GREAT WESTERN EXPLORATION LIMITED
AND CONTROLLED ENTITIES
ABN 53 123 631 470
ANNUAL REPORT
30 JUNE 2016
GREAT WESTERN EXPLORATION LIMITED
ABN 53 123 631 470
CORPORATE DIRECTORY
Directors
Kevin Clarence Somes (Chairman)
Jordan Ashton Luckett (Managing Director)
Craig Donald Mathieson (Non-executive
Director)
Terrence Ronald Grammer (Non-executive
Director)
Auditor
Bentleys
London House, 216 St George’s Terrace
Perth
Western Australia 6005
Company Secretary
Justin Barton
Registered and Principal Office
Level 2
35 Outram Street
West Perth
Western Australia 6005
Telephone (08) 6311 2852
Facsimile: (08) 6313 3997
Solicitors
Kings Park Corporate Lawyers
Level l2
45 Richardson Street
West Perth
Western Australia 6005
Share Registry
Computershare Investor Services Pty Limited
Level 11
172 St Georges Terrace
Perth
Western Australia 6000
Stock Exchange
The Company’s shares are listed by the
Australian Securities Exchange Limited
The home exchange is Perth
ASX Code - Fully paid shares GTE
Telephone: 1300 787 272
Facsimile: (08) 9323 2033
Website:
www.greatwesternexploration.com.au
GREAT WESTERN EXPLORATION LIMITED
CONTENTS
Review of Exploration Activities
Directors’ Report
Corporate Governance Statement
Consolidated Statement of Financial Position
Consolidated Statement of Profit or Loss and other
Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Auditors Independence Declaration
Independent Auditors Report
Additional Information
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Great Western Exploration Limited
Review of Exploration Activities
Executive Summary
During the year the Great Western Exploration Limited (“the Company”; “Great Western”)
continued to focus on its Yerrida Basin projects in the Doolgunna region of Western Australia
focusing on copper massive sulphide, magmatic nickel sulphide and lode gold styles of
mineralisation.
The Company also commenced a corporate takeover of Vanguard Exploration Limited
(“Vanguard”). Vanguard is a public unlisted Company with two projects, Ives Find and
Fairbairn.
The Doolgunna region has become a major area of interest as one of Australia’s most exciting
emerging copper-gold districts following the Sandfire Resource’s (“Sandfire”) discovery of
massive copper sulphide mineralisation at Monty which is located 10 km from their previous
discovery Degrussa, and only 17 km from the Company’s project area.
The last 12 months has seen the Yerrida basin subject to a pegging rush with Sandfire alone
acquiring approximately 1,300 km2 directly around the company’s projects. The increased
activity, especially from Sandfire who are the region’s most successful explorer, further
demonstrates just how well the company has benefited from being a first mover and identifying
a valuable and prospective land position.
Furthermore there is no more ground available for new entrants which will put upward pressure
on the value of the Company’s projects, especially once the news flow from the region increases
due to the increased exploration activity.
Great Western’s exploration activity during the year identified the Chisel prospect, where the
company completed a reverse circulation drilling targeting potential copper mineralisation.
While there were no significant assay results the drilling was encouraging as it demonstrated
favourable geological conditions for the formation of VHMS style base metal massive sulphide
mineralisation and further work is warranted.
The Company made an all script takeover offer for Vanguard on the basis of four GTE shares for
one Vanguard share. Vanguard’s main project is the Ives Find gold prospect where RC drilling
completed by Vanguard intersected bonanza grade gold intersections under the historical
workings. The drilling also identified two new gold prospects, the Duck and Duckling, which
require further work.
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Great Western Exploration Limited
Yerrida Exploration
The Company has been focussing on the Yerrida basin where it currently has 11 exploration
licenses for a total of 1,415 km2 area (Fig 1).
Figure 1. Location of Great Western tenements and prospects within the Yerrida Basin.
The Yerrida Basin is a Palaeoproterozoic aged basin situated on the northern margin of the
Archaean Yilgarn block located approximately 750 km northeast of Perth within an area that
extends from Meekatharra to the west and Wiluna to the east and approximately 80 km north
from the Goldfields Highway that links both towns (Fig 2).
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Great Western Exploration Limited
Figure 2. Location of Yerrida Basin
The company recognised that the Yerrida Basin, as host to the Magellan Lead Deposit and
Thaduna copper deposit, might also be prospective for copper massive sulphide mineralisation
because of its similarities in geological age, rock types and proximity to the Degrussa deposit.
Furthermore the Company recognised that the northern area of the Yerrida Basin had very little
historic exploration.
Initially the company acquired 10 exploration licences for 1,400 km2 area and increased this area
to over 3,200 km2 before reducing the area back to its current 1,415 km2. The Company was one
of the first movers into the region following the discovery of the Degrussa copper deposit.
The Company used the geological and geochemical data published in the GSWA Report 60 to
identify similar stratigraphy that host the Degrussa VHMS and also focussed on regional scale
lineaments identified by previous studies and/or in the available geophysical data.
The Company believes that the mineralisation seen on the eastern side of the Capricorn Orogeny
where the majority of the copper and gold deposits are located, which includes the Degrussa,
Monty, Thaduna, Plutonic, Magellan and Wiluna deposits, occur at or near the intersection of
northwest and northeast trending lineaments. The northwest trending lineaments represent re-
activated Archaean faults and the northeast trending lineaments represent faults that formed at
the same time as the Yerrida basin during the Capricorn Orogeny.
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Great Western Exploration Limited
Previous workers have at different times proposed that the major northwest trending lineaments
observed in the Yerrida basin are the continuation of the Keith Kilkenny fault zone (Rio Tinto
2001 & 2002), Perseverance fault (RGC 1994 & 1995; pmdCRC 2004), Bardoc Fault Zone
(pmdCRC 2004) and Mt Ida fault zone (GSWA Report 135, 2014 and pmdCRC 2004) all of which
are significant regional faults that are known to be the first order control and/or host many of the
largest nickel, copper and gold deposits in the northern Yilgarn.
The company has interpreted these main fault zones as the Waroonga-Ida, Bardoc and
Perseverance fault zones after mainly the pmdCRC, 2004 (Fig 3) which are the first order controls.
The second order controls are the northeast trending faults that localise the mineralisation at or
near the intersection of the re-activated first order fault zones. Examples of the second order
control are the Goodin and Jenkins faults.
Figure 3. Map showing interpreted major structural corridors of the eastern Yerrida basin.
Because the majority of the Yerrida Basin has been subject to little or no previous exploration
there was not the extensive existing databases to utilise that are normally available over much of
the Yilgarn area. As a result the Company had to initially carry out regional scale program so
that further prospective areas could be identified. These regional program identified the current
prospects New Springs, Finlayson, Chisel and Goodin (Fig 1).
Chisel Prospect
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Great Western Exploration Limited
The Chisel prospect is located approximately 40 km northwest of Wiluna and 13 km north of the
Magellan lead mine. The company is targeting VHMS and silver - lead -zinc mineralisation. Most
of the exploration in the region was completed by RSG in the early to mid-1990s that resulted in
the discovery of the Magellan lead mine. There are a number of base metal anomalies delineated
by the RSG work that are yet to be followed up.
The company completed three RC holes for 591 m this year to determine the nature of the base
metal anomalism intersected in an historical diamond hole completed by RGC in in 1994. The
historical hole intersected 2 m @ 3.2% copper, 8 g/t silver, 0.296 g/t gold and 0.12% zinc from 146
m depth and also 2 m @ 0.67 g/t gold, 8 g/t silver and 0.4% zinc from 98 m depth. There was no
further drilling completed.
The main interest in the historical diamond drill hole was the juxtaposition of base metal
mineralisation and “peperite” which is a diagnostic feature of Degrussa and Monty style massive
copper mineralisation. The hole was logged as a sequence of mafic volcanics (dolerite, basalt)
interbedded with altered siltstone and shales with the mineralisation occurring along and near
the contact where “graded clasts have been ripped off the base” which closely matches the
description of peperite. It has been reported that peperite has an important relationship with the
mineralisation seen at both Monty and Degrussa.
This sequence at Chisel is very similar to what Talisman Mining Limited reported after the initial
discovery of Monty by JV partner Sandfire Resources Limited in an announcement dated 25th
June 2015:-
“In TLDD0004A, the host unit itself comprises rapidly alternating (centimetre-scale) interlayered
sandstone, siltstone and shale sedimentary rocks. The upper half of the sedimentary package has
been intruded by basalt intrusive rocks that exhibit peperite contact zones. Peperites are created
when magma (basalt) intrudes, and mixes with, wet sediments. Very similar features have been
documented at the Degrussa mine where, in the Conductor 5 deposit, massive sulphide
mineralisation often occurs in the peperite contact zone between basalt sills and inter-layered
sandstone, siltstone and shale.”
The RC drilling completed by Great Western confirmed the geology described in the original
diamond hole where mafic volcanics have erupted and/or intruded into a sedimentary sequence
forming peperite and extensive hydrothermal alteration. The drilling also intersected wides
zones (>50 m) of strongly altered mafic volcanic sequences with locally intense carbonate and
pyrite alteration which is indicative of a large hydrothermal system. This is similar to what has
seen observed at Degrussa where the mafic volcanics are similarly altered with the strong
carbonate alteration peripheral to the main lodes.
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Great Western Exploration Limited
Four potential VHMS horizons have been identified using path finder geochemistry where there
has been a combination is barium, silver, cobalt, copper, manganese, iron, molybdenite and zinc
enrichment.
Previously RGC interpreted that the Perseverance fault is located 1 km to the east and orientated
northwest. This is a major regional fault that hosts some of WA’s largest nickel and gold mines
to the southeast. Great Western has interpreted this as a possible first order control that would
have been re-activated during the formation of the Yerrida basin. The fault can be traced in the
regional magnetics and gravity along strike to the northwest as far as the Monty deposit.
In addition, approximately 3.5 km to the southwest RGC recognised a structurally complex area
where there are northeast trending faults crosscutting the Perseverance fault that has a co-
incident gravity anomaly. The company is interpreting this as a prime VHMS target that requires
further work (Fig 4).
Furthermore, approximately 6 km to the south of Chisel an historical drill hole intersected 2 m @
85 g/t silver from 44 m (bottom of hole) that also requires further follow-up work (Fig 4).
Chisel
Drilling
Historical drillhole
2m @ 85 g/t Ag
Figure 4. VHMS target area at Chisel.
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Great Western Exploration Limited
New Springs (100% GTE)
The New Springs nickel prospect is located in the Yerrida basin approximately 85 km northwest
of the Wiluna. The Company believes the area is prospective for magmatic nickel sulphide
mineralisation. This style of mineralisation accounts for approximately 60 percent of the world’s
Ni production and are also a major source of chromium, cobalt, copper and PGEs.
According to the United States Geological Survey (“USGS”) geology model and exploration
guide for the discovery of economic magmatic Ni-Cu±PGE sulphide deposits the New Springs
prospect exhibits all the main characteristics for this style of mineralisation which include:
Large volume of mafic volcanic sequences with evidence of primitive Mg-rich melts
and large volumes of tholeiitic magmatic rocks occurring on or near the edges of
ancient cratons.
Province boundaries, rifts, and deeply penetrating faults that can allow for efficient
transport of magma through the crust.
Small- to medium-sized differentiated mafic and (or) ultramafic dykes and sills,
Deposits are generally not hosted in thick, large-layered intrusions.
Sulphur-bearing crustal rocks into which the layered mafic rocks are intruded.
The prospect is located within a mafic – ultramafic (gabbro-pyroxenite) sequence that forms a
part of the Cunyu sill (a Killara volcanic unit) within the Yerrida basin that has been emplaced
along the margin of the Yilgarn Craton during the Proterozoic (Fig 5).
Further positive evidence is provided by the whole rock geochemical analysis completed by the
GSWA on the Killara volcanics (GSWA Report 60, 2000) which is consistent with sulphur
saturation that is a key geological process that can lead to the formation and segregation of a
nickel – copper bearing sulphide mineralisation from the parent magma which is essential for
the formation of nickel sulphide deposits. Further analysis of this data by Rio Tinto also
concluded that the sequence had similar geochemistry to the Norilsk host rocks.
The Company has also identified similarities with the Nova deposit which is also hosted in a
Proterozoic gabbro-pyroxenite sequence emplaced along the margin of the Yilgarn Craton prior
to the metamorphic overprinting that is a characteristic of the Fraser Range Complex. These
similarities are listed in Table 1.
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Great Western Exploration Limited
Table 1. Comparisons with of New Springs with Nova nickel deposit.
Description
Nova
New Springs
Similar
rocks
(layered
gabbro-pyroxenite
intrusion)
Proterozoic age
Located on margin of Yilgarn craton
Regional geochemical Ni anomaly
Similar sized “eye” setting (~2.5 km)
Similar size EM plate model (~800 m)
(271 ppm
NI)
(221 ppm Ni)
Metamorphic grade
High
Low
The USGS study also concluded that as magmatic nickel sulphides mineralisation forms prior to
any regional metamorphism there is no obvious correlation between the metamorphic grade of
the host rocks and the formation of magmatic nickel sulphides deposits.
The New Springs prospect is strongly anomalous (> 20 times background) in nickel, copper,
cobalt, gold and PGEs with the peak nickel values of 574 ppm and 221 ppm and maps out a broad
area that is enriched in nickel, copper, cobalt, gold and PGEs co-incident with the layered mafic
– ultramafic sequence (Fig 6).
The regional geochemical response compares favourably with the Nova nickel deposit where a
similar regional geochemical survey was completed that identified a nickel anomaly with a peak
value of 271 ppm that ultimately led to its discovery. The Nova deposit is also hosted in gabbro-
pyroxenite sequence with a similar whole rock geochemical signature.
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Great Western Exploration Limited
Pyroxenite
Figure 5. Regional surface geochemistry at New Springs.
Pyroxenite
Nickel
Response ratio
( x background)
Gabbro
Figure 6.
GSWA regional geology showing the layered dolerite-gabbro-pyroxenite
stratigraphy.
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Great Western Exploration Limited
There is currently 200 m VTEM (airborne EM) and 300 m line spaced HeliTEM (airborne EM)
that cover parts of the prospect area and broad 400 m spaced regional government aeromagnetic
data that covers the entire region.
The broad spaced nature of the aeromagnetic data is only reliable for identifying larger regional
features and lacks the detail required for working at a local scale. However the company has
identified some features of interest that are co-incident with the regional geochemical anomalies
which may represent smaller distinct layers or intrusions within a larger intrusive body (Fig 7).
There are number of EM anomalies where the airborne surveys have covered areas within the
dolerite-gabbro-pyroxenite sequences that are of interest to the Company. Three of these
anomalies were selected for detailed plate modelling on the basis of the proximity to the
pyroxenite outcrop and elevated nickel, copper and gold in the regional soil sampling along
strike of these anomalies (Fig 8).
Gabbro
Pyroxenite
Figure 7. Regional aeromagnetic map at New Springs.
The company has stated that further work required included ground EM surveys and drilling.
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Great Western Exploration Limited
Figure 8. Airborne EM plate models at New Springs.
Finlayson Gold Prospect
The Finlayson gold prospect is within the Cunyu JV project which is located approximately 70
km northwest of the Wiluna gold deposits. The Cunyu JV project is a Joint Venture between
Glencore and Great Western whereby the Company is earning 70% by funding and managing
exploration within the project area.
Historical drilling initially confirmed the presence Archaean greenstone comprising of mafic –
ultramafic sequences with traces of nickel sulphides along strike to the northwest of some of
WA’s largest nickel deposits (Honeymoon Well, Mt Keith, and Yakabindie) that are located
southeast of Wiluna. Furthermore a number of regional interpretations show the extension of the
Bardoc and/or Perseverance faults through to the prospect area.
The regional gravity data indicates the Archaean Wiluna greenstone belt continues under cover
of the younger Palaeoproterozoic Yerrida Basin sequences. A single historical diamond drill hole
at Quartermaine located 5 km west of the Finlayson prospect (further within the Yerrida basin)
intersected Archaean greenstone at 300 m depth validating the gravity data.
The regional Government maps show the eastern margin of the Wiluna belt covered by the
Finlayson member which is the basal unit of the Yerrida basin that has been mapped between 10
m and 60 m thick.
At the Finlayson prospect nine shallow RC holes drilled by WMC in the 1990s to test the
Terrabubba magnetic anomaly intersected mafic –ultramafic at depths from several metres to 20
m which is consistent with the thickness of the Finlayson member providing further evidence
that the Wiluna belt is a under thin cover along the eastern margin of the Yerrida basin.
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Great Western Exploration Limited
The Company then developed the conceptual model where the faults and rock types that host
the Wiluna gold deposits continue along strike to the northwest through to the Cunyu JV project
under a thin cover of between 10 m to 60 m of the Palaeoproterozoic Finlayson unit. This thin
cover of predominantly sandstone would mask any potential mineralisation as surface
geochemical sampling would mostly be ineffective.
To test this conceptual model the company completed nine broadly spaced RC holes for a total
of 1,529 m. The drilling demonstrated that there was greenstone basement from 20 m to 180 m
depth.
The drilling was also successful in demonstrating that the Finlayson prospect is prospective for
gold intersecting a hydrothermally altered mafic shear zone in hole CNRC005 that contains
anomalous gold mineralisation and associated pathfinder elements including bismuth, silver
and tellurium (Fig 9).
Figure 9. CNRC005 mineralised shear zone.
The shear zone has a downhole width of 15 metres with peak gold anomalism that includes 1
metre intervals of 157 ppb (0.16 g/t Au) and 155 ppb (0.16 g/t Au) from 144 m and 150 m depth
respectively. The gold anomalism along with the important pathfinder elements is strong
evidence of a gold bearing hydrothermal system. The discovery of a mineralised shear zone
within a greenstone sequence is a significant development at this early stage of drilling.
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Great Western Exploration Limited
Goodin Prospect
The Goodin prospect is located from 25 km to 17 km south east of the Degrussa copper mine and
the Monty deposit respectively. To date the company has completed surface soil sampling,
1:20.000 scale geological mapping, airborne EM (HeliTEM) over approximately half of the
prospect area and two RC drill holes for 400 m.
Copper response ratio
(x background)
Figure 10. Plan showing Surface geochemistry and airborne EM anomalies at Goodin.
The Company identified 12 late-time airborne EM conductors co-incident with surface
geochemical anomalies that occur in the vicinity of the Johnson Cairn unit which is the unit that
forms the footwall at the Degrussa deposit (Fig 10). Five of these conductors have been plate
modelled.
13
Further follow-up areas 1. Enrichment of copper along NW fault above density anomaly, prospective area for further follow-up. No EM completed over this area yet. 2. Unexplained enrichment of copper. Requires further follow-up. No EM completed over this area yet 3. Unexplained moderate copper enrichment co-incident with strong gold enrichment. Requires further follow-up. No EM completed over this area.
Great Western Exploration Limited
Last year the Company completed two RC holes for 400 metres to test two airborne EM plate
models. The drilling intersected a zone of approximately 20 metres of disseminated sulphides in
shale at both targets that the company believes explains the EM anomalies. The drilling also
confirmed the stratigraphic sequence
The company has eight remaining untested EM anomalies at Goodin prospect which occur at or
near the Johnson Cairn – mafic volcanic contact along the western half of the projects.
This year the Company identified the Monty trend in both the aeromagnetic and regional soils
dataset and has so far identified two high priority structural targets with copper & gold
enrichment in soils co-incident with gravity anomalies along this trend (Fig 11).
Goodin
Prospect
Monty
High Priority
Target
Figure 11. Map Showing exploration target along at Goodin along strike from the Monty
Deposit.
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Great Western Exploration Limited
Millrose (GTE 100%)
During the year the Company relinquished the remaining tenement.
Mt Gibb (GTE 10% free carried)
During the Year the JV made the decision to relinquish the project.
Competent Person Statement
The information in this report that relates to Exploration Results, Mineral Resources or Ore
Reserves is based on information compiled by Mr Jordan Luckett who is a member of the
Australian Institute of Mining and Metallurgy. Mr Luckett is an employee of Great Western
Exploration Limited and has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Luckett
consents to the inclusion in the report of the matters based on his information in the form and
context in which it appears.
Exploration Targets
It is common practice for a company to comment on and discuss its exploration in terms of
target size and type. The information in this announcement relating to exploration targets
should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore
Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context in this
announcement. The potential quantity and grade of resource targets are conceptual in nature
since there has been insufficient work completed to define them beyond exploration targets and
that it is uncertain if further exploration will result in the determination of a Mineral Resource
or Ore Reserve.
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Great Western Exploration Limited
Tenement Schedule
Yerrida Project
Doolgunna
Neds Creek
Paroo
Paroo
Paroo
Goodwin
Paroo
Paroo
Paroo
Paroo
Finlayson Range
Finlayson Range
Finlayson Range
E51/1324
E51/1330
E51/1540
E51/1560
E51/1727
E51/1728
E53/1712
E53/1713
E53/1730
E53/1740
E53/1774
E53/1775
E53/1776
Live
Live
Live*
Live
Pending
Pending
Live
Live
Live
Live
Live*
Live*
Live*
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Cunyu JV
Cunyu JV
Cunyu JV
E51/1234
E51/1238
Live
Live
GTE earning 70%
GTE earning 70%
*Relinquished post 30 June 2016
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Great Western Exploration Limited
Directors’ Report
The Directors of Great Western Exploration Limited submit herewith the annual report
of Great Western Exploration Limited and subsidiaries (“the Group”) for the financial
year ended 30 June 2016.
Information on Directors:
The names and details of the Company’s directors in office during the financial year and
up to the date of this report are as follows. Directors were in office for the entire year
unless otherwise stated.
K C Somes
J A Luckett
C D Mathieson
T R Grammer
Mr Kevin Clarence Somes FCA
Non-executive Chairman
Experience and expertise
Mr Somes is a fellow of the Institute of Chartered Accountants and was a partner of
Somes & Cooke Chartered Accountants for over 25 years.
Mr Somes has extensive experience in the management of exploration companies, with
Somes & Cooke being the auditors of a number of ASX listed mining companies during
his tenure.
Other current directorships
None.
Former directorships in last three years
None.
Mr Jordan Ashton Luckett
Managing Director
Experience and expertise
During his career, Mr Luckett has been a member of a number of successful exploration
teams that have made discoveries in Western Australia, Queensland, Canada and Africa.
For the previous twelve years he has held senior management positions in both mining
and exploration companies.
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Great Western Exploration Limited
Directors’ Report (continued)
Mr Luckett has a Bachelor of Science degree and is a member of the Australasian Institute
of Mining and Metallurgy.
Mr Luckett has 24 years’ of experience in both exploration and mining geology, having
worked throughout Australia, North America and Africa. He has a broad experience
that includes grass roots exploration, project generation, resource definition,
underground mining and geological management.
Other current directorships
None.
Former directorships in last three years
None.
Mr Craig Douglas Mathieson
Non-executive
Experience and expertise
After completing a Bachelor of Business (Banking & Finance), Mr Mathieson spent 10
years in commercial banking, principally in commercial property finance. In 2001, he
returned to the family business, DMS Glass, as Managing Director until its sale to CSR
Ltd in 2007. Mr Mathieson is currently CEO of the Mathieson Group, a large family
group with diverse investments, including property, business and rural interests.
Mr Mathieson has extensive commercial experience and he is currently a Non-executive
Director of Funtastic Ltd.
Other current directorships
Funtastic Ltd (August 2009 – current)
World Oil Resources Limited (June 2013 – current)
Former directorships in last three years
IPB Petroleum Ltd (August 2012 – March 2014)
Mr Terrence Ronald Grammer – Appointed 25 July 2014
Non-executive
Experience and expertise
Mr Grammer is one of Australia’s most successful exploration geologist’s with a
career spanning more than 40 years in Australia, Africa, Asia and New Zealand.
Mr Grammer has been based in Western Australia since 1988 and has extensive
professional experience in the exploration of gold, base metals & industrial minerals
and has an enviable record over a long period of time that includes being directly
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Great Western Exploration Limited
Directors’ Report (continued)
involved in three highly successful exploration companies that made the transition from
junior explorer to an ASX200 Company.
He was a founder and promoter in 1999 of Western Areas NL, and was exploration
manager of the company from 2000 until retiring in 2004.
In 2000 he was joint winner of the AMEC Prospector of the Year Award for his role in
the discovery of the highly profitable Cosmos nickel deposit in 1997 that subsequently
resulted in Jubilee Mines NL becoming a leading mid‐tier Australian mining company
prior to its takeover by Xstrata.
In June 2010 Mr Grammer joined the Board of Sirius Limited that subsequently went on
to make the Nova discovery that has transformed that company and will likely become
a significant nickel producer in the near future.
Mr Grammer was also Chairman of South Boulder Mines Limited from May 08 through
to August 2013 where he helped guide the company through the discovery, development
and funding of the Colluli potash deposit in Eritrea.
Mr Grammer is currently Non- Non-Executive Chairman of Metal Tiger PLC (AIM
Listed) and Non-Executive Chairman of Kin Mining NL.
Other current directorships
Metal Tiger PLC (September 2014 – current)
Kin Mining NL (August 2011 - current )
Former directorships in last three years
Sirius Resources NL (June 2010 – September 2015)
South Boulder Mines Limited (October 2007 – July 2013)
Fortis Mining Limited (December 2010 – November 2011)
COMPANY SECRETARY
The Company Secretary is Mr Justin Barton. Mr Barton was appointed Chief Financial
Officer (CFO) and company secretary on 24 August 2015.
Mr Barton is a Chartered Accountant, with over 20 years’ experience in accounting,
international finance and mining and has held Board and Chief Financial Officer position
with other ASX listed mining company.
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Great Western Exploration Limited
Directors’ Report (continued)
PRINCIPAL ACTIVITIES
The principal activity during the year to 30 June 2016 was mineral exploration for copper,
gold and nickel.
During the year the group continued its strategy of reviewing and exploring its mineral
exploration projects.
OPERATING AND FINANCIAL REVIEW
Review
The principal activity of the Company is mineral exploration. The objective of the Group,
in the event of the discovery of a mineral resource, would be the successful exploration
and development of the resource.
Details of the Company’s exploration projects are included in the Review of Exploration
Activities on page 1.
Financial position
At the end of the financial year the Group had cash reserves of $39,184 (2015: $131,139).
The Company incurred expenditure on exploration and evaluation of $416,669 (2015:
$559,753) before write offs.
Results of Operations
The operating loss for the year, after providing for income tax was $2,788,727
(2015: $1,624,590).
RISKS AND RISK MANAGEMENT
The Company attempts to mitigate risks that may affect its future performance through
a systematic process of identifying, assessing, reporting and managing risks of corporate
significance. Key operational risks and their management are recurring items for
discussion at Board meetings.
The following discusses the Company’s most significant business risks.
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Great Western Exploration Limited
Directors’ Report (continued)
a) Exploration
Whilst considered highly prospective, the Company’s tenements are early stage
exploration tenements with limited exploration undertaken on them to date.
Exploration is a high risk undertaking. The Company’s joint venture projects for
copper, nickel and gold prospects in Australia are in the preliminary stages of
exploration and no assurance is given that exploration of its current projects or
any future projects will result in the delineation or discovery of a significant
mineral resource. Even if a significant mineral resource is identified, there can be
no guarantee that it can be economically exploited.
b) Commodity prices
As an explorer for copper, gold, nickel and potentially other minerals, any
successes of the Company are expected to be closely related to the price of those
and other commodities. Fluctuating prices in those commodities make market
prices for securities in the Company more volatile than for other investments.
Commodities prices are affected by numerous factors beyond the control of the
Company. These factors include worldwide and regional supply and demand for
commodities, general world economic conditions and the outlook for interest
rates, inflation and other economic factors on both a regional and global basis.
These factors may have a positive or negative effect on the Company’s
exploration, project development and production plans and activities, together
with the ability to fund those plans and activities.
c) Environmental
The Company’s projects are subject to rules and regulations regarding
environmental matters and the discharge of hazardous wastes and materials. As
with all mineral projects, the Company’s projects are expected to have a variety
of environmental impacts should development proceed. Development of any of
the Company’s projects will be dependent on the Company satisfying
environmental guidelines and, where required, being approved by government
authorities.
21
Great Western Exploration Limited
Directors’ Report (continued)
The Company intends to conduct its activities in an environmentally responsible
manner and in accordance with all applicable laws, but may still be subject to
accidents or other unforeseen events which may compromise its environmental
performance and which may have adverse financial implications.
d) Future capital needs.
The Company’s ability to raise further capital (equity or debt) within an
acceptable time of a sufficient amount and on terms acceptable to the Company
will vary according to a number of factors, including prospectivity of projects
(existing and future), the results of exploration, subsequent feasibility studies,
development and mining, stock market and industry conditions and the price of
relevant commodities and exchange rates.
No assurance can be given that future funding will be available to the Company
on favourable terms (or at all). If adequate funds are not available on acceptable
terms, the Company may not
be able to further develop its projects and it may impact on the Company’s ability
to continue as a going concern.
22
Great Western Exploration Limited
Directors’ Report (continued)
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There has been no significant change in the state of affairs of the Company during the
financial year other than:
In December 2015, the placement of 31,500,000 ordinary fully paid shares at an
issue price of $0.01 each to raise $315,000 after issue costs.
In January 2016, the placement of 20,000,000 ordinary fully paid shares at an issue
price of $0.01 each to raise $200,000 after issue costs and payment in lieu of
directors fees and salaries of 23,552,600 ordinary fully paid shares at an issue price
of $0.01 each, to settle outstanding fees and salaries of $235,526.
In April 2016, the announcement that the Company had made an all script offer
for unlisted public company Vanguard Exploration Limited (“Vanguard”). The
offer is for four (4) shares in the Company for every one (1) Vanguard share. This
proposed acquisition remains ongoing after year end 30 June 2016.
DIVIDENDS
No dividends have been recommended by the Directors.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
The Directors are not aware of any other matter or circumstance that has arisen since 30
June 2016, which has significantly affected or may significantly affect the operations of
the Group, the results of those operations, or the state of affairs of the Group, in future
financial years other than:
The Company continues to progress the Vanguard Exploration Limited acquisition
announced on the 26th April 2016. A general meeting of shareholders has been called for
25 October 2016 for shareholders to consider and if thought, pass the following
resolutions:
Resolution 1: Approval of Issue of Securities to Acquire Vanguard
Approval for the Company to issue 130,349,124 Company shares to vendors
unrelated to the Company pursuant to the proposed acquisition.
23
Great Western Exploration Limited
Directors’ Report (continued)
Resolution 2: Approval of Issue of Securities to Related Parties to Acquire Vanguard
Approval for the Company to issue 20,483,332 Company shares to Mr Kevin
Somes, a Director pursuant to the proposed acquisition.
Resolution 3: Approval to Issue Securities under Share Placement
Approval for the Company to issue up to 100,000,000 Company shares pursuant
to a Share Placement.
Resolution 4: Approval for Ratification of Prior Securities Issue
Approval for the ratification of the issue of 24,540,000 fully paid ordinary shares
to various sophisticated investors to raise $368,100.
On 2 August 2016, the Company announced that it had raised $368,100 through the issue
of 24,540,000 shares at an issue price of $0.015 from sophisticated investors, which has
been used for additional working capital and to help facilitate the acquisition of
Vanguard Exploration Limited.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Directors are not aware of any developments that might have a significant effect on
the operations of the Company in subsequent financial years not already disclosed in
this report.
ENVIRONMENTAL REGULATIONS
Great Western Exploration Limited conducts
in an
environmentally sensitive manner, and believes it has adequate systems in place for the
management of environmental requirements. The Company is not aware of any breach
of statutory conditions or obligations.
its exploration activities
The Directors have considered the enacted National Greenhouse and Energy Reporting
Act 2007 (the NGER Act) which introduces a single national reporting framework for
the reporting and dissemination of information about the greenhouse gas emissions,
greenhouse gas projects, and energy use and production of corporations. At the current
stage of development, the Directors have determined that the NGER Act will have no
effect on the Company for the current, nor subsequent, financial year. The Directors will
reassess this position as and when the need arises.
24
Great Western Exploration Limited
Directors’ Report (continued)
SHARE OPTIONS
During the year ended 30 June 2016, all unlisted options of the Company expired, which
included the following:
Grant Date Number
Under
Option
4,000,000
4,000,000
2,000,000
9 August 2011
12 December 2012
25 July 2014
Exercise
Price
60 cents
60 cents
10 cents
Expiry Date
30 May 2016
30 June 2016
30 June 2016
Unlisted
Unlisted
Unlisted
DIRECTORS’ INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
The particulars of Directors’ interest in shares and options are as at the date of this report.
K C Somes
J A Luckett
C D Mathieson
T R Grammer
Ordinary
Shares
24,389,572
22,783,333
28,218,496
-
Options
-
-
-
-
DIRECTORS AND OFFICERS INSURANCE
The Company has made an agreement to indemnify all the Directors and Officers against
all indemnifiable losses or liabilities incurred by each Director and Officer in their
capacities as Directors and Officers of the Company to the extent permitted by the
Corporations Act 2001.
The Company has taken out an insurance policy at a premium of $8,409 in relation to
Directors and Officers indemnity.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the
company or intervene in any proceedings to which the company is a party for the
purpose of taking responsibility on behalf of the company for all or any part of those
proceedings.
The company was not a party to any such proceedings during the year.
25
Great Western Exploration Limited
Directors’ Report (continued)
NON-AUDIT SERVICES
Bentleys did not receive fees for non-audit services during the financial year. Bentleys
are however providing non-audit services via the provision of an Independent Experts
Report as part of the Vanguard Exploration Limited acquisition.
The Directors are satisfied that the provision of non-audit services is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001.
Details of the amounts paid or payable to the auditor for audit and other services paid
during the year are set out in Note 24
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration, as required under section 307C of the
Corporations Act 2001, is set out on page 100.
26
Great Western Exploration Limited
REMUNERATION REPORT (AUDITED)
Remuneration Policy
This Remuneration Report outlines the director and executive remuneration
arrangements of the Company in accordance with the requirements of the Corporations
Act 2001 and its Regulations. For the purposes of this report Key Management Personnel
(KMP) of the Company are defined as those persons having authority and responsibility
for planning, directing and controlling the major activities of the Company and the
Company, directly or indirectly, including any director (whether executive or otherwise)
of the Company.
For the purposes of this report, the term “executive” encompasses the Chief Executive
and senior executives.
i)
Directors
K C Somes
J A Luckett
C D Mathieson Director (Non-executive)
Director (Non-executive)
T R Grammer
Director (Non-executive)
Director (Executive)
There were no other changes of key management personnel after reporting date
and before the financial report was authorised for issue.
The Company has not established a Remuneration Committee, the role of the Committee
is assumed by the Board, as a whole, which is responsible for determining and reviewing
the remuneration arrangements of the directors and executives.
The Board assesses the appropriateness of the nature and amount of emoluments of such
Directors and executives on an annual basis by reference to market and industry
conditions.
In order for the Company to prosper, thereby creating shareholder value, the Company
must be able to attract and retain the highest calibre executives.
Executive and non-executive directors, other key management personnel and other
senior employees have been granted options over ordinary shares under the Company’s
Employee Share Option Plan. The recipients of options are responsible for growing the
Company and increasing shareholder value. If they achieve this goal the value of the
options granted to them will also increase. Therefore the options provide an incentive to
the recipients to remain with the Company and to continue to work to enhance the
Company’s value.
Due to the nature of the Company’s operations the current remuneration policy is not
linked to the performance of the Company.
27
Great Western Exploration Limited
REMUNERATION REPORT (AUDITED)
Remuneration Policy (continued)
Non-executive Directors remuneration
The Board seeks to set remuneration levels that provide the Company with the ability to
attract and retain the highest calibre professionals.
Fees and payments to non-executive Directors reflect the demands that are made on and
the responsibilities of the Directors from time to time.
Directors’ fees are determined by the Board within the aggregate Directors fee limit
approved by shareholders. The maximum currently approved by the Constitution
stands at $250,000.
Remuneration in the form of share options issued under the Company’s Employee Share
Option Plan is designed to reward Directors and executives in a manner aligned to the
creation of shareholder wealth. Subject to shareholders’ approval non-executive
directors may participate in the Company’s Employee Share Option Plan. The Board
considers the grant of options to be reasonable given the necessity to attract and retain
the highest calibre professionals to the Company.
Non‐executive Directors receive superannuation benefits in accordance with the
Superannuation Guarantee Legislation. Non‐executive directors are permitted to salary
sacrifice all or part of their fees.
Due to the nature of the Company’s operation i.e. mineral exploration and development,
the remuneration of directors and executives, at present, does not include performance‐
based incentives.
Executive Remuneration (including executive directors)
The Board aims to reward executives with a level and mix of remuneration
commensurate with their position and responsibilities to align the interests of executives
with those of shareholders and to ensure that remuneration is market competitive.
Remuneration consists of:
Fixed Remuneration.
Being base salary, non‐monetary benefits and superannuation. Fixed
remuneration is reviewed annually.
28
Great Western Exploration Limited
REMUNERATION REPORT (AUDITED)
Remuneration Policy (continued)
Variable remuneration – Long term incentives.
Being share options issued under the Company’s Employee Share Option Plan.
The options do not have any vesting conditions other than service conditions.
Remuneration issued in the form of share options issued under the Company’s
Employee Share Option Plan is designed to reward directors and executives in a
manner aligned to the creation of shareholder wealth.
Due to the nature of the Company’s operation i.e. mineral exploration and development,
the remuneration of directors and executives, at present, does not include performance‐
based incentives.
The Company has entered into contracts of employment with the Managing Director,
and standard contracts with other executives, the details of which are set out below.
Name
J A Luckett
Position
Managing
Director
Contract Details
Annual salary of $120,000, plus
superannuation, reviewed annually.
In addition, will receive $30,000 for
Director Fees annually.
The Company may terminate, other
than for gross misconduct, with 1
month’s notice or payment in lieu of
an amount of $12,500 on the grounds
inadequate performance or
of
prolonged
illness, or 3 month’s
notice or payment in lieu of an
amount of $37,500 for redundancy
or the Company being taken over.
Termination payments are not
payable on resignation or under
of unsatisfactory
circumstances
performance.
29
Great Western Exploration Limited
REMUNERATION REPORT (AUDITED) (continued)
Remuneration of Key Management Personnel
Short Term Post Employment Long Term Share based Payment
Salary
& Fees
$
Cash
Bonus
$
Non-monetary
Benefits
$
Other
$
Superannuation
$
Retirement
Benefits
$
Incentive
Plans
$
Long
service
leave
$
Options
$
Total
$
%
Performance
related
$
30 June 2016
Non-executive
directors
K C Somes
C D Mathieson
T R Grammer
Executive directors
J A Luckett
Total
30 June 2015
Non-executive
directors
K C Somes
C D Mathieson
T R Grammer
Executive directors
J A Luckett
55,000
30,000
35,000
120,000
150,0001
270,000
55,000
30,000
32,603
117,603
150,0001
-
-
-
-
-
-
-
-
-
-
-
Total
-
1.Includes Directors fees of $30,000 in 2015 and 2016.
267,603
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,225
2,850
3,325
11,400
11,400
22,800
5,225
2,850
3,097
11,172
11,400
22,572
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60,225
32,850
38,325
131,400
161,400
292,800
-
-
31,018
31,018
60,225
32,850
66,718
159,793
-
161,400
31,018
321,193
-
-
-
-
-
-
-
-
-
-
30
Great Western Exploration Limited
REMUNERATION REPORT (AUDITED) (continued)
Compensation Options: Granted and Vested during the year
30 June 2016
No Compensation options were granted or vested during the year ended 30 June 2016.
The following Compensation options expired during the year ended 30 June 2016.
Directors
T R Grammer
Grant Date
Exercise Price per Option
Expiry Date
25 July 2014
$0.10
30 June 2016
No. of
Options
2,000,000
30 June 2015
Details of Share based payments granted as compensation to Key Management
Personnel.
Directors
T R Grammer
Grant Date
Fair Value per Option
Exercise Price per Option
Expiry Date
First Exercise Date
Last Exercise Date
Vested No.
Vested %
25 July 2014
$0.0155
$0.10
30 June 2016
25July 2014
30 June 2016
2,000,000
100
No. of
Options
2,000,000
2,000,000
31
Great Western Exploration Limited
REMUNERATION REPORT (AUDITED) (continued)
Options granted as part of remuneration
30 June 2016
No options were granted as part of remuneration for the year ended 30 June 2016.
30 June 2015
Value of
Options
Granted
During the
Year
Value of
Options
Exercised
During the
Year
Value of
Options
Lapsed
During the
Year
Directors
T R Grammer
$
31,018
31,018
$
$
-
-
-
-
%
Remuneration
consisting of
Options for the
Year
45.13
For details on the valuation of options, including models and assumptions used, refer to
Note 19.
There were no alterations to the terms and conditions of options granted as remuneration
since their grant date.
32
Great Western Exploration Limited
REMUNERATION REPORT (AUDITED) (continued)
Option Holding of Key Management Personnel
30 June 2016
Balance
1 July 2015
Granted as
Remuneration
Options
Exercised/
Cancelled
Expired
Balance
30 June 2016
Exercisable
Not
Exercisable
Directors
K C Somes
J A Luckett
T R Grammer
C D Mathieson
-
3,000,000
2,000,000
1,000,000
6,000,000
-
-
-
-
-
30 June 2015
Balance
1 July 2014
Granted as
Remuneration
Options
Exercised/
Cancelled
Directors
K C Somes
J A Luckett
T R Grammer
C D Mathieson
-
3,000,000
-
1,000,000
4,000,000
-
-
2,000,000
-
2,000,000
-
-
-
-
-
-
-
-
-
-
-
(3,000,000)
(2,000,000)
(1,000,000)
(6,000,000)
-
-
-
-
-
-
-
-
-
-
Expired
Balance
30 June 2015
Exercisable
Not
Exercisable
-
-
-
-
-
-
3,000,000
2,000,000
1,000,000
6,000,000
-
3,000,000
2,000,000
1,000,000
6,000,000
-
-
-
-
-
-
-
-
-
-
33
Balance
1 July 2015
Granted as
Remuneration
On exercise of
Options
Net Change
Other
Balance
30 June 2016
Great Western Exploration Limited
REMUNERATION REPORT (AUDITED) (continued)
Shareholdings of Key Management Personnel
30 June 2016
Directors
K C Somes
J A Luckett
C D Mathieson
T R Grammer
8,366,972
8,538,333
14,933,496
-
31,838,801
6,022,600
14,245,000
3,285,000
-
23,552,6001
1. Shares issued in lieu of outstanding 30 June 2015 director fees
30 June 2015
Directors
K C Somes
J A Luckett
C D Mathieson
T R Grammer
Balance
1 July 2014
Granted as
Remuneration
On exercise of
Options
4,671,273
7,838,333
8,266,830
-
20,776,436
-
-
-
-
-
END OF REMUNERATION REPORT (AUDITED)
-
-
-
-
-
-
-
-
-
-
10,000,000
-
10,000,000
-
20,000,000
24,389,572
22,783,333
28,218,496
-
75,391,401
Net Change
Other
Balance
30 June 2015
3,695,699
700,000
6,666,666
-
11,062,365
8,366,972
8,538,333
14,933,496
-
31,838,801
34
Great Western Exploration Limited
Directors’ Report (continued)
This Report of Directors, incorporating the Remuneration Report, is signed in accordance
with a resolution of the Directors.
Dated this 27 day of September 2016
K C Somes
Chairman
35
Great Western Exploration Limited
Corporate Governance Statement
For the year ended 30 June 2016
The Board of Directors of Great Western Exploration Limited is responsible for
Corporate Governance of the company. The Board guides and monitors the business
and affairs of the Company on behalf of the shareholders by whom they are elected and
to whom they are accountable.
Due to the size and nature of the Company’s activities, the Board as a whole is involved
in matters where larger Boards would ordinarily operate through sub-committees. Some
of the best practices recommended are not cost effective for adoption in a small company
environment.
The Board is committed to the standards of Corporate Governance as set out in the ASX
Corporate Governance Council’s Principles and Recommendations.
STRUCTURE OF THE BOARD
The skills, experience and expertise relevant to the position of Director held by each
director in office at the date of the Annual Report is set out in the Directors’ Report.
Directors of Great Western Exploration Limited are considered to be independent when
they are independent of management and free from any business or other relationship
that could materially interfere with or could reasonably be perceived to materially
interfere with the exercise of their unfettered and independent judgement.
The following directors were considered to be independent during the year:
Mr K C Somes
Mr C D Mathieson
MR T R Grammer
There are procedures in place to enable Directors to seek independent professional
advice, at the expense of the Company, on issues arising in the course of their duties as
Directors.
Set out below is the term in office held by each Director at the date of this report:
Mr K C Somes
Mr J A Luckett
Mr C D Mathieson
Mr T R Grammer
Non-executive Director
Managing Director
Non-executive Director
Non-executive Director
Appointed 11 October 2013
Appointed 22 January 2008
Appointed 9 December 2011
Appointed 25 July 2014
Nomination Committee
The function of establishing the criteria for Board membership, nomination of Directors
and review of Board membership, is performed by the Board as a whole, until such time
as the Company is of a sufficient size to warrant the establishment of a separate
Nomination Committee.
The composition of the Board is determined ensuring that there is an appropriate
combination of corporate and operational expertise and qualifications.
36
Great Western Exploration Limited
Corporate Governance Statement (continued)
For the year ended 30 June 2016
Performance
An evaluation of Directors is conducted by the Board on an annual basis. The
Managing Director is responsible for the review of key executives.
Remuneration
The Board as a whole is responsible for determining and reviewing the arrangements for
Directors and Executive management. The Board assesses the appropriateness of the
nature and amount of emoluments of such Officers on an annual basis by reference to
market and industry conditions and taking into account the Company’s operational and
financial performance.
Details of remuneration received by Directors and executives are included in the
Remuneration Report contained within the Directors’ Report.
CODE OF CONDUCT
The Company has established its Code of Conduct to ensure that directors and senior
executives are provided with clear principles setting out the expectations of their
conduct.
It is expected that directors and senior executives will actively promote the highest
standards of ethics, honesty and integrity in carrying out their roles and responsibilities
for the Company.
In dealings with the Company’s suppliers, competitors, customers and other
organisations with which they have contact, they will exercise fairness and integrity, and
will observe the form and substance of the regulatory environment in which the
Company operates.
Directors and senior executives must, at all times, act in the interests of the Company
and will ensure compliance with the laws and regulations in relation to the jurisdictions
in which the Company operates.
Directors and senior executives have a role in ensuring compliance with this code of
conduct, and therefore should be vigilant and report any breach of this code of conduct.
For further information on the Company’s Code of Conduct refer to our website.
DIVERSITY POLICY
Diversity includes, but is not limited to, gender, age, ethnicity and cultural
background. The Company is committed to workplace diversity and recognises the
benefits arising from employee and board diversity including a broader pool of high
quality employees, improving employee retention, accessing different perspectives and
ideas and benefiting from all available talent.
The Board is responsible for developing measurable objectives and strategies to meet
the objectives and the monitoring of the progress of the objectives.
37
Great Western Exploration Limited
Corporate Governance Statement (continued)
For the year ended 30 June 2016
Due to the present scale of operations and number of staff the Company has not yet set
measurable objectives for achieving gender diversity. The Board will review progress
against any objectives identified on an annual basis.
Details of women employed within the Company are as follows:
No.
%
Women on the Board
Women in senior management roles
Women employees in the Company
TRADING POLICY
-
-
-
-
-
-
Under the Company’s Securities Trading Policy Directors and Key Management
Personnel must not trade in any securities of the Company at any time when they are in
possession of information which is not generally available to the market and, if it were
generally available to the market, would be likely to have a material effect on the price
or value of the Company’s securities.
Directors and Key Management Personnel are permitted to deal in the securities of the
Company throughout the year except during the following periods:
In the two weeks prior to, and 24 hours after the release of the Company’s Annual
Financial Report;
In the two weeks prior to, and 24 hours after the release of the Interim Financial Report
of the Company;
In the two weeks prior to, and 24 hours after the release of the Company’s Quarterly
Reports (together the Block out Period)
Any Director wishing to deal in the Company’s securities must obtain the prior written
approval of the Chairman or the Board before doing so.
If the Chairman wishes to deal in the Company’s securities the Chairman must obtain
the prior approval of the Board before doing so.
Any Key Management Personnel wishing to deal in the Company’s securities must
obtain the prior written approval of the Managing Director before doing so.
ASX Listing Rules require the Company to notify ASX within 5 business days after any
dealing in the securities of the Company
The Securities Trading Policy can be found on the company’s website.
AUDIT COMMITTEE
The Board has not established an Audit Committee.
The role of the Audit Committee in the establishment of effective internal control
framework to safeguard the Company’s assets, maintain proper accounting records and
ensure the reliability of financial information was performed by the Board as a whole
during the financial year.
38
Great Western Exploration Limited
Corporate Governance Statement (continued)
For the year ended 30 June 2016
The Board as a whole deals directly with and receives reports from the Company’s
external auditors in relation to the Annual financial reports and other statutory
requirements.
RISK MANAGEMENT
The Board as a whole carries out the role of Risk Management. The Board evaluates and
monitors areas of operational and financial risk.
The Board determines the Company’s risk profile and is responsible for overseeing and
approving risk management strategy and policies, internal compliance and internal
control. The effectiveness of controls is monitored and reviewed regularly.
The Chief Executive Officer and Chief Financial Officer, or equivalent, have provided a
written statement to the Board that in their view the Company’s financial report is
founded on a sound system of risk management and internal compliance and control
which implements the financial policies adopted by the Board and that the company’s
risk management and internal compliance and control system is operating effectively in
all material respects.
COMPLIANCE WITH DISCLOSURE REQUIREMENTS
The Company is committed to meeting its disclosure obligations and to the promotion
of investor confidence in its securities. It has in place written policies and procedures to
ensure compliance with ASX Listing Rule 3.1.
The Company will immediately notify the market by announcement to the ASX of any
information concerning the business of Great Western Exploration Limited that a
reasonable person would expect to have a material effect on the price or value of the
Company’s securities.
SHAREHOLDERS
The Board endeavours to ensure that shareholders are fully informed of all activities
affecting the Company. Information is conveyed to shareholders via the Annual Report,
Quarterly Reports and other announcements.
This
www.greatwesternexploration.com.au, and in hard copy upon request.
information
available
Company’s
the
on
is
website,
The Board encourages attendance and participation of shareholders at the Annual
General and other General Meetings of the Company.
The Company’s external auditor is requested to attend the Annual General Meeting and
be available to take questions about the conduct of the audit and the content of the
Auditors’ Report.
39
Great Western Exploration Limited
Corporate Governance Statement (continued)
For the year ended 30 June 2016
COMPLIANCE WITH BEST PRACTICE RECOMMENDATIONS
The Board sets out below its “if not why not” report in relation to those matters of
corporate governance where
the Company’s practices depart
from
the
Recommendations.
Recommendation
Great Western Exploration Limited
Current Practice
1.1
Companies should establish the
Satisfied.
functions reserved for the board and
those delegated to senior executives and
Board Charter is available at
disclose those functions.
www.greatwesternexploration.com.au
in the Corporate Governance Statement.
1.2
Companies should disclose the process
Satisfied.
for evaluating the performance of senior
executives.
Performance Evaluation Policy is
available at
www.greatwesternexploration.com.au
in the Corporate Governance Statement.
2.1
A majority of the board should be
Satisfied.
independent directors.
At present, due to the size and nature of
the Company’s operations, the Directors
believe the current structure and
makeup of the Board which provides an
appropriate combination of corporate
and operational expertise to be in the
best interests of shareholders. This
position is to be reviewed annually.
2.2
The chair should be an independent
Satisfied.
director.
40
Great Western Exploration Limited
Recommendation
Great Western Exploration Limited
Current Practice
Mr K C Somes is an independent
director and was appointed chair in
October 2013.
2.3
The roles of chair and Chief Executive
Satisfied.
Officer should not be exercised by the
same individual.
Refer 2.2 above, the role of Chair and
Chief Executive Officer are held by
different individuals.
2.4
The board should establish a
Not satisfied.
nomination committee.
The Board has not established a
Nomination Committee.
The Board considers that given the
current size, this function is efficiently
achieved with full Board participation,
until such time as the Company is of
sufficient size to warrant the
establishment of the Committee.
2.5
Companies should disclose the process
Satisfied.
for evaluating the performance of the
board, its committees and individual
Performance Evaluation Policy is
directors.
available at
www.greatwesternexploration.com.au
in the Corporate Governance Statement.
3.1
Companies should disclose a code of
Satisfied.
conduct and disclose the code or a
summary of the code as to:
The Code of conduct is available at
41
Great Western Exploration Limited
Recommendation
The practices necessary to maintain
Great Western Exploration Limited
Current Practice
www.greatwesternexploration.com.au
confidence in the company’s integrity
in the Corporate Governance Statement.
The practices necessary to take into
account their legal obligations and the
reasonable expectations of their
stakeholders
The responsibility and accountability of
individuals for reporting and
investigating reports of unethical
practices.
3.2
Companies should establish a policy
Satisfied.
concerning diversity and disclose the
policy or a summary of that policy. The
The Diversity Policy is available at
policy should include requirements for
www.greatwesternexploration.com.au
the board to establish measurable
in the Corporate Governance Statement
objectives for achieving gender diversity
for the board to assess annually both the
objectives and progress in achieving
them.
3.3
Companies should disclose in each
Not satisfied.
annual report the measurable objectives
for achieving gender diversity set by the
At present due to the Company’s
board in accordance with the diversity
present scale of operations and number
policy and progress towards them.
of staff it has not yet set measurable
objectives for achieving gender
diversity. The Board will review on an
annual basis progress against any
objectives identified.
3.4 Companies should disclose in each
Satisfied
annual report the proportion of women
employees in the whole organisation,
42
Great Western Exploration Limited
Recommendation
women in senior management and
women on the board.
Great Western Exploration Limited
Current Practice
4.1
The board should establish an audit
Not satisfied.
committee.
The Board has not established an Audit
Committee. The Board as a whole
carries out the role of the Audit
Committee due to the current size and
nature of the Company’s operations and
size of the Board.
4.2
The audit committee should be
Not satisfied.
structured so that it:
Consists only of non-executive directors
Refer to comment 4.1.
Consists of a majority of independent
directors
Is chaired by an independent chair, who
is not chair of the board. Has at least
three members.
4.3
The audit committee should have a
Not satisfied.
formal charter.
Refer to comment 4.1.
5.1
Companies should establish written
Satisfied.
policies designed to ensure compliance
with ASX Listing Rule disclosure
Continuous disclosure policy is
requirements and to ensure
available at
accountability at senior executive level
www.greatwesternexploration.com.au
for that compliance and disclose those
in the Corporate Governance statement.
policies or a summary of those policies.
6.1
Satisfied.
43
Great Western Exploration Limited
Recommendation
Companies should design a
Great Western Exploration Limited
Current Practice
communications policy for promoting
Shareholders communication policy is
effective communication with
available at
shareholders and encouraging their
www.greatwesternexploration.com.au
participation at general meetings and
in the Corporate Governance statement.
disclose their policy or a summary of
their policy.
7.1
Companies should establish policies for
Satisfied.
the oversight and management of
material business risks and disclose a
Risk management program is available
summary of those policies.
at
www.greatwesternexploration.com.au
in the Corporate Governance statement.
7.2
The board should require management
Satisfied.
to design and implement the risk
management and internal control
The management and implementation
system to manage the company’s
of risk management and internal control
material business risks and report to it
systems to manage the Company’s
on whether those risks are being
material business risks is routinely
managed effectively. The board should
considered by the Board.
disclose that management has reported
to it as to the effectiveness of the
company’s management of its material
business risks.
7.3
The board should disclose whether it
Satisfied.
has received assurance from the chief
executive officer (or equivalent) and the
The Board has received a section 295A
chief financial officer (or equivalent) that
declaration pursuant to the 2014
the declaration provided in accordance
financial year.
with section 295A of the corporations
Act is founded on a sound system of
44
Great Western Exploration Limited
Recommendation
risk management and internal control
and that the system is operating
effectively in all material respects in
relation to financial reporting risks.
Great Western Exploration Limited
Current Practice
8.1
The board should establish a
Not Satisfied.
remuneration committee.
The Board has not established a
remuneration committee.
The Board considers that given the
current size this function is efficiently
achieved with full Board participation,
until such time as the Company is of
sufficient size to warrant the
establishment of the committee.
8.2
Companies should clearly distinguish
The structure of Directors’
the structure of non-executive directors’
remuneration is disclosed in the
remuneration from that of executive
remuneration report of the annual
directors and senior executives.
report.
For further information on the corporate governance policies adopted by Great
Western Exploration Limited refer to our website:
www.greatwesternexploration.com.au
45
Great Western Exploration Limited
Consolidated Statement of Financial Position
As at 30 June 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other financial assets
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Property, plant and equipment
Mineral exploration expenditure
Other financial assets
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
8
9
10
11
12
10
13
2016
$
39,184
12,773
400
52,357
2015
$
131,139
12,611
400
144,150
6,950
3,611,559
-
3,618,509
17,880
5,522,609
-
5,540,489
3,670,866
5,684,639
530,334
530,334
503,244
503,244
530,334
503,244
3,140,532
5,181,395
14
15
20,244,437
-
(17,103,905)
19,496,573
1,682,618
(15,997,796)
3,140,532
5,181,395
The above statement of financial position should be read in conjunction with the
accompanying notes.
46
Great Western Exploration Limited
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For The Year Ended 30 June 2016
Note
2016
$
2015
$
Interest received
Net (loss) / gain on revaluation of financial assets
Other income
Gain on foreign exchange
Employee benefit expense
Administration expenses
Directors’ fees
Depreciation
Compliance and regulatory expenses
Mineral exploration written off
Impairment on property, plant and equipment
5
12
151
-
136,824
-
(142,458)
(250,805)
(150,000)
(10,930)
(43,790)
(2,327,719)
-
4,178
(600)
-
39,148
(476,965)
(350,690)
(119,435)
(19,906)
(75,033)
(578,997)
(46,290)
Loss before income tax
(2,788,727)
(1,624,590)
Income tax expense
6
-
-
Loss for the year
Other comprehensive income
(2,788,727)
(1,624,590)
Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translating foreign
controlled entities
Total comprehensive income for the year
-
(43,765)
(2,788,727)
(1,668,355)
Basic loss per share (cents per share)
7
(1.24)
(0.965)
The above statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
47
Great Western Exploration Limited
Consolidated Statement of Changes in Equity
For The Year Ended 30 June 2016
Issued Capital
Share
Option Reserve
30 June 2016
$
$
Balance At 1 July 2015
Loss for the year
Foreign exchange
differences
Total comprehensive
income for the year
Transfer of expired options
Share based payments
Shares issued during the
year
Transaction costs
Balance at 30 June 2016
19,496,573
-
1,682,618
-
-
-
-
-
-
235,526
515,000
(1,682,618)
-
-
(2,662)
20,244,437
-
-
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
Total
Equity
$
$
(15,997,796)
(2,788,727)
5,181,395
(2,788,727)
-
-
(2,788,727)
(2,788,727)
1,682,618
-
-
-
235,526
515,000
-
(17,103,905)
(2,662)
3,140,532
-
-
-
-
-
-
-
-
-
Issued Capital
Share
Option Reserve
30 June 2015
$
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
Total
Equity
$
$
Balance At 1 July 2014
Loss for the year
Foreign exchange differences
Total comprehensive income
for the year
Transfer of expired options
Share based payments
Shares issued during the year
Transaction costs
Balance at 30 June 2015
-
-
1,109,262
(54,508)
19,496,573
18,441,819
-
1,784,858
-
43,765
-
(14,506,464)
(1,624,590)
5,763,978
(1,624,590)
-
-
-
-
(133,258)
31,018
-
-
1,682,618
(43,765)
-
(43,765)
(43,765)
(1,624,590)
(1,668,355)
-
-
-
-
-
133,258
-
-
-
(15,997,796)
-
31,018
1,109,262
(54,508)
5,181,395
The above statement of changes in equity should be read in conjunction with the
accompanying notes.
48
Great Western Exploration Limited
Consolidated Statement of Cash Flows
For The Year Ended 30 June 2016
Cash flows from operating activities
Cash payments to suppliers and employees
Payments for exploration and evaluation
expenditure
Interest received
Interest and other finance costs paid
Net cash used in operating activities
Cash flows from investing activities
Payments for acquisition of mineral tenements
Payments for property, plant and equipment
Refund of security deposits
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares and options
Share issue costs
Net cash provided by financing activities
Note
2016
$
2015
$
(325,752)
(283,423)
(500,136)
(735,778)
9,686
(4,804)
(604,293)
4,178
-
(1,231,736)
16
-
-
-
-
-
(3,336)
-
(3,336)
515,000
(2,662)
512,338
1,109,262
(54,508)
1,054,754
Net increase in cash held
(91,955)
(180,318)
Cash at the beginning of the financial year
131,139
311,457
Cash at the end of the financial year
8
39,184
131,139
The above statement of cash flows should be read in conjunction with the
accompanying notes.
49
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016
These financial statements and notes represent those of Great Western Exploration
Limited (‘the Company’) and its controlled entities (‘the Group’).
The financial statements were authorised for issue on 30 September 2016 by the Directors
of the Company.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. The Group is a
for-profit entity for financial reporting purposes under Australian Accounting
Standards.
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 stated otherwise.
Except for cash flow information, 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.
a) Going Concern
The financial report has been prepared on the going concern basis, which
contemplates the continuity of normal business activity, and the realisation of
assets and the settlement of liabilities in the ordinary course of business.
The Group incurred a loss for the year of $2,788,727 (2015: $1,624,590). During the
year the company raised $512,338 after issue costs, by the way of share placements
in December 2015 and January 2016. The Group has a working capital deficit of
$477,977 at 30 June 2016 (30 June 2015: Deficit $359,094). The Group has ongoing
expenditures in respect of administration costs, the proposed Vanguard
Exploration Limited acquisition and exploration and evaluation expenditure on
its Australian exploration projects.
50
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
On 2 August 2016, the Company raised $350,100 after issue costs, from the
placement of shares to sophisticated investors. The Company has also announced
in April 2016, that as a condition to the proposed Vanguard Exploration Limited
acquisition, that it will place up to 100,000,000 shares at an issue price of no less
than $0.01, to raise at least $1,000,000.
The directors have prepared a cash flow forecast, which indicates that the Group
will have sufficient cash flows to meet all commitments (including those at Note
22) and working capital requirements for the 12 month period from the date of
signing this financial report.
The Directors believe that at the date of signing of the financial statements there
are reasonable grounds to believe that, having regard to the matters set out above,
the Group will be able to raise sufficient additional funds to meet its obligations
as and when they fall due and continue to proceed with the Group’s objectives
beyond the currently committed expenditure for the 12-month period from the
date of signing this financial report. In arriving at this conclusion, the Directors
are comfortable that, as and when required, they will be able to raise equity to
provide sufficient working capital, and the directors have resolved to not call on
outstanding amounts from the company until the company is in a financial
position to repay these amounts.
Should the Directors not achieve the matters as set out above, there is material
uncertainty whether the Group will continue as a going concern and therefore
whether they will realise their assets and extinguish their liabilities in the normal
course of business and at the amounts stated in the financial report.
The financials do not include any adjustments relating to the recoverability and
classification of recorded asset amounts and classification of liabilities that might
be necessary, should the Group not continue as a going concern and meet its debts
as and when they fall due.
b) Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results
of entities controlled by Great Western Exploration Limited at the end of the
reporting period. A controlled entity is any entity over which Great Western
Exploration Limited has the ability and right to govern the financial and operating
policies so as to obtain benefits from the entity’s activities.
51
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Where controlled entities have entered or left the Group during the year, the
financial performance of those entities is included only for the period of the year
that they were controlled. A list of controlled entities is contained in Note 21 to
the financial statements.
In preparing the consolidated financial statements, all intragroup balances and
transactions between entities in the consolidated group have been eliminated in
full on consolidation.
the consolidated statement of
Non-controlling interests, being the equity in a subsidiary not attributable,
directly or indirectly, to a parent, are reported separately within the equity section
of
financial position and statement of
comprehensive income. The non-controlling interests in the net assets comprise
their interests at the date of the original business combination and their share of
changes in equity since that date.
Business combinations
Business combinations occur where an acquirer obtains control over one or more
businesses.
A business combination is accounted for by applying the acquisition method,
unless it is a combination involving entities or businesses under common control.
The business combination will be accounted for from the date that control is
attained, whereby the fair value of the identifiable assets acquired and liabilities
(including contingent liabilities) assumed is recognised (subject to certain limited
exemptions).
When measuring the consideration transferred in the business combination, any
asset or liability resulting from a contingent consideration arrangement is also
included. Subsequent to initial recognition, contingent consideration classified as
equity is not remeasured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or liability is remeasured
in each reporting period to fair value, recognising any change to fair value in
profit or loss, unless the change in value can be identified as existing at acquisition
date.
All transaction costs incurred in relation to business combinations are expensed
to the Statement of Profit or Loss and Other Comprehensive income.
52
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The acquisition of a business may result in the recognition of goodwill or a gain
from a bargain purchase.
Goodwill
The consideration transferred;
(i)
(ii) Any non-controlling interest, and
(iii) The acquisition date fair value of any previously held equity interest over
the acquisition date fair value of net identifiable assets acquired.
The acquisition date fair value of the consideration transferred for a business
combination plus the acquisition date fair value of any previously held equity
interest shall form the cost of the investment in the separate financial statements.
Fair value uplifts in the value of pre-existing equity holdings are taken to the
statement of comprehensive income. Where changes in the value of such equity
holdings had previously been recognised in other comprehensive income, such
amounts are recycled to profit or loss.
The amount of goodwill recognised on acquisition of each subsidiary in which the
Company holds less than a 100% interest will depend on the method adopted in
measuring the non-controlling interest. The Company can elect in most
circumstances to measure the non-controlling interest in the acquire either at fair
value (full goodwill method) or at the non-controlling interest’s proportionate
share of the subsidiary’s identifiable net assets (proportionate interest method).
In such circumstances, the Company determines which method to adopt for each
acquisition and this is stated in the respective notes to these financial statements
disclosing the business combination.
Under the full goodwill method, the vair value of the non-controlling interests is
determined using valuation techniques which make the maximum use of market
information where available. Under this method, goodwill attributable to the
non-controlling interests is recognised in the consolidated financial statements.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill
on acquisition of associates is included in investments in associates.
Goodwill is tested for impairment annually and is allocated to the Company’s
cash-generating units or groups of cash-generating units, representing the lowest
level at which goodwill is monitored not larger than an operating
53
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
segment. Gains and losses on the disposal of an entity include the carrying
amount of goodwill related to the entity disposed of.
c) Application of New and Revised Accounting Standards
New, revised or amending Accounting Standards and Interpretations adopted
The group has adopted all of the new, revised or amending Accounting
Standards and Interpretations issued by the Australian Accounting Standards
Board ('AASB') that are mandatory for the current reporting period. The
adoption of these Accounting Standards and Interpretations did not have any
significant impact on the financial performance or position of the group during
the financial year.
Any new, revised or amending Accounting Standards or Interpretations that are
not yet mandatory have not been early adopted.
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 group for the annual reporting period ended 30 June 2016. The group's
assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the group, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1
January 2018. The standard replaces all previous versions of AASB 9 and
completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models
for financial assets. A financial asset shall be measured at amortised cost, if it is
held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and
interest. All other financial instrument assets are to be classified and measured
at fair value through profit or loss unless the entity makes an irrevocable
election on initial recognition to present gains and losses on equity instruments
(that are not held-for-trading) in other comprehensive income ('OCI'). For
financial liabilities, the standard requires the portion of the change in fair value
that relates to the entity's own credit risk to be presented in OCI (unless it would
create an accounting mismatch). New simpler hedge accounting requirements
are intended to more closely align the accounting treatment with the risk
54
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
management activities of the entity. New impairment requirements will use an
'expected credit loss' ('ECL') model to recognise an allowance. Impairment will
be measured under a 12-month ECL method unless the credit risk on a financial
instrument has increased significantly since initial recognition in which case the
lifetime ECL method is adopted. The standard introduces additional new
disclosures. The group will adopt this standard from 1 July 2018 but the impact
of its adoption is yet to be assessed by the group.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1
January 2018. The standard provides a single standard for revenue recognition.
The core principle of the standard is that an entity will recognise revenue to
depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. The standard will require: contracts (either written,
verbal or implied) to be identified, together with the separate performance
obligations within the contract; determine the transaction price, adjusted for the
time value of money excluding credit risk; allocation of the transaction price to
the separate performance obligations on a basis of relative stand-alone selling
price of each distinct good or service, or estimation approach if no distinct
observable prices exist; and recognition of revenue when each performance
obligation is satisfied. Credit risk will be presented separately as an expense
rather than adjusted to revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods. For services, the
performance obligation is satisfied when the service has been provided, typically
for promises to transfer services to customers. For performance obligations
satisfied over time, an entity would select an appropriate measure of progress to
determine how much revenue should be recognised as the performance
obligation is satisfied. Contracts with customers will be presented in an entity's
statement of financial position as a contract liability, a contract asset, or a
receivable, depending on the relationship between the entity's performance and
the customer's payment. Sufficient quantitative and qualitative disclosure is
required to enable users to understand the contracts with customers; the
significant judgements made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a
customer. The group will adopt this standard from 1 July 2018 but the impact of
its adoption is yet to be assessed by the group.
55
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1
January 2019. The standard replaces AASB 117 ‘Leases’ and for lessees will
eliminate the classifications of operating leases and finance leases. Subject to
exceptions, a ‘right-of-use’ asset will be capitalised in the statement of financial
position, measured as the present value of the unavoidable future lease
payments to be made over the lease term. The exceptions relate to short-term
leases of 12 months or less and leases of low-value assets (such as personal
computers and small office furniture) where an accounting policy choice exists
whereby either a ‘right-of-use’ asset is recognised or lease payments are
expensed to profit or loss as incurred. A liability corresponding to the
capitalised lease will also be recognised, adjusted for lease prepayments, lease
incentives received, initial direct costs incurred and an estimate of any future
restoration, removal or dismantling costs. Straight-line operating lease expense
recognition will be replaced with a depreciation charge for the leased asset
(included in operating costs) and an interest expense on the recognised lease
liability (included in finance costs). In the earlier periods of the lease, the
expenses associated with the lease under AASB 16 will be higher when
compared to lease expenses under AASB 117. However EBITDA (Earnings
Before Interest, Tax, Depreciation and Amortisation) results will be improved as
the operating expense is replaced by interest expense and depreciation in profit
or loss under AASB 16. For classification within the statement of cash flows, the
lease payments will be separated into both a principal (financing activities) and
interest (either operating or financing activities) component. For lessor
accounting, the standard does not substantially change how a lessor accounts for
leases. The group will adopt this standard from 1 July 2019 but the impact of its
adoption is yet to be assessed by the group.
d) Cash and Cash Equivalents
Cash and cash equivalents in the statement of financial position comprise cash at
bank and in hand and short-term deposits with an original maturity of six months
or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
e) Trade and Other Receivables
Trade receivables, which generally have 30 day terms, are recognised initially at
fair value and subsequently measured at amortised cost using the effective
interest method, less an allowance for impairment. Collectability of trade
receivables is reviewed on an ongoing basis. Debts that are known to be
56
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
uncollectible are written off when identified. An impairment provision is
recognised when there is objective evidence that the Company will not be able to
collect the receivable.
f) Investments and Other Financial Assets
Investments and financial assets in the scope of AASB 139 Financial Instruments:
Recognition and Measurement are categorised as either financial assets at fair value
through profit or loss, loans and receivables, held-to-maturity investments, or
available-for-sale financial assets.
When financial assets are recognised initially, they are measured at fair value,
plus, in the case of assets not at fair value through profit or loss, directly
attributable transaction costs.
All regular way purchases and sales of financial assets are recognised on the trade
date i.e. the date that the Company commits to purchase the asset. Regular way
purchases or sales are purchases or sales of financial assets under contracts that
require delivery of the assets within the year established generally by regulation
or convention in the market place. Financial assets are derecognised when the
right to receive cash flows from the financial assets have expired or been
transferred.
(i)
Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category
‘financial assets at fair value through profit or loss’. Financial assets are classified
as held for trading if they are acquired for the purpose of selling in the near term
with the intention of making a profit. Derivatives are also classified as held for
trading unless they are designated as effective hedging instruments. Gains or
losses on investments held for trading are recognised in the profit or loss and the
related assets are classified as current assets in the Statement of Financial Position.
(ii)
Loans and receivables
Loans and receivables including loan notes and loans to key management
personnel are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Such assets are carried at
amortised cost using the effective interest method. Gains and losses are
recognised in profit or loss when the loans and receivables are derecognised or
57
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
impaired. These are included in current assets except for those maturities greater
than 12 months after balance date, which are classified as non-current.
(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 Group’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, except for those
which 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 Investments
Available-for-sale investments are those non-derivative financial assets that are
designated as available-for-sale or are not classified as any of the three preceding
categories. After initial recognition available-for sale investments are measured
at fair value with gains or losses being recognised as a separate component of
equity until the investment is derecognised or until the investment is determined
to be impaired, at which time the cumulative gain or loss previously reported in
equity is recognised in profit or loss.
The fair values of investments that are actively traded in organised financial
markets are determined by reference to quoted market bid prices at the close of
business on the balance sheet date. Investments with no active market, and whose
fair values cannot be reliably measured, shall be measured at cost.
At each reporting date, 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 the Statement of Comprehensive Income.
58
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
g) Property, Plant and Equipment
Plant and equipment is stated at historical cost less accumulated depreciation
and any accumulated impairment losses.
Depreciation is calculated on a straight-line basis over the estimated useful life of
the assets as follows:
Plant and Equipment – over 6 to 15 years
Motor Vehicles – over 4 years
Computer Equipment – over 3 years
The assets’ residual values, useful lives and amortisation methods are reviewed,
and adjusted if appropriate, at each financial year end.
An item of property, plant and equipment is derecognised upon disposal or when
no further future economic benefits are expected from its use or disposal.
Any gain or loss arising on de-recognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is
included in profit or loss in the year the asset is derecognised.
h) Exploration and Evaluation Expenditure
Exploration and evaluation costs are capitalised as exploration and evaluation
assets on a project by project basis pending determination of the technical
feasibility and commercial viability of the project. The capitalised costs are
presented as either tangible or intangible exploration and evaluation assets
according to the nature of the assets acquired.
When a licence is relinquished or a project abandoned, the related costs are
recognised in the Statement of Comprehensive Income immediately.
Exploration and evaluation assets shall be assessed for impairment when facts and
circumstances suggest that the carrying amount of an exploration and evaluation
asset may exceed its recoverable amount. When facts and circumstances suggest
that the carrying amount exceeds the recoverable amount an impairment loss is
recognised in the Statement of Comprehensive Income.
59
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
i) Interests in Joint Ventures
The Company’s shares of the assets, liabilities, revenue and expenses of jointly
controlled operations have been included in the appropriate line items of the
consolidated financial statements.
j) Impairment of Assets
Assets are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount exceeds its recoverable amount. An impairment
loss is recognised for the amount by which the asset’s carrying amount exceeds it
recoverable amount. Recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. For the purposes of assessing impairment, assets are
Group at the lowest levels for which there are separately identifiable cash inflows
that are largely independent of the cash inflows from other assets or Group of
assets (cash –generating units). Non-financial assets other than goodwill that
suffered an impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the impairment may
have reversed.
k) Trade and other Payables
Trade and other payables are carried at amortised cost; due to their short term
nature they are not discounted. They represent liabilities for goods and services
provided to the Company prior to the end of the financial year that are unpaid
and arise when the Company becomes obliged to make future payments in respect
of the purchase of these goods and services. The amounts are unsecured and are
usually paid within 30 days of recognition.
l) Provisions and Employee Leave Benefits
Provisions are recognised when the Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
When the Company expects some or all of the provision to be reimbursed, for
example under an insurance contract, the reimbursement is recognised as a
separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the Statement of Comprehensive Income
net of any reimbursement.
60
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Provisions are measured at the present value of management’s best estimate of
the expenditure required to settle the present obligation at the balance sheet date.
If the effect of the time value of money is material, provisions are discounted using
a current pre-tax rate that reflects the time value of money and the risks specific
to the liability. The increase in the provision resulting from the passage of time is
recognised in finance costs.
Employee Leave Benefits
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave
and accumulating sick leave expected to be settled within 12 months of the
reporting date are recognised in respect of employees’ services up to the reporting
date. They are measured at the amounts expected to be paid when the liabilities
are settled. Expenses for non-accumulating sick leave are recognised when the
leave is taken and are measured at the rates paid or payable.
(ii) Long service leave
The liability for long service leave is recognised and measured as the present level
of expected future payments to be made in respect of services provided by
employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of
employee departures, and periods of service. Expected future payments are
discounted using market yields at the reporting date on national government
bonds with terms to maturity and currencies that match, as closely as possible, the
estimated future cash outflows.
m) Share Based Payment Transactions
(i) Equity settled transaction:
The Company provides benefits to its employees (including key management
personnel) in the form of share-based payments, whereby employees render
services in exchange for shares or rights over shares (equity-settled transactions).
The Company has in place the Great Western Exploration Limited Employee
Share Option Plan to provide benefits to directors and senior executives.
61
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The cost of these equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments at the date at which they are
granted. The fair value is determined by an external valuer using a binomial
model.
In valuing equity-settled transactions, no account is taken of any vesting
conditions other than conditions linked to price of the shares of the Company
(market conditions) if applicable.
The cost of equity-settled transactions
is recognised, together with a
corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled (the vesting period), ending on the date on
which the relevant employees become fully entitled to the award (the vesting
date).
At each subsequent reporting date until vesting the cumulative charge to the
Statement of Comprehensive Income is the produce of:
(i) the grant date fair value of the award;
(ii) the current best estimate of the number of awards that will vest, taking into
account such factors as the likelihood of employee turnover during the vesting
period and the likelihood of non-market performance conditions being met;
and
(iii)
the expired portion of the vesting period.
The charge to the Statement of Comprehensive Income for the year is the
cumulative amount as calculated above less the amounts already charged in
previous years. There is a corresponding credit to equity.
Until an award has vested, any amounts recorded are contingent and will be
adjusted if more or fewer awards vest than were originally anticipated to do
so. Any award subject to a market condition is considered to vest irrespective
of whether or not that market condition is fulfilled, provided that all other
conditions are satisfied.
If the terms of an equity-settled award are modified, as a minimum an expense
is recognised as if the terms had not been modified. An additional expense is
recognised for any modification that increases the total fair value of the share
based payment arrangement, or is otherwise beneficial to the employee, as
measured at the date of modification.
62
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
If an equity-settled award is cancelled, it is treated as if it had vested on the
date of cancellation, and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for the
cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional
share dilution in the computation of diluted earnings per share.
n) 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, net of tax,
from the proceeds.
o) Revenue Recognition
Revenue is recognised and measured at the fair value of the consideration
received or receivable to the extent it is probable that the economic benefits will
flow to the Company and the revenue can be reliably measured. The following
specific recognition criteria must also be met before revenue is recognised.
(i)
Interest Income
Revenue is recognised as interest accrues using the effective interest method. This
is a method of calculating the amortised cost of a financial asset and allocating the
interest income over the relevant year using the effective interest rate, which is the
rate that exactly discounts estimated future cash receipts through the expected life
of the financial asset to the net carrying amount of the financial asset.
p) Income Tax and other Taxes
Current tax assets and liabilities for the current and prior years are measured at
the amount expected to be recovered from or paid to the taxation authorities based
on the current year’s taxable income. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted by the balance
sheet date.
63
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Deferred income tax is provided on all temporary differences at the balance sheet
date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences
except:
o When the deferred income tax liability arises from the initial recognition of
goodwill or of an asset or liability in the transaction that is not a business
combination and that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
o when the taxable temporary difference is associated with investments in
subsidiaries, associates or interests in joint ventures, and the timing of the
reversal of the temporary difference can be controlled and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax credits and unused tax losses, to the
extent that it is probable that taxable profit will be available against which the
deductible temporary differences and the carry-forward of unused tax credits and
unused tax losses can be utilised, except:
o when the deferred income tax asset relating to the deductible temporary
difference arises from the initial recognition of an asset or liability in a
transaction that is not
o a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; or
o when the deductible temporary difference is associated with investments
in subsidiaries, associates or interests in joint ventures, in which case a
deferred tax asset is only recognised to the extent that it is probable that
the temporary difference will reverse in the foreseeable future and taxable
profit will be available against which the temporary difference can be
utilised.
The carrying amount of deferred income tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred income tax asset
to be utilised.
64
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Unrecognised deferred income tax assets are reassessed at each balance sheet date
and are recognised to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are
expected to apply to the year when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted
at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset only if a legally
enforceable right exists to set off current tax assets against current tax liabilities
and the deferred tax assets and liabilities relate to the same taxable entity and the
same taxation authority.
Other Taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
when the GST incurred on a purchase of goods and services is not recoverable
from the taxation authority, in which case the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the
GST component of cash flows arising from investing and financing activities,
which is recoverable from, or payable to, the taxation authority is classified as part
of operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
q) Earnings 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.
65
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Diluted earnings per share is calculated as net profit attributable to members of
the parent, adjusted for:
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential
ordinary shares; and
other non-discretionary changes in revenues or expenses during the year 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.
r) Fair Value of Assets and Liabilities
The Company measures some of its assets and liabilities at fair value on either a
recurring or non-recurring basis, depending on the requirements of the applicable
Accounting Standard.
Fair value is the price the Company would receive to sell an asset or would have
to pay to transfer a liability in an orderly (i.e. unforced) transaction between
independent, knowledgeable and willing market participants at the measurement
date.
As fair value is a market-based measure, the closest equivalent observable market
pricing information is used to determine fair value. Adjustments to market values
may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are
determined using one or more valuation techniques. These valuation techniques
maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal
market for the asset or liability (i.e. the market with the greatest volume and level
of activity for the asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (i.e.
the market that maximises the receipts from the sale of the asset or minimises the
payments made to transfer the liability, after taking into account transaction costs
and transport costs).
66
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For non-financial assets, the fair value measurement also takes into account a
market participant's ability to use the asset in its highest and best use or to sell it
to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding
those related to share-based payment arrangements) may be valued, where there
is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such
instruments are held as assets. Where this information is not available, other
valuation techniques are adopted and, where significant, are detailed in the
respective note to the financial statements.
Valuation techniques
In the absence of an active market for an identical asset or liability, the Company
selects and uses one or more valuation techniques to measure the fair value of the
asset or liability, The Company selects a valuation technique that is appropriate
in the circumstances and for which sufficient data is available to measure fair
value. The availability of sufficient and relevant data primarily depends on the
specific characteristics of the asset or liability being measured. The valuation
techniques selected by the Company are consistent with one or more of the
following valuation approaches:
Market approach: valuation techniques that use prices and other relevant
information generated by market transactions for identical or similar assets or
liabilities.
Income approach: valuation techniques that convert estimated future cash flows
or income and expenses into a single discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of
an asset at its current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers
and sellers would use when pricing the asset or liability, including assumptions
about risks. When selecting a valuation technique, the Company gives priority to
those techniques that maximise the use of observable inputs and minimise the use
of unobservable inputs. Inputs that are developed using market data (such as
publicly available information on actual transactions) and reflect the assumptions
that buyers and sellers would generally use when
67
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
pricing the asset or liability are considered observable, whereas inputs for which
market data is not available and therefore are developed using the best
information available about such assumptions are considered unobservable.
Fair value hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value
hierarchy, which categorises fair value measurements into one of three possible
levels based on the lowest level that an input that is significant to the
measurement can be categorised into as follows:
Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date.
Measurements based on inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly or indirectly.
Level 2
Measurements based on inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly or indirectly
Level 3
Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are
determined using one or more valuation techniques. These valuation techniques
maximise, to the extent possible, the use of observable market data. If all
significant inputs required to measure fair value are observable, the asset or
liability is included in Level 2. If one or more significant inputs are not based on
observable market data, the asset or liability is included in Level 3.
The Company would change the categorisation within the fair value hierarchy
only in the following circumstances:
(i) if a market that was previously considered active (Level 1) became inactive
(Level 2 or Level 3) or vice versa; or
(ii) if significant inputs that were previously unobservable (Level 3) became
observable (Level 2) or vice versa.
68
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
When a change in the categorisation occurs, the Company recognises transfers
between levels of the fair value hierarchy (i.e. transfers into and out of each level
of the fair value hierarchy) on the date the event or change in circumstances
occurred.
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and assumptions are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. Equally, the Company continually
employs judgement in the application of its accounting policies.
Management has identified the following critical accounting policies for which
significant judgements, estimates and assumptions are made. Actual results may
differ from these estimates under different assumptions and conditions. Those which
may materially affect the carrying amounts of assets and liabilities reported in future
years are discussed below.
(a) Significant accounting estimates and judgements
(i) Impairment of non-financial assets
The Company assesses impairment on all assets at each reporting date by evaluating
conditions specific to the Company and to the particular asset that may lead to
impairment. These include technology and economic environments. If an
impairment trigger exists, the recoverable amount of the asset is determined. This
involves value-in-use calculations, which incorporate a number of key estimates and
assumptions.
(ii) Share-based payment transactions
The Company measures the cost of equity settled transactions with directors and
employees by reference to the fair value of the equity instruments at the date at which
they are granted. Equity settled transactions comprise only options. Their fair value
is determined using the Binomial Options Pricing model. The accounting estimates
and assumptions relating to equity settled share-based payments would have no
impact on the carrying amounts of assets and liabilities within the next annual
reporting year but may impact expenses and equity.
69
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (continued)
(iii)Estimation of useful lives of assets
The estimation of useful lives of assets has been based on historical experience.
Adjustments to useful lives are made when considered necessary. Depreciation and
amortisation charges as well as estimated useful lives are included in Note 1(g).
(iv) Exploration and evaluation costs
Acquisition, exploration and evaluation expenditure incurred is accumulated in
respect of each identifiable area of interest. These costs are carried forward in respect
of an area that has not at balance sheet 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 relating to, the area of interest
are continuing.
(v) Environmental issues
Balances disclosed in the financial statements and notes thereto are not adjusted for
any pending or enacted environmental legislation, and the Directors understanding
thereof. At the current stage of the Company’s development and its current
environmental impact, the Directors believe such treatment is reasonable and
appropriate.
(vi) Taxation
Balances disclosed in the financial statements and the notes thereto, related to
taxation, and are based on the best estimates of Directors. These estimates take into
account both the financial performance and position of the Company as they pertain
to current income taxation legislation, and the Directors understanding thereof. No
adjustment has been made for pending or future taxation legislation. The current
income tax position represents that Directors best estimate, pending an assessment
by the Australian Taxation Office.
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company’s financial instruments consist mainly of deposits with banks, accounts
receivable and payable.
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:
70
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Financial Assets
Cash and cash equivalents
Receivables
Financial assets at fair value through profit or loss
- Held for trading
Financial Liabilities
Trade and payables
Financial Risk Management Policies
Note
8
9
10
13
2016
$
39,184
12,773
400
52,357
2015
$
131,139
12,611
400
144,150
530,334
530,334
503,244
503,244
The Company attempts to mitigate risks that may affect its future performance through
a systematic process of identifying, assessing, reporting and managing risks of corporate
significance.
The management and the Board discuss the principal risks of our businesses, particularly
during the strategic planning and budgeting processes. The board sets policies for the
implementation of systems to manage and monitor identifiable risks. The Board Risk
Committee is responsible for the oversight of risk management.
The Company’s principal financial instruments comprise cash and short term deposits.
The Company has various other financial assets and liabilities such as trade receivables
and trade payables, which arise directly from its operations.
The main purpose of these financial assets and liabilities is to raise finance for the
Company’s operations. It is, and has been throughout the entire year under review, the
Company’s policy that no trading in financial instruments shall be undertaken.
The main risks arising from the Group’s financial instruments are cash flow interest rate
risk. Other minor risks are either summarised below or disclosed in Note 9 in the case
of credit risk and Note 14 in the case of capital risk management. The Board reviews and
agrees policies for managing each of these risks.
71
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(a)
Credit Risk
The Company minimises credit risk by undertaking a review of its potential
customers’ financial position and the viability of the underlying project prior to
entering into material contracts.
Financial instruments other than receivables that potentially subject the Company
to concentrations of credit risk consist principally of cash deposits. The Company
places its cash deposits with high credit-quality financial institutions, being in
Australia only the major Australian (big four) banks. Cash holdings in other
countries are generally not significant. The Company’s cash deposits all mature
within twelve months and attract a rate of interest at normal short-term money
market rates.
The maximum amount of credit risk the Company considers it would be exposed
to would be $39,583 (2015: $131,539) being the total of its cash and cash
equivalents and financial assets.
(b)
Cash Flow Interest Rate Risk
The Company’s exposure to the risks of changes in market interest rates relates
primarily to the Company’s short term deposits with a floating interest rate. All
other financial assets and liabilities in the form of receivables and payables are
non-interest bearing. The Company does not engage in any hedging or derivative
transactions to manage interest rate risk.
72
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
The following table sets out the Company’s exposure to interest rate risk and the
effective weighted average interest rate for each class of these financial
instruments.
Floating Interest
Rate
Non-Interest
Bearing
Total Carrying
Amount
Note
2016
$
2015
$
2016
$
2015
$
2016
2015
8
9
Financial
Assets
Cash and cash
equivalents
Trade and
other
Receivables
Other
Financial
assets
Weighted
average
interest rate
39,184
131,139
-
-
39,184
131,139
-
-
-
-
12,773
12,611
12,773
12,611
400
400
400
400
2.03
2.45
The effect on profit and equity, after tax, if interest rates at that date had been 10%
higher or 10% lower with all other variables held constant as a sensitivity analysis.
Would be a +/- change to profit and equity of $3,918 (2015: $13,114).
A sensitivity of 10% has been selected as this is considered by management to be
reasonable in the current environment.
The Company constantly analyses its interest rate exposure to ensure the
appropriate mix of fixed and variable rates.
The Company has not entered into any hedging activities to cover interest rate
risk. In regard to its interest rate risk, the Company continuously analyses its
exposure. Within this analysis consideration is given to potential renewals of
existing positions, alternative investments and the mix of fixed and variable
interest rates.
73
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(c)
Price Risk
The Company is not exposed to equity securities price risk. There is no active
market for available for sale investments.
(d) Liquidity Risk
The Company’s objective is to match the terms of its funding sources to the terms
of the assets or operations being financed. The Company uses a combination of
trade payables and operating leases to provide its necessary debt funding.
The Company aims to hold sufficient reserves of cash or cash equivalents to help
manage the fluctuations in working capital requirements and provide the
flexibility for investment into long-term assets without the need to raise debt.
Contracted maturities of payables at balance date
Payable
- Less than 6 months
- 6 to 12 months
- 1 to 5 years
(e)
Commodity Price Risk
2016
$
530,334
-
-
530,334
2015
$
503,244
-
-
503,244
Due to the early stage of the Company’s operations its exposure is considered
minimal. Risk arises as its operations are involved in exploration and
development of mineral commodities, changes in the price of commodities for
which the Group is exploring and developing may result in changes to the
Company’s market price. The Company entity does not hedge any of its
exposures.
(f)
Foreign currency exchange rate
A risk arises when future commercial transactions and recognised assets and
liabilities are denominated in a currency other than the Company’s functional
currency. At present, the Company is not considered to be exposed to any
significant foreign currency risk.
74
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(g) Net fair values
The Company has no financial assets or liabilities where the carrying value
amount exceeds fair value at balance date. The directors consider that the carrying
amounts of financial assets and financial liabilities recognised in the consolidated
financial statements approximate their fair value.
The Company’s financial assets at fair value through profit or loss are listed
investments (Note 10) and are categorised as Level 1, meaning fair value is
determined from quoted prices in active markets for identical assets.
4. OPERATING SEGMENTS
Segment Information
Identification of reportable segments
The Company has identified its operating segments based on the internal reports that
are reviewed and used by the Board of Directors (chief operating decision makers) in
assessing performance and determining the allocation of resources.
The Company’s principal activities are mineral exploration and are managed primarily
on a project by project basis. Operating segments are therefore determined on the same
basis.
Reportable segments disclosed are based on aggregating operating segments where the
segments are considered to have similar economic characteristics.
Types of products and services by segment
The Company’s exploration projects consist of:
Nickel and Gold
Base metals
Basis of accounting for purposes of reporting by operating segments
Unless stated otherwise, all amounts reported to the Board of Directors as the chief
decision maker with respect to operating segments are determined in accordance with
accounting policies that are consistent to those adopted in the annual financial
statements of the Company.
75
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
4. OPERATING SEGMENTS (Continued)
Segment assets
Segment assets are clearly identifiable on the basis of their nature and physical location.
Unless indicated otherwise in the segment assets note, investments in financial assets,
deferred tax assets and intangible assets have not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence
of the liability and the operations of the segment. Segment liabilities include trade and
other payables and certain direct borrowings.
Unallocated items
Items of revenue, expense, assets and liabilities are not allocated to operating segments
if they are not considered part of the core operations of any segment.
76
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
4. OPERATING SEGMENTS (Continued)
(i)
Segment performance
30 June 2016
External sales
Total segment
revenue
Segment net
profit/(loss) before tax
Reconciliation of
segment result to net
profit/(loss) before
tax:
(i) Amount not
included in segment
result but reviewed
by the Board:
Other Revenue
Interest received
Gain on foreign
exchange
Net loss on
revaluation of
financial asset
Directors fees
Compliance
Depreciation
Other expenses
Net profit/(loss)
before tax from
continuing
operations
Doolgunna
Base Metals
Kazakhstan
Copper
Forrestania
Nickel &
Gold
Millrose
Nickel &
Gold
Other
Total
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
(9,297)
-
(2,314,201)
(1,915)
(54,232)
(2,379,645)
136,824
151
-
-
(150,000)
(43,790)
(10,930)
(341,337)
(2,788,727)
77
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
4. OPERATING SEGMENTS (Continued)
30 June 2015
External sales
Total segment
revenue
Segment net
profit/(loss) before tax
Reconciliation of
segment result to net
profit/(loss) before
tax:
(i) Amount not
included in segment
result but reviewed
by the Board:
Interest received
Gain on foreign
exchange
Net loss on
revaluation of
financial asset
Directors fees
Compliance
Depreciation
Other expenses
Net profit/(loss)
before tax from
continuing
operations
Doolgunna
Base Metals
Kazakhstan
Copper
Forrestania
Nickel &
Gold
Millrose
Nickel &
Gold
Other
Total
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
(218,568)
(101,765)
(9,130)
(294,036)
(57,263)
(680,762)
4,178
39,148
(600)
(119,435)
(75,033)
(14,817)
(777,269)
(1,624,590)
78
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
4. OPERATING SEGMENTS (Continued)
(ii) Segment assets
Doolgunna
Base
Metals
$
Kazakhstan
Copper
$
Forrestania
Nickel &
Gold
$
Xstrata Base
Metals
$
Millrose
Gold
$
Other
Total
$
$
30 June 2016
Segment assets
2,950,425
351,984
351,984
Segment asset
increases for the year:
Capital
expenditure
Reconciliation of
segment assets to total
assets:
Unallocated assets:
Cash and cash
equivalents
Receivables
Other assets
Property plant
and equipment
Other financial
assets
Total assets from
continuing operations
-
-
-
-
-
-
661,134
51,166
51,166
-
-
-
-
3,611,559
403,150
-
403,150
39,184
12,773
-
6,950
400
3,670,866
79
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
4. OPERATING SEGMENTS (Continued)
Doolgunna
Base
Metals
$
Kazakhstan
Copper
$
Forrestania
Nickel &
Gold
$
Xstrata Base
Metals
$
Millrose
Gold
$
Other
Total
$
$
30 June 2015
Segment assets
2,598,440
-
2,314,201
609,968
-
-
5,522,609
Segment asset
increases for the year:
Capital
expenditure
Reconciliation of
segment assets to total
assets:
Unallocated assets:
Cash and cash
equivalents
Receivables
Other assets
Property plant
and equipment
Other financial
assets
Total assets from
continuing operations
192,914
192,914
-
-
-
-
287,083
25,914
53,842
559,753
287,083
25,914
53,842
559,753
131,139
12,611
-
17,880
400
5,684,639
80
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
4. OPERATING SEGMENTS (Continued)
(ii)
(iii)
Segment liabilities
30 June 2016
Segment liabilities
Reconciliation of
segment liabilities to
total liabilities:
Unallocated liabilities:
Other liabilities
Total liabilities from
continuing operations
30 June 2015
Segment liabilities
Reconciliation of
segment liabilities to
total liabilities:
Unallocated liabilities:
Other liabilities
Total liabilities from
continuing operations
Doolgunna
Base Metals
$
Kazakhstan
Copper
$
Forrestania
Nickel &
Gold
$
Xstrata Base
Metals
$
Millrose
Gold
Other
Total
$
$
-
-
-
-
-
-
-
530,334
530,334
Doolgunna
Base Metals
Kazakhstan
Copper
Forrestania
Nickel &
Gold
Xstrata Base
Metals
Bullseye
Millrose
Gold
Other
-
-
-
-
-
-
-
503,244
503,244
81
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
4. OPERATING SEGMENTS (Continued)
Revenue by geographical region
The Company’s revenue is received from sources within Australia.
(vi) Assets by geographical region
The location of segment assets is disclosed below by geographical location of the
assets:
Australia
(vii) Major customers
Balance as
at 30.6.2016
$
3,670,866
Balance as
at 30.6.2015
$
5,522,609
3,670,866
5,522,609
Due to the nature of its current operations, the Company does not provide
products and services.
5. EXPENSES
Employee benefits
Salaries
Superannuation
Share-based payments
2016
$
120,000
22,458
-
142,458
2015
$
397,337
48,610
31,018
476,965
82
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
6. INCOME TAX
2016
$
2015
$
a) The prima facie tax on profit/(loss) from ordinary
activities before income tax is reconciled to the income tax
expense as follows:
Accounting loss before income tax
(2,788,727)
(1,624,590)
Income tax benefit at the statutory income tax rate of
30% (2015: 30%)
(836,618)
(487,377)
Expenditure not allowable for income tax purposes
698,316
216,627
Capitalised mineral exploration expenditure
(120,945)
(167,326)
Capital raising costs
(32,889)
(16,352)
Benefit of tax losses not brought to account as an asset
292,136
454,428
Income Tax expense reported in the Statement of Profit
or Loss and Other Comprehensive Income
-
-
b) As at 30 June 2016, the Company has estimated tax losses of approximately
$18,800,000 (2015: $17,800,000), which may be available to be offset against deferred
tax liabilities and taxable income in future years. The availability of these losses is
subject to satisfying Australian taxation legislative requirements. The deferred tax
asset attributable to tax losses has not been brought to account in these financial
statements as the Directors believe it is not presently appropriate to regard
realisation of the future income tax benefits as probable.
c) Deferred Tax Liability
With regard to Mineral Exploration Expenditure of $3,611,559 (2015: $5,522,609) the
tax liability in respect of the book value has not been brought to account as it is offset
by the tax losses set out in 6(b) above.
83
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
7. EARNINGS PER SHARE
2016
$
2015
$
Loss used in the calculation of basic EPS
(2,788,727)
(1,624,590)
Weighted average number of ordinary shares used in
calculation
of basic earnings per share
226,326,870
168,344,559
8. CASH AND CASH EQUIVALENTS
Cash at bank
Cash on deposit
2016
$
39,150
34
39,184
2015
$
99,523
31,616
131,139
The effective interest rate on short term bank deposits on average was 2.03% (2015
2.45%), with an average maturity of 6 months.
84
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
9. TRADE AND OTHER RECEIVABLES
Current
GST receivable
Other
2016
$
12,773
-
12,773
2015
$
12,611
-
12,611
Sundry debtors are non-interest bearing and receivable within 30 days.
Allowance for impairment loss
Trade and other receivables do not contain impaired assets and are not past due. It is
expected that these other balances will be received when due.
Fair value and credit risk
Due to the short term nature of the receivables, their carrying value is assumed to
approximate their fair value.
Given the nature of the receivables the Company’s exposure to risk is not considered
material.
10. OTHER FINANCIAL ASSETS
Current
Financial assets at fair value through profit or loss
Held for trading Australian listed shares (Level 1 fair
value hierarchy)
2016
$
2015
$
400
400
Changes in fair value are included in the statement of comprehensive income.
Non-current
Cash on deposit
-
-
85
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
11. PROPERTY, PLANT AND EQUIPMENT
Plant and Equipment – at cost
Less: accumulated depreciation
Reconciliation of the carrying amount of property, plant
and equipment
Carrying amount at beginning of year
Additions
Disposals
Depreciation for the year
Written Off
Carrying amount at end of financial year
12. MINERAL EXPLORATION EXPENDITURE
Balance at beginning of the year
Deferred exploration expenditure
Exploration expenditure refund
Mineral expenditure written off (i)
Balance at end of financial year
2016
$
92,863
(85,913)
6,950
2016
$
17,880
-
-
(10,930)
-
6,950
2015
$
92,863
(74,983)
17,880
2015
$
85,358
2,674
(3,956)
(19,906)
(46,290)
17,880
2016
$
2015
$
5,522,609
416,669
-
(2,327,719)
3,611,559
5,541,853
559,753
-
(578,997)
5,522,609
(i) Mineral expenditure written off for the year was $2,327,719. The main area
written off in 2016 was the Forrestania project and previously capitalised
expenditure on various tenements relinquished during the financial year.
The value of the Company’s interest in exploration expenditure is dependent upon:
the continuance of the Company’s rights to tenure of the areas of interest;
the results of future exploration; and
The recoupment of costs through successful development and exploitation of the
areas of interest or, alternatively, by their sale.
86
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
13. TRADE AND OTHER PAYABLES
Current
Trade payables
Sundry payables and accruals
2016
$
193,121
337,213
530,334
2015
$
54,381
448,863
503,244
Due to the short-term nature of these payables, their carrying value is assumed to
approximate fair value.
Trade payables are non-interest bearing and are generally settled within 30 days.
14. ISSUED CAPITAL
Ordinary Shares
Movements
Ordinary Shares
Balance 1 July
2016
$
20,244,437
2015
$
19,496,573
2016
Number
2015
Number
2016
$
2015
$
189,048,226
147,873,163
19,496,573
18,441,819
Share based payments
23,552,600
-
235,526
-
Rights Issue
- July 2014
- Jan 2015
Placement
- Dec 2015
-
Jan 2016
- Oct 2014
-
June 2015
Issue costs
At 30 June
-
-
9,526,303
12,447,760
-
-
285,789
373,433
31,500,000
20,000,000
-
-
-
-
8,601,000
10,600,000
315,000
200,000
-
-
-
-
344,040
106,000
264,100,826
-
264,100,826
189,048,226
-
189,048,226
20,247,099
(2,662)
20,244,437
19,551,081
(54,508)
19,496,573
87
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
14. ISSUED CAPITAL (continued)
The Company at 30 June 2016 has issued share capital amounting to 264,100,826 (2015:
189,048,226) ordinary shares with no par value.
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.
Capital Risk Management
The Company’s objectives when managing capital are to safeguard their ability to
continue as a going concern, so that they may continue to provide returns for
shareholders and benefits for other stakeholders.
Due to the nature of the Company’s activities, being mineral exploration, the Company
does not have ready access to credit facilities, with the primary source of funding being
equity raisings. Therefore, the focus of the Company’s capital risk management is the
current working capital position against the requirements of the Company to meet
exploration programmes 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 working capital position of the Company is as follows:
Cash and cash equivalents
Trade and other receivables
Other financial assets
Trade and other payables
Working capital position
2016
$
2015
$
39,184
12,773
400
(530,334)
(477,977)
131,139
12,611
400
(503,244)
(359,094)
88
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
15. RESERVES
Share Option Reserve
Foreign Currency Translation Reserve
2016
$
-
-
-
2015
$
1,682,618
-
1,682,618
(a) Share Option Reserve
Movements
Options
Unlisted
- Expiring 30 May 2016
Exercisable at $0.60
At 1 July
Expired during the year
Exercised during the year
At 30 June
Unlisted
- Expiring 30 June 2015
Exercisable at $0.40
At 1 July
Expired during the year
Transferred to Accumulated
Losses
At 30 June
2016
No.
2015
No.
2016
$
2015
$
4,000,000
(4,000,000)
-
-
4,000,000
-
-
4,000,000
1,371,600
(1,371,600)
-
-
1,371,600
-
-
1,371,600
-
-
-
-
350,000
(350,000)
-
-
-
-
-
-
123,725
-
(123,725)
-
89
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
15. RESERVES (Continued)
2016
No.
2015
No.
2016
$
2015
$
Unlisted
- Expiring 30 June 2015
Exercisable at $0.40
At 1 July
Issued during the year
Expired during the year
Transferred to Accumulated
Losses
At 30 June
Unlisted
- Expiring 30 June 2016
Exercisable at $0.60
At 1 July
Expired during the year
Exercised during the year
At 30 June
Unlisted
-Expiring 30 June 2016
At 1 July
Issued during the year
Expired during the year
Exercised during the year
At 30 June
Unlisted
-Expiring 30 June 2016
At 1 July
Issued during the year
Expired during the year
Exercised during the year
At 30 June
-
-
-
-
-
1,000,000
-
(1,000,000)
-
-
-
-
-
-
-
9,553
-
-
(9,553)
-
4,000,000
(4,000,000)
-
-
4,000,000
-
-
4,000,000
280,000
(280,000)
-
-
280,000
-
-
280,000
-
-
-
-
2,000,000
(2,000,000)
-
-
2,000,000
-
2,000,000
31,018
(31,018)
-
-
31,018
-
31,018
-
-
-
10,600,000
(10,600,000)
-
-
10,600,000
-
10,600,000
1,682,618
(1,682,618)
-
-
-
-
-
-
Total
-
20,600,000
-
1,682,618
90
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
15. RESERVES (Continued)
The share based payments reserve is used to record the value of share based payments
provided to employees, including key management personnel, as part of their
remuneration. Refer to Note 19 for further details of these plans.
The Group operates an Employee Share Option Plan under which Options to subscribe
for the Company’s shares have been granted to directors, senior executives and
employees.
16. CASH FLOW STATEMENT RECONCILIATION
- Reconciliation of net loss after tax to net cash
flows from operations
Loss for the year
Depreciation
Share based payments
Other Income
Mineral exploration expenditure written off
Impairment on property, plant and equipment
Revaluation of financial assets
Gain on foreign exchange
Changes in assets and liabilities
(Increase)/Decrease in trade and other receivables
(Increase)/Decrease in other assets
Increase/(Decrease) in trade and other payables
(Increase)/Decrease in exploration expenditure
Increase /(Decrease) in provisions
2016
$
2015
$
(2,788,727)
10,930
-
(126,524)
2,327,719
-
-
-
(162)
-
389,141
(416,670)
-
(604,293)
(1,624,590)
19,906
31,018
-
578,997
46,290
600
(39,148)
11,521
65,100
262,362
(559,753)
(24,039)
(1,231,736)
17. RELATED PARTY DISCLOSURE
a) Transactions with Directors and Directors Related Entities
During the year the group paid $35,775 (2015: $3,975) to Somes Cooke, an
accounting practice of which Mr K C Somes a director, is a partner, for company
secretarial, taxation and accounting services. The above transactions were entered
into on normal terms and conditions.
91
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
18. KEY MANAGEMENT PERSONNEL
(a)
Compensation for Key Management Personnel
Short term employee benefits
Post employment benefits
Other long term benefits
Termination benefits
Share based payments
19. SHARE BASED PAYMENTS
(a) Recognised share based payment
2016
$
270,000
22,572
-
-
-
292,572
2015
$
267,603
22,572
-
-
31,018
321,193
The share based payment expense recognised for employee services received
during the year is shown in the table below:
Expense arising from equity settled share-based
payment transactions
Expense arising from cash settled
share-based payment transactions
Total expense arising from
share-based payment transactions
2016
$
-
-
-
2015
$
31,018
-
31,018
The share-based payment plans are described below. There have been no
cancellations or modifications to any of the plans during 2016 and 2015.
b)
Types of Share based payment plans
Great Western Exploration Limited, Employee Share Option Plan
Share options are granted to senior executives and designed to provide executives
an incentive and participate along with shareholders by increasing
92
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
19. SHARE BASED PAYMENTS (continued)
the value of the Company’s shares. The options are issued by the Board having
regard, in each case to:
(i)
the contribution to the Company which has been made by the Participant;
(ii)
(iii)
(iv)
the period of employment of the Participant with the Company, including
(but not limited to) the years of service by that Participant;
the potential contribution of the Participant to the Company; and
any other matters which the Board considers in its absolute discretion, to
be relevant.
The options are issued to participants at a price the Board considers appropriate,
but in any event, no more than nominal consideration.
Details of options expiry date and exercise price are set out in Note 19 (c) below.
c)
Summary of Options granted under Employee Share Option Plan
2016
No.
Exercise
Price
2015
No.
Exercise
Price
10,000,000
9,350,000
Outstanding at
beginning of financial year
Granted during the year
- expiring 30 June 2016
Forfeited during the year
Expired during the year
Exercised during the year
-
(10,000,000)
-
Outstanding at end of financial year
-
-
-
-
2,000,000
10 cents
(1,350,000)
-
10,000,000
-
-
93
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
19. SHARE BASED PAYMENTS (Continued)
The following share-based payment arrangements were in existence during the
current and prior reporting periods:
Grant
Grant
Date
Date
Fair Value
Exercise
Price
No of
Options
Vesting
Date
Expiry
Date
9 August 2011
2 September 2011
12 December 2012
31 January 2014
25 July 2014
4,000,000
350,000
4,000,000
1,000,000
2,000,000
$0.342
$0.353
$0.07
$0.0095
$0.0155
$0.60
$0.40
$0.60
$0.40
$0.10
30 May 2016
30 June 2015
30 June 2016
30 June 2015
30June 2016
9 August 2011
2 September 2011
12 December 2012
31 January 2014
25 July 2014
The total number of options exercisable at year end was nil.
No options were exercised during the year.
d)
Option pricing model
Equity-settled transactions
The fair value of the equity-settled share options granted under the Employee
Share Option Plan is estimated as at the date of the grant using a Binomial
Model Pricing Model taking into account the terms and conditions upon which
the options were granted.
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Expected life of options (yrs)
Option exercise price ($)
Weighted average share price at measurement date ($)
25 July
2014
0
88.33
2.55
0.91
10
0.052
e) Share issued in lieu of services
2016
Grant Date/entitlement
Shares issued in lieu of 30
June 2015 outstanding
director fee 2016 as approved
at GM on 7 January
Number of
Instruments
Grant and Vesting
Date
Fair Value at grant
date $
23,552,600
07/01/2016
0.01
2015
There was none issue during the period.
94
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
20.
PARENT INFORMATION
2016
$
2015
$
The following information has been extracted from the
books and records of the parent and has been prepared in
accordance with Australian Accounting Standards.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current Assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
52,357
3,618,509
144,151
5,540,489
3,670,866
5,684,639
530,334
-
503,244
-
530,334
503,244
20,244,437
-
(17,103,905)
19,496,573
1,682,618
(15,997,794)
3,140,532
5,181,395
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Total loss
(2,788,727)
(1,657,663)
Total comprehensive income
(2,788,727)
(1,657,663)
95
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
20. PARENT INFORMATION (Continued)
Guarantees
Great Western Exploration Limited has not entered into any guarantees, in the current
or previous financial year, in relation to the debts of its subsidiaries.
Contingent Liabilities
At 30 June 2016, there were no contingent liabilities in relation to the subsidiaries.
Contractual commitments
At 30 June 2016, Great Western Exploration Limited had not entered into any
contractual commitments for the acquisition of property, plant and equipment (2015:
Nil).
21. CONTROLLED ENTITIES
Interests are held in the following:
Name
Principal
Activities
Country of
Incorporation
Ownership
Interest
2016
%
2015
%
Carrying Amount
of Investment
2016
$
2015
$
Shares
GTE Holdings Pte
Ltd
Investment
Singapore Ordinary
100
100
GTE KZ LLP
Mineral
Exploration
Kazakhstan Ordinary
100
100
1
1
1
1
22. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
a) Exploration Tenement Leases
In order to maintain current rights of tenure to
exploration tenements, the Group is required to outlay
lease rentals and to meet the minimum expenditure
requirements of the Western Australian Department of
Mines & Petroleum.
Within one year
2016
$
2015
$
643,000
1,285,000
96
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
22. COMMITMENTS AND CONTINGENCIES (Continued)
CONTINGENCIES
There were no contingencies at the end of the financial year.
23. EVENTS AFTER BALANCE DATE
The Directors are not aware of any matter or circumstance that has arisen since 30 June
2016 which has significantly affected or may significantly affect the operations of the
Group, the results of those operations, or the state of affairs of the Group, in future
financial years other than:
The Company continues to progress the Vanguard Exploration Limited acquisition
announced on the 26th April 2016. A general meeting of shareholders has been called for
25 October 2016 for shareholders to consider and if thought, pass the following
resolutions:
Resolution 1: Approval of Issue of Securities to Acquire Vanguard
Approval for the Company to issue 122,976,456 Company shares to vendors
unrelated to the Company pursuant to the proposed acquisition.
Resolution 2: Approval of Issue of Securities to Related Parties to Acquire Vanguard
Approval for the Company to issue 20,483,332 Company shares to Mr Kevin
Somes, a Director pursuant to the proposed acquisition.
Resolution 3: Approval to Issue Securities under Share Placement
Approval for the Company to issue up to 100,000,000 Company shares pursuant
to a Share Placement.
Resolution 4: Approval for Ratification of Prior Securities Issue
Approval for the ratification of the issue of 24,540,000 fully paid ordinary shares
to various sophisticated investors to raise $368,100.
On 2 August 2016, the Company announced that it had raised $368,000 through the issue
of 24,540,000 shares at an issue price of $0.015 from sophisticated investors, which has
been used for additional working capital and to help facilitate the acquisition of
Vanguard Exploration Limited.
97
Great Western Exploration Limited
Notes To The Consolidated Financial Statements For The Year Ended 30 June 2016 (Continued)
24. AUDITORS REMUNERATION
2016
$
2015
$
The Auditor of Great Western Exploration Limited is
Bentleys
Amounts received or due and receivable for
an audit or review of the financial report of the Group
other services in relation to the Group – other services
38,693
-
31,000
-
38,693
31,000
Bentleys did not receive fees for non-audit services during the financial year ended 30
June 2016. Bentleys are however providing non-audit services via the provision of an
Independent Experts Report as part of the Vanguard Exploration Limited acquisition,
with non-audit services of $20,000.
98
Great Western Exploration Limited
Directors’ Declaration
In accordance with a resolution of the directors of Great Western Exploration Limited,
the Directors of the Company declare that:
1.
the financial statements and notes, as set out on pages 46 to 98, are in accordance
with the Corporations Act 2001 and:
a.
b.
comply with Australian Accounting Standards, which, as stated in
accounting policy Note 1 to the financial statements, constitutes
compliance with International Financial Reporting Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2016 and of
the performance for the year ended on that date of the Company;
in the Directors’ opinion, subject to the matters mentioned in Note 1(a) to the
financial statements, there are reasonable grounds to believe that the Company
will be able to pay its debts as and when they become due and payable; and
the Directors have been given the declarations required by s 295A of the
Corporations Act 2001 for the financial year ended 30 June 2016.
2.
3.
Dated this 27 day of September 2016
K C Somes
Chairman
99
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit director for the audit of the financial statements of Great Western
Exploration Limited for the financial year ended 30 June 2016, I declare that to the best
of my knowledge and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
Dated at Perth this 27th day of September 2016
Independent Auditor's Report
To the Members of Great Western Exploration Limited
We have audited the accompanying financial report of Great Western Exploration
Limited (“the Company”) and Controlled Entities (“the Consolidated Entity”), which
comprises the statement of financial position as at 30 June 2016, and the statement of
profit or loss and other comprehensive income, statement of changes in equity and
statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’
declaration of the Consolidated Entity, comprising the Company and the entities it
controlled at the year’s end or from time to time during the financial year.
Directors Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and
the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standards AASB 101: Presentation
of Financial Statements, that the financial statements comply with International Financial
Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether
the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of the financial report that
gives a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Independent Auditor’s Report
To the Members of Great Western Exploration Limited (Continued)
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Opinion
In our opinion:
a. The financial report of Great Western Exploration Limited is in accordance with the Corporations Act 2001,
including:
i.
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2016 and of its
performance for the year ended on that date; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001;
b. The financial statements also comply with International Financial Reporting Standards as disclosed in
Note 1.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 1(a) in the financial report which indicates that the
Consolidated Entity incurred a net loss of $2,788,727 during the year ended 30 June 2016. This condition,
along with other matters as set forth in Note 1(a), indicates the existence of a material uncertainty which may
cast significant doubt about the ability of the Consolidated Entity to continue as a going concern and whether it
will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in
the financial report.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2016.
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Great Western Exploration Limited for the year ended 30 June
2016, complies with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELARUENTIS CA
Director
Dated at Perth this 27th day of September 2016
Great Western Exploration Limited
ADDITIONAL INFORMATION
1.
SHAREHOLDER INFORMATION
1.1
VOTING RIGHTS
In accordance with the Company’s constitution, on a show of hands every member
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.
1.2
SUBSTANTIAL SHAREHOLDERS AS AT 23 September 2016
Shareholder
No of Shares
HSBC Custody Nominees (Australia) Limited – A/C 2
Mrs Jane Elizabeth Somes & Ms Amy Jane Somes
Mr Jordan Luckett
24,958,045
17,339,032
14,445,000
1.3
DISTRIBUTION OF HOLDERS AS AT 23 September 2016
Number of Holders
Distribution is:
1 – 1000
1001 – 5,000
5001 – 10,000
10,001 – 100,000
100,001 – and over
`
Fully Paid
Ordinary Shares
1,297
226
175
142
516
238
1,297
102
Great Western Exploration Limited
ADDITIONAL INFORMATION
1.4
TOP TWENTY HOLDERS:
(a)
Ordinary Shares
The names of the twenty largest ordinary fully paid shareholders as at
23 September 2015 are as follows:
Name
%
No. of Shares
1 HSBC Custody Nominees (Australia)
Limited – A/C 2
2 Mrs J E Somes & Ms A J Somes (Jane
Somes Pension Fund)
3 Mr Jordan Luckett
4 HSBC Custody Nominees (Australia)
Limited
5 BAM NR 1 Pty Ltd
6 BNP Paribas Noms Pty Ltd
7 Rogue Investments Pty Ltd
8 Sunden Pty Ltd
9 Soria Nominees Pty Ltd
10 Frank Cannavo Investments Pty Ltd
11 Mr John Stanislaus Moran
12 Sunden Pty Ltd
13 Mr Kevin Somes and Mr John Cooke
14 Hallco No42 Pty Ltd
15 Mr Philip Arie Cath & Mrs Debra Susan
Cath
16 Ancan Investments Pty Ltd
17 Mrs Kelly Sarich
18 Koon Lip Choo
19 Mr Nicholas Laurence Blakesley
20 Canna Investments Pty Ltd
8.65
6.01
5.00
4.67
3.80
3.77
3.46
3.46
2.43
2.39
2.37
2.14
1.91
1.54
1.45
1.20
1.16
1.15
1.13
1.07
58.75
24,958,045
17,339,032
14,445,000
13,482,546
10,959,841
10,881,065
10,000,000
10,000,000
7,000,000
6,900,000
6,834,111
6,166,667
5,500,000
4,440,000
4,181,000
3,473,121
3,341,000
3,333,333
3,266,042
3,083,474
169,584,277
2.
SCHEDULE OF MINERAL TENEMENTS
Details of Mineral Tenements are disclosed in the Review of Exploration Activities.
103