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2021 ReportFlinders Mines Limited
ABN 46 091 118 044
Annual Report
for the year ended 30 June 2017
Flinders Mines Limited
Annual Report - 30 June 2017
Contents Page
Corporate Directory
Chairman’s Report
Directors' Report
Auditors Independence report
Financial Statements
Directors’ Declaration
Independent auditor's report to the members
Additional Information
Corporate Governance Statement
Interest in Mining Tenements
Mineral Resources and Ore Reserves Information
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2
Flinders Mines Limited
Corporate Directory
30 June 2017
Corporate Directory
Board of Directors
Neil Warburton
Independent Non-Executive Chairman
David McAdam
Interim Executive Director
Robert Kennedy
Independent Non-Executive Director
Michael Wolley
Non-Executive Director
Evan Davies
Non-Executive Director
Company Secretary
Shannon Coates
Registered Office
45 Ventnor Avenue
West Perth WA 6005
Telephone: 08 9389 4483
Email: info@flindersmines.com
Website: www.flindersmines.com
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Telephone: 08 9323 2000
Website: www.computershare.com.au
Auditors
Grant Thornton Audit Pty Ltd
Level 3, 170 Frome Street
Adelaide SA 5000
Securities Exchange Listing
Shares in Flinders Mines Limited are quoted on the Australian Securities Exchange under trading code FMS.
3
Flinders Mines Limited
Chairman’s Report
Chairman’s Report
Dear Shareholders,
The financial year ending 30 June 2017 was a year of significant change for the company and a year where we
were able to define a strategic development pathway for the Pilbara Iron Ore Project (“PIOP”) asset. After TIO
(NZ) Limited, a wholly owned subsidiary of Todd Corporation, taking a controlling interest in Flinders Mines Limited
in August 2016, the company restructured the board of directors in October 2016. The new board commissioned
a detailed strategic review of the company with a focus on the development constraints and options for the PIOP
asset. This review was conducted in the first quarter of CY17 and the strategic review concluded that:
the potential of the PIOP to be an economic asset;
the economic development of the asset being dependent on the development of a financeable
infrastructure solution; and,
the requirement for an asset maturation phase to further define the project’s commercial viability ahead of
any pre-feasibility study.
The commencement of this asset maturation work was funded through a non-renounceable Rights Issue capital
raise that was available equally on a pro rata basis to all shareholders. With approximately 60% of the
shareholders (based on shares held) taking up their rights, a total of approximately $9.5m (before costs) was
raised. This has enabled the commencement of the field work and the results of this work are scheduled for
release in the first quarter of CY18.
During the year the company relocated its corporate office from Adelaide to Perth to better align the operations with
relevant iron ore market advisors, consultants and technical skills.
The company looks forward to completion of the asset maturation work and being able to better define the quantity
and quality of the PIOP resource in order to inform an accurate basis for further feasibility work.
Neil Warburton
Chairman
Perth, Western Australia
14 September 2017
4
Flinders Mines Limited
Directors’ Report
Directors' Report
Your Directors present their report on the Consolidated Entity comprising Flinders Mines Limited (the “Company” or
“Flinders”) and its controlled entities (“the Group”) for the financial year ended 30 June 2017.
Directors
The following persons held office as Directors of Flinders Mines Limited from the start of the financial year to the
date of this report, unless otherwise stated.
Neil Warburton1
David McAdam
Robert Kennedy1
Michael Wolley
Evan Davies
Kevin Malaxos
Ewan Vickery
Nicholas Smart
Independent Non-Executive Chairman
Interim Executive Director
Independent Non-Executive Director
Non-Independent Non-Executive Director
Non-Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Alternate Director to R Kennedy
Appointed 19 October 2016
Appointed 19 October 2016
Appointed 19 October 2016
Appointed 19 October 2016
Resigned 19 October 2016
Resigned 19 October 2016
Resigned 5 June 2017
1 On 20 December 2016, Mr Warburton was appointed Independent Non-Executive Chairman. Mr Kennedy,
former Independent Non-Executive Chairman remains as an Independent Non-Executive Director.
Company Secretary
The following persons held the position of Company Secretary during the whole of the financial year and up to the
date of this report except as noted below:
Shannon Coates
Justin Nelson
Appointed 9 May 2017
Resigned 9 May 2017
Information on Directors and Officers
Neil Warburton
Independent Non-Executive Chairman
Qualifications
Experience
Assoc. MinEng WASM, MAusIMM, FAICD
Mr Warburton has over 37 years’ experience in corporate and all areas of mining
operations. Mr Warburton held senior positions with Barminco Limited culminating
in being the Chief Executive Officer from August 2007 to March 2012. He
successfully grew Barminco into Australia and West Africa’s largest underground
hard rock mining contractor before expanding to non-executive director roles on ASX
listed mining companies.
Interest in FMS Shares and
Options at the date of this
report
Nil
Special responsibilities
Chairman of Nominations and Remuneration Committee, member of Audit and Risk
Committee, Corporate Governance Committee and Strategic Review Committee1.
Directorships held in other
listed entities in the last
three years
Non-executive director of the following listed companies: Australia Mines Limited
(April 2003 to date) and Independence Group Limited (October 2015 to date).
Previously a non-executive director of Peninsula Energy Limited (February 2013 to
April 2016), Sirius Resources NL (August 2013 to September 2015) Namibian
Copper NL (September 2014 to December 2016) and Red Mountain Mining (May
2006 to July 2016).
5
Flinders Mines Limited
Directors’ Report
David McAdam
Interim Executive Director
Qualifications
Experience
BE (Chemical, 1st Class Hons), MBA, FAICD, FIEAust
In the past 20 years, Mr McAdam has been focused on senior management
leadership roles in design and construction organisations that focus on the resource
and infrastructure industries. In these roles he has led the creation and
re-establishment of a series of highly successful engineering companies across a
range of industries in a variety of locations. These roles have included
responsibilities as a director in listed and private organisations.
Interest in FMS Shares and
Options at the date of this
report
Nil
Special responsibilities
Chairman of Strategic Review Committee1 and member of Nominations and
Remuneration Committee and Corporate Governance Committee.
Directorships held in other
listed entities in the last
three years
Robert Kennedy
Qualifications
Experience
Previously Managing Director and CEO of Seymour Whyte Limited (February 2013
to May 2015).
Independent Non-Executive Director
KSJ, ASAIT, Grad Dip (Systems Analysis), Dip Financial Planning, Dip Financial
Services, FCA, CTA, AGIA, Life Member AIM, FAICD, MRSASA
Mr Kennedy is a Chartered Accountant and brings to the Board his expertise and
extensive experience as chairman and non-executive director of a range of listed
public companies in the resources sector.
Interest in FMS Shares and
Options at the date of this
report
Nil
Special responsibilities
Chairman of Audit and Risk Committee, member of Nominations and Remuneration
Committee, Corporate Governance Committee and Strategic Review Committee1.
Directorships held in other
listed entities in the last
three years
Chairman of Ramelius Resources Limited (November 1995 to date), Maximus
Resources Limited (December 2004 to date), Monax Mining Limited (August 2004 to
date) and Tychean Resources Limited (March 2006 to date).
Michael Wolley
Qualifications
Experience
Previously a non-executive director of Crestal Petroleum Limited (formerly Tellus
Resources Limited and currently Firstwave Cloud Technology Ltd) (December 2013
to February 2015) and Marmota Energy Limited (April 2006 to April 2015).
Non-Executive Director
BE (Chemical and Materials, 1st Class Hons), Masters of Management
Mr Wolley had a 15 year career with Mobil Oil Australia Pty Ltd in a range of roles
including engineering, operations, strategic planning and business development.
Mr Wolley was previously Chief Operating Officer for Lynas Corporation and is
currently Vice President Minerals for the Todd Corporation.
Interest in FMS Shares and
Options at the date of this
report
Nil
Special responsibilities
Chairman of the Corporate Governance Committee and member of Audit and Risk
Committee, Nominations and Remuneration Committee and Strategic Review
Committee1.
Directorships held in other
listed entities in the last
three years
Non-executive director of Wolf Minerals Limited (June 2013 to date).
Previously a non-executive director of Rutila Resources (now BBI Group) (June 2012
to August 2015) and Red Mountain Mining (April 2011 to July 2016).
6
Flinders Mines Limited
Directors’ Report
Evan Davies
Non-Executive Director
Qualifications
Experience
Bachelor Town Planning, Master of Science and Master of Philosophy
Mr Davies has previously held leadership roles in Rainbow Corporation and Brierley
Properties Group (New Zealand). Mr Davies was Managing Director of Sky City
Entertainment Group (New Zealand) from 1996 to 2007, which he grew from a single
site to have business operations through New Zealand and Australia.
Mr Davies has been Managing Director of Todd Properties Group since 2008.
Interest in FMS Shares and
Options at the date of this
report
Nil
Special responsibilities
Member of Audit and Risk Committee, Nominations and Remuneration Committee,
Corporate Governance Committee and Strategic Review Committee1.
Directorships held in other
listed entities in the last
three years
Shannon Coates
Qualifications
Experience
Nil
Company Secretary
LLB, BA (Jur), GAICD, GIA
Ms Coates is a Chartered Secretary and has over 20 years’ experience in corporate
law and compliance. Ms. Coates is currently named Company Secretary to a number
of public companies listed on ASX, and has provided company secretarial and
corporate advisory services to Boards and various committees across a variety of
industries including financial services, resources, manufacturing and technology.
1The Strategic Review Committee ceased operation on 9 May 2017, following material completion of the Pilbara
Iron Ore Project strategic review.
Meeting of Directors
The numbers of meetings of the Company's Board of Directors and of each Board committee held during the year
ended 30 June 2017, and the numbers of meetings attended by each Director were:
Full meetings
of Directors
Meetings of committees
Audit & Risk Nominations
&
Remuneration
Corporate
Governance
Strategic
Review5
A
6
6
7
5
11
5
5
-
B
6
6
6
6
11
5
5
-
A
2
2
2
2
3
1
1
-
B
2
2
2
2
3
1
1
-
A
1
1
1
1
1
-
-
-
B
1
1
1
1
1
-
-
-
A
1
1
1
1
1
-
-
-
B
1
1
1
1
1
-
-
-
A
1
1
1
1
1
-
-
-
B
1
1
1
1
1
-
-
-
N Warburton
D McAdam 1
M Wolley 2
E Davies
R Kennedy
K Malaxos 3
E Vickery 3
N Smart 4
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office or was a member of the committee during the
year.
1 = Mr McAdam ceased to be a member of the Audit & Risk Committee on 30 June 2017.
2 = Mr Wolley attended the 18 October 2016 Full Meeting of Directors as an invitee prior to becoming a Director.
3 = Resigned 19 October 2016.
4 = Alternate Director (resigned 5 June 2017).
5 = The Strategic Review Committee ceased operation on 9 May 2017, following material completion of the Pilbara
Iron Ore Project strategic review.
Principal Activities
The Group's principal continuing activities during the year consisted of mineral exploration. There were no
significant changes in the nature of the activities of the Group during the year.
7
Flinders Mines Limited
Directors’ Report
Dividends
No dividends have been declared or paid during the financial year (2016: $nil).
Operating Results and Financial Position
The net result of operations for the financial year was a loss of $2.264m (2016: $4.057m).
Review of Operations
Corporate
On 31 August 2016, the TIO (NZ) Limited (“TIO”) takeover bid closed, at which point TIO’s voting power in Flinders
was approximately 52.6%.
On 7 October 2016, Flinders announced a non-renounceable entitlement offer at $0.017 per share to raise
approximately $5m (before costs).
The entitlement offer was completed on 9 November 2016 with a total of 246,175,757 new shares issued raising
$4.185m (before costs). The funds were used to repay a loan from PIO Mines Pty Ltd (subsidiary of TIO), meet the
minimum tenement expenditure commitments on the Company’s Pilbara Iron Ore Project (“PIOP”) and provide
working capital to the Company.
A further non-renounceable entitlement offer was announced on 9 May 2017, at an issue price of $0.055 per share
to raise approximately $16m (before costs).
The entitlement offer was completed on 7 June 2017 with a total of 172,771,273 new shares issued raising $9.5m
(before costs). The funds are being used to complete a series of maturation programs on the PIOP.
On 19 October 2016, Flinders restructured its Board with the appointments of Mr Warburton and Mr McAdam as
Independent Non-Executive Directors and Mr Wolley and Mr Davies as nominee Non-Executive Directors
representing TIO. The resignations of Mr Malaxos and Mr Vickery were also effective on this date.
On 20 December 2016, Mr Warburton was appointed Independent Non-Executive Chairman. Mr Kennedy,
formerly Independent Non-Executive Chairman remained as an Independent Non-Executive Director.
On 23 March 2017, Mr McAdam was appointed to the position of Interim Executive Director.
On 5 June 2017, Mr Smart resigned as Alternate Director to Mr R Kennedy.
In June 2017, Flinders moved its corporate office and registered address from Adelaide, South Australia to Perth,
Western Australia.
Pilbara Iron Ore Project
During the March 2017 quarter, Flinders undertook a strategic review of the PIOP to identify the best path forward
to unlock the assets value.
The strategic review concluded that:
The PIOP has the potential to be an economic asset;
The economic development of the asset is dependent on the development of a financeable infrastructure
solution;
A further asset maturation phase is required to define the project’s commercial viability ahead of any
pre-feasibility study; and
Further funding via an entitlement offer will need to be completed to fast track the asset maturation phase.
This entitlement offer was completed in early June 2017 and asset maturation programs commenced in late June
2017.
During the June 2017 quarter, the Company commenced the implementation of a comprehensive drilling program
at the PIOP to collect a range of drill core from different iron ore horizons for future testing to confirm and enhance
a series of bases used in the strategic review. The Company is focussed on reducing the risks associated with its
preliminary data by conducting a more thorough analysis of decision critical information that will guide the ultimate
production rate, ore quality and mine planning. These factors are key determinants in quantifying the value of the
PIOP and optimum project delivery method.
The Company anticipates completion of the drilling program before the end of the calendar year 2017 and results of
the drilling program and other works will be collated and assessed during the December 2017 and March 2018
quarters.
Work has also commenced on assessing the infrastructure solution opportunities complete with analysis of the
relative strategies and the implications for the retention of future opportunity. During the next two quarters, the
Company expects to decide on the preferred option and to commence the development of necessary agreements
to secure this vital part of the PIOP.
8
Flinders Mines Limited
Directors’ Report
Canegrass and South Australia
Whilst there was limited exploration activities undertaken on the Group’s Canegrass tenements in Western
Australia during the financial year, the Canegrass Project remained under active consideration by Flinders with a
range of exploration strategies under review.
During the June 2017 quarter, the Company’s Board opted to relinquish the Gawler Ranges tenements in South
Australian due to the perceived limited potential.
Likely Developments and Business Strategies
The likely developments of the Group and the expected results of those developments in the current financial year
are as follows:
Completion of asset maturation phase programs at PIOP;
Consideration of the results of the asset maturation phase programs at PIOP to determine the strategy
forward;
Commence discussions with a third party to establish a financeable infrastructure solution at PIOP; and
Commence active exploration activity at the Group’s Canegrass tenements in Western Australia.
Events Subsequent to the End of the Reporting Period
There are no material events subsequent to balance date.
Environmental Regulation
The Group's operations are subject to significant environmental regulation under both Commonwealth and relevant
State legislation in relation to the discharge of hazardous waste and materials arising from any exploration or
mining activities and development conducted by the Group on any of its tenements. The Group believes it has
complied with all environmental obligations.
Remuneration Report - Audited
This report sets out the remuneration arrangements in place for Directors and senior management of the Company
and the Group in accordance with requirements of the Corporations Act 2001 and its regulations. For the
purposes of the report, Key Management Personnel (“KMP”) of the Group are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company and the
Group, directly or indirectly, including any Director (whether Executive or otherwise) of the Company.
Key Management Personnel Covered in this Report
The names and positions of the KMP of the Company and the Group during the financial year were:
Neil Warburton1
David McAdam
Robert Kennedy1
Michael Wolley
Evan Davies
Kevin Malaxos
Ewan Vickery
Nicholas Smart
Jim Panagopoulos
Independent Non-Executive Chairman
Interim Executive Director (from 23 March 2017)
Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Alternate Director to R Kennedy
Chief Financial Officer
Appointed 19 October 2016
Appointed 19 October 2016
Appointed 19 October 2016
Appointed 19 October 2016
Resigned 19 October 2016
Resigned 19 October 2016
Resigned 5 June 2017
Redundant 29 April 2017
1 On 20 December 2016, Mr Warburton replaced Mr Kennedy as Independent Non-Executive Chairman.
Remuneration Governance
The Nominations and Remuneration Committee is a sub-committee of the Board. It is primarily responsible for
making recommendations and assisting the Board to:
ensure that it is of an effective composition, size and commitment to adequately discharge its
responsibilities and duties;
independently ensure that the Company adopts and complies with remuneration policies that attract,
retain and motivate high calibre executives and directors so as to encourage enhanced performance by
the Company; and
motivate Directors and management to pursue the long-term growth and success of the Company within
an appropriate framework.
Use of Remuneration Consultants
During the year the Nominations and Remuneration Committee sought advice from BDO regarding market data
and advice in relation to Director fees and the Company’s overall remuneration framework. Such consultants
were engaged by and reported directly to the Nominations and Remuneration Committee and were required to
confirm in writing, their independence from the Company’s senior management and other executives. As a
consequence, the Board of Directors is satisfied that the recommendations were made free from undue influence
from any member of the KMP.
9
Flinders Mines Limited
Directors’ Report
The recommendations from BDO were provided directly to the Nominations and Remuneration Committee as an
input to the decision making process. These recommendations were considered along with other factors by the
Company in makings its remuneration decisions and recommendations to the Board of Directors. The fees paid to
BDO for this market data and advice were $14,750.
Executive Remuneration Policy and Framework
The Group's policy for determining the nature and amounts of emoluments of senior executives is as follows:
In determining executive remuneration, the Board aims to ensure that remuneration practices are:
competitive and reasonable, enabling the Company to attract and retain key talent; and
aligned to the Company's strategic and business objectives and the creation of shareholder value.
The remuneration of Mr McAdam (Interim Executive Director) is determined by the Non-Executive Directors on the
Board as part of the terms and conditions of his employment which are subject to review from time to time. The
employment conditions of the Interim Executive Director were formalised in a Services Agreement.
The Services Agreement commenced on 27 February 2017 and details the consulting fee per day, a maximum
number of days per week during which the services are to be performed, term of the agreement and termination
clauses. Prior to year end, the Interim Executive Director’s Service Agreement was extended to 31 December
2017.
The Company does not currently have in place any short or long term performance related milestones and
obligations on its KMP.
Non-Executive Directors Remuneration Policy
Non-Executive Directors receive a Board fee and are eligible for fees for extra exertion and consulting services, at
the discretion of the full Board. Fees provided to Non-Executive Directors are inclusive of superannuation.
Fees are reviewed annually by the Board's Nominations and Remunerations Committee taking into account
comparable roles and market data provided by the Board's independent remuneration adviser.
Non-Executive Directors fees are determined within an aggregate Directors' fee pool limit, which is periodically
recommended for approval by shareholders. The maximum currently stands at $750,000 per annum and was
approved by shareholders at the Annual General Meeting on 6 November 2009. The Board may apportion any
amount up to this maximum amount amongst the Non-Executive Directors as it determines. Directors are also
entitled to be paid reasonable travel, accommodation and other expenses incurred in performing their duties as
Directors.
Non-Executive Directors remuneration is by way of fee, statutory superannuation contributions and salary sacrifice.
Non-Executive Directors do not participate in schemes designed for remuneration of executives, nor do they
receive options or bonus payments and are not provided with retirement benefits other than salary sacrifice and
statutory superannuation.
Details of Remuneration
The following tables show details of the remuneration received by the Directors and KMP of the Group for the
current and previous financial year.
10
30-Jun-17
Short-term
benefits
Post-employment
Non-executive Directors
N Warburton 1
M Wolley 1, 3
E Davies 1, 3
R Kennedy
K Malaxos 2
E Vickery 2
Sub-total non-executive directors
Executive Directors
D McAdam 1, 4
Sub-total executive directors
Other key management personnel
(Group)
J Panagopoulos 5
Total key management personnel
compensation (group)
Salary and Fees Super-annuation
$
104,160
49,160
49,160
139,196
42,000
38,356
422,032
266,360
266,360
$
-
-
-
9,804
-
3,644
13,448
-
-
Termination
benefits
$
-
-
-
-
-
-
-
-
-
218,744
18,004
79,463
907,136
31,452
79,463
Flinders Mines Limited
Directors’ Report
Share-based
payments
Rights over
shares
$
-
-
-
-
-
-
-
-
-
-
Total
$
104,160
49,160
49,160
149,000
42,000
42,000
435,480
266,360
266,360
316,211
1,018,051
1 Appointed 19 October 2016.
2 Resigned 19 October 2016.
3 Mr Wolley and Mr Davies Director Fees are paid directly to the major shareholder, TIO.
4 Mr McAdam’s remuneration includes $70,800 for strategic review services, $146,400 for Interim Executive
Director services and $49,160 for Non-Executive Director services.
5 Redundant 29 April 2017.
30-Jun-16
Non-executive Directors
R Kennedy
K Malaxos
E Vickery
Sub-total non-executive directors
Executive Directors
I Gordon1
Other key management personnel
(Group)
M Rapaic2
J Panagopoulos
Sub-total other key management
personnel
Total key management personnel
compensation (group)
1 Resigned 28 June 2016.
2 Resigned 31 July 2015.
Short-term
benefits
Post-employment
Salary and Fees Super-annuation
$
$
Termination
benefits
$
Share-based
payments
Rights over
shares
$
142,466
78,000
71,233
291,699
13,534
-
6,767
20,301
-
-
-
-
-
-
-
-
Total
$
156,000
78,000
78,000
312,000
384,931
38,220
237,634
89,932
750,717
27,523
195,722
223,245
11,062
18,593
29,655
189,085
-
189,085
-
19,566
19,566
227,670
233,881
461,551
899,875
88,176
426,719
109,498
1,524,268
11
Flinders Mines Limited
Directors’ Report
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Other KMP of the group
I Gordon
M Rapaic
J Panagopoulos
Fixed remuneration
At risk - LTI 1
2017
%
-
-
-
2016
%
73
100
-
2017
%
-
-
-
2016
%
27
-
-
1 Long-term incentives (LTI) include equity grants issued via the Company's Employee Share Option and Incentive
Rights Plans. These plans are designed to provide long-term incentives for executives to deliver long-term
shareholder returns.
Terms of Employment
The terms of employment for the Interim Executive Director are formalised in Service Agreements. Material terms
relating to the duration and termination as at 30 June 2017 are set out below;
Name
D McAdam
Compensation
$2,500 per day
for a
maximum of 4 days per
week
Notice Period
One week’s notice
in
writing by either Mr D
McAdam or the Company
Term
Concludes 31 December
2017
Share-Based Payment Compensation
Options
No shares were issued to Directors as a result of the exercise of remuneration options during the financial year
(2016: Nil).
No options were granted to Directors, KMP or employees of the Company during the financial year (2016: Nil).
Employee Incentive Rights
The Company has an Employee Incentive Rights Plan that enables the Board to offer eligible employees rights to
acquire ordinary fully paid shares in the Company. Under the terms of the Plan, rights to acquire ordinary fully paid
shares at no cost may be offered to the Company's eligible employees as determined by the Board in accordance
with the terms and conditions of the Plan.
There were no rights issued, granted or exercised to employees during the current financial year.
During the 2016 financial year, 19,866,000 performance and incentive rights vested into fully paid ordinary shares
and 2,930,000 did not vest and were forfeited.
Equity Instrument Disclosures Relating to KMP
Rights holdings
There were no rights issued, granted to or exercised by employees in the 2017 financial year.
The numbers of rights to acquire ordinary shares in the Company held during the 2016 financial year by each
Director and KMP of the Group, including their personally related parties, are set out below.
30-Jun-16
I Gordon
M Rapaic
J Panagopoulos
Balance at start
of the year
Granted as
compensation
No.
10,000,000
3,609,000
1,967,000
No.
-
-
-
Exercised
(option)/ Vested
(rights)
No.
(10,000,000)
(3,609,000)
-
Forfeited
Balance at the
end of the year
No.
-
-
(1,967,000)
No.
-
-
-
12
Flinders Mines Limited
Directors’ Report
Share holdings
No Directors or KMP held a relevant interest in shares in the Company during the 2017 financial year. There were
no shares granted during the reporting period as compensation.
The numbers of shares in the Company held during the 2016 financial year by each Director and KMP of the Group,
including their personally related parties, are set out below. There were no shares granted during the reporting
period as compensation.
30-Jun-16
R Kennedy
I Gordon
K Malaxos
E Vickery
N Smart
Balance at start
of the year
Granted as
compensation
No.
44,000,000
3,033,334
3,200,000
7,000,000
838,095
No.
-
-
-
-
-
Exercised
(option)/ Vested
(rights)
No.
-
-
-
-
-
Acquired/(dispos
ed) 1
Balance at the
end of the year
No.
(44,000,000)
(3,033,334)
(3,200,000)
(7,000,000)
(838,095)
No.
-
-
-
-
-
1 The disposal of shares by Directors in 2016 was directly related to accepting the takeover offer from TIO.
Other Transactions with KMP and their Related Parties
During the year ended 30 June 2017, the Group utilised the tenement management services of BBI Group Pty Ltd,
a subsidiary of its major shareholder, TIO. The total value of these services was $59,488 (2016: nil).
During the year ended 30 June 2017, the Group paid Director Fees to TIO, its major shareholder, for Director
services provided by Mr Wolley and Mr Davies. The total value of these services was $98,920 (2016: nil).
This is the end of the audited remuneration report.
Options Granted over Unissued Shares
There are no unissued ordinary shares of Flinders Mines Limited under option at the date of this report.
Non Audit Services
No non-audit services were provided by the entity’s auditor, Grant Thornton Audit Pty Ltd.
Indemnification and Insurance of Officers
The Company has taken out an insurance policy insuring Directors and Officers of the Company against any
liability arising from a claim bought by a third party against the Company or its current or former Directors or Officers
and against liabilities for costs and expense incurred by them in defending any legal proceedings arising out of their
conduct while acting in their capacity as a Director or Officer of the Company, other than conduct involving a wilful
breach of duty in relation to the Company.
The Company indemnifies each of the Directors and Officers of the Company. Under its Constitution, the
Company will indemnify those Directors or Officers against any claim or for any expenses or costs which may arise
as a result of work performed in their respective capacities as Directors or Officers of the Company or any related
entities.
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Grant Thornton, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Grant Thornton during or since the financial year.
Rounding
The amounts contained in the financial report have been rounded to the nearest $1,000 (unless otherwise stated)
pursuant to the option available to the Company under ASIC Class Order 2016/191. The Company is an entity to
which this class order applies.
13
Auditor’s independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is
set out on page 15.
This report is made in accordance with a resolution of Directors.
Flinders Mines Limited
Directors’ Report
David McAdam
Interim Executive Director
Perth, Western Australia
14 September 2017
14
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T 61 8 8372 6666
F 61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF FLINDERS MINES LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Flinders Mines Limited for the year ended 30 June 2017, I declare that, to the best
of my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Partner - Audit & Assurance
Adelaide, 14 September 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to
one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the
member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not
provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In
the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries
and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Flinders Mines Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2017
Revenue from continuing operations
Other revenue
Other income
Administrative expenses
Other expenses
Finance costs
(Loss) before income tax
Income tax (expense)/benefit
(Loss) for the year
Item that may b e reclassified to profit or loss
Changes in the fair value of available-for-sale financial assets
Other comprehensive income for the year, net of tax
30-Jun-17
30-Jun-16
Notes
$'000
$'000
6
6
6
6
6
7
43
-
(2,070)
(167)
(27)
(2,221)
(43)
(2,264)
85
2
(3,996)
(892)
(5)
(4,806)
749
(4,057)
-
-
292
292
Total comprehensive income for the year
(2,264)
(3,765)
(Loss) is attributable to:
Owners of Flinders Mines Limited
Total comprehensive income for the year is attributable to:
(2,264)
(4,057)
Owners of Flinders Mines Limited
(2,264)
(3,765)
Earnings per share for loss attributable to the ordinary equity
holders of the Company:
Basic and diluted earnings per share
25
(0.073)
(0.144)
Cents
Cents
The above statement should be read in conjunction with the accompanying notes.
16
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Available-for-sale financial assets
Exploration and evaluation
Plant and equipment
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained losses
Total equity
Flinders Mines Limited
Consolidated Statement of Financial Position
As at 30 June 2017
30-Jun-17
30-Jun-16
Notes
$'000
$'000
8
9
10
11
12
9
13
14
15
16
10,067
127
467
551
851
297
10,661
1,699
3
5
48,890
46,518
72
7
217
7
48,972
46,747
59,633
48,446
941
-
941
1,073
37
1,110
941
1,110
58,692
47,336
138,859
125,239
-
-
(80,167)
(77,903)
58,692
47,336
The above statement should be read in conjunction with the accompanying notes.
17
Flinders Mines Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2017
Contributed
equity
$'000
Available for
sale asset
reserve
$'000
Share based
payments
reserve
$'000
Balance at 1 July 2015
124,414
(292)
Loss for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs and tax
Rights expired during the year
Transfer of expired rights
Rights issued during the year
Balance at 30 June 2016
Loss for the year
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs and tax
Balance at 30 June 2017
-
124,414
825
-
-
-
125,239
-
125,239
13,620
138,859
292
-
-
-
-
-
-
-
-
-
-
The above statement should be read in conjunction with the accompanying notes.
561
-
561
-
(716)
-
155
-
-
-
-
-
Retained
losses
Total equity
$'000
$'000
(74,562)
50,121
(4,057)
(78,619)
(3,765)
46,356
-
-
716
-
(77,903)
(2,264)
(80,167)
825
(716)
716
155
47,336
(2,264)
45,072
-
(80,167)
13,620
58,692
18
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Research and Development tax incentive received
Interest expense
Interest received
Flinders Mines Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2017
30-Jun-17
30-Jun-16
Notes
$'000
$'000
-
33
(2,387)
(3,107)
-
(24)
43
578
-
45
Net cash (outflow) from operating activities
24
(2,368)
(2,451)
Cash flows from investing activities
Proceeds from sale of plant and equipment
Proceeds from sale of available-for-sale financial assets
Payments for exploration activities
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Transaction costs
Proceeds from borrowings
Repayment of borrowings
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
8
The above statement should be read in conjunction with the accompanying notes.
1
-
(1,695)
(1,694)
13,670
(92)
2,000
(2,000)
13,578
9,516
551
10,067
3
41
(1,637)
(1,593)
825
-
-
-
825
(3,219)
3,770
551
19
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
1
Corporate information
The consolidated financial report of Flinders Mines Limited for the year ended 30 June 2017 was authorised for
issue in accordance with a resolution of the Directors on 14 September 2017. The Board of Directors has the
power to amend the consolidated financial statements after issue.
Flinders Mines Limited (the “Company” or “Flinders”) is a for-profit company limited by shares whose shares are
publicly traded on the Australian Securities Exchange. The Company and its subsidiaries were incorporated and
domiciled in Australia. The registered office and principal place of business of the Company is 45 Ventnor
Avenue, West Perth, WA 6005.
The nature of the operations and principal activities of the Company are disclosed in the Directors’ Report.
The amounts contained in the financial report have been rounded to the nearest $1,000 (unless otherwise stated)
pursuant to the option available to the Company under ASIC Class Order 2016/191. The Company is an entity to
which this Class Order applies.
2
Reporting entity
The Consolidated Financial Statements comprise of the Company and its subsidiaries, (together referred to as the
“Consolidated Entity” or the “Group”).
3
Summary of significant accounting policies
Basis of preparation
a)
The Consolidated Financial Statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting
Standards Board and the Corporations Act 2001. The Consolidated Financial Statements also comply with
International Financial Reporting Standards as issued by the International Accounting Standards Board. The
accounting policies are consistent with those of the previous financial year except as detailed in Note 3v.
These financial statements have been prepared under the historical cost convention except for certain financial
assets and liabilities which are required to be measured at fair value.
Basis of consolidation
b)
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of
the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the Consolidated
Statement of Profit or Loss, Statement of Comprehensive Income, Statement of Changes in Equity and Balance
Sheet respectively.
Segment reporting
c)
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as the Board of Directors.
Revenue recognition
d)
Interest income
Interest income is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
Other income
Other income includes fees for services provided to external parties and fuel tax rebate.
Income tax
e)
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on
the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
20
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
3
Summary of significant accounting policies (continued)
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the
deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting nor taxable profit
nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or
the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences or losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the Parent entity is able to control the timing of the reversal of
the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
Impairment of non-financial assets
f)
At each reporting date, the entity assesses whether there is any indication that an asset may be impaired. Where
an indicator of impairment exists, the entity makes a formal estimate of recoverable amount. Where the carrying
amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its
recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). 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 or the cash generating unit.
Cash and cash equivalents
g)
Cash and short-term deposits in the Consolidated Statement of Financial Position comprise of cash at bank and in
hand and short-term deposits with an original maturity of three months or less.
For the purposes of the Consolidated Statement of Cash Flows, cash includes cash on hand and in banks, as
defined above (and money market investments readily convertible to cash on hand), net of outstanding bank
overdrafts.
Trade receivables
h)
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. Trade receivables are generally due for settlement within
30 days. They are presented as current assets unless collection is not expected for more than 12 months after the
reporting date.
Research and development tax incentive fund
i)
Refund amounts received or receivable under the Federal Government's Research and Development Tax
Incentive are recognised on an accruals basis at the point the asset can be reliably measured. The research and
development tax incentive fund is recognised as a tax expense credit.
j)
Recognition and de-recognition
Other financial assets
Regular purchases and sales of financial assets are recognised on trade-date - the date on which the Group
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Group has transferred substantially all the risks
and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in
other comprehensive income are reclassified to profit or loss as gains and losses from investment securities.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
21
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
3
Summary of significant accounting policies (continued)
Loans and receivables and held-to-maturity investments are subsequently carried at amortised cost using the
effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried
at fair value. Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit
or loss' category are presented in profit or loss within other income or other expenses in the period in which they
arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part
of revenue from continuing operations when the Group's right to receive payments is established. Interest income
from these financial assets is included in the net gains/(losses).
Changes in the fair value of monetary securities denominated in a foreign currency and classified as
available-for-sale are analysed between translation differences resulting from changes in amortised cost of the
security and other changes in the carrying amount of the security. The translation differences related to changes in
the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other
comprehensive income. Changes in the fair value of other monetary and non-monetary securities classified as
available-for-sale are recognised in other comprehensive income. Details on how the fair value of financial
instruments is determined are disclosed in Note 4.
Fair value
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active
(and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use
of recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash
flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on
entity specific inputs.
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred
after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the
case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost is considered an indicator that the assets are impaired.
If there is evidence of impairment for any of the Group's financial assets carried at amortised cost, the loss is
measured as the difference between the asset's carrying amount and the present value of estimated future cash
flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial
asset's original effective interest rate. The loss is recognised in profit or loss.
Property, plant and equipment
k)
Each class of plant and equipment is carried at historical cost or fair value less, where applicable, any accumulated
depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset's carrying amounts or recognised as separate assets, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost
can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive
income during the financial year in which they are incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the Group
commencing from the time the asset is held ready for use. The depreciation rates used for plant and equipment
range from 12.5 to 40%.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
the consolidated statement of comprehensive income. When revalued assets are sold, it is Group policy to transfer
any amounts included in other reserves in respect of those assets to retained earnings.
22
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
3
Summary of significant accounting policies (continued)
Trade creditors
l)
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year
which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the
reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using
the effective interest method.
Provisions
m)
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the Consolidated Statement of Comprehensive Income net of any
reimbursement.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle
the present obligation at the reporting date. The discount rate used to determine the present value reflects current
market assessments of the time value of money and the risks specific to the liability. The increase in the provision
resulting from the passage of time is recognised in finance costs.
Employee entitlements
Provision is made for employee benefits accumulated as a result of employees rendering services up to the
reporting date. These benefits include wages and salaries, annual leave and long service leave. Liabilities arising in
respect of wages and salaries, annual leave and long service leave and any other benefits expected to be wholly
settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration
rates which are expected to be paid when the liability is settled. All other employee benefit liabilities are measured
at the present value of the estimated future cash outflow to be made in respect of services provided by employees
up to the reporting date. In determining the present value of future cash outflows, the market yield as at the
reporting date on high quality corporation bonds, which have terms to maturity approximating the terms of the
related liabilities, are used.
Share-based payments transactions
n)
The Company provides benefits to employees (including Directors) in the form of share-based payments whereby
employees render services in exchange for shares or rights over shares (“share-based payments” or “equity-settled
transactions”).
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date
they are granted. The value is determined using an appropriate valuation model. In valuing equity-settled
transactions, no account is taken of any performance conditions, other than conditions linked to the price of the
shares of FMS (“market conditions”) if applicable.
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects
the extent to which the vesting period has expired and the number of awards that, in the opinion of the Directors, will
ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is
made for the likelihood of market conditions being met as the effect of these conditions is included in the
determination of fair value at grant date. The Consolidated Statement of Comprehensive Income charge or credit
for the period represents the movement in the cumulative expense recognised as at the beginning and end of that
period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional
upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms
had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a
result of the modification as measured at the date of modification.
Where an equity-settled award is cancelled (other than cancellation when a vesting condition is not satisfied), it is
treated as if it had vested on the date of cancellation and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for the cancelled award and designated as a
replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of the outstanding options is reflected as additional share dilution in the computation of
earnings per share.
23
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
3
Summary of significant accounting policies (continued)
Earnings per share
o)
Basic earnings/loss per share is determined by dividing net profit or loss after income tax attributable to members of
the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings/loss per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares by the weighted average number of shares assumed to have been issued for no consideration in
relation to potential ordinary shares.
Exploration and evaluation expenditure
p)
Exploration and evaluation costs related to an area of interest are written off as incurred except they may be carried
forward as an item in the consolidated statement of financial position where the rights of tenure of an area are
current and one of the following conditions is met:
the costs are expected to be recouped through successful development and exploitation of the area of
interest, or alternatively, by its sale; and
exploration and/or evaluation activities in the area of interest have not at the end of each reporting period
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.
Capitalised costs include costs directly related to exploration and evaluation activities in the relevant area of
interest. General and administrative costs are allocated to an exploration or evaluation asset only to the extent that
those costs can be related directly to operational activities in the area of interest to which the asset relates.
Capitalised exploration and evaluation expenditure is written off where the above conditions are no longer satisfied.
Exploration and evaluation expenditure incurred subsequent to the acquisition in respect of an exploration asset
acquired is accounted for in accordance with the policy outlined above.
All capitalised exploration and evaluation expenditure is assessed for impairment if facts and circumstances
indicate that an impairment may exist. Exploration and evaluation assets are also tested for impairment once
commercial reserves are found, before the assets are transferred to development properties.
q)
Goods and services tax (“GST”)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the
consolidated statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
r)
Comparative figures are adjusted to conform to Accounting Standards when required.
Comparative figures
Contributed equity
s)
Issued share capital is recognised at the fair value of the consideration received by the Company. Any transaction
costs arising on the issue of ordinary shares are recognised, net of tax, directly in equity as a reduction of the share
proceeds received.
Significant accounting estimates and assumptions
t)
The preparation of the consolidated financial statements requires management to make estimates and
assumptions. These estimates and assumptions are continually evaluated and are based on historical experience
and other factors, including expectations of future events that may have a financial impact on the Group and that
are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below:
Estimated impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may
lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is
determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key
estimates.
24
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
3
Summary of significant accounting policies (continued)
Exploration and evaluation
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related area of interest itself or, if not, whether it successfully
recovers the related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the level of reserves and resources, future
technological changes which could impact the cost of mining, future legal changes (including changes to
environmental obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the
future, this will reduce profits and net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if rights to tenure of the area of interest are current
and activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves. To the extent that is determined in the future that this
capitalised expenditure should be written off, this will reduce profits and net assets in the period in which this
determination is made.
Share-based payments
The Company measures the cost of equity-settled transactions with employees and consultants by reference to the
fair value of the equity instruments at the date on which they are granted. The fair value is determined using the
Black-Scholes valuation method, taking into account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have
no impact on the carrying amounts of assets and liabilities within the next reporting period, but may affect expenses
and equity
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the
Consolidated Entity’s future taxable income against which the deferred tax assets can be utilised. In addition,
significant judgement is required in assessing whether the entity meets the requirements of taxation laws and
regulations to qualify in the future for utilisation of the assets. In this respect, the ultimate tax determination is
uncertain. Current tax liabilities and assets are recognised at the amount expected to be paid to or recovered from
the taxation authorities. Refer to Note 7.
u)
Accounting standards and interpretations issued but not yet effective
The following accounting standards and interpretations have been issued or amended but are not yet effective.
These standards have not been adopted by the Group for the period ended 30 June 2017and are outlined below:
AASB 9 Financial Instruments (effective and applicable to the Group from 1 January 2018) - AASB 9 (December
2014) is a new standard which replaces AASB 139. This new version supersedes AASB 9 issued in December
2009 (as amended) and AASB 9 (issued in December 2010) and includes a model for classification and
measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially-reformed approach
to hedge accounting. AASB 9 Financial Instruments addresses the classification, measurement and de-recognition
of financial assets and financial liabilities and introduces new rules for hedge accounting. When this standard is first
adopted in the year ending 30 June 2019, there will be no material impact on the transactions and balances
recognised in the financial statements.
AASB 15 Revenue from contracts with customers (effective and applicable to the Group from 1 January 2018) -
AASB 15 introduces a new framework for accounting for revenue and will replace AASB 118 revenue, AASB 111
Construction Contracts and IFRIC 13 Customer Loyalty Programs. AASB 15 establishes principles for reporting the
nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.
The new standard is based on the principle that revenue is recognised when control of a good or service transfers
to a customer, therefore the notion of control replaces the existing notion of risks and rewards. When this standard
is first adopted in the year ending 30 June 2019, there will be no material impact on the transactions and balances
recognised in the financial statements.
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or contribution of Assets between an
Investor and its Associate or Joint Venture (effective and applicable to the Group from 1 January 2018) – AASB
2014-10 amends AASB 10 and AASB 128 to address an inconsistency in dealing with sale or contribution of assets
between an investor and its associate or joint venture. The amendments include (a) a full gain or loss to be
recognised when a transaction involves a business and (b) a partial gain or loss to be recognised when a
transaction involves assets that do not constitute a business. When this standard is first adopted in the year ending
30 June 2019, there will be no material impact on the transactions and balances recognised in the financial
statements.
25
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
3
Summary of significant accounting policies (continued)
AASB 16 Leases (effective and applicable to the Group from 1 January 2019) - One of the key changes to AASB 16
Leases is that lessees are required to recognise assets and liabilities for all leases with a term of more than 12
months, unless the underlying asset is of low value. AASB 16 will result in lessees recognising most leases on the
balance sheet. When this standard is first adopted in the year ending 30 June 2020, there will be no material impact
on the transactions and balances recognised in the financial statements.
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for
Unrealised Losses [AASB 112] (effective and applicable to the Group from 1 January 2017) – This amendment
clarifies the requirement on recognition of deferred tax assets for unrealised losses on debt instruments measured
at fair value. When this standard is first adopted in the year ending 30 June 2018, there will be no material impact
on the transactions and balances recognised in the financial statements.
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107
(effective and applicable to the Group from 1 January 2017) – This amendment requires disclosures that will enable
a user to evaluate changes in liabilities arising from financing activities, including both changes arising from cash
flows and non-cash changes. When this standard is first adopted in the year ending 30 June 2018, there will be no
material impact on the transactions and balances recognised in the financial statements.
IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration (effective and applicable to the
Group from 1 January 2018) – addresses the exchange rate to use in transactions that involve advance
consideration paid or received in a foreign currency. When this standard is first adopted in the year ending 30 June
2019, there will be no material impact on the transactions and balances recognised in the financial statements.
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.
New accounting standards and interpretations
v)
In the year ended 30 June 2017, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board that are relevant to the Company and
effective for the current annual reporting period.
As a result of this review, the Directors have determined that there is no material impact of the new and revised
Standards and Interpretations on the Company and, therefore, no material change is necessary to Company
accounting policies.
4
Financial risk management
The Group's activities expose it to a variety of financial risks: interest rate risk; credit risk and liquidity risk. The
Group's overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by management under policies approved by the Board of Directors. Management
identifies, evaluates and hedges financial risks in close co-operation with the Group's operating units. The Board
provides principles for overall risk management, as well as policies covering specific areas, such as interest rate
risk, credit risk, and use of financial instruments and investment of excess liquidity where appropriate.
The Group's financial instruments consist mainly of deposits with banks, accounts receivable and payable,
available-for-sale investments and loans to associated companies.
Interest rate risk
The Group’s exposure to market risk for changes in interest rates arise from variable interest rate exposure on
cash, fixed deposits and interest bearing liabilities.
The Group’s policy is to manage its exposure to interest rate risk by holding cash in short-term, fixed rate and
variable rate deposits with reputable high credit quality financial institutions. With interest bearing liabilities,
consideration is also given to the potential renewal of existing positions, alternative financing and the mix of fixed
and variable interest rates.
The following table summarises the financial assets and liabilities of the Group, together with the effective interest
rates as at the balance date.
26
4
Financial risk management (continued)
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
30-Jun-17
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Financial Liabilities
Trade and other payables
30-Jun-16
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Financial Liabilities
Trade and other payables
Fixed interest rate maturing in:
Average interest rates
Floating
interest rate
$'000
< 1 Year 1 to 5 years
> 5 years
$'000
$'000
$'000
Non-interest
bearing
$'000
3,917
-
-
6,150
-
-
-
-
-
-
-
-
-
-
-
-
-
134
3
941
Floating
%
1.50%
-
-
Fixed
%
2.20%
-
-
-
-
Fixed interest rate maturing in:
Average interest rates
Floating
interest rate
$'000
< 1 Year 1 to 5 years
> 5 years
$'000
$'000
$'000
Non-interest
bearing
$'000
401
-
-
150
-
-
-
-
-
-
-
-
-
-
-
-
Floating
%
2.45%
-
-
Fixed
%
2.50%
-
-
-
858
5
1,073
-
-
As at 30 June 2017, if interest rates had moved by the points shown below, with all other variables being held
constant, post-tax loss and equity would have been affected as follows:
+1% (100 basis points)
-1% (100 basis points)
Post tax losses
Equity
30-Jun-17
$'000
101
(101)
30-Jun-16
$'000
6
(6)
30-Jun-17
$'000
(101)
101
30-Jun-16
$'000
(6)
6
The movements in loss after income tax are due to higher/lower interest costs from fixed and variable rate debt and
cash balances during the relevant year. Reasonably possible movements in interest rates were determined based
on observations of historical movements in the past two years.
The net exposure at balance date is representative of what the Group was and is expecting to be exposed to in the
next twelve months from balance date.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and
other receivables. The Group’s exposure to credit risk arises from potential default of the counter party, with a
maximum exposure equal to the carrying amount of the instruments. Exposure at balance date is addressed in
each applicable note.
The Group trades only with recognised, creditworthy third parties and as such, collateral is not requested nor is it
the Group’s policy to securitise its receivables. Receivable balances are monitored on an ongoing basis with the
result that the Group’s experience of bad debts has not been significant.
The credit quality of the Group’s financial assets as at 30 June 2017 is as follows:
30-Jun-17
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
AAA
$'000
-
91
-
AA-
$'000
10,067
-
-
Internally
rated
$'000
-
43
3
Total
$'000
10,067
134
3
27
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
4
Financial risk management (continued)
30-Jun-16
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
AAA
$'000
-
851
-
AA-
$'000
551
-
-
Internally
rated
$'000
-
7
5
Total
$'000
551
858
5
The equivalent S&P and Moody’s rating of the financial assets represents the rating of the counterparty with whom
the financial asset is held rather than the rating of the financial asset itself.
Internally rated, no default customers are customers with who the Group has traded before and have no history of
default.
Liquidity risk
The Group’s objective is to ensure sufficient liquid funds are available to meet the Group’s financial commitments in
a timely and cost effective manner.
The Group’s treasury function continually reviews the Group’s liquidity position including cash flow forecasts to
determine the forecast liquidity position and maintain appropriate liquidity levels. Sensitivity analysis is conducted
to ensure that the Group has the ability to meet commitments.
30-Jun-17
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Financial Liabilities
Trade and other payables
Net inflow/(outflow)
30-Jun-16
Financial Assets
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Financial Liabilities
Trade and other payables
Net inflow/(outflow)
< 1 year < 1 to 5 years
$'000
$'000
10,067
127
-
(941)
9,253
-
7
3
-
10
< 1 year < 1 to 5 years
$'000
$'000
551
851
-
(1,073)
329
-
7
5
-
12
Total
$'000
10,067
134
3
(941)
9,263
Total
$'000
551
858
5
(1,073)
341
Fair value measurements
The fair value of financial assets and financial liabilities is the amount at which the asset could be exchanged or
liability settled in a current transaction between willing parties after allowing for transaction costs. The fair value of
financial assets and liabilities approximate their carrying values, unless otherwise specified.
The Group does hold available-for-sale financial assets of which it is required to disclose its measurement by level
of the following fair value measurement hierarchy:
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (level 2), and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)
The fair value of financial instruments traded in active markets (such as available-for-sale securities) is based on
quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by
the Group is the current bid price. These instruments are included in Level 1.
28
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
5
Segment information
Identification of reportable segments
Management has determined the operating segments based on the reports reviewed and used by the Board of
Directors (the chief operating decision maker) that are used to make strategic decisions. The Group is managed
primarily on the basis of geographical area of interest, since the diversification of Group operations inherently has
notably different risk profiles and performance assessment criteria. Operating segments are therefore determined
on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered
to have similar economic characteristics and are also similar with respect to the following:
external regulatory requirements
geographical and geological styles
Operations
The Group has exploration operations in two styles of iron mineralisation, gold and base metals. The costs
associated with these operations are reported on in this segment.
Accounting policies developed
Unless stated otherwise, all amounts reported to the Board of Directors as chief decision maker with respect to
operating segments are determined in accordance with accounting policies that are consistent to those adopted in
the Consolidated Financial Statements of the Group.
30-Jun-17
Segment result / Adjusted EBITDA
Impairment of assets
Capital expenditure
Total segment assets
Total segment liabilities
30-Jun-16
Segment result / Adjusted EBITDA
Impairment of assets
Capital expenditure
Total segment assets
Total segment liabilities
Pilbara Iron
Ore
$'000
-
-
2,302
48,820
498
Pilbara Iron
Ore
$'000
-
-
1,518
46,518
6
Canegrass
Magnetite
$'000
-
-
70
70
5
Canegrass
Magnetite
$'000
(360)
(360)
86
-
11
Other Minerals
$'000
(165)
(165)
165
-
-
Other Minerals
$'000
(150)
(150)
150
-
-
Total
$'000
(165)
(165)
2,537
48,890
503
Total
$'000
(510)
(510)
1,754
46,518
17
Other segment information
Segment revenue reconciles to total revenue from continuing operations as follows:
Total segment revenue
Interest revenue
Other revenue
Total revenue (note 6)
30-Jun-17
$'000
43
-
43
30-Jun-16
$'000
-
52
33
85
A reconciliation of adjusted EBITDA to operating profit/loss before income tax is provided as follows:
Adjusted EBITDA
Other revenue from ordinary activities
Loss on disposal of assets
Administrative expenses
Impairment of financial assets
Finance costs
Profit/loss before income tax
30-Jun-17
$'000
(165)
43
-
(2,070)
(2)
(27)
(2,221)
30-Jun-16
$'000
(510)
85
2
(3,996)
(382)
(5)
(4,806)
29
5
Segment information (continued)
Reportable segments' assets are reconciled to total assets as follows:
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Segment assets
Unallocated:
Cash and cash equivalents
Trade and other receivables
Other current assets
Available-for-sale financial assets
Plant and equipm ent
Other non-current assets
30-Jun-17
$'000
48,890
30-Jun-16
$'000
46,518
10,067
127
467
3
72
7
551
851
297
5
217
7
Total assets as per the consolidated statement of financial
position
59,633
48,446
Reportable segments' liabilities are reconciled to total liabilities as follows:
Segment liabilities
Unallocated:
Trade and other payables
Provisions
Total liabilities as per the consolidated statement of financial
position
6
Income and expenses
Other revenue
Interest received
Other revenue
Other income
Profit on sale of asset
Administrative expenses
Compliance
Depreciation
Administration costs
Salary and wages
Share based payments
Legal fees
Occupancy costs
Marketing and promotion
30-Jun-17
$'000
503
30-Jun-16
$'000
17
438
-
941
1,056
37
1,110
30-Jun-17
$'000
30-Jun-16
$'000
43
-
43
52
33
85
30-Jun-17
$'000
30-Jun-16
$'000
-
2
30-Jun-17
$'000
30-Jun-16
$'000
252
33
650
839
-
113
183
-
2,070
37
82
935
974
155
206
155
1,452
3,996
30
6
Income and expenses (continued)
Other expense
Exploration expenditure written off
Impairment of exploration assets
Impairment of financial assets
Finance costs
Interest expense
Bank fees
7
Income tax expense
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
30-Jun-17
$'000
30-Jun-16
$'000
165
-
2
167
117
393
382
892
30-Jun-17
$'000
30-Jun-16
$'000
24
3
27
-
5
5
The prima facie income tax expense on pre-tax accounting losses from continuing operations reconciles to the
income tax expense in the financial statements as follows:
30-Jun-17
$'000
30-Jun-16
$'000
Loss from continuing operations before income tax expense
(2,221)
(4,806)
Tax at the Australian tax rate of 30% (2016: 30%)
(666)
(1,442)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income:
Other non-allowable items
Tax losses not brought to account
Transfer of available for sale reserve to impairment expense
Adjustment for Research and Development tax offset
Income tax expense/(benefit)
1
707
1
-
43
47
1,307
88
(749)
(749)
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate
entities on taxable profits under Australian Tax Law. There has been no change in this tax rate since the previous
reporting period.
A deferred tax asset (“DTA”) on the timing differences has not been recognised as they do not meet the recognition
criteria as outlined in Note 3(e) of the financial statements. A DTA has not been recognised in respect of tax losses
either as realisation of the benefit is not regarded as probable.
The taxation benefits will only be obtained if:
a)
the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to
enable the benefit from the deduction for the loss to be realised;
b)
the Consolidated Entity continues to comply with the conditions for deductibility imposed by law; and
c) no changes in tax legislation adversely affect the consolidated entity in realising the benefits from the
deductions for the loss.
The Consolidated Entity’s ability to realise and recognise the deferred tax asset in the future is dependent on the
Consolidated Entity satisfying the “Continuity of Ownership” or “Same Business” tests. FMS has assessed that
Continuity of Ownership testing has been failed as at 30 June 2016 and the Same Business test will be required to
be passed in order for the Group’s tax losses to remain available. At present, the Company is of the opinion that
the Same Business Test will be met.
The Group has net DTAs arising in Australia of $23.337m (2016: $22.611m) that are available for offset indefinitely
against future taxable profits of the companies in which the losses arose.
31
8
Cash and cash equivalents
Cash at bank and in hand
Term deposits
9
Trade and other receivables
Current
Trade receivables
Other receivables
Income tax receivables
Non Current
Security bond
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
30-Jun-17
$'000
3,917
6,150
10,067
30-Jun-16
$'000
401
150
551
30-Jun-17
$'000
30-Jun-16
$'000
-
127
127
7
95
749
851
7
7
All current receivables are due within 30 days (2016: 30 days). There are no past due or impaired receivables.
10
Available-for-sale financial assets
Shares in listed companies
30-Jun-17
$'000
3
30-Jun-16
$'000
5
Available-for-sale financial assets comprise investments in the ordinary capital of PNX Metals Limited formerly
(Phoenix Copper Limited). There are no fixed returns or fixed maturity dates attached to these investments. On
occasion, the Company acquires shares in listed entities through consideration for commercial transactions. The
shares are held as available for sale and their value is marked to market at financial year end.
11
Exploration and evaluation expenditure
Opening balance
Expenditure incurred
Impairment loss
Closing balance
30-Jun-17
$'000
46,518
2,537
(165)
48,890
30-Jun-16
$'000
45,274
1,754
(510)
46,518
The ultimate recoupment of costs carried forward for areas of interest in the exploration and evaluation phases is
dependent upon the successful development and commercial exploitation, or sale, of the respective areas of
interest. For areas which do not meet the criteria of the accounting policy per Note 3(t), those amounts are charged
to the Consolidated Statement of Comprehensive Income.
32
12
Property, plant and equipment
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Year ended 30 Jun 2017
Opening net book amount
Depreciation charge
Closing net book amount
At 30 Jun 2017
Cost
Accumulated depreciation
Net book amount
Year ended 30 Jun 2016
Opening net book amount
Disposals
Depreciation charge
Closing net book amount
At 30 Jun 2016
Cost or fair value
Accumulated depreciation
Net book amount
Plant and
equipment
$'000
Furniture,
fittings and
$'000
Machinery and
vehicles
$'000
Computer
software
$'000
Computer
hardware
$'000
161
(112)
49
972
(923)
49
23
(8)
15
172
(157)
15
26
(18)
8
383
(375)
8
5
(5)
-
539
(539)
-
2
(2)
-
460
(460)
-
Total
$'000
217
(145)
72
2,526
(2,454)
72
Plant and
equipment
Furniture,
fittings and
equipment
Machinery and
vehicles
Computer
software
Computer
hardware
Total
$'000
$'000
$'000
$'000
$'000
$'000
280
-
(119)
161
972
(811)
161
38
(2)
(13)
23
172
(149)
23
71
-
(45)
26
383
(357)
26
21
(16)
5
539
(534)
5
9
(1)
(6)
2
460
(458)
2
419
(3)
(199)
217
2,526
(2,309)
217
During the year $112k (2016: $117k) of depreciation was included in the amount capitalised as exploration and
evaluation.
13
Trade and other payables
Trade payables
Other payables
30-Jun-17
$'000
491
450
941
30-Jun-16
$'000
389
684
1,073
Trade and other payables are non-interest bearing and usually settled within 30 days.
14
Provisions
Current
Employee entitlements
Non Current
Employee entitlements
30-Jun-17
$'000
30-Jun-16
$'000
-
-
37
-
33
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
15
Contributed equity
3,366,951,446 (2016: 2,947,152,568) ordinary fully paid shares
Issued shares:
At 1 July 2015
Conversion of employee rights
Share placement
Share issue costs
As at 30 June 2016
At 1 July 2016
Shares issued pursuant to non-renounceable rights issues
Share issue costs
As at 30 June 2017
Ordinary shares
30-Jun-17
$'000
30-Jun-16
$'000
No. of Shares
$'000
2,762,995,689
19,156,879
165,000,000
-
2,947,152,568
2,947,152,568
419,798,878
-
3,366,951,446
124,414
-
825
-
125,239
125,239
13,717
(97)
138,859
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Options and Rights
Information relating to the Flinders Mines Limited Employee Option and Incentive Rights Plans, including details of
options and rights issued, exercised and lapsed during the financial year and options and rights outstanding at the
end of the financial year, is set out in Note 26.
Capital risk management
The Group's debt and capital includes ordinary share capital supported by financial assets. There are no externally
imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its
capital structure in response to changes in these risks and in the market. These responses include the
management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the
prior year. This strategy is to ensure that the Group has no debt.
16
Reserves
Nature and purpose of reserves
Available for sale financial assets
Changes in the fair value of instruments, such as equities, classified as available-for-sale financial assets, are
recognised in other comprehensive income as described in Note 1(j) and accumulated in a separate reserve within
equity. Amounts are reclassified to profit or loss when the associated assets are sold or impaired.
Share-based payments reserve
The share-based payments reserve records items recognised as expenses on valuation of employee options,
employee rights and options issued to external parties in consideration for goods and services rendered.
34
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
17
Key management personnel disclosures
Details of key management personnel
The names and positions of the KMP of the Company and the Group during the financial year were:
Neil Warburton
David McAdam
Robert Kennedy
Michael Wolley
Evan Davies
Kevin Malaxos
Ewan Vickery
Nicholas Smart
Jim Panagopoulos
Independent Non-Executive Chairman
Interim Executive Director
Independent Non-Executive Director
Non-Independent Non-Executive Director
Non-Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Alternate Director to R Kennedy
Chief Financial Officer
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Termination payments
Share-based payments
18
Remuneration of auditors
Appointed 19 October 2016
Appointed 19 October 2016
Appointed 19 October 2016
Appointed 19 October 2016
Resigned 19 October 2016
Resigned 19 October 2016
Resigned 5 June 2017
Redundant 29 April 2017
30-Jun-17
$
907,136
31,452
79,463
-
1,018,051
30-Jun-16
$
899,875
88,176
426,719
109,498
1,524,268
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
Amounts paid or payable to the auditors:
Auditing and reviewing of financial reports
44,482
32,500
30-Jun-17
$
30-Jun-16
$
19
Contingent assets and liabilities
The Group had no contingent assets or liabilities at 30 June 2017 (2016: nil).
20
Commitments
Non-cancellable operating lease
On 1 July 2014 the Group leased one office under a non-cancellable operating lease. This lease expired on 29 April
2017.
Commitments for minimum lease payments in relation to non-
cancellable operating lease are payable as follows:
Within one year
Later than one year but not later than five years
30-Jun-17
$'000
30-Jun-16
$'000
-
-
-
117
-
117
35
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
20
Commitments (continued)
Exploration and evaluation expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to meet the minimum
expenditure requirements specified by various State and Territory Governments. These obligations are subject to
renegotiation when application for a mining lease is made and at other times. These obligations are not provided
for in this financial report.
The minimum level of exploration commitment expected in the year ending 30 June 2018 for the Group is
approximately $1.400m. These obligations are expected to be fulfilled in the normal course of operations.
Subject to funding, the Group expects to spend in excess of $10.000m on the PIOP and Canegrass project in the
year ending 30 June 2018.
21
Related party transactions
Parent entity
The Parent Entity within the Group is Flinders Mines Limited.
Loans to subsidiaries
Loans between entities in the wholly owned Group are non-interest bearing, unsecured and are payable upon
reasonable notice having regard to the financial situation of the entity.
Other transactions with related parties
During the year ended 30 June 2017, the Group utilised the tenement management services of BBI Group Pty Ltd,
a subsidiary of its major shareholder. The total value of these services was $59,488 (2016: nil).
During the year ended 30 June 2017, the Group paid Director Fees to TIO (NZ) Limited, its major shareholder, for
Director services provided by Mr M Wolley and Mr E Davies. The total value of these services was $98,920 (2016:
nil).
22
Subsidiaries
The Consolidated Financial Statements include the financial statements of Flinders Mines Limited and the
subsidiaries listed in the following table:
Name of entity
FME Exploration Services Pty Ltd
Flinders Canegrass Pty Ltd
Flinders Diamonds Pty Ltd
Flinders Iron Pty Ltd
Country of
incorporation Class of shares
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Equity holding %
2017
2016
100
100
100
100
100
100
100
100
23
Interests in joint venture operations
The Group has the following interests in unincorporated joint venture operations:
Participant/Joint Operation
Copper Range Limited
PNX Metals 1
Tarcowie Phosphate Ltd
Prenti Exploration Pty Ltd
Percentage of interest held in joint
venture %
2017
Nil
100%
Nil
Nil
2016
100%
100%
100%
100%
1 FMS maintains 100% of the rights to explore for and, if warranted, develop mining operations on PNX Metals
Jamestown Project, EL 5557 tenement, located in South Australia, for diamonds, barium, talc and phosphate.
36
24
Reconciliation of loss for the year to net cash flows from operations
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Loss for the year
Depreciation
Exploration expenditure written off
Non-cash employee benefits expense (share-based payments)
Impairment of exploration
Impairment of financial assets
Net profit on disposal of non-current assets
Deferred income tax expense
Changes in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
(Increase) in other assets
(Decrease)/increase in trade and other payables
(Decrease) in provisions
Net cash flows from operating activities
25
Loss per share
Loss used in calculating basic and diluted loss per share
Loss used in calculating basic and diluted loss per share from
continuing operations
30-Jun-17
$'000
30-Jun-16
$'000
(2,264)
33
165
-
-
2
-
43
672
(310)
(672)
(37)
(2,368)
(4,057)
82
117
155
393
293
(2)
-
(36)
(31)
853
(218)
(2,451)
30-Jun-17
$'000
30-Jun-16
$'000
(2,264)
(2,264)
(4,057)
(4,057)
30-Jun-17
No.
30-Jun-16
No.
Weighted average number of ordinary shares used in the calculation
of basic and diluted loss per share
3,114,608,516 2,823,300,003
26
Share-based payments
Employee Share Option Plan
The Flinders Mines Limited Employee Share Option Plan enables the Board, at its discretion, to issue Options to
employees of the Company or its associated companies. Each Option will have a life of five years and be
exercisable at a price determined by the Board. This price will not be below the market price of a share at the time
of issue. Any Option granted under the plan are un-listed and carry no voting or dividend rights.
There were no Options granted under the Employee Share Option Plan in 2017 or 2016 financial years.
Employee Incentive Rights Plan
The Flinders Mines Limited Employee Incentive Rights Plan enables the Board, at its discretion, to issue Rights to
employees of the Company or its associated companies. The vesting periods of the Rights are set at the Board's
discretion and all Rights have conditions that must be met before they vest. All Rights are un-listed and
non-transferable. The Rights granted under the Employee Incentive Rights Plan carry no voting or dividend rights.
On 1 July 2014 22,796,000 rights were issued to nine Company employees under the Company’s Employee
Incentive Rights Plan. The unvested Rights expired on 30 June 2016.
There were no Rights issued in the 2017 financial year.
37
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
30-Jun-17
$'000
10,637
48,960
59,597
935
935
138,817
-
(80,154)
58,663
(2,826)
(2,826)
30-Jun-16
$'000
2,527
46,148
48,675
1,339
1,339
125,239
-
(77,902)
47,337
(4,057)
(4,057)
27
Parent entity information
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Reserves
Accumulated losses
Loss for the year
Total comprehensive loss for the year
The Company has no material contingent liabilities.
28
Events occurring after the reporting period
There are no material events subsequent to balance date.
38
Flinders Mines Limited
Directors’ Declaration
30 June 2017
In the Directors' opinion:
(a)
the Financial Statements and notes are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
giving a true and fair view of the Consolidated Entity's financial position as at 30 June 2017 and of
its performance for the year ended on that date, and
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable, and
the financial statements and notes thereto are in accordance with the International Financial Reporting
Standards issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required
by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of Directors.
David McAdam
Interim Executive Director
Perth, Western Australia
14 September 2017
39
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
Correspondence to:
GPO Box 1270
Adelaide SA 5001
T 61 8 8372 6666
F 61 8 8372 6677
E info.sa@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
to the Members of Flinders Mines Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Flinders Mines Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017,
the consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
and notes to the consolidated 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:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
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.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to
one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the
member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not
provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In
the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries
and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Exploration and Evaluation Assets – valuation
Note 3(p) and 11
At 30 June 2017, the carrying value of Exploration
and Evaluation Assets was $49 million.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Company is
required to assess at each reporting date if there are
any triggers for impairment which may suggest the
carrying value is in excess of the recoverable value.
The process undertaken by management to assess
whether there are any impairment triggers in each
area of interest involves an element of management
judgement.
This area is a key audit matter due to the valuation of
exploration and evaluation assets being a significant
risk.
Our procedures included, amongst others:
Obtaining the management prepared reconciliation
of capitalised exploration and evaluation
expenditure and agreeing to the general ledger;
Reviewing management’s area of interest
considerations against AASB 6;
Conducting a detailed review of management’s
-
assessment of trigger events prepared in
accordance with AASB 6 including;
-
Tracing projects to statutory registers to
determine whether a right of tenure existed;
Enquiry of management regarding their
intentions to carry out exploration and
evaluation activity in the relevant exploration
area, including review of managements’
budgeted expenditure;
- Understanding whether any data exists to
suggest that the carrying value of these
exploration and evaluation assets are unlikely
to be recovered through development or sale;
Assessing the accuracy of impairment recorded for
the year as it pertained to exploration interests;
and
Reviewing the appropriateness of the related
disclosures within the financial statements.
Information Other than the Financial Report and Auditor’s Report Thereon
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 2017, 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 we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 13 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of Flinders Mines Limited, for the year ended 30 June
2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Partner - Audit & Assurance
Adelaide, 14 September 2017
Flinders Mines Limited
Additional Information
As at 4 September 2017
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this
report is as follows: The information is current as at 4 September 2017.
Issued Equity Capital
Number of holders
Number on issue
Voting Rights
Ordinary Shares
4,492
3,366,951,446
Options
Nil
Nil
Voting rights, on a show of hands, are one vote for every registered holder of Ordinary Shares and on a poll, are
one vote for each share held by registered holders of Ordinary Shares. Options do not carry any voting rights.
Distribution of Holdings of Equity Securities
Holding ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Unmarketable Parcels
Number of Equity Security Holders
Ordinary Shares
351
490
703
2,056
892
4,492
Units
35,709
1,806,480
5,766,327
77,049,628
3,282,293,302
3,366,951,446
The number of shareholders holding less than a marketable parcel (which as at 4 September 2017 was 9,091
Shares) was 1,246.
Substantial Shareholders
TIO (NZ) Limited
OCJ Investment (Australia) Pty Ltd
On Market Buy Back
There is no current on-market buy-back.
Number of Ordinary
Shares
Percentage (%)
1,861,779,287
686,000,000
55.30
20.37
43
Flinders Mines Limited
Additional Information
As at 4 September 2017
Top 20 Shareholders
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
TIO (NZ) LIMITED
OCJ INVESTMENT (AUSTRALIA) PTY LTD
MR KENNETH MARTIN KEANE
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
MISS SHUOHANG WANG
MR CHUNLEI OUYANG
MR IAN DRUMMOND + MRS JANICE DRUMMOND
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