More annual reports from Fresenius Medical Care:
2021 ReportFlinders Mines Limited
ABN 46 091 118 044
Annual Report
for the year ended 30 June 2018
For personal use only Flinders Mines Limited
Annual Report - 30 June 2018
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
3
4
5
13
14
32
33
37
39
40
41
2
For personal use only
Flinders Mines Limited
Corporate Directory
30 June 2018
Corporate Directory
Board of Directors
Neil Warburton
Independent Non-Executive Chairman
David McAdam
Executive Director
Michael Wolley
Non-Executive Director
Evan Davies
Non-Executive Director
Shannon Coates
Independent 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
KPMG
235 St Georges Terrace
Perth WA 6000
Securities Exchange Listing
Shares in Flinders Mines Limited are quoted on the Australian Securities Exchange under trading code FMS.
3
For personal use only Flinders Mines Limited
Chairman’s Report
Chairman’s Report
Dear Shareholders,
I am pleased to present the Company’s Annual Report for the year ended 30 June 2018.
During the year, the Company completed its planned maturation work at the Pilbara Iron Ore Project (PIOP),
located 70km from Tom Price in Western Australia. Geotechnical, hydrological and metallurgical test work was
completed and the potential for lower-grade detrital material to contribute to the PIOP Mineral Resource confirmed
and on 1 March 2018, a revised JORC Mineral Resource Statement for the PIOP was announced. Base case
metallurgical processing test work indicated that the PIOP detrital resource material, whilst being upgradeable to a
circa 59%Fe product, experiences significantly lower yields than non-detrital ores. Key metallurgical, geotechnical
and geohydrological risks identified during the strategic review were better understood and able to be mitigated as
a result of the maturation work.
Whilst the maturation programme achieved the majority of its goals and progressed the PIOP project towards
development, it also highlighted areas of future work, which include progressing discussions on provision of a
logistics solution for transportation and shipping, considering further exploration programs at PIOP to identify
additional higher grade Mineral Resources and optimising product quality and processing plant development to
assess the impacts of the ore characteristics.
The Company also continued to work on further exploration of the Canegrass tenements, with the focus being on
extending its knowledge of the VTM Resource and its ongoing assessment of the potential for gold in the various
tenement holdings.
During the year, the Company was extremely saddened by the passing of longstanding Non-Executive Director,
Mr Robert Kennedy, in March 2018. Bob worked tirelessly in his role as Director and as Chair of the Audit and Risk
Committee for over 17 years. Following Bob’s passing, Ms Shannon Coates was appointed as Non-Executive
Director and Chair of the Audit and Risk Committee on 20 June 2018.
Post the end of the financial year, the Company undertook a non-renounceable entitlement issue, raising $8.275
million (before costs) which represented approximately 88% of the offer. The funds were used to repay a $5 million
unsecured loan (plus interest) from PIO Mines Pty Ltd, a subsidiary of its major shareholder, TIO (NZ) Limited,
costs of the offer and will also be applied towards future tenement management expenditure and working capital.
In conclusion, I would like to thank Executive Director, Mr David McAdam, and his team for their valuable
contribution to the Company, and shareholders for their continued support. I look forward to reporting further
progress on our projects during the 2019 financial year.
Neil Warburton
Chairman
Perth, Western Australia
19 September 2018
4
For personal use only 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 2018.
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 Warburton
David McAdam
Robert Kennedy 1
Michael Wolley
Evan Davies
Shannon Coates
Independent Non-Executive Chairman
Executive Director
Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Appointed 19 October 2016
Appointed 19 October 2016
Appointed 14 December 2001
Appointed 19 October 2016
Appointed 19 October 2016
Appointed 20 June 2018
1 Deceased 20 March 2018
Company Secretary
Shannon Coates held the position of Company Secretary during the whole of the financial year and up to the date
of this report.
Information on Directors and Officers
Neil Warburton
Independent Non-Executive Chairman
Qualifications
Experience
Assoc. MinEng WASM, MAusIMM, FAICD
Mr Warburton has over 38 years’ experience in corporate and all areas of mining
Mr Warburton held senior positions with Barminco Limited
operations.
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
Chair of Nominations and Remuneration Committee and member of Audit and Risk
Committee and Strategic Review Committee.
Directorships held in other
listed entities in the last
three years
Non-executive director of Independence Group Limited (October 2015 to date) and
non-executive chairman of Coolgardie Minerals Limited (July 2017 to date).
Previously a non-executive director of Australian Mines Limited (April 2003 to
December 2017), 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 Limited (May 2006
to July 2016).
David McAdam
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
Member of Nominations and Remuneration Committee and Strategic Review
Committee.
Directorships held in other
listed entities in the last
three years
Previously Managing Director and CEO of Seymour Whyte Limited (February 2013
to May 2015).
5
For personal use only
Flinders Mines Limited
Directors’ Report
Michael Wolley
Non-Executive Director
Qualifications
Experience
BE (Chemical and Materials, 1st Class Hons), MMan
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
Member of Nominations and Remuneration Committee and Audit and Risk
Committee and Strategic Review Committee.
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 Limited (now BBI Group)
(June 2012 to August 2015) and Red Mountain Mining Limited (April 2011 to July
2016).
Evan Davies
Non-Executive Director
Qualifications
Experience
BTP, MSc, MPhi
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 Nominations and Remuneration Committee and Audit and Risk
Committee and Strategic Review Committee.
Directorships held in other
listed entities in the last
three years
Nil
Shannon Coates
Independent Non-Executive Director and Company Secretary
Qualifications
Experience
LLB, BA (Jur), GAICD, GIA
Ms Coates is a non-executive director and Chartered Secretary. She is a qualified
lawyer and has over 20 years’ experience in corporate law and compliance. Ms.
Coates is currently Managing Director of Evolution Corporate Services, a boutique
corporate advisory firm providing company secretarial and corporate advisory
support to boards and various committees across a variety of industries including
financial services, resources, oil and gas, manufacturing and technology.
Interest in FMS Shares
and Options at the date of
this report
Nil
Special responsibilities
Chair of the Audit and Risk Committee and Strategic Review Committee and
member of Nominations and Remuneration Committee
Directorships held in other
listed entities in the last
three years
Non-executive director of the following listed companies: Vmoto Limited (May 2014
to date) and Kopore Metals Limited (October 2015 to date).
6
For personal use only Flinders Mines Limited
Directors’ Report
Robert Kennedy
Independent Non-Executive Director
Qualifications
Experience
KSJ, ASAIT, Grad Dip (Systems Analysis), Dip Financial Planning, Dip Financial
Services, FCA, CTA, AGIA, Life Member AIM, FAICD, MRSASA
Chartered Accountant with extensive experience as chairman and non-executive
director for 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
Nil
Directorships held in other
listed entities in the last
three years
Previously Chairperson of Ramelius Resources Limited (November 1995 to
March 2018), Maximus Resources Limited (December 2004 to March 2018),
Monax Mining Limited (August 2004 to March 2018) and Tychean Resources
Limited (March 2006 to March 2018) and 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).
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 2018, and the numbers of meetings attended by each Director were:
Full meetings
of Directors
Audit & Risk
Committee
A
12
12
10
12
6
-
B
12
12
12
12
8
-
A
4
-
3
3
2
-
B
4
-
4
4
4
-
Nominations
&
Remuneration
Committee
Corporate
Governance
Committee 3
Strategic
Review
Committee 4
A
3
3
2
3
1
-
B
3
3
3
3
2
-
A
B
A
B
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N Warburton
D McAdam
M Wolley
E Davies
R Kennedy 1
S Coates 2
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 = Deceased 20 March 2018.
2 = Ms Coates was appointed as Director on 20 June 2018, no board or committee meetings were held in the period
from her appointment to 30 June 2018.
3 = The Board resolved to cease the Corporate Governance Committee on 18 July 2018. Corporate Governance
is a standing agenda item at each Board Meeting and as such, Corporate Governance is undertaken by the full
Board pursuant to the Corporate Governance Committee Charter.
4 = The Board established a Strategic Review Committee on 7 September 2018.
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.
Dividends
No dividends have been declared or paid during the financial year (2017: $nil).
Operating Results and Financial Position
The net result of operations for the financial year was a loss of $1.810m (2017: loss of $2.264m).
Review of Operations
Corporate
On 6 November 2017, Flinders entered into a loan facility agreement with PIO Mines Pty Limited, a subsidiary of
the Company’s major shareholder TIO (NZ) Limited.
The short-term loan facility was for a total of A$5m. The loan facility was unsecured and required repayment on
or before 31 August 2018. Interest was payable at the repayment date at a rate of 3.885% per annum.
Subsequent to year end, this loan was repaid in its entirety including accrued interest.
7
For personal use only Flinders Mines Limited
Directors’ Report
The funds were used to complete all work programs associated with the maturation work undertaken at the Pilbara
Iron Ore Project (‘PIOP’).
Pilbara Iron Ore Project, Western Australia
In March 2017, the Company undertook a strategic review to identify the best path forward to unlock the value of
the PIOP asset.
The strategic review concluded that, among other things, a further asset maturation phase was required to define
the PIOP’s commercial viability ahead of any pre-feasibility study.
These maturation works commenced in June 2017 and concluded in May 2018.
The primary purpose of the maturation program was to determine if lower iron grade detrital ores (‘DID’s’), ranging
in grade from ~40% to 50%Fe could be upgraded to a product that would contribute to a total project marketable
quality blend. If successful, this would increase the total recoverable tonnes from the PIOP.
As a result of this work, an updated JORC Code 2012 Mineral Resource for the PIOP was announced to the ASX
on 1 March 2018.
The maturation program has also produced a preliminary process design for Ore Processing Facility 1 and 2. The
initial process flow diagrams and mechanical equipment lists reflect the metallurgical test work and will facilitate
engagement with process engineering designers and contractors once the infrastructure solutions and ore
marketability has been further developed.
The maturation program achieved majority of its goals and progressed the PIOP towards development, it also
highlighted future areas of work, including:
•
•
•
•
•
Commence discussions on provision of a logistics solution;
Consider further exploration programs at PIOP to identify additional Mineral Resources and higher
resource grade;
Product quality optimisation and marketing update;
Process plant development to assess the impacts of the ore characteristics; and
Undertake detailed mine planning once infrastructure parameters are secured.
Canegrass, Western Australia
The Company completed the planned field drilling and analysis work on the Canegrass tenements during the
period. The drilling program conducted at Canegrass in November 2017, targeted cobalt, nickel, copper soil and
rock chip anomalies and included reverse circulation and air-core drilling. None of the drilling intersected any
cobalt, nickel, copper sulphide mineralisation of economic interest. Previous drilling on Canegrass where copper,
cobalt and platinum group elements were also analysed supports this result, with only low values of cobalt and
platinum group elements associated with the copper zones and reinforces the conclusion that the prospects of any
significant cobalt and/or platinum group elements mineralisation in the current tenure are negligible.
An updated JORC Code 2012 Vanadium Mineral Resource for Canegrass was announced to the ASX on 30
January 2018.
Additional exploratory drilling designed to explore for additional vanadium resources and gold prospectivity within
the Company’s funding constraints, is expected to commence in the September 2018 quarter.
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:
•
•
•
Consideration of the future areas of work highlighted from the results of the maturation program at PIOP;
Commence discussions with a third party for provision of a logistics solution at PIOP; and
Continue active exploration activity at the Group’s Canegrass tenements in Western Australia.
Events Subsequent to the End of the Reporting Period
Subsequent to year end, the Company completed a rights issue raising $8.275m (before costs) by issuing
118,218,635 fully paid ordinary shares at $0.07 per share. These proceeds have been used to repay the PIO loan
facility in entirety, $5.127m including accrued interest. The remaining funds will be used to fund ongoing
exploration and evaluation programs.
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.
8
For personal use only Flinders Mines Limited
Directors’ Report
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 Warburton
David McAdam
Robert Kennedy
Michael Wolley
Evan Davies
Shannon Coates
Independent Non-Executive Chairman
Executive Director
Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Remuneration Governance
Deceased 20 March 2018
Appointed 20 June 2018
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. Consequently, the
Board of Directors is satisfied that the recommendations were made free from undue influence from any member
of the KMP.
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 $5,547.
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 (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 Executive Director, which are in addition to Mr McAdam’s role as a Non-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. Subsequent to year end, the Executive Director’s Service Agreement has been extended to 1 March
2019 with a rolling 3 month extension at the Board’s discretion.
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 Remuneration Committee taking into account
comparable roles and market data provided by an independent remuneration adviser.
9
For personal use only Flinders Mines Limited
Directors’ Report
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.
2018
Short-term
benefits
Post-employment
Salary & Fees
Superannuation
Non-Executive Directors
N Warburton
M Wolley 1
E Davies 1
R Kennedy 2
S Coates 3
Subtotal Non-Executive Directors
Executive Directors
D McAdam 4
Total
$
188,000
119,000
119,000
88,744
3,344
518,088
590,000
1,108,088
$
-
-
-
507
318
825
-
825
Total
$
188,000
119,000
119,000
89,251
3,662
518,913
590,000
1,108,913
1 Mr Wolley and Mr Davies Non-Executive Director Fees are paid directly to the major shareholder, TIO.
2 Deceased 20 March 2018.
3 Ms Coates was appointed as a Non-Executive Director on 20 June 2018 and as at 30 June 2018, $3,662 in Non-
Executive Director Fees were payable to Ms Coates for the period 20 June 2018 to the year ending 30 June 2018.
4 Mr McAdam’s remuneration includes $520,000 for Executive services and $70,000 for Director services.
2017
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
Subtotal Non-Executive
Directors
Executive Directors
D McAdam 1, 4
Other key management personnel
J Panagopoulos 5
Total
Salary & Fees Superannuatio
$
104,160
49,160
49,160
139,196
42,000
38,356
422,032
n
$
-
-
-
9,804
-
3,644
13,448
266,360
-
Termination
benefits
$
-
-
-
-
-
-
-
-
218,744
907,136
18,004
31,452
79,463
79,463
Total
$
104,160
49,160
49,160
149,000
42,000
42,000
435,480
266,360
316,211
1,018,051
10
For personal use only Flinders Mines Limited
Directors’ Report
1 Appointed 19 October 2016.
2 Resigned 19 October 2016.
3 Mr Wolley and Mr Davies Non-Executive 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 Executive services and
$49,160 for Director services.
5 Redundant 29 April 2017.
No remuneration
exercised/lapsed during the years ended 30 June 2018 and 30 June 2017.
linked
is
to performance and no share-based payments were received/granted or
Terms of Employment
The terms of employment for the Executive Director are formalised in Service Agreements. Material terms relating
to the duration and termination as at 30 June 2018 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 30 September
2018
Subsequent to year end, the Executive Director’s Service Agreement has been extended to 1 March 2019 with a
rolling 3 month extension at the Board’s discretion. The previous one week notice period has been extended to
align with the end of the respective term.
Share holdings
No Directors or KMP held a relevant interest in shares in the Company during the 2018 and 2017 financial year.
There were no shares granted during the reporting period as compensation.
Other Transactions with KMP and their Related Parties
During the year ended 30 June 2018, the Group utilised the tenement management and field services of BBI Group
Pty Ltd, a subsidiary of its major shareholder, TIO. The total value of these services was $172,595 (2017:
$59,488).
During the year ended 30 June 2018, 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 $238,000 (2017: $98,320).
During the year ended 30 June 2018, the Group received Company Secretarial services from Evolution Corporate
Services, a company of which Ms Coates is a Director of. The total value of these services for the period of time
Ms Coates was a Director was $2,167.
The above transactions are all entered into at arm’s length.
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, KPMG.
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
The Company has not indemnified its auditors, KPMG.
11
For personal use only Flinders Mines Limited
Directors’ Report
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 Legislative Instrument 2016/191. The Company is
an entity to which this class order applies.
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 13.
This report is made in accordance with a resolution of Directors.
David McAdam
Executive Director
Perth, Western Australia
19 September 2018
12
For personal use only Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Flinders Mines Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Flinders Mines Limited for
the financial year ended 30 June 2018 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
R Gambitta
Partner
Perth
19 September 2018
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
For personal use only Flinders Mines Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2018
Revenue from continuing operations
Finance income
Other income
Administrative expenses
Other expenses
Finance costs
Loss before income tax
Income tax (expense)/benefit
Loss for the year
Items that may be reclassified to profit or loss:
Other comprehensive income
Other comprehensive loss for the year
attributable to owners of the Company
Loss per share attributable to ordinary
equity holders:
Basic and diluted loss per share
Notes
5
5
5
5
5
6
7
2018
$’000
105
49
(1,718)
(117)
(112)
(1,793)
(17)
(1,810)
-
(1,810)
Cents
(0.058)
The above statement should be read in conjunction with the accompanying notes.
2017
$’000
43
-
(2,070)
(167)
(27)
(2,221)
(43)
(2,264)
-
(2,264)
Cents
(0.073)
14
For personal use only 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
Current liabilities
Trade and other payables
Loans and borrowings
Total current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Accumulated losses
Total equity
Flinders Mines Limited
Consolidated Statement of Financial Position
As at 30 June 2018
Notes
8
9
10
11
9
12
13
14
2018
$’000
3,301
84
468
3,853
-
58,461
4
-
58,465
62,318
436
5,000
5,436
5,436
2017
$’000
10,067
127
467
10,661
3
48,890
72
7
48,972
59,633
941
-
941
941
56,882
58,692
138,859
(81,977)
56,882
138,859
(80,167)
58,692
The above statement should be read in conjunction with the accompanying notes.
15
For personal use only
Flinders Mines Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Contributed
equity
$’000
Accumulated
losses
$’000
Total equity
$’000
47,336
(2,264)
(2,264)
13,620
58,692
(1,810)
(1,810)
(77,903)
(2,264)
(2,264)
-
(80,167)
(1,810)
(1,810)
-
(81,977)
-
56,882
Balance at 1 July 2016
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity
as owners:
Contributions of equity, net of costs and tax
Balance as at 30 June 2017
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity
as owners:
Contributions of equity, net of costs and tax
125,239
-
-
13,620
138,859
-
-
-
Balance as at 30 June 2018
138,859
The above statement should be read in conjunction with the accompanying notes.
16
For personal use only Flinders Mines Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2018
Notes
Cash flows from operating activities
Payments to suppliers and employees
Interest expense
Interest received
Net cash outflow from operating activities
8
Cash flows from investing activities
Proceeds from sale of plant and equipment
Proceeds
financial assets
Payments for exploration activities
from sale of available-for-sale
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issues of shares
Transaction costs
Proceeds from borrowings
Repayment of borrowings
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at the beginning
of the year
Cash and cash equivalents at the end of
the year
8
2018
$’000
(1,687)
-
105
(1,582)
14
73
(10,219)
(10,132)
-
(52)
5,000
-
4,948
(6,766)
10,067
3,301
The above statement should be read in conjunction with the accompanying notes.
2017
$’000
(2,387)
(24)
43
(2,368)
1
-
(1,695)
(1,694)
13,670
(92)
2,000
(2,000)
13,578
9,516
551
10,067
17
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
1
Corporate information
The consolidated financial report of Flinders Mines Limited for the year ended 30 June 2018 was authorised for
issue in accordance with a resolution of the Directors on 19 September 2018. 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 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’).
Basis of preparation
3
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.
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
a)
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.
b)
Revenues, expenses and assets are recognised net of the amount of GST except:
Goods and services tax (‘GST’)
•
•
when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are
classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
Comparatives
c)
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
Going Concern
d)
The Company was required to repay the unsecured short term loan facility with PIO Mines Pty Limited (“PIO”), a
subsidiary of its major shareholder, TIO (NZ) Limited, by 31 August 2018.
Subsequent to year end, the Company completed a rights issue raising $8.275m (before costs) by issuing
118,218,635 fully paid ordinary shares at $0.07. These proceeds have been used to repay the PIO loan facility in
entirety, $5.127m including accrued interest. The remaining funds will be used to fund ongoing exploration and
evaluation programs.
On this basis, the financial statements have been prepared on a going concern basis
18
For personal use only Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
4
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 iron ore mineralisation, gold and base metals. The costs associated with
the Pilbara Iron Ore Project are reported on in the Pilbara Iron Ore segment and the costs associated with
Canegrass gold and base metals are reported in the Canegrass 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.
2018
Pilbara Iron Ore
Canegrass
$’000
$’000
Segment result
Impairment of assets
Capital expenditure
Total segment assets
Total segment liabilities
2017
Segment result
Impairment of assets
Capital expenditure
Total segment assets
Total segment liabilities
-
-
9,097
57,917
156
-
-
2,302
48,820
498
-
-
474
544
6
-
-
70
70
5
Other
$’000
(65)
(65)
65
-
-
(165)
(165)
165
-
-
A reconciliation of segment loss to operating loss before income tax is provided as follows:
Total segment loss
Finance income
Profit on disposal of assets
Administrative expenses
Non-mine site rehabilitation
Impairment of financial assets
Finance cost
Loss before income tax
2018
$’000
(65)
105
49
(1,718)
(52)
-
(112)
(1,793)
Total
$’000
(65)
(65)
9,636
58,461
162
(165)
(165)
2,537
48,890
503
2017
$’000
(165)
43
-
(2,070)
-
(2)
(27)
(2,221)
19
For personal use only
4
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 2018
Segment assets
Unallocated:
Cash and cash equivalents
Trade and other receivables
Other current assets
Available-for-sale financial assets
Plant and equipment
Other non-current assets
Total assets
2018
$’000
58,461
3,301
84
429
-
4
-
62,279
Reportable segments' liabilities are reconciled to total liabilities as follows:
Segment liabilities
Unallocated:
Trade and other payables
Loans and borrowings
Total liabilities
5
Income and expenses
Other revenue
Interest received
2018
$’000
162
274
5,000
5,436
2018
$’000
105
105
2017
$’000
48,890
10,067
127
467
3
72
7
59,633
2017
$’000
503
438
-
941
2017
$’000
43
43
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial asset.
Other income
Profit on sale of assets
Profit on sale of available-for-sale financial assets 1
2018
$’000
7
42
49
2017
$’000
-
-
-
1 Represents the profit on sale of 1,000,000 Rumble Resources Limited shares at a weighted average sale price of
$0.705 and 250,000 Phoenix Metals Limited shares at a weighted average sale price of $0.011.
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or
are not classified in another category of financial assets. Available-for-sale financial assets are recognised initially
at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment
losses are recognised in other comprehensive income and presented in the available-for-sale fair value reserve in
equity. When an investment is derecognised, the cumulative gain or loss in equity is reclassified to profit or loss.
20
For personal use only
5
Income and expenses (continued)
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
Administrative expenses
Compliance
Depreciation
Administration costs
Salary and wages
Legal costs
Occupancy costs
Other expense
Exploration expenditure written off
Non-mine site rehabilitation
Impairment of financial assets
Finance expense
Interest expense
Bank fees
2018
$’000
149
22
854
603
45
45
1,718
2018
$’000
65
52
-
117
2018
$’000
110
2
112
2017
$’000
252
33
650
839
113
183
2,070
2017
$’000
165
-
2
167
2017
$’000
24
3
27
6
Income tax expense
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:
Loss from continuing operations before income tax
Tax at the Australian tax rate of 30% (2017: 30%)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Other non allowable items
Temporary differences not bought to account
Transfer of available for sale asset reserve to impairment
expense
Tax expense
2018
$’000
(1,793)
(538)
19
536
-
17
2017
$’000
(2,221)
(666)
1
707
1
43
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 below. A DTA has not been recognised in respect of tax losses either as realisation of the
benefit is not regarded as probable.
21
For personal use only
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
6
Income tax expense (Continued)
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. The Company 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 $23.873m (2017: $23.337m) that are available for offset indefinitely
against future taxable profits of the companies in which the losses arose.
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.
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.
7
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
Weighted average number of ordinary shares used in the
calculation of basic and diluted loss per share
2018
$’000
(1,793)
(1,793)
2017
$’000
(2,264)
(2,264)
2018
Number
3,114,608,516
2017
Number
3,114,608,516
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.
22
For personal use only
8
Cash and cash equivalents
Cash at bank and in hand
Term deposits
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
2018
$’000
3,241
60
3,301
2017
$’000
3,917
6,150
10,067
Cash and short-term deposits comprise of cash at bank and in hand and short-term deposits with an original
maturity of three months or less.
Reconciliation of loss for the year to net cash flows from operations:
Loss for the year
Depreciation
Exploration expenditure written off
Profit on disposal of assets
Profit on disposal of available-for-sale financial assets
Impairment of financial assets
Income tax expense
Changes in operating assets and liabilities
Decrease in trade and other receivables
Decrease/(increase) in other assets
Increase/(decrease) in trade and other payables
Decrease in provisions
Net cash flows from operating activities
9
Trade and other receivables
Current
Other receivables
Non-current
Security bonds
2018
$’000
(1,793)
22
65
(7)
(42)
-
17
5
18
150
-
(1,582)
2018
$’000
84
84
-
-
2017
$’000
(2,264)
33
165
-
-
2
43
672
(310)
(672)
(37)
(2,368)
2017
$’000
127
127
7
7
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.
All current receivables are due within 30 days (2017: 30 days). There are no past due or impaired receivables.
10
Other assets
Other current assets
2018
$’000
468
468
2017
$’000
467
467
Other current assets represents the prepaid portion of rates and rents of the Group’s tenements and corporate
insurances.
23
For personal use only
11
Exploration and evaluation expenditure
Opening balance
Expenditure incurred
Impairment loss
Closing balance
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
2018
$’000
48,890
9,636
(65)
58,461
2017
$’000
46,518
2,537
(165)
48,890
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, those amounts are charged to the
Consolidated Statement of Comprehensive Income. During the years ending 30 June 2018 and 30 June 2017
expenditure relating to depreciation and tenement administrative services was written off.
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.
12
Trade and other payables
Trade payables
Other payables 1
2018
$’000
190
246
436
2017
$’000
491
450
941
1 Included in Other payables is accrued interest of $110k payable on the PIO Mines Pty Limited loan. Refer Note
13.
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, non-interest bearing 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.
24
For personal use only
13
Loans and Borrowings
Short-term loan
Closing balance
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
2018
$’000
5,000
5,000
2017
$’000
-
-
On 6 November 2017, the Company announced that it had entered into an unsecured $5m short term loan facility
with PIO Mines Pty Limited, a subsidiary of its major shareholder, TIO (NZ) Limited.
The key terms are as follows:
• Repayable on or before 31 August 2018;
•
•
Interest payable on repayment date at a rate of 3.885% per annum; and
Funds must be used to complete the PIOP maturation work programs.
As at 30 June 2018, this loan was fully drawn. Subsequent to year end, this loan and applicable interest was
repaid in its entirety.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees
paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and
amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
14
Contributed equity
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.
Issued shares:
At 1 July 2016
Shares issued pursuant to a non-renounceable rights issue
Share issue costs
As at 30 June 2017
Share issue costs
As at 30 June 2018
Ordinary shares
Number of shares
$’000
2,947,152,568
419,798,878
-
3,336,951,446
-
3,336,951,446
125,239
13,717
(97)
138,859
-
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.
Capital risk management
The Group's debt and capital includes ordinary share capital and short term debt. 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.
25
For personal use only
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
15
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 and
loans to related parties.
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.
2018
Fixed interest maturing in:
Average interest rates
Floating
interest
rate
$’000
3,241
-
-
-
< 1 year
–
1
years
5
> 5 years Non-
Floating
Fixed
interest
bearing
$’000
$’000
$’000
$’000
%
%
60
-
-
5,000
-
-
-
-
-
-
-
-
-
84
436
-
1.70%
2.68%
-
-
-
-
-
3.92%
Cash and cash
equivalents
Trade and
other
receivables
Trade and
other payables
Loans and
borrowings
2017
Fixed interest maturing in:
Average interest rates
Floating
interest
rate
$’000
3,917
-
-
-
Cash and cash
equivalents
Trade and
other
receivables
Available-for-
sale financial
assets
Trade and
other payables
< 1 year
1
–
years
5
> 5 years Non-
Floating
Fixed
interest
bearing
$’000
$’000
$’000
$’000
%
%
6,150
-
-
-
-
-
-
-
-
-
-
-
-
1.50%
2.20%
134
3
941
-
-
-
-
-
-
As at 30 June 2018, if interest rates had moved by 1%, with all other variables being held constant, post-tax loss
and equity would have been affect by +/- $0.033m (2017: +/- $0.101m).
26
For personal use only
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
15
Financial risk management (continued)
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 2018 is as follows:
2018
Cash and cash equivalents
Trade and other receivables
2017
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
AAA
$’000
-
46
-
91
-
AA-
$’000
3,301
-
10,067
-
-
Internally rated
$’000
-
38
-
43
3
Total
$’000
3,301
84
10,067
134
3
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.
2018
< 1 year
1 – 5 years
Total
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Loans and borrowings
Net outflow
2017
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Trade and other payables
Net inflow
3,301
84
(436)
(5,000)
(2,051)
10,067
127
(941)
9,253
-
-
-
-
-
-
7
3
-
10
3,301
84
(436)
(5,000)
(2,051)
10,067
134
3
(941)
9,263
27
For personal use only
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
16
Subsidiaries
The Consolidated Financial Statements include the financial statements of Flinders Mines Limited and the
subsidiaries listed in the following table:
Name of entity
Country of
incorporation Class of shares
FME Exploration Services Pty Ltd
Flinders Canegrass Pty Ltd
Flinders Diamonds Pty Ltd
Flinders Iron Pty Ltd
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Equity holding %
2017
2018
100
100
100
100
100
100
100
100
17
Interests in exploration projects
The Company 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.
18
Parent entity information
Current assets
Non-current assets
Current liabilities
Issued capital
Accumulated losses
Total equity
Loss for the year
Total comprehensive loss for the year
2018
$’000
3,794
58,465
5,436
138,820
(81,997)
56,823
(1,843)
(1,843)
2017
$’000
10,637
48,960
935
138,817
(80,154)
58,663
(2,826)
(2,826)
The Company has no material contingent liabilities.
19
Contingent assets and liabilities
The Group had no contingent assets or liabilities at 30 June 2018 (2017: nil).
20
Remuneration of auditors
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:
Auditing and reviewing of financial reports
2018
$
30,000
30,000
2017
$
44,482
44,482
The auditor of the parent entity for the year ended 30 June 2018 is KPMG and for the year ended 30 June 2017 it
was Grant Thornton Audit Pty Ltd.
21
Commitments
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 2019 for the Group is
approximately $1.400m (2018: $1.400m). These obligations are expected to be fulfilled in the normal course of
operations.
28
For personal use only
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
22
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 2018, 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 $172,595 (2017: $59,488).
During the year ended 30 June 2018, 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 $238,000
(2017: $98,920).
During the year ended 30 June 2018, the Group received Company Secretarial services from Evolution Corporate
Services, a company of which Ms Coates is a Director of. The total value of these services for the period of time
Ms Coates was a Director was $2,167.
The above transactions are all entered into at arm’s length
23
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
Shannon Coates
Independent Non-Executive Chairman
Executive Director
Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Termination payments
Deceased 20 March 2018
Appointed 20 June 2018
2018
$
1,108,088
825
-
1,108,913
2017
$
907,136
31,452
79,463
1,018,051
24
Events occurring after the reporting period
Subsequent to year end, the Company completed a rights issue raising $8.275m (before costs) by issuing
118,218,635 fully paid ordinary shares at $0.07. These proceeds have been used to repay the PIO loan facility in
entirety, $5.127m including accrued interest. The remaining funds will be used to fund ongoing exploration and
evaluation programs.
25
Critical accounting estimates and assumptions
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:
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.
29
For personal use only
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
25
Critical accounting estimates and assumptions (Continued)
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.
26
Changes in accounting policy
In the year ended 30 June 2018, the directors have reviewed all the new and revised Standards and Interpretations
issued by the AASB 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 Group
accounting policies.
27
New accounting standards and interpretations
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective and have not been adopted by the Group for the year ended 30 June 2018 with relevant standards and
interpretations outlined below.
AASB 9 Financial Instruments (effective from 1 July 2018)
AASB 9 Financial Instruments addresses the classification, measurement and de-recognition of financial assets
and financial liabilities and introduces new rules for hedge accounting. All financial assets that are within the
scope of AASB 9 are required to be measured at either amortised cost or fair value, while financial liabilities
measured at fair value through profit and loss will require consideration as to the portion change in fair value that
is attributable to changes in the credit risk of that liability. Such changes in value with a connection to change in
credit risk will be presented in other comprehensive income rather than profit and loss.
The requirements for hedge accounting under AASB 9 retain similar accounting treatments to those currently
available under AASB 139. The new standard introduces greater flexibility to types of transactions eligible for
hedge accounting while the previous requirement for hedge effectiveness testing has been replaced with the
principle of an ‘economic relationship’ and the requirement for retrospective assessment of hedge effectiveness
has been removed. The standard has however introduced enhanced disclosure requirements regarding risk
management activities.
The Group has considered the impact on its consolidated Financial Statements and assessed that the effect of the
new standard will be minimal.
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of
Share-based Payment transactions (effective from 1 July 2018)
This standard amends AASB 2 Share-Based Payments clarifying how to account for certain types of share-based
payment transactions. The amendments provide requirements on the accounting for:
The effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments; and
Share-based payment transactions with a net settlement feature for withholding tax obligations.
A modification to the terms and conditions of a share-based payment that changes the classification of the
transaction from cash-settled to equity-settled.
The Group has considered the impact on its consolidated Financial Statements and assessed that the effect of the
new standard will be minimal.
AASB 16 Leases (effective from 1 July 2019)
AASB 16 distinguishes leases and services contracts based on whether an identified asset is controlled by the
customer. Distinctions between operating leases (previously off-balance sheet) and finance leases (previously on
balance sheet) are removed under the new standard and replaced by the concept of right of use. Where an entity
has control over and an ongoing right to use an asset, that asset will be recognised on the balance sheet as an
asset with a corresponding liability.
The Group has considered the impact on its consolidated Financial Statements and assessed that the effect of the
new standard is minimal. The Group will continue to assess its contracts and other arrangements that may be
impacted by the introduction of the revised standard.
30
For personal use only
Flinders Mines Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2018
27
New accounting standards and interpretations (Continued)
AASB Interpretation 23 Uncertainty over Income Tax Treatments (effective from 1 July 2019)
This Interpretation clarifies the application of the recognition and measurement criteria in AASB 112 Income Taxes
when there is uncertainty over income tax treatments. The Interpretation specifically addresses the following:
Whether an entity considers uncertain tax treatments separately;
The assumptions an entity makes about the examination of tax treatments by taxation authorities;
How an entity determines taxable profit, tax bases, unused tax losses, unused tax credits and tax rates; and
How an entity considers changes in facts and circumstances.
The Group has considered the impact on its consolidated Financial Statements and assessed that the effect of the
new standard will be minimal.
31
For personal use only
Flinders Mines Limited
Directors’ Declaration
30 June 2018
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 2018 and of
its performance for the year ended on that date, and
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.
(b)
(c)
The Directors have been given the declarations by the Executive Director 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
Executive Director
Perth, Western Australia
19 September 2018
32
For personal use only Independent Auditor’s Report
To the shareholders 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).
In our opinion, the accompanying Financial
Report of the Company is in accordance with the
Corporations Act 2001, including:
• giving a true and fair view of the Group's
financial position as at 30 June 2018 and of its
financial performance for the year ended on
that date; and
• complying with Australian Accounting
Standards and the Corporations Regulations
2001.
Basis for opinion
The Financial Report comprises:
• Consolidated Statement of Financial Position as at
30 June 2018
• 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
• Notes including a summary of significant
accounting policies
• Directors' Declaration.
The Group consists of the Company and the entities
it controlled at the year end or from time to time
during the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 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 fulfilled our other ethical responsibilities in accordance with the Code.
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.
This matter was 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 this matter.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
For personal use only Exploration and evaluation expenditure $58.461 million
Refer to Note 11 of the Financial Report
The key audit matter
How the matter was addressed in our audit
Exploration and evaluation expenditure capitalised
(E&E) is a key audit matter due to:
•
•
the significance of the activity to the Group’s
business and the balance (being 93.9% of total
assets); and
the greater level of audit effort to evaluate the
Group’s application of the requirements of AASB
6 Exploration for and Evaluation of Mineral
Resources to the Pilbara Iron Ore Project (PIOP)
in particular the maturation program of works
undertaken to progress the feasibility of the
project. The presence of impairment indicators
would necessitate a detailed analysis by the
Group of the value of E&E. Given the criticality
of this to the scope of our work, we involved
senior team members to challenge the Group’s
determination that no such indicators existed.
In assessing the conditions allowing capitalisation of
relevant expenditure, we focused on:
•
•
•
the determination of the areas of interest
(areas);
documentation available regarding rights to
tenure, via licensing, and compliance with
relevant conditions, to maintain current rights to
an area of interest and the Group’s intention and
capacity to continue the relevant E&E activities;
the Group’s determination of whether the E&E
are expected to be recouped through successful
development and exploitation of the area of
interest.
In assessing the presence of impairment indicators,
we focused on those that may draw into question
the commercial continuation of E&E activities for
PIOP where significant capitalised E&E exists. In
addition to the assessments above, and given the
financial position of the group, we paid particular
attention to:
•
The ability of the Group to fund the continuation
of activities
• Results from latest activities regarding the
existence or otherwise of economically
recoverable reserves.
Our audit procedures included:
•
Evaluating the Group’s accounting policy to
recognise exploration and evaluation assets
using the criteria in the accounting standard;
• We assessed the Group’s determination of its
areas of interest for consistency with the
definition in the accounting standard. This
involved analysing the licenses in which the
Group holds an interest and the exploration
programmes planned for those for consistency
with documentation such as license related
technical conditions and planned work
programmes
•
For each area of interest, we assessed the
Group’s current rights to tenure by checking the
ownership of the relevant license to government
registries. We also tested for compliance with
conditions, such as minimum expenditure
requirements, on a sample of licenses;
• We tested the Group’s additions to E&E for the
year by evaluating a statistical sample of
recorded expenditure. We tested consistency
to underlying records, the capitalisation
requirements of the Group’s accounting policy,
and the requirements of the accounting
standard;
• We evaluated Group documents, such as
minutes of Board meetings, for consistency with
their stated intentions for continuing E&E in
certain areas. We challenged this through
interviews with key operational and finance
personnel.
• We obtained project and corporate budgets
identifying areas with existing funding and those
requiring alternate funding sources. We
compared this for consistency with areas with
E&E, for evidence of the ability to fund
continued activities.
• We analysed the Group’s determination of
recoupment through successful development
and exploitation of the area by evaluating the
Group’s documentation of planned future
activities including work programmes and
project budgets for a sample of areas.
For personal use only Other Information
Other Information is financial and non-financial information in Flinders Mines Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
• implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate
the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• 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 Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They 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 the 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.
For personal use only Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Flinders Mines Limited for the year ended 30
June 2018, complies with Section 300A of the
Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report included
on pages 9 to 11 of the Directors’ report for the year
ended 30 June 2018.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
KPMG
R Gambitta
Partner
Perth
19 September 2018
For personal use only 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 2018.
Flinders Mines Limited
Additional Information
As at 4 September 2018
Issued Equity Capital
Number of holders
Number on issue
Voting Rights
Ordinary Shares
Options
4,280
3,485,170,081
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
Number of Equity Security Holders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Unmarketable Parcels
Ordinary Shares
370
462
704
1,915
829
4,280
Units
37,888
1,692,314
5,774,908
70,852,572
3,406,812,399
3,485,170,081
The number of shareholders holding less than a marketable parcel (which as at 4 September 2018 was 6,850
Shares) was 1,033.
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 (%)
1,936,250,459
758,160,000
55.56
21.75
37
For personal use only Flinders Mines Limited
Additional Information
As at 4 September 2018
Top 20 Shareholders
Rank
Name
TIO (NZ) LIMITED
OCJ INVESTMENT (AUSTRALIA) PTY LTD
MR KENNETH MARTIN KEANE
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
MR CHUNLEI OUYANG
QUATTUOR REGIONIS PTY LTD
Continue reading text version or see original annual report in PDF format above