Duketon Mining Limited
Annual Report 2018

Plain-text annual report

DUKETON MINING LIMITED ANNUAL REPORT 2018 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 ANZ Banking Corporation Level 1, 1275 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 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 4 23 30 31 32 33 34 35 36 51 52 56 3 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 and 2) 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. Developing strategic partnerships specific to 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 the Golden Star project. Golden Star is shaping up to be a significant project within the Duketon portfolio and will attract significant attention within the following twelve months. Additional drilling work was completed at Lancefield North resulting in the declaration of the maiden resource of 96,000oz of gold. Numerous other early stage projects also attracted significant attention. Economic nickel sulphids have already been found within the Duketon tenements at Rosie, C2, and the Nariz discovery These discoveries shows the further upside potential of the tenement package that Duketon controls. The total Mineral Resource that Duketon has at the C2 and Rosie deposits (see below), is now 71,000t of nickel plus associated copper, platinum and palladium. 4 Review of Operations (Cont’d) Figure 1: Location of the Duketon Project 5 Review of Operations (Cont’d) Figure 2: Duketon Project showing DKM tenements and location of Gold and Nickel Prospects 6 Review of Operations (Cont’d) 1.2 Exploration 1.2.1 Golden Star Significant intersections from the most recent drill program at Golden Star include the following (see ASX announcement 17 July 2018); • • • • • 50m @ 1.8g/t Au incl. 5m @ 9.2g/t Au and 6m @ 2.9g/t Au 35m @ 1.4g/t Au incl. 11m @ 2.9g/t Au and 8m @ 1.3g/t Au 15m @ 6.5g/t Au incl. 4m @ 23.3g/t Au 15m @ 2.2g/t Au incl. 4m @ 7.4g/t Au 13m @ 1.5g/t Au incl. 2m @ 7.9g/t Au These latest results, along with significant historic intersections (see ASX Announcements 19 April 2018, 19 December 2017 and 23 October 2017) reinforce the potential of a major new discovery at Golden Star that is continuous over 600 metres of strike and remains open both to the north, south and down dip. High grades, up to 60g/t Au, continue to be intersected as does substantial +50 gram metre intersections and in places +90 gram metre intersections. Mineralisation occurs within 4m of the surface in places and high grades are seen throughout the entire zone. Sulphides and some quartz veining have been identified north and south of this main zone of mineralisation. Mineralisation at Golden Star occurs as several stacked lenses within a sequence of foliated sheet like gabbroic intrusive units and is associated with quartz veining and sulphide alteration between two strike parallel shear zones. The prospect is along the same geological trend from the Rosemont Mine (Regis Resources (ASX: RRL)) and is located approximately 25km south of the Garden Well Mine (RRL) and processing facility (see Figure 2). Assays from RC drilling during 2017 and 2018 into the prospect include the following (see ASX Announcements 19 April 2018, 19 December 2017 and 23 October 2017); • • • • • • • • • • • • • 50m @ 1.6g/t Au incl. 17m @ 3.8g/t Au and 16m @ 2.3g/t Au incl. 8m @ 4.3g/t Au 26m @ 1.6g/t Au incl. 5m @ 6.3g/t Au 20m @ 0.9g/t Au incl. 1m @ 9.4g/t Au 12m @ 4.0 g/t Au incl. 8m @ 5.9 g/t Au 28m @ 1.0 g/t Au incl. 4m @ 4.7 g/t Au 20m @ 1.1 g/t Au incl. 8m @ 2.2 g/t Au 12m @ 1.6 g/t Au incl. 4m @ 3.1 g/t Au and 4m @ 1.4 g/t Au 8m @ 3.5 g/t Au incl. 3m @ 2.8 g/t Au 16m @ 1.2 g/t Au incl. 4m @ 3.2 g/t Au 25m @ 2.5g/t Au incl. 5m @ 10.7g/t Au 6m @ 6.6g/t Au incl. 1m @ 37.7g/t Au 4m @ 2.7g/t Au All these holes were targeting areas along strike and down dip of historical intersections in this area that include (see ASX announcements 15 June 2017 and 28 July 2016); • • • • • 44m @ 1.0 g/t Au 14m @ 2.7 g/t Au 12m @ 1.2 g/t Au 10m @ 1.5 g/t Au 6m @ 2.5 g/t Au • • • • 4m @ 7.2 g/t Au 4m @ 2.8 g/t Au 5m @ 2.0 g/t Au 2m @ 5.21 g/t Au 7 Review of Operations (Cont’d) Figure 3: Plan View of Golden Star 1.2.2 Thompson Bore RC drilling during the year at Thompson included the following significant intersections (see ASX Announcement 19 December 2017); • • 47m @ 1.3g/t Au including 3m @ 2.6g/t Au, 1m @ 1.1g/t Au, 8m @ 4.6g/t Au and 3m @ 3g/t Au 17m @ 1.4g/t Au including 8m @ 2.8g/t Au Mineralisation is hosted within a north west trending folded sequence of strongly sheared and silicified mafic rocks, felsic to intermediate intrusive rocks and sedimentary rocks. Mineralisation is associated with sulphide replacement of magnetite and associated quartz veining within a banded iron formation. Drilling was designed to test along strike of several previously drilled RC holes (DKM) and aircore holes (pre-DKM) based on a re-interpretation of the area. These holes include 47m @ 1.3g/t Au including 3m @ 2.6g/t Au, 8m @ 4.6g/t Au and 3m @ 3.0g/t Au (DKRC0088), 3m @ 2.8g/t Au (DKMRC003), 4m @ 8.6g/t Au (DKMRC010) and 11m @ 1.0g/t Au (DKMRC004) (see ASX announcements 15 September 2014 and 6 September 2017). Thompson Bore is located approximately 10km south west of the operating Gloster Gold Mine owned by Regis Resources. 8 Review of Operations (Cont’d) Figure 4: Plan View of Thompson Bore 9 Review of Operations (Cont’d) Figure 5: Oblique cross-section, Thompson Bore 10 Review of Operations (Cont’d) 1.2.3 Lancefield North During the year an Inferred Mineral Resource estimated of 1,918,295 tonnes at 1.55 g/t Au for a contained 95,679 ounces of gold was declared for the Lancefield North prospect (see ASX Announcement 14 March 2018). The resource estimate is reported at a 0.5 g/t Au cut-off. VOLUME TONNES DENSITY Au g/t Ounces 673,086 1,918,295 2.86 1.55 95,679 Table 1. Lancefield North Deposit resources cut-off of 0.5 g/t Au (all inferred) The Lancefield North Prospect is located approximately 5km north of the historical Lancefield mine (circa. +1Moz) and approximately 12km north of Laverton (see Figure 2). The Mineral Resource is based on drilling from 2016-2017. Mineralisation remains open along strike and down plunge. Duketon have completed several drill campaigns between late 2016 and late 2017. 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 6: Plan view of Lancefield North with gold mineralisation projected to surface 11 Review of Operations (Cont’d) Figure 7: Lancefield North Cross Section 6846350mN 1.2.4 Davies Bore Figure 8: 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). 12 Review of Operations (Cont’d) Figure 9: 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 drill lines (aircore and RC) spaced between 100m and 200m apart. Assay results from RC drilling during the previous 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. There was no work completed at Davies Bore during the year. 13 Review of Operations (Cont’d) 1.2.5 Henrys Bore Seven RC holes were drilled at the Henrys Bore North Prospect during the year, testing key targets generated from an evaluation and targeting exercise. Significant intersections include (see ASX announcement 31 January 2018); • 37m @ 0.5 g/t Au including 2m @ 1.2 g/t Au and 1m @ 2.1 g/t Au (6m @ 0.8 g/t Au at the end of hole) 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 10: Henrys Bore Prospect showing Max Au in holes over magnetics 14 Review of Operations (Cont’d) Figure 11. Cross Section, Henry’s Bore Prospect 1.2.6 Hacks Bore The Hacks Bore Project is located 8 kilometres NNW of Regis’ Garden Well mining operation. During the quarter four aircore holes were drilled into the Prospect. All four holes intersected significant cobalt and nickel mineralisation from 24 metres downhole. Intersections include: • • • • 4m @ 0.13% Co & 0.3% Ni including 1m @ 0.38% Co and 0.3% Ni and further downhole 10m @ 0.07% Co & 0.8% Ni including 2m @ 0.16% Co & 1.1% Ni 24m @ 0.10% Co & 0.9% Ni including 9m @ 0.12% Co & 1.3% Ni 23m @ 0.08% Co & 0.5% Ni including 3m @ 0.11% Co & 0.5% Ni 11m @ 0.09% Co & 0.8% Ni including 5m @ 0.13% Co & 1.0% Ni 15 Review of Operations (Cont’d) 1.2.7 Gold JV (RRL earning 75%) Rehabilitation of exploration work was undertaken by Regis prior to the earn in period expiring on 13 October 2017. 1.2.8 Rosie 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 12: Location Plan of C2, Rosie, Nariz and Thompsons Bore 16 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 2: 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 3: Rosie Nickel Resource > 1.0% Ni with Auxiliary Attributes Figure 13: Long section of Rosie looking toward the east showing significant intercepts and relevant DHEM plates 17 Review of Operations (Cont’d) 1.2.9 C2 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 4 and 5). This represents the in-situ undiluted Mineral Resource at 0.5% nickel cut-off (see Table 4 and 5 and Figure 14). 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 2018 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 4: 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 5: 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 6: 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 18 Review of Operations (Cont’d) Figure 14: 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 15: Grade Tonnage Curve at Ni cut-offs 19 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) 1.2.10 Nariz 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 16, 17 and ASX announcement 2 December 2014). Figure 16: Photo of massive sulphide zone from hole DKMDD005 20 Review of Operations (Cont’d) 1.2.11 Regional Exploration (DKM 100%) Figure 17: 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 Element 25 Limited The Company has held an equity position in Element 25 Limited. 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. 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 several other listed and unlisted companies For further details, please refer to the Company website. 21 Review of Operations (Cont’d) Appendix 1 – Summary of JORC Resources Table 1a: Total Nickel Mineral Resources as at 30 June 2017 Table 1b: Total Gold Mineral Resources as at 30 June 2017 Table 2: Total Mineral Resources as at 30 June 2016 Mineral Resources Attached as Appendix 1 are three tables comparing the Company’s Mineral Resources as at 30 June 2017 (Table 1a and 1b Appendix 1) against those at 30 June 2016 (Table 2 Appendix 1). No ore reserves have been estimated. Review of material changes During the year, a maiden resource was calculated of the Lancefield North project. There have been no changes to the Company’s other 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 Miss Kirsty Culver, Member of the Australian Institute of Geoscientists (AIG) and an employee of Duketon Mining Limited. Miss Culver 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. Miss Culver 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 information that relates to Lancefield North is extracted from ASX announcement 14 March 2018. 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. 22 Tonnes ('000)Ni (%)Ni TonnesTonnes ('000)Ni (%)Ni TonnesTonnes ('000)Ni (%)Ni TonnesTonnes ('000)Ni (%)Ni TonnesRosie1,4101.724,1005301.68,6001,9401.732,700C25,7000.738,0005,7000.738,000TOTAL1,4101.724,1006,2301.346,6007,6401.0870,700ProjectMeasuredIndicatedInferredTotalProjectLancefield Nth673,0001.696,000673,0001.696,000TOTAL673,0001.696,000673,0001.696,000OuncesOuncesTonnesg/t AuOuncesTonnesg/t AuMeasuredIndicatedInferredTotalTonnesg/t AuOuncesTonnesg/t AuTonnes ('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 2018. 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 52) 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, Element 25 Ltd since 30 June 2011 and Danakali Ltd since 15 July 2014. Stuart Fogarty Managing Director B.Sc (Geology) (Hons) (Age 46) Mr Fogarty has over 20 years of exploration experience with BHP Billiton and Western Mining Corporation, and prior to leaving 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. Mr Fogarty is a former non- executive director of Windward Resources Ltd, resigning 30 November 2016. Heath Hellewell B.Sc (Hons), MAIG (Age 48) 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 an Executive Director of Capricorn Metals Ltd since 3 February 2016. COMPANY SECRETARY Dennis Wilkins B.Bus, MAICD, ACIS (Age 55) 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. 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 company Shaw River Manganese Ltd (resigned 18 December 2015). 23 Directors’ Report (Cont’d) 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 3,817,850 550,000 100,000 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 $4,244,963 and listed equity investments with a market value of $956,246. During the year the Company completed a placement of 14,545,455 ordinary shares to raise gross funds of $4,000,000. The Company also issued 148,148 ordinary shares, with a value of $22,963, as part of employee remuneration. 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 $3,160,112 (2017: $4,470,221) for the financial year ended 30 June 2018 and included in the loss for the year was exploration expenditure of $3,155,785 (2017: $3,648,685). 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 $5,083,699, and listed equity investments with a market value of $1,158,847. 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) 2018 Revenues $ Results $ 507,639 (3,160,112) 2018 (3.0) 2017 (4.5) Risk Management The board is responsible for ensuring that risks, and 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 numerous 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. • 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. 24 Directors’ Report (Cont’d) 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 2018 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. 25 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 2018. Voting and comments made at the Company’s 2017 Annual General Meeting The Company received approximately 99.9% of “yes” votes on its remuneration report for the 2017 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 23 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 2018 2017 Stuart Fogarty 2018 2017 Heath Hellewell 2018 2017 50,000 50,000 255,362 235,000 30,000 30,000 Total key management personnel compensation 2018 2017 335,362 315,000 Service agreements - - - - - - - - - - 25,156 22,325 - - 25,156 22,325 - - - - - - - - - 37,950 - 50,600 - 25,300 50,000 87,950 280,518 307,925 30,000 55,300 - 113,850 360,518 451,175 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. 26 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 were no options over ordinary shares of the Company granted to or vesting with key management personnel during the year. 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. 2018 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 3,617,850 460,000 100,000 - - - 200,000 90,000 - 3,817,850 550,000 100,000 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: 2018 Balance at start of the year Granted as compen- sation Exercised Other changes Balance at end of the year Vested and exercisable Unvested Directors of Duketon Mining Limited Seamus Cornelius Stuart Fogarty Heath Hellewell 3,750,000 8,050,000 1,500,000 - - - - - - - - - 3,750,000 8,050,000 1,500,000 3,750,000 8,050,000 1,500,000 - - - 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 2018 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 4 4 4 4 4 4 - - - - - - - - - - - - 27 Directors’ Report (Cont’d) 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 18 November 2014 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 18 November 2019 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 20.2 20.0 30.0 25.0 8,250,000 15,000,000 3,000,000 1,500,000 1,000,000 1,550,000 2,250,000 2,800,000 2,500,000 250,000 38,100,000 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. 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 2018 $ 800 2017 $ 800 28 Directors’ Report (Cont’d) 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 30. Signed in accordance with a resolution of the directors. Stuart Fogarty Managing Director Perth, 21 September 2018 29 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 2018 Corporate Governance Statement was approved by the Board on 21 September 2018 and is current as at 21 September 2018. 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. 31 Statement of Profit or Loss and Other Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2018 Notes Company 2018 $ 2017 $ REVENUE Interest Fair value gains on financial assets at fair value through the profit or loss 4 82,597 114,094 425,042 - 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 (250,412) (15,504) (223,087) (3,155,785) - (22,963) (305,970) (3,198) (116,834) (3,648,685) (372,878) (136,750) (3,160,112) (4,470,221) - - 22 6 TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO THE OWNERS OF DUKETON MINING LIMITED (3,160,112) (4,470,221) Basic and diluted earnings per share (cents per share) 21 (3.0) (4.5) The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 32 Statement of Financial Position AS AT 30 JUNE 2018 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 2018 $ 2017 $ 7 8 9 10 11 5,083,699 96,748 1,158,847 6,339,294 4,244,963 120,721 956,246 5,321,930 57,009 57,009 60,104 60,104 6,396,303 5,382,034 428,516 428,516 277,098 277,098 428,516 277,098 5,967,787 5,104,936 12 13(a) 13(b) 22,900,030 1,163,425 (18,095,668) 5,967,787 18,877,067 1,287,835 (15,059,966) 5,104,936 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 33 Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2018 Notes Contributed Equity $ Options Reserve $ Accumulated Losses $ Total $ BALANCE AT 1 JULY 2016 Loss for the year TOTAL COMPREHENSIVE LOSS 14,317,635 - - 1,151,085 - - (10,589,745) (4,470,221) (4,470,221) 4,878,975 (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 4,848,332 (288,900) - - - 136,750 13(a) - - - 4,848,332 (288,900) 136,750 BALANCE AT 30 JUNE 2017 Loss for the year TOTAL COMPREHENSIVE LOSS 18,877,067 1,287,835 (15,059,966) 5,104,936 - - - - (3,160,112) (3,160,112) (3,160,112) (3,160,112) TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS Shares issued during the year Employee and consultant options 12 13(a) 4,022,963 - - (124,410) - 124,410 4,022,963 - BALANCE AT 30 JUNE 2018 22,900,030 1,163,425 (18,095,668) 5,967,787 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. 34 Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2018 Notes Company CASH FLOWS FROM OPERATING ACTIVITIES Interest received Payments to suppliers and employees Expenditure on mining interests Payments for financial assets at fair value through profit or loss 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 FROM FINANCING ACTIVITIES NET INCREASE 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 2018 $ 2017 $ 81,283 (422,848) (3,041,796) (194) 222,635 (3,160,920) 112,929 (420,275) (3,638,354) - 321 (3,945,379) - - (62,000) (62,000) 4,000,000 - (344) 3,999,656 838,736 4,244,963 4,848,332 (288,900) (1,232) 4,558,200 550,821 3,694,142 7 5,083,699 4,244,963 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. 35 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 21 September 2018. 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 2017. (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. 36 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. 37 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. 38 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 2018 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. 39 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 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. AASB 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Company plans to adopt the new standard on the required effective date and will not restate comparative information. Based on the Company’s current operations and financial assets and liabilities currently held, the Company does not anticipate any material 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 2018). AASB 15 will replace AASB 118 which covers revenue arising from the sale of goods and the rendering of services and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer and establishes a five-step model to account for revenue arising from contracts with customers. The standard permits either a full retrospective or a modified retrospective approach for the adoption. The Company plans to adopt the new standard on the required effective date using the full retrospective method. There will be no material impact on the Company’s financial position or performance from the adoption of this new standard. AASB 16 Leases (applicable for annual reporting periods commencing on or after 1 January 2019). AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the statement of financial position, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The accounting for lessors will not significantly change. The Company plans to adopt the new standard on the required effective date. The Company continues to assess the potential impact of AASB 16 on its consolidated financial statements. None of the other amendments or Interpretations are expected to affect the accounting policies of the Company. (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 the directors’ best estimate, pending an assessment by the Australian Taxation Office. 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. 40 Notes to the Financial Statements (Cont’d) 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 2018, 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 $178,827 lower/higher (2017: $143,437 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 $5,083,699 (2017: $4,244,963) 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 2.3% (2017: 2.1%). Sensitivity analysis At 30 June 2018, 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 $36,249 lower/higher (2017: $54,615 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. 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. 41 Notes to the Financial Statements (Cont’d) 2. FINANCIAL RISK MANAGEMENT (Cont’d) (d) Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The equity investments held by the Company are classified at fair value through profit or loss. The market value of all equity investments represents 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. The carrying amounts and estimated fair values of financial assets and financial liabilities are as follows: Financial Assets Cash and cash equivalents Trade and other receivables Financial assets at fair value through profit or loss Total Financial Assets Financial Liabilities Trade and other payables Total Financial Liabilities Company 2018 $ 5,083,699 96,748 1,158,847 6,339,294 2017 $ 4,244,963 120,721 956,246 5,321,930 428,516 428,516 277,098 277,098 The methods and assumptions used to estimate the fair value of financial instruments are outlined below: Cash The carrying amount is fair value due to the liquid nature of these assets. Receivables/Payables Due to the short-term nature of these financial rights and obligations, their carrying amounts are estimated to represent their fair values. Fair value measurements of financial assets The carrying values of financial assets and liabilities of the Company approximate their fair values. Fair values of financial assets and liabilities have been determined for measurement and / or disclosure purposes. Fair value hierarchy The Company classifies assets and liabilities carried at fair value using a fair value hierarchy that reflects the significance of the inputs used in determining that value. The following table analyses financial instruments carried at fair value by the valuation method. The different levels in the hierarchy have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and inputs for the asset or liability that are not based on observable market data (unobservable inputs). Level 3: Level 1 $ Level 2 $ Level 3 $ Total $ 30 June 2018 Financial assets at fair value through profit or loss Total as at 30 June 2018 1,158,847 1,158,847 30 June 2017 Financial assets at fair value through profit or loss Total as at 30 June 2017 956,246 956,246 - - - - - - - - 1,158,847 1,158,847 956,246 956,246 Due to their short-term nature, the carrying amount of the current receivables and current payables is assumed to approximate their fair value. 42 Notes to the Financial Statements (Cont’d) 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 Revenue Other revenue Interest from financial institutions 5. EXPENSES Company 2018 $ 2017 $ 82,597 114,094 Loss before income tax includes the following specific expenses: Superannuation expense Minimum lease payments relating to operating leases 40,514 35,411 33,561 - 6. INCOME TAX (a) Income tax expense/(benefit) Current tax Deferred tax - - - - - - (b) Numerical reconciliation of income tax expense to prima facie tax payable Loss from continuing operations before income tax expense (3,160,112) (4,470,221) Prima facie tax benefit at the Australian tax rate of 27.5% (2017: 27.5%) 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) (869,031) (1,229,311) 6,315 (862,716) 37,606 (1,191,705) (116,887) 86,653 979,603 - 1,105,052 - 43 Notes to the Financial Statements (Cont’d) 6. INCOME TAX (Cont’d) (c) Unrecognised temporary differences Deferred Tax Assets at 27.5% (2017: 27.5%) 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 Company 2018 $ 2017 $ - 35,507 3,813,633 3,849,140 - 3,849,140 (3,849,140) - 63,558 93,735 3,829,522 3,986,815 - 3,986,815 (3,986,815) - 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. In April 2017, the Australian Government enacted legislation which reduces the corporate rate for small and medium business entities from 30% to 25% over the next decade. For the 2017 financial year the corporate tax rate reduced to 27.5% for small business entities with turnover less than $10 million. This turnover threshold will progressively increase until it reaches $50 million in the 2019 financial year. From the 2025 financial year, the tax rate will then progressively decrease until it reaches 25% for the 2027 and later financial years. 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 296,193 4,787,506 141,584 4,103,379 5,083,699 4,244,963 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 96,748 120,721 9. CURRENT ASSETS – FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Australian listed equity securities 1,158,847 956,246 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. 44 Notes to the Financial Statements (Cont’d) 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 Company 2018 $ 2017 $ 79,117 (22,108) 57,009 60,104 12,409 (15,504) 57,009 51,476 352,574 24,466 428,516 66,708 (6,604) 60,104 1,302 62,000 (3,198) 60,104 144,006 108,282 24,810 277,098 12. ISSUED CAPITAL (a) Share capital 2018 2017 Notes Number of shares $ Number of shares $ Ordinary shares fully paid 12(b), 12(d) 117,849,615 22,900,030 103,156,012 18,877,067 Total issued capital 117,849,615 22,900,030 103,156,012 18,877,067 (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 @ $0.275 each Issued for cash @ $0.235 each Issued as part of employee remuneration(1) 2018 2017 Number of shares $ Number of shares $ 103,156,012 18,877,067 82,524,812 14,317,635 14,545,455 - 148,148 - 117,849,615 4,000,000 - 22,963 - 22,900,030 - 20,631,200 - - 103,156,012 - 4,848,332 - (288,900) 18,877,067 (1) On 18 October 2017 the Company issued 148,148 ordinary shares to an employee as a reward and incentive. The closing price of $0.155 on the date of issue was the grant date fair value of the shares issued. 45 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 $0.25 on or before 31 January 2022 Issued, exercisable at $0.30 on or before 24 November 2021 Expired on 4 August 2017, exercisable at $0.35 Expired on 31 January 2018, exercisable at $0.30 End of the financial year Number of options 2017 2018 41,400,000 - - (3,000,000) (300,000) 38,100,000 38,650,000 250,000 2,500,000 - - 41,400,000 (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 2018 and 30 June 2017 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 Transferred to accumulated losses upon expiry of options Balance at end of year Company 2018 $ 5,083,699 96,748 1,158,847 (428,516) 5,910,778 2017 $ 4,244,963 120,721 956,246 (277,098) 5,044,832 1,287,835 - (124,410) 1,163,425 1,151,085 136,750 - 1,287,835 46 Notes to the Financial Statements (Cont’d) 13. RESERVES AND ACCUMULATED LOSSES (Cont’d) (b) Accumulated losses Balance at beginning of year Transferred from share-based payments reserve upon expiry of options Net loss for the year Balance at end of year Company 2018 $ 2017 $ (15,059,966) (10,589,745) 124,410 (3,160,112) (18,095,668) - (4,470,221) (15,059,966) (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 335,362 25,156 - - - 360,518 315,000 22,325 - - 113,850 451,175 Detailed remuneration disclosures are provided in the remuneration report on pages 25 to 27. (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 35,500 41,500 (b) Non-audit services Rothsay Chartered Accountants – tax compliance services 800 800 17. CONTINGENCIES There are no material contingent liabilities or contingent assets of the Company at balance date. 47 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 2018 $ 2017 $ 1,603,380 1,730,200 1,730,700 5,064,280 1,440,980 2,429,600 1,914,000 5,784,580 57,600 - - 57,600 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 (a) 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 Decrease/(increase) in trade and other receivables (Increase)/decrease in financial assets at fair value through profit or loss Increase in trade and other payables Net cash outflow from operating activities (3,160,112) (4,470,221) 22,963 15,504 136,750 3,198 23,973 (202,601) 139,353 (3,160,920) (63,375) 373,199 75,070 (3,945,379) (b) Non-cash investing and financing activities On 18 October 2017 the Company issued 148,148 ordinary shares to an employee as a reward and incentive, for a value of $22,963. This amount is included in ‘share-based payments expense’ on the statement of profit or loss and other comprehensive income of the Company. 48 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 2018 $ 2017 $ (3,160,112) (4,470,221) No. of Shares No. of Shares Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share 106,726,512 100,386,344 (c) Information on the classification of options As the Company has made a loss for the year ended 30 June 2018, 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 on issue at 30 June 2018 have exercise prices ranging from $0.20 to $0.35 and expiry dates ranging from 31 March 2019 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. There were no options granted during the 2018 financial year. The weighted average fair value of the options granted during the 2017 financial year was 5.0 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 2018 - - - - - 2017 29.5 5.0 16.7 50.0% 2.4% 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. The options on issue at 30 June 2018 have an exercise price of $0.20 and expiry date of 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 granted during the 2018 or 2017 financial years. c) Employee shares On 18 October 2017 the Company issued 148,148 ordinary shares to an employee as a reward and incentive, for a value of $22,963. The closing price of $0.155 on the date of issue was the grant date fair value of the shares issued. 49 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 2018 2017 Weighted average exercise price cents 25.8 - - - 34.5 25.0 25.0 Number of options 38,650,000 2,750,000 - - - 41,400,000 41,400,000 Number of options 41,400,000 - - - (3,300,000) 38,100,000 38,100,000 Weighted average exercise price cents 25.5 29.5 - - - 25.8 25.8 The weighted average remaining contractual life of share options outstanding at the end of the financial year was 2.1 years (2017: 2.9 years), with exercise prices ranging from $0.20 to $0.35. d) 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 Shares issued to employees shown as share-based payments Company 2018 $ - 22,963 22,963 2017 $ 136,750 - 136,750 50 Directors’ Declaration In the Directors’ opinion: (a) the financial statements and notes set out on pages 32 to 50 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 2018 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, 21 September 2018 51 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 18 September 2018. (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 St Barbara Ltd Harmanis Holdings Pty Ltd Cairnglen Investments Pty Ltd Twynam Agricultural Group Pty Ltd Lomacott Pty Ltd Citicorp Nominees Pty Ltd Jetosea Pty Ltd Liam Raymond Cornelius SFN Holdings Pty Ltd Gandria Capital Pty Ltd Southern Cross Capital Pty Ltd Dongarra Ltd Ranguta Ltd Cheung Shun Resources Ltd Hawkestone Resources Pty Ltd Peter Howells Qing Mi Alpha Boxer Ltd Element 25 Ltd National Nominees Ltd Ordinary Shares Number of holders Number of shares 220 176 212 299 86 993 317 77,174 472,739 1,579,927 10,571,629 105,148,146 117,849,615 248,488 Listed ordinary shares Number of shares 14,545,455 11,400,000 5,157,500 4,901,030 4,025,420 3,688,758 3,655,882 3,446,430 3,300,000 3,300,000 3,118,500 2,792,853 2,698,547 2,058,709 1,800,000 1,766,052 1,530,663 1,467,986 1,450,000 1,374,999 77,478,784 Percentage of ordinary shares 12.34 9.67 4.38 4.16 3.42 3.13 3.10 2.92 2.80 2.80 2.65 2.37 2.29 1.75 1.53 1.50 1.30 1.25 1.23 1.17 65.76 56 ASX Additional Information (Cont’d) (c) Substantial shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are: St Barbara Limited Harmanis Holdings Pty Ltd (d) Voting rights All ordinary shares (whether fully paid or not) carry one vote per share without restriction. (e) Unquoted securities Number of Shares 14,545,455 7,572,816 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 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 1,000,000 2,500,000 1,550,000 8,250,000 1 7 4 1 1 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 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 1,000,000 1,000,000 750,000 500,000 1,550,000 3,000,000 57 ASX Additional Information (Cont’d) (f) 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% 58 

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