Freehill Mining Limited
Annual Financial Report
for the year ended 30 June 2016
Contents
Corporate information
Corporate governance statement
Directors’ report
Auditor’s independence declaration
Independent auditor’s report to the members of Freehill Mining Limited
Directors’ declaration
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Corporate information
ABN 27 091 608 025
Freehill Mining Limited
Annual Financial Report 2016
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Freehil Mining Limited is a based in Melbourne, Australia, and was listed on the Australian Stock Exchange in
April 2002. It has been suspended from trading on the ASX since January 2010 and was delisted in March 2016.
Registered Office
Level 1, 141 Capel Street
North Melbourne, Victoria 3051
Auditor
RSM Australia Partners
Level 21,
55 Collins Street
Melbourne VIC 3000
Share register
Computershare Investor Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford, Victoria, 3067
Telephone: 1300 85 05 05 (Australia)
+61 3 9415 4000 (Overseas)
Freehill Mining Limited
Annual Financial Report 2016
Corporate governance statement
The Board of Directors of Freehill Mining Limited is responsible for the corporate governance of the Company. The Board
guides and monitors the business and affairs of Freehill Mining Limited on behalf of the shareholders by whom they are
elected and to whom they are accountable.
Freehill Mining Limited’s corporate governance principles and policies are therefore structured with reference to the
Corporate Governance Council’s best practice recommendations, which are as follows:
1.
2.
3.
4.
5.
6.
7.
8.
Lay solid foundations for management and oversight.
Structure the Board to add value.
Promote ethical and responsible decision making.
Safeguard integrity in financial reporting.
Make timely and balanced disclosure.
Respect the rights of shareholders.
Recognise and manage risk.
Remunerate fairly and responsibly.
Lay solid foundations for management and oversight
1.
As the Board acts on behalf of and is accountable to the shareholders, the Board seeks to identify shareholders’
expectations, as well as other regulatory and ethical expectations and obligations. It is also responsible for identifying areas
of significant business risk and ensuring arrangements are in place to adequately manage those risks. The Board seeks to
discharge these responsibilities in a number of ways.
The Board has delegated the responsibility for operating and administering the Company to the executive team. The Board
ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place
procedures to assess their performance. Within this setting, the executive team regularly reports to the Board on all
operational and financial matters.
The Board is responsible for ensuring that management’s objectives and activities are aligned with the expectations and
risks identified by the Board. The Board has a number of mechanisms in place to ensure this is achieved. In addition to
establishing Committees these mechanisms include:
•
•
Approving a strategic plan, which encompasses the Company’s vision, mission, and strategy statements, designed
to meet stakeholders’ needs and manage business risk.
Implementing operating plans and budgets by management and Board monitoring of progress against budget.
2.
Structure the Board to add value
Board composition
The Board composition is determined according to the following principles and guidelines:
•
•
•
•
the Board should have at least three directors,
the chairperson must be a non-executive director,
the Board should comprise directors with an appropriate range of qualifications and expertise, and
the Board shall meet as often as required for the effective operation of the Company and follow meeting
guidelines set down to ensure all directors are made aware of, and have available all necessary information, to
participate in an informed discussion of all agenda items.
The skills, experience and expertise relevant to the position of each director who is in office at the date of the annual report
and their term of office are detailed in the Directors’ Report.
The names of independent directors of the Company are listed below:
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Freehill Mining Limited
Annual Financial Report 2016
Name
Appointed / Resigned
Stephen Chaplin
Appointed 3 August 2015
Raymond Charles Mangion
Appointed 20 March 2015
Nicholas Kapes
Paul Davies
Appointed 20 March 2015
Appointed 20 March 2015, not independent after 3 August 2015
When determining whether a non-executive director is independent the director must not fail any of the following tests:
•
less than 10% of Company shares are held by the director and any entity or individual directly or indirectly
associated with the director;
• within the last three years the director has not been employed in an executive capacity with the Company; and
•
none of the director’s income or the income of an individual or entity directly or indirectly associated with the
director is derived from the Company other than an income derived as a director of the Company.
At balance date the Company had three independent directors.
Directors have the right to seek independent advice in the furtherance of their duties as directors at the Company’s
expense. Approval must be obtained from the Chairman or Board prior to incurring any expense on behalf of the Company.
Given the size of the Board, the Board has not established a Nomination Committee. The responsibility for the
appointment of Directors and review of Board succession plans is undertaken by the Board. The evaluation of the Board’s
performance is undertaken by the Chairman of the Board.
Promote ethical and responsible decision-making
3.
The Company has not established a formal code of conduct. At present the Company has no employees. Directors and
staff, as appointed, are expected to act ethically and responsibly at all times to ensure the protection of and proper use of
the Company’s assets and compliance with laws and regulations.
The Company does not have a formal policy concerning the trading in Company securities by directors, officers and
employees however trading in Company securities should only occur in circumstances where the market is considered to be
fully informed of the Company’s activities.
The Board recognises the importance of promoting ethical and responsible decision-making and has embarked on
establishing appropriate formal policies in this regard.
Safeguard integrity in financial reporting
4.
Audit Committee
Given the nature of the Company’s current operations and the size of the Board, as of 1 July 2008 the Board decided not to
maintain an Audit Committee and to directly assume the role of the Audit Committee. The undertaking of the roles and
responsibilities of the Audit Committee by the Board of Freehill Mining Limited will allow for a more efficient and
streamlined decision making process and promotes better corporate governance.
The responsibilities of the Board in regard to audit related matters include:
•
•
•
•
•
•
•
the review of accounting policies;
the detailed review of the Company’s annual, half yearly financial reports;
the effectiveness of accounting and internal control systems;
addressing the findings of the external auditors;
the assessment of the scope, quality and cost of the external audit;
identifying areas of operation, regulatory and legal risk and recommending procedures to the Board to ensure
those risks are effectively managed; and
ensuring that conflicts of interest do not arise from services provided by the company’s external advisors.
The external auditors are invited to attend Board meetings at the discretion of the Board.
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Freehill Mining Limited
Annual Financial Report 2016
5. Make timely and balanced disclosure
The Board is aware of the continuous disclosure requirements of the ASX and have procedures in place to disclose any
information concerning the Company that a reasonable person would expect to have a material effect on the price or value
of the Company’s securities.
The Chairman and Board members with Board Approval are authorised to make statements and representations on Freehill
Mining Limited’s behalf. The Company Secretary is responsible for overseeing and coordinating the disclosure of
information to the ASX, analysts, stockbrokers, shareholders, the media and the public.
Respect the rights of shareholders
6.
The Board aims to ensure that all shareholders, on behalf of whom they act, are informed of major developments affecting
the affairs of the Company. Information is communicated to the shareholders through the annual and half year reports,
disclosures made to the ASX, notices of meetings and occasional letters to shareholders where appropriate.
Recognise and manage risk
7.
The Board has procedures in place to recognise and manage risk. Monthly reporting of financial performance, position and
cash flow is in place as are policies to manage other business risks.
The Chairman and one other director both sign statements to the Board for the full and half year financial reports
confirming that:
•
•
•
The Company’s financial reports present a true and fair view, in all material respects of the Company’s financial
condition and operational results and are in accordance with relevant accounting standards;
The statement given above is founded on a sound system of risk management and internal compliance and
control which implements the policies adopted by the Board; and
The Company’s risk management and internal compliance and control system is operating efficiently in all
8.
Remunerate fairly and responsibly
Remuneration policies
Remuneration for the Board will be put to the next general meeting of Shareholders.
Remuneration policies for employees will be developed in line with the Company’s activities and will be consistent with
relevant industry standards.
The number of meetings of the Committee and their attendance at meetings is disclosed in the Directors’ Report.
There are no schemes for retirement benefits other than statutory superannuation for non-executive directors.
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Freehill Mining Limited
Annual Financial Report 2016
Directors’ report
Your directors are pleased to present their report on Freehill Mining Limited (“Freehill” or “the Company”) for the financial
year ended 30 June 2016.
Directors
The Company’s directors in office during and since the end of the financial year ended 30 June 2015 are as follows:
Stephen Chaplin
(Chairman appointed 3 August 2015)
Paul Davies
(Chairman, appointed 20 March 2015, Resigned as Chairman and appointed Chief Financial
Officer 3 August 2015)
Raymond Charles Mangion
(appointed 20 March 2015)
Nicholas Kapes
(appointed 20 March 2015)
Information on Directors
Stephen Chaplin
Chairman
Mr Chaplin has been a company director with over 30 years’ experience in a number of Australian companies including
mining, manufacturing, commercial fishing and property development. Stephen has participated in "Team Australia" which
is a government initiative inviting Australian small business to pitch directly to the USA military procurement program, has
extensive experience in international trade, is a significant investor in many ASX listed companies and a member of the
Australian Institute of Company Directors.
Paul Davies
Director and Chief Financial Officer
Mr. Davies has extensive experience as CFO of both publicly traded and privately held companies. Over the past 10 years he
has been involved with many early stage companies involving reporting, strategic planning, systems implementation,
fundraising and IPO. Prior to this Mr Davies was Director in Charge of Corporate and Institutional Banking for Deutsche Bank
Australia and a member of the Deutsche Bank Credit Committee. He has been directly involved in over $20 billion worth of
transactions involving origination, advising, arranging, structuring, project finance, lead managing, syndication, negotiation,
risk management, including servicing many of Australia’s major mining companies. Before Deutsche Bank Mr. Davies
worked for a number of years with both Bankers Trust Australia and Macquarie Bank.
With his 20 plus years in the finance sector Mr. Davies brings to the Company considerable experience in both debt and
equity markets in addition to significant understanding of the mining sector.
Mr. Davies holds an Economics Degree from Monash University, has qualified as a Chartered Accountant and is an alumnus
of the Stanford Business School.
Nicholas Kapes
Non-executive director
Mr. Kapes began his professional career in 1988, where he commenced merchant banking after completing a Bachelor of
Economics. He brings to the Board an array of experience including trading on the world’s major exchanges on behalf of
some of the world’s premier banks, including Credit Suisse. Mr Kapes was a Director of Proprietary Trading at Credit Suisse
for two years.
In his time as a merchant banker Mr. Kapes became heavily involved in companies evolving from venture capital stage to
listing on the Australian Securities Exchange.
Since his return to Melbourne in late 2005, Mr. Kapes has actively engaged in originating deal opportunities and
implementing strategic business initiatives including mergers and acquisitions, private and public equity capital raisings
through initial public offerings, private placements and rights issues.
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Freehill Mining Limited
Annual Financial Report 2016
Raymond Charles Magnion
Non-executive director
Mr Mangion has performed the role of Managing Director of Morbak Investments Pty Ltd for the past 18 years, having created
the business as a start-up business. He has approximately 30 years’ managerial experience and holds an Associate Diploma
of Business (Accounting) and an RG146 Associate Diploma in Financial Planning.
Directors’ share and option holdings
As at the date of this report, the directors’ interests in Freehill Mining Limited’s shares and options are as follows:
Stephen Chaplin
Paul Davies
Raymond Charles Mangion
Nicholas Kapes
Ordinary
Shares
-
-
-
-
-
Principal activities
Freehill Mining Limited was de-listed in March 2016. During 2015-2016 financial year, the principal activities of the
company has been to undertake a capital restructure, raise funds via convertible instruments and prepare a prospectus in
order raising capital to allow for the proposed acquisition of Freehill Investments Pty Ltd. The target company has interests
in two Chilean companies that own a producing magnetite iron ore sands project in Chile, the Yerbas Buenas Project. In
addition, Freehill is seeking re-listing of its shares on the ASX.
Review and results of operations
Freehill Mining Limited incurred losses of $507,888 for the financial year ended 30 June 2016 (2015: Profit of $819,513).
The losses incurred were largely due to expenses in relation to the Company’s proposed acquisition of Freehill Investments
Pty Ltd including extensive work done on the development of a Prospectus for the Company’s fundraising and compliance
costs associated with the Company itself.
Future developments
Freehill, with the support of investors and funding provided through the issue of Convertible Notes has restructured its capital
and formalised its offer for the acquisition of Freehill Investments Pty. Ltd. The Company will be lodging a Prospectus with
ASIC in late August 2016 for a $6 million fundraising of which $4 million will be underwritten as part of the acquisition which
will provide working capital to develop the Chilean mining assets and facilitate the relisting of the Company’s shares on the
ASX.
Significant events after balance date
The Company has held an EGM and obtained approval for the acquisition of Freehill Investments Pty Ltd. As part of these
approvals and subject to successful completion Mr Juan Enrique Dagach will be appointed to the Board as Chief Executive
Officer.
Dividends
No dividends were paid or declared since the start of the financial year and the directors do not recommend the payment
of a dividend in respect of the financial year ended 30 June 2016.
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Freehill Mining Limited
Annual Financial Report 2016
Remuneration report
This report details the nature and amount of compensation for each director of Freehill Mining Limited and its executives
(key management personnel).
Remuneration policy
The Company is currently reviewing its operations and is undertaking an acquisition which will require a review of the
Company’s remuneration policies and practices. The Board will ensure that appropriate policies and procedures will be put
in place to ensure Remuneration practices are in line with relevant industry standards.
Over the past 12 months no Directors fees have been paid however a grant of shares in lieu of fees was approved by
shareholders at an Extraordinary General Meeting post Balance Date. The Grant is for 500,000 shares for each director and
the Company Secretary based on 20 cent shares reflecting both the fact that directors have received no fees during the past
12 months and the risk associated with completion of the acquisition and proposed fundraising currently proposed by the
Company. Shares issued under this grant will be subject to a two year escrow period. Directors are entitled to $45,000 per
year Directors fees. The grant described above, while approved by shareholders subsequent to balance date, will not be
brought to account until successful completion of the Company’s acquisition and associated fundraising
Since August 2015, Executive Director, Mr Paul Davies, receives $2,000 per month for accounting and professional services
provided to the Company.
Directors and executives (key management personnel compensation) disclosures
The key management personnel of Freehill Mining Limited during the year were:
Directors
Stephen Chaplin (appointed 3 August 2015)
Chairman
Paul Davies (appointed 20 March 2015)
Appointed Finance Director August 3, 2015 formerly Chairman
Nicholas Kapes (appointed 20 March 2015)
Ray Magnion (appointed 20 March 2015)
Non-Executive director
Non-Executive director
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Freehill Mining Limited
Annual Financial Report 2016
Primary (short-term) employee benefits
Post
employment
benefits
Other long
term
benefits
Salary & fees
Bonus
Other
(allowances)
Superannuation
2016
$
$
$
$
Long
service
leave
accrued
$
Share
based
payments
Shares in
lieu of
salary &
fees1
Total
$
$
Directors
Stephen Chaplin (appointed August 3
2015)
Paul Davies (appointed March 20
2015)
Nicholas Kapes (appointed 20 March
2015)
Ray Magnion (appointed 20 March
2015)
Total
22,000
-
-
22,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,000
-
-
22,000
Primary (short-term) employee benefits
Post
employment
benefits
Other long
term
benefits
Salary & fees
Bonus
Other
(allowances)
Superannuation
2015
$
$
$
$
Long
service
leave
accrued
$
Share
based
payments
Shares in
lieu of
salary &
fees1
Total
$
$
Directors
Shihao Li
Kee Guan Saw
Gavin Boyd
Paul Davies (appointed March 20
2015)
Nicholas Kapes (appointed 20 March
2015)
Ray Magnion (appointed 20 March
2015)
-
11,000
9,000
-
-
-
Total
20,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,000
9,000
-
-
-
20,000
Contracts for service of key management personnel
The Company has no contracts in place for the services of key management personnel.
Options issued to directors and executives
There were no options granted, exercised or lapsed during the annual reporting period to the directors and executives.
End of Audited Remuneration Report
Indemnification and insurance of directors and officers
During the financial year, the Company paid a premium in respect of a contract insuring the directors and executives of the
Company and all the executive officers of the Company and any related body corporate against a liability incurred as such a
director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor
of the Company or any related body corporate against a liability incurred as such an officer or auditor.
Environmental regulations
The Company is not subject to any significant environmental regulations.
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Freehill Mining Limited
Annual Financial Report 2016
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of
the Corporations Act 2001.
Directors’ meetings
The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during
the financial year and the number of meetings attended by each director while they were a director or committee member:
FY 2016
Number of
meetings
attended
FY 2016
Number of
meetings
eligible to
attend
FY 2015
Number of
meetings
attended
FY 2015
Number of
meetings
eligible to
attend
Number of meetings
attended:
Stephen Chaplin
(appointed 3 August 2015)
Paul Davies (appointed 20
March 2015)
Nicholas Kapes (appointed
20 March 2015)
Raymond Mangion
(appointed 20 March 2015)
6
7
7
4
7
7
7
7
-
1
1
1
-
1
1
1
Given the financial circumstances Freehill found itself in during the year, no distinct remuneration committee meetings
were held. All matters in relation to remuneration were handled directly by the Board of Directors.
Committee membership
As at the date of this report Freehill Mining Limited does not have a Remuneration Committee as Freehill Mining Limited
has no current employees and Directors fees associated with current directors will be put to the next meeting of
shareholders for approval. Should the Company take on employees appropriate practice in relation to determination of
remuneration will be adopted by the Board.
As at the date of this report, Freehill Mining Limited does not have an Audit Committee. The Board of Directors has
assumed the role and responsibilities of the Audit Committee as at 1 July 2008.
Non-audit services provided by auditor
The Company’s auditor, RSM Australia Partners, provided non-audit services in relation to general assistance with the
earlier prospectus during the year ended 30 June 2016. The directors are satisfied that the provision of non-audit services
during the financial year by the auditor is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
Auditor’s independence declaration
The auditor’s independence declaration, as required under Section 307C of the Corporations Act 2001, is included on page
10.
Signed in accordance with a resolution of the directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the directors
Paul Davies
Director
Melbourne, 24 August 2016
9
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Freehilll Mining Limited for the year ended 30 June 2016, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
R B MIANO
Partner
Melbourne, VIC
Dated: 23 August 2016
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Pty Ltd is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Pty Ltd ACN 009 321 377 atf Birdanco Practice Trust ABN 65 319 382 479 trading as RSM
Liability limited by a scheme approved under Professional Standards Legislation
10
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FREEHILL MINING LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Freehill Mining Limited (“the company”), which comprises the
statement of financial position as at 30 June 2016, and the statement of comprehensive income, statement of changes in
equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies
and other explanatory information and the directors' declaration.
Directors’ Responsibility 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 is free from material misstatement,
whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International Financial Reporting
Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether
the financial report is free from material misstatement.
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 and fair presentation of the financial report 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. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Independence
11
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Pty Ltd is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Pty Ltd ACN 009 321 377 atf Birdanco Practice Trust ABN 65 319 382 479 trading as RSM
Liability limited by a scheme approved under Professional Standards Legislation
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm
that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Freehill
Mining Limited, would be in the same terms if given to the directors as at the time of this auditor's report.
Opinion
In our opinion:
(a)
the financial report of Freehill Mining Limited (Formerly Iatia Limited) is in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the company's financial position as at 30 June 2016 and of its performance for
the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 1(p) in the financial report which refers to the significant net
liability position of $403,729 as at 30 June 2016, and operating losses of $507,888 and net cash outflows from operating
activities of $341,822 for the year then ended, as well as the reliance of the company on its ability to obtain equity funds
to enable it to meet its debts as and when they fall due. These conditions, along with other matters set forth in Note 1(p),
indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue
as a going concern and, therefore, the company may be unable to realise its assets and discharge its liabilities in the
normal course of business.
Report on the Remuneration Report
We have audited the Remuneration Report in the directors’ report for the year ended 30 June 2016. 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
In our opinion the Remuneration Report of Freehill Mining Limited for the year ended 30 June 2016 complies with section
300A of the Corporations Act 2001.
RSM AUSTRALIA PARTNERS
R B MIANO
Partner
Melbourne, VIC
Dated: 23 August 2016
12
Freehill Mining Limited
Annual Financial Report 2016
Directors’ declaration
The directors of Freehill Mining Limited declare that:
1. The financial statements, comprising the statement of comprehensive income, statement of financial position,
statement of cash flows, statement of changes in equity, accompanying notes, are in accordance with the
Corporations Act 2001 and:
a.
b.
comply with Accounting Standards and the Corporations Regulations 2001; and
give a true and fair view of the company’s financial position as at 30 June 2016 and of its performance
for the year ended on that date.
2. The company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards.
3.
In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable.
4. The remuneration disclosures included in the directors’ report (as part of audited Remuneration Report), for the
year ended 30 June 2016, comply with section 300A of the Corporations Act 2001.
5. The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
directors by:
Paul Davies
Director
Melbourne, 24 August 2016
13
Statement of comprehensive income
for the financial year ended 30 June 2016
Freehill Mining Limited
Annual Financial Report 2016
Note
Jun-16
Jun-15
Revenue from continuing operations
2
Loan Forgiveness
22
-
983
1,012,567
Capital Raising Expenses
Employee benefits expense
Compliance and Filing Fees
Geologist's Reports
Interest Expense
Insurance expenses
Printing & Stationary
Professional fees
Share registry expenses
Technical Consultant
Travel & Accommodation
Web Services
Other expenses
(24,350)
-
(13,813)
(78,601)
(55,884)
(9,184)
(6,140)
(218,714)
(46,406)
(15,000)
(32,681)
(2,500)
(4,637)
(10,591)
(20,000)
-
-
(3,408)
(18,204)
-
(95,406)
(46,428)
-
-
-
-
Profit/(Loss) from continuing operations before income tax benefit
(507,888)
819,513
Income tax benefit
3
-
-
Profit/(Loss) from continuing operations
(507,888)
819.513
Total comprehensive income for the half-year
(507,888)
819,513
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
10
10
(8.27)*
(8.27)*
0.07
0.07
*Calculated after 222 for 1 consolidation and approved issue of shares
The above Statement of comprehensive income is to be read in conjunction with the accompanying notes.
14
Freehill Mining Limited
Annual Financial Report 2016
Statement of financial position
as at 30 June 2016
Note
Jun-16
Jun-15
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
9(b)
4
$
$
38,829
16,720
-
25,651
4,846
-
55,548
30,497
Total current assets
55,548
30,497
Non-Current Assets
Loan receivable
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Non Current Liabilities
Financial Liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
5
6
7
8
310,000
310,000
-
-
365,548
30,497
177,221
177,221
56,119
56,119
592,056
47,505
592,056
47,505
769,277
103,624
(403,729)
(73,127)
16,821,001
16,821,001
320,681
143,394
(17,545,411)
(17,037,522)
(403,729)
(73,127)
The above Statement of financial position is to be read in conjunction with the accompanying notes.
15
Freehill Mining Limited
Annual Financial Report 2016
Statement of changes in equity
for the financial year ended 30 June 2016
Contributed
equity
Convertible
Notes Reserve
Accumulated
losses
Total
$
$
$
$
Balance at 30 June 2014
16,791,001
99,474
(17,857,035)
(966,560)
Transactions with equity holders in
their capacity as equity holders
Issue of share capital
Issue of convertible notes
Share based payments
30,000
-
-
-
43,920
-
-
-
-
30,000
43,920
-
16,821,001
143,394
(17,857,035)
(892,640)
Total comprehensive income for the year
Comprehensive income for the year
-
-
819,513
819,513
Balance at 30 June 2015
16,821,001
143,394
(17,037,522)
(73,127)
Transactions with equity holders in
their capacity as equity holders
Issue of share capital
Issue of convertible notes
Share based payments
Total comprehensive income for the
year
-
-
-
-
177,287
-
-
-
-
-
177,287
-
16,821,001
320,681
(17,037,522)
104,160
Comprehensive income for the year
-
-
(507,888)
(507,888)
Balance at 30 June 2016
16,821,001
320,681
(17,545,410)
(403,729)
The above Statement of changes in equity is to be read in conjunction with the accompanying notes.
16
Freehill Mining Limited
Annual Financial Report 2016
Statement of cash flows
for the financial year ended 30 June 2016
Cash Flows from Operating Activities
Payments to suppliers
Interest received
Borrowing costs
Note
2016
2015
(285,960)
(156,589)
22
(55,884)
983
(1,983)
Net cash flows (used in)/provided by
operating activities
9(a)
(341,822)
(157,589)
Cash flows from investing activities
Loan to Freehill Investments Pty Ltd
Net cash flows (used in)/provided by
investing activities
Cash flows from financing activities
Proceeds from borrowings
Proceeds from capital raising
Net cash flows (used in)/provided by
financing activities
(310,000)
(310,000)
-
-
665,000
-
110,000
30,000
665,000
140,000
Net increase/(decrease) in cash held
13,178
(17,589)
Add opening cash brought forward
25,651
43,240
Closing cash carried forward
9(b)
38,829
25,651
The above Statement of cash flows is to be read in conjunction with the accompanying notes.
17
Freehill Mining Limited
Annual Financial Report 2016
Notes to the financial statements
For the financial year ended 30 June 2015
1. Summary of significant accounting policies
Statement of compliance
Freehill Mining Limited (“the Company”) is a company limited by shares incorporated in Australia whose shares were delisted
from trading on the Australian Stock Exchange.
The address of the registered office and principal place of business is Level 1, 141 Capel Street, North Melbourne, VIC 3051.
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial report also complies with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”).
Basis of preparation
The financial report has been prepared on the basis of historical cost. Cost is based on the fair values of the consideration
given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.
The following significant accounting policies have been adopted in the preparation and presentation of the financial report:
(a) Borrowing costs
Borrowing costs incurred for the construction of any qualifying assets are capitalised during the period of time that is required
to complete and prepare the asset for its intended use or sale. All other borrowing costs are recognised in profit or loss in the
period in which they are incurred.
(b)
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 balance sheet.
(c)
Contributed equity
Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or options are shown as a
deduction from the equity proceeds, net of any income tax benefit.
(d) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to members of Iatia Limited, adjusted for the after-
tax effect of preference dividends on preference shares classified as equity, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares during the year. The weighted
average number of issued shares outstanding during the financial year does not include shares issued as part of the Employee
Share Loan Plan that are treated as in-substance options.
Diluted earnings per share
Earnings used to calculate diluted earnings per share are calculated by adjusting the basic earnings by the after-tax effect of
dividends and interest associated with dilutive potential ordinary shares. The weighted average number of shares used is
adjusted for the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
18
Freehill Mining Limited
Annual Financial Report 2016
1. Summary of significant accounting policies (cont’d)
(e) Financial instruments issued by the company
Debt and equity instruments
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual
arrangement.
Compound instruments
The component parts of compound instruments are classified separately as liabilities and equity in accordance with the
substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using
the prevailing market interest rate for a similar non-convertible debt. The equity component initially brought to account is
determined by deducting the amount of the liability component from the amount of the compound instrument as a whole.
Transaction costs on the issue of equity instruments
Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds
of the equity instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection
with the issue of those equity instruments and which would not have been incurred had those instruments not been issued.
Interest and dividends
Interest and dividends are classified as expenses or as distributions of profit consistent with the statement of financial position
classification of the related debt or equity instruments or component parts of compound instruments.
(f) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as
applicable; and
•
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the balance sheet.
Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
(g)
Impairment of assets
At each reporting date, the company 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 company estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment
annually and whenever there is an indication that the asset may be impaired. An impairment of goodwill is not subsequently
reversed.
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.
19
Freehill Mining Limited
Annual Financial Report 2016
1. Summary of significant accounting policies (cont’d)
(h)
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 comprehensive balance sheet 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.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches,
associates and joint ventures except where the company 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 company 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 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 profit or loss, 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.
Tax consolidation
After the sale of subsidiary companies, Iatia Limited is not the head entity of a tax-consolidated group from 01 July 2012.
(i)
Interest bearing liabilities
All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the redemption amount is recognised in the profit or loss over the
period of the loans and borrowings using the effective interest method.
The fair value of a liability portion of a convertible note is determined using a market rate of interest for an equivalent non-
convertible note and stated on an amortised cost basis until conversion or maturity of the notes. The remainder of the
proceeds is allocated to the conversion option and is shown as equity. Issue costs are apportioned between the liability and
equity components based on the allocation of proceeds to the liability and equity components when the instruments are first
recognised.
All borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
20
Freehill Mining Limited
Annual Financial Report 2016
1. Summary of significant accounting policies (cont’d)
(j) Other liabilities
Other liabilities comprises non-current amounts due to related parties that do not bear interest and are repayable in 366
days from balance sheet date. As these are non-interest bearing, fair value at initial recognition requires an adjustment to
discount these loans using a market-rate of interest for a similar instrument with a similar credit rating (Company's
incremental borrowing rate). The discount is credited to the profit or loss immediately and amortised using the effective
interest method.
(k) Payables
Trade and other payables represent liabilities for goods and services provided to the Company prior to the year end and
which are unpaid. These amounts are unsecured and have 30-60 day payment terms.
(l) Provisions
Provisions are recognised when the company has a present obligation, the future sacrifice of economic benefits is probable,
and the amount of the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured
using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
the receivable is recognised as an asset if it is probable that recovery will be received and the amount of the receivable can
be measured reliably.
Provisions are not recognised for future operating losses.
(m) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can
be reliably measured. Revenue is recognised at the fair value of consideration received or receivable.
(n) Trade receivables
Trade receivables are recognised at original invoice amounts less an allowance for uncollectible amounts and have repayment
terms between 30 and 90 days. Collectability of trade receivables is assessed on an ongoing basis. Debts which are known to
be uncollectible are written off. An allowance is made for doubtful debts where there is objective evidence that the Company
will not be able to collect all amounts due according to the original terms. Objective evidence of impairment include financial
difficulties of the debtor, default payments or debts more than 90 days overdue. On confirmation that the trade receivable
will not be collectible the gross carrying value of the asset is written off against the associated provision.
From time to time, the Company elects to renegotiate the terms of trade receivables due from customers with which it has
previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes
to the amounts owed and are not, in the view of the directors, sufficient to require the derecognition of the original
instrument.
(o) Critical accounting estimates and judgements
Estimates and judgements are based on past performance and management expectations for the future.
The Company makes certain estimates and assumptions concerning the future, which by definition will seldom represent
actual results. The estimates and assumptions that have a significant inherent risk in respect of estimates based on future
events which could have a material impact on the assets and liabilities in the next financial year, are outlined below:
•
•
Convertible notes – in determining the fair value of the liability, in accordance with the accounting policy outlined
in note 1(i), the company used a discount rate of 25%.
Loan receivable recoverability – the recoverability of the $310,000 loan receivable from Freehill Investments Pty
Ltd, the target company that Freehill Mining Limited will acquire should equity raising be successful, is considered
recoverable on the basis that management believe the equity raising will be successful.
21
Freehill Mining Limited
Annual Financial Report 2016
1. Summary of significant accounting policies (cont’d)
(p) Going concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business
activities and the realisation of assets and discharge of liabilities in the normal course of business.
As disclosed in the financial statements, the company incurred a net loss of $507,888 (2015: $193,054 before loan forgiveness
gain of $1,012,567) and had net cash outflows from operating activities of $341,822 (2015: $157,589) for the year ended 30
June 2016. As at that date the company had net liabilities of $403,729 (2015: $73,127).
These factors indicate a material uncertainty which may cast significant doubt over the ability of the company to continue as
a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business
and at the amounts stated in the financial report.
The Directors believe that there are reasonable grounds to believe that the company will be able to continue as a going
concern after consideration of the following factors:
•
•
•
•
•
The Company has re-structured its capital to facilitate a potential capital raising.
The Company is in the process of finalising its fundraising Prospectus and anticipates lodging with ASIC before the
end of August with fundraising to ensue shortly thereafter.
The Company has received convertible note proceeds of $665,000 during the past 12 months and further funds of
$300,000 have been raised post balance date.
Following on from the above points, the Company has sought and received approval from shareholders to acquire
Freehill Investments Pty Ltd whose interests in the Chilean resource sector have been the subject of significant
evaluation by the Company. As part of this acquisition the Company is finalising its Prospectus to proceed with
fundraising and achieve re-listing of the Company’s shares on the ASX.
The recoverability of the $310,000 loan receivable from Freehill Investments Pty Ltd, the target company that
Freehill Mining Limited will acquire should equity raising be successful, is considered recoverable on the basis that
management believe the equity raising will be successful.
Accordingly, the Directors believe that the company will be able to continue as a going concern and that it is appropriate to
adopt the going concern basis in the preparation of the financial report.
The financial report does not include any adjustments relating to the amounts or classification of recorded assets or
liabilities that might be necessary if the company does not continue as a going concern.
22
Freehill Mining Limited
Annual Financial Report 2016
1. Summary of significant accounting policies (cont’d)
(q) New accounting standards and interpretations
As at 30 June 2016, the following standards and interpretations, which may impact the entity in the period of initial
application, have been issued but are not yet effective:
Other than changes to disclosure formats, it is not expected that the initial application of these new standards in the
future will have any material impact on the financial report.
Reference
Title
Summary
AASB 2014-9
AASB 2015-1
Amendments to Australian
Accounting Standards –
Equity Method in Separate
Financial Statements
This amending standard allows entities
to use the equity method of accounting
for investments in subsidiaries, joint
ventures and associates in their
separate financial statements.
Amendments to Australian
Accounting Standards –
Annual Improvements to
Australian Accounting
Standards 2012-2014 Cycle
The Standard makes amendments to
various Australian Accounting
Standards arising from the IASB’s
Annual Improvements process, and
editorial corrections.
AASB 2015-2
Amendments to Australian
Accounting Standards –
Disclosure Initiative:
Amendments to AASB 101
The Standard makes amendments to
AASB 101 Presentation of Financial
Statements arising from the IASB’s
Disclosure Initiative project.
AASB 15
Revenue from Contracts
with Customers
This Standard establishes principles
(including disclosure requirements) for
reporting useful information about the
nature, amount, timing and uncertainty
of revenue and cash flows arising from
an entity’s contracts with customers.
Application date
(financial years
beginning)
1 January 2016
1 January 2016
1 January 2016
1 January 2018
AASB 2014-5
Amendments to Australian
Accounting Standards
arising from AASB 15
AASB 9
Financial Instruments
AASB 2014-7
Amendments to Australian
Accounting Standards
arising from AASB 9
(December 2014)
Consequential amendments arising
from the issuance of AASB 15.
1 January 2017
1 January 2018
This Standard supersedes both AASB 9
(December 2010) and AASB 9
(December 2009) when applied. It
introduces a “fair value through other
comprehensive income” category for
debt instruments, contains
requirements for impairment of
financial assets, etc.
Consequential amendments arising
from the issuance of AASB 9
1 January 2018
23
2
Revenue
Revenue from continuing operations
Interest - unrelated parties
Total revenue from continuing operations
Freehill Mining Limited
Annual Financial Report 2016
2016
2015
$
$
22
22
983
983
2016
2015
$
$
3
Income tax
The prima facie tax expense on profit/(loss) before income tax is
reconciled to the income tax expense as follows:
Prima facie tax expense/(benefit) at 30%
(152,366)
245,854
Add/(Less):
Non-deductible items
Non-assessable income
10,132
57,916
-
(303,770)
Temporary differences and losses not brought to account
(142,234)
Income tax attributable to profit/(loss) before income tax
-
-
-
4
Trade and other receivables
Current
GST & Other receivable
Trade debtors are non-interest bearing and generally on 30
day terms.
5
Loan receivable
Loan to Freehill Investments Pty Ltd (a)
(a) The unsecured loan is repayable 3 years from
commencement date at interest of 10% per annum,
payable at the end of the term of the loan.
2016
2015
$
$
16,720
16,720
4,846
4,846
2016
2015
$
310,000
310,000
$
-
-
24
6
Trade and other payables
Current
Trade creditors
Other creditors and accruals
Freehill Mining Limited
Annual Financial Report 2016
2016
2015
$
$
35,000
36,839
142,221
19,280
177,221
56,119
Trade creditors are non-interest bearing and are normally settled on 30 day terms.
7
Financial Liabilities
Non-Current
Convertible note (unsecured) (a)
2016
2015
$
$
592,056
47,505
592,056
47,505
(a) Convertible notes with a face value of $90,000 were issued in the last quarter of the 30 June
2015 year.
All convertible notes remain outstanding at 30 June 2016.
The convertible notes mature 3 years from the issue of the notes and have a 10% per annum
interest rate.
The conversion price of the notes was $0.000169 which was updated to $0.037518
post consolidation of shares. The number of shares issued is determined by the total
face value of the notes to be converted divided by the conversion price based on the number of
shares on issue at the time of Note issuance.
Any future changes to the share structure will be pro rata reflected in the in the conversion price.
Convertible notes with a face value of $665,000 were issued in the year to 30 June 2016.
All the convertible notes were on the same terms as the previously issued convertible notes with
the conversion price also at $0.037518..
25
Freehill Mining Limited
Annual Financial Report 2016
2016
2015
Number
$
Number
$
8
Contributed equity & reserves
Ordinary shares
(a)
Issued and paid up capital
Ordinary shares fully paid
1,363,346,543
16,821,001
1,363,346,543 16,821,001
(b)
Movements in shares on
issue
Ordinary shares
Beginning of the financial
year
Issued during the year
Consolidation of shares 222
for 1
1,363,346,543
16,821,001
1,185,518,733 16,791,001
-
(1,357,205,342)
-
-
177,827,810
30,000
-
-
End of the financial year
6,141,201
16,821,001
1,363,346,543 16,821,001
Terms and conditions of contributed equity and reserves
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the
company, to participate in the proceeds from the sale of all surplus assets in proportion to the number
of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote per share, either in person or by proxy, at a meeting of
the company.
26
Freehill Mining Limited
Annual Financial Report 2016
2016
$
2015
$
9
Statement of cash flows
(a)
Reconciliation of the net profit /
(loss) after tax to the net cash
flows from operations
Net profit / (loss)
(507,888)
819,513
Non-operating / non-cash Items
Loan forgiveness
Notional interest expense
Changes in assets and liabilities
(Increase)/decrease in receivables
/ other assets
(Decrease)/increase in trade and
other payables
Net cash flow from operating
activities
(b)
Reconciliation of cash
Cash balance comprises:
- cash at bank
Closing cash balance
-
(1,012,567)
55,884
1,425
(10,920)
12,057
121,102
21,983
(341,822)
(157,589)
38,829
38,829
25,651
25,651
27
10
Earnings/(loss) per share
Basic profit/ (loss) per share (cents per share) from continuing operations
Basic profit/ (loss) per share (cents per share)
Diluted Profit/( loss) per share (cents per share) from continuing operations
Diluted Profit/( loss) per share (cents per share)
Freehill Mining Limited
Annual Financial Report 2016
2016
$
2015
$
(8.27)
(8.27)
(8.27)
(8.27)
0.07
0.07
0.07
0.07
Net Profit/(Loss)
(507,888)
819,513
Weighted average number of ordinary shares used in the calculation
of basic and diluted loss per share
6,141,201
1,229,975,686
11
Auditors' remuneration
Audit or review of the financial
report
Other services
2016
$
2015
$
15,000
14,500
29,500
14,500
-
14,500
28
Freehill Mining Limited
Annual Financial Report 2016
12
Key management personnel compensation
The company has transferred various compensation information disclosures of key management personnel to the
"Remuneration Report" section of the Directors' Report, as allowed under 2M.6.04.
The key management personnel of the company during the year were:
Directors
Stephen Chaplin (appointed 3 August 2015)
Paul Davies (appointed 20 March 2015)
Raymond Mangion (appointed 20 March 2015)
Nicholas Kapes (appointed 20 March 2015)
The aggregate compensation of the key
management personnel of the company is set
out below:
Short-term employee benefits
Post-employment benefits
Other long term benefits
Share based payments - expensed
Share based payments - capitalised into
development costs
Options & rights holdings
There were no options held by key management
personnel during the years ended 30 June 2016
and 2015.
2016
2015
Y
Y
Y
Y
Y
Y
$
22,000
$
20,000
-
-
-
-
-
-
-
-
22,000
20,000
29
Freehill Mining Limited
Annual Financial Report 2016
13
Financial instruments
(a)
Financial risk management objectives
The company does not enter into or trade in financial instruments, including derivative financial
instruments, for speculative purposes. The company's activities expose it primarily to the financial risk of
changes in foreign currency exchange rates and interest rates.
In common with all other businesses, the company is exposed to risks that arise from its use of financial
instruments. This note describes the company’s objectives, policies and processes for managing those risks
and the methods used to measure them. Further quantitative information in respect of these risks is
presented throughout these financial statements.
There have been no substantive changes in the company’s exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the methods used to measure them from
previous periods unless otherwise stated in this note.
The Board has overall responsibility for the determination of the company’s risk management objectives
and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for
designing and operating processes that ensure the effective implementation of the objectives and policies
to the company’s finance function. The company’s' risk management policies and objectives are therefore
designed to minimise the potential impacts of these risks on the results of the company where such impacts
may be material. The company generally uses derivative financial instruments such as foreign exchange
contracts and interest rate swap contracts to hedge these risks. The Board receives monthly reports from
the company Financial Controller through which it reviews the effectiveness of the processes put in place
and the appropriateness of the objectives and policies it sets. The company’s internal auditors also review
the risk management policies and processes and report their findings to the Audit Committee.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly
affecting the company’s competitiveness and flexibility. Further details regarding these policies are set out
below.
(b) 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.
(c)
Foreign currency risk
The company undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate
fluctuations arise. The company does not have any Sales in foreign currencies in current year. Currently, no
instruments to hedge foreign currency are used.
(d)
Interest rate risk management
The company is exposed to interest rate risk as it borrows funds at fixed interest rates. The level of interest beared
borrowings is low and therefore no instruments are entered into to hedge interest rate risk.
The company has no significant interest-bearing assets or liabilities and the company’s income and operating cash
flows are not materially exposed to changes in market interest rates. As such management have not used sensitivity
analysis to monitor such risks.
The Company does have interest bearing Convertible Notes on issue which have a fixed interest rate. Interest rate
movement swill not impact the interest rate obligations associated with these Notes.
Maturity profile of financial instruments
The following tables details the company’s exposure to interest rate risk:
30
Freehill Mining Limited
Annual Financial Report 2016
13
Financial instruments (cont.)
Variable
interest
rate
$
2016
Financial assets:
Cash and cash
equivalents
Other
receivables
Loan receivable
Financial liabilities
Trade and
other payables
Borrowings
38,829
-
-
38,829
-
-
-
Variable
interest
rate
$
2015
Financial assets:
Cash and cash
equivalents
Other
receivables
Financial liabilities
Trade and
other payables
Borrowings
25,651
-
25,651
-
-
-
Interest bearing
Non-interest bearing
Total
Less
than 1
year
$
1-2 years
2-3 years
$
$
Less
than 1
year
$
1-2 years
2-3 years
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,720
310,000
-
310,000
16,720
- 177,221
82,749
509,307
-
82,749
509,307 177,221
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38,829
16,720
365,549
177,221
592,056
769,277
Interest bearing
Non-interest bearing
Total
Less
than 1
year
$
1-2 years
2-3 years
$
$
Less
than 1
year
$
1-2 years
2-3 years
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,846
4846
-
56,119
47,505
-
47,505
56,119
-
-
-
-
-
-
-
-
-
-
-
-
25,651
4,846
30,497
56,119
47,505
103,624
31
13
Financial instruments (cont.)
Freehill Mining Limited
Annual Financial Report 2016
(e)
(f)
(g)
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the company. The
company has adopted a policy of only dealing with creditworthy
counterparties. The company measures credit risk on a fair value
basis.
The credit risk on liquid funds is limited because the counterparties
are banks with high credit-ratings assigned by international credit-
rating agencies.
The carrying amount of financial assets recorded in the financial
statements, net of any allowances for losses, represents the
company’s maximum exposure to credit risk.
Fair value of financial
instruments
The directors consider the carrying amount of financial assets and
financial liabilities recorded in the financial statements approximates
their fair values.
The fair values of financial assets and financial liabilities are
determined as follows:
• the fair value of financial assets and financial liabilities with
standard terms and conditions and traded on active liquid markets
are determined with reference to quoted market prices; and
• the fair value of other financial assets and financial liabilities are
determined in accordance with generally accepted pricing models
based on discounted cash flow analysis.
Liquidity risk
management
The company manages liquidity risk by maintaining adequate reserves
and by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities. The
majority of Convertible debt providers have indicated an intention to
convert their debt into shares in the Company. Full details will be
provided in the Company’s Prospectus.
Carrying
amount
Contractual
cash flows
2016
< 6 mths
6-12 mths
1-3 yrs > 3yrs
$
$
$
$
$
$
Financial liabilities
Trade and other
payables
177,221
177,221
177,221
-
-
-
Borrowings
592,056
755,000
-
- 755,000
-
769,277
932,221
177,221
- 755,000
-
14
Related party transactions
There are no related Party transactions.
32
Freehill Mining Limited
Annual Financial Report 2016
15
16
17
Segment Reporting
The company is operating as a single entity, and does not have any other reportable segments.
Capital risk management
The company’s objectives when managing capital is to safeguard their ability to continue as a going concern, so that they
can continue to provide returns for shareholders and benefits to other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Given the nature of the business the Company monitors capital on the basis of current business operations and cash flow
requirements.
Subsequent events
Freehill Mining Limited is actively pursuing the acquisition of an Australian private company which has a producing iron
ore mine and associated tenements in Chile. The acquisition was approved by a General Meeting of the Company’s
Shareholders subsequent to balance date. The details of the acquisition and related transactions were included in the
Company’s Notice of Meeting previously distributed to shareholders but also available on the Company’s website
freehillmining.com.
As discussed earlier in this report the Company is in the final stages of preparation of its Prospectus for a proposed
fundraising of $6 million with $4 million to be underwritten. Minimum requirement for successful closing of this raising is
the $4million underwritten amount.
In addition to the $665,000 raised by issue of Convertible Loans prior to balance date a further $300,000 has been raised
subsequent to balance date.
33