GEOPACIFIC RESOURCES LIMITED
ACN 003 208 393
and controlled entities
ASX code: GPR
Financial Statements
for the year ended 31 December 2018
CONTENTS
Corporate Directory
Review of Operations
Mineral Resources
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Independent Auditors’ Report
Directors' Declaration
Consolidated Statement of Profit and Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Shareholder Information
2
3
10
13
21
33
34
39
40
42
43
44
45
98
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
2018 HIGHLIGHTS
CORPORATE DIRECTORY
Geopacific
Resources Limited
Public listed Company (ASX Code: GPR) incorporated in New South Wales in 1986
Australian Business
Number (ABN)
57 003 208 393
Directors &
Secretary in Office
Milan Jerkovic
Non-Executive Chairman
Ron Heeks
Managing Director
Mark Bojanjac
Non-Executive Director
Ian Clyne
Non-Executive Director
Colin Gilligan
Non-Executive Director
appointed 26 June 2018
Philippa Leggat
Executive Director - Corporate
resigned 10 September 2018
Matthew Smith
Company Secretary
Registered Office
Level 1
278 Stirling Highway
Claremont WA 6010
Postal Address PO Box 439
Claremont WA 6910
Auditor
Share Registry
Fiji Operations
Office
Ernst & Young
The Ernst & Young Building
11 Mounts Bay Road
Perth WA 6000
Boardroom Pty Ltd
Grosvenor Place
Level 12, 225 George Street
Sydney NSW 2000
Banker
ANZ Banking Group Ltd
Corner of Hay Street & Outram
Street
West Perth WA 6005
Stock Exchange ASX Limited
Level 4, Central Park
152-158 St Georges Terrace
Perth WA 6000
ASX Code: GPR
1 Cawa Street
Martintar Nadi Fiji
Tel: 679 6 727150
Fax: 679 6 727152
PO Box 9975
Nadi Airport Fiji
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
REVIEW OF OPERATIONS
EXPLORATION & DEVELOPMENT ACTIVITIES
Woodlark Island, Papua New Guinea
Delivery of Pre-feasibility Study and Definitive Feasibility Study
Geopacific Resources Limited (“Geopacific” or “the Company”) reached multiple milestones during the year
with the delivery of the Woodlark Gold Project’s (Woodlark) November 2018 Definitive Feasability Study
(DFS)1 and updated Reserve1 that built on from the March 2018 Pre-feasabilty Study (PFS), Resource and
Reserve.
The PFS determined that Woodlark had the characteristics required for a robust, low-cost, low-strip ratio,
open pit operation delivering an average output of 100Koz Au per annum. The DFS advanced the
development pathway of the Project by supporting a similar operation to the PFS but with an improved mine
plan and a simplified process route.
The DFS demonstrates a 13-year gold project with a compelling development option, both from a technical
and financial perspective. The Project generates A$626 million of operating cashflow (based on A$1,650 /
ounce gold price assumption) and a rapid 2.2 year project payback period. Its feasibility is driven by low costs,
a positive operating environment and a simple process route. Project highlights include:
• High margin - all-in sustaining costs (AISC) averaging A$866/oz (Yr 1-5) and A$1,033/oz Life of Mine
(LOM) due to shallow pits, low waste to ore ratio, flat terrain and outcropping soft ore.
• Strong cash flow – upfront operating cash flow generates rapid 2.2 year payback period.
• Robust production profile – simple process route with gold production averaging 100Koz per annum
(Yr 1-5), 967Koz (LOM) (incl. 41.koz Au Inferred).
• +1Moz – Reserve 28.9Mt @ 1.12g/t Au for 1,037,600oz of gold.2
Resource 47Mt @ 1.04g/t Au for 1.57Moz of gold.3
•
Licence to operate – operating permits granted in proven mining investment jurisdiction with a
supportive local community.
• Exploration upside – immediate near-pit resource growth potential & highly prospective regional
exploration portfolio.
AISC averaging A$866/oz in the first 5 years, and A$1,033/oz over the life of mine, are possible due to wide,
near surface ore zones. This allows for a very low waste : ore stripping ratio averaging 2.7:1 in the first 2 years
driving maximum upfront cashflow. A conventional Carbon in Leach (CIL) processing plant combined with
free milling, fast leaching and soft ore provides for strong cash generation. These factors, coupled with a
simple mining and processing route, de-risk the Project and provide a rapid payback period due to high
margins generated.
Woodlark Island presents an attractive operating environment with many logistical advantages and
competitive operating costs, made possible by its flat topography and supportive local community. With the
majority of the future labour force living locally, the development of the Project will provide a positive social
benefit for the local community while maintaining competitive operational costs. The construction of a
dedicated wharf facility within close proximity to operations also provides substantial logistical advantages
during the construction and operational phase.
1 All material assumptions underpinning the production target and forecast financial information continue to apply and have not changed
materially.
2 Refer to Figure 2 for a breakdown of the Ore Reserve Estimate announced on 7 November 2018.
3 Refer to Figure 1 for a breakdown of the Mineral Resource Estimate.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
The table below presents a key information summary covering the operational physicals, key inputs,
cashflow, unit costs and financials.
OPERATIONAL PHYSICALS
Strip Ratio
Total Material Mined
Ore Mined
Grade Mined
Contained Gold
Ore Processed
Grade
Recovery
Gold Produced
* Excl udes pre-s tri p peri od
KEY INPUTS
Gold Price
Foreign Exchange
Mining Cost
Processing Cost
General & Admin Cost
CASHFLOW
Cashflow from Operations
Less: Capital Expenditure
Free Cashflow (Pre-tax)
Less: Income Tax
Free Cashflow (Post-tax)
UNIT COSTS - C1 & AISC
Mining
Processing
G&A
Refining Costs
Total C1 Costs
Royalties
Sustaining Capital
Corporate Overheads
Total AISC
Unit
(x)
(kt)
(kt)
(g/t Au)
(oz Au)
(kt)
(g/t Au)
(%)
(oz)
First 5 Yrs of Production *
3.2
77,601
18,404
1.16
688,948
11,804
1.52
90.2%
522,034
Unit
/oz Au
A$ : US$
/t mi ned
/t proces s ed
/t proces s ed
Mi l l i on (M)
Mi l l i on (M)
Mi l l i on (M)
Mi l l i on (M)
Million (M)
/oz Au
/oz Au
/oz Au
/oz Au
/oz Au
/oz Au
/oz Au
/oz Au
/oz Au
Life of Mine US$
1,237
1.33
1.88
10.33
3.35
Life of Mine US$
469
(152)
318
(60)
257
Life of Mine US$
281
324
105
5
714
28
13
20
775
Life of Mine
3.9
149,189
30,304
1.11
1,083,291
30,304
1.11
88.8%
967,117
Life of Mine A$
1,650
0.75
2.51
13.77
4.47
Life of Mine A$
626
(202)
424
(80)
343
Life of Mine A$
374
431
140
6
952
37
18
26
1,033
FINANCIAL METRICS - POST-TAX
NPV @ 8%
IRR
Project Payback
Life of Mine US$M
Life of Mine A$M
148
29%
2.2 Years
197
29%
2.2 Years
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
Project Financing
Leading up to the completion of the Woodlark Project DFS, the Company appointed Ironstone Capital as its
financial advisor to support the project financing process. Following the appointment of Ironstone, the initial
phase of project financing work was focussed on the identification of a potential funding group in order to
short-list a combination of bank and non-bank financiers.
The next stage of project financing work involved discussions with the potential funding group to agree the
scope of work required by independent technical experts (ITE) to form the basis of the independent
technical review. This culminated in the appointment of SRK Consulting to lead the ITE review alongside a
specialist group ERM, to complete the environmental and social aspects. Both ITE’s presented initial reports
during the period which identified there were no fatal flaws with the Woodlark Project.
In December, positive progress was made in the project financing process with the receipt of the first
indicative non-binding term sheet for the debt component of the project financing, verifying Woodlark as a
viable development opportunity.
After the reporting period, Geopacific announced it would focus on advancing the equity component of the
project financing prior to the completion of any additional ITE studies.
Regional Exploration
Activities were initially focussed on a development drill program designed to upgrade the Project’s Reserve.
Since the release of the PFS, the Company shifted its focus to regional exploration aimed at expanding the
1.57Moz gold Resource and testing the true scale of the Woodlark goldfield.
A regional exploration program commenced during the year and was designed to generate geochemical and
geological targets for further testing to identify additional deposits. The program entailed the completion
of a limited drilling campaign at the Great Northern Prospect, soil sampling across the entire outcropping
volcanic sequences, completion of the first comprehensive geological map of outcropping volcanic
sequences, and the assessment of geophysical properties of the volcanoclastic sequence at the Great Circle
target area.
Drilling
Drilling focussed on the Great Northern prospect, assessing a possible plunge extension of mineralisation
below the pit design. Three shallow drillholes were also completed around the Great Circle target area,
confirming depth of cover thickness interpretation and assessing geophysical properties of volcanoclastic
lithologies buried under shallow sedimentary cover.
Results from diamond drilling at the Great Northern prospect delineated several high-grade gold zones along
the Kweiyau Fault (Figure 2). Highlights include:
•
•
•
10m @ 5.41g/t Au from 74m
7.7m @ 2.07g/t Au from 99m
3m @ 9.54g/t Au from 91m including 1m @ 19.4g/t Au
Drilling results confirmed the prospectivity and advanced the understanding of the Great Northern
prospect geology and controls on gold mineralisation, with clear targets defined for follow up drilling.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
Figure 1: Great Northern and Great Circle Target Areas
Figure 2: Great Northern Cross Section
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
Soil Sampling
An island wide soil sampling and geological mapping program was undertaken over prospective,
outcropping volcanic lithologies. The program represents the first comprehensive, island-wide geochemical
assessment of prospective lithologies and was designed to provide a consistent level of base data to guide
exploration in testing the true potential of the broader Woodlark goldfield.
Sampling commenced on the southern peninsula at Suloga, at the Watou prospect area and other areas
surrounding the Woodlark King deposit. These areas returned encouraging soil geochemistry results
confirming strong gold anomalism over a 1.4km strike at the Watou prospect. Soil gold values up to 6.28g/t
Au and rock chip values to 48.41g/t Au were received.
Stream sediment from drainages in the Talpos and Watou prospect areas were systematically gold panned,
with observed gold grains assessed for degree of transportation and proximity to primary source. Several
drainages with strong gold in pan concentrate levels were identified for detailed follow up.
High copper anomalism was recorded at the Norac and Loluai prospects, located on the Suloga Peninsula,
along with very high grade gold values in soil sampling. Gold in soil to 32g/t Au and copper values 0.97% Cu
were confirmed by rock chip values to 1.4% Cu in rock chips.
The program identified 29 new target areas worthy of follow up by infill soil sampling, trenching, detailed
mapping and if warranted, drill testing. Further testing of the defined target areas is aimed at expanding the
current Resource and unlocking the true scale of the goldfield.
Woodlark’s 600km2 Exploration Licence remains largely underexplored and highly prospective with
significant mineralisation falling outside the current Resource base.
Kou Sa Project, Cambodia
The Kou Sa Project (Kou Sa) is located in northern Cambodia’s Chep District, Phreah Vihear province and
covers a license area of 158 square kilometres. A Maiden Resource (2012 JORC Code compliant) of 51,000
tonnes of copper equivalent was released in 2016. The resource was calculated to assess the project’s initial
inventory at Prospects 150 and 160. Geopacific believes Kou Sa holds significant potential for the discovery
of additional deposits with economic grade and tonnage. A number of IP anomalies across the license still
remain untested.
Exploration activity over the period comprised completion of diamond drilling designed to test anomalous
surface geochemical signatures at Prospects 181 and 118, both of which yielded new discoveries.
Initial results from diamond drilling at Prospect 181 identified wide zones of epithermal-style, gold-silver
mineralisation over a strike length of more than 250 metres. Mineralisation remains open at depth and
along strike in both directions. True widths have yet to be determined but appear to be in excess of 40
metres. Significant drilling intercepts included 11.5m @ 3.14g/t Au and 14m @ 109.46g/t Ag.
A scout drilling program at Prospect 118 encountered a widespread gold and silver anomalism returning
gold values up to 32.35g/t Au and silver values up to 2,300 g/t Ag. Drilling highlights are displayed in Figure
3 below and include 6.5m @ 223.58g/t Ag from 1m and 26.8m @ 1.11 g/t Au, 55.32 g/t Ag from 36.2m.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
Figure 3: Prospect 118 Cross Section
An IP geophysical survey over the Prospect 181 was also undertaken in the latter half of the year identifying
IP chargeability anomalism that occurs in areas of drill defined gold and silver mineralisation. Limited surface
trenching was conducted to assess selected IP and geochemical anomalies in the Prospect 181 area.
Fijian Gold and Copper Projects, Fiji
Geopacific is the largest licence holder in Fiji, with projects located on the two main islands of Viti Levu and
Vanua Levu.
The Nabila, Rakiraki, Sabeto and Vuda Projects are in the highly-prospective north-east trending zone that
also hosts the world-class Vatukoula and Mt Kasi gold mines.
The projects are at various stages of exploration from early to advanced, with the presence of deeper
mineralised systems being identified in areas.
Exploration to date has provided evidence for porphyry and/or epithermal systems at all projects. There
remains potential to expand the already identified gold mineralisation at Faddy’s, which is the most
advanced prospect across all of the Fijian projects.
An application was submitted in late 2018 to relinquish the Rakiraki, Qalau, Tabuka and Cakaudrove licences.
The board also wishes to pursue opportunities to divest the Fijian assets.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
CORPORATE
Woodlark Gold Project Joint Venture Transaction and Kula Gold Limited Takeover
Geopacific announced on 23 August 2018 that its overall economic interest in the Woodlark Gold Project
increased to 93% after achieving its second tranche incentive milestone of the joint venture with Kula Gold
Limited (Kula). The 93% is comprised of its direct interest in the Project of 51% and an additional effective
interest of 42% by virtue of its 85% controlling interest in Kula.
Director appointment and resignation
Geopacific appointed Mr Colin Gilligan to the board as a Non-Executive Director. Mr Gilligan is a mining
engineer with over 25 years’ experience in the resources sector in Australia, South Africa, North America
and Asia. He has held technical, executive and director roles with a number of companies throughout his
career including Mitsui, Thiess, Anglo, Coalspur Mines and Resource Generation.
Ms Philippa Leggat stepped down from her role as Executive Director Corporate in order to pursue new
opportunities in the junior resource sector.
Oversubscribed capital raising – A$10m
On 30 April 2018, Geopacific announced the completion of a placement to raise A$10 million at A$0.036 per
share, representing a 5.3% discount to the previous day’s closing share price. This demonstrated the strong
support from quality institutional investors for Geopacific’s strategy to finalise the DFS and bring a significant
exploration program online to continue to grow the Project.
All resolutions voted on at the Annual General Meeting passed
Geopacific held its annual general meeting on 30 May 2018. All resolutions passed. The ordinary resolutions
included adoption of the remuneration report, re-election of Director Milan Jerkovic and approval of a new
incentive plan and its associated termination benefits, plan options and share appreciation rights. Special
resolutions included ratification of prior issue of equity securities and approval of a 10% placement facility.
All resolutions voted on at the General Meeting passed
Geopacific held a general meeting on 11 June 2018. All resolutions were passed. Resolutions included
approval of the issue of equity securities and approval to issue securities to a related party, Milan Jerkovic,
in a share placement.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
FINANCIAL REVIEW
2014
$
2015
$
2016
$
2017
$
2018
$
Net Loss After Tax
(1,636,029)
(2,000,637)
(4,144,977)
(4,042,911)
(53,750,659)
Loss Per Share (Cents)
(0.67)
(0.25)
(0.45)
(0.27)
(2.49)
Cash and Cash Equivalents
4,165,516 12,589,002
11,469,015
6,765,343
3,059,221
Expenditure on Exploration
5,529,505 15,787,417
12,140,869
15,219,583
8,447,600
Total Assets
Net Assets
23,617,573 48,233,948
64,554,032
80,720,300
42,103,633
22,778,317 47,143,679
57,717,361
73,334,855
34,685,715
The Group recorded a net loss after tax for the year ended 31 December 2018 of $53,750,659 (2017:
$4,042,911). The increase in the loss compared to the 2017 financial year mainly relates to an impairment of
the Group’s Kou Sa Project in Cambodia.
At 31 December 2018, the Group’s total assets were $42,103,633 (2017: $80,720,300) and net assets were
$34,685,715 (2017: $73,334,855). The impairment of the Groups Kou Sa Project in Cambodia was the major
reason for the significant decrease in total assets and net assets at year end. The Group had additions of
$8,447,600 (2017: $15,219,583 including prepayments) in exploration and evaluation assets mainly relating
to the Woodlark Gold Project.
MINERAL RESOURCES AND RESERVES
Woodlark Gold Project Resources and Reserves
The Woodlark Resource is 47Mt @ 1.04g/t Au for 1.57Moz of gold4 including 222,000oz of gold in the
Inferred category (Table 1). There was no change to the Mineral Resources reported at 31 December 2017
for comparison.
Table 1: Woodlark Global Mineral Resource Estimate – March 2018
Category
(>0.4g/t lower cut)
Measured
Indicated
Inferred
Total
Tonnes
(Million)
21.24
18.94
6.8
47.04
Grade
g/t Au
1.10
0.98
1.00
1.04
Ounces (Thousand)
754
597
222
1,573
4 Refer to March 2018 Pre-feasibility Study – ‘Robust Woodlark Gold project PFS Supports Development.’
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
An updated Ore Reserve estimate was released in November 2018 and was completed by independent
consultants, Mining Plus. The updated Ore Reserve estimate of 28.9Mt @ 1.12g/t Au for 1,037,600oz5 of
gold is detailed in Table 2.
Table 2: Woodlark Ore Reserve Estimate – November 2018
Total by deposit
Busai
Kulumadau
Woodlark King
Total Ore Reserve
Category
(>0.4g/t lower cut)
Proven
Probable
Proven
Probable
Proven
Probable
Proven
Probable
Total
Tonnes
(Mt)
9.3
4.3
7.4
5.2
1.9
0.8
18.6
10.4
28.9
Grade
(g/t)
1.03
0.87
1.37
1.17
1.06
0.84
1.17
1.02
1.12
Ounces
(oz)
307,300
120,900
324,700
196,900
65,000
22,800
697,000
340,600
1,037,600
Kou Sa Project Mineral Resource – Prospects 150 & 160
The Mineral Resource for Prospects 150 and 160 at the Kou Sa Project was 3.84 million tonnes at 0.77% Cu,
0.66g/t Au and 5.27g/t Ag for 51.2k tonnes of Cu equivalent. The Mineral Resources estimated at a 0.4%
CuEq lower cut-off are detailed in Table 3. There was no change to the Mineral Resources reported at 31
December 2017 for comparison.
Table 3: Kou Sa Global Mineral Resource Estimate – July 2016
Category
Indicated
Inferred
Total
Tonnes
(Million)
3.49
0.35
3.84
Cu
%
0.78
0.70
Au
g/t
0.71
0.20
0.77
0.66
Ag
g/t
5.37
4.30
5.27
CuEq
%
1.38
0.90
1.33
Cu
Kt
27.1
2.30
Au
Koz
79.2
2.70
29.40
81.80
Ag
Koz
602
48
651
CuEq
Kt
48.1
3.1
51.2
Competent Persons Statement
The information in this report that relates to Woodlark exploration results is based on information compiled by or under
the supervision of James Kerr, a Competent Person who is a Member of The Australasian Institute of Mining and
Metallurgy and General Manager, Geology for Geopacific. Mr Kerr has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and the activity 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 Kerr consents to the inclusion in this report of the matters based on his information
in the form and context in which it appears.
The information in this report that relates to Woodlark Mineral Resources is based on information compiled and
reviewed by Mr Nicholas Johnson, a Competent Person who is a Member of the Australian Institute of Geoscientists and
a full-time employee of MPR Geological Consultants Pty Ltd. Mr Johnson has sufficient experience which is relevant to
the style of mineralization and type of deposits under consideration and to the activity which he has undertaken to
qualify as a Competent Person as defined in the JORC Code 2012 and is a qualified person for the purposes of NI43-101.
Mr Johnson has no economic, financial or pecuniary interest in the company and consents to the inclusion in this report
of the matters based on his information in the form and context in which it appears.
5 Refer to ‘Woodlark Ore Reserve Update’ announced on 7 November 2018.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
REVIEW OF OPERATIONS
The information in this report that relates to Woodlark Mineral Reserves is based on information compiled and reviewed
by Mr John Battista, a Competent Person who is a Member and Chartered Professional of the Australian Institute of
Mining and Metallurgy (AusIMM) and a full-time employee of Mining Plus Pty Ltd. Mr Battista has sufficient experience
which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he
has undertaken to qualify as a Competent Person as defined in the JORC Code 2012 and is a qualified person for the
purposes of NI43-101. Mr Battista has no economic, financial or pecuniary interest in the company and consents to the
inclusion in this report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to the Cambodian Mineral Resource estimate is based on information
compiled by Jonathon Abbott, a Competent Person who is a Member of the Australian Institute of Geoscientists.
Jonathon Abbott is a full-time employee of MPR Geological Consultants Pty Ltd and is an independent consultant to
Geopacific Resources Limited. Mr Abbott has sufficient experience that is relevant to the style of mineralisation and
type of deposit under consideration and to the activity being undertaking to qualify as a Competent Person as defined
in the 2012 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Abbott consents
to the inclusion in this report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to Cambodian exploration results is based on information compiled by or
under the supervision of Ron Heeks, a Competent Person who is a Member of The Australasian Institute of Mining and
Metallurgy and Managing Director of Geopacific. Mr Heeks has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and the activity 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 Heeks consents to the inclusion in the report of the matters based on his information in the form
and context in which it appears.
Forward Looking Statements
All statements other than statements of historical fact included in this report including, without limitation, statements
regarding future plans and objectives of Geopacific are forward-looking statements. When used in this report, forward-
looking statements can be identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’ or
‘intends’ and other similar words that involve risks and uncertainties.
These statements are based on an assessment of present economic and operating conditions, and on a number of
assumptions regarding future events and actions that, as at the date of this report, are expected to take place. Such
forward-looking statements are not guarantees of future performance and involve known and unknown risks,
uncertainties, assumptions and other important factors, many of which are beyond the control of the company, its
directors and management of Geopacific that could cause the Company’s actual results to differ materially from the
results expressed or anticipated in these statements.
Geopacific cannot and does not give any assurance that the results, performance or achievements expressed or implied
by the forward-looking statements contained in this report will actually occur and investors are cautioned not to place
undue reliance on these forward-looking statements. The Company does not undertake to update or revise forward-
looking statements, or to publish prospective financial information in the future, regardless of whether new
information, future events or any other factors affect the information contained in this report, except where required
by applicable law and stock exchange listing requirements.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
DIRECTORS REPORT
The Directors present their report together with the financial report of the Geopacific Group, being
Geopacific Resources Limited (“Geopacific” or “the Company”) and its controlled entities (“the Group” or
“Consolidated entity”) for the financial year ended 31 December 2018, and the auditors’ report thereon.
1. DIRECTORS AND COMPANY SECRETARY
The names of the Company’s Directors and Company Secretary in office during the financial year and
until the date of this report are as follows. Directors were in office for the entire period unless otherwise
stated.
Name, Position Held &
Qualification
Milan Jerkovic
Non-Executive Chairman
Appointed: 23 April 2013
B. App. Sc (Geology)
Fellow of AusIMM
Member of AICD
Post Graduate Diploma in
Mineral Economics
Post Graduate Diploma in
Mining
Ron Heeks
Managing Director
Appointed: 28 March 2013
B. App. Sc (Geology)
Member of AusIMM
Experience, Special Responsibilities & Other Directorships
Mr Jerkovic is a qualified geologist with postgraduate qualifications in
Mining & Mineral Economics with over 30 years of experience in the mining
industry involving resource evaluation, operations, financing, acquisition,
project development and general management.
Mr Jerkovic was the Chief Executive Officer of Straits Resources Limited and
has held positions with WMC, BHP, Nord Pacific, Hargraves, Tritton and
Straits Asia. Mr Jerkovic was the founding Chairman of Straits Asia
Resources and is currently Executive Chairman of Blackham Resources
Limited and a Non-Executive Director of Metals X Limited.
Mr Jerkovic was appointed Chairman of the Company on 1 August 2013 and
is also a member of the Audit and Risk Committee.
Mr Jerkovic has the following interest in Shares in the Company as at the
date of this report – 13,196,677 ordinary shares.
With 30 years’ mining industry experience, Mr Heeks was a founder of
Exploration and Mining Consultants and has had previous experience with
WMC, Newcrest, Newmont (US) and RSG Consulting.
Mr Heeks has held senior roles in both mine management and exploration
and is a Former General Manager – Technical for Straits Asia Indonesian
Operations and Chief Technical Officer for Adamus Resources Southern
Ashanti Gold Operation. He has lived and worked in various countries
around the world gaining extensive experience in South-East Asia and
Indonesia in particular.
Mr Heeks was appointed Managing Director of the Company on 28 March
2013 after the takeover of Worldwide Mining Projects Ltd.
Mr Heeks is currently a Non-Executive Director of Kula Gold Limited.
Mr Heeks has the following interest in shares in the Company as at the date
of this report – 8,768,618 ordinary shares.
13 | P a g e
Mark Bojanjac
Non-Executive Director
Appointed: 28 March 2013
B. Com
Member of CAANZ
Ian Clyne
Non-Executive Director
Appointed: 6 October 2016
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
Mr Bojanjac is a Chartered Accountant with over 20 years’ experience in
developing resource companies. Mr Bojanjac was a founding director of
Gilt-Edged Mining Limited which discovered one of Australia’s highest grade
gold mines and was managing director of a public company which
successfully developed and financed a 2.4m oz gold resource in Mongolia.
He also co-founded a 3 million oz gold project in China.
Mr Bojanjac was most recently Chief Executive Officer of Adamus Resources
Limited and oversaw its advancement from an early stage exploration
project through its definitive feasibility studies, and managed the debt and
equity financing of its successful Ghanaian gold mine.
Mr Bojanjac was appointed a Director of the Company on 28 March 2013
after the takeover of Worldwide Mining Projects Ltd.
Mr Bojanjac serves as Executive Chairman of Canadian explorer, PolarX
Limited and is the Non-Executive Chairman of Kula Gold Limited.
Mr Bojanjac is also the Chairman of the Audit and Risk Committee.
Mr Bojanjac has the following interest in shares in the Company as at the
date of this report – 3,416,666 ordinary shares.
Mr Clyne has over 35 years’ experience in international banking having
worked in senior executive positions in ten countries in Asia, Oceania,
Australia and Europe. He has specialised in emerging markets and has held
roles of President, Director, Managing Director and Chief Executive Officer
with universal banking operations that have extensive branch networks and
large employee bases. Mr Clyne has successfully re-engineered banks in
Indonesia, Italy, Poland and PNG.
Mr Clyne held the role of Managing Director and Group CEO of Bank South
Pacific (BSP), based in Port Moresby (2008 – 2013). He undertook a major
transformation program changing BSP from a typical emerging economy
banking institution into an innovative, technology driven, modern bank.
Under his leadership, the bank grew from having 400,000 accounts in PNG
to over 1 million in PNG and 1.5 million across the Pacific, including Fiji and
the Solomon Islands, with a market capitalisation of $1.7 billion at the end
of his term.
Mr Clyne is also a member of the Audit and Risk Committee.
Mr Clyne is currently a Non-Executive Director of Union Bank of Nigeria.
Mr Clyne has the following interest in shares in the Company as at the date
of this report – 2,400,000 ordinary shares.
14 | P a g e
Colin Gilligan
Non-Executive Director
Appointed: 26 June 2018
Matthew Smith
Company Secretary
Appointed: 1 December
2016
B. Com (Accounting)
Member of CAANZ
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
Mr Gilligan is a mining engineer with over 25 years’ experience in the
resources sector, in Australia, South Africa, North America and Asia. He has
held technical, executive and director roles with a number of companies
throughout his career including Mitsui, Thiess, Anglo, Coalspur Mines and
Resource Generation.
During his career Mr Gilligan has provided leadership to a number of
operations, EPC contracts, mining contracts and development projects
across different commodities. He has also successfully contributed to
raising development funding in various forms.
Mr Gilligan brings a successful background in organisational leadership,
project development and delivery, predominantly achieved through a focus
on people, culture and optimal efficiency.
Mr Gilligan also contributes significant board-level experience at private
and public company level, particularly on technical matters, governance,
funding, risk management, strategy and leadership.
Mr Gilligan is currently an Independent Non-Executive Director at Resource
Generation Limited.
Mr Gilligan held no interest in shares in the Company as at the date of this
report.
Mr Smith has over 15 years’ experience in the resource industry across a
broad range of commodities including precious metals, industrials and bulk
commodities. Mr Smith has worked for a range of companies operating in
the Asia Pacific region and most recently held the role of Chief Financial
Officer at ASX listed Kingsrose Mining Limited, with gold operations in
Indonesia.
Mr Smith is a Chartered Accountant with relevant industry experience on
an array of financing transactions across debt and equity markets. Mr Smith
also brings specialist knowledge in the areas of international taxation,
corporate structuring, accounting and corporate governance.
Mr Smith has previously held the role of Company Secretary at Straits
Resources Limited and is currently a Non-Executive Director of Kula Gold
Limited.
Mr Smith held no interest in shares in the Company as at the date of this
report.
15 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
Philippa Leggat
Executive Director –
Corporate
Appointed: 13 January 2017
B. Com (Finance, Risk &
Strategic Management)
Member of AICD
Resigned: 10 September
2018
Ms Leggat has extensive experience in corporate mining roles and also
brings a new perspective to the Board having worked in several other
industries where she has achieved successful corporate outcomes. Clients
in the resource sector include MMG, Anglo-Gold Ashanti, Anglo Platinum
and Xstrata.
Ms Leggat is a corporate advisor and company director with over 15 years’
experience in assisting international organisations that operate in Africa,
Asia, Australia and Europe. She has a strong background in corporate
governance and finance and a practical understanding of the issues faced
by developed-world businesses operating in emerging economies. Ms
Leggat’s experience covers; negotiations, mergers and acquisitions, fund
raising, defining and executing business improvement strategies.
Ms Leggat was previously a Non-Executive Director of Kula Gold Limited and
Parker Resources NL.
Ms Leggat held no interest in shares in the Company as at the date of
resignation.
2. PRINCIPAL ACTIVITY
The principal activity of the Group is mineral development and exploration focussed on gold and copper
deposits in Papua New Guinea and Cambodia.
There were no significant changes in the nature of this activity of the Group during the financial year.
3. OPERATING AND FINANCIAL REVIEW
A review of the operations and financial position of the Company during the year ended 31 December
2018, including details of the results of operations, changes to the state of affairs, and likely
developments in the operation of the Company in subsequent financial years is set out in the Operations
Review.
4. DIVIDENDS
No dividends were paid or declared during the financial year.
5. STATE OF AFFAIRS
There have not been any significant changes in the state of affairs of the Company during the financial
year, other than those noted in the financial report.
16 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
6. EVENTS SUBSEQUENT TO REPORTING DATE
On 8 March 2019, the Company announced it had agreed to acquire from Kula Gold Ltd (Kula) all of Kula’s
rights and interests in the Woodlark Gold Project (Woodlark), consolidating Geopacific’s 100% direct
ownership of the gold project.
Under an agreement signed 6 March 2019 (Agreement) Kula agreed to sell, free from all encumbrances
and third party claims, and Geopacific agreed to purchase, all of the outstanding shares in Woodlark
Mining Limited (Woodlark) not currently owned by Geopacific (Sale Shares).
The purchase price payable under the Agreement comprises of:
1. the cancellation by way of selective buy back under section 257A of the Corporations Act 2001 (Cth)
of all of the shares in Kula held by Geopacific (Kula Shares);
2. subject to the cancellation of the Kula Shares, the immediate issue to Kula of 150,000,000 fully paid
ordinary shares in Geopacific at a deemed issue price of 1.7c each (Geopacific Shares) proposed to
be distributed to Kula shareholders (other than Geopacific) following regulatory approvals and
procedures, in specie or similar;
3. the payment by Geopacific to Kula of an amount (equal to the amount, as at completion, of the inter-
company debt between Geopacific, as lender and Kula, as borrower (Kula Debt Amount)) (Cash
Consideration) to be applied at completion against the Kula Debt Amount in accordance with the
Agreement. The Parties anticipate the Kula Debt Amount to be between $500,000 and $750,000;
4. payment by Geopacific to Kula of $20,000; and
5. assignment by Kula to Geopacific of the inter-company loan owed by Woodlark (being $7.1million as
at the date of the Agreement).
17 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
7. DIRECTORS’ INTERESTS AND BENEFITS
The relevant interest of each Director in the share capital as notified by the Directors to the Australian
Securities Exchange in accordance with section 205G(1) of the Corporations Act 2001, at the date if this
report is as follows:
Name
M Jerkovic
M Bojanjac
I Clyne
C Gilligan
R Heeks
Direct
Options
Shares
3,777,778
916,666
2,400,000
-
-
-
750,000
-
4,000,000 10,593,263
Rights
-
-
-
-
4,838,214
Shares
9,418,899
2,500,000
-
-
4,768,618
Indirect
Options
Rights
-
-
-
-
-
-
-
-
-
-
8. DIRECTORS’ MEETINGS
The number of Directors’ meetings (including meetings of committees) and the number of meetings
attended by each of the Directors of the Company during the financial year are set out below:
Directors Meetings
Audit and Risk Committee Meetings
Attended*
Name
M Jerkovic
M Bojanjac
I Clyne
C Gilligan
R Heeks
P Leggat
*Either in person, or by electronic means.
Eligible to Attend
9
9
9
4
9
7
9
9
8
4
9
7
Attended*
Eligible to Attend
2
2
2
-
-
-
2
2
2
-
-
-
The Board of Directors takes ultimate responsibility for corporate governance. This includes the
establishment of compensation arrangements for the Company’s Executive Directors and senior
executives. It also includes the appointment and retirement of Non-Executive Directors, appointment of
Auditors, monitoring key areas of business risk, maintenance of ethical standards and Audit and Risk
Committees. The Board seeks independent professional advice as necessary in carrying out its duties
and responsibilities.
9. LIKELY DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Group will continue to advance its development and exploration portfolio and seek to increase its
tenement holdings by acquiring further projects.
18 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
10. ENVIRONMENTAL REGULATIONS
Entities in the Group are subject to normal environmental regulations in areas of operations in Papua
New Guinea, Cambodia and Fiji. There have been no breaches of these regulations during the financial
year, or in the period subsequent to the end of the financial year and up to the date of this report.
11. SHARE OPTIONS
There were 62,673,263 Options over unissued shares unexercised at 31 December 2018 (2017 –
1,000,000). During the financial year, the Company did not issue any shares on the exercise of unlisted
Options. Since the end of the financial year, no unlisted Options have been cancelled or exercised.
Details of unlisted Options over unissued shares in the Company as at the date of this report are
presented in the following table:
Options on Issue
800,000
Exercise Price
Expiry Date
$2.5000 Not later than 5-years after defining a JORC compliant ore reserve of
over 200,000oz Au on the Faddy’s Gold Deposit
200,000
$5.0000 Not later than 10-years after defining a JORC compliant ore reserve
of over 1,000,000oz Au on the Faddy’s Gold Deposit
17,188,888
24,265,875
20,218,500
$0.0000
$0.0000
$0.0408
10 July 2019
10 July 2021
10 July 2022
Option holders do not have any rights to participate in any issues of shares or other interest in the
Company or any other entity.
12. SHARE APPRECIATION RIGHTS
There were 22,365,071 share appreciation rights over unissued shares unexercised at 31 December 2018
(2017 – Nil). During the financial year, the Company did not issue any shares on the exercise of unlisted
share appreciation rights. Since the end of the financial year, no unlisted share appreciation rights have
been cancelled or exercised.
Details of unlisted share appreciation rights over unissued shares in the Company as at the date of this
report are presented in the following table:
Share appreciation
rights on Issue
22,365,071
Exercise Price
$0.0285
Expiry Date
10 July 2022
13. INSURANCE OF OFFICERS
The Company has paid a premium to insure the Directors and Company Secretary of the Group in respect
of certain legal liabilities, including costs and expenses in successfully defending legal proceedings, whilst
they remain as Directors and for seven years thereafter. The insurance contract prohibits the disclosure
of the total amount of the premiums and a summary of the nature of the liabilities.
19 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
14. PROCEEDINGS ON BEHALF OF COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a
party, for the purpose of taking responsibility on behalf of the Company for all or part of those
proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court
under section 237 of the Corporations Act 2001.
15. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 31 December 2018 is set out on page 33.
16. AUDITOR
The Company’s auditor is Ernst & Young.
The Company has agreed with Ernst & Young, as part of its terms of engagement, to indemnify Ernst &
Young against certain liabilities to third parties arising from the audit engagement. The indemnity does
not extend to any liability resulting from a negligent, wrongful or wilful act or omission by Ernst & Young.
During the financial year the company has not paid any premium in respect to any insurance for Ernst &
Young or a body corporate related to Ernst & Young.
During the year, the following fees were paid or payable to the auditors of the Company for services
provided by the auditor of the Company and its subsidiaries, its related practices and non-related audit
firms:
Audit Services
Greenwich & Co
Audit and review of the financial report and other audit work
under the Corporations Act 2001
Other non-audit services
Ernst & Young
Audit and review of the financial report for Geopacific Resources
Limited and its controlled subsidiaries and other audit work under
the Corporations Act 2001
Total
17. NON-AUDIT SERVICES
Consolidated
2018
$
2017
$
12,091
2,200
30,000
10,450
67,500
81,791
26,500
66,950
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. The nature and scope of
each type of non-audit service provided means that auditor independence was not compromised.
20 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT - AUDITED
This report outlines the remuneration arrangements of the Group pursuant to the requirements of the
Corporations Act 2001 and its regulations. This information has been audited as required under section
308(3)(c) of the Corporations Act 2001.
This report details the remuneration arrangements of the Group’s key management personnel (KMP),
who are defined as those persons who have the authority and responsibility for planning, directing and
controlling the major activities of the Group, directly or indirectly, including any Director of Geopacific.
Details of the KMP of the Group during the reporting period are set out in the table below:
Name
Non-Executive Directors
Milan Jerkovic
Mark Bojanjac
Ian Clyne
Colin Gilligan
Executives
Ron Heeks
Philippa Leggat
Matthew Smith
Glenn Zamudio
James Kerr
Appointed – 26 June 2018
Resigned – 10 September 2018
Position
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Managing Director
Executive Director - Corporate
Chief Financial Officer & Company Secretary
General Manager - Projects
General Manager - Geology
There were no changes to KMP other than those noted above after the reporting date and before the
date the financial report was authorised for issue.
Remuneration Governance
Due to the size and structure of the Board the Company does not have a separate Remuneration
Committee. Remuneration matters are dealt with by the full Board, with Directors excluded from
individual discussions as required. The Board will continue to assess the Company’s circumstances in
determining whether the establishment of a separate Remuneration Committee is required.
The Board is responsible for reviewing and recommending the remuneration arrangements of the Group
KMP each year and ensuring that the Group’s remuneration structures are aligned with the interests of
the Company and its shareholders. This includes an annual remuneration review of base salary (including
superannuation), short term incentives (STI) and long term incentives (LTI), including the appropriateness
of performance hurdles.
21 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Remuneration Consultants
During the previous reporting period, BDO Chartered Accountants developed a comprehensive
remuneration framework for the Company to provide recommendations as defined in section 9B of the
Corporations Act 2001.
The new remuneration framework was further refined in the current reporting period and approved by
shareholders at the Annual General Meeting (AGM) held on 30 May 2018.
Remuneration Overview and Strategy
The objective of the Group’s remuneration framework is to support the delivery of sustained shareholder
value and to ensure rewards accurately reflect achievements in line with general market conditions. The
strategy is designed to attract, motivate and retain high calibre individuals through the provision of
remuneration packages that incorporate a balance of fixed and variable remuneration. In accordance
with sound corporate governance practices, the structure of Non-Executive and Executive remuneration
is separate and distinct. There is no direct relationship between remuneration and the financial
performance of the Group.
The following table shows the Company’s performance over the reporting period and the previous four
financial years and against overall remuneration for these years:
2014
$
2015
$
2016
$
2017
$
2018
$
Loss Per Share (Cents)
0.67
0.25
0.45
0.27
Year-end share price
0.051
0.041
0.036
0.027
Market capitalisation (million)
17.1
32.8
41.6
48.7
2.49
0.016
33.3
Total KMP remuneration
973,785
1,033,501
1,011,937
1,468,516
2,196,274
Executive Remuneration Framework
The Board’s objective is to reward Executives with a quantum and mix of remuneration commensurate
with their position and responsibilities and that is competitive within the marketplace. With this in mind,
the Company remunerates its Executives with a mix of both fixed and at risk, or variable, remuneration.
Variable remuneration incorporates a balance of short, medium and long term incentives.
Fixed remuneration for Executives consists of base salary, Zero Exercise Price Options (ZEPOs),
superannuation and other non-cash benefits. It is designed to provide a base level of remuneration which
is appropriate for the Executives position, reflecting the individual’s skills, level of experience and
responsibilities.
Variable remuneration, or performance linked remuneration, includes a combination of short, medium
and long term incentives designed to provide an “at risk” reward in a manner which aligns with the
creation of sustained shareholder value.
22 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Executive Remuneration Framework (continued)
All Executives are eligible to receive short, medium and long term incentives which can be issued in
accordance with the Company’s Securities Incentive Plan (Incentive Plan) that was approved by
shareholders at the AGM held on 30 May 2018.
The incentive Plan incorporates a 5% cap on total shares that can be issued to Executives under plan.
The following table provides a high level summary of the Company’s new remuneration framework:
Fixed
remuneration
Remuneration linked to market
rate of the role.
Total fixed
remuneration
Remuneration for meeting role
requirements.
Variable
remuneration
Incentive
Remuneration for delivering on key
milestones which are designed to
create value for shareholders.
Short term
incentive
Incentive for the achievement of
annual objectives.
Medium term
incentive
Incentive for the achievement of
sustained business value.
Variable
remuneration
Reward
Remuneration for the creation of
value for shareholders - directly
linked to shareholder returns.
Long term
incentive
Reward for performance over the
long term.
The Incentive Plan provides for the use of a range of equity based instruments to deliver incentives which
focus participants on the delivery of sustained shareholder value and to minimise the cash component
of total remuneration. The various components of the Incentive Plan are outlined below.
Fixed Remuneration Correction Plan
The fixed remuneration correction plan was designed to align total fixed remuneration with market rates
using a share based payment rather than cash. In order to determine appropriate market rates, a peer
group consisting of fourteen development and exploration companies across a range of commodities was
selected on the basis of:
• Company size by reference to market capitalisation;
• Scale and stage of development of projects; and
• Geographic operating locations.
Independent analysis completed by BDO Chartered Accountants determined that a gap existed between
the total fixed remuneration of the Company’s executives in comparison to the Peer Group for given
roles.
In order to ameliorate the gap, in the prior year BDO Chartered Accountants recommended the issue of
Class A Options in the form of Zero Exercise Price Options (ZEPOs) for the difference between:
•
•
the 50th percentile of peer group total fixed remuneration for their given role; versus
the participants total cash based annual fixed remuneration.
23 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Fixed Remuneration Correction Plan (continued)
Class A Options are issued annually in advance, for no consideration and have an exercise price of nil. As
the Class A Options are issued as part of the correction plan, there are no vesting conditions attached
other than the continuation of service which can be waived at the discretion of the Board.
During the year, short term ZEPOs were issued with a one year vesting period in relation to services
performed for the 2017 and 2018 financial years.
Incentive Plan
The Incentive Plan is linked to the achievement of milestones that are set each calendar year by the
Board. The Board selects milestones that are intended to drive ongoing returns for shareholders. Each
milestone is then given a weighting based on significance.
Following the completion of each calendar year, the Board determined which performance milestones
were satisfied in the prior year in order to calculate the quantum of instruments to be issued. The total
incentive plan opportunity, which represents the maximum that could be issued, is determined as
follows:
• 190% of total fixed remuneration for the Managing Director; and
• 160% of total fixed remuneration for all other participants.
The total incentive plan opportunity is divided up between a cash based bonus and a range of equity
based instruments. Each element is given a weighting designed to provide an appropriate mix if short,
medium and long term incentives for participants.
During the reporting period, instruments were issued under the Incentive Plan in relation to milestones
that were achieved during the 2017 calendar year. The Board determined that three out of the four
performance milestones had been satisfied, resulting in the award of up to 75% of the total incentive
plan.
The milestones set for the 2018 year are as follows:
• 30% on the released of a Definitive Feasibility Statement for the Woodlark Project;
• 25% on the restructure of the Group via corporate transaction/s which may include demerger, joint
venture or sale;
• 15% on the Resource growth to a JORC standard of greater than 10% at the Woodlark Project as
measured from the initial GPR Woodlark Resource;
• 15% on release of a new Ore Reserve Statement for the Woodlark Project containing greater than
1M oz Au; and
• 15% on Board acceptance of a financing solution for the development of the Woodlark Project.
24 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Incentive Plan (continued)
The table below outlines the maximum percentages available along with the percentages awarded based
on the milestones met:
Plan
Element
Short
term
incentive
Medium
term
incentive
Long term
incentive
Managing Director
Other Participants
Instrument
Maximum
Available
Incentive
Awarded
Maximum
Available
Incentive
Awarded
Vesting
Period
Exercise
Price
Conditions
Cash based bonus
11%
Nil
11%
Nil
N/A
N/A
N/A
Class B Options -
ZEPOs
Class C Options –
Premium Exercise
Price Options
(PEPOs)
45%
34%
45%
33%
3 years
Nil
21%
16%
21%
14%
4 years
143% of the
Company’s
share price
at grant
date
Long term
incentive
Share Appreciation
Rights (SARs)
23%
17%
23%
18%
3 years
Nil*
Total
100%
67%
100%
65%
* Exercise price of SARs - theoretical exercise price is the Company’s share price at grant date.
Continuation
of service
Continuation
of service
Continuation
of service
The Board, in exercising its discretion, determined that cash based bonuses would not be paid.
Non-Executive Directors
Fees and payments to Non-Executive Directors reflect the demands, which are made on, and the
responsibilities of the Directors. A review of Non-Executive Directors’ fees and payments is conducted
annually. The Board may from time to time seek the advice of independent remuneration consultants to
ensure Non-Executive Directors’ fees and payments are appropriate in the market setting.
The Chairman’s fees are determined independently to the fees of Non-Executive Directors based on
comparative roles in market. The Chairman is not present at any discussions relating to determination
of his own remuneration.
Directors’ fees
Non-Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is
periodically recommended for approval by shareholders. The pool limit currently stands at $400,000 per
year in aggregate as agreed at the 2012 AGM.
A Director may also be paid fees or other amounts if special duties are performed outside the scope of
normal duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a
result of their directorship or any special duties.
25 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Details of Remuneration
The tables below set of the details of the remuneration of the Group’s KMP, pursuant to AASB 124 Related Party Disclosures.
Short Term Benefits
Salaries &
Fees
$
Annual
Leave
$
Bonus
$
Post Employment Benefits
Termination
Payments
$
Super-
annuation
$
Share Based
Payments
Options &
Rights
$
Long Term
Benefits
Long Service
Leave
$
2018
Non-Executive Directors
M Jerkovic
M Bojanjac
I Clyne
C Gilligan (i)
NED Sub-total
Executive Directors
R Heeks
P Leggat (ii)
Directors Sub-total
Other KMP
M Smith
G Zamudio
J Kerr
Other KMP Sub-total
TOTAL
(i)
(ii)
95,000
60,000
60,000
25,000
240,000
330,000
140,000
470,000
210,000
180,000
180,000
570,000
-
-
-
-
-
-
-
-
14,538
6,923
2,423
23,884
1,280,000
23,884
-
-
-
-
-
-
-
-
-
-
-
-
-
9,025
5,700
5,700
2,375
22,800
-
24,938
24,938
19,950
17,100
17,100
54,150
-
-
-
-
-
-
140,000
140,000
-
-
-
-
-
-
10,948
-
10,948
50,311
333,336
383,647
83,849
83,849
83,849
251,547
Performance
Related
%
-
-
14
-
13
52
25
29
29
Total
$
104,025
65,700
76,648
27,375
273,748
380,311
638,274
1,018,585
-
-
-
-
-
-
-
-
1,597
1,369
1,394
4,360
329,934
289,241
284,766
903,941
101,888
140,000
646,142
4,360
2,196,274
Mr C Gilligan commenced on 26 June 2018
Ms P Leggat resigned on 10 September 2018. On this date, the Board approved that Ms. Leggat would be entitled to her unvested Options and
Rights, waiving the service period normally required as at the date she ceased employment. This resulted in an accelerated expensing profile. The
Geopacific Resources Limited share price on that date was $0.022. The fair value of these grants was not changed at the date of modification and
the remaining vesting conditions assigned to her options and rights were not modified on this date.
26 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Details of Remuneration (continued)
2017
Non-Executive Directors
M Jerkovic
M Bojanjac
I Clyne
NED Sub-total
Executive Directors
R Heeks
P Leggat
Directors Sub-total
Other KMP
M Smith
G Zamudio
J Kerr
Other KMP Sub-total
Short Term Benefits
Salaries &
Fees
$
Annual
Leave
Bonus
$
Post Employment Benefits
Termination
Payments
$
Super-
annuation
$
Share Based
Payments
Options &
Rights
$
Long Term
Benefits
Long Service
Leave
95,000
60,000
60,000
215,000
330,000
190,346
520,346
190,346
180,000
180,000
550,346
-
-
-
-
-
-
-
16,346
11,769
13,918
42,033
-
-
-
-
-
50,000
50,000
-
-
-
-
9,025
5,700
5,700
20,425
-
18,083
18,083
18,083
17,100
17,100
52,283
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
1,285,692
42,033
50,000
90,791
The above table presents comparative information for the 2017 financial year.
Performance
Related
%
-
-
-
-
-
-
-
-
Total
$
104,025
65,700
65,700
235,425
330,000
258,429
588,429
224,775
208,869
211,018
644,662
1,468,516
27 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Service Agreements
A summary of the key terms of the Director contracts with the Company are set out below:
Milan Jerkovic - Non-Executive Chairman
• Directors Fees of $95,000 per annum;
• Statutory superannuation contributions;
• Eligible to participate in the long-term incentive schemes offered by the Company; and
• No Notice Period.
Mark Bojanjac - Non-Executive Director
• Directors Fees of $60,000 per annum;
• Statutory superannuation contributions;
• Eligible to participate in the long-term incentive schemes offered by the Company; and
• No Notice Period.
Ian Clyne - Non-Executive Director
• Directors Fees of $60,000 per annum;
• Statutory superannuation contributions;
• Eligible to participate in the long-term incentive schemes offered by the Company; and
• No Notice Period.
Colin Gilligan - Non-Executive Director
• Directors Fees of $60,000 per annum;
• Statutory superannuation contributions;
• Eligible to participate in the long-term incentive schemes offered by the Company; and
• No Notice Period.
Ron Heeks – Managing Director
• Consulting Fees of $330,000 per annum;
• Eligible to participate in the long-term incentive schemes offered by the Company; and
• Six month notice period plus an additional one month for each year of service.
Philippa Leggat – Executive Director - Corporate
• Salary of $210,000 per annum;
• Eligible to participate in the long-term incentive schemes offered by the Company; and
• Four month notice period plus an additional one month for each year of service.
Short-term Incentives
No bonus payments were made to Directors of the Company or other KMP of the Group during the period
and all potential benefits under the short term incentive plan were forfeited.
28 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Long-term Incentives - Share-based Compensation
Options
Options over ordinary shares in the Company were provided as remuneration to Directors of the
Company and KMP of the Group during the year as per the Securities Incentive Plan, which was approved
by shareholders at the Company’s AGM held on 30 May 2018. The following table outlines the Options
granted or vested to the Directors of the Company and other KMP of the Group.
Options
granted
during the
year
Year
Grant date
Fair
value
per
option
at grant
date
Value of
option
at grant
date ($)
Vesting
date
Exercise
price
Expiry
date
Options
vested/
lapsed
during
the year
2018
750,000
30-May-18
$0.030
22,500
10-Jul-19
$0.00
10-Jul-19
2017
2018
2018
2018
2017
2018
2018
2018
2017
2018
2018
2018
2017
2018
2018
2018
2017
2018
2018
2018
94,444
94,444
5,521,875
4,882,500
1,747,222
1,747,222
3,813,333
3,120,000
1,747,222
1,747,222
3,813,333
3,120,000
1,747,222
1,747,222
3,813,333
3,120,000
1,747,222
1,747,222
3,813,333
3,120,000
30-May-18
30-May-18
30-May-18
30-May-18
30-May-18
30-May-18
30-May-18
30-May-18
3-Jul-18
3-Jul-18
3-Jul-18
3-Jul-18
3-Jul-18
3-Jul-18
3-Jul-18
3-Jul-18
3-Jul-18
3-Jul-18
3-Jul-18
3-Jul-18
$0.030
$0.030
$0.030
$0.016
$0.030
$0.030
$0.030
$0.016
$0.030
$0.030
$0.030
$0.016
$0.030
$0.030
$0.030
$0.016
$0.030
$0.030
$0.030
$0.016
2,834
2,834
165,656
78,120
52,417
52,417
114,400
49,920
52,417
52,417
114,400
49,920
52,417
52,417
114,400
49,920
52,417
52,417
114,400
49,920
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
$0.00
$0.00
$0.00
$0.0408
$0.00
$0.00
$0.00
$0.0408
$0.00
$0.00
$0.00
$0.0408
$0.00
$0.00
$0.00
$0.0408
$0.00
$0.00
$0.00
$0.0408
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Instru
-ment
2018
Non-Executive Directors
I Clyne
ZEPO
Executive Directors
ZEPO
R Heeks
ZEPO
R Heeks
ZEPO
R Heeks
PEPO
R Heeks
P Leggat
P Leggat
P Leggat
P Leggat
Other KMP
M Smith
M Smith
M Smith
M Smith
G Zamudio
G Zamudio
G Zamudio
G Zamudio
J Kerr
J Kerr
J Kerr
J Kerr
ZEPO
ZEPO
ZEPO
PEPO
ZEPO
ZEPO
ZEPO
PEPO
ZEPO
ZEPO
ZEPO
PEPO
ZEPO
ZEPO
ZEPO
PEPO
All options were issued on 3 July 2018. The grant date differs for the directors to comply with the
accounting standards.
The fair value of the Options is measured at grant date and allocated equally over the period from grant
date to vesting date. This allocation is reflected in the Share Based Payments column of the remuneration
tables above.
The fair value at grant date was determined by a combination of internal and external sources using a
Black-Scholes option pricing model and independent third party valuations.
29 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Long-term Incentives - Share-based Compensation (continued)
Share Appreciation Rights
Share Appreciation Rights over ordinary shares in the Company were granted as remuneration to
Directors of the Company and KMP of the Group during the year as per the Securities Incentive Plan,
which was approved by shareholders at the Company’s AGM held on 30 May 2018. The following table
outlines the Share Appreciation Rights granted or vested to the Directors of the Company and other KMP
of the Group.
Rights
granted
during the
year
Year
Grant date
Fair
value
per
right at
grant
date
Value of
right at
grant
date ($)
Vesting
date
Exercise
price
Expiry
date
2018
2018
4,838,214
3,565,714
30-May-18
30-May-18
$0.018
$0.018
87,088
64,183
10-Jul-21
10-Jul-21
$0.0285
$0.0285
10-Jul-22
10-Jul-22
2018
2018
2018
3,565,714
3,565,714
3,565,714
3-Jul-18
3-Jul-18
3-Jul-18
$0.018
$0.018
$0.018
64,183
64,183
64,183
10-Jul-21
10-Jul-21
10-Jul-21
$0.0285
$0.0285
$0.0285
10-Jul-22
10-Jul-22
10-Jul-22
Rights
vested/
lapsed
during
the year
-
-
-
-
-
Instru
-ment
2018
Executive Directors
SAR
R Heeks
SAR
P Leggat
Other KMP
M Smith
G Zamudio
J Kerr
SAR
SAR
SAR
All share appreciations rights were issued on 3 July 2018. The grant date differs for the directors to
comply with the accounting standards.
The fair value of the Share Appreciation Rights is measured at grant date and allocated equally over the
period from grant date to vesting date. This allocation is reflected in the Share Based Payments column
of the remuneration tables above.
The fair value at grant date was independently determined by a third party.
30 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Equity Instrument Disclosures Relating to KMP
Options
Options over Ordinary Shares in the Company held during the financial year by Directors of the Company
and other KMP of the Group.
Opening
Balance
1 January
2018
Granted
During
the Year
Exercised
During
the Year
Net
Change
Other
Held at
Resignation
Closing
Balance
31
December
2018
Options
Exercisable
at 31
December
2018(i)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
-
10,593,263
10,427,777
21,771,040
10,427,777
10,427,777
10,427,777
31,283,331
53,054,371
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,427,777
10,427,777
-
-
-
-
10,427,777
-
-
750,000
-
10,593,263
-
11,343,263
10,427,777
10,427,777
10,427,777
31,283,331
42,626,594
-
-
750,000
-
10,593,263
-
11,343,263
10,427,777
10,427,777
10,427,777
31,283,331
42,626,594
2018
Directors
M Jerkovic
M Bojanjac
I Clyne
C Gilligan
R Heeks
P Leggat
Subtotal
Other KMP
M Smith
G Zamudio
J Kerr
Subtotal
TOTAL
(i) Options exercisable at 31 December 2018 have not yet vested.
Share Appreciation Rights
Share Appreciation Rights over Ordinary Shares in the Company held during the financial year by
Directors of the Company and other KMP of the Group.
Opening
Balance
1 January
2018
Granted
During
the Year
Exercised
During
the Year
-
-
-
-
-
-
-
-
-
-
-
4,838,214
3,565,714
8,403,928
2018
Directors
M Jerkovic
M Bojanjac
I Clyne
C Gilligan
R Heeks
P Leggat
Subtotal
Other KMP
-
M Smith
-
G Zamudio
-
J Kerr
-
Subtotal
TOTAL
-
(i) Rights exercisable at 31 December 2018 have not yet vested.
3,565,714
-
3,565,714
-
3,565,714
-
- 10,697,142
- 19,101,070
-
-
-
-
-
-
-
Net
Change
Other
Held at
Resignation
Closing
Balance
31
December
2018
Rights
Exercisable
at 31
December
2018(i)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,565,714
3,565,714
-
-
-
-
3,565,714
-
-
-
-
4,838,214
-
4,838,214
3,565,714
3,565,714
3,565,714
10,697,142
15,535,356
-
-
-
-
4,838,214
-
4,838,214
3,565,714
3,565,714
3,565,714
10,697,142
15,535,356
31 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ REPORT
18. REMUNERATION REPORT – AUDITED (CONTINUED)
Ordinary Shares
The number of Ordinary Shares in the Company held during the financial year by each Director of the
Company and other KMP of the Group, including their personally related parties, are as follows:
Opening
Balance
1 January 2018
Issued on
Vesting of
Performance
Rights
Shares
Acquired on
Market
Held at
Resignation
Closing Balance
31 December
2018
2018
Directors
M Jerkovic
M Bojanjac
I Clyne
C Gilligan
R Heeks
P Leggat
Subtotal
Other KMP
M Smith
G Zamudio
J Kerr
Subtotal
10,418,899
3,416,666
2,400,000
-
7,523,757
-
23,759,322
-
1,000,000
-
1,000,000
TOTAL
24,759,322
-
-
-
-
-
-
-
-
-
-
-
-
2,777,778
-
-
-
1,244,861
-
4,022639
-
-
-
-
4,022639
-
-
-
-
-
-
-
-
-
-
-
-
13,196,677
3,416,666
2,400,000
-
8,768,618
-
27,781,961
-
1,000,000
-
1,000,000
28,781,961
Transaction with directors, director related entities and other related parties
During the year ended 31 December 2018 the Group did not enter into any related party transactions
with directors (2017: $98,673).
END OF REMUNERATION REPORT
The Directors Report, including the Remuneration Report, is signed in accordance with a resolution of
the Directors:
Ron Heeks
Managing Director
Perth, Australia
22 March 2019
32 | P a g e
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Geopacific
Resources Limited
As lead auditor for the audit of the financial report of Geopacific Resources Limited for the financial year
ended 31 December 2018, I declare to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Geopacific Resources Limited and the entities it controlled during the
financial year.
Ernst & Young
Pierre Dreyer
Partner
22 March 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PD:DA:GEOPACIFIC:003
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent Auditor's Report to the Members of Geopacific Resources
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Geopacific Resources Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 31
December 2018, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year then
ended, notes to the financial statements, including a summary of significant accounting policies, and the
directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 31 December
2018 and of its consolidated financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report, which describes the principal conditions that raise
doubt about the Group’s ability to continue as a going concern. These events or conditions indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going
Concern section, we have determined the matters described below to be the key audit matters to be
communicated in our report. For each matter below, our description of how our audit addressed the
matter is provided in that context.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PD:DA:GEOPACIFIC:004
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1.
Carrying value of capitalised exploration and evaluation assets
Why significant
How our audit addressed the key audit matter
At 31 December 2018 the Group held capitalised
exploration and evaluation assets of $37.5 million.
During the year then ended, the Group recorded an
impairment loss of $43.3 million for the Kou Sa area
of interest as described in Notes 3 and 14.
We considered and challenged the Group’s assessment as
to whether there were impairment indicators present that
required the areas of interest for capitalised exploration
and evaluation assets to be tested for impairment as at 31
December 2018.
The carrying value of exploration and evaluation
expenditure is assessed for impairment by the Group
when facts and circumstances indicate that the
exploration and evaluation expenditure for an area of
interest may exceed its recoverable amount.
The determination as to whether there are any
indicators to require an area of interest for capitalised
exploration and evaluation assets to be assessed for
impairment, involves a number of judgments including
whether the Group has tenure, will be able to perform
ongoing expenditure and whether there is sufficient
information for a decision to be made that the
relevant area of interest is not commercially viable.
The Group determined that there were impairment
indicators present in respect of the Kou Sa area of
interest at 31 December 2018. As detailed in Note 14,
the directors estimated that this project’s recoverable
amount exceeded its carrying value by $43.3 million
and hence this amount was recorded as an impairment
loss for the year ended 31 December 2018.
We considered this to be a key audit matter because
significant judgement is required when estimating the
determination of recoverable amount, in relation to:
►
underlying reserves and resources
► multiples associated with comparable project
transactions.
In performing our procedures, we:
►
►
►
Considered whether the Group’s right to explore was
current, which included obtaining and assessing
supporting documentation such as license
agreements
Considered the Group’s intention to carry out
significant ongoing exploration and evaluation
activities in the relevant areas of interest which
included reviewing the Group’s Board approved cash-
flow forecast and enquiring of senior management
and Directors as to their intentions and the strategy
of the Group
Assessed whether exploration and evaluation data
existed to indicate that the carrying value of
exploration and evaluation assets was unlikely to be
recovered through development or sale.
Where impairment indicators were identified we assessed
the key assumptions used in determining recoverable
amount. This included consideration of resource multiples
for comparable projects from external transactions. Our
valuation specialists assisted us in this assessment.
We assessed the adequacy of the disclosures in Note 14 of
the financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PD:DA:GEOPACIFIC:004
2.
Carrying value of discontinued operations
Why significant
How our audit addressed the key audit matter
We challenged the Group’s assessment that the operations
identified as discontinued operations in the prior year
continued to be appropriately classified as such under
Australian Accounting Standards.
We assessed the Group’s determination of fair value less
disposal costs to ensure that it was supportable.
We assessed the adequacy of the disclosures in Note 12 of
the financial report.
At 31 December 2018 the Group held assets classified
as held for sale of $0.15 and recorded an impairment
loss of $7.0 million in respect of its discontinued
operations as described in Notes 3 and 12. These
operations were initially classified as a discontinued
operation in the prior financial year.
Australian Accounting Standards set out a number of
requirements before an operation is able to be
classified as a discontinued operation. Where an
operation qualifies to be classified as a discontinued
operation, the net assets within that operation are
disclosed as assets held for sale. Assets classified as
held for sale are required to carried at the lower of
carrying value or fair value less disposal costs.
The Group determined that the fair value less disposal
costs of the assets held for sale were lower than their
associated carrying value by $7.0 million, requiring an
impairment loss of this amount for the year ended 31
December 2018.
We considered this to be a key audit matter as
significant judgement was involved in determining:
►
►
whether the operation met the requirements to
be classified as a discontinued operation; and
the estimated fair value less disposal costs of
assets classified as held for sale.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2018 Annual Report other than the financial report and our auditor’s report
thereon. We obtained the Review of Operations and Directors’ Report that are to be included in the
Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections
of the Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PD:DA:GEOPACIFIC:004
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PD:DA:GEOPACIFIC:004
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 21 to 32 of the directors' report for the year
ended 31 December 2018.
In our opinion, the Remuneration Report of Geopacific Resources Limited for the year ended 31
December 2018, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
Pierre Dreyer
Partner
Perth
22 March 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PD:DA:GEOPACIFIC:004
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Geopacific Resources Limited, I declare that:
1.
In the opinion of the Directors:
(a) the financial statements and notes, of Geopacific Resources Limited for the financial year ended 31
December 2018 are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2018
and of its performance for the year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001.
(b) the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in Note 1.
(c) Subject to the matters disclosed in Note 1, there are reasonable grounds to believe that the Company
will be able to pay its debts as and when they become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors by
the Chief Executive Officer and Chief Financial Officer in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 31 December 2018.
On behalf of the Board
Ron Heeks
Managing Director
Perth, Australia
22 March 2019
39 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
Finance Income
Administration expenses
Consultancy expense
Depreciation expense
Employee benefits expense
Share based payments
Occupancy expenses
Discount unwind
Impairment write downs
Loss before income tax
Note
6
16
26
17
Consolidated
2018
$
2017
$
Restated
64,013
104,313
(275,809)
(1,162,501)
(36,121)
(1,572,695)
(709,371)
(170,167)
(1,123,578)
(44,230,355)
(49,216,584)
(394,158)
(1,133,527)
(26,952)
(1,234,397)
-
(152,448)
(831,726)
-
(3,668,895)
Income tax benefit/(expense)
9
474,749
(28,395)
Loss after tax from continuing operations
(48,741,835)
(3,697,290)
Loss after tax from discontinued operation (attributable to
equity holders of the company)
Loss for the period
32
(5,008,824)
(53,750,659)
(345,621)
(4,042,911)
Income/(loss) for the year attributable to:
Non-controlling interest
Owners of the parent
Other comprehensive income/(loss)
Items of other comprehensive income/(loss) to be
reclassified to profit or loss in subsequent periods (net of
tax)
Exchange differences on translating foreign controlled
entities
Other comprehensive income/(loss) for the year, net of
tax
(80,466)
(53,670,193)
(32,399)
(4,010,512)
(53,750,659)
(4,042,911)
4,708,862
(1,810,198)
4,708,862
(1,810,198)
Total comprehensive loss for the year attributable to
members of the parent entity
(49,041,797)
(5,853,109)
40 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
Total comprehensive income/(loss) attributable to:
Non-controlling interest
Owners of the parent
Consolidated
2018
$
2017
$
Restated
Note
27,245
(49,069,042)
(49,041,797)
52,894
(5,906,003)
(5,853,109)
Loss per share (cents) for loss from continuing operations
attributable to the ordinary equity holders of the company:
Basic earnings per share
Diluted earnings per share
Loss per share (cents) for loss attributable to the ordinary
equity holders of the company:
Basic loss per share
Diluted loss per share
27
27
27
27
(2.49)
(2.49)
(0.27)
(0.27)
(2.74)
(2.74)
(0.29)
(0.29)
The above consolidated statement of profit or loss and other comprehensive income should be read
in conjunction with the accompanying notes.
41 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
2018
$
Consolidated
2017
$
Restated
Note
Current Assets
Cash and cash equivalents
Receivables
Assets classified as held for sale
Inventory
Total Current Assets
Non-Current Assets
Receivables
Exploration and evaluation expenditure
Prepayment
Property, plant and equipment
Total Non-Current Assets
TOTAL ASSETS
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Non-Current Liabilities
Deferred tax liabilities
Trade and other payables
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
Total equity attributable to equity holders
Non-controlling interest
Total Equity
10
11
12
13
11
14
16
17
18
9
17
18
19
20
2016
$
Restated
11,469,015
2,265,486
-
-
13,734,501
3,059,221
316,617
149,388
242,771
3,767,997
6,765,343
155,540
4,831,070
280,802
12,032,755
-
37,494,025
-
841,611
38,335,636
602,503
67,389,026
-
696,016
68,687,545
-
37,039,623
13,679,845
100,063
50,819,531
42,103,633
80,720,300
64,554,032
3,236,829
135,569
3,372,398
1,797,045
317,144
2,114,189
573,122
10,184
583,306
-
3,852,972
192,548
4,045,520
474,749
4,622,793
173,714
5,271,256
2,218,897
4,034,468
-
6,253,365
7,417,918
7,385,445
6,836,671
34,685,715
73,334,855
57,717,361
104,116,108
5,790,853
(76,061,543)
33,845,418
840,297
34,685,715
94,432,822
(383,128)
(22,391,350)
71,658,344
1,676,511
73,334,855
74,671,129
1,427,070
(18,380,838)
57,717,361
-
57,717,361
The above consolidated statement of financial position should be read
in conjunction with the accompanying notes.
42 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDING 31 DECEMBER 2018
Consolidated
Issued
Capital
$
Share
Based
Payments
Reserve
$
Foreign
Currency
Translation
Reserve
$
Other
Equity
Reserve
Accumulated
Losses
$
$
Total
Attributable
to Owners of
Parent
$
Non-
Controlling
Interest
Total
Equity
$
$
At 1 January 2018
Profit/(loss) for the year
Exchange difference on translation of foreign operations
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as owners
Shares issued during the year
Share issue costs
Transfer to other reserve
Share based payments
94,432,822
-
-
-
10,080,000
(396,714)
-
-
789,838
-
-
-
-
-
-
709,371
(1,172,966)
-
4,708,862
4,708,862
-
-
-
-
(22,391,350)
(53,670,193)
-
(53,670,193)
71,658,344
(53,670,193)
4,708,862
(48,961,331)
1,676,511
(80,466)
-
(80,466)
73,334,855
(53,750,659)
4,708,862
(49,041,797)
-
-
-
-
-
-
755,748
-
-
-
-
-
10,080,000
(396,714)
755,748
709,371
-
-
(755,748)
-
10,080,000
(396,714)
-
709,371
At 31 December 2018
104,116,108
1,499,209
3,535,896
755,748
(76,061,543)
33,845,418
840,297
34,685,715
At 1 January 2017
Prior period restatement
At 1 January 2017 (restated)
Profit/(loss) for the year
Exchange difference on translation of foreign operations
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as owners
Shares issued during the year
Share issue costs
Acquisition of subsidiaries
At 31 December 2017
74,671,129
-
74,671,129
-
-
-
20,369,749
(608,056)
-
94,432,822
789,838
-
789,838
-
-
-
-
-
-
789,838
637,232
-
637,232
-
(1,810,198)
(1,810,198)
-
-
-
(1,172,966)
-
-
-
-
-
-
-
-
-
-
(18,185,657)
(195,181)
(18,380,838)
(4,010,512)
-
(4,010,512)
-
-
-
(22,391,350)
57,912,542
(195,181)
57,717,361
(4,010,512)
(1,810,198)
(5,820,710)
20,369,749
(608,056)
-
71,658,344
-
-
-
(32,399)
-
(32,399)
57,912,542
(195,181)
57,717,361
(4,042,911)
(1,810,198)
(5,853,109)
-
-
1,708,910
1,676,511
20,369,749
(608,056)
1,708,910
73,334,855
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
43 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDING 31 DECEMBER 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Net Cash Used In Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
Exploration expenditure
Cash acquired on acquisition of a subsidiary
Net Cash Used In Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issues (net of costs)
Net Cash From Financing Activities
Consolidated
Note
2018
$
2017
$
(3,580,837)
64,013
(3,516,824)
(4,037,087)
104,313
(3,932,774)
31(b)
(246,401)
(9,626,184)
-
(9,872,585)
(30,029)
(11,062,437)
254,605
(10,837,861)
9,683,287
9,683,287
10,066,962
9,985,784
NET DECREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of the financial year
CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR
(3,706,122)
6,765,343
3,059,221
(4,703,673)
11,469,016
6,765,343
The above table presents comparative information where required for consistency with the current year’s presentation.
The above consolidated statement of cash flows should be read
in conjunction with the accompanying notes.
44 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Geopacific Resources Limited (“the Company” or “Geopacific”) is an Australian Securities Exchange listed
public company domiciled in Australia. The consolidated financial report of the Company for the financial
year ended 31 December 2018 comprises the Company and its controlled entities (together referred to as
the ‘Group’). The registered office is located at 278 Stirling Highway, Claremont, 6008.
The Group is principally engaged in mineral development and exploration focussed on gold and copper
deposits in Papua New Guinea and Cambodia.
The financial report was authorised for issue by the directors on 22 March 2019.
Basis of preparation
The financial report is a general purpose financial report that has been prepared in accordance with
Australian Accounting Standards, 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.
Compliance with Australian Accounting Standards ensures that the financial statements and the notes
thereto also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Material accounting policies adopted in the preparation of these financial statements are presented below
and have been consistently applied unless otherwise stated.
The financial report has been prepared on a historical cost basis.
Going Concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of
normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of
business.
During the year ended 31 December 2018, the Group incurred a net loss after tax of $53,750,659 (2017:
$4,042,911) and had cash outflows from operations of $3,516,824 (2017: $3,932,774).
Whilst the Group has cash on hand of $3,059,221 (2017: $6,765,343) at 31 December 2018, the Group’s cash
flow forecast for the year ended 31 December 2019 reflects that the Group will require additional funding
over that period in order to meet the Group’s committed expenditure.
45 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Going Concern (continued)
The Directors have considered the funding and operational status of the business in arriving at their
assessment of going concern and believe that the going concern basis of preparation is appropriate based
on:
• The Group’s ability to raise funds from external sources to meet ongoing development, exploration and
working capital requirements, as demonstrated by the capital raising of $10.1 million during the year
ended 31 December 2018;
• The Group’s ability to manage the timing of cash flows to meet the obligations of the business as and
when they fall due; and
• The Group’s ability to renegotiate the repayment terms of the deferred consideration liability with a
present value of $6.2 million owed for the purchase of the Kou Sa Project, as the Group has previously
renegotiated the repayment terms in September 2016 and is confident that it can do so again (see Note
17).
Notwithstanding the above, these conditions indicate the existence of a material uncertainty that may cast
a significant doubt about the Group’s ability to continue as a going concern and, therefore, whether it will be
unable to realise its assets and discharge its liabilities in the normal course of business and at the amounts
stated in this financial report.
This financial report does not include any adjustments relating to the recoverability and classification of
recorded asset amounts, nor to the amounts or classification of liabilities that might be necessary should the
Group not be able to continue as a going concern.
New and amended Accounting Standards and Interpretations adopted during the year
The Group has adopted all Accounting Standards and Interpretations effective from 1 January 2018, including:
AASB 9 Financial Instruments (AASB 9)
The Group has adopted AASB 9 as issued in July 2014 with the date of initial application being 1 January 2018.
In accordance with the transitional provisions in AASB 9, comparative figures have not been restated. AASB
9 replaces parts of AASB 139 Financial Instruments: Recognition and Measurement (AASB 139), bringing
together all three aspects of the accounting for financial instruments: classification and measurement,
impairment and hedge accounting. The accounting policies have been updated to reflect the application of
AASB 9 for the period from 1 January 2018 (see note 1(d) for details of the new accounting policy for financial
assets).
46 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New and amended Accounting Standards and Interpretations adopted during the year (continued)
Measurement and classification
Under AASB 9, there is a change in the classification and measurement requirements relating to financial
assets. Previously, there were four categories of financial assets: loans and receivables, fair value through
profit or loss, held to maturity and available for sale. Under AASB 9, financial assets are either classified as
amortised cost, fair value through profit or loss or fair value through other comprehensive income.
For debt instruments, the classification is based on two criteria: the Group’s business model for managing
the assets, and whether the instruments’ contractual cash flows represent ‘solely payments of principal and
interest’ on the principal amount outstanding (the SPPI criterion).
At date of initial application, existing financial assets and liabilities of the Group were assessed in terms of
the requirements of AASB 9. The assessment was conducted on instruments that had not been derecognised
as at 1 January 2018. In this regard, the Group has determined that the adoption of AASB 9 has impacted the
classification of financial instruments at 1 January 2018 as follows:
Class of financial
instrument presented in
the statement of financial
position
Original measurement
category under AASB 139
(i.e. prior to 1 January
2018)
Cash at bank and on
hand
Receivables
Trade and other
payables
Loans and receivables
Loans and receivables
Financial liabilities at
amortised cost
New measurement category under
AASB 9
(i.e. from 1 January 2018)
Financial assets at amortised
cost
Financial assets at amortised
cost
Financial liabilities at amortised
cost
Carrying value at
31 December
2017 under AASB
139
$6,765,343
$758,043
$6,419,838
The change in classification of financial instruments has not resulted in any re-measurement adjustments at
1 January 2018.
47 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New and amended Accounting Standards and Interpretations adopted during the year (continued)
Impairment of financial assets
In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit loss model to
be applied as opposed to an incurred credit loss model under AASB 139. The expected credit loss model
requires the Group to account for expected credit losses and changes in those expected credit losses at each
reporting date to reflect changes in credit risk since initial recognition of the financial asset. In particular,
AASB 9 requires the Group to measure the loss allowance at an amount equal to lifetime expected credit loss
(ECL) if the credit risk on the instrument has increased significantly since initial recognition. On the other
hand, if the credit risk on the financial instrument has not increased significantly since initial recognition, the
Group is required to measure the loss allowance for that financial instrument at an amount equal to the ECL
within the next 12 months.
At 1 January 2018, the Group reviewed and assessed the existing financial assets for impairment using
reasonable and supportable information. Based on historical and expected losses, the application of the ECL
model had no significant impact on the Group. The result of the assessment is as follows:
Items existing at 1 January
2018 that are subject to the
impairment provisions of
AASB 9
Cash at bank and short-term
deposits
Receivables
Credit risk attributes
All balances are assessed to have low credit risk as
they are either on demand or have short term
maturities and held with reputable financial
institutions with high credit ratings.
The Group has applied the simplified approach and
concluded that the lifetime ECL for these assets
would be negligible due to the short term maturity
and therefore no additional loss allowance was
required at 1 January 2018.
Cumulative
additional loss
allowance
recognised on 1
January 2018 ($)
-
-
48 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New and amended Accounting Standards and Interpretations adopted during the year (continued)
Hedge accounting
The Group has not applied hedge accounting.
AASB 15 Revenue from Contracts with Customers (AASB 15)
The Group has adopted AASB 15 as issued in May 2014 with the date of initial application being 1 January
2018. In accordance with the transitional provisions in AASB 15, the Group has adopted the standard using
the full retrospective approach.
AASB 15 supersedes AASB 18 Revenue and related interpretations and it applies to all revenue arising from
contracts with customers, unless those contracts are in the scope of other standards. The new standards
establishes a five-step model to account for revenue arising from contracts with customers. Under AASB 15,
revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled
in exchange for transferring goods or services to a customer. Under AASB 15, revenue is recognised at an
amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring
goods or services to a customer.
At 1 January 2018 it was determined that the adoption of AASB 15 had no impact on the Group.
49 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
New and Amended Accounting Standards and Interpretations issued but not yet effective
Australian Accounting Standards that have recently been issued or amended but are not yet effective and
have not been adopted by the Group for the annual reporting year ended 31 December 2018 are outlined
in the table below. The potential effect of these Standards is yet to be fully determined.
Reference
Title
Summary
AASB 16
Leases
The key features of AASB 16 are as follows:
Lessee accounting
Application date
of standard*
January
1
2019
for Group
1 January
2019
•
Lessees are required to recognise assets and
liabilities for all leases with a term of more than
12 months, unless the underlying asset is of low
value.
• Assets and liabilities arising from a lease are
initially measured on a present value basis. The
measurement includes non-cancellable lease
payments
inflation-linked
payments), and also includes payments to be
made in optional periods if the lessee is
reasonably certain to exercise an option to
extend the lease, or not to exercise an option
to terminate the lease.
(including
• AASB 16 contains disclosure requirements for
lessees.
Lessor accounting
• AASB 16 substantially carries forward the lessor
accounting
in AASB 117.
requirements
Accordingly, a lessor continues to classify its
leases as operating leases or finance leases,
and to account for those two types of leases
differently.
• AASB 16 also requires enhanced disclosures to
improve
be provided by
information disclosed about a lessor’s risk
exposure, particularly to residual value risk.
lessors that will
AASB 16 supersedes:
a) AASB 117 Leases
b) Interpretation 4 Determining whether an
Arrangement contains a Lease
c) SIC-15 Operating Leases—Incentives
Evaluating
d) SIC-27
the
of
Transactions Involving the Legal Form of a
Lease
Substance
The new standard will be effective for annual periods
beginning on or after 1 January 2019.
50 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
Significant accounting policies
The following is a summary of the material accounting policies adopted by the Group in the preparation of
the financial report. The accounting policies have been consistently applied, unless otherwise stated.
(a) Cash and cash equivalents
Cash and short-term deposits in the consolidated statement of financial position comprise cash at bank
and on hand. Cash equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash
and cash equivalents as defined above.
(b) Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction from the proceeds.
(c) Employee benefits
Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be
wholly settled within 12-months of the reporting date are recognised in provisions in respect of
employees’ services up to the reporting date. The liabilities are measured at the amounts expected to be
paid when they are settled. All other amounts are considered other long term benefits for measurement
purposes and are measured at the present value of expected future payments to be made in respect to
services provided by employees.
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as
the present value 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 salary levels, experience of employee departures and periods of service. Expected future
payments are discounted using market yields at the reporting date on high quality corporate bonds with
terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Superannuation
The Group makes contributions on behalf of its employees to complying superannuation funds in
accordance with the rates outlined by the statutory regulations.
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and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Employee benefits (continued)
Share-based payments
The fair value of options and rights granted to Directors and employees is recognised as a share based
payments expense with a corresponding increase in equity. The fair value is measured at grant date and
recognised over the period during which the employees become unconditionally entitled to the options
or rights.
The fair value at grant date is determined by a combination of internal and external sources using a Black-
Scholes option pricing model and independent third party valuations that take into account the exercise
price, the term of the right or option, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the
term of the right or option.
The fair value of the options and rights granted is adjusted to reflect market vesting conditions, but
excludes the impact of any non-market vesting conditions (for example, profitability and sales growth
targets). Non-market vesting conditions are included in assumptions about the number of options and
rights that are expected to become exercisable. At each year end, the Company revises its estimate of
the number of options that are expected to become exercisable. The employee benefit expense
recognised each period takes into account the most recent estimate.
Upon the exercise of options or rights, the balance of the share-based payments reserve relating to those
options is transferred to share capital and the proceeds received, net of any directly attributable
transaction costs, are credited to share capital.
(d) Financial Instruments (new policy applied from 1 January 2018 due to adoption of AASB 9)
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair
value through other comprehensive income (OCI), or fair value through profit or loss (FVTPL).
The classification of financial assets at initial recognition that are debt instruments depends on the
financial asset’s contractual cash flow characteristics and the Group’s business model for managing them.
With the exception of trade receivables that do not contain a significant financing component or for
which the Group has applied the practical expedient, the Group initially measures a financial asset at its
fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
Trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient for contracts that have a maturity of one year or less, are measured at
the transaction price determined under AASB 15.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it
needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal
amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument
level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in
order to generate cash flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the financial assets, or both.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Financial Instruments (new policy applied from 1 January 2018 due to adoption of AASB 9) (continued)
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e.
the date that the Group commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
•
•
Financial assets at amortised cost (debt instruments)
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses
upon derecognition (equity instruments)
Financial assets at fair value through profit or loss
•
•
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost
if both of the following conditions are met:
•
The financial asset is held within a business model with the objective to hold financial assets in order
to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
•
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR)
method and are subject to impairment. Interest received is recognised as part of finance income in the
statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or
loss when the asset is derecognised, modified or impaired.
Financial assets at fair value through profit or loss
Financial assets that do not meet the criteria for amortised cost are measured at fair value through profit
and loss.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Financial Instruments (new policy applied from 1 January 2018 due to adoption of AASB 9) (continued)
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at
fair value through profit or loss. ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the Group expects to receive, discounted
at an approximation of the original EIR. ECLs are recognised in two stages. For credit exposures for which
there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit
losses that result from default events that are possible within the next 12-months (a 12-month ECL). For
those credit exposures for which there has been a significant increase in credit risk since initial
recognition, a loss allowance is required for credit losses expected over the remaining life of the
exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and other receivables due in less than 12 months, the Group applies the simplified
approach in calculating ECLs. In this regard, the Group recognises a loss allowance based on the financial
asset’s lifetime ECL at each reporting date The lifetime ECL on these financial assets is estimated based
on the Group’s historic credit loss experience, adjusted for factors that are specific to the debtor, general
economic conditions and an assessment of both the current as well as forecast conditions at the reporting
date.
For all other financial assets measured at amortised cost, the Group recognises lifetime ECLs when there
has been a significant increase in credit risk since initial recognition. If the credit risk on the financial
instrument has not increased significantly since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to a 12 month ECL. The determination of the
ECL includes both quantitative and qualitative information and analysis, based on the Group’s historical
experience and forward-looking information.
The Group considers an event of default has occurred when a financial asset is more than 90 days past
due or external sources indicate that the debtor is unlikely to pay its creditors, including the Group. A
financial asset is credit impaired when there is evidence that the counterparty is in significant financial
difficulty or a breach of contract, such as a default or past due event has occurred. The Group writes off
a financial asset when there is information indicating the counterparty is in severe financial difficulty and
there is no realistic prospect of recovery.
(e) Financial Instruments (policy applied pre 1 January 2018)
Initial recognition and measurement
Financial assets and liabilities are recognised when the entity becomes a party to the contractual
provisions of the instrument. For financial assets, this is equivalent to the date that the Company commits
itself to either the purchase or sale of the asset.
Financial instruments are initially measured at fair value plus transaction costs, except where the
instrument is classified ‘at fair value through profit or loss’, in which case transaction costs are expensed
to profit or loss immediately.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Financial Instruments (policy applied pre 1 January 2018) (continued)
Derecognition
Financial assets are derecognised when the right to receive cash flows from the financial assets have
expired or been transferred. Financial liabilities are derecognised when the related obligations are either
transferred, discharged or expired. The difference between the carrying value of the financial liability
extinguished or transferred to another party and the fair value of consideration paid, including the
transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest
method, or cost.
Financial assets 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. The classification
depends on the purpose for which the investments were acquired. Designation is re-evaluated at each
financial year end, but there are restrictions on reclassifying to other categories.
(i) Loans and receivables
Loans and receivables 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. Gain or losses are recognized in profit or loss through the amortisation process and when the
financial asset is derecognised.
(ii) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at
amortised cost using the effective interest method.
The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognised and included
in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion
option classified as equity will remain in equity until the conversion option is exercised, in which case,
the balance recognised in equity will be transferred to issued capital. Where the conversion option
remains unexercised at the maturity date of the convertible note, the balance recognised in equity will
be transferred to accumulated losses within equity.
No gain or loss is recognised in profit or loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity
components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity
component are recognised directly in equity. Transaction costs relating to the liability component are
included in the carrying amount of the liability component and are amortised over the lives of the
convertible notes using the effective interest method.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Financial Instruments (policy applied pre 1 January 2018) (continued)
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a
financial asset has been impaired. A financial asset (or a group of financial assets) is deemed to be
impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a
“loss event”) having occurred, which has an impact on the estimated future cash flows of the financial
asset(s).
In the case of financial assets carried at amortised cost, loss events may include: indications that the
debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in
interest or principal payments; indications that they will enter bankruptcy or other financial
reorganisation; and changes in arrears or economic conditions that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance
account is used to reduce the carrying amount of financial assets impaired by credit losses. After having
taken all possible measures of recovery, if management establishes that the carrying amount cannot be
recovered by any means, at that point the written-off amounts are charged to the allowance account or
the carrying amount of impaired financial assets is reduced directly if no impairment amount was
previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been
renegotiated, the Group recognises the impairment for such financial assets by taking into account the
original terms as if the terms have not been renegotiated so that the loss events that have occurred are
duly considered.
(f) Foreign currency transactions and balances
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (‘the functional currency’).
The consolidated financial statements are presented in Australian dollars, which is Geopacific Resources
Limited’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit
or loss and other comprehensive income.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the
Group’s presentation currency, are translated as follows:
• assets and liabilities are translated at year-end exchange rates prevailing at reporting date; and
•
income and expenses are translated at average exchange rates for the period.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) Foreign currency transactions and balances (continued)
Exchange differences arising on translation of foreign operations are transferred directly to the Group’s
foreign currency translation reserve in the statement of changes in equity. These differences are
recognised in the consolidated statement of profit or loss and other comprehensive income in the period
in which the operation is disposed.
(g) Goods and Services Tax (GST) & Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of associated GST or VAT, unless the
GST or VAT incurred is not recoverable from the taxation authority. In this case, the GST or VAT is
recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST or VAT receivable or payable. The
net amount of GST or VAT recoverable from, or payable to, the taxation authority is included with other
receivables or payables in the consolidated statement of financial position.
Cash flows are presented on a gross basis. The GST or VAT components of cash flows arising from
investing or financing activities which are recoverable from, or payable to the taxation authority, are
presented as operating cash flows.
(h) Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal
of the impairment at each reporting date.
(i) Interests in Joint Arrangements
Joint arrangements represent the contractual sharing of control between parties in a business venture
where unanimous decisions about relevant activities are required. Separate joint venture entities
providing joint venturers with an interest in net assets are classified as a joint venture and accounted for
using the equity method.
Joint venture operations represent arrangements whereby joint operators maintain direct interests in
each asset and exposure to each liability of the arrangement. The Group’s interests in the assets,
liabilities, revenue and expenses of joint operations are included in the respective line items of the
consolidated financial statements.
Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties’
interests. When the Group makes purchases from a joint operation, it does not recognise its share of the
gains and losses from the joint arrangement until it resells those goods/assets to a third party.
57 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Income tax
The income tax expense or revenue for the year is the tax payable on the current year’s taxable income
based on the notional income tax rate adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are settled. The relevant tax rates are applied to the
cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset
or liability. An exception is made for certain temporary differences arising from the initial recognition of
an asset or a liability.
No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in
a transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit or loss.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying
amount and tax bases of investments in controlled entities where the Company is able to control the
timing of the reversal of the temporary differences and it is probable that the differences will not reverse
in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
(k) Loss per share
Basic loss per share
Basic loss per share is calculated by dividing the result attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares
issued during the year.
Diluted loss per share
Diluted loss per share adjusts the figures used in the determination of basic loss per share to take into
account the after tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
(l) Mineral Tenements and Deferred Mineral Exploration Expenditure
Exploration and evaluation expenditure is carried forward as an asset when rights to tenure are current;
and:
•
such costs are expected to be recouped through the successful development and exploitation of the
area of interest, or by its sale; or
• exploration activities in the area of interest have not reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves and active or
significant operations in, or in relation to, the area of interest are continuing.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l) Mineral Tenements and Deferred Mineral Exploration Expenditure (continued)
In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of
reduced value, accumulated costs carried forward are written off or impaired in the year in which that
assessment is made. A regular review is undertaken of each area of interest to determine the
appropriateness of continuing to carry forward costs in relation to that area of interest.
Immediate restoration, rehabilitation and environmental costs necessitated by exploration and
evaluation activities are treated as exploration and evaluation expenditure. Exploration activities
resulting in future obligations in respect of restoration costs result in a provision to be made by
capitalising the estimated costs, on a discounted basis, of restoration. The unwinding of the effect of the
discounting on the provision is recorded as a finance cost in the statement of profit or loss and other
comprehensive income.
(m) Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated
impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of
the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to the consolidated statement of profit or loss and other comprehensive income during the
financial year in which they are incurred.
Depreciation on assets is calculated using the straight-line or diminishing value method to allocate their
cost, net of their residual values, over their estimated useful lives, as follows:
• Plant and equipment
• Computer software
• Motor vehicles
• Furniture and fittings
5% - 37.5%
25%
25% - 33%
7% - 20%
The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted
prospectively if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
An item of plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected to arise from the continued use of the asset.
Any gains or loss on the derecognition of an asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) are included in the consolidated statement of profit or
loss and other comprehensive income in the period the item is derecognised.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(n) Inventory
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in,
first-out method as all inventory at year-end are parts and supplies, which are consumed in the normal
course of operations.
Company policy is to recognise major stock items consisting of diesel, cements, chemicals, piping,
lubricants and other fuel-based products as assets at period-end based on inventory counts conducted.
Minor stock items consisting of small equipment parts, minor lubricants and other related materials are
immediately expensed out and capitalised as part of deferred exploration expenditures which is included
under intangible assets.
(o) Principles of consolidation
The consolidated financial statements comprise the financial statements of Geopacific Resources Limited
and its controlled entities, referred to collectively throughout these financial statements as the “Group”.
Controlled entities are consolidated from the date on which control commences until the date that
control ceases.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if, and only if, the Group has:
• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee);
• Exposure, or rights, to variable returns from its involvement with the investee; and
• The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an investee,
the Group considers all relevant facts and circumstances in assessing whether it has power over an
investee, including:
• The contractual arrangement(s) with the other vote holders of the investee;
• Rights arising from other contractual arrangements;
• The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year
are included in the consolidated financial statements from the date the Group gains control until the date
the Group ceases to control the subsidiary.
The financial statements of the controlled entities are prepared for the same reporting period as the
parent company using consistent accounting policies. Adjustments are made to bring into line any
dissimilar accounting policies that may exist.
The balances and effects of transactions between controlled entities included in the consolidated
financial statements have been fully eliminated.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(o) Principles of consolidation (continued)
Non-controlling interest
Non-controlling interests are allocated their share of net profit or loss after tax in the consolidated
statement of profit or loss and other comprehensive income and are presented within equity in the
consolidated statement of financial position, separately from the equity of the owners of the parent.
Losses are attributed to the non-controlling interests even if that results in a deficit balance. When
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of the Group are eliminated in full
on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is
accounted for as an equity transaction.
(p) Assets held for sale
Assets and disposal groups are classified as ‘held for sale’ if their carrying amount is to be recovered
principally through a sales transaction rather than through continuing use. The reclassification takes
place when the assets are available for immediate sale and the sale is highly probably. Non-current assets
held for sale are measured at the lower of carrying amount and fair value less costs of disposal. Assets
held for sale are not depreciated or amortised.
(q) Interest Revenue
Revenue is recognised as the interest accrues using the effective interest method.
(r) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes
in presentation for the current financial year.
(s) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to the statement of profit or loss and other comprehensive income on a
straight-line basis over the period of the lease.
(t) Provisions
Provisions are recognised when the Group has legal or constructive obligation, as a result of past events,
for which it is probable that an outflow of economic benefits will result and that outflow can be reliably
measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the
end of the reporting period.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u) Business combinations
The acquisition method of accounting is used to account for all business combinations regardless of
whether equity instruments or other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the Group. The consideration transferred also includes the fair value of any
asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-
existing equity interest in the subsidiary. Acquisition related costs are expensed as incurred. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition by
acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or
at the non-controlling interest's proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of
all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain
purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity's
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value with changes in fair value recognised in
statement of profit or loss and other comprehensive income.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
2
FINANCIAL RISK MANAGEMENT
The Group has exposure to a variety of risks arising from its use of financial instruments. This note presents
information about the Group’s exposure to the specific risks, and the policies and processes for measuring
and managing those risks. Further quantitative disclosures are included throughout this financial report. The
Board of Directors have the overall responsibility for the risk management framework.
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from transactions with customers and
investments.
The Directors do not consider that the Group’s financial assets are subject to a material level of credit
risk. Therefore, no disclosures are made.
Receivables
The Group has no listed investments and the current nature of the business activity does not result in
trading receivables. The receivables that the Group recognises through the normal course of business
are short term in nature. The risk of non-recovery of receivables from this source is considered to be
negligible.
Cash deposits
The Group’s primary banker is the ANZ Banking Group. The Group currently has no significant
concentrations of credit risk. The Moody’s credit rating of ANZ Banking Group is A1.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it has sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group manages its liquidity risk by monitoring its cash reserves and forecast spending. Management
is cognisant of the future demands for resources to finance the Group’s current and future operations,
and consideration is given to the liquid assets available to the Group before commitment is made for
future expenditure or investment.
(c) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
equity prices will affect the Group’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising any return.
63 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
2
FINANCIAL RISK MANAGEMENT (CONTINUED)
(c) Market risk (continued)
Foreign exchange risk
The Group operates in Australia, Papua New Guinea, Cambodia and Fiji and is exposed to foreign
exchange risks arising from the fluctuation of the exchange rates of the Australian dollar, United States
dollar, the Fijian dollar and the PNG Kina. The Group has no further material foreign currency dealings
other than the above.
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities
are denominated in a currency that is not the functional currency of the Group entity in question. The
Group does not have a formal foreign currency risk management policy however, it monitors its foreign
currency expenditure in light of exchange rate movements.
Interest rate risk
The Group does not have significant interest bearing assets and the Group’s income and operating cash
flows are not materially exposed to changes in market interest rates. The assets are short term interest
bearing deposits. No financial instruments have been used to mitigate risk (Note 30 – Financial
Instruments).
(d) Capital management
The Board’s policy is to maintain a sound capital base, defined as equity, so as to maintain investor,
creditor and market confidence and to sustain future development of the business. The Board of
Directors monitors capital expenditure and cash flows as mentioned in (b).
The objective when managing capital is to safeguard the Group’s ability to continue as a going concern,
so as to maintain a strong capital base sufficient to maintain future exploration and development of its
projects. In order to maintain or adjust the capital structure, the Group may return capital to
shareholders, issue new shares or sell assets to reduce debt. The Group’s focus has been to raise
sufficient funds through equity to fund exploration and evaluation activities.
There were no changes in the Group’s approach to capital management during the year. Risk
management policies and procedures are established with regular monitoring and reporting. Neither the
Company nor any of its controlled entities are subject to externally imposed capital requirements.
64 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
3
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors
including expectations of future events that may have a financial impact on the Group and that are believed
to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition, seldom equal the related actual results.
Key judgments
Exploration and evaluation expenditure
The Group’s policy in relation to the accounting for exploration and evaluation expenditure is stated in Note
1(l). There is judgment involved in determining the treatment of exploration and evaluation expenditure,
including, the interest rate to be applied to present value any deferred payments and in determining whether
it should be carried forward as capitalised exploration, or written off to the consolidated statement of profit or
loss and comprehensive income.
The Board and management give due consideration to the areas of interest relating to the exploration and
evaluation expenditure on a regular basis and are confident that decisions to either write off or carry forward
such expenditure reflect fairly the prevailing situation. In the year ended 31 December 2018, $43,306,477 has
been written off in relation to the Kou Sa Project (2017: nil).
Assets held for sale
Assets held for sale are measured at the lower of cost and fair value less estimated costs of sale. If the fair
value at reporting date is lower than the carrying value, an impairment for the difference is recognised in the
Group’s financial report.
During the year the decision was made not to renew the Raki Raki, Qalau, Tabuka, Cakaudrove and Nuku
licences. In light of these circumstances, a full write down to the carrying value of the capitalised expenditure
for the above mentioned licences was booked at 30 June 2018. The Board and management reviewed the
remaining net assets of the Fiji group at 31 December 2018 and determined their fair value. As such a total
impairment loss of $7,012,198 was recognised for the Fijian Group assets held for sale for the year ended 31
December 2018 (2017: nil).
At 31 December 2018 the net assets of the Fijian companies being sold was $149,388 as stated in Note 12.
Key Estimates
Share based payments
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by a combination of internal
and external sources using a Black-Scholes option pricing model and independent third party valuations.
Refer Note 26 for details of estimates and assumptions used.
65 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
4
PRIOR PERIOD RESTATEMENT
During the year, the Group identified that the Heads of Agreement revising the terms of the sale and purchase
of the issued shares of Golden Resource Development Co had been superseded by an amended Agreement
executed on 21 September 2016. The terms of the amended Agreement show that the deferred
consideration payable had been incorrectly recorded in the Group’s Financial Statements as at 31 December
2016 and 31 December 2017. Therefore, the Group’s 2017 and 2016 consolidated financial statements
contained a material error within the consolidated statement of financial position.
The Group’s financial statements as at 31 December 2016 and 31 December 2017 disclosed the deferred
consideration as a contingent liability as follows:
• Under the revised terms, one final payment of US$1.575 million is due at completion of a bankable
feasibility study for the Kou Sa project, in addition to a 2% royalty on production capped at US$8.425
million.
The amended Agreement outlines the terms of the deferred consideration as follows:
•
A US$1.575 million payment which is due on completion of a bankable feasibility study or three years
from signing of the amended agreement (21 September 2019);
• A US$4.725 million payment which is due over 36 equal monthly instalments of US$131,250 from
the date of the above payment of $1.575 million; and
• A net smelter royalty on sales of production from the Kou Sa Project capped at US$3.7 million.
The correct accounting treatment based on the terms of the amended Agreement, with the exception of the
net smelter royalty, would be to record the deferred consideration as a non-current liability (rather than a
contingent liability) in the 2017 and 2016 financial statements.
As a result as at 31 December 2017 and 1 January 2017, contingent liabilities were overstated by $4,622,793
(2016: $4,034,468) (US$6.3 million), the non-current liability balance was understated by $4,622,793 (2016:
$4,034,468) and the non-current exploration and evaluation asset was understated by $3,607,661 (2016:
$3,839,287).
The details of the restated prior period accounts are shown below:
66 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
4
PRIOR PERIOD RESTATEMENT (CONTINUED)
31 December
2017
$
Previously
disclosed
Consolidated
31 December
2017
$
$
Adjustment
Restated
63,781,365
65,079,884
77,112,639
-
648,463
2,762,652
3,607,661
3,607,661
3,607,661
4,622,793
4,622,793
4,622,793
67,389,026
68,687,545
80,720,300
4,622,793
5,271,256
7,385,445
Consolidated statement of financial position
Exploration and evaluation expenditure
Total non-current assets
Total assets
Other non-current payables
Total non-current liabilities
Total liabilities
Net Assets
74,349,987
(1,015,132)
73,334,855
Reserves
Accumulated losses
Total equity attributable to equity holders
Total Equity
(394,903)
(21,364,443)
72,673,476
74,349,987
11,775
(1,026,907)
(1,015,132)
(1,015,132)
(383,128)
(22,391,350)
71,658,344
73,334,855
67 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
4
PRIOR PERIOD RESTATEMENT (CONTINUED)
31 December
2017
$
Previously
disclosed
Consolidated
31 December
2017
$
$
Adjustment
Restated
Consolidated statement of profit or loss and other
comprehensive income
Discount unwind
Loss before income tax
Loss from continuing operations
Loss for the period
Loss attributable Owners of the parent
-
(2,837,169)
(2,865,564)
(3,211,185)
(3,178,786)
(831,726)
(831,726)
(831,726)
(831,726)
(831,726)
(831,726)
(3,668,895)
(3,697,290)
(4,042,911)
(4,010,512)
Exchange differences on translating foreign
controlled entities
Total comprehensive loss for the year attributable
to members of the parent entity
Owners of the parent
Earnings per share (cents) for profit from
continuing operations attributable to the ordinary
equity holders of the company:
Basic earnings per share
Diluted earnings per share
Earnings per share (cents) for profit attributable to
the ordinary equity holders of the company:
Basic earnings per share
Diluted earnings per share
(1,821,973)
11,775
(1,810,198)
(5,033,158)
(819,951)
(5,853,109)
(5,086,054)
(819,951)
(5,906,003)
(0.21)
(0.21)
(0.23)
(0.23)
(0.06)
(0.06)
(0.06)
(0.06)
(0.27)
(0.27)
(0.29)
(0.29)
68 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
5
PARENT COMPANY INFORMATION
The following information has been extracted from the books and records of the parent entity and has been
prepared in accordance with 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
STATEMENT OF COMPREHENSIVE INCOME
Total profit/(loss)
TOTAL COMPREHENSIVE LOSS
Guarantees
Parent
2018
$
2017
$
2,871,665
29,978,189
32,849,854
6,438,480
72,788,266
79,226,746
606,648
-
606,648
906,388
789,122
1,695,510
104,116,108
(668,985)
(71,203,917)
32,243,206
94,432,822
(1,378,356)
(15,523,230)
77,531,236
(55,680,687)
(55,680,687)
(2,516,894)
(2,516,894)
Geopacific Resources Limited has not entered into any guarantees, in relation to the debts of its subsidiaries.
The Company has restricted cash of $132,000 (2017: $82,000) over the lease of its office premises and credit
card facilities. This has been classified as receivables.
Contingent liabilities
At 31 December 2018, Geopacific Resources Limited had no contingent liabilities (2017: nil).
Contractual commitments
At 31 December 2018, Geopacific Resources Limited had not entered into any contractual commitments for
the acquisition of property, plant and equipment (2017: nil).
69 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
6
FINANCE INCOME
Interest income – financial institutions
Total finance income
7
LOSS BEFORE INCOME TAX
Loss before income tax includes the following specific expenses:
Operating lease payments
Contributions to defined superannuation funds
Total
Consolidated
2018
$
2017
$
64,013
64,013
104,313
104,313
Consolidated
2018
$
2017
$
146,229
166,768
312,997
108,627
156,071
264,698
8
REMUNERATION OF AUDITORS
The Auditor of Geopacific Resources Limited is Ernst & Young (2017: Greenwich and Co Audit Pty Ltd).
Amounts received or receivable - Ernst & Young for:
- An audit or review of the financial report
Total
Amounts received or receivable - Greenwich & Co Audit Pty Ltd for:
- An audit or review of the financial report
- Tax Services
Total
Consolidated
2018
$
2017
$
67,500
67,500
12,091
2,200
14,291
26,500
26,500
30,000
10,450
40,450
70 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
9
INCOME TAX
(a)
The components of the income tax expense/(benefit) comprise:
Current tax
Deferred tax
Total tax expense / (benefit)
Total tax (benefit)/expense is attributable to:
Loss from continuing operations
(Loss)/profit from discontinued operation
Total tax (benefit)/expense
(b)
Reconciliation of income tax to prima facie tax benefit:
Net loss before tax
Loss from discontinued operation
Consolidated
2018
$
2017
$
-
(2,570,029)
(2,570,029)
(474,749)
(2,095,280)
(2,570,029)
-
292,838
292,838
28,395
264,443
292,838
Consolidated
2018
$
2017
$
(49,216,584)
(7,104,104)
(56,320,688)
(2,837,168)
(81,178)
(2,918,346)
Prima facie tax benefit at 30% (2017: 30%)
(16,896,206)
(875,504)
Adjusted for the tax effect of:
Non-deductible share based payments
Other non-deductible expenses
Impairment charge
Tax losses not recognised
Foreign exchange on opening deferred tax balances
Total tax expense/(benefit)
212,811
2,929
13,269,107
841,330
-
(2,570,029)
-
1,349
-
1,118,655
48,338
292,838
71 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
9
INCOME TAX (CONTINUED)
(c)
Deferred tax:
Deferred tax assets:
Business related costs/employee entitlements
Tax losses
Total before offset
Offset by deferred tax liabilities
Total deferred tax assets after offset
Deferred tax liabilities:
Exploration and evaluation expenditure
Total before offset
Offset by deferred tax assets
Total deferred tax liabilities after offset
(d)
Deferred tax assets not recognised:
Deferred tax assets not recognised
Tax losses not brought to account
Total tax assets
Consolidated
2018
$
2017
$
59,547
9,315,183
9,374,730
(9,374,730)
-
366,489
7,020,993
7,387,481
(7,387,481)
-
9,374,730
9,374,730
(9,374,730)
-
7,862,230
7,862,230
(7,387,481)
474,749
Consolidated
2018
$
2017
$
44,149,377
44,149,377
43,308,047
43,308,047
Deferred tax assets relating to tax losses have only been recognised in Papua New Guinea to the extent of
the deferred tax liability balance.
The deferred tax asset relating to the remainder of the Group have not been recognised in the current
reporting period as the Director’s do not believe the realisation is probable at this point in time.
72 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
10
CASH AND CASH EQUIVALENTS
Current
Cash at bank
Total Cash and Cash Equivalents(i)
Consolidated
2018
$
2017
$
3,059,221
3,059,221
6,765,343
6,765,343
(i) Restricted cash was reclassified from cash and cash equivalents to receivables during the period, to better reflect the nature of
the asset.
11
RECEIVABLES
Current
Security deposits
Sundry debtors
GST receivable
Loan receivable
Total Current Trade and Other Receivables
Non-Current
VAT receivable
Total Non-Current Trade and Other Receivables
Consolidated
2018
$
2017
$
142,417
64,805
34,112
75,283
316,617
9,577
84,009
-
61,954
155,540
-
-
602,503
602,503
Write down
During the reporting period a write down of $750,642 was recorded in respect of the non-current VAT
receivable which relates to the Group’s Cambodian based subsidiaries. The board and management believe
that due to the duration of receivable being outstanding, while opportunities remain for the recovery of the
VAT receivable, material uncertainty exists on the timing and extent of the balance being refunded.
As a result, the balance of the non-current VAT receivable was fully written down in the current
reporting period with the corresponding loss recorded in the write down expense
73 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
12
ASSETS CLASSIFIED AS HELD FOR SALE
Current
Assets held for sale
Movement during the year
Carrying value - beginning of the year
Movement during the period
Impairment write down
Other net liabilities reversed
Transfer from exploration expenditure
Other net liabilities taken on
Carrying value - end of the year
Consolidated
2018
$
2017
$
149,388
4,831,070
4,831,070
235,236
(7,012,198)
2,095,280
-
-
149,388
-
-
-
-
6,639,151
(1,808,081)
4,831,070
Write down
During the reporting period the Company continued its efforts to divest the Groups operations in Fiji. While
the sales process continued, the board and management scaled back activities in Fiji, which included the
relinquishment of a number of non-core tenements during the period.
In accordance with the accounting standards, the Company conducted an assessment of the fair value less
costs to sell of the Fiji Group’s assets and liabilities. Due to the inherent difficulty in the estimation of the fair
value of early stage exploration works, the board and management adopted a conservative position in
determining the fair value less costs to sell by reference to the value of the realisable assets and liabilities of
the Fiji Group.
As a result, a write down of $7.0M was recognised in the current reporting period against the Assets Held for
Sale, with the corresponding loss recognised in the write down expense.
74 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
13
INVENTORY
Current
Consumables
Kitchen stocks
Cleaning stocks
Medical stocks
Protective clothing
Total
Consolidated
2018
$
2017
$
165,542
62,486
8,331
3,871
2,541
242,771
280,802
-
-
-
-
280,802
During the year ended 31 December 2018 there were consumables which expired and as such has no net
realisable value. The full amount of PGK414,170 ($A173,235) was written off from inventory to write downs
in the consolidated statement of comprehensive income.
14
EXPLORATION EXPENDITURE
Consolidated
2018
$
2017
$
Restated
Non-current
37,494,025
67,389,026
Movement during the year
Carrying value - beginning of the year
Acquired on acquisition of subsidiaries
Additions
Transfers from property, plant and equipment
Transfer from prepayments
Impairment write downs
Transfer to assets held for sale
Foreign exchange fluctuation
Carrying value - end of the year
67,389,026
-
8,447,600
80,759
-
(43,306,477)
-
4,883,117
37,494,025
37,039,623
10,483,290
15,219,583
89,571
13,679,845
-
(6,639,151)
(2,483,735)
67,389,026
75 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
14
EXPLORATION EXPENDITURE (CONTINUED)
Write down
In accordance with the accounting standards, the Company conducted an assessment to determine whether
there were any indicators of impairment in relation to the carrying value of its capitalised exploration assets.
On review, the board and management were of the view that indicators of impairment existed at balance
date relating to the carrying value of exploration expenditure on the Group’s Kou Sa Project in Cambodia.
In estimating the recoverable amount, a range of valuations were considered using available calculation
methodologies including resource multiples and the cost approaches. In addition, the Company conducted a
detailed assessment of all available commercial considerations regarding the Kou Sa Project.
As a result, a write down the of $43.3M was recognised in the current reporting period to the carrying value
of capitalised exploration expenditure, with the corresponding loss recognised in the write down expense.
Prior year restatement
As outlined in Note 17, during September 2016 the Company renegotiated the payment schedule with Vendor’s
for the acquisition of Golden Resource Development Co. Under the revised terms, the non-contingent
instalments of the purchase price are to be paid as follows:
a) $US1.575 million due at completion of a bankable feasibility study for the Kou Sa Project, or by 21
September 2019, whichever is earlier; and
b) $US4.725 million paid in monthly instalments over three years after payment of the $US1.575 million.
Information regarding the prior period restatement is disclosed in Note 4.
Transfer to assets held for sale
The Company confirmed its intention to divest its Fiji assets and an active program to locate a buyer for these
assets commenced. The associated assets and liabilities were consequently transferred to assets held for sale
as disclosed in Note 12.
15
JOINT ARRANGEMENTS
Interest in Joint Operations:
Geopacific Resources Limited has a 50% interest
in following Joint Venture with Peninsula Energy Limited:
Raki Raki (Fiji) Joint Venture
Current Assets
Assets classified as held for sale
Total
Consolidated
2018
$
2017
$
-
-
-
962,004
962,004
962,004
The above Joint arrangement is a Fijian based projects that Geopacific holds that makes up part of the
carrying value of the assets held for sale as disclosed in Note 12. A full write down to the carrying value of
the capitalised exploration expenditure of this licence was recorded for the year ended 31 December 2018
as the licence was not renewed.
76 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
16
PLANT AND EQUIPMENT
2018
Consolidated
Plant &
Equipment
$
Computer
Software
$
Furniture &
Fittings
$
Total
$
Gross carrying amount – at cost
Less: accumulated depreciation
Balance
4,760,940
(4,573,037)
187,903
144,760
(141,980)
2,780
1,088,081
(437,153)
650,928
5,993,781
(5,152,170)
841,611
2017
Gross carrying amount – at cost
Less: accumulated depreciation
Balance
Consolidated
Plant &
Equipment
$
4,578,146
(4,396,797)
181,349
Computer
Software
$
144,754
(135,197)
9,557
Furniture &
Fittings
$
891,296
(386,186)
505,110
Total
$
5,614,196
(4,918,180)
696,016
Plant & Equipment
Movement 2018
Plant &
Equipment
$
Computer
Software
$
Furniture &
Fittings
$
Total
$
Balance at 1 January 2018
Additions
Transfers to exploration
Foreign exchange fluctuation
Depreciation
Balance at 31 December 2018
Plant & Equipment
Movement 2017
Balance at 1 January 2017
Assets acquired on acquisition of
subsidiary
Additions
Disposals
Transfers to assets held for sale
Transfers to exploration
Depreciation
Foreign exchange fluctuation
Balance at 31 December 2017
181,349
71,061
(44,268)
4,106
(24,345)
187,903
9,557
114
-
-
(6,891)
2,780
505,110
175,226
(36,491)
11,968
(4,885)
650,928
696,016
246,401
(80,759)
16,074
(36,121)
841,611
Plant &
Equipment
$
Computer
Software
$
Furniture &
Fittings
$
Total
$
71,269
13,223
15,571
100,063
187,782
21,066
(1,520)
(11,311)
(72,082)
(19,416)
5,561
181,349
-
1,983
(112)
-
-
(5,537)
-
9,557
494,665
2,139
-
(3,755)
(17,489)
(1,999)
15,978
505,110
682,447
25,188
(1,632)
(15,066)
(89,571)
(26,952)
21,539
696,016
77 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
17
TRADE AND OTHER PAYABLES
Current
Trade creditors and accrued expenses
Deferred consideration
Total
Non-current
Deferred consideration
Total
Deferred consideration movement during the year
Carrying value - beginning of the year
Unwind of the discount
Foreign exchange fluctuation
Carrying value - end of the year
Consolidated
2018
$
2017
$
Restated
844,874
2,391,955
3,236,829
1,797,045
-
1,797,045
3,852,972
3,852,972
4,622,793
4,622,793
4,622,793
1,123,578
498,556
6,244,927
4,034,468
831,726
(243,401)
4,622,793
In January 2015, the Company’s subsidiary, Royal Australia Resources Ltd (RAR), entered into an agreement to
acquire 100% of the issued capital of Golden Resource Development Co Ltd for $US14 million of which $US7.7
million has already been paid.
The Company renegotiated the payment schedule in relation to its agreement with the Vendors in September
2016. Under the revised terms, the non-contingent instalments of the purchase price are to be paid as follows:
a) $US1.575 million due at completion of a bankable feasibility study for the Kou Sa Project or by 21
September 2019, whichever is earlier; and
b) $US4.725 million paid in equal monthly instalments over three years after payment of the $US1.575
million.
The deferred consideration has been present valued using a discount cash rate at 31 December 2018 of 20%
(2017: 20%).
Information regarding the prior period restatement relating to this deferred consideration arrangement is
disclosed in Note 4.
78 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
18
PROVISIONS
Current
Employee provisions
Total
Non-current
Rehabilitation provision
Employee provisions
Total
Movements
Rehabilitation provision
Balance at 1 January
Acquire on acquisition
Foreign exchange fluctuation
Balance at 31 December
19
ISSUED CAPITAL
Consolidated
2018
$
2017
$
135,569
135,569
317,144
317,144
178,183
14,365
192,548
173,714
-
173,714
173,714
-
4,469
178,183
-
173,714
-
173,714
Consolidated
2018
$
2017
$
Issued Capital
104,116,108
94,432,822
Reconciliation of movements in Issued Capital during the period:
2018
2017
Date
Shares
$
Shares
$
Balance at 1 January
Shares issued per off-market takeover
Shares issued per off-market takeover
Shares issued pursuant to a Placement
Shares issued per off-market takeover
Shares issued pursuant Share Purchase
Plan
Shares issued per off market takeover
Shares issued pursuant to a Placement
Less: share issue costs
9-Aug-17
17-Aug-17
7-Sept-17
15-Sept-17
6-Oct-17
18-Oct-17
18-Jun-18
1,801,907,130
-
-
-
-
94,432,822
-
-
-
-
236,782,061
13,685,836
1,155,743,584 74,671,129
8,050,590
479,004
350,000,000 10,500,000
430,250
15,366,076
-
-
5,833,334
175,017
-
280,000,000
-
-
10,080,000
(396,714)
24,496,239
-
-
734,888
-
(608,056)
Balance at 31 December
2,081,907,130
104,116,108
1,801,907,130 94,432,822
79 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
20
RESERVES
(a) Reserves
Share-based payments reserve
Foreign currency translation reserve
Other equity reserve
Total
(b) Movements
Share-based payments reserve
Balance at 1 January
Share based payment expense (note 26)
Balance at 31 December
Foreign currency translation reserve
Balance at 1 January
Exchange gains/(losses) during year
Balance at 31 December
Other equity reserve
Balance at 1 January
Transfers during the year
Balance at 31 December
Total reserves
(c) Nature and purpose of reserves
Share-based payments reserve
The share-based payments reserve records:
Consolidated
2018
$
2017
$
Restated
1,499,209
3,535,896
755,748
5,790,853
789,838
(1,172,966)
-
(383,128)
789,838
709,371
1,499,209
789,838
-
789,838
(1,172,966)
4,708,862
3,535,896
637,232
(1,810,198)
(1,172,966)
-
755,748
755,748
-
-
-
5,790,853
(383,128)
•
•
•
•
the value of unexercised options issued to employees and Directors which has been expensed;
the value of options issued on acquisition of Millennium Mining (Fiji) Ltd;
the value of unexercised options granted pursuant to the Securities Incentive Plan which have been
expensed; and
the value of unexercised Share Appreciation Rights issued to employees and Directors which have
been expensed.
Foreign currency translation reserve
The foreign currency translation reserve records unrealised exchange gains and losses on translation of
Group’s entities results and financial position where their functional currency is different to the Group’s
presentation currency.
Other equity reserve
The other equity reserve records transfers of interests to the Group from non-controlling interests.
80 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
21
CONTINGENT LIABILITIES
Kou Sa – Revised Repayment Schedule
In January 2015, the Company’s subsidiary, Royal Australia Resources Ltd, entered into an agreement to
acquire 100% of the issued capital of Golden Resource Development Co Ltd for $US14 million plus interest
payments of US$1,275,750.
The Company renegotiated the payment schedule in relation to its agreement with the Vendors in September
2016. Other than the remaining non-contingent instalments of the purchase price to be paid as described in
Notes 14 and 17, a 2% net smelter royalty on sales of production from the Kou Sa project is payable, capped
at $US3.7 million. This royalty is conditional upon production from the Kou Sa project.
The Group did not have any other contingent liabilities at the end of the reporting period (2017: nil).
22
COMMITMENTS
(a)
Tenement Commitments
Entities in the Group are required to spend certain amounts to retain their interest in areas over which
Special Prospecting Licenses are held. All requirements have been complied with and all reports and
lodgements have been made. In the ordinary course of business, the Group is currently waiting on the
reissue of certain licences by the Mineral and Resource Departments of Papua New Guinea.
The following table provides an outline of the annual expenditure required by tenement:
Tenement
Location
Tenement
Renewed to
Annual
Commitment
2019
Comments
EL 1172
EL 1279
EL 1465
Papua New
Guinea
Papua New
Guinea
Papua New
Guinea
27-Nov-19
125,481 Licence renewal lodged with authorities.
25-Aug-19
22-Dec-18
Annual expenditure as budgeted.
50,192 Licence renewal lodged with authorities.
Annual expenditure as budgeted.
83,654 Licence renewal lodged with authorities.
Annual expenditure as budgeted.
81 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
22
COMMITMENTS (CONTINUED)
(a)
Tenement Commitments (continued)
Tenement
Location
SPL 1216
Fiji
SPL 1231
SPL 1373
SPL 1436
SPL 1361
SPL 1368
SPL 1415
Fiji
Fiji
Fiji
Fiji
Fiji
Fiji
Tenement
Renewed
to
2-Aug-19
29-Nov-18
29-Nov-18
29-Nov-18
14-Apr-19
14-Apr-19
12-Feb-19
Annual
Commitment
2019
Comments
39,732 Under renewal application. Year 1
expenditure of FJD 60,000 pending Mines
Department approval.
- Under relinquishment application.
- Under relinquishment application.
- Under relinquishment application.
132,442 Renewed 24 April 2017.
132,442 Renewed 24 April 2017.
49,666 Currently under renewal application.
Previous period had a two year expenditure
of FJD$150,000.
SPL 1493
Fiji
29-Nov-18
- Under relinquishment application.
The Group is also committed to spend US$505,000 in aggregate in the 2019 and 2020 calendar years on the
Kou Sa project in Cambodia subject to pending licence renewals. During the 2017 – 2018 exploration period
over US$3.1 million was spent on exploration expenditure in Cambodia. The Kou Sa licence, which expires in
March 2019, is currently under renewal application for a further two year period. The final expenditure
commitment is yet to be agreed upon by the Cambodian Ministry of Mines and Energy.
(b) Operating Lease Commitments
Payable – minimum lease payments:
Payable not later than one year
Payable later than one year, but not later than five years
Total
Consolidated
2018
$
2017
$
146,858
126,447
273,305
149,469
275,673
425,142
82 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
23
PARTICULARS RELATING TO CONTROLLED ENTITIES
(a) Material Subsidiaries
Country of
Incorporation
and Carrying
on Business
Worldwide Mining Projects Pty Ltd
PT IAR Indonesia Ltd
Eastkal Pte Ltd
Royal Australia Resources Ltd
Golden Resource Development
Geopacific Limited
Beta Limited
Millennium Mining (Fiji) Limited
Woodlark Mining Limited
Kula Gold Limited
Australia
Indonesia
Singapore
Cambodia
Cambodia
Fiji
Fiji
Fiji
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Papua New Guinea Ordinary
Ordinary
Australia
Class of
Share
Effective Ownership
Percentage
2018
%
100
100
100
85
100
100
100
100
93
85
2017
%
100
100
100
85
100
100
100
100
86
85
Worldwide Mining Projects Pty Ltd and Petrochemicals (Cambodia) Refinery Ltd entered into a Shareholders
Agreement in December 2012 to explore, develop and hold the Kou Sa project. Petrochemicals (Cambodia)
Refinery Ltd will be a free carried partner until a decision to mine on the Kou Sa project area is made.
In the event that a decision to mine is made, Petrochemicals (Cambodia) Refinery Ltd will be granted an
option to purchase further shares in Royal Australia Resources Ltd at fair market value to increase its
percentage shareholding to 20%; and contribute to all costs, expenses and liabilities incurred or sustained in
proportion to its shareholding interest in Royal Australia Resources Ltd.
At 31 December 2018 Kula Gold Limited was entitled to a 49% (2017: 95%) interest in Woodlark Mining
Limited resulting in Geopacific Resources Limited holding an indirect interest of 42% (2017: 81%) in Woodlark
Mining Limited as well as being entitled to a 51% (2017: 5%) direct interest for a total interest of 93% (2017:
86%).
83 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
23
PARTICULARS RELATING TO CONTROLLED ENTITIES (CONTINUED)
(b) Non-Controlling Interests
Set out below is summarised financial information for each subsidiary that has non-controlling interests that
are material to the group. The amounts disclosed for each subsidiary are before inter-company eliminations.
Summarised statement of financial position
Current assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets
Accumulated NCI
Summarised statement of comprehensive income
Income
Profit / (Loss) for the period
Other comprehensive income
Total comprehensive income
Profit allocated to NCI
Summarised cash flows
Woodlark Mining Limited
2018
$
2017
$
586,895
31,989,173
32,576,068
522,059
24,197,018
24,719,077
281,029
19,979,046
20,260,075
822,259
12,352,829
13,175,088
12,315,993
11,543,989
904,359
1,643,445
-
(233,150)
1,466,866
1,233,716
-
(1,272,666)
569,163
(703,503)
89,536
(100,153)
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
(33,894)
(7,460,869)
7,601,442
106,679
(258,129)
(3,324,704)
3,707,698
124,865
The comparative numbers represent the information from the date of acquisition on 9 August 2017 through
to 31 December 2017.
84 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
24
KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Directors
Details of each person holding the position of Director of the Company during the current and prior reporting
periods are outlined in the table below:
Name
Non-Executive Directors
Milan Jerkovic
Mark Bojanjac
Ian Clyne
Colin Gilligan
Executive Directors
Ron Heeks
Philippa Leggat
(appointed 26 June 2018)
(resigned 10 September 2018)
Position
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Managing Director
Executive Director - Corporate
(b) Other Key Management Personnel (KMP)
Details of the Other KMP of the Group during the current and prior reporting periods are set out in the table
below:
Name
Executives
Matthew Smith
Glenn Zamudio
James Kerr
(c)
KMP Compensation
Key Management Personnel Compensation:
Short term benefits
Post-employment benefits
Share based payments
Annual leave
Long term benefits
Termination payments
Total
Position
Chief Financial Officer & Company Secretary
General Manager - Projects
General Manager - Geology
Consolidated
2018
$
2017
$
1,280,000
101,888
646,142
23,884
4,360
140,000
2,196,274
1,335,692
90,791
-
42,033
-
-
1,468,516
85 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
25
RELATED PARTY TRANSACTIONS
Transactions with Key Management Personnel:
Xavier Group Pty Ltd – Consulting Services
Total
Consolidated
2018
$
2017
$
-
-
98,673
98,673
Xavier Group Pty Ltd is an entity in which the Company’s Non-Executive Chairman, Mr M Jerkovic, is a Director
and shareholder.
Xavier Group Pty Ltd provided corporate consulting services to the Company. All transactions with related
parties are on normal commercial terms.
26
SHARE-BASED PAYMENTS
(a)
Employee Incentive Plan
The Company’s Securities Incentive Plan was approved by shareholders at the AGM held on 30 May 2018. All
employees are eligible to participate in the plan.
Instruments granted under the plan are issued for no consideration, carry no dividend or voting rights and
when exercised convert into ordinary shares.
Included under share based payments expense in the statement of profit or loss and other comprehensive
income is an amount of $709,371 (2017: nil) which relates to equity settled share based payments
transactions issued under the plan.
All options granted to key management personnel are for ordinary shares in Geopacific Resources Limited,
which confer a right of one ordinary share for every option held.
All Share Appreciation Rights granted to key management personnel are for ordinary shares in Geopacific
Resources Limited, which confer an amount of shares equal to the difference between the Company’s share
price at the end of the vesting period and the price on grant date.
86 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
26
SHARE-BASED PAYMENTS
(a)
Employee Incentive Plan (continued)
During the reporting period the Company issued four types of incentives to employees. They were short term
zero exercise price options (ZEPOs), medium term ZEPOs, premium exercise price options (PEPOs) and share
appreciation rights (SARs). These incentives were granted on 3 July 2018 and were issued in accordance with
the new securities incentive plan adopted at the Company’s AGM on 30 May 2018. The vesting condition of
each incentive is continuous employment (at Board discretion).
The incentives were valued by a combination of internal and external sources using a Black-Scholes option
pricing model and independent third party valuations. The key inputs and valuations are summarised below:
Item
Underlying share
value
Exercise price
Valuation date(i)
Vesting date
Vesting period
(years)
Expiry date
Life of the options
(years)
Volatility
Risk free rate
Dividend yield
2017 Short
Term ZEPOs
2018 Short
Term ZEPOs
Medium Term
ZEPOs
PEPOs
SARs
$0.030
$0.030
Nil
3-Jul-18
3-Jul-19
Nil
3-Jul-18
3-Jul-19
1.00
1.00
$0.030
Nil
3-Jul-18
3-Jul-21
3.00
$0.030
$0.0408
3-Jul-18
3-Jul-22
4.00
$0.030
$0.0285
3-Jul-18
3-Jul-21
3.00
10-Jul-19
10-Jul-19
10-Jul-21
10-Jul-22
10-Jul-22
1.02
80%
2.06%
Nil
1.02
80%
2.06%
Nil
3.02
80%
2.06%
Nil
4.02
80%
2.06%
Nil
4.02
80%
2.06%
Nil
Number of options
Value per option
Value per tranche
8,594,444
$0.030
$257,834
8,594,444
$0.030
$257,834
24,265,875
$0.030
$727,976
20,218,500
$0.016
$323,496
22,365,071
$0.018
$402,571
(i) The grant date for I. Clyne. R. Heeks and P. Leggat was determined as the AGM date, being the 30th May
2018.
87 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
26
SHARE-BASED PAYMENTS (CONTINUED)
(a)
Employee Incentive Plan (continued)
2018
2017
Number of
options or
rights
Weighted
average
exercise
price ($)
Number of
options or
rights
Weighted
average
exercise
price ($)
-
41,454,763
-
-
41,454,763
-
20,218,500
-
-
20,218,500
-
22,365,071
-
-
22,365,071
-
-
-
-
-
-
0.0408
-
-
0.0408
-
0.0285*
-
-
0.0285*
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Zero exercise price options
Outstanding at beginning of year
Granted
Expired/lapsed
Exercised
Outstanding at end of year
Premium exercise price options
Outstanding at beginning of year
Granted
Expired/lapsed
Exercised
Outstanding at end of year
Share appreciation rights
Outstanding at beginning of year
Granted
Expired/lapsed
Exercised
Outstanding at end of year
*The exercise price of the Share Appreciation Rights – represents a theoretical exercise price given the payoff
is the difference between the Company’s share price at the end of the vesting period and the price on grant
date.
The weighted average contract life of the incentives are:
Instrument
Zero exercise price options
Premium exercise price options
Share appreciation rights
Years
2.19
4.02
4.02
88 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
26
SHARE-BASED PAYMENTS (CONTINUED)
(b) Unlisted Incentives
There were 1,000,000 options over unissued shares unexercised at reporting date (2017 – 1,000,000). Since
the end of the financial year, no unlisted options have been cancelled or exercised.
Details of unlisted options over unissued shares in the Company as at the date of this report are outlined in
the tables below:
Issue Date
Expiry Date
Exercise
Price
Number on
Issue
Movement During the Year Number on
Issue
6-Jun-09
6-Jun-09
Note (a)
Note (b)
$
1-Jan-18
Granted
Lapsed
31-Dec-18
2.50
5.00
800,000
200,000
1,000,000
-
-
-
-
-
-
800,000
200,000
1,000,000
(a) Not later than 5 years after defining a JORC compliant ore reserve of over 200,000oz Au on the Faddy’s Gold Deposit.
(b) Not later than 10 years after defining a JORC compliant ore reserve of over 1,000,000oz Au on the Faddy’s Gold Deposit.
Issue Date
Expiry Date
Exercise
Price
Number on
Issue
Movement During the Year
Number on
Issue
6-Jun-09
6-Jun-09
5-Aug-14
Note (a)
Note (b)
5-Aug-17
$
1-Jan-17
Granted
Lapsed
31-Dec-17
2.50
5.00
0.07
800,000
200,000
1,688,768
2,688,768
-
-
-
-
-
-
(1,688,768)
(1,688,768)
800,000
200,000
-
1,000,000
(a) Not later than 5 years after defining a JORC compliant ore reserve of over 200,000oz Au on the Faddy’s Gold Deposit.
(b) Not later than 10 years after defining a JORC compliant ore reserve of over 1,000,000oz Au on the Faddy’s Gold Deposit.
(c)
Services
During the reporting period, the Company did not issue any shares as payment for services (2017: nil).
89 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
27
LOSS PER SHARE
(a)
Basic and Diluted Loss per Share
Basic loss per share:
From continuing operations attributable to the ordinary equity
holders of the company
From discontinued operation
Diluted loss per share:
From continuing operations attributable to the ordinary equity
holders of the company
From discontinued operation
(b)
Reconciliation of Loss Used in Calculating Loss Per Share
Basic and Diluted Loss Per Share:
Loss attributable to the ordinary equity holders of the Company
used in calculating basic and diluted loss per share:
From continuing operations
From discontinued operation
(c) Weighted Average Number of Shares Used as the Denominator
Weighted average number of ordinary share used as the
denominator in calculating basic and diluted loss per share
Consolidated
2018
Cents
2017
Cents
Restated
(2.49)
(0.25)
(2.74)
(2.49)
(0.25)
(2.74)
(0.27)
(0.02)
(0.29)
(0.27)
(0.02)
(0.29)
Consolidated
2018
$
2017
$
Restated
(48,741,835)
(5,008,824)
(53,750,659)
(3,697,290)
(345,621)
(4,042,911)
Consolidated
2018
No. of Shares
2017
No. of Shares
1,960,176,777
1,375,377,691
90 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
28
EVENTS OCCURRING AFTER BALANCE DATE
On 8 March 2019, the Company announced it had agreed to acquire from Kula Gold Ltd (Kula) all of Kula’s
rights and interests in the Woodlark Gold Project (Woodlark), consolidating Geopacific’s 100% direct
ownership of the gold project.
Under an agreement signed 6 March 2019 (Agreement) Kula agreed to sell, free from all encumbrances and
third party claims, and Geopacific agreed to purchase, all of the outstanding shares in Woodlark Mining
Limited (Woodlark) not currently owned by Geopacific (Sale Shares).
The purchase price payable under the Agreement comprises of:
1. the cancellation by way of selective buy back under section 257A of the Corporations Act 2001 (Cth)
of all of the shares in Kula held by Geopacific (Kula Shares);
2. subject to the cancellation of the Kula Shares, the immediate issue to Kula of 150,000,000 fully paid
ordinary shares in Geopacific at a deemed issue price of 1.7c each (Geopacific Shares) proposed to
be distributed to Kula shareholders (other than Geopacific) following regulatory approvals and
procedures, in specie or similar;
3. the payment by Geopacific to Kula of an amount (equal to the amount, as at completion, of the inter-
company debt between Geopacific, as lender and Kula, as borrower (Kula Debt Amount)) (Cash
Consideration) to be applied at completion against the Kula Debt Amount in accordance with the
Agreement. The Parties anticipate the Kula Debt Amount to be between $500,000 and $750,000;
4. payment by Geopacific to Kula of $20,000; and
5. assignment by Kula to Geopacific of the inter-company loan owed by Woodlark Mining (being
$7.1million as at the date of the Agreement).
91 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
29
OPERATING SEGMENTS
The Group has identified its operating segments based on the internal reports that are reviewed by the Board
in assessing performance and determining the appropriate allocation of the Group’s resources. The Group
also has had regard to the qualitative thresholds for the determination of operating segments.
For management purposes the Group is organised into two operating segments based on geographical
locations, which involves mineral exploration and development in Cambodia and Papua New Guinea. All
other corporate expenses are disclosed as “Corporate” within this segment report. The Group’s principal
activities are interrelated and the Group has no revenue from operations. For the 31 December 2018 segment
note, Fiji has been reclassified into “Asset Held for Sale” to reflect the change in accounting treatment of
moving the Fijian group to assets held for sale.
All significant operating decisions are based on analysis of the Group as two segments. The accounting
policies applied for internal reporting purposes are consistent with those applied in preparation of the
financial statements.
Cambodia
Papua New
Guinea
Corporate
$
$
$
Asset Held
for Sale
$
Total
$
2018
Revenue
-
-
64,013
Net Profit/(Loss) for the year
(44,935,949)
(233,150)
(4,047,485)
-
64,013
- (49,216,584)
Segment Assets
Segment Liabilities
6,325,530
32,576,068
3,052,647
149,388
42,103,633
6,299,485
479,519
638,914
-
7,417,918
2017
Other Revenue
-
-
104,313
Net Profit/(Loss) for the year
(951,833)
(38,656)
(2,678,406)
-
-
104,313
(3,668,895)
Segment Assets (restated)
41,919,619
24,719,079
9,250,532
4,831,070
80,720,300
Segment Liabilities (restated)
4,950,453
995,974
1,439,018
-
7,385,445
92 | P a g e
GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
30
FINANCIAL INSTRUMENTS DISCLOSURES
Credit Risk
The Directors do not consider that the Group’s financial assets are subject to a material level of credit risk.
Therefore, no disclosures are made. Refer to Note 2(a).
Impairment Losses
The Directors do not consider that any of the Group’s financial assets are subject to impairment at the
reporting date. No impairment expense or reversal or impairment charge has been recorded during the
reporting period in relation to the Group’s financial assets (2017: nil).
Liquidity Risk
Liquidity risk arises from the financial liabilities of the Group and the Group’s ability to meet their obligations
to repay their financial liabilities as and when they fall due. The Group monitors rolling forecasts of liquidity
on a regular basis.
The following table reflects the liquidity risk arising from the financial liabilities held by the Group at balance
date. The contractual maturity reflects undiscounted gross amounts:
Consolidated
2018
Carrying
amount
$
Contractual
cash flows
$
6 months
or less
$
6-12
months
$
1-5 years
$
Financial Liabilities - Due for Payment
Trade and other payables
Total expected outflows
7,089,801
7,089,801
9,784,848
9,784,848
844,874
844,874
2,793,742
2,391,955
6,146,232
6,146,232
Consolidated
2017
Carrying
amount
$
Contractual
cash flows
$
6 months
or less
$
6-12
months
$
1-5 years
$
Financial Liabilities - Due for Payment
Trade and other payables (Restated)
Total expected outflows
6,419,838
6,419,838
9,866,726
9,866,726
1,797,045
1,797,045
-
-
8,069,681
8,069,681
At 31 December 2018, the Group had no interest-bearing liabilities (2017: nil).
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
30
FINANCIAL INSTRUMENTS DISCLOSURES (CONTINUED)
Currency risk
The Group is exposed to foreign currency on expenditures that are denominated in a currency other than
Australian Dollars. The United States Dollar, Papua New Guinea Kina and Fiji Dollars are the currencies that
primarily give rise to the Group’s currency risk.
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the functional currency of the Group entity in question. The Group
does not have a formal foreign currency risk management policy however, it monitors its foreign currency
expenditure in light of exchange rate movements.
Interest rate risk
The interest profile of the Group’s interest-bearing financial instruments at the reporting date are outlined
in the table below:
Variable rate instruments:
Financial assets
Total
Consolidated
2018
$
2017
$
3,059,221
3,059,221
6,765,343
6,765,343
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity
and comprehensive income by the amounts shown below. The analysis assumes that all other variables
remain constant.
Profit and Loss
Equity
100bp
increase
$
100bp
decrease
$
100bp
increase
$
100bp
decrease
$
2018 - Variable rate instruments
2017 - Variable rate instruments
30,592
67,653
30,592
(67,653)
30,592
67,653
(30,592)
(67,653)
Fair values versus carrying amounts
The carrying amounts of financial assets and liabilities as described in the consolidated statement of financial
position represent their estimated net fair value, expect for the deferred consideration payment for the
purchase of the Kou Sa Project which is carried at its present value.
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
31
NOTES TO THE STATEMENT OF CASH FLOWS
(a)
Cash and Cash Equivalents
Cash and cash equivalents at the end of the financial year as shown in the Statement of Cash flows is
reconciled to the related items in the Statement of Financial Position as follows:
Cash at bank
Total
(b)
Reconciliation of Cash Flows from Operating Activities
Consolidated
2018
$
2017
$
3,059,221
3,059,221
6,765,343
6,765,343
Consolidated
2018
$
2017
$
Net loss after income tax
(53,750,659)
(3,211,185)
Adjustments for Non-cash Items:
Depreciation
Share based payments
Unrealised net foreign exchange (gain) / loss
Impairment write downs
Discount unwind
Acquisition of subsidiary’s net assets
Transactions with non-controlling interests
Changes in Assets & Liabilities
(Increase) / Decrease in trade and other receivables
(Increase) / Decrease in inventory
Increase / (Decrease) in trade and other payables
Increase / (Decrease) in provisions
Increase / (Decrease) in deferred tax liabilities
36,121
709,371
-
44,230,355
1,123,578
-
7,104,104
(300,575)
38,032
(189,223)
52,101
(2,570,029)
26,952
-
(1,821,974)
-
-
(203,229)
81,178
1,515,837
(280,802)
1,223,923
480,674
(1,744,148)
Net Cash Used in Operating Activities
(3,516,824)
(3,932,774)
(c) Non-cash financing activities
Shares issued under off-market takeover
Consolidated
2018
$
2017
$
-
9,694,732
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
32
DISCONTINUED OPERATION
In 2017 the Group confirmed its intention to sell its Fijian controlled companies and an active program to
locate a buyer for these companies commenced. The associated assets and liabilities were consequently
presented as held for sale (Note 12).
The financial performance information for these companies is presented below.
Income
Administration expense
Depreciation expense
Employee benefits expense
Occupancy expense
Impairment write downs
Loss before income tax
Income tax benefit/(expense)
Loss from discontinued operation
Earnings per share
2018
$
2017
$
-
2,598
(23,079)
(1,751)
(46,634)
(20,442)
(7,012,198)
(7,104,104)
(7,104,104)
2,095,280
(5,008,824)
(16,233)
(3,135)
(44,600)
(19,808)
-
(83,776)
(81,178)
(264,443)
(345,621)
Consolidated
2018
Cents
2017
Cents
Basic loss per share rom discontinued operation:
Diluted loss per share rom discontinued operation:
(0.26)
(0.26)
(0.03)
(0.03)
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
33
BUSINESS ACQUISITION
Between 9 August 2017 and 8 October 2017 Geopacific acquired 85% of the issued capital of Kula Gold
Limited (Kula), in an off market takeover offer. The takeover offer involved the issue of Geopacific shares to
Kula shareholders who accepted into the offer. Accepting Kula shareholders received 1 Geopacific share for
every 1.1 Kula shares.
The takeover offer resulted in Geopacific gaining control of Kula on 9 August 2017 when the conditions of
the takeover offer were removed and Geopacific issued the first tranche of shares gaining over 50% of the
issued capital of Kula. Ultimately Geopacific acquired 85% of Kula by the time the takeover offer closed in
October 2017.
At 31 December 2017 Kula owned a 95% interest in Woodlark Mining Limited (Woodlark), the 100% owner
of the Woodlark Gold Project. Geopacific owns the remaining 5% of Woodlark. Geopacific therefore owns an
81% indirect interest in the Woodlark Gold Project along with a 5% direct interest. The acquisition was made
as Geopacific believes that combining Woodlark Mining Limited under a single ownership structure is in the
interest of the shareholders of both companies.
Fair value of consideration transferred
Amount settled for the issue of shares in Geopacific
Total
Recognised amounts of identifiable net assets:
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Exploration and evaluation expenditure
Property, plant and equipment
Total non-current assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Identifiable net assets
Amount settled for the issue of shares in Geopacific
Non-controlling interest
2017
$
9,694,732
9,694,732
254,605
85,703
272,666
612,974
10,483,290
682,447
11,165,737
187,001
188,068
375,069
11,403,642
9,694,732
1,708,910
11,403,642
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 18 March 2019.
(a)
Analysis of numbers of equity security holders by size of holding:
Analysis of numbers of equity security holders by size holding:
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
(b)
Equity security holders – ordinary shares
Class of Equity Security
Ordinary Shares
Number
Shares
40
23
31
553
488
1,135
6,920
71,363
272,294
24,607,139
2,056,949,414
2,081,907,130
The names of the twenty largest holders of quoted equity securities, ordinary shares, are listed below:
Ordinary Shares
Number Held
% of Issued
Shares
NDOVU CAPITAL IV B V
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HOME IDEAS SHOW PTY LTD
WASHINGTON H SOUL PATTINSON AND COMPANY
MR CRAIG GRAEME CHAPMAN
GWYNVILL TRADING PTY LTD
HOME IDEAS SHOW PTY LTD
ORION MINE FINANCE FUND II LP
MR DANIEL MCDONAGH
ZERO NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
MR ANTHONY WILLIAM OLDING & MRS CAROLINE ANNE OLDING
CITICORP NOMINEES PTY LIMITED
BRAZIL FARMING PTY LTD
WHITESMAN INVESTMENTS PTY LTD
HENDERSON INTERNATIONAL PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
TOP 20 SHAREHOLDERS
OTHER SHAREHOLDERS
TOTAL ORDINARY SHAREHOLDERS
596,369,174
358,912,138
240,581,631
71,610,770
60,072,352
48,594,815
45,000,000
44,800,000
29,581,427
29,069,768
24,243,947
19,500,000
15,815,999
14,510,000
13,279,218
12,345,435
11,000,000
9,564,090
9,514,471
9,330,997
1,663,696,232
418,210,898
2,081,907,130
28.65
17.24
11.56
3.40
2.89
2.23
2.16
2.15
1.42
1.40
1.17
0.94
0.76
0.70
0.64
0.56
0.53
0.49
0.48
0.46
79.83
20.17
100.00
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
SHAREHOLDER INFORMATION
(c)
Substantial holders
Extracts from substantial shareholder register:
NDOVU CAPITAL IV B V
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES
(d)
Voting rights
Shareholding
Number Held
% of Issued
Shares
596,369,174
358,912,138
240,581,631
28.65
17.24
11.56
The voting rights attached to each class of equity securities are set out below:
Fully paid Ordinary Shares
On a show of hands, every member present at a meeting in person or by proxy shall have one vote and
upon a poll each share shall have one vote.
Options – listed and unlisted
There are no voting rights attached to options.
(e)
Summary of unlisted options issued
Options expiring not later than five years after
the defining on Faddy's Gold Deposit of a JORC
complaint Ore Reserve of over 200,000 oz of
contained Au with an exercise price of $2.50
Option holder with more than 20% of class
Exploration Drilling Services (Fiji) Ltd
L Andreson Investments Pty Ltd
Sheila Anderson Investments
Options expiring not later than ten years after
the defining on Faddy's Gold Deposit of a JORC
compliant Ore Reserve of over 1,000,000 oz of
contained Au with an exercise price of $5.00
Option holder with more than 20% of class
Exploration Drilling Services (Fiji) Ltd
L Andreson Investments Pty Ltd
Sheila Anderson Investments
Number of
Options
Number of
Holders
Options
Held
% of
Options
Issued
800,000
5
200,000
5
320,000
220,000
180,000
80,000
55,000
45,000
40.0
27.5
22.5
40.0
27.5
22.5
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
SHAREHOLDER INFORMATION
(e)
Summary of unlisted options issued (continued)
Zero exercise price options expiring 1 year from
the issue date on 10 July 2019
Option holder with more than 20% of class
M Smith
P Leggat
J Kerr
G Zamudio
Zero exercise price options expiring 3 years
from the issue date on 10 July 2021
Option holder with more than 20% of class
R Heeks
Premium exercise price options expiring 4 years
from the issue date on 10 July 2022
Option holder with more than 20% of class
R Heeks
Share appreciation rights expiring 4 years from
the issue date on 10 July 2022
Option holder with more than 20% of class
R Heeks
Number of
Options
Number of
Holders
Options
Held
% of
Options
Issued
17,188,888
6
3,494,444
3,494,444
3,494,444
3,494,444
20.3
20.3
20.3
20.3
5,521,875
22.8
4,882,500
21.4
4,838,214
21.6
6
6
6
24,265,875
20,218,500
22,365,071
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GEOPACIFIC RESOURCES LIMITED
and Controlled Entities
TENEMENT DETAILS
Current interest in tenements held by Geopacific Resources Limited and its subsidiaries, as at 22 March 2019
are listed below:
Country
Location
Tenement
Interest
Fiji
Fiji
Fiji
Fiji
Cambodia
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
SPL 1368
SPL 1361
SPL 1216
SPL 1415
Nadi, Viti Levu
Nadi, Viti Levu
Nadi, Viti Levu
Nadi, Viti Levu
Preah Vihear Provence Kou Sa Project
Woodlark Island
Woodlark Island
Woodlark Island
Woodlark Island
Woodlark Island
Woodlark Island
Woodlark Island
Woodlark Island
Woodlark Island
Woodlark Island
Woodlark Island
EL 1172
EL 1279
EL 1465
LMP 89
LMP 90
LMP 91
LMP 92
LMP 93
ME 85
ME 86
ML 508
100%
100%
100%
100%
85%
93%
93%
93%
93%
93%
93%
93%
93%
93%
93%
93%
101 | P a g e