yield curve out to six months to ensure a balance is maintained between the liquidity of cash assets
and the interest rate return. The entire balance of cash and cash equivalents for the Company of $4,244,963 (2016:
$3,694,142) is subject to interest rate risk. The proportional mix of floating interest rates and fixed rates to a maximum of six
months fluctuate during the year depending on current working capital requirements. The weighted average interest rate
received on cash and cash equivalents by the Company was 2.1% (2016: 2.8%).
Sensitivity analysis
At 30 June 2017, if interest rates had changed by -/+ 100 basis points from the weighted average rate for the year with all
other variables held constant, post-tax loss for the Company would have been $54,615 lower/higher (2016: $44,928
lower/higher) as a result of lower/higher interest income from cash and cash equivalents.
(b) Credit risk
The Company has no significant concentrations of credit risk. The maximum exposure to credit risk at balance date is the
carrying amount (net of provision for impairment) of those assets as disclosed in the statement of financial position and notes
to the financial statements.
As the Company does not presently have any debtors, lending, significant stock levels or any other credit risk, a formal credit
risk management policy is not maintained.
(c) Liquidity risk
The Company manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash
and marketable securities are available to meet the current and future commitments of the Company. Due to the nature of the
Company’s activities, being mineral exploration, the Company does not have ready access to credit facilities, with the primary
source of funding being equity raisings. The Board of Directors constantly monitor the state of equity markets in conjunction
with the Company’s current and future funding requirements, with a view to initiating appropriate capital raisings as required.
39
Notes to the Financial Statements (Cont’d)
2. FINANCIAL RISK MANAGEMENT (Cont’d)
The financial liabilities of the Company are confined to trade and other payables as disclosed in the Statement of financial
position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes. All financial assets and financial liabilities of the Company at the balance date are recorded at amounts
approximating their carrying amount.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The
quoted market price used for financial assets held by the Company is the current bid price.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values
due to their short-term nature.
3. SEGMENT INFORMATION
Industry and geographical segment
The Company operates in one segment, being the mining exploration sector in Australia.
In determining operating segments, the Company has had regard to the information and reports the Managing Director
decision maker uses to make strategic decisions regarding resources. The Managing Director is considered to be the chief
operating decision maker and is empowered by the Board of Directors to allocate resources and assess the performance of
the Company.
4. REVENUE AND OTHER INCOME
(a) Revenue
Other revenue
Interest from financial institutions
(b) Other income
Gain on sale of mineral interests
5. EXPENSES
Company
2017
$
2016
$
114,094
127,428
-
100,000
Loss before income tax includes the following specific expenses:
Superannuation expense
33,561
38,402
6.
INCOME TAX
(a) Income tax expense/(benefit)
Current tax
Deferred tax
-
-
-
-
-
-
40
Notes to the Financial Statements (Cont’d)
6.
INCOME TAX (Cont’d)
(b) Numerical reconciliation of income tax expense to prima facie
tax payable
Loss from continuing operations before income tax expense
(4,470,221)
(1,614,947)
Company
2017
$
2016
$
Prima facie tax benefit at the Australian tax rate of 27.5% (2016:
28.5%)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income:
Share-based payments
Movements in unrecognised temporary differences
Tax effect of current year tax losses for which no deferred tax asset
has been recognised
Income tax expense/(benefit)
(c) Unrecognised temporary differences
Deferred Tax Assets at 27.5% (2016: 28.5%)
On Income Tax Account
Capital raising costs
Financial assets at fair value through profit or loss
Carry forward tax losses
Set off of deferred tax liabilities
Net deferred tax assets
Less deferred tax assets not recognised
(1,229,311)
(460,260)
37,606
(1,191,705)
21,067
(439,193)
86,653
26,180
1,105,052
-
413,013
-
63,558
93,735
3,829,522
3,986,815
-
3,986,815
(3,986,815)
-
-
49,164
2,823,541
2,872,705
-
2,872,705
(2,872,705)
-
Net deferred tax assets have not been brought to account as it is not probable within the immediate future that tax profits will
be available against which deductible temporary differences and tax losses can be utilised.
The Company’s ability to use losses in the future is subject to the Company satisfying the relevant tax authority’s criteria for
using these losses.
During 2017 the government enacted a change in the income tax rate for small business entities from 28.5% to 27.5%. Duketon
Mining Limited satisfies the criteria to be a small business entity.
7. CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents as shown in the statement of financial
position and the statement of cash flows
141,584
4,103,379
166,937
3,527,205
4,244,963
3,694,142
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash
requirements of the Company, and earn interest at the respective short-term deposit rates.
8. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Trade and other receivables
120,721
57,346
41
Notes to the Financial Statements (Cont’d)
Company
2017
$
2016
$
9. CURRENT ASSETS – FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Australian listed equity securities
956,246
1,329,445
The market value of all equity investments represent the fair value based on quoted prices on active markets (ASX) as at the
reporting date without any deduction for transaction costs. These investments are classified as Level 1 financial instruments.
There have been no transfers between levels of the fair value hierarchy used in measuring the fair value of these financial
instruments, or changes in its classification as a result of a change in the purpose or use of these assets.
Changes in fair values of financial assets at fair value through profit or loss are disclosed directly on the face of the statement
of profit or loss and other comprehensive income.
10. NON-CURRENT ASSETS - PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated depreciation
Net book amount
Plant and equipment
Opening net book amount
Additions
Depreciation charge
Closing net book amount
11. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
Funds held on trust for unmarketable parcel roundup
66,708
(6,604)
60,104
1,302
62,000
(3,198)
60,104
144,006
108,282
24,810
277,098
4,708
(3,406)
1,302
2,874
-
(1,572)
1,302
114,827
62,391
26,042
203,260
12. ISSUED CAPITAL
(a) Share capital
2017
2016
Notes
Number of
shares
$
Number of
shares
$
Ordinary shares fully paid
12(b), 12(d) 103,156,012
18,877,067
82,524,812
14,317,635
Total issued capital
103,156,012
18,877,067
82,524,812
14,317,635
(b) Movements in ordinary share capital
Beginning of the financial year
Issued during the year:
Transaction costs
End of the financial year
Issued for cash @ $0.235 each
2017
2016
Number of
shares
$
Number of
shares
$
82,524,812
14,317,635
47,524,812
8,093,061
20,631,200
-
103,156,012
4,848,332
(288,900)
18,877,067
-
-
82,524,812
-
-
14,317,635
42
Notes to the Financial Statements (Cont’d)
12. ISSUED CAPITAL (Cont’d)
(c) Movements in options on issue
Beginning of the financial year
Issued, exercisable at $0.20 on or before 30 November 2020
Issued, exercisable at $0.25 on or before 31 January 2022
Issued, exercisable at $0.30 on or before 24 November 2021
End of the financial year
Number of options
2016
2017
38,650,000
-
250,000
2,500,000
41,400,000
35,850,000
2,800,000
-
-
38,650,000
(d) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to
the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and
upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(e) Capital risk management
The Company’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they
may continue to provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to credit
facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Company’s capital risk
management is the current working capital position against the requirements of the Company to meet exploration programmes
and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated
operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the
Company at 30 June 2017 and 30 June 2016 are as follows:
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Trade and other payables
Working capital position
13. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Share-based payments reserve
Balance at beginning of year
Employee and consultant options
Balance at end of year
Company
2017
$
4,244,963
120,721
956,246
(277,098)
5,044,832
2016
$
3,694,142
57,346
1,329,445
(203,260)
4,877,673
1,151,085
136,750
1,287,835
1,077,165
73,920
1,151,085
43
Notes to the Financial Statements (Cont’d)
13. RESERVES AND ACCUMULATED LOSSES (Cont’d)
(b) Accumulated losses
Balance at beginning of year
Net loss for the year
Balance at end of year
Company
2017
$
2016
$
(10,589,745)
(4,470,221)
(15,059,966)
(8,974,798)
(1,614,947)
(10,589,745)
(c) Nature and purpose of reserves
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued.
14. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
15. RELATED PARTY TRANSACTIONS
(a) Key management personnel compensation
Short-term benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
315,000
22,325
-
-
113,850
451,175
321,880
22,325
-
-
52,800
397,005
Detailed remuneration disclosures are provided in the remuneration report on pages 22 to 25.
(b) Loans to related parties
There were no loans to related parties, including key management personnel, during the year.
16. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the Company, its related
practices and non-related audit firms:
(a) Audit services
Rothsay Chartered Accountants - audit and review of financial reports
32,500
35,500
(b) Non-audit services
Rothsay Chartered Accountants – tax compliance services
800
750
17. CONTINGENCIES
There are no material contingent liabilities or contingent assets of the Company at balance date.
44
Notes to the Financial Statements (Cont’d)
18. COMMITMENTS
(a) Exploration commitments
The Company has certain commitments to meet minimum expenditure
requirements on the mineral exploration assets it has an interest in.
Outstanding exploration commitments are as follows:
within one year
later than one year but not later than five years
later than five years
(b) Lease commitments: Company as lessee
Operating leases (non-cancellable):
Minimum lease payments
within one year
later than one year but not later than five years
later than five years
Aggregate lease expenditure contracted for at reporting date but not
recognised as liabilities
Company
2017
$
2016
$
1,440,980
2,429,600
1,914,000
5,784,580
1,201,160
2,772,600
2,105,400
6,079,160
57,600
57,600
-
115,200
-
-
-
-
The property lease is a non-cancellable lease with a two-year term, with rent payable monthly in advance. The lease includes
standard conditions customary for commercial property leases.
19. EVENTS OCCURRING AFTER THE REPORTING DATE
No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial
periods.
20. CASH FLOW INFORMATION
Reconciliation of net loss after income tax to net cash outflow from
operating activities
Net loss for the year
Non-Cash Items
Share-based payment expense
Depreciation expense
Change in operating assets and liabilities
(Increase)/decrease in trade and other receivables
Decrease in financial assets at fair value through profit or loss
Increase/(decrease) in trade and other payables
Net cash outflow from operating activities
(4,470,221)
(1,614,947)
136,750
3,198
(63,375)
373,199
75,070
(3,945,379)
73,920
1,572
57,193
91,860
(272,081)
(1,662,483)
45
Notes to the Financial Statements (Cont’d)
21. LOSS PER SHARE
(a) Reconciliation of earnings used in calculating earnings per
share
Loss attributable to the owners of the Company used in calculating
basic and diluted loss per share
(b) Weighted average number of shares used as the denominator
Company
2017
$
2016
$
(4,470,221)
(1,614,947)
No. of Shares
No. of Shares
Weighted average number of ordinary shares used as the denominator
in calculating basic and diluted loss per share
100,386,344
82,524,812
(c) Information on the classification of options
As the Company has made a loss for the year ended 30 June 2017, all options on issue are considered antidilutive and have
not been included in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per
share in the future.
22. SHARE-BASED PAYMENTS
a) Employee and Consultant Options
The Company provides benefits to employees (including directors), contractors and consultants of the Company in the form
of share-based payment transactions, whereby employees, contractors and consultants render services in exchange for
options to acquire ordinary shares. The options issued have exercise prices ranging from $0.20 to $0.35 and expiry dates
ranging from 31 January 2018 to 31 January 2022.
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share of the
Company with full dividend and voting rights.
The weighted average fair value of the options granted during the year was 5.0 cents (2016: 2.6 cents). The fair value was
calculated by using the Black-Scholes European Option Pricing Model applying the following inputs:
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free interest rate
2017
29.5
5.0
16.7
50.0%
2.4%
2016
20.0
5.0
10.0
50.0%
2.3%
b) Supplier Options
Suppliers have been granted options in accordance with the terms of the non-renounceable pro-rata rights issue prospectus
issued in May 2013, and the Initial Public Offering issued in August 2016. The options issued have exercise prices ranging
from $0.20 to $0.35 and expiry dates ranging from 4 August 2017 to 1 August 2019.
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share of the
Company with full dividend and voting rights.
There were no options issued during the 2017 or 2016 financial years.
46
Notes to the Financial Statements (Cont’d)
22. SHARE-BASED PAYMENTS (Cont’d)
Set out below are summaries of the share-based payment options granted per (a) and (b):
Outstanding at the beginning of the year
Granted
Forfeited
Exercised
Expired
Outstanding at year-end
Exercisable at year-end
Company
2017
2016
Weighted
average
exercise
price cents
25.5
29.5
-
-
-
25.8
25.8
Number of
options
35,850,000
2,800,000
-
-
-
38,650,000
38,650,000
Number of
options
38,650,000
2,750,000
-
-
-
41,400,000
41,400,000
Weighted
average
exercise
price cents
25.9
20.0
-
-
-
25.5
25.5
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 2.1 years
(2016: 2.9 years), with exercise prices ranging from $0.20 to $0.35.
c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Options issued to employees and contractors shown as share-based payments
136,750
Company
2017
$
2016
$
73,920
47
Directors’ Declaration
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 29 to 47 are in accordance with the Corporations Act 2001,
including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
giving a true and fair view of the Company’s financial position as at 30 June 2017 and of its performance for the
financial year ended on that date;
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
a statement that the attached financial statements are in compliance with International Financial Reporting Standards
has been included in the notes to the financial statements.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Stuart Fogarty
Managing Director
Perth, 27 September 2017
48
ASX Additional Information
Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The
information is current as at 11 September 2017.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
and over
The number of equity security holders holding less than a marketable parcel of
securities are:
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Citicorp Nominees Pty Ltd
Lomacott Pty Ltd
Liam Raymond Cornelius
Southern Cross Capital Pty Ltd
Gandria Capital Pty Ltd
Dongarra Ltd
Ranguta Ltd
Paul Hartley Watts
BT Portfolio Services Ltd
Cheung Shun Resources Ltd
Darley Pty Ltd
Goldrich Holdings Pty Ltd
Jetosea Pty Ltd
Harmanis Holdings Pty Ltd
Coast Equity Pty Ltd
Qing Mi
Alpha Boxer Ltd
Peter Howells
Montezuma Mining Company Ltd
Hawkestone Resources Pty Ltd
Ordinary Shares
Number of holders Number of shares
228
182
223
353
125
1,111
374
81,169
486,451
1,660,827
13,454,497
87,473,068
103,156,012
402,965
Listed ordinary shares
Number of shares
4,219,611
3,945,000
3,546,430
3,118,500
3,000,000
2,792,853
2,698,547
2,400,000
2,350,000
2,158,709
2,111,938
2,000,000
1,858,946
1,715,400
1,600,000
1,538,249
1,517,986
1,498,525
1,450,000
1,400,000
46,920,694
Percentage of
ordinary shares
4.09
3.82
3.44
3.02
2.91
2.71
2.62
2.33
2.28
2.09
2.05
1.94
1.80
1.66
1.55
1.49
1.47
1.45
1.41
1.36
45.49
52
ASX Additional Information (Cont’d)
(c) Substantial shareholders
The Company has not received any notifications of substantial shareholding in accordance with section 671B of the
Corporations Act 2001.
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
(e) Schedule of interests in mining tenements
Location
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Duketon
Tenement
E38/1537
E38/1800
E38/2231
E38/2661
E38/2666
E38/2699
E38/2714
E38/2717
E38/2737
E38/2738
E38/2805
E38/2819
E38/2834
E38/2866
E38/2892
E38/2898
E38/2916
E38/2919
E38/2976
E38/2983
E38/3002
E38/3011
E38/3012
E38/3022
E38/3026
E38/3061
E38/3083
E38/3090
E38/3098
E38/3159
E38/3160
E38/3176
E38/3177
E38/3178
E38/3200
E38/3245
L38/174
M38/330
M38/1252
P38/3893
P38/3984
P38/4251
P38/4393
Percentage held /
earning
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
53
ASX Additional Information (Cont’d)
(f) Unquoted securities
Class
20 cent Options, Expiry 31 March 2019
Number of
Securities
3,000,000
Number of
Holders
3
20 cent Options, Expiry 1 August 2019
20 cent Options, Expiry 30 November 2020
20.2 cent Options, Expiry 18 November 2019
15,000,000
2,800,000
2,250,000
25 cent Options, Expiry 31 March 2019
25 cent Options, Expiry 31 January 2022
30 cent Options, Expiry 31 January 2018
30 cent Options, Expiry 31 March 2019
30 cent Options, Expiry 24 November 2021
35 cent Options, Expiry 31 March 2019
35 cent Options, Expiry 14 May 2019
1,500,000
250,000
300,000
1,000,000
2,500,000
1,550,000
8,250,000
1
7
4
1
1
2
1
4
1
7
Holders of 20% or more of the class
Holder Name
DWCorporate Pty Ltd
Seamus Cornelius
Pato Negro
Silver Sino Holdings
Pato Negro
Pato Negro
Seamus Cornelius
Nedlands Nominees
Pato Negro
Kristy Culver
Bradley Drabsch
Trevor Saul
Pato Negro
Pato Negro
Seamus Cornelius
Nedlands Nominees
Pato Negro
Mark Gunther
Number of
Securities
1,000,000
1,000,000
1,000,000
15,000,000
1,000,000
1,000,000
500,000
500,000
1,500,000
250,000
150,000
150,000
1,000,000
1,000,000
750,000
500,000
1,550,000
3,000,000
54