CORPORATE DIRECTORY
GOLD MOUNTAIN LIMITED
ABN 95 112 425 788
ASX: GMN
Directors
Share Register
Graham Kavanagh Non-Executive Chairman
Boardroom Pty Limited
Sin Pyng “Tony” Teng Managing Director
Douglas Smith Executive Director – Exploration
Grosvenor Place, Level 12, 225 George Street,
SYDNEY NSW 2000,
GPO Box 3993, SYDNEY NSW 2001
Management
Eric Kam Company Secretary
David Clark Chief Financial Officer
Registered and Principal Office
Suite 2501, Level 25
31 Market Street
SYDNEY NSW 2000 Australia
Telephone: +61 2 9283 3880
Facsimile: +61 2 9477 5565
info@goldmountainltd.com.au
www.goldmountainltd.com.au
Telephone: 1300 737 760
Facsimile: 1300 653 459
Solicitor
HWL Ebsworth Lawyers
Level 14, Australia Square
264 – 278 George Street
SYDNEY NSW 2000
Banker
Australia and New Zealand Banking Group Limited
Westpac Banking Corporation Limited
Auditor
KS Black & Co. Chartered Accountants
Level 5, 350 Kent Street, SYDNEY NSW 2000
◄ Front cover image:
Visible gold on quartz of excavated float sample near Pit 65 (Left); and
cleared surrounding ready for mobilisation (background).
GOLD MOUNTAIN LIMITED ANNUAL REPORT
1
TABLE OF CONTENTS
CORPORATE DIRECTORY ............................................................................................................................................... 1
LETTER TO SHAREHOLDERS.......................................................................................................................................... 2
DIRECTORS’ REPORT ...................................................................................................................................................... 4
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY ............................................................................ 6
OPERATIONS REPORT................................................................................................................................................ 8
REMUNERATION REPORT (Audited)......................................................................................................................... 17
SCHEDULE OF TENEMENTS ......................................................................................................................................... 23
AUDITOR’S INDEPENDENCE DECLARATION ............................................................................................................... 24
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME.......................................................... 25
STATEMENT OF FINANCIAL POSITION......................................................................................................................... 26
STATEMENT OF CHANGES IN EQUITY......................................................................................................................... 27
STATEMENT OF CASHFLOWS....................................................................................................................................... 28
NOTES TO THE FINANCIAL STATEMENTS ................................................................................................................... 29
DIRECTORS’ DECLARATION.......................................................................................................................................... 56
INDEPENDENT AUDITORS REPORT ............................................................................................................................. 57
ADDITIONAL SHAREHOLDER INFORMATION .............................................................................................................. 62
GOLD MOUNTAIN LIMITED ANNUAL REPORT
3
DIRECTORS’ REPORT
Your Directors submit the annual financial report of Gold Mountain Limited for the financial year ended 30
In order to comply with the provisions of the Corporations Act, the Directors’ report as follows:
June 2017.
KEY MANAGEMENT PERSONNEL DISCLOSURES
DIRECTORS
The names of Directors who held office during or since the end of the year and until the date of this report are as follows.
Directors were in office for this entire period unless otherwise stated.
Graham Kavanagh
Sin Pyng “Tony” Teng
Douglas Smith (appointed 29 December 2016)
Matthew Morgan (resigned 29 December 2016)
Names, qualifications, experience and special responsibilities
Graham Kavanagh
Non-Executive Chairman
Qualifications
B Comm ASIA
Experience
Mr Kavanagh has an extensive background over more than 25 years in securities and fund
management, property investment and development as well as earlier experience in the
Department of Mines. He has held senior positions as securities analyst, general manager
and director in fund management and property investment.
Interest in shares and
Options
1,500,000 unlisted options granted under the Employee Share Option Plan exercisable at
$0.30 and expiring on 28 November 2019
Directorships held in
other listed entities
No directorships held of ASX listed entities
Sin Pyng “Tony” Teng Managing Director
Qualifications
B. Econ. Dip. Fin. Mangt. CPA, FAICD, AFAIM
Experience
Mr Teng has had experience as a management consultant and with merger and acquisitions,
corporate restructuring and public company capital raising. He was co-founder and former
director of Coalworks Limited that was acquired by Whitehaven in 2012 in a $200m takeover
bid.
Interest in shares
and Options
510,000 ordinary shares
8,510,000 ordinary shares (indirect interest)
5,000,000 unlisted options granted under the Employee Share Option Plan exercisable at
$0.30 and expiring on 28 November 2019 (indirect interest)
Directorships held in
other listed entities
No directorships held of ASX listed entities in the past three years
GOLD MOUNTAIN LIMITED ANNUAL REPORT
4
Douglas Smith
Executive Director – Exploration (appointed 29 December 2016)
Qualifications
Experience
B.Sc (Geology), MAusIMM
Mr Smith is a very experienced geologist with a 20+ year career working on major precious
metals projects and exploration assets in Canada, Alaska, Australia, and more recently PNG
where he has worked since 2011 on projects such as Ok Tedi and Highland Pacific’s Star
Mountains exploration tenements. Mr Smith also worked on the giant Pebble Alaska 100M oz
gold, 80B lbs copper project, jointly managing over 200 contractors and the design of the
original geophysical survey (89 square miles), as well as executing an extensive drilling
program to bring the resource to the Indicated category and take the project to a pre-
feasibility stage.
Interest in shares
and Options
Nil ordinary shares
2,000,000 unlisted options granted under the Employee Share Option Plan exercisable at
$0.30 and expiring on 28 November 2019 (indirect interest)
Directorships held in
other listed entities
No directorships held of ASX listed entities
Matthew Morgan
Non-Executive Director (resigned 29 December 2016)
Qualifications
BSc (Geology)
Experience
Mr Morgan has over twenty years of experience in exploration and mine development and
has negotiated off-take mineral contracts with several foreign governments.
Interest in shares
and Options
750,000 ordinary shares at 29 December 2016
100,000 ordinary shares (indirect interest) at 29 December 2016
Directorships held in
other listed entities
No directorships held of ASX listed entities
MANAGEMENT
Eric Kam
Company Secretary
Qualifications: FCPA, FCMA, MBA, MAICD
Mr Kam has extensive experience in finance and operations management across diverse businesses and industries in
engineering, construction, mining & resources,
finance, marketing and distribution. He is involved in
corporate change and listing of companies, and is on the board of several other companies. Mr Kam has had extensive
experience as Company Secretary in several public listed and unlisted companies.
technology,
David Clark
Chief Financial Officer
Qualifications: CA, CPA, AGIS, B Comm. (UNSW), MBA Executive (AGSM), Registered Tax Agent
Mr Clark is a Chartered Accountant, Chartered Secretary and Registered Tax Agent of over twenty (20) years standing
and holds a Bachelor of Commerce degree from UNSW and a Master of Business of Administration (Executive) from the
Australian Graduate School of Management. Mr Clark is principal of D.W. Clark & Co., Chartered Accountant providing
corporate financial,
taxation and secretarial services and advice to listed and unlisted companies in the mineral
exploration and oil and gas industries.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
5
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
DIRECTORS’ SHAREHOLDINGS
As at the date of this report, the interests of the Directors in the securities of Gold Mountain Limited were:-
Director
Name
Shares and Options
Shares and Options
Direct
Indirect
Graham Kavanagh
Nil
Douglas Smith
Nil
1,500,000 unlisted options granted under
the
Employee Share Option Plan exercisable at
$0.30 and expiring on 28 November 2019
2,000,000 unlisted options granted under
the
Employee Share Option Plan exercisable at
$0.30 and expiring on 28 November 2019
Sin Pyng “Tony” Teng
510,000 shares
8,510,000 shares;
5,000,000 unlisted options granted under
the
Employee Share Option Plan exercisable at
$0.30 and expiring on 28 November 2019
Movement in equity instruments (other than options and rights)
Details of the movement in equity instruments (other than options and rights) held directly, indirectly or
beneficially by Directors and Key Management Personnel and their related parties are as follows:
Balance at
beginning of the
Year
Granted as
remuneration
during the Year
Issued on
Exercise of
Options during
the Year
30 June 2017
Graham Kavanagh
-
Sin Pyng “Tony” Teng
9,020,000
Douglas Smith1
Matthew Morgan2
Total
-
850,000
9,870,000
-
-
-
-
-
-
-
-
-
-
Other changes
during the Year
Balance at end
of the Year
-
-
-
(850,000)
-
9,020,000
-
-
(850,000)
9,020,000
30 June 2016
Graham Kavanagh
Sin Pyng “Tony” Teng
Matthew Morgan
Total
Balance at
beginning of the
Year
Granted as
remuneration
during the Year
Issued on
Exercise of
Options during
the Year
-
7,620,000
750,000
8,370,000
-
-
-
-
-
-
-
-
Other changes
during the Year
Balance at end
of the Year
-
-
1,400,000
9,020,000
100,000
850,000
1,500,000
9,870,000
(1) Deemed acquisition when joined the Board or Company.
(2) Deemed disposal when left the Board or Company.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
6
Exercise of Options
No ordinary shares were issued by the Company during and/or since the end of the financial year as a result of the
exercise of options by Directors and Key Management Personnel and their related parties. There are no unpaid amounts
on the shares issued.
Options and Rights Holdings
Details of movements in options and rights held directly, indirectly or beneficially by Directors and Key Management
Personnel and their related parties are as follows:
30 June 2017
Graham Kavanagh
Sin Pyng “Tony” Teng
Douglas Smith1
Matthew Morgan2
Total
30 June 2016
Graham Kavanagh
Sin Pyng “Tony” Teng
Matthew Morgan
Total
Balance at
beginning of
period
Granted as
remuneration
Options
exercised or
vested
Net change
Other
Balance at
end of period
-
-
-
-
-
1,500,000
5,000,000
2,000,000
3,600,000
12,100,000
-
-
-
-
-
-
-
-
(3,600,000)
1,500,000
5,000,000
2,000,000
-
(3,600,000)
8,500,000
Balance at
beginning of
period
Granted as
remuneration
Options
exercised or
vested
Net change
Other
Balance at
end of period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Deemed acquisition when joined the Board or Company.
(2) Deemed disposal when left the Board or Company.
Options on issue at the date of this report are:-
Issue Date
18 Oct 2016
28 Nov 2016
29 Jun 2017
Number
42,610,715
14,800,000
14,622,400
Expiry Date
18 Jan 2018
28 Nov 2019
30 Jun 2019
Exercise price
$0.055
$0.303
$0.15
Number of holders
25
9
30
(3) Options are exercisable at $0.30 until expiry date 28/11/2019 and subject to the vending condition that the Company’s share
price must exceed $0.50 based on VWAP over a 5 day consecutive period.
Dividends
No dividends have been paid or declared since the start of the financial year and/or the Directors do not recommend the
payment of a dividend in respect of the financial year.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
7
OPERATIONS REPORT
Principal Activities
The principal activity of the Company during the financial period was to acquire, explore and develop areas that are
highly prospective for gold and other precious and base metals and minerals in Australia, Papua New Guinea and
elsewhere.
Operating and Financial Review
(i)
Operations
Gold Mountain is an exploration company operating in Australia and Papua New Guinea to acquire, explore and develop
areas that are highly prospective for gold and other precious and base metals and minerals.
The Company creates value for shareholders, through exploration activities which develop and quantify mineral assets.
Once an asset has been developed and quantified within the framework of the JORC guidelines the Company may elect
to move to production, to extract and refine ore which will then be available for sale as a primary product.
The Company is actively exploring and developing gold projects in Australia and Papua New Guinea.
Please refer to the Review of Operations for more information on the status of the projects.
(ii)
Financial Performance & Financial Position
The Company listed on the Australian Securities Exchange (ASX) on 2 September 2011 as Commissioners Gold
Limited. On 16 December 2014, following shareholder approval at the 2014 AGM, the Company changed its name to
Gold Mountain Limited.
The financial results of the Company for the five (5) years to 30 June 2017 are:
30 June 2017
30 June 2016
30 June 2015
30 June 2014
30 June 2013
Cash and cash equivalents
2,693,337
1,189,947
759,938
200,070
51,406
Net assets
12,420,975
3,404,265
2,460,399
1,371,820
567,107
Revenue & financial income
32,874
3,178
5,046
38,151
13,293
Net loss after tax
(1,279,915)
(1,515,979)
(847,685)
(526,993)
(1,559,101)
EBITDAX
(840,424)
(1,351,697)
(659,879)
(468,681)
(742,346)
Share price at 30 June
Loss per share (cents)
$0.086
(0.35)
$0.036
(0.69)
$0.039
(0.57)
$0.023
(0.69)
$0.034
(3.58)
a)
Financial Performance
The net loss after tax of the Company for the financial year after tax amounted to $1,279,915 (2016: Loss $1,515,979).
The Company is creating value for shareholders through its exploration expenditure and currently has no revenue
generating operations. Revenue and financial income are generated from interest income from funds held on deposit and
miscellaneous income. As the average funds held on deposit have increased during the year, accordingly interest
income has increased from $3,178 to $6,874 when compared to the prior year. The Company also received $26,000 is
rental income in FY 2017 (FY 2016: Nil) from sub-leasing unused office space at its Sydney CBD office.
During the year, the operations relating to the Papua New Guinea gold project continued and expanded as the Company
undertook its rapid exploration program, accordingly deferred exploration expenditure increased from $1,675,098 in the
2016 FY to $3,038,522 in the 2017 FY. Personnel and external consulting requirements remained constant and legal and
professional costs decreased from $346,240 in the 2016 FY to $319,473 in the 2017 FY. There was an increase in public
and investor relations expense from $16,128 in the 2016 FY to $141,854 in the 2017 FY.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
8
b)
Financial Position
The Company’s main activity during the year was the investment of cash of $2,693,337 (2016: $1,189,947). The carrying
value of the exploration assets and the capitalised exploration assets increased by $1,363,424 or 81% to $3,038,522
(2016: $1,675,098).
The 30 June 2017 financial report has been prepared on the going concern basis that contemplates the continuity of
normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of
business. For the year ended 30 June 2017, the Company recorded a loss after tax of $1,279,915 (2016: Loss
$1,515,979) and had a net working capital surplus of $2,692,751 (30 June 2016: Deficiency of $77,662). The 2016 net
working capital deficiency was the result of a liability of $1,182,000 for application funds received prior to 30 June 2016
and shares subsequently issued on 8 August 2016.
As the Company is an exploration and development entity, ongoing exploration and development activities are reliant on
future capital raisings. Based on these facts, the Directors consider the going concern basis of preparation to be
appropriate for this financial report.
(iii)
Business Strategies and Prospects for future financial years
The Company actively evaluates the prospects of each project as results from each program become available, these
results are available via the ASX platform for shareholders information. The Company then assesses the continued
exploration expenditure and further asset development. The Company will continue the evaluation of its mineral projects
in the future and undertake generative work to identify and acquire new resource projects.
There are specific risks associated with the activities of the Company and general risks which are largely beyond the
control of the Company and the Directors. The risks identified below, or other risk factors, may have a material impact on
the future financial performance of the Company and the market price of the Company’s shares.
a)
Operating Risks
The operations of the Company may be affected by various factors, including failure to locate or identify mineral deposits,
failure to achieve predicted grades in exploration and mining, operational and technical difficulties encountered in mining,
sovereign risk difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown,
unanticipated metallurgical problems which may affect extraction costs, adverse weather conditions, industrial and
environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare
parts, plant and equipment.
b)
Environmental Risks
The operations and proposed activities of the Company are subject to the laws and regulations of Australia and Papua
New Guinea concerning the environment. As with most exploration projects and mining operations, the Company’s
activities are expected to have an impact on the environment, particularly if advanced exploration or mine development
proceeds. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation,
including compliance with all environmental laws.
c)
Economic
General economic conditions, movements in interest and inflation rates and currency exchange rates may have an
adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund
those activities.
d)
Market conditions
Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating
performance. Share market conditions are affected by many factors such as:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
general economic outlook;
introduction of tax reform or other new legislation;
interest rates and inflation rates;
changes in investor sentiment toward particular market sectors;
the demand for, and supply of, capital; and
terrorism or other hostilities.
The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the
market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors
warrant the future performance of the Company or any return on an investment in the Company.
e)
Additional requirements for capital
The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate
income, the Company will require further financing. Any additional equity financing will dilute shareholdings, and debt
financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain
additional financing as needed, it may be required to reduce the scope of its operations and scale back its exploration
GOLD MOUNTAIN LIMITED ANNUAL REPORT
9
programs as the case may be. There is however no guarantee that the Company will be able to secure any additional
funding or be able to secure funding on terms favourable to the Company.
f)
Speculative investment
The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the
Company. The above factors, and others not specifically referred to above, may in the future materially affect the
financial performance of the Company and the value of the Company’s shares. Potential investors should consider that
the investment in the Company is speculative and should consult their professional advisers before deciding whether to
invest.
5.
Significant Changes in the State of Affairs
On 3 August 2016, the Company announced it had successfully raised $2.3 million through the issue of 54 million new
shares at an issue price of $0.042 per share under the Company’s existing placement capacity. The company also
announced it will seek shareholder approval to issue options to subscribers of the Placement Shares, at no additional
cost, on the basis of one option for each two Placement Shares subscribed.
On 9 August 2016, the Company released Appendix 3B for the issue of 57,197,619 new ordinary shares in the Company
raising a total of $2,402,300. Of these shares, 25,447,359 shares were issued under Listing Rule 7.1A Additional
Placement Capacity approved by shareholders at the 2015 Annual General Meeting.
On 9 August 2016, the Company announced the recommencement of exploration activity at the Company’s flagship
Crown Ridge gold project within EL1968 in the PNG Highlands region following completion of the three-dimensional (3D)
modelling of the Magnetic Survey and that 35 shallow anomalous targets had been identified and an extensive trenching
program commenced over these target areas.
On 16 August 2016, the Company announced completion of the acquisition of an additional 50% interest in the PNG
project company, Viva No. 20 Limited (Viva) and issued 60,000,000 shares at $0.08 each to the Vendors as
consideration for the purchase. The Company also advised that on completion of this acquisition, the Company holds a
controlling interest of 70% in Viva.
On 23 August 2016, the Company announced it had signed an exclusive agreement with the owner of the highly
prospective EL2306 tenement, which adjoins flagship Crown Ridge gold project. In consideration for the payment by the
Company of the fee of AUD150,000 the owner has granted the Company an exclusive dealing period of 270 days ending
on 19 May 2017.
On 29 August 2016, the Company announced the issue of 18,400,000 share options to employees, consultants and
directors of the Company pursuant to the Company’s Employee Share Option Plan. The options have an exercise price
of $0.30, expire 36 months after the grant date and are subject to certain vesting conditions such that the Company’s
underlying share price must exceed $0.50 based on volume weighted average price (VWAP) over a 5 day consecutive
period; the holder must be an actual consultant to or employee of the Company at the time of exercise of the relevant
Granted Options and the exercise period shall not commence until a date that is at least 12 months after the date of the
grant of the Granted Options to the holder.
On 1 September 2016, the Company announced preliminary results from its ongoing trenching program, which confirmed
visible gold, from initial 92 metres of trenching at its flagship project, Crown Ridge, EL1968, Wabag, PNG. The trenching
program is being undertaken to investigate magnetic anomalies defined by the processing of the ground magnetics
surveyed during 2015.
On 8 September 2016, the Company announced the Notice of an Extraordinary General Meeting (EGM) to be held on 11
October 2016 to seek approval from shareholders for the prior issue of ordinary shares and refresh the Company’s 15%
placement capacity; for the issue of options to August 2016 placement investors and promoters; to raise additional
capital by issue of up to 80m shares (up to $10m); and for the issue of options under the Employee Share Option Plan.
These resolutions were subsequently approved by shareholders with the results of the EGM announced to the market on
11 October 2016.
On 22 September 2016, the Company announced the completion of an extensive airborne magnetic survey over
tenements EL1966, EL1968, & EL2306, as well as the commencement of an extensive bulk sampling program at the
Crown Ridge Gold Project following discovery of high presence of free gold in the majority of trenches. At about the
same time, due diligence exploration work has commenced on the prospective EL2306 tenement
targeting an
“interpreted crater rim” diatreme.
On 18 October 2016, the Company completed an additional placement to professional and sophisticated investors of
1,238,095 shares at $0.0420 each to raise $52,000 following over-subscription of 8 August 2016 placement.
On 18 October 2016, following approval by shareholders at the EGM held on 11 October 2016, the Company issued
29,217,858 options at an exercise price of $0.055 and expiring on 18 January 2018 to the August 2016 placement
investors at no additional cost and on the basis of one option for each two placement shares subscribed.
On 18 October 2016, following approval by shareholders at the EGM held on 11 October 2016, the Company issued
17,000,000 options at an exercise price of $0.055 and expiring on 18 January 2018 to the Promoters who have had a
GOLD MOUNTAIN LIMITED ANNUAL REPORT
10
material involvement in the success of the August Placement, or who have provided a service to the Company in relation
to the August Placement.
On 3 November 2016, the Company announced that significant free gold has been recovered from ongoing Bulk
Sampling Program. The Company also announced a portable gold screening test plant was ordered from Gray Brothers
Engineering, New Zealand to increase current sample recoveries near term. The Company noted 3D Geophysical
Modelling was currently underway with results expected near term.
On 13 December 2016, the Company announced that the 3D Magnetic Survey identified multiple future shallow free
Gold Zones and a significant Porphyry Target at Crown Ridge. The Company also announced further exploration targets
identified correlated to known mineralisation produced from free gold recovered from bulk sampling and panning.
Geophysical interpretation by Allender Exploration of 3D Magnetic Survey is to be released shortly.
On 23 December 2016, the Company announced that the 3D Magnetic Survey identified two potential large Calderas
within Crown Ridge. The discovery would potentially place Crown Ridge in the league of other nearby Caldera-hosted
deposits such as the 57Moz Lihir mine.
On 29 December 2016, the Company announced the appointment of Mr Douglas Smith as the PNG Exploration and In-
Country Operations Director. The Company also announced the resignation of Mr Matt Morgan as a Non Executive
Director.
On 12 January 2017, the Company announced that Phase 2 of its bulk sampling program has commenced at the
flagship Crown Ridge Gold project, EL1968, under the supervision of In-Country Director and Geologist Douglas Smith.
On 20 January 2017, the Company announced 3,600,000 options to acquire ordinary shares in the Company at an
exercise price of $0.30 (subject to underlying share price must exceed $0.50 based on VWAP over a 5 day consecutive
period) and expiring of 28/11/2019 were cancelled under the rules of GMN’s Employee Share Option Plan (ESOP) due to
cessation of employment of an employee.
On 20 January 2017, the Company announced the issue of 1,000,000 new fully paid ordinary shares in respect of the
exercise of 1,000,000 unlisted Options at an exercise price of $0.055.
On 15 February 2017, the Company announced that further gold and platinum recoveries from its Phase 2 Bulk
Sampling program at the flagship Crown Ridge Gold Project on EL1968.
On 27 February 2017, the Company further announced the completion of three-dimensional (3D) Magnetic Modelling
activities and the subsequent results following recent Helimag survey programme at EL 2306 “Abundance Valley”, EL
1966 “Sak Creek” and EL 1968 the extension of flagship Crown Ridge.
On 16 March 2017, the Company announced a significant expansion of the free gold area to over 7km2 and the
recommencement of Phase 2 Bulk Sampling program at the flagship Crown Ridge Gold Project on EL1968.
On 6 April 2017, the Company announced that geophysical modelling indicates Crown Ridge is sitting above a potential
4 km continuous intrusive with similar geological settings to +20 Moz Au Porgera Mine.
On 6 April 2017, the Company announced the acquisition of a Knelson Concentrator to treat the bulk sampling campaign
at Crown Ridge and working closely with Consep Pty Ltd, the processing is expected to produce higher recoveries than
Stage 1 sampling and treatment methods.
On 11 April 2017,
the Company announced Exploration Licence (ELA 2522) was lodged with the PNG Mineral
Resources Authority. The new ELA covers an additional 841 km2 of highly prospective ground located south of the
Company's current tenements and following approval, will take the Company’s overall tenement holding at the flagship
Crown Ridge Project to over 2010 km2, a ~72% increase.
On 11 May 2017, the Company announced the commencement of a resource definition sampling program to define
Mineral Resources that can be classified and reported in compliance with the JORC Code 2012 at the Company’s
flagship Crown Ridge Gold Project.
On 15 May 2017, the Company announced the extension of the Exclusivity Dealing Agreement to secure the highly
prospective 328km2 EL 2306 tenement, which adjoins the Company’s flagship Crown Ridge gold project.
On 12 May 2017, the Company announced it had secured $2.8 million (increased to $3.0 million on 2 June 2017) in
funding commitments through the issue of 28,000,000 ordinary shares at $0.10 per share with one attaching unlisted
option for every two shares issued. Each option is exercisable at $0.15 within a 24-month expiry term from date of issue.
Subsequently, on 12 May 2017, the Company issued 10.7 million new shares at an issue price of $0.010 per share, 17
million new shares on 5 June 2017 and a further 1.5 million new shares on 29 June 2017 also at an issue price of $0.010
per share for a total of 29.2 million new shares issued under the Company’s existing placement capacity. 14.6 million
free attaching options entitlement of one (1) for every two (2) placement shares were issued on 29 June 2017.
On 9 June 2017, the Company announced commencement of the Resource Definition and scaled up Exploration
program at the Crown Ridge gold project.
On 20 June 2017, the Company announced a fully funded diamond drilling program aimed at testing multiple gold targets
in conjunction with the program of bulk sampling of shallow pits at the Crown Ridge gold project.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
11
Review of Operations
A.
Papua New Guinea Project
Wabag, PNG (EL1966, EL1967, EL1968, EL2426, & EL2430)
As previously announced on 30 June 2014, the Company entered into an Agreement to acquire an initial 20% interest
(Tranche 1) in Viva No.20 Limited (Viva) with an option to acquire a further 50% (Tranche 2) subject to certain conditions.
On 22 March 2016 GMN completed the acquisition of the initial 20% of the entire issued capital of Viva and issued 50
million GMN consideration shares at $0.03 each to the Vendors in accordance to the terms and conditions set out in the
Letter Agreement of 30 June 2014 and approved by shareholders at the Annual General Meeting held on 15 December
2014. Simultaneously, the Vendors issued 50 ordinary shares to GMN comprising 20% of the entire issued capital of
Viva held by the Vendors.
On 30 July 2015, the Company entered into an Agreement with Viva to acquire a further 50% interest in Viva. At the
2015 AGM held on 26 November 2015, shareholders approved the Tranche 2 share purchase agreement between GMN,
Viva and the Vendors.
On 16 August 2016, the Company completed the acquisition of an additional 50% of the issued capital of Viva through
the issue of 60,000,000 shares at $0.08 each to the Vendors. Simultaneously, the Vendors issued 125 ordinary shares to
GMN comprising 50% of the entire issued capital of Viva held by the Vendors. On completion of this acquisition, the
Company now holds a controlling interest of 70% in Viva. See Notes 12, 28 and 29 for further information.
The project covers a suite of Miocene intermediate intrusive rocks, related volcanics and younger metasediments of the
New Guinea Thrust Belt, a strongly mineralised structural zone that dominates the Central Highlands region of PNG.
Previous exploration has identified gold and platinum anomalies in stream sediments, most noticeably in the Timun River
area of EL1968, where historic production of around 100kg gold and 3.5kg platinum has been recorded from alluvial
mining operations since 1948. Artisanal gold mining is currently being undertaken in several locations within the Wabag
Project area.
Exploration conducted by Gold Mountain Limited during 2014 & 2015 has detected anomalous gold and base metal
zones over numerous locations including the Sak Creek prospect (EL1966) and Crown Ridge prospect (EL1968).
Crown Ridge Prospect
The 3D geophysical modelling completed in April 2017 indicates that the Crown Ridge is sitting on top of a continuous
body over 4 km in a North-South direction and extending into the adjacent lease EL2306 Abundance Valley. The body
has an overlain weathered zone of 60 and 100 meters thick, producing the copious free gold that is confirmed in the bulk
sampling pits completed to date.
Gold Mountain has followed up with bulk sampling program for a full-scale processing facility to treat the Crown Ridge
resource. A Knelson concentrator is procured for its innovative technology that meets the processing requirements
consistent to the nature of mineralisation at Crown Ridge.
It will be used to prove gold recoveries for the sampling
programs for resource assessment, and is expected to enhance recovery of fine gold missed out in previous sampling
program.
Activities during the reporting period consisted mainly of forward planning for a maiden resource estimation of the free
gold mineralisation at Crown Ridge. Site visits by external consultants have resulted in program design for an inferred
JORC compliant resource statement (ASX 11/05/2017).
Site operations are planned for recommencement immediately after the National Election in Papua New Guinea.
Preparations are well underway for a scale up exploration program at Crown Ridge which will consist of both ongoing
bulk sampling of pits and a diamond drilling campaign. The work to be undertaken includes,
-
-
-
-
expanding the camp facilities and other logistics;
clearing access tracks;
locating suitable sites for more bulk sampling pits, and
designing and implementing a diamond drilling program.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
12
B.
Peruvian Project
Goldsmith Resources SAC
Following the review of the Peruvian project, the GMN Board impaired, in full, the carrying amount of this investment
resulting in an asset impairment expense of $514,640 and a nominal carrying value of $1 for year ended 30 June 2016.
The value of this investment was written down to zero for year ended 30 June 2017.
C.
Australian Projects
The Company continues to assess its exploration assets in NSW, with particular focus on Cowarra gold project, in
southern New South Wales.
Cowarra, NSW
The Cowarra Project (EL5939) was formerly held by Gold Mountain Limited (50%) and Capital Mining Limited
(ASX:CMY) under a farm-in agreement whereby Gold Mountain could earn up to 85% by exploration expenditure.
On 6th January 2015, the Company announced that it had entered into an agreement with Capital Mining Limited to
purchase the remaining unearned interest in the Cowarra Project.
The Department of Industry (Resources & Energy) has on 26 April 2017 finally effected the transfer of authority of
EL5939 to Gold Mountain Limited such that EL5939 is now 100% owned. The renewal of EL5939 has also been granted
for further 2 years effective from 20 June 2017.
No work was done on the tenement during the period of transition of authority and for the year ended 30 June 2017.
There has had been recent changes in the NSW resources regulatory requirements. The Company will re-assess, in-
light of those regulatory requirements, the status of Cowarra Project with the aim to update its resource estimates of
37,253 ounces of gold (JORC Inferred 500,000 tonnes @ 2.31g/t Au) for eventual development of Cowarra into a
production mine.
The accumulated exploration expenditure incurred in the Cowarra Project to date $609,000.
Dalton, NSW
The Company considers the prospects of Dalton (EL 6922) do not meet the aspirations of the Company and lodged an
application to the NSW Department of Industry (Resources & Energy) for cancellation of the exploration licence. The
cancellation was approved on 5 July 2017, subsequent to the end of the financial year.
Grenfell, NSW
The NSW Department of Industry (Resources & Energy) approved the cancellation of the exploration licence at Grenfell
(EL8263) in retrospect on 29 April 2017.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
13
Capital Raisings
During the reporting period, the Company conducted two capital raisings, the first in August 2016 (2016
Placement) and the second in May 2017 (2017 Placement). In total, the Company raised $5,612,173 to fund
ongoing operations in Papua New Guinea and Australia.
Capital Raising
Date
Shares Issued
Price
Amount Raised
Placement to Viva No.20 Ltd
2016 Placement
2016 Placement
Exercise of options
Exercise of ESOP options
Exercise of options
Exercise of options
2017 Placement
Exercise of options
2017 Placement
2017 Placement
Total
Risk management
17-08-2016
08-08-2016
18-10-2016
13-12-2016
13-12-2016
20-01-2017
31-03-2017
15-05-2017
15-05-2017
05-06-2017
29-06-2017
60,000,000
57,197,619
1,238,095
1,150,000
500,000
1,000,000
707,143
10,660,000
750,000
17,034,000
1,550,800
151,787,657
$0.080
$0.042
$0.042
$0.055
$0.070
$0.055
$0.055
$0.100
$0.055
$0.100
$0.100
-
2,402,300
52,000
63,250
35,000
55,000
38,893
1,066,000
41,250
1,703,400
155,080
$5,612,173
Details of the Company’s Risk Management policies are contained within the Corporate Governance Statement.
Corporate Governance
A statement disclosing the extent to which the Company has followed the best practice recommendations set by the ASX
Corporate Governance Council during the period is displayed on the Company’s website.
Subsequent events after balance date
On 5 July 2017, the NSW Department of Industry (Resources & Energy) approved the cancellation of the Dalton, NSW
exploration licence EL6922.
On 19 July 2017, the Company announced an agreement to acquire 70% interest in the highly prospective 328km2
tenement adjoining flagship Crown Ridge gold project in Papua New Guinea.
On 19 July 2017, the Company announced it had entered into agreement to acquire 70% interest in highly prospective
328 km² tenement adjoining the flagship Crown Ridge Gold Project. The key terms of the acquisition include;
•
•
The purchase price for the Tenement is $5.2 million comprising of $3 million in cash ($300,000 of which was paid
as a non-refundable deposit) and 22 million GMN shares @ $0.10 per share (Consideration Shares);
Completion of the acquisition of the Tenement Interest is due to occur on the business day immediately following
the second anniversary of the registration of EL 2306 (14th December 2017) by the PNG Mineral Resources
Authority;
• On Completion on or before 16/12/2017;
o
o
o
o
full title and risk in the Tenement Interest passes to the Company;
the Company must issue the Consideration Shares and pay a Completion instalment of $450,000;
the issue of Consideration Shares will be put to Shareholders approval at the next general meeting of the
Company; and
the Consideration Shares are subject to agreed voluntary escrow conditions for 24 months
•
The balance of the cash consideration ($2,250,000) is payable in six (6) bi-annual
December 2020.
instalments ending on 16
GOLD MOUNTAIN LIMITED ANNUAL REPORT
14
And, Completion of the acquisition of the Tenement Interest is conditional on conditions precedent including GMN has
first right of refusal to acquire the remaining 30% of the project from the vendor
On 24 July 2017, the Company announced it had secured $3.7 million in funding commitments (increased by $700,000
from $3.0 million in funding commitments announced on 2 June 2017). The funds raised will be used for general working
capital requirements and ongoing exploration and project development activities at the flagship Crown Ridge Project in
PNG. On 9 August 2017, the Company announced the allotment of 7,984,800 new shares at a price of $0.10 per share
and 3,992,400 free attaching options, one (1) free option entitlement for every two (2) shares issued. The options are
exercisable at $0.15 and expire on 30 June 2019.
On 23 August 2017, the Company announced it had secured $5.0 million in funding commitments (increased by $1.3
million from $3.7 million in funding commitments announced on 24 July 2017). Subject to the Company's placement
capacity under Listing Rule 7.1A, new shares will be allotted at $0.10 per share with a free option entitlement of one (1)
option for every two (2) shares issued. The options will be exercisable at $0.15 and expire on 30 June 2019.
On 26 September 2017, the Company announced that it is well advanced for drilling and bulk sampling program at the
Crown Ridge Gold Project with the view of delivering a JORC (2012) compliant maiden resource estimate and the work
is expected to be completed in early 2018.
the Company announced the granting of 7,800,000 share options to employees and
On 26 September 2017,
to shareholders approval) according to the Company’s Employee Share
consultants including directors (subject
Options Plan. The granted options have an exercise price of $0.15 and expires 46 months from the grant date and the
granted options shall be vested over 3 periods of 12 months per period.
On 27 September 2017, the Company lodged on its website an investment research report on the Company. The
report, commissioned by the Company is prepared by Independent Investment Research who is an independent
investment research house based in Australia and the United States.
There has not been any other matter or circumstance that has arisen after balance date that has significantly affected, or
may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the
Company in future financial periods.
Environmental legislation
The Company is subject to significant environmental and monitoring requirements in respect of its natural
resource exploration activities. The Directors are not aware of any significant breaches of these requirements
during the period.
Indemnification and insurance of Directors and Officers
The Company has agreed to indemnify all the Directors of the Company for any liabilities to another person (other than
the Company or related entity) that may arise from their position as Directors of the Company, except where the liability
arises out of conduct involving a lack of good faith.
During the financial year, GMN paid a premium in respect of a contract insuring the Directors and officers of the
Company against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
Options
The maximum terms of options granted during the year are as follows:
29,217,858 unlisted options granted to participants who were entitled to one option for every two shares issued as part of
a placement during August 2016. The remaining unexercised options expire on 18 January 2018 and are exercisable at
$0.055 with no vesting conditions.
17,000,000 unlisted options granted to promoters of the August 2016 placement following approval at the Extraordinary
General Meeting of shareholders held on 11 October 2016. The options were issued during October 2016 and expire on
18 January 2018. The options are exercisable at $0.055 with no vesting conditions.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
15
14,800,000 unlisted options granted on 29 August 2016 pursuant to the Company’s Employee Share Option Plan have
an exercise price of $0.30 and are subject to the following vesting conditions:
(1) The Company's underlying share price must exceed $0.50 based on volume weighted average price (VWAP)
over a 5-day consecutive period;
(2) The holder must be an actual consultant to or employee of the Company at the time of exercise of the relevant
Granted Options. In addition, the exercise of the Granted Options is subject to the following conditions:
(3) The exercise period shall not commence until a date that is at least 12 months after the date of the grant of the
Granted Options to the holder; and
(4) a granted option expires 36 months after the date on which the relevant granted options were granted.
The unlisted options granted under the Employee Share Option Plan exercisable at $0.30 expires on 28 November 2019.
14,622,400 unlisted options granted to participants who were entitled to one option for every two shares issued as part of
the placement offer initiated in May 2017 (Placement Offer). The remaining unexercised options expire on 30 June 2019
and are exercisable at $0.15 with no vesting conditions.
The options must be exercised on or before the expiry date in cash.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
16
REMUNERATION REPORT (AUDITED)
The Board, in consultation with the Remuneration Committee, is responsible for determining and reviewing
the directors and executive management. The Board assesses the
compensation arrangements for
In
appropriateness of
determining the amount and nature of officers’ packages, the Board takes into consideration the Company’s
financial and operational performance along with industry and market conditions.
the nature and amount of remuneration of key personnel on an annual basis.
The Committee has the authority to retain any outside advisor at the expense of the Company, without the
Board’s approval, at any time and has the authority to determine any such advisor’s fees and other retention
terms.
In setting corporate goals and objectives relevant to Senior Executives’ compensation, the Committee
considers both short-term and long-term compensation goals and the setting of criteria around this. In
relation to setting Directors’ remuneration the Committee looks at and considers comparative data from
similar companies.
This report outlines the remuneration arrangements in place for Directors and Key Management Personnel of
Gold Mountain Limited (the “Company”) for the financial year ended 30 June 2017.
The following persons acted as Directors during or since the end of the financial year:
Graham Kavanagh
Sin Pyng “Tony” Teng
Douglas Smith
Matthew Morgan
The term ‘Key Management Personnel’ is used in this remuneration report to refer to the following persons.
Except as noted, the named persons held their current position for the whole of the financial year and since
the end of the financial year:
Graham Kavanagh
Sin Pyng “Tony” Teng
Douglas Smith
Remuneration Philosophy
Eric Kam
David Clark
The performance of the Company depends upon the quality of the Directors and executives. The philosophy of the
Company in determining remuneration levels is to:
•
•
•
set competitive remuneration packages to attract and retain high calibre employees;
link executive rewards to shareholder value creation; and
establish appropriate, demanding performance hurdles for variable executive remuneration
Remuneration Committee
The Remuneration Committee of the Board of Directors of the Company is responsible for determining and reviewing
compensation arrangements for the Directors and the Senior Management team.
The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of Directors and
senior executives on a periodic basis by reference to relevant employment market conditions with an overall objective of
ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
17
Remuneration Structure
In accordance with best practice Corporate Governance, the structure of Non-Executive Director and
executive remuneration is separate and distinct.
Non-Executive Director Remuneration
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain
Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Each Director is entitled to such remuneration from the Company as the Directors decide, but the total amount provided
to all non-executive directors must not exceed in aggregate the amount fixed by the Company in a general meeting. The
aggregate remuneration for all non-executive directors has been set at an amount of $300,000 per annum.
The ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from
time to time by a general meeting.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned
amongst Directors is reviewed annually. The Board considers advice from external shareholders as well as the fees paid
to Non-Executive Directors of comparable companies when undertaking the annual review process.
Each Director is entitled to receive a fee for being a Director of the Company.
The remuneration of Non-Executive Directors for the year ended 30 June 2017 is detailed in the Remuneration of
Directors and named executives section of this report on the following pages of this report.
Senior Manager and Executive Director Remuneration
Remuneration consists of fixed remuneration and Company options (as determined from time to time). In addition to the
Company employees and Directors, the Company has contracted key consultants on a contractual basis. These
contracts stipulate the remuneration to be paid to the consultants.
Fixed Remuneration
Fixed remuneration is reviewed annually by the Independent Directors’ Committee (which assumes the role of the
Remuneration Committee). The process consists of a review of relevant comparative remuneration in the market and
internally and, where appropriate, external advice on policies and practices. The Committee has access to external,
independent advice where necessary.
Fixed remuneration is paid in the form of cash payments.
The fixed remuneration component of the six most highly remunerated Company executives is detailed in Table 1.
Employment Contracts
During the year and to the date of this report there are no employment contracts with the Company.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
18
Remuneration of Directors and named executives
Table 1: Directors’ and named executives remuneration for the year ended 30 June 2017
Short-term employee benefits
Post-employment benefits
Equity
Other
Total
%
Salary &
Fees
Bonuses
Non- Monetary
Benefits
Super-
annuation
Prescribed
Benefits
Options
Shares
Deferred
Benefits
Performance
Related
Graham Kavanagh 1
36,000
Sin Pyng “Tony” Teng 2
108,000
Douglas Smith 3
182,000
Matthew Morgan 4
Eric Kam 5
David Clark 6
Total
99,000
77,500
36,000
538,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,140
570
-
-
-
1,710
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Table 2: Directors’ and named executives remuneration for the year ended 30 June 2016
Short-term employee benefits
Post-employment benefits
Equity
Salary &
Fees
Bonuses
Non- Monetary
Benefits
Super-
annuation
Prescribed
Benefits
Options
Shares
Graham Kavanagh 1
36,000
Sin Pyng “Tony” Teng 2
108,000
Matthew Morgan 4
Eric Kam 5
David Clark 6
Total
108,000
72,000
44,400
368,400
-
-
-
-
-
-
-
-
-
-
-
-
-
1,140
-
-
-
1,140
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,000
109,140
182,570
99,000
77,500
36,000
540,210
0%
0%
0%
0%
0%
0%
-
Other
Total
%
Deferred
Benefits
Performance
Related
-
-
-
-
-
-
36,000
109,140
108,000
72,000
44,400
369,540
0%
0%
0%
0%
0%
-
GOLD MOUNTAIN LIMITED ANNUAL REPORT
19
1. Paid to Drumcliffe Investments Pty Ltd for corporate advisory services of which Mr Kavanagh is a director and shareholder.
2. Paid to Rodby Holdings Pty Ltd for corporate advisory services of which Mr Teng is a director.
3. Paid to of Dougnic Pty Ltd for geological services which Mr Smith is a director and shareholder and Dougie Downunder which Mr Smith is principal.
4. Paid to Mineral X Pty Ltd for corporate advisory services of which Mr Morgan is a director and shareholder.
5. Paid to Useful Ways Pty Ltd for corporate advisory services of which Mr Kam is a director and shareholder and EKam Commercial of which Mr Kam is principal.
6. Paid to D.W. Clark & Co., Chartered Accountant for corporate advisory services of which Mr Clark is principal.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
20
Other Key Management Personnel Transactions
The Company has established the Gold Mountain Limited Employee Share Option Plan (ESOP) and a
summary of the terms and conditions of the Plan are set out below:
i.
ii.
iii.
iv.
v.
vi.
vii.
All employees (full time and part time) will be eligible to participate in the Plan.
Options are granted under the Plan at the discretion of the board and if permitted by the board, may be
issued to an employee’s nominee.
Each option is to subscribe for one ordinary share in the Company and will expire 5 years from its date
of issue. An option is exercisable at any time from its date of issue provided all relevant vesting
conditions, if applicable, have been met. Options will be issued free. The exercise price of options will
be determined by the board. The total number of shares the subject of options issued under the Plan,
when aggregated with issues during the previous 5 years pursuant to the Plan and any other employee
share plan, must not exceed 5% of the Company’s issued share capital.
If, prior to the expiry date of options, a person ceases to be an employee of the Company for any
than retirement at age 60 or more (or such earlier age as the board permits),
reason other
permanent disability,
that person’s
to occur of a) the expiry of the period of 30 days from the
nominee) automatically lapse on the first
the options held by that person
If a person dies,
date of such occurrence, and b) the expiry date.
will be exercisable by that person’s legal personal representative.
the options held by that person (or
redundancy or death,
Options cannot be transferred other
option holder.
than to the legal personal
representative of a deceased
The Company will not apply for official quotation of any options.
Shares issued as a result of
previously issued shares.
the exercise of options will
rank equally with the Company’s
viii.
Option holders may only participate in new issues of securities by first exercising their options.
ix.
x.
xi.
Options are granted under the plan for no consideration.
Each share options converts into one ordinary shares of Gold Mountain Limited.
14,800,000 unlisted options granted on 29 August 2016 pursuant to the Company’s Employee Share
Option Plan have an exercise price of $0.30 and are subject to the following vesting conditions:
(1) The Company's underlying share price must exceed $0.50 based on volume weighted average
price (VWAP) over a 5 day consecutive period;
(2) The holder must be an actual consultant to or employee of the Company at the time of exercise of
the relevant Granted Options. In addition, the exercise of the Granted Options is subject to the
following conditions:
(3) The exercise period shall not commence until a date that is at least 12 months after the date of the
grant of the Granted Options to the holder; and
(4) a granted option expires 36 months after the date on which the relevant granted options were
granted.
The unlisted options granted under the Employee Share Option Plan exercisable at $0.30 expires on
28 November 2019.
The Board may amend the terms and conditions of the plan subject to the requirements of the Listing Rules.
There have been no other transactions involving equity instruments other than those described in the tables above. For
details of other transactions with Key Management Personnel, refer to Note 20: Related Party Disclosures.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
21
SCHEDULE OF TENEMENTS
EL No.
Holder
GMN
Interest
Location
EL1966
Viva No.20 Limited
70%
Enga Province, PNG
Viva No.20 Limited
EL1967
Viva No.20 Limited
EL1968
GMN 6768 (PNG) Ltd
EL2426
EL2430
GMN 6768 (PNG) Ltd
ELA2522 GMN 6768 (PNG) Ltd
EL2306
Khor Eng Hock & Sons (PNG) Limited
EL5939
Gold Mountain Limited
70%
70%
100%
100%
Application
Exclusivity
to Acquire
100%
Enga Province, PNG
Enga Province, PNG
Enga Province, PNG
Enga Province, PNG
Enga Province, PNG
Enga Province, PNG
Area
(sq km)
120
147
164
99
311
841
328
Expiry
26/06/2017
(Renewal pending)
27/11/2017
27/11/2017
27/05/2018
27/05/2018
-
13/12/2017
Cowarra, NSW
19.5
29/04/2019
Figure 1 – Suite of tenements located at the Enga Province in Papua New Guinea
GOLD MOUNTAIN LIMITED ANNUAL REPORT
23
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Other income
Administration costs
Depreciation expense
Doubtful debts expense
Employment costs
Exploration expense
Impairments expense
Investor and public relations expense
Legal and professional costs
Other expenses
Note
3
9
11
2017
$
32,874
32,874
2016
$
3,178
3,178
(302,398)
(238,426)
(11,049)
(643)
-
(158,054)
(62,010)
(62,600)
(428,442)
(164,925)
(2)
(514,640)
(141,854)
(16,128)
(319,474)
(346,240)
(47,560)
(17,501)
Loss before income tax expense
(1,279,915)
(1,515,979)
Income tax expense
Net loss for the period
Attributable to the owners of Gold Mountain Limited
5
-
-
(1,279,915)
(1,515,979)
Other comprehensive income
Total other comprehensive income for the year, net of tax
Total comprehensive loss for the period
Attributable to the owners of Gold Mountain Limited
-
-
-
-
(1,279,915)
(1,515,979)
Loss per share
Basic loss per share (cents)
Diluted loss per share (cents)
23
(0.35)
N/A
(0.69)
N/A
The statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
25
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Note
2017
$
2016
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Deferred exploration and evaluation expenditure
Equity accounted investees
Available-for-sale financial assets
Intangible assets
Investments
Other assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Other current liabilities
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
6
7
8
9
10
11
12
13
14
15
16
17
18
2,693,337
1,189,947
125,439
45,817
2,818,776
1,235,764
108,620
1,273
3,038,522
1,675,098
-
-
6,004,982
500,555
75,545
1,575,000
1
-
200,555
30,000
9,728,224
3,481,927
12,547,000
4,717,691
126,025
131,426
-
1,182,000
126,025
1,313,426
126,025
1,313,426
12,420,975
3,404,265
19,942,315
9,645,792
-
23,250
(7,521,403)
(6,264,777)
Total equity attributable to equity holders of the Company
12,420,912
3,404,265
Non controlling interest
TOTAL EQUITY
63
-
12,420,975
3,404,265
The statement of financial position should be read in conjunction with the accompanying notes.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
26
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Issued Capital
$
Options
Expense
Reserve
$
Accumulated
Losses
Non
Controlling
Interest
Total
$
$
$
Balance at 1 July 2015
7,185,947
52,425
(4,777,973)
Comprehensive Income
Net loss for the period
Other comprehensive
income
Total comprehensive
income for the year
Transactions with owners
in their capacity as
owners
Issue of share capital
Share issue costs
Lapse of options
Total transactions with
owners in their capacity
as owners
-
-
-
2,553,470
(93,625)
-
-
-
-
-
(1,515,979)
-
(1,515,979)
-
-
-
(29,175)
29,175
2,459,845
(29,175)
29,175
Balance at 30 June 2016
9,645,792
23,250
(6,264,777)
Balance at 1 July 2016
9,645,792
23,250
(6,264,777)
Comprehensive Income
Net loss for the period
Other comprehensive
income
Total comprehensive
income for the year
Transactions with owners
in their capacity as
owners
Accumulated losses - Non
controlling interest
Issue of share capital
Share issue costs
Lapse of options
Total transactions with
owners in their capacity
as owners
-
-
-
-
10,412,173
(115,650)
-
-
-
-
-
-
(1,279,915)
-
(1,279,915)
39
-
-
-
(23,250)
23,250
10,296,523
(23,250)
23,289
Balance at 30 June 2017
19,942,315
-
(7,521,403)
-
-
-
-
-
-
-
-
-
-
-
-
-
(39)
102
-
-
63
63
2,460,399
(1,515,979)
-
(1,515,979)
2,553,470
(93,625)
-
2,459,845
3,404,265
3,404,265
(1,279,915)
-
(1,279,915)
-
10,412,275
(115,650)
-
10,296,625
12,420,975
GOLD MOUNTAIN LIMITED ANNUAL REPORT
27
STATEMENT OF CASHFLOWS
FOR YEAR ENDED 30 JUNE 2017
Cash flows from operating activities
Interest received
Payments to suppliers and employees
Other receipts
Note
2017
$
2016
$
6,874
3,178
(982,519)
(620,893)
50,200
-
Net cash (used in) provided by operating activities
30
(925,445)
(617,715)
Cash flows from investing activities
Payments for plant and equipment
Payments for security deposits
Payments for other investments
(118,398)
(35,545)
(455)
-
13
(470,000)
(150,000)
Receipt of tenement security deposits
10,000
-
Payments for exploration and evaluation
9
(1,261,990)
(623,266)
Net cash (used in) provided by investing activities
(1,875,933)
(773,721)
Cash flows from financing activities
Proceeds from issue of shares
Payments for share issue costs
Proceeds from borrowings
Net cash provided by (used in) financing activities
Net increase/(decrease) in cash
and cash equivalents
4,330,873
733,070
(26,105)
(93,625)
-
1,182,000
4,304,768
1,821,445
1,503,390
430,009
Cash and cash equivalents at beginning of financial year
1,189,947
759,938
Cash and cash equivalents at end of financial year
6
2,693,337
1,189,947
Non-cash financing activities
(i) Share issue
A share placement to key sophisticated investors on 8 August 2016 raised $2,402,300 through the issue of 57,197,619
shares at the placement price of $0.042 per share. As part of this placement, share application funds of $1,182,000
are not included in the statement of cashflows for the year to 30 June 2017 as these funds were received during the
year ended 30 June 2016. In addition, the issue of 60,000,000 shares to Viva No.20 Ltd for the non cash consideration
of $4,800,000 for 50% of Viva's issued capital and shares issued in lieu of cash of $69,300 for the payment for fund
raising costs are not included in the statement of cashflows for the year to 30 June 2017.
The statement of cashflows should be read in conjunction with the accompanying notes.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
28
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
This financial report includes the financial statements and notes of Gold Mountain Limited.
Number
Notes to the Financial Statements
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Summary of significant accounting policies
Operating segments
Revenue & other income
Loss for the year
Income tax expense
Current assets - Cash and cash equivalents
Current assets - Trade and other receivables
Non-current assets – Plant and equipment
Non-current assets – Deferred exploration and evaluation expenditure
Non-current assets – Equity accounted investees
Non-current assets – Available for sale financial assets
Non-current assets – Intangible assets
Non-current assets – Investments
Non-current assets – Other assets
Current liabilities – Trade and other payables
Current liabilities – Other current liabilities
Contributed equity
Reserves
Share based payments
Related party disclosures
Key management personnel compensation
Loss per share
Financial Risk Management
Auditor’s remuneration
Commitments and contingencies
Dividends
Events subsequent to reporting date
Business combinations
Controlled entities
Cash flow information
GOLD MOUNTAIN LIMITED ANNUAL REPORT
29
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
a.
Basis of Preparation
The financial statements are general purpose financial statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of
the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in
financial statements containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in
the preparation of these financial statements are presented below and have been consistently applied unless
otherwise stated.
The financial statements have been prepared on an accruals basis and are based on historical costs, modified,
where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities
b.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
When the Company applies an accounting policy retrospectively, makes a retrospective restatement or
reclassifies items in its financial statements, financial statements as at the beginning of the earliest comparative
period will be disclosed.
c.
Principles of consolidation
Business combinations
For every business combination, the Company identifies the acquirer, which is the combining entity that obtains
control over the other combining entities. An investor controls an investee when it is exposed to, or has rights to,
variable returns from its involvement with the investee and has the ability to affect those returns through its
power over the investee. In assessing control, the Company takes into consideration potential voting rights that
are currently exercisable. The acquisition date is the date on which control is transferred from the acquirer.
Interests in equity-accounted investees
The Company’s interests in equity-accounted investees comprise the interest in a joint venture. A joint venture is
a joint arrangement, whereby the Group and other parties have joint control and have rights to the net assets of
the arrangement. The interest in the joint venture is accounted for using the equity method. It is recognised initial
at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements
include the Company’s share of
the profit or loss and other comprehensive income of equity-accounted
investees, until the date on which significant influence or joint control ceases.
Joint arrangements
As a result of AASB 11, the Company has changed its accounting policy for its interests in joint arrangements.
Under AASB 11, the Company has classified its interests in joint arrangements as either joint operations (if the
Group has rights to the assets, and obligations for the liabilities, relating to an arrangement) or joint ventures (if
the Group has rights only to the net assets of an arrangement).
When making this assessment, the Company considered the structure of the arrangements, the legal form of
any separate vehicles, the contractual terms of the arrangements and other facts and circumstances. Previously,
the structure of the arrangement was the sole focus of classification.
The Company did not have any joint arrangements at the start of the financial year. On 22 March 2016, GMN
announced the acquisition of the initial 20% of the entire issued capital of Viva No.20 Limited. As a result of the
acquisition and in accordance with AASB 11, the new arrangement has been recognised as a joint venture. In
accordance with AASB 11, the investment has been equity accounted for.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
30
d.
Impairment of Assets
At the end of each reporting period, the Company assesses whether there is any indication that an asset may be
impaired. The assessment will include the consideration of external and internal sources of information. If such
an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the
asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying
amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in
profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (eg in
accordance with the revaluation model in AASB 116). Any impairment loss of a revalued asset is treated as a
revaluation decrease in accordance with that Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
e.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks and other short-
term highly liquid investments with original maturities of three months or less.
f.
Provisions
Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events,
for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of
the reporting period.
g.
Trade and other payables
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and
services received by the Company during the reporting period which remain unpaid. The balance is recognised
as a current liability with the amounts normally paid within 30 days of recognition of the liability.
h.
Income Tax
The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred
tax expense (income).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities
(assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during
the year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax
relates to items that are recognised outside profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when
the asset
is realised or the liability is settled and their measurement also reflects the manner in which
management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent
that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset
can be utilised.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the
deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and
settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred
tax assets or liabilities are expected to be recovered or settled.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
31
i.
Exploration and Development Expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an
exploration and evaluation asset in the year in which they are incurred where the following conditions are
satisfied:
(i)
(ii)
The rights to tenure of the area of interest are current; and
at least one of the following conditions is also met:
(a)
(b)
the exploration and evaluation expenditures are expected to be recouped through successful
development and exploration of the area of interest, or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not at the reporting date reached a
stage which permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or in relation to, the area of interest
are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore,
studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation
and amortised of assets used in exploration and evaluation activities. General and administrative costs are only
included in the measurement of exploration and evaluation costs where they are related directly to operational
activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the
carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable
amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated
being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if
any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset in previous years.
Where a decision has been made to proceed with development in respect of a particular area of interest, the
relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to
development.
Costs of site restoration are provided over the life of the project from when exploration commences and are
included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant,
equipment and building structures, waste removal, and rehabilitation of the site in accordance with local laws and
regulations and clauses of the permits. Such costs have been determined using estimates of future costs,
current legal requirements and technology on an undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations
and future legislation. Accordingly the costs have been determined on the basis that the restoration will be
completed within one year of abandoning the site.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
32
j.
Revenue and Other Income
Revenue is measured at
the consideration received or receivable. When the inflow of
consideration is deferred, it is treated as the provision of financing and is discounted at a rate of interest that is
generally accepted in the market
initially
recognised and the amount ultimately received is interest revenue.
The difference between the amount
for similar arrangements.
the fair value of
All revenue is stated net of the amount of goods and services tax (GST).
k.
Earnings (Loss) per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude
any costs of servicing equity (other than dividends) divided by the weighted average number of ordinary shares,
adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members, adjusted for:
(i)
(ii)
(iii)
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have
been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any bonus element.
l.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Taxation Office (ATO).
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 ATO is included with other receivables or payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows
included in receipts from customers or payments to suppliers.
m.
Plant and Equipment
Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any
accumulated depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation
and any accumulated impairment.
In the event the carrying amount of plant and equipment is greater than the
estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable
amount and impairment losses are recognised either in profit or loss or as a revaluation decrease if the
impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when
impairment indicators are present.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net
cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash
flows have been discounted to their present values in determining recoverable amounts.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
33
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of
profit or loss and other comprehensive income during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the
Company commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Plant and equipment
20%-32%
The assets’ residual values and useful
reporting period.
lives are reviewed, and adjusted if appropriate, at the end of each
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 the carrying amount. These gains
and losses are included in the statement of profit or loss and other comprehensive income. When revalued
assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained
earnings.
n.
Financial Instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions to the instrument. For financial assets, this is equivalent to the date that the Company commits itself to
either the purchase or sale of the asset (ie trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is
classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss
immediately.
Classification and subsequent measurement
Finance instruments are subsequently measured at fair value, amortised cost using the effective interest rate
method, or cost.
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less
principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the
difference between that initial amount and the maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over the relevant period and
is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction
costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the
contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability.
Revisions to expected future net cash flows will necessitate an adjustment
to the carrying value with a
consequential recognition of an income or expense item in profit or loss.
(i)
Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the
purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated
as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial
assets is managed by key management personnel on a fair value basis in accordance with a documented
risk management or investment strategy. Such assets are subsequently measured at fair value with
changes in carrying value being included in profit or loss.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
34
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, where they are expected to mature within 12
months after the end of the reporting period.
(iii)
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or
determinable payments, and it is the Company’s intention to hold these investments to maturity. They are
subsequently measured at amortised cost.
Held-to-maturity investments are included in non-current assets where they are expected to mature within
12 months after the end of the reporting period. All other investments are classified as current assets.
(iv)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be
classified into other categories of financial assets due to their nature, or they are designated as such by
management. They comprise investments in the equity of other entities where there is neither a fixed
maturity nor fixed or determinable payments.
They are subsequently measured at fair value with changes in such fair value (ie gains or losses)
recognised in other comprehensive income (except for impairment losses and foreign exchange gains and
losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset
previously recognised in other comprehensive income is reclassified into profit or loss.
Available-for-sale financial assets are included in non-current assets where they are expected to be sold
within 12 months after the end of the reporting period. All other financial assets are classified as current
assets.
(v)
Financial liabilities
Non-derivative financial
amortised cost.
Impairment
liabilities (excluding financial guarantees) are subsequently measured at
At the end of each reporting period, the Company assesses whether there is objective evidence that a financial
instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the
value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are
recognised in profit or
loss. Also, any cumulative decline in fair value previously recognised in other
comprehensive income is reclassified to profit or loss at this point.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is
transferred to another party whereby the Company no longer has any significant continuing involvement in the
risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations
are discharged, cancelled or expired. The difference between the carrying value of
liability
extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-
cash assets or liabilities assumed, is recognised in profit or loss.
the financial
GOLD MOUNTAIN LIMITED ANNUAL REPORT
35
o.
Employee Benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by employees
to the end of the reporting period. Employee benefits that are expected to be settled within one (1) year have
been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later
than one (1) year have been measured at the present value of the estimated future cash outflows to be made for
those benefits. In determining the liability, consideration is given to employee wages increases and the probability
that the employee may satisfy vesting requirements. Those cash flows are discounted using market yields on
national government bonds with terms to maturity that match the expected timing of cash flows.
p.
Rounding of Amounts
The parent entity has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts in
the financial statements and directors’ report have been rounded off to the nearest one dollar ($1).
q.
Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgments incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and within the Company.
Key estimates
(i)
Impairment
The Company assesses impairment at the end of each reporting period by evaluating conditions and
events specific to the Company that may be indicative of impairment triggers. Recoverable amounts of
relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.
Key judgments
(i)
Exploration and evaluation expenditure
The Company capitalises expenditure relating to exploration and evaluation where it is considered likely to
be recoverable or where the activities have not reached a stage that permits a reasonable assessment of
the existence of reserves. While there are certain areas of interest from which no reserves have been
extracted, the directors are of the continued belief that such expenditure should not be written off since
feasibility studies in such areas have not yet concluded.
r.
Going concern
The financial statements have been prepared on the going concern basis, the validity of which depends upon the
further funds will be required to be
positive cash position. The Company’s existing projections show that
generated, either by capital raisings, sales of assets or other initiatives, to enable the Company to fund its
currently planned activities for at least the next twelve months from the date of signing these financial statements.
Should new opportunities present
take action to reprioritise
activities, dispose of assets and or raise further funds.
funds the Directors will
that require additional
Notwithstanding this issue, accordingly the Directors have prepared the financial statements of the Company on a
going concern basis. In arriving at this position, the Directors have considered the following pertinent matter:
-
Australian Accounting Standard, AASB 101 “Accounting Policies”, states that an entity shall prepare
financial statements on a going concern basis unless management either
intends to liquidate the
entity or to cease trading, or has no realistic alternative but
to do so.
In the Directors’ opinion, at
believe that
prepared on a going concern basis.
there are reasonable grounds to
the matters set out above will be achieved and therefore the financial statements have been
the date of signing the financial
report,
s.
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction from the proceeds.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
36
t.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors of Gold Mountain Limited.
u.
Associates
Associates are entities over which the Company has significant
influence but not control or joint control.
Investments in associates are accounted for using the equity method. Under the equity method, the share of the
profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is
recognised in other comprehensive income. Investments in associates are carried in the statement of financial
position at cost plus post-acquisition changes in the Company’s share of net assets of the associates. Dividends
received or receivable from associates reduce the carrying amount of the investment.
When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any
unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.
v.
Joint Ventures
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is
subject to joint control. The Company’s interest in joint venture entities are accounted for using the proportionate
consolidation method of accounting. The Company recognises its interest in the assets that it controls and the
liabilities that it incurs and the expenses that it incurs and its share of the income that it earns from the sale of
goods or services by the joint venture, classified according to the nature of the assets, liabilities, income or
expense.
Profits or losses on transactions establishing the joint venture entities and transactions with the joint venture are
eliminated to the extent of the Company’s ownership interest until such time as they are realised by the joint
venture entity on consumption or sale, unless they relate to an unrealised loss that provides evidence of the
impairment of an asset transferred.
The Company discontinues the use of proportionate consolidation from the date on which it ceases to have joint
control over a jointly controlled entity.
w.
Fair Value of Assets and Liabilities
Equity Instruments
The fair value of available-for-sale financial assets is determined by reference to their quoted closing bid price at
the reporting date.
Trade and Other Receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at
the market rate of interest at the reporting date. This fair value is determined for disclosure purposes. Due to the
short term nature of other receivables, their carrying value is assumed to approximate their fair value.
Non-Derivative Financial Liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the reporting date.
x.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Company for the annual reporting period ended 30 June 2017.
The Company’s assessment of the impact of these new or amended Accounting Standards and Interpretations
are that they will have no material effect.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
37
NOTE 2: OPERATING SEGMENTS
Segment Information
Identification of reportable segments
During the year, the Company operated principally in one business segment being mineral exploration and in three
geographical segments being Australia, Papua New Guinea (from 1 July 2014) and Peru.
The Company’s revenues and assets and liabilities according to geographical segments are shown below.
June 2017
June 2016
Total
Australia
PNG
$
$
$
Peru
$
Total
Australia
PNG
$
$
$
Peru
$
32,874
32,874
32,874
32,874
-
-
-
-
3,178
3,178
3,178
3,178
-
-
-
-
REVENUE
Revenue
Total segment revenue
RESULTS
Net loss before income tax
(1,279,915)
(815,176)
(464,737)
(2) (1,524,731)
(733,390)
(118,647)
(672,694)
Income tax
Net loss
-
-
-
-
-
-
-
-
(1,279,915)
(815,176)
(464,737)
(2) (1,524,731)
(733,390)
(118,647)
(672,694)
ASSETS AND LIABILITIES
Assets
Liabilities
12,547,000 2,954,395
9,592,605
126,025
117,475
8,550
-
-
4,717,691
1,596,771 3,120,918
1,313,426
1,309,449
3,977
2
-
NOTE 3: REVENUE AND OTHER INCOME
Note
2017
$
2016
$
a.
Revenue
Other income
Interest received 1
Rental income
Total other income
Total revenue
1 Interest received from:
Bank
6,874
26,000
32,874
32,874
3,178
-
/3,178
3,178
6,874
3,178
GOLD MOUNTAIN LIMITED ANNUAL REPORT
38
NOTE 4: LOSS FOR THE YEAR
Loss before income tax includes the following specific expenses:
—
—
—
a.
Consultants fees
Legal costs
Rental expense on operating leases
Significant expenses
The following significant expense items are relevant in explaining the financial
performance:
—
—
—
Doubtful debts expense
Exploration expense
Impairments expense
NOTE 5: INCOME TAX EXPENSE
The prima facie tax on the loss before income tax is reconciled to
income tax as follows:
Loss before income tax expense
Prima facie tax benefit on the loss before income tax at 27.5%
(2013: 30%)
Add:
Tax effect of:
Other non-allowable items
Less:
Tax effect of:
Other deductible expenses
Future tax benefits not brought to account
Income tax attributable to the Company
2017
$
2016
$
149,000
53,474
12,976
236,800
109,440
19,216
-
428,442
2
158,054
164,925
514,640
2017
$
2016
$
(1,279,915)
(1,515,979)
(351,977)
(454,794)
144,012
129,919
144,012
129,919
(77,297)
(77,969)
285,261
402,844
-
-
The Company has tax losses arising in Australia of $6,238,066 (2016: $5,200,752) that are available indefinitely to offset
against future taxable profits.
Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set
out in Note 1(h) occur.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
39
NOTE 6: CASH AND CASH EQUIVALENTS
Cash at bank
Short-term bank deposits
2017
$
198,524
2016
$
12,229
2,494,813
1,177,718
2,693,337
1,189,947
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of cash flows is
reconciled to items in the statement of financial position as follows:
Cash and cash equivalents
2,693,337
1,189,947
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying
periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn
interest at the respective short-term deposit rates.
NOTE 7: TRADE AND OTHER RECEIVABLES
Current
PNG Project Advance
Security Deposits
Performance bonds with NSW Mines Department
Other receivables
Goldsmith Resources SAC
2017
$
2016
$
77,246
-
-
26,600
10,000
38,192
-
-
19,216
1
Total current trade and other receivables
125,438
45,817
NOTE 8: PLANT AND EQUIPMENT
Plant and equipment – at cost
Accumulated depreciation
Reconciliation of the carrying amount of plant and equipment at the beginning
and end of the current and previous financial year:
Carrying amount at beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at end of the year
2017
$
120,954
(12,334)
108,620
1,273
118,398
-
(11,049)
108,620
2016
$
2,557
(1,284)
1,273
1,461
455
-
(643)
1,273
GOLD MOUNTAIN LIMITED ANNUAL REPORT
40
NOTE 9: DEFERRED EXPLORATION AND EVALUATION EXPENDITURE
Assets in Development
Balance at the beginning of the year
Expenditure incurred
Expenditure incurred on acquisition of subsidiary
Impairment loss on existing tenements
Net carrying value
2017
$
2016
$
1,675,098
1,210,941
1,261,990
629,082
294,876
-
(193,442)
(164,925)
3,038,522
1,675,098
Recoverability of the carrying amount of deferred exploration and evaluation expenditure is dependent on the successful
development and commercial exploitation or sale of the areas of interest. Management reassess the carrying value of the
Company’s tenements at each half year, or at a period other than that should there be an indication of impairment.
During the year to 30 June 2017, an impairment expense of $193,442 was recognised. This impairment refers to past
costs incurred in maintaining the Company’s NSW exploration projects.
NOTE 10: EQUITY ACCOUNTED INVESTEES
Viva No. 20 Limited
Equity investment in Viva No. 20 Limited
Total Investment
2017
$
2016
$
-
-
1,575,000
1,575,000
On 22 March 2016, GMN announced the acquisition of the initial 20% of the issued capital of the PNG project company,
Viva No. 20 Limited (Viva). The issue of 50 million consideration shares at $0.03 each to the Vendors (Viva shareholders)
were approved by shareholders at the Annual General Meeting held on 15 December 2014. On 16 August 2016, following
approval by shareholders at the 2015 AGM, the Company completed the acquisition of an additional 50% interest in Viva.
GMN issued 60 million shares at $0.08 to Viva shareholders on completion of the transfer to GMN of an additional 125
Viva shares representing 50% of shares held by existing Viva shareholders. At 16 August 2016, the Company owned 70%
of the issued share capital of Viva. Accordingly, the Company acquired a controlling interest in Viva from the date of
acquisition on 16 August 2016 and Viva is accounted for on a consolidated basis from the date of acquisition for the year
ended 30 June 2017. Refer to Notes 12, 28 and 29 for further information.
NOTE 11: AVAILABLE FOR SALE FINANCIAL ASSETS
Interests are accounted for at fair value. Information relating to Available for sale financial assets is set out below:
(a) Carrying amounts
Percentage interest
Company
Unlisted entity
Principal activities
Goldsmith Resources SAC
Mineral processing
2016
%
18.75
2015
%
18.75
2017
2016
$
-
$
1
(b) Movements in carrying amounts
Carrying amount at the beginning of the financial year
Less: Asset impairments expense
Carrying amount at the end of the financial year
(shown as investment cost)
514,641
514,641
(541,641)
(514,640)
-
1
Following the review of the Peruvian project, the GMN Board impaired, in full, the carrying amount of this investment
resulting in an asset impairment expense of $514,640 and a nominal carrying value of $1 for year ended 30 June 2016.
The value of this investment was written down to zero for year ended 30 June 2017.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
41
NOTE 12: INTANGIBLE ASSETS
Intangible assets
Goodwill on acquisition
Total intangible assets
Movements in Carrying Amounts
2017
$
6,004,982
6,004,982
2016
$
-
-
Movement in the carrying amounts for intangible assets between the beginning and the end of the current financial year:
Opening balance at 16 August 2016
Additions
Pre-Acquisition Accumulated Losses
Carrying amount at 30 June 2017
Goodwill on acquisition
2017
$
-
6,004,853
129
6,004,982
2016
$
-
-
-
-
On 16 August 2016, the Company completed the acquisition of an additional 50% of the issued capital of Viva through
the issue of 60,000,000 shares at $0.08 each to the Vendors. Simultaneously, the Vendors issued 125 ordinary shares
to GMN comprising 50% of the entire issued capital of Viva held by the Vendors.
On completion of this acquisition, the Company now holds a controlling interest of 70% in Viva. Goodwill of $6,004,982 is
recorded from the acquisition (Note 28).
NOTE 13: INVESTMENTS
Non-Current
Gold nuggets
Papua New Guinea exclusive option fees
NOTE 14: OTHER ASSETS
Non-Current
Security deposits
Acquisition costs - EL5939 Cowarra NSW
Performance bonds with NSW Mines Department
2017
$
2016
$
50,555
50,555
450,000
150,000
500,555
200,555
2017
$
55,545
20,000
-
75,545
2016
$
-
-
30,000
30,000
GOLD MOUNTAIN LIMITED ANNUAL REPORT
42
NOTE 15: TRADE AND OTHER PAYABLES
Current
Unsecured liabilities:
Trade payables and accrued expenses
Amounts payable to Director and related entities
NOTE 16: OTHER CURRENT LIABILITIES
Current
Share placement liability
Total other current liabilities
Summary of borrowing arrangements:
Share placement liability
2017
$
2016
$
108,425
17,600
65,965
65,461
126,025
131,426
2017
$
2016
$
-
-
1,182,000
1,182,000
During the year ended 30 June 2016, a share placement liability arose due to share application funds of $1,182,000
received as at 30 June 2016 for unissued shares. Share application funds were received from key sophisticated and
professional investors and the issue of these securities took place on 8 August 2016. The placement raised $2,402,300
through the issue of 57,197,619 shares at the placement price of $0.042 per share.
NOTE 17: CONTRIBUTED EQUITY
(a) Ordinary shares
Ordinary Shares, issued
Share issue costs
Total issued capital
2017
Number of
shares
2017
$
2016
Number of
shares
2016
$
413,302,165
21,284,541
261,514,508
10,872,368
(1,342,226)
19,942,315
(1,226,576)
9,645,792
Ordinary shares carry one vote per share and carry the rights to dividends.
Ordinary shares participate in dividends and the proceeds on winding-up of the parent entity in proportion to the number
of shares held.
At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands.
(b) Movements in ordinary shares on issue
Date
Particulars
At 1 July 2015
Number of
shares
185,502,842
Issue Price
$
15-07-15
Placement to professional and sophisticated investors
19,510,000
14-03-16
Placement to professional and sophisticated investors
6,501,666
22-03-16
Placement to Viva No.20 Ltd for 20% of issued capital
(escrowed for 12 months)
50,000,000
$0.040
$0.042
$0.030
30-06-16
Share issue costs
At 30 June 2016
261,514,508
GOLD MOUNTAIN LIMITED ANNUAL REPORT
7,185,947
780,400
273,070
1,500,000
(93,625)
9,645,792
43
17-08-16
18-10-16
08-08-16
Placement to professional and sophisticated investors
57,197,619
Placement to Viva No.20 Ltd for 50% of issued capital
(escrowed for 12 months)
60,000,000
$0.042
$0.080
2,402,300
4,800,000
placement
Additional
and
sophisticated investors following over-subscription of
8 August placement.
professional
to
1,238,095
$0.042
52,000
13-12-16
Issue of shares on exercise of options
1,150,000
13-12-16
Issue of shares on exercise of 2013 employee options
500,000
20-01-17
Issue of shares on exercise of options
31-03-17
Issue of shares on exercise of options
1,000,000
707,143
15-05-17
Placement to professional and sophisticated investors
10,660,000
15-05-17
Issue of shares on exercise of options
750,000
05-06-17
Placement to professional and sophisticated investors
17,034,000
29-06-17
Placement to professional and sophisticated investors
1,550,800
30-06-17
Share issue costs
At 30 June 2017
413,302,165
$0.055
$0.070
$0.055
$0.055
$0.100
$0.055
$0.100
$0.100
63,250
35,000
55,000
38,893
1,066,000
41,250
1,703,400
155,080
(115,650)
19,942,315
Movement in options over ordinary shares on issue
Date
Particulars
Total
Number of
Options
Ex. Price
$0.07
Exp 31Dec16
Ex. Price
$0.055
Exp 18Jan18
Ex. Price
$0.15
Exp 30Jun19
Ex. Price
$0.301
Exp 28Nov19
01-Mar-13
KMP unlisted options
500,000
500,000
30-Jun-16
18-Oct-16
18-Oct-16
18-Oct-16
28-Nov-16
13-Dec-16
13-Dec-16
29-Dec-16
20-Jan-17
Total options on issue
Issue of unlisted options to
Aug 16 placement investors
Issue of unlisted options to
promoters following
shareholder approval
Issue of unlisted options to
Aug 16 placement investors
Issue of unlisted ESOP(1)
options subject to vending
conditions
Exercise of unlisted options
Exercise of 2012 KMP
unlisted options
Lapse of unlisted ESOP
options on departure of
employee
Exercise of unlisted options
31-Mar-17
Exercise of unlisted options
15-May-17
Exercise of unlisted options
29-Jun-17
Issue of unlisted options to
May17 placement investors
500,000
500,000
28,598,810
17,000,000
619,048
18,400,000
(1,150,000)
-
-
-
-
-
(500,000)
(500,000)
(3,600,000)
(1,000,000)
(707,143)
(750,000)
14,622,400
30-Jun-17 Total options on issue
72,033,115
-
-
28,598,810
17,000,000
619,048
-
(1,150,000)
-
-
(1,000,000)
(707,143)
(750,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
14,622,400
-
-
-
-
-
18,400,000
-
-
(3,600,000)
-
-
-
-
42,610,715
14,622,400
14,800,000
-
-
-
-
-
-
(1) ESOP options are exercisable at $0.30 until expiry date 28/11/2019 and subject to vending condition that the Company’s
share price must exceed $0.50 based on VWAP over a 5 day consecutive period.
(d) Capital Management
The Directors’ objectives when managing capital are to safeguard the Company’s ability to continue as a going concern, so
that they may continue to provide returns for shareholders and benefits for other stakeholders. The Group’s overall strategy
remains unchanged from the 2016 financial year.
The focus of the Company’s capital risk management is the current working capital position against the requirements of the
GOLD MOUNTAIN LIMITED ANNUAL REPORT
44
Movement in options over ordinary shares on issue
Company to meet exploration programs and corporate overheads. The Company’s strategy is to ensure appropriate liquidity
is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required.
The Company’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.
There are no externally imposed capital requirements.
Management effectively manages the Company’s capital by assessing the Company’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,
budgeting and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Company since the prior
year.
NOTE 18: RESERVES
Reserves
Share based payments reserve
Movements in options over ordinary shares on issue
At 1 July 2016
Options exercised/lapsed during the period
At 30 June 2017
NOTE 19: SHARE BASED PAYMENTS
(a) Share-based payments
Write-back arising from lapse of options
Write-back arising from exercise of options
Total allocated against Share Based Payment Reserve
2017
$
-
-
23,250
(23,250)
-
2017
$
(23,250)
(23,250)
2016
$
23,250
23,250
52,425
(29,175)
23,250
2016
$
(29,175)
-
(29,175)
Detailed movement in options over ordinary shares on issue
Date
Particulars
Number of
Options
Exercise
Price
Expiry Date
Valuation
1-Jul-2015
Opening balance
1,250,000
$52,425
31-Dec-2015
Expiry of unlisted options
(750,000)
$0.25
31-Dec-2015
(29,175)
30-Jun-2016
Closing balance
500,000
$23,250
31-Dec-2016
Exercise of 2012 KMP unlisted options
(500,000)
$0.07
31-Dec-2016
(23,250)
30-Jun-2017
Closing balance
-
-
(b) Unlisted options
The following table details the number, weighted average exercise prices (WAEP) and movements in share
options issued as capital raising purposes, employment incentives or as payments to third parties for
services during the year.
Outstanding at the beginning of the year
Unlisted options granted during the year
GOLD MOUNTAIN LIMITED ANNUAL REPORT
2017
Number
500,000
79,240,258
2017
WAEP
$0.07
$0.13
45
NOTE 19: SHARE BASED PAYMENTS
Options lapsed during the year(1)
Exercised during the year
Outstanding at the end of the year
(c) Options exercisable at reporting date
Unlisted options expiring 18 January 2018
Unlisted options expiring 30 June 2019
Unlisted options expiring 28 November 2019(1)
(3,600,000)
(4,107,143)
72,033,115
2017
Number
42,610,715
14,622,400
14,800,000
$0.30
$0.06
$0.12
Exercise
Price
$0.055
$0.150
$0.300
Exercisable at reporting date
(1) Options are exercisable at $0.30 until expiry date 28/11/2019 and subject to the vending condition that the Company’s share
price must exceed $0.50 based on VWAP over a 5 day consecutive period.
72,033,115
(d) Options issued during the year
The maximum terms of options granted during the year are as follows:
29,217,858 unlisted options granted to participants who were entitled to one option for every two shares issued as part of
a placement during August 2016. The remaining unexercised options expire on 18 January 2018 and are exercisable at
$0.055 with no vesting conditions.
17,000,000 unlisted options granted to promoters of the August 2016 placement following approval at the Extraordinary
General Meeting of shareholders held on 11 October 2016. The options were issued during October 2016 and expire on
18 January 2018. The options are exercisable at $0.055 with no vesting conditions.
14,800,000 unlisted options granted on 29 August 2016 pursuant to the Company’s Employee Share Option Plan have
an exercise price of $0.30 and are subject to the following vesting conditions: (1) The Company's underlying share price
must exceed $0.50 based on volume weighted average price (VWAP) over a 5 day consecutive period; (2) The holder
must be an actual consultant to or employee of the Company at the time of exercise of the relevant Granted Options. In
addition, the exercise of the Granted Options is subject to the following conditions: (3) The exercise period shall not
commence until a date that is at least 12 months after the date of the grant of the Granted Options to the holder; and (4)
a granted option expires 36 months after the date on which the relevant granted options were granted.5,000,000 unlisted
options granted under the Employee Share Option Plan exercisable at $0.30 and expiring on 28 November 2019.
14,622,400 unlisted options granted to participants who were entitled to one option for every two shares issued as part of
a placement during May 2017. The remaining unexercised options expire on 30 June 2019 and are exercisable at $0.15
with no vesting conditions.
The options must be exercised on or before the expiry date in cash.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
46
(e) Fair value of unlisted options
The fair value of the options granted is estimated as having a Nil value at the date of grant using a Black-
Scholes model taking into account the terms and conditions upon which the options were granted. The
unlisted options were issued in three tranches on 18 October 2016, 28 November 2016 and 29 June 2017.
The following table lists the inputs to the model used for the year ended 30 June 2017.
Unlisted options
Unlisted options expiring 18 January 2018
Fair value at grant date
Share price at decision to grant options (1 August 2016)
Exercise price
Expected volatility
Expected life
Expected dividends
Risk-free interest rate
Number of options issued
Valuation
The total value of these options was $Nil at the date they were granted.
Unlisted options expiring 30 June 2019
Fair value at Placement Offer date (3 May 2017)
Share price at Placement Offer date
Exercise price
Expected volatility
Expected life
Expected dividends
Risk-free interest rate
Number of options issued
Valuation
The total value of these options was $Nil at the date they were granted.
Unlisted ESOP options expiring 28 November 2019(1)
Fair value at grant date (29 August 2016)
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividends
Risk-free interest rate
Number of options issued
Valuation
Nil
$0.040
$0.055
20%
15 months
Nil
2.31%
46,217,858
Nil
Nil
$0.090
$0.150
10%
24 months
Nil
2.60%
14,622,400
Nil
Nil
$0.170
$0.300
10%
36 months
Nil
2.67%
18,400,000
Nil
The total value of these options was $Nil at the date they were granted.
(1) Options are exercisable at $0.30 until expiry date 28/11/2019 and subject to the vending condition that the Company’s share
price must exceed $0.50 based on VWAP over a 5-day consecutive period.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
47
NOTE 20: RELATED PARTY DISCLOSURES
Related Parties
a.
The Company’s main related parties are as follows:
i.
Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the
Company, directly or indirectly, including any director (whether executive or otherwise), are considered key
management personnel.
The directors in office during the year were as follows:
Graham Kavanagh
Sin Pyng “Tony” Teng
Douglas Smith
Matthew Morgan
Appointed 5 June 2014
Appointed 9 July 2014
Appointed 29 December 2016
Appointed 3 July 2014, resigned 29 December 2016
For details of disclosures relating to key management personnel, refer to Key Management Personnel
disclosures Directors and Remuneration Report.
b.
Transactions with related parties:
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
The following transactions occurred with related parties:
i.
Other related parties:
Purchase of goods and services:
Corporate advisory fees paid to Drumcliff Investment Pty Ltd as Directors
Fees, an entity associated with Mr Graham Kavanagh.
Corporate advisory fees paid to Rodby Holdings Pty Ltd as Directors Fees
and Consulting Fees, an entity associated with Mr Sin Pyng “Tony” Teng.
Corporate advisory fees paid to Dougnic Pty Ltd and Dougie Downunder
as Directors and Consulting Fees, entities associated with Mr Doug Smith.
Corporate advisory fees paid to Mineral X Pty Ltd as Directors Fees and
Consulting Fees, an entity associated with Mr Matthew Morgan.
c.
Amounts payable to related parties:
Trade and other payables:
Amounts payable to Directors and related entities, as follows:
Directors fees
Superannuation
Reimbursement of expenses
Corporate advisory services
Total trade and other payable related party amounts
GOLD MOUNTAIN LIMITED ANNUAL REPORT
2017
$
2016
$
36,000
36,000
108,000
96,000
176,000
-
99,000
96,000
2017
$
2016
$
23,018
65,461
9,300
570
4,348
8,800
23,018
6,600
-
1,461
57,400
65,461
48
NOTE 21: KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment benefits
Share based payments
Non Executive Directors Fees
Balance at the end of year
NOTE 22: LOSS PER SHARE
2017
$
478,500
1,710
-
60,000
540,210
2016
$
308,400
1,140
-
60,000
369,540
2017
$
2016
$
(0.35)
(0.69)
Basic Loss per share
Basic Loss (cents per share)
a.
i
ii.
iii.
b.
Net loss used to calculate basic loss per share
(1,279,915)
(1,515,979)
No.
No.
Weighted average number of ordinary shares outstanding during the year
used in calculating basic loss per share
370,116,937
220,000,661
Diluted loss per share
The Company’s potential ordinary shares, being its options granted, are not
considered dilutive as the conversion of these options would result in a
decrease in the net loss per share.
Not applicable
Not applicable
NOTE 23: FINANCIAL RISK MANAGEMENT
The Company’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term
investments, accounts receivable and payable, loans to and from related parties, bills and leases. The following table
details the expected maturities for the Company’s non-derivative financial assets. These have been drawn up based on
undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except
where the Company anticipates that the cash flow will occur in a different period.
Financial Risk Management Policies
The Board has overall responsibility for the establishment and oversight of the risk management framework. The Board
reviews and agrees policies for managing each of these risks as summarised below. The Audit and Risk Committee (ARC)
has been delegated responsibility by the Board of Directors for, among other issues, monitoring and managing financial
risk exposures of the Company. The ARC monitors the Company’s financial risk management policies and exposures and
approves financial transactions within the scope of its authority. It also reviews the effectiveness of internal controls relating
to commodity price risk, counterparty credit risk, currency risk, financing risk and interest rate risk.
The ARC’s overall risk management strategy seeks to assist the Company in meeting its financial targets, while minimising
potential adverse effects on financial performance. Its functions include the review of the use of hedging derivative
instruments, credit risk policies and future cash flow requirements.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
49
Specific Financial Risk Exposures and Management
The main risks the Company is exposed to through its financial instruments are credit risk, liquidity risk and market risk
consisting of interest rate risk. This note presents the information about the Company’s exposure to each of the above
risks, their objectives, policies and processes for measuring and managing risk, and the management of capital.
a.
Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Company.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems
for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and
monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible, that
customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing
receivables for impairment. Depending on the division within the Company, credit terms are generally 14 to 30 days
from the invoice date.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in
entities that the FRMC has otherwise cleared as being financially sound. Where the Company is unable to ascertain
a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further managed through
title retention clauses over goods or obtaining security by way of personal or commercial guarantees over assets of
sufficient value which can be claimed against in the event of any default.
Credit risk exposures
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period
excluding the value of any collateral or other security held, is equivalent to the carrying value and classification of
those financial assets (net of any provisions) as presented in the statement of financial position.
The Company has no significant concentrations of credit risk with any single counterparty or company of
counterparties. Details with respect to credit risk of trade and other receivables are provided in Note 7.
Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality.
b.
Liquidity risk
Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or otherwise
liabilities. The Company manages this risk through the following
meeting its obligations related to financial
mechanisms:
preparing forward-looking cash flow analysis in relation to its operational, investing and financing activities;
using derivatives that are only traded in highly liquid markets;
monitoring undrawn credit facilities;
obtaining funding from a variety of sources;
maintaining a reputable credit profile;
managing credit risk related to financial assets;
only investing surplus cash with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual
timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial
liabilities reflects the earliest contractual settlement dates and does not reflect management’s expectations that
banking facilities will be rolled forward.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
50
c.
Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates and equity prices
will affect the Company’s income or value of the holdings of financial instruments. The Company is exposed to
movements in market interest rates on short term deposit. The policy is to monitor the interest rate yield curve out to
120 days to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The
Company does not have short or long term debt, and therefore this risk is minimal. The Company limits its exposure
to credit risk by only investing in liquid securities and only with counterparties that have acceptable credit ratings.
d.
Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting
period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial
instruments. The Company is also exposed to earnings volatility on floating rate instruments. The Company is
exposed to interest rate risk as the Company deposits the bulk of its cash reserves in Term Deposits. The risk is
managed by the Company by maintaining an appropriate mix between short term and medium-term deposits. The
Company’s exposures to interest rate on financial assets and financial
liabilities are detailed in the liquidity risk
management section of this note.
Interest rate sensitivity
At 30 June 2017, the effect on loss and equity as a result of changes in the interest rate, with all other variable
remaining constant would be as follows:
Increase in interest rate by 1%
Decrease in interest rate by 1%
Interest rate risk is not material to the Company.
2017
$
1,500
2016
$
1,000
(1,500)
(1,000)
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to
these financial statements, are as follows:
Note
2017
2016
Floating
Interest
Rate
Non-
interest
bearing
Fixed
Interest
Rate
Total
2017
Floating
Interest
Rate
Non-
interest
bearing
Fixed
Interest
Rate
Total
2015
Financial Assets
Cash and cash
equivalents
Trade and other
receivables
Other financial assets
6
7
14
2,693,337
-
- 2,693,337
1,189,947
-
- 1,189,947
-
-
115,438
75,545
-
-
115,438
75,545
-
-
45,817
30,000
-
-
45,817
30,000
Total financial assets
2,693,337
190,983
- 2,884,320
1,189,947
75,817
- 1,265,764
Financial liabilities at amortised cost:
Financial Liabilities
- Trade and other payables
- Other financial liabilities
Total financial liabilities
15
16
-
-
-
126,025
-
126,025
-
-
-
126,025
-
126,025
-
-
-
131,426
-
131,426
1,182,000
- 1,182,000
1,313,426
- 1,313,426
Net Financial Assets
2,693,337
64,958
- 2,758,295
1,189,947 (1,237,609)
-
(47,662)
GOLD MOUNTAIN LIMITED ANNUAL REPORT
51
NOTE 24: AUDITOR'S REMUNERATION
Remuneration of the auditor of the Company for:
Auditing or reviewing the financial statements
NOTE 25: COMMITMENTS AND CONTINGENCIES
Remuneration Commitments
2017
$
30,900
30,900
2016
$
29,830
29,830
There are no remuneration commitments apart from ongoing director and management fees incurred on a monthly basis.
Guarantees
Gold Mountain Limited did not commit to nor make guarantees of any form as at 30 June 2017.
Contingent liabilities
There are no contingent liabilities as at 30 June 2017.
Exploration licence expenditure requirements
The Company has full management and operational rights with respect to five (5) exploration licences in Enga province,
Papua New Guinea (collectively termed the Wabag Project) and is required to incur $600,000 minimum expenditure over 2
years on the development and maintenance on these licences on the basis of $225,000 in the first year and $375,000 in the
second year. GMN also has an exclusivity to acquire an interest over a sixth exploration licence, EL 2306. This lease which
will incur additional expenditure commitments of $100,000 over two (2) years should GMN acquire the interest in this lease
after completion of due diligence in May 2017, on which the Company has entered into a conditional agreement with the
Vendors for its acquisition of 70% interest as announced to the market on 19 July 2017.
It is likely that the granting of new licences and changes in licence areas at renewal or expiry, will change the expenditure
commitment to the Company from time to time.
NOTE 26: DIVIDENDS
The Directors of the Company have not declared any dividends for the year ended 30 June 2017.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
52
NOTE 27: EVENTS SUBSEQUENT TO REPORTING DATE
On 5 July 2017, the NSW Department of Industry (Resources & Energy) approved the cancellation of the Dalton, NSW
exploration licence EL6922.
On 19 July 2017, the Company announced an agreement to acquire 70% interest in the highly prospective 328km2 tenement
adjoining flagship Crown Ridge gold project in Papua New Guinea.
On 19 July 2017, the Company announced it had entered into agreement to acquire 70% interest in highly prospective 328 km²
tenement adjoining the flagship Crown Ridge Gold Project. The key terms of the acquisition include;
•
•
The purchase price for the Tenement is $5.2 million comprising of $3 million in cash ($300,000 of which was paid as a
non-refundable deposit) and 22 million GMN shares @ $0.10 per share (Consideration Shares);
Completion of the acquisition of the Tenement Interest is due to occur on the business day immediately following the
second anniversary of the registration of EL 2306 (14th December 2017) by the PNG Mineral Resources Authority;
• On Completion on or before 16/12/2017;
o
o
o
o
full title and risk in the Tenement Interest passes to the Company;
the Company must issue the Consideration Shares and pay a Completion instalment of $450,000;
the issue of Consideration Shares will be put to Shareholders approval at the next general meeting of the
Company; and
the Consideration Shares are subject to agreed voluntary escrow conditions for 24 months
•
The balance of the cash consideration ($2,250,000) is payable in six (6) bi-annual instalments ending on 16 December
2020.
And, Completion of the acquisition of the Tenement Interest is conditional on conditions precedent including GMN has first right
of refusal to acquire the remaining 30% of the project from the vendor
On 24 July 2017, the Company announced it had secured $3.7 million in funding commitments (increased by $700,000 from
$3.0 million in funding commitments announced on 2 June 2017). The funds raised will be used for general working capital
requirements and ongoing exploration and project development activities at the flagship Crown Ridge Project in PNG. On 9
August 2017, the Company announced the allotment of 7,984,800 new shares at a price of $0.10 per share and 3,992,400 free
attaching options, one (1) free option entitlement for every two (2) shares issued. The options are exercisable at $0.15 and
expire on 30 June 2019.
On 23 August 2017, the Company announced it had secured $5.0 million in funding commitments (increased by $1.3 million
from $3.7 million in funding commitments announced on 24 July 2017). Subject to the Company's placement capacity under
Listing Rule 7.1, new shares will be allotted at $0.10 per share with a free option entitlement of one (1) option for every two (2)
shares issued. The options will be exercisable at $0.15 and expire on 30 June 2019.
On 26 September 2017, the Company announced that it is well advanced for drilling and bulk sampling program at the Crown
Ridge Gold Project with the view of delivering a JORC (2012) compliant maiden resource estimate and the work is expected to
be completed in early 2018.
On 26 September 2017, the Company announced the granting of 7,800,000 share options to employees and consultants
including directors (subject to shareholders approval) according to the Company’s Employee Share Options Plan. The
granted options have an exercise price of $0.15 and expires 46 months from the grant date and the granted options shall be
vested over 3 periods of 12 months per period.
On 27 September 2017, the Company lodged on its website an investment research report on the Company. The report,
commissioned by the Company is prepared by Independent Investment Research who is an independent investment research
house based in Australia and the United States.
There has not been any other matter or circumstance that has arisen after balance date that has significantly affected, or may
significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in
future financial periods.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
53
NOTE 28: BUSINESS COMBINATIONS
Acquisition of Viva No. 20 Limited
As previously announced on 30 June 2014, the Company entered into an Agreement to acquire an initial 20% interest
(Tranche 1) in Viva with an option to acquire a further 50% (Tranche 2) subject to certain conditions. On 22 March 2016 GMN
completed the acquisition of the initial 20% of the entire issued capital of Viva and issued 50 million GMN consideration
shares at $0.03 each to the Vendors in accordance to the terms and conditions set out in the Letter Agreement of 30 June
2014 and approved by shareholders at the Annual General Meeting held on 15 December 2014. Simultaneously, the Vendors
issued 50 ordinary shares to GMN comprising 20% of the entire issued capital of Viva held by the Vendors.
On 30 July 2015, the Company entered into an Agreement with Viva to acquire a further 50% interest in Viva. At the 2015
AGM held on 26 November 2015, shareholders approved the Tranche 2 share purchase agreement between GMN, Viva and
the Vendors.
On 16 August 2016, the Company completed the acquisition of an additional 50% of the issued capital of Viva through the
issue of 60,000,000 shares at $0.08 each to the Vendors. Simultaneously, the Vendors issued 125 ordinary shares to GMN
comprising 50% of the entire issued capital of Viva held by the Vendors. On completion of this acquisition, the Company now
holds a controlling interest of 70% in Viva.
a. Assets acquired and liabilities assumed
Viva No.20 Limited had the following identifiable assets and liabilities at 16 August, 2016, the date of acquisition. Goodwill of
$6,004,982 is recorded from the acquisition, as follows:
Cash at bank
Deferred exploration expenditure
Total assets
Borrowings
Total liabilities
Total identifiable net assets at fair value
Acquisition consideration - issue of 50,000,000 ordinary shares at AUD $0.03 and 60,000,000
ordinary shares at AUD $0.08 in Gold Mountain Limited
Borrowings netted against goodwill
Exchange difference
Goodwill on acquisition (Note 12)
NOTE 29: CONTROLLED ENTITIES
16-Aug-2016
$
263
295,589
295,852
(295,718)
(295,718)
134
6,300,000
(295,718)
566
6,004,982
Controlled Entities Consolidated
Country of Incorporation
Percentage Owned (%)
Subsidiaries of Gold Mountain Limited:
Viva No. 20 Limited
GMN 6768 (PNG) Limited
Papua New Guinea
Papua New Guinea
70%
100%
Unless otherwise stated, the subsidiary listed above has share capital consisting solely of ordinary shares, which are held
directly by the group, and the proportion of ownership interests held equals to the voting rights held by the group. The
country of incorporation or registration is also their principal place of business.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
54
NOTE 30: CASH FLOW INFORMATION
Reconciliation of Net Cash (used in) provided by operating activities with Loss
after Income Tax
Loss
Non-cash flows in profit:
Impairments expense
Exploration expense
Doubtful debts expense
Depreciation expense
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade payables and other payables
2017
$
2016
$
(1,279,915)
(1,515,979)
2
134,896
428,442
-
11,049
(79,622)
(5,401)
-
52,685
642
180,228
44,699
Net Cash (used in) provided by operating activities
(925,445)
(617,715)
GOLD MOUNTAIN LIMITED ANNUAL REPORT
55
INDEPENDENT AUDITOR’S REPORT
GOLD MOUNTAIN LIMITED ANNUAL REPORT
57
ADDITIONAL SHAREHOLDER INFORMATION
AS AT 15 SEPTEMBER 2017
A.
Corporate Governance
A statement disclosing the extent to which the Company has followed the best practice recommendations set by the
ASX Corporate Governance Council during the period is contained within the Directors’ Report.
B.
Shareholding
1. Substantial Shareholders
Shareholders
SUWARDI
G H A DEVELOPMENT PTY LTD
1
2
Substantial
Holding
% of Issued
Capital
31,850,000
22,013,694
7.560%
5.225%
2. Number of holders in each class of equity securities and the voting rights attached (as at 15 September 2017)
Ordinary Shares
In accordance with the Company’s Constitution, on a show of hands every number present in person or by proxy or
attorney or duly authorised representative has one vote. On a poll every member present in person or by proxy or
attorney or duly authorised representative has one vote for every fully paid ordinary share held.
Options
There were sixty-four (64) holder of options at 15 September 2017.
3. Distribution schedule of the number of holders in each class of equity security as at close of business
on 15 September 2017.
Ordinary Shares
Spread of Holdings
Holders
Units
% of Issued Capital
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001+
TOTAL ON REGISTER
4. Marketable Parcel
16
20
125
247
282
690
2,079
67,105
1,182,717
11,120,845
0.000%
0.016%
0.281%
2.640%
408,914,219
97.063%
421,286,965
100%
There are 38 non-marketable parcels at 15 September 2017, representing 80,184 shares.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
62
5. Twenty largest holders of each class of quoted equity security
The names of the twenty largest holders of each class of quoted security, the number of equity security each holds
and the percentage of capital each holds (as at 15 September 2017) is as follows:
Ordinary Shares Top 20 holders and percentage held
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Shareholder
SUWARDI
Holding
% of Issued
Capital
31,850,000
7.560%
G H A DEVELOPMENT PTY LTD
22,013,694
5.225%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
18,243,404
4.330%
CITICORP NOMINEES PTY LIMITED
13,154,879
3.123%
ISMAIL HARITH MERICAN
12,000,000
2.848%
MR GHINAN MOHAMED SANI
10,266,667
2.437%
KO CHU HONG
MS IRENE TENG
10,250,000
2.433%
10,083,311
2.393%
ASLAN EQUITIES PTY LTD
10,076,250
2.392%
PAY CHUAN LIM
10,000,000
2.374%
MINPAX RESOURCES LIMITED
MS IRENE TENG
SIEW HONG KOH
GHINAN MOHAMED SANI
MISS YOKE LAN GAN
MS QIN ZHANG
MR SUWEI CHEN
RODBY HOLDINGS PTY LIMITED
MS NYOK CHIN WONG
MS KWAI SAU HAU
TOP 20 TOTAL
Other shareholders
TOTAL ISSUED CAPITAL
9,000,000
2.136%
8,900,000
2.113%
8,880,000
2.108%
8,750,000
2.077%
8,050,000
1.911%
7,406,334
1.758%
6,910,000
1.640%
4,500,000
1.068%
4,392,846
1.043%
3,850,000
0.914%
218,577,385
51.88%
202,709,580
48.12%
421,286,965
100%
6. Company Secretary
The name of the Company Secretary is Eric Kam.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
63
Address and telephone details of the Company’s registered administrative office and principal place of business:
Suite 2501, Level 25
31 Market Street
SYDNEY NSW 2000 Australia
Telephone: +61 2 9283 3880
Facsimile: +61 2 9477 5565
info@goldmountainltd.com.au
www.goldmountainltd.com.au
Address and telephone details of the office at which a registry of securities is kept:
Boardroom Pty Limited
Grosvenor Place, Level 12, 225 George Street, SYDNEY NSW 2000
GPO Box 3993, SYDNEY NSW 2001
Telephone: 1300 737 760
Facsimile: 1300 653 459
Stock exchange on which the Company’s securities are quoted:
The Company’s listed equity securities are quoted on the Australian Securities Exchange – code GMN.
Restricted Securities
Ordinary Shares
There are restricted ordinary shares
60,000,000 ordinary shares escrowed to16 August 2017
Options
Number
42,610,715
18,614,800
14,800,000
Strike
$0.055
$0.15
$0.30
Expiry
Restriction
18 January 2018
30 June 2019
28 November 2019
ESOP Vesting VWAP
$0.50
Review of Operations
A review of operations is contained in the Directors’ Report on page 12 of this Annual Report.
Schedule of Tenements
The Company’s Schedule of Tenements is on page 23 of this Annual Report.
GOLD MOUNTAIN LIMITED ANNUAL REPORT
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GOLD MOUNTAIN LIMITED ANNUAL REPORT
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Back Cover Image
Sliced rock sample with visible gold on quartz-pyrite texture
GOLD MOUNTAIN LIMITED ANNUAL REPORT
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