Fin Resources Limited
Annual Report 2019

Plain-text annual report

Fin Resources Limited Annual Report 30 June 2019 finresources.com.au ABN 25 009 121 644 CONTENTS Corporate Directory Directors’ Report Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Auditor’s Independence Declaration Independent Auditor’s Report ASX Additional Information Tenements and Project Locations Important Information and Disclaimers PAGE 1 2 11 12 13 14 15 34 35 36 40 43 44 CORPORATE DIRECTORY Directors Jason Bontempo - Non-Executive Director Andrew Radonjic - Non-Executive Director Justin Tremain - Non-Executive Director Auditors Stantons International Audit & Consulting Pty Ltd Level 2, 1 Walker Avenue WEST PERTH WA 6005 Company Secretary Aaron Bertolatti Registered Office First Floor 35 Richardson Street WEST PERTH WA 6005 Share Registry Advanced Share Registry Pty Ltd 110 Stirling Highway NEDLANDS WA 6009 Solicitors Edwards Mac Scovell Level 7, 140 St Georges Terrace Perth WA 6000 Stock Exchange Australian Securities Exchange (Home Exchange: Perth, Western Australia) ASX Code: FIN Website finresources.com.au Directors’ Report The Directors present their report for Fin Resources Limited (“Fin Resources”, “Fin” or “the Company”) and its subsidiaries (“the Group”) for the year ended 30 June 2019. DIRECTORS The names, qualifications and experience of the Company’s Directors in office during the year and until the date of this report are as follows. Directors were in office for the entire year unless otherwise stated. Jason Bontempo Non-Executive Director Mr Bontempo has 22 years’ experience in public company management, corporate advisory, investment banking and public company accounting, qualifying as a chartered accountant with Ernst & Young. Mr Bontempo has worked primarily serving on the board and the executive management of minerals and resources public companies focusing on advancing and developing mineral resource assets and business development. Mr Bontempo also provides corporate advice services and the financing of resource companies across multiple capital markets including resource asset acquisitions and divestments. Andrew Radonjic Non-Executive Director Andrew Radonjic is a geologist and holds a master’s degree in Mineral Economics. He has over 30 years of experience in mining and exploration, with a specific focus on gold and nickel in the Eastern Goldfields of Western Australia. During Mr. Radonjic’s career he has been instrumental in the discovery of three significant gold deposits near Kalgoorlie in Western Australia as well as a major tin/tungsten deposit in Tasmania Mr. Radonjic is Managing Director of ASX listed Venture Minerals Limited (ASX: VMS) and is a Technical Director of Blackstone Minerals Limited (ASX: BSX). Justin Tremain Non-Executive Director Justin Tremain graduated from the University of Western Australia with a Bachelor of Commerce degree. Mr. Tremain cofounded ASX listed Renaissance Minerals Limited in June 2010 and served as Managing Director until its takeover by ASX Emerald Resources NL in November 2016. Prior to founding Renaissance Minerals Limited, he had over 10 years’ investment banking experience in the natural resources sector. He has held positions with Investec, NM Rothschild & Sons and Macquarie Bank and has extensive experience in the funding of natural resource projects in the junior to mid-tier resource sector. DIRECTORSHIPS OF OTHER LISTED COMPANIES Directorships of other listed companies held by current directors in the 3 years immediately before the end of the financial year are as follows: Director Company Period of Directorship Jason Bontempo Red Emperor Resources NL Odin Metals Limited First Cobalt Corporation Andrew Radonjic Venture Minerals Limited Justin Tremain Blackstone Minerals Limited Carnaby Resources Limited Odin Metals Limited Exore Resources Limited Emerald Resources NL Director since January 2011 Director since February 2018 Director from November 2015 to December 2017 Director since May 2006 Director since August 2016 Director since February 2016 Director since October 2017 Director since February 2018 Director from September 2016 to October 2018 Fin Resources Limited 2 2019 Annual Report to Shareholders Directors’ Report COMPANY SECRETARY Aaron Bertolatti Aaron Bertolatti is a qualified Chartered Accountant and Company Secretary with over 15 years’ experience in the mining industry and accounting profession. Mr. Bertolatti has both local and international experience and provides assistance to a number of resource companies with financial accounting and stock exchange compliance. Mr. Bertolatti has significant experience in the administration of ASX listed companies, corporate governance and corporate finance. INTERESTS IN THE SECURITIES OF THE COMPANY As at the date of this report, the interests of the Directors in the securities of Fin Resources Limited are: Director Jason Bontempo Andrew Radonjic Justin Tremain Ordinary Shares Performance Rights - - - 2,000,000 2,000,000 2,000,000 RESULTS OF OPERATIONS The Group’s net loss after taxation attributable to the members of Fin Resources for the year to 30 June 2019 was $274,901 (2018: net loss $576,273). DIVIDENDS No dividend was paid or declared by the Company during the year and up to the date of this report. CORPORATE STRUCTURE Fin Resources Limited is a company limited by shares, which is incorporated and domiciled in Australia. NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES The principal activity of the Company during the financial year was mineral exploration and evaluation. REVIEW OF OPERATIONS Fin Resources Limited is an Australian based resources company listed on the Australian Securities Exchange (ASX: FIN). The Company’s projects comprise exploration licences covering ground located in Western Australia, which the Company intends to explore for gold, base metals and graphite. McKenzie Springs Project The McKenzie Springs Project is located 85km northeast of the township of Halls Creek in the Kimberley region of Western Australia. The Project comprises a single granted Exploration Licence, namely E80/4808. The Project hosts mafic and ultramafic intrusions that are prospective for magmatic Ni-Cu sulfide and Platinum Group Element (PGE) mineralisation. Additionally, the Tickalara Metamorphic geology within the project is prospective for graphite mineralisation. Nickel mineralisation within the McKenzie Springs Project is associated with the basal contact of mafic-ultramafic rocks in a similar geological setting to the Savannah Nickel Mine owned by Panoramic Resources Ltd (ASX: PAN) to the north. Commencement of Nickel-Copper Exploration In August 2018, the Company announced the commencement of exploration activities at the McKenzie Springs Project. After an extensive review of previously gathered exploration data the Company commenced a field work program of soil geochemical sampling, rock chip sampling and geological mapping. The aim of the program was to identify and prioritise Nickel-Copper-Cobalt and PGM (Platinum Group Metals) targets for a follow-up electromagnetic (EM) survey, to define priority drill target areas. Fin Resources Limited 3 2019 Annual Report to Shareholders Directors’ Report A total of 735 (minus 1.6mm sieved) soil samples were taken over a 11.5 kilometre strike of the McKenzie Spring intrusion on a 400m by 40m sample spacing. Results returned up to 1,354ppm Nickel (Ni), 508ppm Copper (Cu), 140ppm Cobalt (Co), 41ppb Palladium (Pd), 39ppb Platinum (Pt), 25ppb Gold (Au) and 460ppb Silver (Ag) (refer ASX announcement dated 30 January 2019). In addition, newly released public domain EM Survey Data led to a re-interpretation with all other geophysical data along with the recently updated geochemical and geological datasets, yielding priority drill ready targets. The results, combined with geological mapping and reprocessing of the EM survey data, confirmed the potential for the McKenzie Springs Project to host Voisey’s Bay-style nickel-copper-cobalt sulfide mineralisation. During June 2019, an external review of the potential of the McKenzie Springs Project was completed by a consultant. The review confirmed that one of the priority targets (MK25) coincides with an isolated gravity anomaly and has the appropriate geological setting to host Ni-Cu-Co occurrences. The target is greatly enhanced by the considerable thickening of magma to other targeted areas within the licence and has reported a similar EM response to the Savanna Ni-Cu-Co Mine that is located along strike to the NE of the project. The external consultant review highlighted the much larger Spring Creek intrusion complex (located in the northern section of the license) which hosts a minor airborne EM anomaly that remains untested, with little modern exploration work done over this area (one drill hole targeting PGM and a rock chip traverse). It was recommended to extend the geochemistry coverage of the intrusion as well as other areas not previously covered. The Company now considers completing a new geochemical survey over the Spring Creek intrusion as essential before prioritising target area for drilling. South Big Bell Project The South Big Bell Project is located 25km west of the township of Cue in the Murchison Goldfields. The Project comprises a single granted Exploration Licence, namely E20/900. The Project lies to the south of the Big Bell Gold Mine, currently held by Westgold Resources Ltd (ASX: WGX) which forms part of their Central Murchison Gold Project. The South Big Bell tenement covers the southern extension of the Mount Magnet- Meekatharra Greenstone Belt. Desktop studies were completed during the year on the South Big Bell Project, however no field work was undertaken. Sentinel Project The Sentinel Project is located 130km east-northeast of the township of Kalgoorlie in the Eastern Goldfields. The Project comprises a single granted Exploration Licence, namely E28/2652. The Project lies within the southern Laverton Tectonic Zone, a regional scale shear/fault system that extends as a set of NNE and NNW trending structures from Laverton towards the Pinjin area. The area has been explored for gold by a number of companies since the 1980s, exploration including predominantly reconnaissance and surface geochemical programs, and limited geochemical drill traverses through covered terrain. Mapping has located minor gold diggings at the Sentinel Prospect on the northern margin of Lake Rebecca. Desktop studies, reports and a GIS data review were completed at the Sentinel Project during the year, however, no field work was undertaken. Corporate - Other The Company completed a Non-Renounceable Entitlement Issue pursuant to its prospectus dated 9 November 2018 (“Entitlement Issue”). The Entitlement Issue offered eligible shareholders registered on the Record Date the ability to subscribe for Options on the basis of one (1) Option for every three (3) Shares held at an issue price of $0.001 per Option to raising up to approximately $97,230 (before costs). Fin Resources Limited 4 2019 Annual Report to Shareholders Directors’ Report SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There have been no significant changes in the state of affairs of the Group during the financial year, other than as set out in this report. SIGNIFICANT EVENTS AFTER THE REPORTING DATE There have been no significant events subsequent to the end of the financial year to the date of this report. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Directors have excluded from this report any further information on the likely developments in the operations of the Group and the expected results of those operations in future financial years, as the Directors believe that it would be speculative and prejudicial to the interests of the Group. ENVIRONMENTAL REGULATIONS AND PERFORMANCE The operations of the Group are presently subject to environmental regulation under the laws of Australia. The Group is, to the best of its knowledge, at all times in full environmental compliance with the conditions of its licences. SHARE OPTIONS AND PERFORMANCE RIGHTS As at the date of this report there were 137,230,915 unissued ordinary shares under options and 8,000,000 under performance rights. The details of these securities are as follows: Number Type 32,000,000 Unlisted Options 105,230,915 Listed Options (ASX: FINOA) 8,000,000 Performance Rights Exercise Price $ Expiry Date $0.03 $0.025 $0.001 14 May 2021 31 December 2021 14 May 2023 No holder has any right under the options or performance rights to participate in any other share issue of the Company or any other entity. No options or performance rights expired unexercised during the financial year. No options or performance rights were exercised during or since the year ended 30 June 2019. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has made an agreement indemnifying all the Directors and Officers of the Company against all losses or liabilities incurred by each Director or Officer in their capacity as Directors or Officers of the Company to the extent permitted by the Corporations Act 2001. The indemnification specifically excludes wilful acts of negligence. The Company paid insurance premiums in respect of Directors’ and Officers’ Liability Insurance contracts for current officers of the Company, including Officers of the Company’s controlled entities. The liabilities insured are damages and 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 entities in the Group. DIRECTORS’ MEETINGS During the financial year, in addition to frequent Board discussions, the Directors met regularly to discuss all matters associated with investment strategy, review of opportunities, and other Company matters on an informal basis. Circular resolutions were passed as necessary to execute formal Board decisions. The number of meetings of Directors held during the year and the number of meetings attended by each Director were as follows: Director Jason Bontempo Andrew Radonjic Justin Tremain Number of Meetings Eligible to Attend 1 1 1 Number of Meetings Attended 1 - 1 Fin Resources Limited 5 2019 Annual Report to Shareholders Directors’ Report PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of the Court to bring proceedings on behalf of the Company or 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. The Company was not a party to any such proceedings during the year. CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Fin Resources Limited support and have adhered to the principles of sound corporate governance. The Board recognises the recommendations of the Australian Securities Exchange Corporate Governance Council, and considers that Fin Resources complies to the extent possible with those guidelines, which are of importance to the commercial operation of a junior listed resources company. During the financial year, shareholders continued to receive the benefit of an efficient and cost-effective corporate governance policy for the Company. The Company has established a set of corporate governance policies and procedures which can be found, along with the Company’s Corporate Governance Statement, on the Fin Resources website: finresources.com.au. AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES Section 307C of the Corporations Act 2001 requires the Company’s auditors to provide the Directors of Fin Resources with an Independence Declaration in relation to the audit of the financial report. A copy of that declaration is included within this annual report. There were no non-audit services provided by the Company’s auditor. Officers of the company who are former partners of Stantons International Audit and Consulting Pty Ltd There are no officers of the company who are former partners of Stantons International Audit and Consulting Pty Ltd (“Stantons”). Auditor Stantons continue in office in accordance with section 327 of the Corporations Act 2001. AUDITED REMUNERATION REPORT This report, which forms part of the directors’ report, outlines the remuneration arrangements in place for the key management personnel (“KMP”) of Fin Resources Limited for the financial year ended 30 June 2019. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for KMP who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Group. Details of Key Management Personnel ▪ ▪ ▪ ▪ Jason Bontempo - Non-Executive Director Andrew Radonjic - Non-Executive Director Justin Tremain - Non-Executive Director Aaron Bertolatti - Company Secretary Fin Resources Limited 6 2019 Annual Report to Shareholders Directors’ Report Remuneration Policy The Board is responsible for determining and reviewing compensation arrangements for the Directors. The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a yearly basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high-quality board and executive team. The expected outcome of this remuneration structure is to retain and motivate Directors. As part of its Corporate Governance Policies and Procedures, the board has adopted a formal Remuneration Committee Charter and Remuneration Policy. The Board has elected not to establish a remuneration committee based on the size of the organisation and has instead agreed to meet as deemed necessary and allocate the appropriate time at its board meetings. Fees and payments to non‑executive directors reflect the demands which are made on, and the responsibilities of the directors. Non‑executive directors’ fees and payments are reviewed annually by the Board. Non‑executive directors do not receive performance-based pay, other than performance rights issued in the prior year. Level Non-Executive Director Senior Executives Cash Remuneration Up to A$36,000 Up to A$60,000 Additional fees A Director may also be paid fees or other amounts as the Directors determine if a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties. Remuneration Consultants Remuneration consultants have not been used in determining the remuneration paid. Retirement allowances for Directors Superannuation contributions required under the Australian Superannuation Guarantee Legislation continue to be made and are deducted from the directors’ overall fee entitlements where applicable. Details of Remuneration Details of the nature and amount of each element of the remuneration of each Director and Executive of the Company for the year ended 30 June 2019 are as follows: 2019 Directors Jason Bontempo Andrew Radonjic Justin Tremain Officers Aaron Bertolatti Base Salary $ Short term4 Director Fees $ Consulting Fees $ Options Share Based Payments $ Super $ Total $ Option related % - - - - - 36,000 27,397 27,397 - - - 8,616 8,616 8,616 3,420 2,603 2,603 48,036 38,616 38,616 - 90,794 60,000 60,000 8,616 34,464 - 68,616 8,626 193,884 17.9 22.3 22.3 12.5 17.7 There were no other executive officers of the Company during the financial year ended 30 June 2019. The fees paid to Directors’ and Officers’ related entities were for the provision of management services of the particular individual to the Group: − BR Corporation Pty Ltd, an entity associated with Jason Bontempo. − 1918 Consulting Pty Ltd, an entity associated with Aaron Bertolatti. Fin Resources Limited 7 2019 Annual Report to Shareholders Directors’ Report Details of the nature and amount of each element of the remuneration of each Director and Executive of the Company for the year ended 30 June 2018 are as follows: 2018 Directors Greg Bandy1 Jason Bontempo Nathan Rayner1 Andrew Radonjic2 Justin Tremain2 Officers Aaron Bertolatti Base Salary $ Short term4 Director Fees $ Consulting Fees $ Options Share Based Payments $ Super $ Other Benefits $ Total $ Option related % 75,000 - - - - - 18,000 12,000 2,500 2,500 - - - - - - 75,000 - 35,000 45,000 45,000 - - - - - - - 7,125 1,710 - 238 238 66,3373 148,462 19,710 12,000 2,738 2,738 - - - - - 9,311 - 45,000 66,337 230,648 - - - - - - - 1 Greg Bandy and Nathan Rayner resigned on 14 May 2018. 2 Andrew Radonjic and Justin Tremain were appointed on 14 May 2018. 3 The other benefits of $66,337 paid to Greg Bandy related to the accrued annual leave payable upon his resignation from the Board of Directors. 4 The Board decided to suspend all Director and corporate advisory fees effective 1 December 2017. The suspension would last until the Company was able to identify and subsequently enter into a transaction suitable for the purposes of having its shares re-quoted and trading on the ASX. Payment of Director fees recommenced on 1 June 2018. There were no other executive officers of the Company during the financial year ended 30 June 2018. Shareholdings of Key Management Personnel The number of shares in the Company held during the financial year by each Director and specified executives of the Group, including their personally related parties, is set out below. There were no shares granted during the reporting year as compensation. Balance at the start of the year Granted during the year as compensation On exercise of share options Other changes during the year Balance at the end of the year Directors Jason Bontempo Andrew Radonjic Justin Tremain Officers Aaron Bertolatti - - - - - - - - - - - - - - - - - - - - All equity transactions with key management personnel other than arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the Company would have adopted if dealing at arm’s length. Option holdings of Key Management Personnel The numbers of options over ordinary shares in the Company held during the financial year by each Director of Fin Resources Limited and specified executives of the Group, including their personally related parties, are set out below: Fin Resources Limited 8 2019 Annual Report to Shareholders Directors’ Report Balance at the start of the year Granted during the year as compensation Exercised during the year Other changes during the year Balance at the end of the year Exercisable Un- exercisable - - - - - - - - - - - - - - - - - - - - - - - - - - - - Directors Jason Bontempo Andrew Radonjic Justin Tremain Officers Aaron Bertolatti Performance Right holdings of Key Management Personnel The numbers of Performance Rights over ordinary shares in the Company held during the financial year by each Director of Fin Resources Limited and specified executives of the Group, including their personally related parties, are set out below: Balance at the start of the year Granted during the year as compensation Exercised during the year Other changes during the year Balance at the end of the year Exercisable Un- exercisable Directors Jason Bontempo Andrew Radonjic Justin Tremain Officers Aaron Bertolatti 2,000,000 2,000,000 2,000,000 2,000,000 - - - - - 2,000,000 2,000,000 2,000,000 - 2,000,000 - 2,000,000 - 2,000,000 - 2,000,000 - 2,000,000 8 million Performance Rights, exercisable at $0.001, were issued during the year to Directors and Officers as approved by shareholders on 13 April 2018. The Performance Rights vest and become exercisable by the holder upon the Company achieving a VWAP of at least $0.03 over a period of 20 trading days. The deadline for conversion is 5 years from the date of issue (14 May 2023). Performance Rights Affecting Remuneration The terms and conditions of Performance Rights affecting remuneration in the current or future reporting years are as follows: 2019 Grant Date Grant Number Expiry date/last exercise date Exercise price per option Value of options at grant date1 Number of options vested2 Vested % Max value yet to vest Directors Jason Bontempo Andrew Radonjic Justin Tremain Officers Aaron Bertolatti 14/05/18 2,000,000 14/05/23 $0.001 14/05/18 2,000,000 14/05/23 $0.001 14/05/18 2,000,000 14/05/23 $0.001 $46,571 $46,571 $46,571 14/05/18 2,000,000 14/05/23 $0.001 8,000,000 $46,571 $186,284 - - - - - - $37,955 - $37,955 - $37,955 - $37,955 - $151,820 1 The value at grant date has been calculated in accordance with AASB 2 Share based payments. 2 The Performance Rights vest and become exercisable by the holder upon the Company achieving a VWAP of at least $0.03 over a period of 20 trading days. The deadline for conversion is 5 years from the date of issue (14 May 2023). Fin Resources Limited 9 2019 Annual Report to Shareholders Directors’ Report Non-Executive Director Service Agreements On appointment to the Board, all non-executive directors enter into a service agreement with the Group in the form of a letter of appointment. The letter summarises the Board policies and terms, including compensation ranging from $30,000 to $39,420 per annum (including Superannuation), relevant to the director. There is no termination clause included in the letter. Senior Executives Aaron Bertolatti (Company Secretary) is engaged under an Executive Agreement dated 1 May 2018. Under the agreement Mr. Bertolatti is paid an annual fee of A$60,000. The Agreement may be terminated by the Company without notice or without cause by giving three months’ notice in writing or payment in lieu of notice. The Agreement may also be terminated by Mr. Bertolatti by providing three months’ notice in writing. Loans to Directors and Executives There were no loans to Directors and executives during the financial year ended 30 June 2019. Additional Information The earnings of the Group for the five years to 30 June 2019 are summarised below: Other income EBITDA EBIT Profit after income tax 2019 $ 61,073 (274,901) (274,901) (274,901) 2018 $ 61,603 (576,273) (576,273) (576,273) 2017 $ 34,693 (473,118) (473,118) (473,118) 2016 $ 36,317 (860,045) (860,045) (860,045) 2015 $ 8,520 (2,675,077) (2,675,077) (2,675,077) The factors that are considered to affect total shareholders return ('TSR') are summarised below: Share price at financial year end ($) Total dividends declared (cents per share) Basic earnings per share (cents per share) 0.012 - (0.09) 0.021 - (0.24) 0.024 - (0.10) 0.024 - (0.19) 0.026 - (0.59) 2019 2018 2017 2016 2015 Voting and comments made at the Company's 2018 Annual General Meeting Fin Resources Limited received 99.6% of “yes” votes on its remuneration report for the 2018 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. END OF AUDITED REMUNERATION REPORT Signed on behalf of the board in accordance with a resolution of the Directors. Jason Bontempo Non-Executive Director Perth, Western Australia 19 September 2019 Fin Resources Limited 10 2019 Annual Report to Shareholders Fin Resources Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2019 Continuing operations Consultancy fees Corporate and compliance expense Employee benefits expense Share based payments Other expenses Total expenses Other income Loss before income tax from continuing operations Income tax expense Loss after income tax from continuing operations Note 30 June 2019 $ 30 June 2018 $ 18(a) (60,500) (89,551) (99,420) (34,464) (52,039) (335,974) (70,000) (277,607) (131,515) (108,000) (50,754) (637,876) 61,073 61,603 (274,901) - (274,901) (576,273) - (576,273) Loss for the year (274,901) (576,273) Other comprehensive income Items that may be reclassified to profit and loss Other comprehensive income for the year net of tax - - - - Total comprehensive loss for the year (274,901) (576,273) Loss attributable to: Owners of the parent Total comprehensive loss attributable to: Owners of the parent Loss per share From continuing operations Basic and diluted loss per share (cents) (274,901) (274,901) (576,273) (576,273) (274,901) (274,901) (576,273) (576,273) 16 (0.09) (0.24) The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. Fin Resources Limited 11 2019 Annual Report to Shareholders Fin Resources Limited Consolidated Statement of Financial Position as at 30 June 2019 Current Assets Cash and cash equivalents Trade and other receivables Other assets Other financial assets Total Current Assets Non-Current Assets Exploration and evaluation expenditure Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Provisions Total Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity Note 30 June 2019 $ 30 June 2018 $ 4 5 6 7 8 9 10 11 12 13 3,805,868 4,220,486 9,568 17,187 100 22,180 18,740 100 3,832,723 4,261,506 680,440 680,440 459,635 459,635 4,513,163 4,721,141 42,904 - 42,904 42,904 89,898 - 89,898 89,898 4,470,259 4,631,243 29,848,259 2,745,272 29,892,965 2,586,649 (28,123,272) (27,848,371) 4,470,259 4,631,243 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. Fin Resources Limited 12 2019 Annual Report to Shareholders Fin Resources Limited Consolidated Statement of Changes in Equity for the year ended 30 June 2019 Balance at 1 July 2017 Total comprehensive loss for the year Loss for the year Other Comprehensive Income Total comprehensive loss for the year Transactions with owners in their capacity as owners Shares issued during the year Subscription proceeds from options issued during the year Cost of issue Share based payment Balance at 30 June 2018 Issued capital $ Accumulated losses $ Reserves $ Total $ 28,786,786 (27,272,098) 2,297,449 3,812,137 - - - (576,273) - (576,273) - - - (576,273) - (576,273) 1,200,000 - - 1,200,000 - (93,821) - 29,892,965 - - - (27,848,371) 1,200 - 288,000 2,586,649 1,200 (93,821) 288,000 4,631,243 Balance at 1 July 2018 29,892,965 (27,848,371) 2,586,649 4,631,243 - - - (274,901) - (274,901) - - - (274,901) - (274,901) Total comprehensive loss for the year Loss for the year Other Comprehensive Income Total comprehensive loss for the year Transactions with owners in their capacity as owners Subscription proceeds from options issued during the year Cost of issue Share based payment Balance at 30 June 2019 29,848,259 (28,123,272) - (44,706) - - - - 105,231 18,928 34,464 2,745,272 105,231 (25,778) 34,464 4,470,259 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. Fin Resources Limited 13 2019 Annual Report to Shareholders Fin Resources Limited Consolidated Statement of Cash Flows for the year ended 30 June 2019 Cash flows from operating activities Payments to suppliers and employees Interest received Net cash used in operating activities Cash flows from investing activities Payments for exploration expenditure Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from issue of options Payments for share issue costs Net cash provided by financing activities 30 June 2019 $ 30 June 2018 $ Note (277,039) 61,073 (215,966) (613,921) 61,603 (552,318) 4 (278,727) (278,727) (19,635) (19,635) - 105,231 (25,156) 80,075 1,000,000 1,200 (93,821) 907,379 Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at the end of the year (414,618) 4,220,486 3,805,868 335,426 3,885,060 4,220,486 4 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. Fin Resources Limited 14 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 1. Corporate Information The financial report of Fin Resources Limited (“Fin Resources”, “Fin” or “the Company”) and its controlled subsidiaries (the “Group”) for the year ended 30 June 2019 was authorised for issue in accordance with a resolution of the Directors on 19 September 2019. Fin Resources is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature of the operations and the principal activities of the Company are described in the Directors’ Report. 2. Summary of Significant Accounting Policies (a) Basis of preparation The financial statements are general-purpose financial statements, which have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial statements have also been prepared on a historical cost basis. The presentation currency is Australian dollars. (b) Statement of compliance The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). (c) Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 22. (d) Basis of consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Fin Resources Limited) and all of the subsidiaries. Subsidiaries are those entities over which the Company has the power to govern the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a Company controls another entity. A list of the subsidiaries is provided in note 15(c). In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-company transactions have been eliminated in full. Unrealised losses are also eliminated unless costs cannot be recovered. Non-controlling interests in the results and equity of subsidiaries are shown separately in the Statement of Profit or Loss and Other Comprehensive Income and Consolidated Statement of Financial Position respectively. (e) Cash and cash equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. (f) Employee benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date. Fin Resources Limited 15 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 (g) Fair Value of Assets and Liabilities The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. Valuation techniques In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation techniques to measure the fair value of the asset or liability, The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the following valuation approaches: − Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical or similar assets or liabilities. − Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single discounted present value. − Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity. − Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable. Fin Resources Limited 16 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 Fair value hierarchy AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows: Level 1 Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 Measurements based on unobservable inputs for the asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3. The Group would change the categorisation within the fair value hierarchy only in the following circumstances: i. ii. if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa. When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (i.e. transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred. (h) Financial assets Recognition, initial measurement and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial instruments (except for trade receivables) are measured initially at fair value adjusted by transactions costs, except for those carried “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss. Where available, quoted prices in an active market are used to determine the fair value. In other circumstances, valuation techniques are adopted. Subsequent measurement of financial assets and financial liabilities are described below. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Financial assets Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments, are classified into the following categories upon initial recognition: ▪ amortised cost; Fin Resources Limited 17 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 ▪ ▪ fair value through other comprehensive income (FVOCI); and fair value through profit or loss (FVPL). Classifications are determined by both: ▪ the contractual cash flow characteristics of the financial assets; and ▪ the entities business model for managing the financial asset. Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL): ▪ they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and ▪ the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Financial liabilities Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss. All interest-related charges and, if applicable, gains and losses arising on changes in fair value that are recognised in profit or loss. Impairment From 1 July 2018, the Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Comparative information The Group has applied AASB 9 Financial Instruments retrospectively, but has elected not to restate comparative information. As a result, the comparative information provided continues to be accounted for in accordance with the Group’s previous accounting policy. Classification Until 30 June 2018, the Group classified its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; ▪ ▪ ▪ held-to-maturity investments; and ▪ available-for-sale financial assets. The classification depended on the purpose for which the investments were acquired. Management determined the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluated this designation at the end of each reporting period. Fin Resources Limited 18 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 (i) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except: i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or for receivables and payables which are recognised inclusive of GST. ii. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. (j) Impairment of assets At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash- generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash- generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately. (k) Income tax Current tax Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable). Deferred tax Deferred tax is accounted for using the statement of financial position liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill. Fin Resources Limited 19 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches, associates and joint ventures except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the company/Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the period Current and deferred tax is recognised as an expense or income in the statement of profit or loss and other comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess. (l) Payables Trade payables and other accounts payable are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services. (m) Revenue recognition The Group has applied AASB 15 Revenue from Contracts with Customers using the cumulative effective method. Therefore, the comparative information has not been restated and continues to be presented under AASB 118 Revenue and AASB 111 Construction Contracts. The Group does not have any revenue from contracts with customers. Interest revenue Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. (n) Exploration and evaluation expenditure Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: the rights to tenure of the area of interest are current; and (i) (ii) at least one of the following conditions is also met: (a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or (b) exploration and evaluation activities in the area of interest have not at the balance date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Fin Resources Limited 20 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. Where an area of interest is abandoned, any expenditure carried forward in respect of that area is written off. (o) Interests in joint ventures Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required. Separate joint venture entities providing joint ventures with an interest to net assets are classified as a "joint venture" and accounted for using the equity method. Joint venture operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure to each liability of the arrangement. The Group's interests in the assets, liabilities, revenue and expenses of joint operations are included in the respective line items of the consolidated financial statements. Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties' interests. When the Group makes purchases from a joint operation, it does not recognise its share of the gains and losses from the joint arrangement until it resells those goods/assets to a third party. (p) Share based payments Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity instrument at the grant date. Fair value is measured either with reference to the value of the goods and services provided or by use of a Black Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. Further details on how the fair value of equity-settled share-based transactions has been determined can be found in note 18. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. Fin Resources Limited 21 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 (q) 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 Board of Directors of Fin Resources Limited. The entity does not have any operating segments with discrete financial information. The Board of Directors review internal management reports on a monthly basis that is consistent with the information provided in the statement of comprehensive income, statement of financial position and statement of cash flows. As a result, no reconciliation is required because the information as presented is what is used by the Board to make strategic decision. (r) Critical accounting judgements and key sources of estimation uncertainty For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date. In the application of the Group’s accounting policies, which are described in note 2, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Key Sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year: Deferred tax assets The Group recognises deferred tax assets when it becomes probable that sufficient taxable income will be derived in future periods against which to offset these assets. At each reporting date, the Group assesses the level of expected future cash flows from the business and the probability associated with realising these cash flows, and makes an assessment of whether the deferred tax assets of the Group should be recognised. (s) New and amended standards adopted by the Group The Group has adopted AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments which became effective for financial reporting periods commencing on or after 1 January 2018. AASB 15 Revenue from contracts with customers AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and several revenue-related Interpretations. AASB 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue to be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The Group has applied the new Standard effective from 1 July 2018 using the modified retrospective approach. Under this method, the cumulative effect of initial application is recognised as an adjustment to the opening balance of retained earnings at 1 July 2018 and comparatives are not restated. The adoption of AASB 15 does not have a significant impact on the Group as the Group does not currently have any revenue from customers. Fin Resources Limited 22 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 AASB 9 Financial Instruments AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement, impairment, and hedge accounting. There were no financial instruments which the Group designated at fair value through profit or loss under AASB 139 that were subject to reclassification. The Board assessed the Group’s financial assets and determined the application of AASB 9 does not result in a change in the classification of the Group’s financial instruments. The adoption of AASB 9 does not have a significant impact on the financial report. (t) New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations issued by the AASB which are not yet mandatorily applicable to the Group have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early. AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019). AASB 16 removes the classification of leases as either operating leases or finance leases for the lessee effectively treating all leases as finance leases. Short term leases (less than 12 months) and leases of a low value are exempt from the lease accounting requirements. Lessor accounting remains similar to current practice. The Group will adopt this standard from 1 July 2019, however as the Company does not have any current leases that would qualify under this policy, it is not expected to have any financial impact on the entity. Other standards not yet applicable There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. 3. Income Tax (a) Income tax expense Major component of tax expense for the year: Current tax Deferred tax (b) Numerical reconciliation between aggregate tax expense recognised in the statement of comprehensive income and tax expense calculated per the statutory income tax rate Loss from before income tax expense Tax at the Australian rate of 30% (2018: 30%) Add tax effect of: Revenue losses and other deferred tax balances not recognised Other non-allowable items Less tax effect of: Other non-assessable items Losses recouped not previously recognised Allowable items Income tax expense 2019 $ 2018 $ - - - - - - (274,901) (82,470) (576,273) (172,882) 72,131 10,339 - 106,963 65,919 - - - - - - - - - Fin Resources Limited 23 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 (c) Deferred tax liabilities Exploration expenditure Development and production assets Deferred tax assets Carry forward revenue losses (d) Unrecognised deferred tax assets: Carry forward revenue losses Carry forward capital losses Capital raising costs Other Offset of deferred tax liabilities Net deferred tax assets not brought to account The benefit for tax losses will only be obtained if: 2019 $ 2018 $ 107,028 (107,028) 25,889 (25,889) - - - - 2,729,620 1,356,430 32,645 9,130 4,127,825 (107,028) 4,020,797 2,526,848 1,356,430 41,061 9,299 3,933,638 (25,889) 3,907,749 i. the Company derives future assessable income in Australia of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; and ii. the Company continues to comply with the conditions for deductibility imposed by tax legislation in Australia; and iii. no changes in tax legislation in Australia adversely affect the Company in realising the benefit from the deductions for the losses. (e) Tax consolidation: Fin Resources Limited and its wholly owned Australian resident subsidiaries have formed a tax consolidated group with effect from 1 July 2009. Fin Resources Limited is the head entity of the tax consolidated group. (f) Tax losses The Group has $9,098,735 gross revenue tax losses arising in Australia that are available to offset against future profit of the Company in which the losses arose. Utilisation of these tax losses is subject to satisfaction of either the continuity of ownership or same business test in accordance with Australian Tax requirements. Deferred tax assets have not been recognised in respect of these losses. 4. Cash and Cash Equivalents Reconciliation of cash Cash comprises of: Cash at bank Reconciliation of operating loss after tax to net cash flow from operations Loss after tax Non-cash items Share based payments expense Exploration and evaluation expenditure Change in assets and liabilities (Increase)/decrease in trade and other receivables and other assets (Decrease) in trade and other payables (Decrease)/increase in provisions Net cash flow (used in) operating activities 3,805,868 4,220,486 (274,901) (576,273) 34,464 - 13,543 10,928 - (215,966) 108,000 (60,000) (26,128) 56,305 (54,222) (552,318) Fin Resources Limited 24 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 Non-cash investing and financing activities During the year ended 30 June 2018, the Company issued 10 million ordinary shares and 20 million unlisted options exercisable at $0.03 on or before 14 May 2021, as consideration for the acquisition of the McKenzie Springs Project, the South Big Bell Project and the Sentinel Project (refer notes 11(b) and 18(b)). 5. Trade and Other Receivables - Current GST receivable 2019 $ 2018 $ 9,568 22,180 Trade debtors, prepayments and GST receivable are non-interest bearing and generally receivable on 30-day terms. They are neither past due nor impaired. The amount is fully collectable. Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value. 6. 7. 8. Other Assets Prepayments Other Financial Assets Investment in listed entity Deferred Exploration and Evaluation Expenditure Opening Balance Acquisition of exploration tenements1 Expenditure capitalised during the year Closing balance 17,187 18,740 100 100 459,635 - 220,805 680,440 - 380,000 79,635 459,635 1 10 million fully paid ordinary shares in the capital of the Company and 20 million unlisted options exercisable at $0.03 on or before 14 May 2021 were issued as consideration for the acquisition of the McKenzie Springs Project, the South Big Bell Project and the Sentinel Project (refer notes 11(b) and 18(b)). The ultimate recoupment of costs carried forward for exploration expenditure is dependent on the successful development and commercial exploitation or sale of the respective mining areas. 9. Trade and Other Payables Trade payables Other payables and accruals 10. Provisions Current Provisions Opening Balance Movements in annual leave Closing balance 11. Issued Capital (a) Issued and paid up capital 20,110 22,794 42,904 68,064 21,834 89,898 - - - 54,222 (54,222) - Issued and fully paid 291,691,438 (2018: 291,691,438) Converting preference shares 100 (2018: 100) 29,847,459 800 29,848,259 29,892,165 800 29,892,965 Fin Resources Limited 25 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 30 June 2019 30 June 2018 No. $ No. $ (b) Movements in ordinary shares on issue Opening balance Share consolidation on a 1 for 2 basis Shares issued via placement1 Shares issued as consideration for acquisition2 Transaction costs on share and option issue Closing balance 291,691,438 - - - - 291,691,438 29,892,165 - - - (44,706) 463,382,876 (231,691,438) 50,000,000 10,000,000 - 29,847,459 291,691,438 28,785,986 - 1,000,000 200,000 (93,821) 29,892,165 1 Fin completed a public offer of 50,000,000 shares in the capital of the Company at an issue price of $0.02 per share raising $1.0 million (before costs). 2 10 million fully paid ordinary shares in the capital of the Company were issued as consideration for the acquisition of the McKenzie Springs Project, the South Big Bell Project and the Sentinel Project at a deemed issue price of $0.02 per share. Fully paid ordinary shares carry one vote per share and carry the rights to dividends. (c) Movements in converting preference shares Opening balance Closing balance 30 June 2019 30 June 2018 No. 2,006 2,006 $ 800 800 No. 2,006 2,006 $ 800 800 The converting preference shares do not have any voting rights but are entitled to the payment of a dividend. The conversion terms for these shares have now expired. (d) Capital risk management The Company’s capital comprises share capital, reserves less accumulated losses amounting to a net equity of $4,470,259 at 30 June 2019. The Company manages its capital to ensure its ability to continue as a going concern and to optimise returns to its shareholders. The Company was ungeared at year end and not subject to any externally imposed capital requirements. Refer to note 17 for further information on the Company’s financial risk management policies. (e) Share Options and Performance Rights As at the date of this report there were 137,230,915 unissued ordinary shares under options and 8,000,000 under performance rights. The details of these securities are as follows: Number Type 32,000,000 Unlisted Options 105,230,915 Listed Options (ASX: FINOA) 8,000,000 Performance Rights Exercise Price $ Expiry Date $0.03 $0.025 $0.001 14 May 2021 31 December 2021 14 May 2023 No holder has any right under the options or performance rights to participate in any other share issue of the Company or any other entity. No options or performance rights expired unexercised during the financial year. No options or performance rights were exercised during or since the year ended 30 June 2019. Fin Resources Limited 26 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 12. Reserves Option, performance rights, share based payments and option premium reserves 2,745,272 2,586,649 2019 $ 2018 $ Movements in Reserves Opening balance Movement Closing balance 2,586,649 158,623 2,745,272 2,297,449 289,200 2,586,649 The share based payments reserve arises on the grant of share options to Directors, Executives and senior employees as part of their remuneration, to consultants for services provided and as consideration for project acquisitions (refer to note 18). Further information about share-based payments to employees is made in the remuneration report. This reserve also includes subscription proceeds from options. 13. Accumulated losses Movements in accumulated losses were as follows: Opening balance Loss for the year Closing balance 14. Auditor’s Remuneration The auditor of Fin Resources Limited is Stantons International Audit and Consulting Pty Ltd Amounts paid or due and payable for: - an audit or review of the financial report (27,848,371) (274,901) (28,123,272) (27,272,098) (576,273) (27,848,371) 33,666 33,666 25,062 25,062 15. Key Management Personnel Disclosures (a) Remuneration of Key Management Personnel Details of the nature and amount of each element of the emolument of each Director and Executive of the Company for the financial year are as follows: Short term employee benefits Share based payments Other benefits Other employee expense (superannuation) Total remuneration 150,794 34,464 - 8,626 193,884 155,000 - 66,337 9,311 230,648 Transactions with key management personnel were made at arm’s length at normal market prices and normal commercial terms. There were no other transactions with key management personnel for the year ended 30 June 2019. (c) Subsidiaries The consolidated financial statements include the financial statements of Fin Resources Limited and the subsidiaries listed in the following table: Name of Entity Komodo Energy Pty Limited Crestwood Pty Ltd Sugarbay Investments Pty Limited Country of Incorporation Australia Australia Australia Equity Holding 2019 2018 100% 100% 100% 100% 100% 100% Fin Resources Limited 27 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 (d) Loans to/from related parties There were no loans made or outstanding to Directors of Fin Resources and other key management personnel of the Group, including their personally related parties. 16. Loss per Share Basic Loss per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. The following reflects the loss and share data used in the basic and diluted earnings per share computations: Loss attributable to owners of the parent Weighted average number of ordinary shares used in calculating basic loss per share: Effect of dilution: Share options and performance rights Adjusted weighted average number of ordinary shares used in calculating diluted loss per share: Loss per share From continuing operations (cents) 2019 $ 2018 $ (274,901) (576,273) Number of Shares 291,691,438 241,883,219 291,691,438 241,883,219 2019 2018 (0.09) (0.24) There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting date and before the completion of these financial statements. 17. Financial Risk Management The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide written principles on the use of financial derivatives. Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements. (a) Liquidity Risk The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. (b) Interest Rate Risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial instruments. The Group’s exposure to market risk for changes to interest rate risk relates primarily to its earnings on cash. The Group manages the risk by investing in short term deposits. Interest rate sensitivity The following table demonstrates the sensitivity of the Group’s statement of profit or loss and other comprehensive income to a reasonably possible change in interest rates, with all other variables constant. Fin Resources Limited 28 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 Change in Basis Points Increase 75 basis points Decrease 75 basis points Effect on Post Tax Loss ($) Increase/(Decrease) 2018 2019 Effect on Equity including retained earnings ($) Increase/(Decrease) 2018 2019 28,544 (28,544) 31,654 (31,654) 28,544 (28,544) 31,654 (31,654) A sensitivity of 75 basis points has been used as this is considered reasonable given the current level of both short term and long-term Australian Dollar interest rates. The change in basis points is derived from a review of historical movements and management’s judgement of future trends. (c) Credit Risk Exposures Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted the policy of dealing with creditworthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures credit risk on a fair value basis. The Group does not have any significant credit risk exposure to a single counterparty or any group of counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the Group’s maximum exposure to credit risk without taking account of the fair value of any collateral or other security obtained. Cash and cash equivalents AA Trade and other receivables (d) Capital Risk Management 2019 $ 3,805,868 9,568 3,815,436 2018 $ 4,220,486 22,180 4,242,666 When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, enter into joint ventures or sell assets. No dividends were paid in 2019 and no dividends are expected to be paid in respect of financial year 2019. There is no current intention to incur debt funding on behalf of the Company as on-going exploration expenditure will be funded via cash reserves, equity or joint ventures with other companies. The Company is not subject to any externally imposed capital requirements. (e) Foreign exchange risk The Group operated in Australia in the year ended 30 June 2019 and had minimal exposure to foreign exchange risk. (f) Fair value estimation The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair value. The Group has performed sensitivity analysis that demonstrates the effect on the current year results and equity which could result from a change in these risks. Fin Resources Limited 29 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 Financial risk management objectives The Group’s corporate treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. 2019 Financial Assets Financial assets at fair value through profit and loss 2018 Financial Assets Financial assets at fair value through profit and loss Level 1 $ Level 2 $ Level 3 $ Total $ 100 100 100 100 - - - - - - - - 100 100 100 100 Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets and liabilities have been based on the closing quoted prices at reporting date, excluding transaction costs. In valuing unlisted investments, included in Level 2 of the hierarchy, valuation techniques such as those using comparisons to similar investments for which market observable prices are available have been adopted to determine the fair values of these investments. Derivative instruments are included in Level 2 of the hierarchy with the fair values being determined using valuation techniques incorporating observable market data relevant to the hedged position. 18. Share Based Payments (a) Recognised share based payment transactions Share based payment transactions recognised either as operational expenses in the statement of profit or loss and other comprehensive income or as capitalised project acquisition costs in equity during the year were as follows: Share based payments as consideration for project acquisition (note 18 (b)) Employee, Consultant and Director share based payments (note 18 (c)) Share based payments to suppliers (note 18 (d)) 2019 $ - 34,464 18,928 2018 $ 180,000 - 108,000 (b) Project acquisition share based payments There were no options granted as consideration for project acquisitions during the financial year ended 30 June 2019. During the financial year ended 30 June 2018, 10 million fully paid ordinary shares in the capital of the Company and 20 million unlisted options exercisable at $0.03 on or before 14 May 2021 were issued as consideration for the acquisition of the McKenzie Springs Project, the South Big Bell Project and the Sentinel Project. Grant Date Expiry date Exercise price per option Balance at start of the year Granted during the year Exercised during the year Expired during the year Balance at end of the year Exercisable at end of the year 14/05/2018 14/05/2021 $0.03 - 20,000,000 - - 20,000,000 20,000,000 Number Number Number Number Number Number Fin Resources Limited 30 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 The amount recognised in respect of the above options granted during the prior year was $180,000. These options have been valued using a binomial option pricing model. The model inputs, not included in the table above, for the project acquisition options granted as consideration for the acquisition included: a) b) c) d) e) expected lives of the options was 3.0 years; share price at grant date was $0.02; expected volatility was 100%; expected dividend yield of nil; and a risk-free interest rate of 2.05% (c) Employee, Consultant and Director share based payments 8 million Performance Rights, exercisable at $0.001, were issued during the year ended 30 June 2018 to Directors and Officers as approved by shareholders on 13 April 2018. The Performance Rights vest and become exercisable by the holder upon the Company achieving a VWAP of at least $0.03 over a period of 20 trading days. The deadline for conversion is 5 years from the date of issue (14 May 2023). The Performance Rights could not vest within 3 months of the Performance Right issue date (14 May 2018). As a result, the share based payment expense in relation to the performance rights has been recorded during the financial year ended 30 June 2019. The fair value at grant date of options granted during the reporting year was determined using the Black Scholes option pricing model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share and the risk-free interest rate for the term of the option. The table below summarises Performance Rights granted during the year ended 30 June 2018. The vesting period for these Performance Rights commenced during the year ended 30 June 2019: Grant Date Expiry date Exercise price per option Balance at start of the year Granted during the year Exercised during the year Expired during the year Balance at end of the year Exercisable at end of the year1 14/05/2018 14/05/2023 $0.001 - 8,000,000 - - 8,000,000 - Number Number Number Number Number Number 1 Options will vest upon the Company achieving a VWAP of at least $0.03 over a period of 20 trading days. The expense recognised in respect of the above Performance Rights which vested during the period was $34,464. The model inputs, not included in the table above, for Performance Rights granted during the year ended 30 June 2018 included: share price at grant date was $0.024; a) Performance Rights were granted for nil cash consideration; b) expected lives of the Performance Rights is 5 years; c) d) expected volatility of 100%; e) expected dividend yield of nil; and f) a risk-free interest rate of 1.25% There were no options granted to Employees, Consultants or Directors during the year ended 30 June 2018. (d) Share-based payment to suppliers During the financial year ended 30 June 2019, the Company issued listed options to Lead Manager’s for broker related services rendered during the year. The fair value at grant date of options granted during the reporting year was determined using the Black Scholes option pricing model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share and the risk-free interest rate for the term of the option. Fin Resources Limited 31 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 The table below summarises options granted to Suppliers during the year ended 30 June 2019. Grant Date Expiry date Exercise price per option Balance at start of the year Granted during the year Exercised during the year Expired during the year Balance at end of the year Exercisable at end of the year 06/12/2018 31/12/2021 $0.025 - 8,000,000 - - 8,000,000 8,000,000 Number Number Number Number Number Number The expense recognised in respect of the above options granted during the year was $18,928. The model inputs, not included in the table above, for supplier options granted during the year ended 30 June 2018 included: a) options were granted for $0.001; b) expected lives of the options is 3.0 years; c) share price at grant date was $0.015; d) expected volatility of 53%; e) expected dividend yield of nil; and f) a risk-free interest rate of 1.94% During the financial year ended 30 June 2018, the Company issued 12,000,000 unlisted options as consideration to lead mangers for services rendered. Grant Date Expiry date Exercise price per option Balance at start of the year Granted during the year Exercised during the year Expired during the year Balance at end of the year Exercisable at end of the year1 14/05/2018 14/05/2021 $0.03 - 12,000,000 - - 12,000,000 - Number Number Number Number Number Number 1 Options are escrowed for a period of 24 months from the date of issue. The expense recognised in respect of the above options granted during the year was $108,000. These options have been valued using a binomial option pricing model. The model inputs, not included in the table above, for supplier options granted during the year ended 30 June 2018 included: g) options were granted for $0.0001; h) expected lives of the options is 3 years; i) share price at grant date was $0.02; j) expected volatility of 100%; k) expected dividend yield of nil; and l) a risk-free interest rate of 2.05% 19. Dividends No dividend was paid or declared by the Company in the year ended 30 June 2019 or the period since the end of the financial year and up to the date of this report. The Directors do not recommend that any amount be paid by way of dividend for the financial year ended 30 June 2019. 20. Contingent Liabilities and Contingent Assets The Directors are not aware of any contingent liabilities or contingent assets at the reporting date. Fin Resources Limited 32 2019 Annual Report to Shareholders Fin Resources Limited Notes to the Consolidated Financial Statements for the year ended 30 June 2019 21. Subsequent Events There have been no significant events subsequent to the end of the financial year and to the date of this report. 22. Parent Entity Information The following details information related to the parent entity, Fin Resources Limited, at 30 June 2019. The information presented here has been prepared using consistent accounting policies as presented in note 2. Current assets Total assets Current liabilities Total liabilities Net assets Issued capital Reserves Accumulated losses Profit/(loss) of the parent entity Other comprehensive income for the year Total comprehensive loss of the parent entity 2019 $ 3,832,716 4,513,156 (42,903) (42,903) 4,470,253 29,848,259 2,745,273 (28,123,279) 4,470,253 (274,901) - (274,901) 2018 $ 4,261,500 4,721,134 (89,898) (89,898) 4,631,236 29,892,965 2,586,649 (27,848,378) 4,631,236 (572,273) - (572,273) The parent company has not provided any guarantees and does not have any other commitments or contingent assets or liabilities that are not disclosed elsewhere in the financial report. 23. Dividends No dividend was paid or declared by the Company in the year ended 30 June 2019 or the period since the end of the financial year and up to the date of this report. The Directors do not recommend that any amount be paid by way of dividend for the financial year ended 30 June 2019. 24. Contingent Liabilities and Contingent Assets The Directors are not aware of any contingent liabilities or contingent assets at the reporting date. 25. Subsequent Events There have been no significant events subsequent to the end of the financial year and to the date of this report. 26. Commitments In order to maintain an interest in the exploration tenements in which the Group is involved, the Group is committed to meet the conditions under which the tenements were granted and the obligations of any joint venture agreements. The timing and amount of exploration expenditure commitments and obligations of the Group are subject to the minimum expenditure commitments required as per the Mining Act, as amended, and may vary significantly from the forecast based upon the results of the work performed which will determine the prospectivity of the relevant area of interest. These obligations are not provided for in the financial report and are payable. The annual minimum expenditure commitment on the Group’s tenements is $101,500. Fin Resources Limited 33 2019 Annual Report to Shareholders Directors’ Declaration In accordance with a resolution of the Directors of Fin Resources Limited, I state that: 1. In the opinion of the Directors: a) the financial statements and notes of Fin Resources Limited for the year ended 30 June 2019 are in accordance with the Corporations Act 2001, including: i. ii. giving a true and fair view of the Company’s consolidated financial position as at 30 June 2019 and of its performance for the year ended on that date; and complying with Accounting Standards (including the Australian Accounting Interpretations), the Corporations Regulations 2001 and other mandatory professional reporting requirements; and b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2. 2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 3. This declaration has been made after receiving the declarations required to be made by the Directors in accordance with sections of 295A of the Corporations Act 2001 for the financial year ended 30 June 2019. On behalf of the Board Jason Bontempo Non-Executive Director Perth, Western Australia 19 September 2019 Fin Resources Limited 34 2019 Annual Report to Shareholders PO Box 1908 West Perth WA 6872 Australia Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au Stantons International Audit and Consulting Pty Ltd trading as Chartered Accountants and Consultants 19 September 2019 Board of Directors Fin Resources Limited Level 1, 35 Richardson Street West Perth WA 6005 Dear Directors RE: FIN RESOURCES LIMITED In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Fin Resources Limited. As Audit Director for the audit of the financial statements of Fin Resources Limited for the year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours faithfully STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) Samir Tirodkar Director Liability limited by a scheme approved under Professional Standards Legislation Stantons International Audit and Consulting Pty Ltd trading as Chartered Accountants and Consultants PO Box 1908 West Perth WA 6872 Australia Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FIN RESOURCES LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Fin Resources Limited and its subsidiaries (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters We have determined the matter below to be a Key Audit Matter communicated in our report. Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Liability limited by a scheme approved under Professional Standards Legislation Key Audit Matters How the matter was addressed in the audit Carrying Value of Exploration and Evaluation Assets As at 30 June 2019, Exploration and Evaluation Assets totalled $680,440 (refer to Note 8 of the financial report). The carrying value of exploration and evaluation assets is a key audit matter due to:    The expenditure capitalised is material in amount and are the largest asset other than cash and cash equivalents; The necessity to assess management’s application of the requirements of the accounting standard Exploration for and Evaluation of Mineral Resources (“AASB 6”), in light of any indicators of impairment that may be present; and The assessment of significant judgements made by management in relation to the capitalised exploration and evaluation expenditure. Inter alia, our audit procedures included the following: i. Assessing the Group’s right to tenure over exploration assets by corroborating the ownership of the relevant licences for mineral resources to government registries and relevant third-party documentation; ii. Reviewing the directors’ assessment of the carrying value of the capitalised exploration and evaluation costs, ensuring the veracity of the data assessing management’s presented consideration of potential impairment indicators, commodity prices and the stage of the Group’s projects also against AASB 6; and iii. Evaluation of Group documents for consistency with the intentions for continuing exploration and evaluation activities in areas of interest and corroborated in discussions with management. The documents we evaluated included:  Minutes of the board and management; and  Announcements made by the Group to the Australian Securities Exchange; and iv. Consideration of the requirements of accounting standard AASB 6 and reviewed the financial statements to ensure appropriate disclosures are made. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2019 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance opinion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in Internal control that we identify during our audit. The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the Remuneration Report included in pages 6 to 10 of the directors’ report for the year ended 30 June 2019. The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion on the Remuneration Report In our opinion, the Remuneration Report of Fin Resources Limited for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001. STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) Samir R Tirodkar Director West Perth, Western Australia 19 September 2019 ASX Additional Information Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current at 30 August 2019. Distribution of Share Holders 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over TOTAL Ordinary Shares Number of Holders Number of Shares 45 107 62 650 294 1,158 10,295 334,563 493,525 22,131,484 268,721,571 291,691,438 There were 650 holders of ordinary shares holding less than a marketable parcel. Top Twenty Share Holders The names of the twenty largest holders of quoted equity securities are listed below: Name SEVENTY THREE PTY LTD J & J BANDY NOMINEES PTY LTD SAMBOR TRADING PTY LTD MS MERLE SMITH + MS KATHRYN SMITH MR JAMES ANTHONY GLEESON PEARSE STREET PTY LTD THIRD REEF PTY LTD CAMPBELL KITCHENER HUME & ASSOCIATES PTY LTD NERO RESOURCE FUND PTY LTD SAMMY RESOURCES PTY LTD SANCOAST PTY LTD 708 CAPITAL PTY LTD ADRIATIC PTY LTD JAMEKER PTY LTD MS INGRID JOAN OLSEN NEON SPACE PTY LTD CROSSPICK RESOURCES PTY LTD SEVENSPEED PTY LTD SHOWCITY PTY LTD JALAVER PTY LTD Substantial Shareholders Name SEVENTY THREE PTY LTD J & J BANDY NOMINEES PTY LTD Shares 32,000,000 30,000,000 11,083,739 10,000,000 8,000,000 7,600,000 7,450,000 6,992,570 6,250,000 5,000,000 5,000,000 4,000,000 3,500,000 3,333,333 3,288,928 2,500,000 2,500,000 2,500,000 2,447,370 2,300,000 155,745,940 % 10.97 10.28 3.80 3.43 2.74 2.61 2.55 2.40 2.14 1.71 1.71 1.37 1.20 1.14 1.13 0.86 0.86 0.86 0.84 0.79 53.39 Shares 32,000,000 30,000,000 62,000,000 % 10.97 10.28 21.25 Fin Resources Limited 40 2019 Annual Report to Shareholders ASX Additional Information Distribution of Option Holders 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over TOTAL Listed Options Number of Holders 8 18 15 112 55 208 Number of Options 4,600 60,546 122,842 4,390,701 100,652,226 105,230,915 There were 166 holders of listed options holding less than a marketable parcel. Top Twenty Listed Option (FINOA) Holders The names of the twenty largest holders of quoted options are listed below: Name J & J BANDY NOMINEES PTY LTD JALAVER PTY LTD MRS DONNA LEA GULLUNI SEVENTY THREE PTY LTD CROSSPICK RESOURCES PTY LTD SURF COAST CAPITAL PTY LTD 2428 PTY LTD MS MERLE SMITH + MS KATHRYN SMITH ABROLHOS EDGE PTY LTD MR DAVID SAMUEL CHURCH NERO RESOURCE FUND PTY LTD MISS STACEY O'NEILL MRS LEONA INEZ LAMPE RANDAL INVESTMENT HOLDINGS PTY LTD ACN 161 604 315 PTY LTD D M L & J D L PTY LTD MRS KELLY ANNE SEVILLE GAZUMP RESOURCES PTY LTD NEON SPACE PTY LTD CROSSPICK RESOURCES PTY LTD 1 Options are exercisable at $0.025 each, expiring 31 December 2021. On-Market Buy Back There is no current on-market buy back. Options1 19,163,823 18,777,778 9,666,667 5,000,000 5,000,000 4,902,813 3,573,573 3,333,334 2,953,838 2,500,020 2,083,334 2,000,000 2,000,000 1,133,334 1,000,000 1,000,000 1,000,000 993,566 833,334 833,334 87,748,748 % 18.21 17.84 9.19 4.75 4.75 4.66 3.40 3.17 2.81 2.38 1.98 1.90 1.90 1.08 0.95 0.95 0.95 0.94 0.79 0.79 83.39 Voting Rights All ordinary shares carry one vote per share without restriction. Options have no voting rights. Use of Proceeds In accordance with listing rule 4.10.19, the Company confirms that it has used cash and assets in a form readily convertible to cash in a way consistent with its business objectives during the financial year ended 30 June 2019. Fin Resources Limited 41 2019 Annual Report to Shareholders ASX Additional Information Unquoted Equity Securities Performance Rights Number Class 8,000,000 Performance Rights over ordinary shares exercisable at $0.001 on or before 14 May 2023. Options Number Class Holders with more than 20% - Aaron Dean Bertolatti 2,000,000 performance rights - Sasha Tara Tremain 2,000,000 performance rights - Mrs Lenore Theresa Radonjic 2,000,000 performance rights - Mrs Tiziana Battista 2,000,000 performance rights Holders with more than 20% 32,000,000 Options over ordinary shares exercisable at - Sammy Resources Pty Ltd 10,000,000 $0.03 on or before 14 May 2021. Options Restricted Securities subject to escrow period Shares Name 12,000,000 Unlisted Options exercisable at $0.03 on or before 14 May 2021 escrowed for 24 months from the date of quotation. 8,000,000 Performance Rights escrowed for 24 months from the date of quotation. Fin Resources Limited 42 2019 Annual Report to Shareholders Tenements and Project Locations FIN Resources Limited Tenements Location Area Structure Western Australia Western Australia Western Australia 134km2 50Km2 44km2 51% 51% 51% AUSTRALIA E80/4808 E20/900 E28/2652 km2 – Square Kilometres Location of the Company’s Projects in Western Australia Fin Resources Limited 43 2019 Annual Report to Shareholders  Important Information and Disclaimers Competent Persons Statement The information in this report that relates to Exploration Results and Exploration Targets is based on information compiled by Mr Scott Bishop, a consultant of the Company and a Member of The Australasian Institute of Mining and Metallurgy. Mr Bishop has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Bishop consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to the interpretation of historic land based FLTEM and airborne VTEM Survey Results, and consequently drill hole design is based on information compiled by Mr Matthew Cooper, who is employed as a Consultant Principal Geophysicist to the Company through Core Geophysics Pty Ltd. Mr Cooper is a member of the Australian Institute of Geoscientists and has sufficient experience of relevance to the styles of mineralisation and the types of deposits under consideration, and activities undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Cooper consents to the inclusion in the report of matters based on information in the form and context in which it appears. Fin Resources Limited 44 2019 Annual Report to Shareholders 

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