NUAL REPORT
AN
Great Southern Mining Limited
(Formerly “Forte Consolidated Limited”)
30th June 2018
CORPORATE INFORMATION
GREAT SOUTHERN MINING LIMITED
ABN 37 148 168 825
Directors
John Terpu (Executive Chairman)
Kathleen Bozanic (Non-executive Director)
Andrew Caruso (Non-executive Director)
Company Secretary
Mark Petricevic
Registered Office
and Principal Place of Business
Suite 4, 213 Balcatta Road
Balcatta WA 6021
Telephone: (08) 9240 4111
Facsimile: (08) 9240 4054
Website: www.gsml.com.au
Solicitors
Gilbert & Tobin
Level 16
Brookfield Place Tower 2
123 St Georges Tce
PERTH WA 6000
Telephone: (08) 9413 8400
Facsimile: (08) 9413 8444
Auditors
HLB Mann Judd (WA Partnership)
Level 4, 130 Stirling Street
Perth WA 6000
Telephone: (08) 9227 7500
Facsimile: (08) 9227 7533
Share Register
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Telephone: (within Australia): 1300 554 474
Telephone: (outside Australia): +61 (02) 8280 7761
Facsimile: (02) 9287 0303
Securities Exchange Listing and domicile
Great Southern Mining Limited (formerly Forte Consolidated Limited) is an Australian Company
limited by shares and listed on the Australian Securities Exchange (ASX: GSN)
CONTENTS
Operating and Financial Review
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
2
10
18
19
Statement of Profit or Loss & Other Comprehensive Income 20
21
22
23
24
52
53
57
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
1
Operating and Financial Review
EXPLORATION STRATEGY
The Company’s strategy has been to undertake efficient and economical drilling campaigns utilising
the available existing resources to improve the knowledge of each mineral deposit and identify future
targets. Following the acquisition of the Mt Lucky Project (hereafter referred to as the “Mon Ami Gold
Project” or “Mon Ami”) in WA in early 2018, a tailored and targeted drill campaign was undertaken
which produced some exciting results.
Exploration also continued in North Queensland to further our understanding of the resource profile of
the tenements.
FY2018 HIGHLIGHTS
•
•
•
•
Acquisition of Mon Ami Gold Project in WA;
Completed RC drill program at Mon Ami;
Application and grant of the Edinburgh Park Project in QLD;
Commencement of ground exploration activities at Edinburgh Park.
BLACK MOUNTAIN GOLD
PROJECT
Ownership: 100% GSN
Status: Grassroots
ExploraNon
EDINBURGH PARK GOLD/
COPPER PROJECT
Ownership: 100% GSN
Status: Grassroots
ExploraNon
JOHNNYCAKE GOLD
PROJECT
Ownership: 100% GSN
Status: Grassroots
ExploraNon
QLD
NSW
VIC
VIC
TAS
TAS
MON AMI GOLD PROJECT
Ownership: 100% GSN
Status: Advanced ExploraNon
WA
NT
SA
Great Southern Mining Project
Great Southern Mining Project
Great Southern Mining Project
Great Southern Mining Project
Por2olio
Por2olio
Por2olio
2
Operating and Financial Review
MON AMI GOLD PROJECT
Consolidated
for
In March 2018 Great Southern Mining Limited
Limited)
(formerly
Forte
the Mon
acquired the Mining Lease
Mon
Ami Project
in Western Australia.
Ami
comprises a Mining Lease M38/1256
granted in 2012 for a term of 21 years. The
tenement lies within the Mt Margaret Mineral
Field of the north-eastern Goldfields of Western
Australia
Belt),
approximately 10 km east of the Granny
Smith Mill and 18 km southeast of Laverton.
Greenstone
(Laverton
There are several historic shafts along a
regional shear which have extracted gold in the
early 19th century (the most significant one
being the Mon Ami shaft that produced 311 oz
of gold from 128 tonnes of ore crushed at a
(GSWA, 1906). The
grade of ~48 g/t Au
‘modern’
tenement has been subjected to
exploration since the late 1980s through a
number of exploration companies
including
Placer (Granny Smith) Pty Ltd between 2001
and 2002.
The project has accumulated a significant
wealth of exploration data. This exploration has
included prospect-scale geological mapping, soil
and rock chip sampling, geophysical surveys,
2,950m of
RAB drilling, 52 RC holes for 5,000 metres and
two diamond cored holes for 280m.
Forty (40) Reverse Circulation (RC) holes for a
total of 5,821m were completed at the Mon Ami
Gold Project during the June drilling campaign.
Best results returned were:
•
•
•
•
•
•
•
20m at 2.03 g/t Au from 26m (MLRC015)
4m at 10.03 g/t Au from 31m (MLRC018)
12m at 2.90 g/t Au from 44m (MLRC021)
14m at 5.41 g/t Au from 64m (MLRC024)
8m at 4.17 g/t Au from 136m (MLRC020)
8m at 3.20 g/t Au from 108m (MLRC038)
2m at 29.85 g/t Au from 173m (MLRC036)
All holes successfully intersected shear hosted
alteration and anomalous gold mineralization.
Gold mineralisation at Mon Ami is hosted by quartz
– sulphide veining within a sheared metasediment
/ carbonaceous contact zone within a regional
north-south trending shear zone. The contact
is marked by a 40-50 m wide deformation zone
with intense shearing and alteration. Significant
intercepts from the drilling were reported in an
ASX release dated 16 July 2018.
Based on these early results, further drilling is
planned in FY2019 to test the along strike and
depth extensions to Mon Ami.
Drilling at Mon Ami
3
Operating and Financial Review
MON AMI GOLD PROJECT
Assay intersections through modelled grade domains within the Barnicoat shearzone
4
Operating and Financial Review
NORTH QUEENSLAND EXPLORATION
EDINBURGH PARK GOLD-SILVER
PROJECT
The ‘Edinburgh Park’ project is a new acquisition
for the Company in FY2018 and comprises two
contiguous EPM’s (26527 & 26810) located at the
northern margin of the Bowen Basin. EPM 26527
was granted in September 2017 for a period of
five (5) years. EPM 26810 was applied for in March
2018 and was still pending grant at the end of FY
2018.
The Project is a “grass roots stage” exploration
project located in a region interpreted to represent
a magmatic arc setting which is regarded as being
prospective for porphyry copper-molybdenum
deposits and epithermal gold-silver deposits.
Desktop studies highlight strong similarities with
the Mt Carlton district some 30 kilometres to the
south. A program of detailed geological mapping
and geochemical sampling within granted EPM
25196 commenced during the last quarter.
The field based programs are focused on detailed
geological and structural mapping, validation of
historic exploration results and drill collars and
confirmatory mapping and sampling of defined
prospects to gain an understanding of the nature
of gold (± copper and silver) mineralization.
As announced to the market on 19 July 2018,
EPM 26810 has been granted. The exploration
program has been extended to include EPM
26527 and EPM 26810 and is aimed to provide a
more detailed understanding of the structures and
further refine future drilling targets on the Project.
The program will extend into the next quarter.
Mapping and sampling hydrothermal breccias
at Edinburgh Park
5
Operating and Financial Review
NORTH QUEENSLAND EXPLORATION
JOHNNYCAKE GOLD-SILVER
PROJECT
BACKGROUND
The ‘Johnnycake’ project comprises EPM 18986
and is located at the northern margin of the
Bowen Basin.
The Project is a “grass roots stage” exploration
project located in a region interpreted to represent
a magmatic arc setting which is regarded as being
prospective epithermal gold-silver deposits.
In order to advance the geological understanding
of the Szarbs and Sledgehammer prospects, Great
Southern Mining undertook a small targeted
stratigraphic drilling program at each prospect to
better understand the geology at depth.
In October, 2017, Four holes were completed for a
total of 1,559m, including 718m of diamond core.
The exploration results relating to this drilling
program were reported in an ASX release dated
11 October 2017.
The extent and intensity of alteration observed in
the holes confirmed the presence of a significant
fossil hydrothermal system at both prospects and
delineated a wide 15-20m zone of shear-hosted
sulphide mineralization at the Szarbs prospect.
The sulphide mineralization provides further
evidence on the strong structural controls on
hydrothermal fluid flow which overprint pervasive
propylitic alteration halos. The zone was not
geochemically anomalous, however the shear zone
provides a good target to define lateral zones of
metal concentrations in sulphide mineralization.
Massive sulphides intersected at Szarbs drilling
Drilling at Szarbs Prospect
6
Operating and Financial Review
OTHER PROJECTS
BACKGROUND
EPM 25755, known as
‘Black Mountain’, was
granted to Great Southern Mining Limited on the 8
April 2015 for a period of five years.
is
located
The permit
in north Queensland,
approximately 100 kilometres northwest of
Townsville, and some 50 km west of the city
of Ingham. EPM 25755 is situated within the
Camel Creek Sub-province which is composed
of Ordovician to Early Devonian sedimentary
rocks which have been deformed and have been
intruded by granitoids of mid-Carboniferous to
mid-Permian age.
The primary exploration target is intrusion related
porphyry and mesothermal gold (± Cu) systems
associated with the intrusive phases and/or older
slate-belt-style lode gold mineralisation within the
metasedimentary host rock.
During the reporting period, only limited desktop
review was undertaken.
MCAREA
EPM 25196 is known as the ‘MCArea’ Project and
was granted to Great Southern Mining Limited in
March 2014 for a term of 6 years.
tenure
The
epithermal-style gold-silver mineralisation.
is considered prospective
for
CORPORATE
During the year the Company achieved a number of
major milestones
to
becoming Great Southern Mining Limited. The
following significant matters and changes during
the period have occurred:
transformation
its
in
Acquisition of the Mon Ami Gold Project:
finalised
the Company
In March 2018
the
acquisition of the Mon Ami Gold Project from a
Director
related entity. The acquisition was
made to provide the Company with access to
prospective gold tenements in Western Australia.
The consideration for the acquisition included 15
million shares (subject to twelve months escrow
period) and $250,000 cash. The Company also
entered a royalty deed entitling the holder to a
net smelter return of 2.75% on revenue produced
from sales of ore extracted. The term of the
Royalty is for the life of the mining lease on the
Mon Ami Gold Project, subject to the availability of
ore to be extracted.
Issue of share capital:
The Company undertook several capital raisings
during the period to fund drilling campaigns
in
North Queensland and Western Australia. In
November 2017, 35.4 million shares were issued
generating $0.7 million (prior to costs) and a further
placement was undertaken in April 2018 of 16.5
million shares providing the Company with $0.4
million (prior to costs) of working capital.
During the reporting period, only limited desktop
review was undertaken.
Appointment of new board members and
executives:
In April 2018 the Company undertook a refresh of
the Board and appointed two new non-executive
directors as well as a new Company Secretary
and Chief Financial Officer. In addition a Head of
Exploration was engaged along with a Senior
Advisor.
Change of Name and Constitution:
On 29 June 2018 the Company held a General
Meeting of members to approve the change in
Company name to Great Southern Mining Limited
and adopt a new Company constitution.
7
Operating and Financial Review
FINANCIAL POSITION AND
PERFORMANCE
The Company’s net assets increased 35% from
the year ended 30 June 2017 predominately due
to capital raising activities and the acquisition
of the Mon Ami Gold Project. Following the
successful capital raising activities during the
year the Company raised $1.1 million with
funds used to advance drilling campaigns in
North Queensland and undertake the maiden
drilling program at Mon Ami. The Company held
$0.7 million as cash and cash equivalents at 30
June 2018.
Exploration and evaluation assets
increased
significantly during the period predominately
due to the acquisition of the Mon Ami Gold
Project with $480,000 relating to the issue of
shares to a director related entity and $250,000
cash component which has been deferred and
classified as a current liability.
Operating cash outflows for the period totalled
$0.6 million with cash outflows from investing
activities totalling $0.6 million. We note the
emphasis of matter paragraph regarding the going
concern assumption included in the auditor’s
report, refer to Note 1(w) for further disclosure.
in a manner
The Company has performed
consistent with that of a junior exploration
Company. The focus during the period was on
undertaking drilling and exploration programs.
The net loss for the period of $0.7 million is
reflective of the corporate and overhead costs
incurred in ensuring regulatory compliance is
maintained. In addition, the loss is inclusive of
Director’s fees ($0.09 million) and consultants fees
($0.08 million). The Company also employed a
Chief Financial Officer and Company Secretary in
April 2018 along with additional corporate staff
in June 2018 and therefore has incurred $0.03
million in wages and salaries expenses during the
financial year ended 30 June 2018.
FUTURE PROSPECTS
As discussed elsewhere in this report, with the
capital raising undertaken in August 2018 the
Company is looking to proceed with further drilling
campaigns at Mon Ami and undertake additional
exploration programs at North Queensland to
further understand the potential of the projects.
Further disclosure of information regarding likely
developments in the operations of the Company
in future financial years and the expected results of
those operations is likely to result in unreasonable
prejudice to the Company. Therefore, this
information has not been presented in this report.
BUSINESS RISKS
The Company is subject to a number of risks that
could potentially have an adverse impact on the
performance of the Company. The Company
has in place policies and procedures to monitor
and manage these risks which can broadly be
catergorised as:
•
•
•
•
•
commodity prices;
currency risks;
market risks;
liquidity risks; and
credit risks.
As the Company is in early stage exploration
programs and not a mineral producer the
exposure to commodity risk and currency risk is
minimal. The Company does hold investments in
a ASX listed Company and is therefore subject
to significant movements in the underlying share
price of the investment. Additionally, liquidity risk
is a constant focus of the directors’ being mindful
of the ability of the Company to raise additional
capital to meet expenditure commitments and
further drilling programs. Further disclosure of
these risks can be found in Note 21 to the Annual
Financial Report.
8
Operating and Financial Review
COMPETENT PERSONS STATEMENT
FORWARD LOOKING STATEMENTS
Limited
targets and exploration
The information in this report that relates to
exploration
results
on ML38/1256, EPM's 25196, 25755, 18986,
26527 and 26810 and is based on information
compiled by Dr Bryce Healy. Dr Healy is an
employee of Noventum Group Pty Ltd (ACN 624
875 323) and has been engaged by Great
Southern Mining
as Head of
He has sufficient
Exploration with GSN.
experience
of
mineralisation and
type of deposit under
consideration. Dr Healy is a Member of the
Australasian Institute of Geoscientists and as
such, is a Competent Person for the Reporting
of Exploration Results, Mineral Resources and
Ore Reserves under the JORC Code (2012).
Dr Healy consents to the inclusion in the report of
the matters based on his information in the form
and context in which they occur.
relevant
style
the
to
from
number
to view on
The information in this review of operations
that has been
information
has contained
extracted
ASX
of
a
announcements released during the year and up
to the date of this report. All announcements
are available
the Company’s
website. The Company confirms that it is not
aware of any new information or data that
materially affects the information included in
the original market
The
Company confirms that the form and context
in which the Competent Person’s findings are
presented have not been materially modified
from the original market announcement.
announcement.
Forward- looking statements are only predictions
and are not guaranteed. They are subject to
known and unknown risks, uncertainties and
assumptions, some of which are outside the
control of the Company. Past performance is not
necessarily a guide to future performance and
no representation or warranty is made as to the
likelihood of achievement or reasonableness of
any forward looking statements or other forecast.
The occurrence of events in the future are subject
to risks, uncertainties and other factors that may
cause the Company’s actual results, performance
or achievements to differ from those referred to
in this announcement. Given these uncertainties,
recipients are cautioned not to place reliance on
forward looking statements. Any forward- looking
statements in this announcement speak only at the
date of issue of this announcement. Subject to any
continuing obligations under applicable law and
the ASX Listing Rules, the Company, its directors,
officers, employees and agents do not give any
assurance or guarantee that the occurrence of the
events referred to in this announcement will occur
as contemplate.
9
Directors’ Report
Your directors submit the annual financial report
of Great Southern Mining Limited, (the Company),
(formerly Forte Consolidated Limited), for the
year ended 30 June 2018.
DIRECTORS AND COMPANY SECRETARY
The names of directors and the secretary who
held office during or since the end of the year and
until the date of this report are as follows.
John Terpu – Executive Chairman (Appointed Non-
executive Chairman 12 January 2011, appointed
Executive Chairman 1 July 2013)
Mr Terpu has over twenty years’ of commercial
and management expertise gained in a broad
range of business and investment activities. He
has been involved in the mining and exploration
industry through the acquisition and investment
in a number of strategic exploration and mining
projects. Mr Terpu has a wide range of contacts
in
investment
Mr Terpu had no other public
community.
Company directorships
in the previous three
years.
the exploration and mining
Kathleen Bozanic B.Com, ACA, AICD – Non-
executive Director (Appointed 26 April 2018)
risk,
commercial and
Ms Bozanic is a chartered accountant with over
twenty five years’ of experience in compliance,
financial
governance,
management including leadership experience in
strategic transformation and restructuring. Ms
Bonzanic also has considerable experience as
a Audit Partner, Chief Financial Officer and the
General Manager of Finance in the mining and
construction sector. Ms Bozanic had no other
public Company directorships in the previous
three years.
Mr Andrew Caruso B.Eng (Mining)(Hons), – Non-
executive Director (Appointed 26 April 2018)
Mr Caruso has over twenty five years’ experience
in the Australian and
as a mining engineer
international mining
including
significant corporate leadership roles. Mr Caruso
has business development experience including
operations and strategic planning including large
scale capital projects and mine management.
industries
10
Mr Caruso has been the director of Ascot
Resources Ltd; a public Company, in the previous
three years.
Bruno Firriolo B.Bus (Acctg) – Non-executive
Director (Appointed 12 January 2011) (Resigned
as Non-Executive Director 26 April 2018, Resigned
as Company Secretary 30 April 2018)
Mr Firriolo is an accountant who has been a
partner with the accounting firm Cleaver &
Associates since April 1991 dealing with all
aspects of accounting and taxation. Mr Firriolo’s
experience in financial and corporate matters is
supplemented by a period of co-ownership in
a national wholesale business. Mr Firriolo had
no other public Company directorships in the
previous three years.
Joseph Radici CPA, B.Bus (Acctg) – Non-executive
Director (Appointed 31 March 2015) (Resigned 26
April 2018)
Mr Radici is a Certified Practising Accountant
and Fellow of the Taxation Institute of Australia.
Since 1995 Mr Radici has been on the board of
a number of unlisted public companies as well
as being a non-executive director of Conquest
Mining Limited for a period of 4 years to May
2010. In addition to skills gained on serving on
Company boards, Mr Radici has a wide network
of entrepreneurial associations and is a respected
member of Perth’s business community. Mr Radici
had no other public Company directorships in the
previous three years.
COMPANY SECRETARY
Mark Petricevic CA, B.Com (Acctg & C.
Finance) (Appointed 30 April 2018)
Mark is a chartered accountant with over fifteen
years’ experience
in accounting, audit and
corporate finance including the last four years as
an Audit and Assurance Partner. Mark has had
no public Company directorships in the previous
three years.
Directors’ Report
DIRECTORS’ MEETINGS
The number of meetings of the Company’s Board
of Directors attended by each Director during the
year ended 30 June 2018 was as follows:
Number of
Board Meetings
Held Whilst in
Office
Number of
Board Meetings
Attended
J. Terpu
B. Firriolo
J. Radici
K. Bozanic
A. Caruso
12
10
10
2
2
12
10
10
2
2
INTERESTS IN THE SHARES AND OPTIONS
OF THE COMPANY AND RELATED BODIES
CORPORATE
The following relevant interests in shares and
options of the Company or a related body
corporate were held by the directors as at the
date of this report.
Directors
Number of fully paid
ordinary shares
The options were issued to a Senior Advisor
upon entering the consulting arrangement with
the Company. The options where not issued
as consideration for services provided. These
options do not entitle the holder to participate in
any share issues of the Company.
No shares have been issued as a result of the
exercise of options during or since the end of the
financial year.
DIVIDENDS
No dividends were declared since the start of the
financial year and the directors do not recommend
the payment of a dividend in respect of the
financial year.
REVIEW OF OPERATIONS
During the year, the Company carried out
exploration on its tenements with the objective of
identifying economic deposits of gold and other
metals. The full review of operations immediately
precedes this report.
John Terpu
K. Bozanic
A. Caruso
OPTIONS
105,567,717
1,200,000
1,200,000
Operating results for the year
The net result of operations for the year was a loss
after income tax of $725,433 (2017: $171,411).
The Operating and Financial Review can be found
in the in the “Review of Operations Section” in
this Annual Report.
Details of ordinary shares issued by the Company
during or since the end of the financial year as a
result of the exercise of an option are:
Nil.
At the date of this report unissued ordinary shares
of the Company under option are:
Date
options
granted
Expiry date
Exercise
price of
shares ($)
Number
under
option
14-May-18
31-Dec-19
$0.02 11,800,000
11
Directors’ Report
PRINCIPAL ACTIVITIES
The principal activity of the Company during
the year was exploration for and evaluation of
economic deposits for gold and other minerals in
Western Australia and Queensland.
SIGNIFICANT CHANGES IN THE STATE OF
AFFAIRS
During the year, the following changes occurred:
1.
2.
3.
Acquisition of the Mt Lucky (Mon Ami)
Project: In March 2018 the Company
finalised the acquisition of the Mon Ami
Gold Project from a director related entity.
The acquisition was made to provide
the Company with access to prospective
gold tenements in Western Australia. The
consideration for the acquisition included
15 million shares (subject to twelve months
escrow period) and $250,000 cash and is
yet to be paid.
Issue of share capital: The Company
undertook several capital raisings during
the period to fund drilling campaigns
in North Queensland and Western
Australia. In November 2017, 35.4 million
shares were issued generating $0.7 million
(prior to costs) and a further placement
was undertaken in April 2018 of 16.4
million shares providing the Company with
$0.4 million (prior to costs) of working
capital.
On 29 June 2018 the Company held a
General Meeting of members to approve
the change in Company name to Great
Southern Mining Limited and adopt a new
Company constitution.
SIGNIFICANT EVENTS AFTER THE REPORTING
DATE
The Company completed a placement of
31,846,669
to
fully paid ordinary
sophisticated investors raising $1,115,429 net of
costs.
shares
The Company entered an executive services
agreement with John Terpu as Executive
Chairman. The terms and conditions have been
included in the Remuneration Report.
12
In September 2018 the Company entered into a
transaction to acquire several exploration licences
from Central Australia Rare Earths Pty Ltd, a wholly
owned subsidiary of Strategic Minerals plc, a AIM
listed Company. Subject to the completion of due
diligence and completion of the transaction the
consideration will consist of $100,000 cash and 1
million shares in the Company. At the date of this
report, the transaction is subject to completion
conditions.
Apart from the above, there has not been any
other matter or circumstance that has arisen after
the reporting date that has significantly affected,
or may significantly affect, the operations of the
Company, the results of those operations, or the
state of affairs of the Company in future financial
periods.
LIKELY DEVELOPMENTS & EXPECTED RESULTS
regarding
information
Disclosure of
likely
developments in the operations of the Company
in future financial years and the expected results of
those operations is likely to result in unreasonable
prejudice to the Company. Therefore, this
information has not been presented in this report.
ENVIRONMENTAL LEGISLATION
The Company’s exploration activities are subject
to conditions and environmental regulations
under the Western Australian and Queensland
State Governments. So far, the Directors are aware
all activities have been undertaken in compliance
with relevant regulations.
INDEMNIFICATION &
DIRECTORS AND OFFICERS
INSURANCE OF
The Company has agreed to indemnify all the
directors of the Company for any liabilities to
another person (other than the Company or
related body corporate) that may arise from their
position as directors of the Company, except
where the liability arises out of conduct involving
a lack of good faith.
Directors’ Report
Remuneration philosophy
The performance of the Company depends
upon the quality of the directors and executives.
The philosophy of the Company in determining
remuneration levels is to:
-
-
-
set competitive remuneration packages to
attract and retain high calibre employees;
link executive rewards to shareholder value
creation; and
establish appropriate, demanding
performance hurdles for variable executive
remuneration
Remuneration Committee
Great Southern Mining Limited has not
established a Remuneration Committee. The
Board of Directors of the Company is responsible
for determining and reviewing compensation
arrangements for the directors and the executive
team.
assesses
The Board of Directors
the
appropriateness of the nature and amount
of remuneration of directors and executives
on a periodic basis by reference to relevant
employment market conditions with an overall
objective of ensuring maximum stakeholder
benefit from the retention of a high quality
Board and executive team.
Remuneration Structure
In accordance with best practice corporate
the structure of non-executive
governance,
director and executive remuneration is separate
and distinct.
Non-executive director remuneration
The Board seeks to set aggregate remuneration
at a level that provides the Company with the
ability to attract and retain directors of the highest
calibre, whilst incurring a cost that is acceptable
to shareholders.
During the financial year the Company paid a
premium in respect of a contract insuring the
directors and officers of the Company against any
liability incurred in the course of their duties to the
extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure of
the nature of the liability and the amount of the
premium.
REMUNERATION REPORT (AUDITED)
the
report
outlines
This
remuneration
arrangements in place for the key management
personnel (“KMP”) of the Company for the
financial year ended 30 June 2018. KMP’s being
defined as those persons having authority
and responsibility for planning, directing and
controlling the major activities of the Company,
directly or
including any director
(whether executive or otherwise). The report
also includes remuneration arrangements of the
executives in the Company receiving the higher
remuneration. The information provided in this
remuneration report has been audited as required
by Section 308(3C) of the Corporations Act 2001.
indirectly,
Key Management Personnel
Directors
J. Terpu (Executive Chairman appointed 1 July
2013, Non-executive Chairman appointed 12
January 2011).
B. Firriolo (Non-executive Director and Company
Secretary appointed 12 January 2011, resigned
26 April 2018 and 30 April 2018 respectively).
J. Radici (Non-executive Director appointed 31
March 2015, resigned 26 April 2018).
K. Bozanic (Non-executive Director appointed 26
April 2018).
A. Caruso (Non-executive Director appointed 26
April 2018).
Company Secretary and CFO
M. Petricevic (Company Secretary and CFO,
appointed 30 April 2018).
13
Directors’ Report
REMUNERATION REPORT (CONTINUED)
The ASX Listing Rules specify that the aggregate
remuneration of non-executive directors shall
be determined from time to time by a general
meeting. The
latest determination was at a
General Meeting, prior to the Company’s listing
on ASX, held on 30 March 2011 when shareholders
approved an aggregate remuneration of $300,000
per year.
The amount of aggregate remuneration sought
to be approved by shareholders and the manner
in which it is apportioned amongst directors is
reviewed annually. The Board refers to the fees
paid to non-executive directors of comparable
companies, when undertaking the annual review
process.
Each non-executive director receives a fee for being
a director of the Company. Should the Company
establish a Board committee, an additional fee
would be paid for each committee on which a non-
executive director sits. The payment of additional
fees for serving on a committee recognises the
additional time commitment required by non-
executive directors who serve on one or more sub
committees. During the financial year ended 30
June 2018 no such committees were in place.
expense payment plans. It is intended that the
manner of payment chosen will be optimal for
the recipient without creating undue cost for the
Company.
Variable Remuneration
During the year ended 30 June 2018 the
Company did not have a performance-based
remuneration component built into director and
executive remuneration packages. A long-term
incentive plan was adopted by shareholders of
the Company at the general meeting of members
held 29th June 2018. No components of variable
remuneration were granted to any eligible persons
during the financial year.
Service Agreements
Remuneration and other terms of employment
for the Executive Director and other Key
Management Personnel are formalised
in a
Service Agreement. The major provisions of the
agreements relating to remuneration are set out
below:
Employee
Base salary
($)
Term of
agreement
Notice
period
J Terpu*
50,000
2 years
3 months
Senior Manager
Remuneration
and Executive Director
M Petricevic
180,000
No fixed
term
3 months
Remuneration consists of fixed remuneration and
variable remuneration (comprising short-term and
long-term incentive schemes).
* Subsequent to 30 June 2018 a new service
agreement was entered into with J Terpu. The
terms of the agreement are as follow:
Fixed Remuneration
Fixed remuneration is reviewed annually by the
Board of Directors. The process consists of a
review of relevant comparative remuneration in
the market and internally and, where appropriate,
external advice on policies and practices. The
Board has access to external, independent advice
where necessary.
Senior managers and executive directors are given
the opportunity to receive their fixed (primary)
remuneration in a variety of forms including cash
and fringe benefits such as motor vehicles and
Employee
Base salary
($)
Term of
agreement
Notice
period
J Terpu
219,000
2 years
6 months
During the mining downturn experienced in prior
years the Company limited its activity and reduced
the Executive Chairman’s salary below market
rates in order to limit cash outflows. The increase in
salary noted above is a result of improving market
conditions and reinstatement of the Executive
Chairman’s salary to market rates.
14
Directors’ Report
REMUNERATION REPORT (CONTINUED)
Remuneration of key management personnel
Table 1: Remuneration of key management personnel for the years ended 30 June 2018 and 30 June
2017
Short-term
employee benefits
Post-em-
ployment
benefits
Other
$
Superan-
nuation
$
Directors
Year
Cash
Salary
& Fees
$
Bonuses
$
J Terpu
Executive
Chairman
B Firriolo
Non-Execu-
tive Director
J. Radici
Non-Execu-
tive Director
K. Bozanic
Non-Execu-
tive Director
A. Caruso
Non-Execu-
tive Director
Total to
Directors
2018
45,665
2017 45,664
2018
4,566
2017
2,283
2018
2017
-
-
2018
6,217
2017
-
2018
6,217
2017
2018
2017
-
62,665
47,947
Other Key Management Personnel
M Petricevic
Company
Secretary/
CFO
Total to KMP
2018
28,557
2017
2018
2017
-
91,222
47,947
Non-
Mon-
etary
Benefits
$
5,265
3,797
551
740
551
693
-
-
-
-
6,367
5,230
551
-
6,918
5,230
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
long-
term
benefits
Long-
service
Leave
$
Equity
Share
Options
$
4,338
20,350
4,338
4,881
20,434
27,717
10,000
7,500
591
-
591
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
75,618
58,680
25,551
30,740
10,551
8,193
6,808
-
6,808
-
35,954
20,350
- 125,336
39,555
4,881
2,713
-
22
-
38,666
20,372
39,555
4,881
-
-
-
97,613
31,843
-
- 157,178
-
97,613
Perfor-
mance
Related
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
K Bozanic, A Caruso and M Petricevic commenced with the Company in April 2018 and were therefore
not remunerated by the Company during the 2017 financial year.
No performance related remuneration was paid to any director or Key Management Personnel during
2018 and 2017.
15
Directors’ Report
REMUNERATION REPORT (CONTINUED)
OPTION PLANS IN EXISTENCE DURING THE FINANCIAL YEAR:
On 29 June 2018 the Shareholders of the Company approved the long-term incentive plan to be
adopted. No options over ordinary shares in the Company were granted as remuneration to KMP during
the financial year and up to the date of this report.
SHARE-BASED COMPENSATION TO DIRECTORS AND EXECUTIVES DURING THE YEAR:
During the period the Company issued 15 million fully paid ordinary shares to entities associated with Mr
John Terpu as consideration for the acquisition of the Mon Ami Gold Project, approved by shareholders at
a General Meeting held 29 March 2018. The ordinary shares were not issued as part of the remuneration.
OPTIONS GRANTED TO DIRECTORS AND EXERCISED OR LAPSED DURING THE YEAR: Nil
Movements in KMP share and option holdings (Directors unless stated otherwise)
Fully paid ordinary shares – directly and indirectly held
2018
J. Terpu
B. Firriolo
J.Radici
K. Bozanic
A. Caruso
2017
J. Terpu
B. Firriolo
J.Radici
Opening
Balance
1/7/2017
At time of
commencing/
(ceasing)
Bought
Sold
Closing Balance
30/06/2018
72,394,181
-
33,273,536
1,790,000
(1,790,000)
100,000
-
-
(100,000)
1,200,000
1,200,000
-
-
-
-
Opening
Balance
1/7/2016
At time of
commencing/
(ceasing)
Bought
Sold
71,840,312
1,790,000
100,000
-
-
-
553,869
-
-
-
-
-
-
-
-
-
-
105,667,717
-
-
1,200,000
1,200,000
Closing Balance
30/06/2017
72,394,181
1,790,000
100,000
The increase for J Terpu of 33,273,536 during 2018 includes the 15,000,000 shares issued relating to the
acquisition of the Mon Ami Gold Project, subject to 12 months escrow, as announced on the ASX on 22
February 2018. No cash consideration was payable.
All other shares were acquired on market.
Transactions with Key Management Personnel
The following comprises amounts paid or payable and received or receivable applicable to entities in
which KMP have an interest.
16
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Great Southern Mining Limited (formerly “Forte
Consolidated Limited”) for the year ended 30 June 2018, I declare that, to the best of my knowledge
and belief, there have been no contraventions of:
(a)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
27 September 2018
D I Buckley
Partner
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers
18
Corporate Governance Statement
The Board is committed to achieving and demonstrating the highest standards of corporate governance.
As such, Great Southern Mining Limited (the “Company”) has adopted the third edition of the Corporate
Governance Principles and Recommendations which was released by the ASX Corporate Governance
Council on 27 March 2014 and became effective for the financial years beginning on or after 1 July 2014.
The Company’s Corporate Governance Statement for the financial year ended 30 June 2018 was
approved by the Board on 27 September 2018. The Corporate Governance Statement is available on the
Company’s website at www.gsml.com.au.
19
Great Southern Mining Limited
Income for the year ended 30 June 2018
Revenue and other income
Expenses
Administration expenses
Consulting fees
Legal fees
Director’s fees
Depreciation expense
Loss on sale of fixed assets
Total expenses
Loss before income tax expense
Income tax expense
Net loss for the year
Other comprehensive income, net of income tax
Items that will not be reclassified to profit or loss
Available-for-sale assets disposed of during the year
Items that may be reclassified to profit or loss
Change in the fair value of available-for-sale investments
Income tax expense
Total comprehensive (loss)/income for the year
Notes
2
2
4
2018
$
2017
$
15,348
340,623
(510,357)
(419,000)
(85,000)
(41,509)
(98,619)
(5,296)
-
(1,307)
(85,771)
(5.037)
-
(919)
(740,781)
(512,034)
(725,433)
(171,411)
-
-
(725,433)
(171,411)
-
(300,395)
42,000
38,815
-
-
(683,433)
(432,991)
Basic and diluted loss per share (cents per share)
5
(0.348)
(0.096)
The accompanying notes form part of these financial statements.
20
Great Southern Mining Limited
Statement of Financial Position As at 30 June 2018
CURRENT ASSETS
Cash and cash equivalents
Other receivables - current
Other assets
Total Current Assets
NON-CURRENT ASSETS
Other receivables - non current
Available-for-sale listed securities
Plant and equipment
Exploration and evaluation expenditure
Total Non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Employee benefits
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Notes
2018
$
2017
$
6
7
8
9
10
11
12
13
14
15
16
748,423
870,380
-
13,244
7,116
20,836
761,667
898,332
10,000
180,000
19,518
7,500
138,000
11,546
3,455,352
1,668,573
3,664,870
1,825,619
4,426,538
2,723,951
810,402
34,014
844,416
844,416
65,470
8,772
74,242
74,242
3,582,122
2,649,709
21,750,349
20,169,503
128,470
51,470
(18,296,697)
(17,571,264)
3,582,122
2,649,709
The accompanying notes form part of these financial statements.
21
Great Southern Mining Limited
Statement of Cash Flows For the year ended 30 June 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Notes
2018
$
2017
$
(649,041)
(501,281)
18,364
29,480
NET CASH USED IN OPERATING ACTIVITIES
17
(630,676)
(471,801)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
Payments for exploration and evaluation expenditure
Payments for purchase of available-for-sale investments
Proceeds from sale of available-for-sale investments
(7,972)
-
(584,154)
(140,502)
-
-
(36,185)
494,810
NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES
(592,127)
318,123
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of Shares (net of costs)
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES
Net decrease in cash held
Cash at beginning of year
CASH AT END OF YEAR
The accompanying notes form part of these financial statements.
1,100,846
1,100,846
-
-
(121,957)
(153,678)
870,380
1,024,058
6
748,423
870,380
22
Great Southern Mining Limited
Statement of Changes in Equity
For the year ended 30 June 2018
Notes
Issued
Capital
$
Accumulated
Losses
$
Financial
Asset
Reserve $
Share Option
Reserve
$
Total
$
Company
Balance at 1 July 2016
20,169,503
(17,399,853)
313,050
Total comprehensive income :
-
(171,411)
-
- 3,082,700
(171,411)
Loss for the year
Available-for-sale assets disposed
of during the year
Change in the fair value of available
for sale investments
-
-
-
(300,395)
-
(300,395)
-
38,815
-
38,815
Balance at 30 June 2017
20,169,503
(17,571,264)
51,470
- 2,649,709
Company
Balance at 1 July 2017
20,169,503
(17,571,264)
51,470
-
2,649,709
Options Issued During the Period
Issue of Share Capital
Capital Raising costs
Issue of Shares under
share-based payment
-
1,118,416
(17,570)
480,000
15
15
15
-
-
-
-
-
-
-
-
35,000
35,000
- 1,118,416
(17,570)
-
-
480,000
Loss for the year
Change in the fair value of available
for sale investments
21,750,349
(17,571,264)
51,470
35,000 4,265,555
-
-
(725,433)
-
-
42,000
-
-
(725,433)
42,000
Balance at 30 June 2018
21,750,349
(18,296,697)
93,470
35,000 3,582,122
The accompanying notes form part of these financial statements.
23
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES
(a)
Reporting entity
Your directors present their report on the
Company for the financial year ended 30
June 2018. The Company is a listed public
Company
in Australia. The
principal activities are the exploration for
and evaluation of economic deposits for gold
and other minerals in North Queensland and
Western Australia.
registered
The address of the Company’s registered
office is Suite 4, 213 Balcatta Rd, Balcatta
WA 6021.
(b)
Basis of preparation and statement
of compliance
and
The general-purpose financial statements
of the Company have been prepared
in accordance with the requirements of
the Corporations Act 2001, Australian
other
Accounting
Standards
authoritative pronouncements of
the
Australian Accounting Standards Board
(AASB). Compliance with Australian
Accounting Standards
full
compliance with the International Financial
Reporting Standards (IFRS) as issued by the
International Accounting Standards Board
(IASB). Great Southern Mining Limited is a
for-profit entity for the purpose of preparing
the financial statements.
results
in
The accounting policies detailed below have
been consistently applied to all of the years
presented unless otherwise stated.
The financial report is presented in Australian
dollars.
The financial statements for the year ended
30 June 2018 were approved and authorised
for issue by the Board of Directors on 27
September 2018.
(c)
Adoption of new and revised standards
Changes in accounting policies on initial
application of Accounting Standards
24
A number of new and revised standards
became effective for the current reporting
period. Information on the more significant
standard(s) is presented below.
AASB 2016-1 Amendments to Australian
Accounting Standards – Recognition of
Deferred Tax Assets for Unrealised Losses
AASB 2016-1 amends AASB 112 Income
Taxes to clarify how to account for deferred
tax assets related to debt instruments
measured at fair value, particularly where
changes in the market interest rate decrease
the fair value of a debt instrument below
cost.
AASB 2016-1
is applicable to annual
reporting periods beginning on or after 1
January 2017.
AASB 2016-2 Amendments to Australian
Accounting Standards – Disclosure Initiative:
Amendments to AASB 107
AASB 2016-2 amends AASB 107 Statement
of Cash Flows to require entities preparing
financial statements in accordance with
Tier 1 reporting requirements to provide
disclosures that enable users of financial
statements to evaluate changes in liabilities
arising from financing activities, including
both changes arising from cash flows and
non-cash changes.
is applicable to annual
AASB 2016-2
reporting periods beginning on or after 1
January 2017.
The directors have reviewed all of the new
and revised Standards and Interpretations
issued by the AASB that are relevant to
its operations and effective for the current
annual reporting period.
It has been determined by the directors that
there is no impact, material or otherwise,
of the new and revised Standards and
its business and,
Interpretations on
therefore, no change
is necessary to
Company accounting policies.
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c)
Adoption of new and revised standards (continued)
Changes in accounting policies on initial application of Accounting Standards
The directors have also reviewed all new Standards and Interpretations that have been issued but
are not yet effective for the year ended 30 June 2018. A summary of the impact is contained in the
table below:
New /revised
Pronouncement
Superseded
Pronouncement
AASB 9 Financial
Instruments
(December 2014)
AASB 139 Financial
Instruments:
Recognition and
Measurement
Effective
Date
Likely impact on initial
application
01-Jan-18 When this standard is first adopted
for the year ending 30 June
2019, there will be no material
impact on the transactions and
balances recognised in the financial
statements. The Company has
simple investments held in ASX
listed companies which can be
traded at quoted market prices.
Should such investments be held
at 30 June 2019 it is likely that the
accounting treatment will be similar
to the current treatment and any
gains or losses on fair value will be
taken to the other comprehensive
income statement.
Nature of Change
AASB 9 introduces new requirements for the
classification and measurement of financial
assets and liabilities and includes a forward-
looking ‘expected loss’ impairment model and
a substantially-changed approach to hedge
accounting. These requirements improve and
simplify the approach for classification and
measurement of financial assets compared
with the requirements of AASB 139. The main
changes are:
a)
Financial assets that are debt instruments
will be classified based on: (i) the objective of
the entity’s business model for managing the
financial assets; and (ii) the characteristics of
the contractual cash flows.
b)
Allows an irrevocable election on initial
recognition to present gains and losses on
investments in equity instruments that are
not held for trading in other comprehensive
income (instead of in profit or loss). Dividends
in respect of these investments that are a return
on investment can be recognised in profit or
loss and there is no impairment or recycling on
disposal of the instrument.
Introduces a ‘fair value through other
c)
comprehensive income’ measurement category
for particular simple debt instruments.
d)
Financial assets can be designated and
measured at fair value through profit or loss
at initial recognition if doing so eliminates
or significantly reduces a measurement or
recognition inconsistency that would arise from
measuring assets or liabilities, or recognising
the gains and losses on them, on different
bases.
e)
Where the fair value option is used for
financial liabilities the change in fair value is to
be accounted for as follows:
-
-
the change attributable to changes in credit
risk are presented in Other Comprehensive
Income (OCI)
the remaining change is presented in profit
or loss
If this approach creates or enlarges an
accounting mismatch in the profit or loss, the
effect of the changes in credit risk are also
presented in profit or loss.
25
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c)
Adoption of new and revised standards (continued)
Changes in accounting policies on initial application of Accounting Standards
New /revised
Pronouncement
Superseded
Pronouncement
Nature of Change
Effective
Date
Likely impact on initial
application
Otherwise, the following requirements have
generally been carried forward unchanged
from AASB 139 into AASB 9:
-
-
classification and measurement of financial
liabilities; and
derecognition requirements for financial
assets and liabilities.
requirements
AASB 9
regarding hedge
accounting represent a substantial overhaul of
hedge accounting that enable entities to better
reflect their risk management activities in the
financial statements.
AASB 16:
a.
b.
c.
d.
e.
replaces AASB 117 Leases and some
lease-related Interpretations
requires all leases to be accounted for ‘on-
balance sheet’ by lessees, other than
short-term and low value asset leases
provides new guidance on the application
of the definition of lease and on sale and
lease back accounting
largely retains the existing lessor
accounting requirements in AASB 117
requires new and different disclosures
about leases.
AASB 16 Leases
AASB 117 Leases,
Int. 4 Determining
whether an
Arrangement
contains a Lease,
Int. 115 Operating
Leases—Lease
Incentives, Int.
127 Evaluating
the Substance
of Transactions
Involving the Legal
Form of a Lease
26
01-Jan-19 Based on the entity’s assessment,
it is expected that the first-time
adoption of AASB 16 for the year
ending 30 June 2020 will have a
material impact on the transactions
and balances recognised in the
financial statements, in particular:
-
At the time of the assessment
the Company is a junior exploration
Company. As exploration leases are
excluded from AASB 16 the only
material lease which may impact
the financial statements is the lease
over the premises.
-
lease assets and financial
liabilities on the balance sheet will
increase by approximately $0.16
million respectively (based on the
facts at the date of the assessment).
there will be a reduction in the
-
reported equity as the carrying
amount of lease assets will reduce
more quickly than the carrying
amount of lease liabilities.
EBIT in the statement of profit
-
or loss and other comprehensive
income will be higher as the
implicit interest in lease payments
for former off-balance sheet leases
will be presented as part of finance
costs rather than being included in
operating expenses.
-
operating cash outflows will be
lower and financing cash flows will
be higher in the statement of cash
flows as principal repayments on all
lease liabilities will now be included
in financing activities rather than
operating activities. Interest can
also be included within financing
activities.
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c)
Adoption of new and revised standards (continued)
Changes in accounting policies on initial application of Accounting Standards
New /revised
Pronouncement
Superseded
Pronouncement
Nature of Change
Effective
Date
Likely impact on initial
application
None
AASB 2016-
5 Amendments
to Australian
Accounting
Standards –
Classification and
Measurement
of Share- based
Payment Transactions
This Standard amends AASB 2 Share-based
Payment to address:
a)
the accounting for the effects of vesting and
non-vesting conditions on the measurement of
cash-settled share-based payments;
01-Jan-18 Whilst a formal assessment has not
yet been undertaken the Company
does not anticipate a material
impact for the year ending 30 June
2019.
b)
the classification of share-based payment
transactions with a net settlement feature for
withholding tax obligations; and
the accounting for a modification to the
c)
terms and conditions of a share-based payment
that changes the classification of the transaction
from cash-settled to equity-settled.
27
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(d)
Critical accounting estimates and
judgements
The application of accounting policies
requires the use of judgements, estimates
and assumptions about carrying values of
assets and liabilities that are not readily
apparent from other sources. The estimates
and associated assumptions are based on
historical experience and other factors that
are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions
are recognised in the period in which the
estimate is revised if it affects only that
period, or in the period of the revision and
future periods if the revision affects both
current and future periods.
Exploration and evaluation expenditure
carried forward
In accordance with accounting policy Note
1 (t), management determines when an area
of interest should be abandoned. When a
decision is made that an area of interest is
not commercially viable, all costs that have
been capitalised in respect of that area of
interest are written off. In determining this,
assumptions including the maintenance of
title, ongoing expenditure and prospectivity
are made. During the year, nil exploration
expenditure was written off. See Note 12 for
disclosure of carrying values.
Recovery of deferred tax assets
Deferred tax assets are currently not
recognised in the financial statements. The
extent to which deferred tax assets can
be recognised is based on an assessment
of the probability of the Group’s future
taxable income against which the deferred
tax assets can be utilised. Given the current
stage of the Company’s exploration and
development cycle, the
likelihood and
timeline of future profits cannot be reliably
estimated. Refer Note 4.
28
Useful lives of depreciable assets
Management reviews its estimate of the
useful lives of depreciable assets at each
reporting date, based on the expected
utility of the assets. Uncertainties in these
estimates relate to technical obsolescence
that may change the utility of certain
software and IT equipment.
Fair value of financial instruments
Management uses valuation techniques
to determine the fair value of financial
instruments (where active market quotes
are not available) and non-financial assets.
This involves developing estimates and
assumptions consistent with how market
participants would price the instrument.
its assumptions on
Management bases
observable data as far as possible, but
this is not always available. In that case
management uses the best information
available. Estimated fair values may vary from
the actual prices that would be achieved in
an arm’s length transaction at the reporting
date (see Note 21).
Share based payments
The Company measures the cost of equity-
settled transactions with employees by
reference to the fair value of the equity
instruments at the date at which they are
granted. For security instruments issued
to consultants, consideration of the fair
value of services received (if available) or
fair value of the equity instruments granted
as consideration is used. The fair value is
determined by using the Black-Scholes
model taking into account the terms and
conditions upon which the instruments were
granted. The accounting estimates and
assumptions relating to equity-settled share-
based payments would have no impact on
the carrying amounts of assets and liabilities
within the next annual reporting period but
may impact profit or loss and equity. (Refer
to Note 24).
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(e)
Segment reporting
reported
in
Operating segments are
a manner consistent with the
internal
reporting provided to the chief operating
decision maker. The chief operating decision
maker, who is responsible for allocating
resources and assessing performance of the
operating segments, has been identified
as the Board of Great Southern Mining
Limited. The Company’s activities included
the exploration and evaluation of projects
in North Queensland and Western Australia.
The Western Australian tenements were
acquired during the current financial year
and hence are deemed to be a new segment.
In addition, corporate assets which are not
directly attributable to the business activities
of the operating segment are not allocated
to a segment. In the financial periods under
audit, this primarily applies to the Company’s
registered office and administrative duties.
There have been no changes from prior
periods in the measurement methods used
to determine reported segment profit or
loss.
(f)
Revenue recognition
received or
Revenue is measured at fair value of the
receivable.
consideration
Revenue is recognised to the extent that it
is probable that the economic benefits will
flow to the Company and the revenue can
be reliably measured. The following specific
recognition criteria must also be met before
revenue is recognised:
Interest income
Interest revenue is recognised on a time
proportionate basis that takes into account
the effective yield on the financial asset.
(g)
Income tax
The income tax expense or benefit for the
period is the tax payable on the current
period’s taxable income based on
29
the applicable income tax rate for each
jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to
temporary difference and to unused tax
losses.
The current income tax charge is calculated
on the basis of the tax laws enacted or
substantively enacted at the end of the
reporting period in the countries where the
Company operates and generates taxable
income. Management periodically evaluates
positions taken in tax returns with respect to
situations in which applicable tax regulation
is subject to interpretation. It establishes
provisions where appropriate on the basis
of amounts expected to be paid to the tax
authorities.
Current tax assets and liabilities for the
current and prior periods are measured
at the amount expected to be recovered
from or paid to the taxation authorities.
The tax rates and tax laws used to compute
the amount are those that are enacted or
substantively enacted by the reporting date.
Deferred income tax is provided on all
temporary differences at the reporting
date between the tax bases of assets and
liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognised
for all taxable temporary differences except:
the
deferred
• when
income
tax liability arises from the initial
recognition of goodwill or of an asset
or liability in a transaction that is not a
business combination and that, at the
time of the transaction, affects neither
the accounting profit nor taxable profit
or loss; or
taxable
the
is
temporary
• when
difference
associated with
investments in subsidiaries, associates
or interests in joint ventures, and the
timing of the reversal of the temporary
difference can be controlled and
it is probable that the temporary
difference will not reverse in the
foreseeable future.
Notes to the Financial Statements
For the year ended 30 June 2018
liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted
at the reporting date.
Income taxes relating to items recognised directly
in equity are recognised in equity and not in profit
or loss.
Deferred tax assets and deferred tax liabilities
are offset only if a legally enforceable right exists
to set off current tax assets against current tax
liabilities and the deferred tax assets and liabilities
relate to the same taxable entity and the same
taxation authority.
Other taxes
Revenues, expenses and assets are recognised
net of the amount of GST except:
• when the GST
incurred on a
purchase of goods and services is
not recoverable from the taxation
authority, in which case the GST is
recognised as part of the cost of
acquisition of the asset or as part of
the expense item as applicable; and
• receivables and payables, which
are stated with the amount of GST
included.
The net amount of GST recoverable from, or
payable to, the taxation authority is included as
part of receivables or payables in the statement
of financial position.
Cash flows are included in the statement of cash
flows on a gross basis and the GST component
of cash flows arising from investing and financing
activities, which is recoverable from, or payable to,
the taxation authority are classified as operating
cash flows.
Commitments and contingencies are disclosed
net of the amount of GST recoverable from, or
payable to, the taxation authority.
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(h)
Income tax (continued)
Deferred income tax assets are recognised
for all deductible temporary differences,
carry-forward of unused tax assets and
unused tax losses, to the extent that it is
probable that taxable profit will be available
against which the deductible temporary
differences and the carry-forward of unused
tax credits and unused tax losses can be
utilised, except:
relating
• when the deferred income tax
the deductible
asset
to
temporary difference arises
from
the initial recognition of an asset or
liability in a transaction that is not a
business combination and, at the time
of the transaction, affects neither the
accounting profit nor taxable profit or
loss; or
is
• when the deductible temporary
difference
associated with
investments in associates or interests
in joint ventures, in which case a
deferred tax asset is only recognised
to the extent that it is probable that
the temporary difference will reverse
in the foreseeable future and taxable
profit will be available against which
the temporary difference can be
utilised.
The carrying amount of deferred income tax assets
is reviewed at each reporting date and reduced
to the extent that it is no longer probable that
sufficient taxable profit will be available to allow
all or part of the deferred income tax asset to be
utilised.
Unrecognised deferred income tax assets are
reassessed at each reporting date and are
recognised to the extent that it has become
probable that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred income tax assets and liabilities are
measured at the tax rates that are expected to
apply to the year when the asset is realised, or the
30
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(i)
Impairment of assets
The Company assesses at each reporting date
whether there is an indication that an asset may
be impaired. If any such indication exists, or when
annual impairment testing for an asset is required,
the Company makes an estimate of the asset’s
recoverable amount. An asset’s recoverable
amount is the higher of its fair value less costs
to sell and its value-in-use and is determined
for an individual asset, unless the asset does not
generate cash inflows that are largely independent
of those from other assets or groups of assets and
the asset’s value-in-use cannot be estimated to
be close to its fair value. In such cases the asset
is tested for impairment as part of the cash-
generating unit to which it belongs. When the
carrying amount of an asset or cash-generating
unit exceeds its recoverable amount, the asset or
cash-generating unit is considered impaired and is
written down to its recoverable amount.
In assessing value-in-use, the estimated future
cash flows are discounted to their present value
using a pre-tax discount rate that reflects current
market assessments of the time value of money
and the risks specific to the asset. Impairment
losses relating to continuing operations are
recognised in those expense categories consistent
with the function of the impaired asset unless the
asset is carried at revalued amount (in which case
the impairment loss is treated as a revaluation
decrease).
An assessment is also made at each reporting date
as to whether there is any indication that previously
recognised impairment losses may no longer
exist or may have decreased. If such indication
exists, the recoverable amount is estimated. A
previously recognised impairment loss is reversed
only if there has been a change in the estimates
used to determine the asset’s recoverable amount
since the last impairment loss was recognised. If
that is the case the carrying amount of the asset
is increased to its recoverable amount. That
increased amount cannot exceed the carrying
amount that would have been determined, net
of depreciation, had no impairment loss been
recognised for the asset in prior years. Such
reversal is recognised in profit or loss unless the
asset is carried at revalued amount, in which case
the reversal is treated as a revaluation increase.
After such a reversal the depreciation charge is
adjusted in future periods to allocate the asset’s
revised carrying amount, less any residual value,
on a systematic basis over its remaining useful life.
(j)
Cash and cash equivalents
Cash comprises cash at bank and in 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. Bank
overdrafts are shown within borrowings in current
liabilities in the statement of financial position.
For the purposes of the statement of cash flows,
cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding
bank overdrafts.
(k)
Trade and other receivables
Trade
initial
receivables are measured on
recognition at fair value and are subsequently
measured at amortised cost using the effective
interest rate method, less any allowance for
impairment. Trade receivables are generally due
for settlement within periods ranging from 15
days to 30 days.
Impairment of trade receivables is continually
reviewed and those that are considered to be
uncollectible are written off by reducing the
carrying amount directly. An allowance account
is used when there is objective evidence that the
Company will not be able to collect all amounts
due according to the original contractual terms.
Factors considered by the Company in making this
determination include known significant financial
difficulties of the debtor, review of financial
information and significant delinquency in making
contractual payments to the Company. The
impairment allowance is set equal to the difference
between the carrying amount of the receivable and
the present value of estimated future cash flows,
discounted at the original effective interest rate.
Where receivables are short-term discounting is
not applied in determining the allowance.
31
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(k)
Trade and other receivables (continued)
The amount of the impairment loss is recognised
in the statement of comprehensive income within
other expenses. When a trade receivable for which
an impairment allowance had been recognised
becomes uncollectible in a subsequent period,
it is written off against the allowance account.
Subsequent recoveries of amounts previously
written off are credited against other expenses in
the statement of comprehensive income.
(l)
Financial assets
Recognition, initial measurement and
derecognition
Financial assets and financial
liabilities are
recognised when the Group becomes a party
to the contractual provisions of the financial
instrument and are measured initially at fair value
adjusted by transactions costs, except for those
carried at fair value through profit or loss, which
are measured initially at fair value. Subsequent
measurement of financial assets and financial
liabilities are described below.
Financial assets are derecognised when the
contractual rights to the cash flows from the
financial asset expire, or when the financial
asset and all substantial risks and rewards are
transferred. A financial liability is derecognised
when it is extinguished, discharged, cancelled or
expires.
Classification and subsequent measurement of
financial assets
For the purpose of subsequent measurement,
financial assets other than those designated and
effective as hedging instruments are classified into
the following categories upon initial recognition:
loans and receivables
financial assets at fair value through profit or loss
(FVTPL)
Held-to-maturity (HTM) investments; or
Available-for-sale (AFS) financial assets
32
All financial assets except for those at fair value
through profit or loss (FVTPL) are subject to review
for impairment at least at each reporting date to
identify whether there is any objective evidence
that a financial asset or a group of financial
assets is impaired. Different criteria to determine
impairment are applied for each category of
financial assets, which are described below.
All income and expenses relating to financial
assets that are recognised in profit or loss are
presented within finance costs, finance income
or other financial items, except for impairment of
trade receivables which is presented within other
expenses.
Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that
are not quoted in an active market. After initial
recognition, these are measured at amortised
cost using the effective interest method, less
provision for impairment. Discounting is omitted
where the effect of discounting is immaterial. The
Group’s trade and most other receivables fall into
this category of financial instruments.
Individually significant receivables are considered
for impairment when they are past due or when
other objective evidence is received that a
specific counterparty will default. Receivables that
are not considered to be individually impaired
are reviewed for impairment in groups, which
are determined by reference to the industry and
region of a counterparty and other shared credit
risk characteristics. The impairment loss estimate
is then based on recent historical counterparty
default rates for each identified group.
Available-for-sale (AFS) financial assets
Available-for-sale
(AFS) financial assets are
non-derivative financial assets that are either
designated to this category or do not qualify for
inclusion in any of the other categories of financial
assets. The Company’s AFS financial assets
includes listed securities.
Notes to the Financial Statements
For the year ended 30 June 2018
•
•
•
the rights to receive cash flows from the
asset have expired;
the Company retains the right to receive
cash flows from the asset, but has assumed
an obligation to pay them in full without
material delay to a third party under a ‘pass-
through’ arrangement; or
the Company has transferred its rights to
receive cash flows from the asset and either:
(a)
(b)
has transferred substantially all the
risks and rewards of the asset, or
has neither transferred nor retained
substantially all the risks and rewards
of the asset but has transferred control
of the asset.
When the Company has transferred its rights to
receive cash flows from an asset and has neither
transferred nor retained substantially all the risks
and rewards of the asset nor transferred control
of the asset, the asset is recognised to the extent
of the Company’s continuing involvement in the
asset. Continuing involvement that takes the
form of a guarantee over the transferred asset
is measured at the lower of the original carrying
amount of the asset and the maximum amount of
consideration received that the Company could
be required to repay.
(ii) Financial liabilities
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires.
When an existing financial liability is replaced by
another from the same lender on substantially
different terms, or the terms of an existing liability
are substantially modified, such an exchange
or modification is treated as a derecognition
of the original liability and the recognition of a
new liability, and the difference in the respective
carrying amounts is recognised in profit or loss.
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(l)
Financial assets (continued)
in other comprehensive
All Available-for-sale (AFS) financial assets are
measured at fair value. Gains and losses are
income
recognised
and reported within the AFS reserve within
equity, except for impairment losses and foreign
exchange differences on monetary assets, which
are recognised in profit or loss. When the asset
is disposed of or is determined to be impaired
the cumulative gain or loss recognised in other
comprehensive income is reclassified from the
equity reserve to profit or loss and presented
as a reclassification adjustment within other
comprehensive income.
For AFS equity investments, impairment reversals
are not recognised in profit or loss and any
subsequent increase in fair value is recognised in
other comprehensive income.
Classification and subsequent measurement of
financial liabilities
The Company’s financial
borrowings, trade and other payables.
liabilities
include
Financial liabilities are measured subsequently
at amortised cost using the effective interest
method, except for financial liabilities held for
trading or designated at FVTPL, that are carried
subsequently at fair value with gains or losses
recognised in profit or loss. All derivative financial
instruments that are not designated and effective
as hedging instruments are accounted for at
FVTPL.
All interest-related charges and, if applicable,
changes in an instrument’s fair value that are
reported in profit or loss are included within
finance costs or finance income.
(m) Derecognition of financial assets
and financial liabilities
(i)
Financial assets
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is derecognised when:
33
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(n)
Impairment of financial assets
The Company assesses at each reporting date
whether a financial asset or group of financial
assets is impaired.
(i)
Financial assets carried at amortised cost
If there is objective evidence that an impairment
loss on loans and receivables carried at amortised
cost has been incurred, the amount of the loss
is measured as the difference between the
asset’s carrying amount and the present value of
estimated future cash flows (excluding future credit
losses that have not been incurred) discounted
at the financial asset’s original effective interest
rate (i.e. the effective interest rate computed at
initial recognition). The carrying amount of the
asset is reduced either directly or through use of
an allowance account. The amount of the loss is
recognised in profit or loss.
The Company first assesses whether objective
evidence of impairment exists individually for
financial assets that are individually significant, and
individually or collectively for financial assets that
are not individually significant. If it is determined
that no objective evidence of impairment exists
individually assessed financial asset,
for an
whether significant or not, the asset is included in
a group of financial assets with similar credit risk
characteristics and that group of financial assets
is collectively assessed for impairment. Assets
that are individually assessed for impairment
and for which an impairment loss is or continues
to be recognised are not included in a collective
assessment of impairment.
If, in a subsequent period, the amount of the
impairment loss decreases, and the decrease can
be related objectively to an event occurring after
the impairment was recognised, the previously
recognised impairment loss is reversed. Any
subsequent reversal of an impairment loss is
recognised in profit or loss, to the extent that the
carrying value of the asset does not exceed its
amortised cost at the reversal date.
(ii) Financial assets carried at cost
If there is objective evidence that an impairment
loss has been incurred on an unquoted equity
instrument that is not carried at fair value (because
its fair value cannot be reliably measured), or on
a derivative asset that is linked to and must be
settled by delivery of such an unquoted equity
instrument, the amount of the loss is measured
as the difference between the asset’s carrying
amount and the present value of estimated future
cash flows, discounted at the current market rate
of return for a similar financial asset.
(iii) Available-for-sale investments
If there is objective evidence that an available-for-
sale investment is impaired, an amount comprising
the difference between its cost and its current
fair value, less any impairment loss previously
recognised in profit or loss, is transferred from
equity to the statement of comprehensive
income. Reversals of impairment losses for equity
instruments classified as available-for-sale are not
recognised in profit.
(o)
Plant and equipment
Plant and equipment is stated at cost less
accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of
replacing parts that are eligible for capitalisation
when the cost of replacing the parts is incurred.
Similarly, when each major inspection is performed,
its cost is recognised in the carrying amount of the
plant and equipment as a replacement only if it is
eligible for capitalisation.
Depreciation is calculated on a straight-line basis
over the estimated useful life of the assets as
follows:
Plant and equipment – over 3 to 5 years
The assets’ residual values, useful lives and
amortisation methods are reviewed, and adjusted
if appropriate, at each financial year end.
(i) Impairment
The carrying values of plant and equipment are
reviewed for impairment at each reporting date,
with recoverable amount being estimated when
events or changes in circumstances indicate that
the carrying value may be impaired.
34
Notes to the Financial Statements
For the year ended 30 June 2018
(q)
Employee leave benefits
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12
months of the reporting date are recognised in
other payables or in employee benefits, in respect
of employees’ services up to the reporting date.
They are measured at the amounts expected to
be paid when the liabilities are settled. Liabilities
for non-accumulating sick leave are recognised
when the leave is taken and are measured at the
rates paid or payable.
Other long-term employee benefits
The Company’s liabilities for annual leave and
long service leave are included in other long-term
benefits as they are not expected to be settled
wholly within 12 months after the end of the
period in which the employees render the related
service. They are measured at the present value
of the expected future payments to be made
to employees. The expected future payments
incorporate anticipated future wage and salary
levels, experience of employee departures and
periods of service, and are discounted at rates
determined by reference to market yields at
the end of the reporting period on high quality
corporate bonds that have maturity dates that
approximate the timing of the estimated future
cash outflows. Any re-measurements arising
from experience adjustments and changes in
assumptions are recognised in profit or loss in the
periods in which the changes occur.
The Company presents employee benefit
obligations as current liabilities in the statement of
financial position if the Company does not have an
unconditional right to defer settlement for at least
12 months after the reporting period, irrespective
of when the actual settlement is expected to take
place.
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(o)
Plant and equipment (continued)
The recoverable amount of plant and equipment is
the higher of fair value less costs to sell and value
in use. In assessing value in use, the estimated
future cash flows are discounted to their present
value using a pre-tax discount rate that reflects
current market assessments of the time value of
money and the risks specific to the asset.
For an asset that does not generate largely
independent cash inflows, recoverable amount is
determined for the cash-generating unit to which
the asset belongs, unless the asset’s value in use
can be estimated to approximate fair value.
An impairment exists when the carrying value
of an asset or cash-generating units exceeds
its estimated recoverable amount. The asset or
cash-generating unit is then written down to its
recoverable amount.
For plant and equipment, impairment losses are
recognised in the statement of comprehensive
income in a separate line item.
(ii) Derecognition and disposal
An item of plant and equipment is derecognised
upon disposal or when no further future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the
asset (calculated as the difference between the
net disposal proceeds and the carrying amount of
the asset) is included in profit or loss in the year
the asset is derecognised.
(p)
Trade and other payables
Trade payables and other payables are carried at
amortised cost and represent liabilities for goods
and services provided to the Company prior to
the end of the financial year that are unpaid and
arise when the Company becomes obliged to
make future payments in respect of the purchase
of these goods and services. Trade and other
payables are presented as current liabilities unless
payment is not due within 12 months.
35
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(r)
Issued capital
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares
or options are shown in equity as a deduction,
net of tax, from the proceeds. Incremental costs
directly attributable to the issue of new shares or
options for the acquisition of a new business are
not included in the cost of acquisition as part of
the purchase consideration.
(s)
Earnings per share
Basic earnings per share is calculated as net profit/
loss adjusted to exclude any costs of servicing
equity (other than dividends) and preference
share dividends, divided by the weighted average
number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share is calculated as net
profit/loss adjusted for:
•
•
•
costs of servicing equity (other than
dividends) and preference share dividends;
the after-tax effect of dividends and interest
associated with dilutive potential ordinary
shares that have been recognised as
expenses; and
other non-discretionary changes in revenues
or expenses during the period that would
result from the dilution of potential ordinary
shares; divided by the weighted average
number of ordinary shares and dilutive
potential ordinary shares, adjusted for any
bonus element.
(t)
Exploration and evaluation expenditure
Exploration and evaluation expenditure in relation
to each separate area of interest are recognised
as an exploration and evaluation asset in the year
in which they are incurred where the following
conditions are satisfied:
(i)
(ii)
the rights to tenure of the area of interest
are current; and
at least one of the following conditions is
also met:
(a) the exploration and evaluation
expenditures are expected to be
recouped through successful
development and exploitation of
the area of interest, or alternatively,
by its sale; or
(b) exploration and evaluation activities in
the area of interest have not at the
reporting date reached a stage which
permits a reasonable assessment
of the existence or otherwise of
economically recoverable reserves, and
active and significant operations in, or
in relation to, the area of interest are
continuing.
Exploration and evaluation assets are initially
measured at cost and include acquisition of rights
to explore, studies, exploratory drilling, trenching
and sampling and associated activities and an
allocation of depreciation and amortised of assets
used in exploration and evaluation activities.
General and administrative costs are only included
in the measurement of exploration and evaluation
costs where they are related directly to operational
activities in a particular area of interest.
that
Exploration and evaluation assets are assessed
for impairment when facts and circumstances
the carrying amount of an
suggest
exploration and evaluation asset may exceed its
recoverable amount. The recoverable amount of
the exploration and evaluation asset (for the cash
generating unit(s) to which it has been allocated
being no larger than the relevant area of interest)
is estimated to determine the extent of the
impairment loss (if any). Where an impairment
loss subsequently reverses, the carrying amount
of the asset is increased to the revised estimate
of its recoverable amount, but only to the extent
that the increased carrying amount does not
exceed the carrying amount that would have
been determined had no impairment loss been
recognised for the asset in previous years.
Where a decision has been made to proceed with
development in respect of a particular area of
interest, the relevant exploration and evaluation
asset is tested for impairment and the balance is
then reclassified to development.
36
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(u)
Share Based payments
The Company operates equity-settled share-
based remuneration plans for its employees.
None of the Company’s plans feature any options
for a cash settlement.
All goods and services received in exchange
for the grant of any share-based payment are
measured at their fair values. Where employees
are rewarded using share-based payments, the
fair values of employees’ services are determined
indirectly by reference to the fair value of the
equity instruments granted. This fair value is
appraised at the grant date and excludes the
impact of non-market vesting conditions (for
example profitability and sales growth targets and
performance conditions).
remuneration
All share-based
is ultimately
recognised as an expense in profit or loss with
a corresponding credit to share option reserve.
If vesting periods or other vesting conditions
apply, the expense is allocated over the vesting
period, based on the best available estimate of
the number of share options expected to vest.
Non-market vesting conditions are included in
assumptions about the number of options that
are expected to become exercisable. Estimates
are subsequently revised if there is any indication
that the number of share options expected to vest
differs from previous estimates. Any cumulative
adjustment prior to vesting is recognised in the
current period. No adjustment is made to any
expense recognised in prior periods if share
options ultimately exercised are different to that
estimated on vesting.
Upon exercise of share options, the proceeds
received net of any directly attributable transaction
costs are allocated to share capital.
(v)
Provisions, contingent liabilities
and contingent assets
Provisions for product warranties, legal disputes,
onerous contracts or other claims are recognised
when the Company has a present legal or
constructive obligation as a result of a past event, it
is probable that an outflow of economic resources
will be required from the Company and amounts
can be estimated reliably. Timing or amount of the
outflow may still be uncertain.
Restructuring provisions are recognised only if a
detailed formal plan for the restructuring has been
developed and implemented, or management
has at least announced the plan’s main features to
those affected by it. Provisions are not recognised
for future operating losses.
Provisions are measured at
the estimated
expenditure required to settle the present
obligation, based on the most reliable evidence
available at the reporting date, including the risks
and uncertainties associated with the present
obligation. Where there are a number of similar
obligations, the likelihood that an outflow will
be required in settlement is determined by
considering the class of obligations as a whole.
Provisions are discounted to their present values,
where the time value of money is material.
Any reimbursement that the Company can be
virtually certain to collect from a third party
with respect to the obligation is recognised as
a separate asset. However, this asset may not
exceed the amount of the related provision.
No liability is recognised if an outflow of economic
resources as a result of present obligation is
not probable. Such situations are disclosed
as contingent liabilities, unless the outflow of
resources is remote in which case no liability is
recognised.
(w) Going Concern
Notwithstanding the working capital deficiency
of $82,748 (2017: surplus $824,091), 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 the Company incurred a net
loss of $725,433 (2017: loss of $171,411). Cash
outflows from operating and investing activities
was $1,222,803 (2017: cash outflows of $153,678).
37
Notes to the Financial Statements
For the year ended 30 June 2018
of business and at the amounts stated in the
financial statements. The financial statements
do not include any adjustments relating to the
recoverability and classification of recorded asset
amounts nor to the amounts and classification
of liabilities that might be necessary should the
Company not continue as a going concern.
NOTE 1: STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(w) Going Concern (continued)
Whilst the Company has achieved exploration
success with its mineral projects, the directors
recognise that the Company will have to seek
additional funding to continue to explore in line
with planned exploration programs at the West
Australian and North Queensland Projects.
The ability of the Company to continue to pay
its debts as and when they fall due is dependent
upon:
•
•
•
Continued cash management according
to exploration success. Future exploration
expenditure is generally discretionary in
nature and exploration activities may be
slowed or suspended as part of the
Company’s cash management strategy;
The Company has historically been able
to raise capital via equity placements and
rights issues to shareholders. Given
the strong support of shareholders and the
prospectivity of the Company’s current
projects the directors are confident that
any future capital raisings will be successful.
The Company has also raised $1.1 million
subsequent to reporting date, refer Note
22; and
The Company has received a letter of
support from a director related entity,
Valleybrook Investments Pty Ltd, to not call
the $250,000 in cash consideration following
the acquisition of the Mon Ami Gold Project
(refer Note 13) until such time that the
Company has sufficient cash reserves to
make the payment.
The directors believe that the above funding
strategies will be achieved and the going concern
basis is appropriate.
Should the Company be unable to obtain
sufficient funding, there is uncertainty which
may cast significant doubt as to whether or not
the Company will be able to continue as a going
concern and whether it will realise its assets and
extinguish its liabilities in the normal course
38
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 2: LOSS BEFORE INCOME TAX EXPENSE
2018
$
2017
$
The following revenue and expense items are relevant in explaining the financial performance for the year.
Revenue
- Interest income – other parties
Other Income
15,348
26,893
- Profit on sale of available-for-sale listed securities
-
313,730
Expense
- Administration services fees
- Employee benefits expense
- Share based payment expense (Note 24).
318,768
34,295
35,000
350,222
-
-
The administration service fee is paid to a related party, (refer Note 18).
Employee remuneration expenses for the year to 30 June 2018 totalled $31,320 (2017: $nil).
$2,975 was paid in superannuation (2017: $nil).
NOTE 3: AUDITOR’S REMUNERATION
The auditor of Great Southern Mining Limited is HLB Mann Judd.
Amounts received or due and receivable by HLB Mann Judd for:
Audit and review of financial reports
Other non-assurance services
NOTE 4: INCOME TAX EXPENSE
(a) Recognised in the statement of comprehensive income
Current income tax expense on net loss for the year
Deferred tax expense relating to the origination and
reversal of temporary differences
Total income tax benefit
(b) Reconciliation between income tax expense and pre-tax profit/(loss)
Loss before tax
Income tax using the domestic small business corporation tax rate of
30% (2017: 27.5%).
Tax effect of:
Non-deductible expenses
Unused tax losses and temporary differences not
recognised as deferred tax assets
Income tax expense on pre-tax loss
2018
$
2017
$
21,500
26,500
2018
$
-
-
-
-
2017
$
-
-
-
-
(725,433)
(171,411)
(217,325)
(47,138)
2,763
214,561
-
968
46,170
-
39
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 4: INCOME TAX EXPENSE (continued)
(c) Tax expense/(benefit) relating to items of other comprehensive income.
Revaluation of available-for-sale investments
Disposal available-for-sale investments
Income tax applicable thereto
(d) Unrecognised deferred tax balances
Deferred tax assets and (liabilities) calculated at 30% (2017: 27.5%) have
not been recognised in respect of the following:
Income tax losses
Temporary differences
2018
$
2017
$
-
-
-
38,815
(300,395)
-
2,045,053
(815,217)
1,229,836
1,479,970
(470,411)
1,009,559
Deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets
(and deferred tax liabilities relating to (i) capitalised exploration expenditure for which immediate tax write-
off is available and (ii) revaluation of available-for-sale investments) have not been recognised in the financial
statements. Refer Note 1(d).
The previously calculated values of unrecognised deferred tax balances brought forward have increased as the
Company no longer qualifies for the small business Corporation tax rate of 27.5%.
NOTE 5: (LOSS) PER SHARE
Basic and diluted loss per share
Weighted average number of ordinary shares used in
calculation of loss per share
2018
Cents per share
2017
Cents per share
(0.35)
(0.10)
208,661,685
179,078,187
Loss used in calculation of basic and diluted (loss) per share
(725,433)
(171,411)
Given the Company is in a loss position for the year ended 30 June 2018 the options that have been issued
during the period are anti-dilutive in nature and therefore do not impact the earnings per share calculation.
NOTE 6: CASH AND CASH EQUIVALENTS
Cash on hand and at bank
Short-term deposits
2018
$
2017
$
748,423
-
748,423
295,380
575,000
870,380
Cash at bank earns interest at floating rates on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and six months depending on the
immediate cash requirements of the Company and earn interest at the respective short-term deposit rates.
NOTE 7: OTHER RECEIVABLES – CURRENT
Other receivables
No receivables are past due.
NOTE 8: OTHER ASSETS
Prepaid expenses
40
2018
$
2017
$
-
7,116
2018
$
2017
$
13,244
20,836
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 9: OTHER RECEIVABLES – NON-CURRENT
Exploration tenement guarantees
NOTE 10: AVAILABLE-FOR-SALE LISTED SECURITIES
Available-for-sale financial assets
Listed securities (a)
Total available-for-sale listed securities
2018
$
2017
$
10,000
7,500
2018
$
2017
$
180,000
180,000
138,000
138,000
(a) During the prior period the Company disposed of a portion of its listed shares for a gain of $313,730. The
market value of the disposed shares as recorded at 30 June 2016 was $407,522. During the year ended
2017, the Company also purchased listed securities for $36,185. Fair value of the listed securities held at 30
June 2017 was $138,000. No disposals of listed securities occurred during the 2018 financial year. The cost
base for securities held at the reporting date was $198,000.
Fair values for the listed securities (Level 1) are determined by reference to quoted ASX market prices and
therefore there are no unobservable inputs in fair value.
NOTE 11: PLANT AND EQUIPMENT
Plant and equipment at cost
Less: Accumulated depreciation
Movement schedule for plant and equipment
Opening written down value
Additions
Sale
Depreciation
Loss on sale
Loss on write-off
Closing written down value
NOTE 12: EXPLORATION AND EVALUATION EXPENDITURE
Cost brought forward in respect of areas of interest in the exploration and
evaluation stage
Expenditure incurred during the year
Acquisition of Mon Ami Gold Project (a)
Cost carried forward
2018
$
2017
$
93,236
79,967
(73,718)
(68,421)
19,518
11,546
11,546
17,501
13,268
-
(5,296)
-
-
19,518
-
-
(5,036)
-
(919)
11,546
2018
$
2017
$
1,668,573
1,545,416
1,056,779
730,000
123,157
-
3,455,352
1,668,573
(a) The Company acquired the Mon Ami Gold Project in March 2018. The acquisition was deemed to be an
asset acquisition. The consideration payable for the transaction and the relevant market values have been
determined as follows:
Cash Consideration payable
Value of 15 million Ordinary Shares in the Company
issued as consideration
Consideration payable
250,000
480,000
730,000
(b)
(c)
41
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 12: EXPLORATION AND EVALUATION EXPENDITURE (continued)
(b) The cash consideration is to be paid to a company related to John Terpu (Executive Chairman). This was
approved by shareholders at the General Meeting held 29 March 2018. At balance date the Company has
not yet paid the consideration and has entered an agreement (under commercial terms) to defer the
consideration payable until such time that the Company has sufficient cash reserves or undertakes a
significant capital raising. In the absence of a definitive repayment date, the amount payable has been
classified as a current liability. Refer Note 13.
(c) The value of the Ordinary Shares issued was determined by reference to the Fair Value of the Equity
Instruments granted as consideration at the date of the shares were issued and control of the project
passed to the Company.
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation
phases is dependent on successful development and commercial exploitation or sale of respective areas.
NOTE 13: TRADE AND OTHER PAYABLES
Trade and other payables (a)
Related party payables (Note 18)
Deferred Consideration - Mon Ami Gold Project (b)
2018
$
2017
$
535,921
24,481
250,000
810,402
36,498
28,972
-
65,470
(a) All trade and other payables are non-interest bearing and are normally settled on 30 day terms.
All amounts are short-term. The carrying values of trade payables and other payables are considered to be
a reasonable approximation of fair value.
(b) Deferred consideration is payable to an entity related to the Executive Chairman. The amount is
considered to be current given there is no set repayment date. An offsetting amount has been capitalised
to Exploration and Evaluation Expenditure as part of the acquisition costs of the Mon Ami Gold Project,
refer to Note 12.
NOTE 14: EMPLOYEE BENEFITS
Current employee entitlements
Annual Leave
Long-Service Leave
2018
$
2017
$
8,759
25,255
34,014
3,891
4,881
8,772
42
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 15: ISSUED CAPITAL
2018
2017
No.
$
No.
$
Issued capital comprises
Fully Paid Ordinary Shares
245,899,003
21,750,349 179,078,187
20,169,503
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Movement in issued shares for the year
2018
2017
No.
$
No.
$
Balance at beginning of the financial year
179,078,187
20,169,503 179,078,187
20,169,503
Issued for cash
- 7 November 2017
- 19 April 2018
Acquisition of Mon Ami Gold Project
- 5 April 2018 (a)
Costs associated with the issue of shares
- ASX listing fees- prior period issue
35,420,816
16,400,000
708,416
410,000
15,000,000
-
-
480,000
(17,570)
-
-
-
-
-
-
-
-
-
-
-
Balance at end of the financial year
245,899,003
21,750,349 179,078,187
20,169,503
(a) The 15,000,000 shares issued as part of the acquisition of the Mon Ami Gold Project are subject to escrow.
The amount has been capitalised as exploration and evaluation expenditure as part of the acquisition costs of
the project – refer Note 12.
NOTE 16: RESERVES
Financial Asset Reserve
Share Option Reserve
Balance at end of the financial year
2018
$
2017
$
93,470
35,000
128,470
51,470
-
51,470
Reconciliation of Movements:
Financial Asset Reserve
Share Option Reserve
2018
$
2017
$
2018
$
2017
$
Balance at beginning of the financial year
51,470
313,050
-
Change during the period
Balance at end of the financial year
42,000
(261,580)
35,000
93,470
51,470
35,000
-
-
-
The financial assets reserve records the revaluation of available-for-sale investments. The share-based
payments reserve records the value of options issued and vested during the period.
43
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 17: STATEMENT OF CASH FLOWS
2018
$
2017
$
Reconciliation of operating loss after income tax to net cash used in operating activities
Loss after income tax
Non-operating income
Add: Non-cash items
Depreciation - PPE
Share based Payment expense
Loss on assets written off
Change in assets and liabilities
(Increase)/decrease in other current assets
(Increase)/decrease in other current operating receivables
Increase/(decrease) in operating payables
Increase/(decrease) in employee entitlements
Net cash used in operating activities
NOTE 18: RELATED PARTY DISCLOSURES
Transactions with key management personnel
(725,433)
-
(166,530)
(313,730)
5,296
35,000
-
10,608
4,100
14,511
25,242
(630,676)
5,036
-
919
2,332
3,753
(3,932)
5,232
(471,801)
2018
$
2017
$
The following comprises amounts paid or payable and received or receivable applicable to entities in which key
management personnel (KMP) have an interest.
Paid/payable to:
J Terpu (as Director of Chellingtons Pty Ltd atf Red Star Trust)
for administration services)
318,768
350,222
Share based payment paid to Valleybrook Investments Pty Ltd (a)
480,000
-
Amounts owing to related parties at balance date:
J Terpu (as Director of Chellingtons Pty Ltd atf Red Star Trust)
for administration services)
23,630
28,972
Mon Ami Gold Project Acquisition (a)
250,000
(a) As disclosed in Note 12 consideration for the acquisition of the Mon Ami Gold Project consisted of:
Cash Consideration payable
Value of 15 million Ordinary Shares in the Company
issued as consideration
250,000
480,000
730,000
-
-
-
The cash consideration is to be paid to a Company related to John Terpu (Executive Chairman). This was approved
by shareholders at the General Meeting held 29 March 2018. At balance date the Company has not yet paid the
consideration and has entered an agreement (under commercial terms) to defer the consideration payable until such
time that the Company has sufficient cash reserves or undertakes a significant capital raising. In the absence of a
definitive repayment date, the amount payable has been classified as a current liability, refer Note 13.
The value of the 15 million Ordinary Shares issued as consideration was determined by reference to the Fair Value of
the equity instruments granted at the date the shares were issued and control of the project passed to the Company.
The shares are subject to twelve months escrow from the date of issue. Refer Note 12 and Note 15.
44
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 18: RELATED PARTY DISCLOSURES (Continued)
2018
$
2017
$
As part of the acquisition of the Mon Ami Gold Project during 2018 the Company has entered a Royalty Deed
with Valleybrook Investments Pty Ltd (“Valleybrook”), being a Company related to J Terpu. The royalty entitles
Valleybrook to a net smelter return of 2.75% on revenue produced from sales of ore extracted. The term of the
Royalty is for the life of the mining lease on the Mon Ami Gold Project, subject to the availability of ore to be
extracted. At the date of this report the Company is not in a position to reliably estimate the amount, if any,
that would be paid to Valleybrook as a result of successful economic extraction of Ore from the project given its
exploration stage and as such this amount has not been recognised in the accounts of the Company at balance
date.
The totals of remuneration paid to KMP of the Company during the year are as follows:
Short-term benefits
Post-employment benefits
Total KMP compensation
98,140
59,038
157,178
53,177
44,436
97,613
NOTE 19: COMMITMENTS AND CONTINGENT LIABILITIES
(a)
Exploration Expenditure Commitments
The Company has certain obligations to perform exploration work and expend minimum amounts of money on
such works on mineral exploration tenements.
These obligations will vary from time to time, subject to statutory approval and capital management. The terms
of the granted licences and those subject to relinquishment will alter the expenditure commitments of the Com-
pany as will change to areas subject to licence.
(b)
Native Title
Native title claims have been made with respect to areas which include tenements in which the Company has
interests. The Company is unable to determine the prospects for success or otherwise of the claims and, in any
event, whether or not and to what extent the claims may significantly affect the Company or its projects.
(c)
Administrative Services Agreement
On 1 March 2016 Mr Terpu as Sole Director of Chellingtons Pty Ltd atf Red Star Trust signed and commenced
a two-year term in relation to a new Administration Service Agreement. An amount $192,000 was paid to the
entity under this agreement in 2017.
At 30 June 2018 the Company has elected to terminate the agreement with Chellingtons. The Company has
entered a lease agreement with Ruby Lane Pty Ltd, a Company related to Mr Terpu, refer to Note 23.
(d)
Contingencies
Apart from the Royalty Deed entered during the year ended 30 June 2018 (refer Note 18), the Company has no
other contingent liabilities or assets at 30 June 2018.
NOTE 20: SEGMENT INFORMATION
The Company undertakes mineral exploration and evaluation work on a number of tenements located in
Western Australia and North Queensland.
Management currently identifies the Company’s assets in each location as separate operating segments.
These operating segments are monitored by the Company’s chief operating decision maker and strategic
decisions are made on the basis of available cash reserves and exploration results.
The items included in the statement of profit or loss and other comprehensive income equate to the Corporate
Segment. Segment assets and liabilities are disclosed in the table below:
45
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 20: SEGMENT INFORMATION (continued)
Western Australia
Queensland
Corporate
Total
2018
$
2017
$
2018
$
2017
$
2018
$
2017
$
2018
$
2017
$
Assets
Exploration and
Evaluation
Expenditure
Cash and Cash
Equivalents
Financial
Instruments
Other assets
Group assets
Liabilities
1,227,874
-
-
-
-
-
-
-
2,227,477
1,668,573
-
- 3,455,351 1,668,573
-
-
-
-
-
748,423
870,380
748,423
870,380
180,000
138,000
180,000
138,000
7,500
42,762
39,498
42,763
46,998
1,227,874
724,898
- 2,227,477 1,676,073
971,186 1,047,879 4,426,538 2,723,952
-
-
47,180
119,519
27,062
844,417
74,242
The Group’s corporate assets, consisting of its corporate office headquarters are not allocated to any
exploration segment’s assets.
NOTE 21: FINANCIAL RISK MANAGEMENT
Overview
This note presents information about the Company’s exposure to credit, liquidity and market risks, its
objectives, policies and processes for measuring and managing risk, and the management of capital.
The Company does not use any form of derivatives as it is not at a level of exposure that requires the use of
derivatives to hedge its exposure. Exposure limits are reviewed by management on a continuous basis. The
Company does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. Management monitors and manages the financial risks relating to the operations of the Company
through regular reviews of the risks.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations and arises principally from the Company’s receivables from customers
and investment securities. Given the Company is not generating sales nor has significant receivable balances
apart from GST payments to be received from the ATO, at the reporting date there were no significant
concentrations of credit risk.
(i)
Cash and cash equivalents
The Company limits its exposure to credit risk by only investing in liquid securities and only with counterparties
that have an acceptable credit rating. The Company has limited its risk to only holding bank accounts with two
Australian financial institutions.
(ii)
Trade and other receivables
As the Company operates primarily in exploration activities, it does not have trade receivables and therefore is
not exposed to credit risk in relation to trade receivables.
The Company where necessary establishes an allowance for impairment that represents its estimate of incurred
losses in respect of other receivables and investments. Management does not expect any counterparty to fail to
meet its obligations.
46
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
(iii)
Exposure to credit risk
The carrying amount of the Company’s financial assets represents the maximum credit exposure. The
Company’s maximum exposure to credit risk at the reporting date was:
Carrying Amount
Cash and cash equivalents
Other receivables
(iv)
Impairment Losses
2018
$
748,423
10,000
2017
$
870,380
14,616
None of the Company’s other receivables are past due (2017: nil).
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The
Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Company’s reputation.
The Company manages liquidity risk by maintaining adequate cash reserves from funds raised in the market
and by continuously monitoring forecast and actual cash flows. The Company does not have any external
borrowings.
The following are the Company’s contractual maturities of financial liabilities, including estimated interest
payments and excluding the impact of netting agreements:
30 June 2018
($)
Carrying
amount
Contractual
cash flows
6 mths or less
6-12 mths
1-2 years
2-5 years
Non-interest
bearing
810,403
810,403
534,921
274,482
30 June 2017
($)
Carrying
amount
Contractual
cash flows
6 mths or less
6-12 mths
1-2 years
Non-interest
bearing
Market Risk
69,361
69,361
65,470
3,891
-
-
2-5 years
-
-
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Company’s income or 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 the return. The Company holds investments in listed securities.
Currency Risk
The Company is not exposed to currency risk and at the reporting date the Company holds no financial assets
or liabilities which are exposed to foreign currency risk.
Commodity Price Risk
The Company operates primarily in the exploration and evaluation phase of gold projects and accordingly the
Company’s financial assets and liabilities are subject to minimal commodity price risk.
47
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
Interest Rate Risk
The Company is exposed to interest rate risk (primarily on its cash and cash equivalents), which is the risk that a
financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest-bearing
financial instruments. The Company does not use derivatives to mitigate these exposures.
At balance date the Company did not have any cash held in term deposits. During the prior period, excess cash
and cash equivalents were held in short term deposit at interest rates maturing over 90 day rolling periods.
(i)
Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or
loss or through equity, therefore a change in interest rates at the reporting date would not affect profit or loss
or equity.
(ii)
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 profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.
The analysis is performed on the same basis for 2017.
Profit or loss
Equity
100bp increase
$
100bp decrease
$
100bp increase
$
100bp decrease
$
30 June 2018
Variable rate
instruments
30 June 2017
Variable rate
instruments
Fair Values
7,384
(7,384)
7,384
(7,384)
2,852
(2,801)
2,854
(2,801)
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of
financial position are as follows:
30-Jun-18
30-Jun-17
Carrying amount
$
Fair value
$
Carrying amount
$
Fair value
$
748,423
748,423
10,000
10,000
870,380
14,616
870,380
14,616
180,000
180,000
138,000
138,000
(810,402)
(810,402)
(65,470)
(65,470)
Cash and cash
equivalents
Other receivables
Available-for-sale
listed securities
Trade and other
payables
Employee benefits
(34,014)
(34,014)
94,007
94,007
(3,891)
953,635
(3,891)
953,635
48
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 21: FINANCIAL RISK MANAGEMENT (continued)
Fair value measurement of financial instruments
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped
into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant
inputs to the measurement, as follows:
-
-
-
Level 1: quoted prices (unadjusted) in active markets for identical assets or liability.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3: unobservable inputs for the asset or liability.
The following table shows the levels within the hierarchy of financial assets and liabilities measured at fair value
on a recurring basis at 30 June 2018 and 30 June 2017:
30 June 2018
Financial assets
Level 1
$
Level 2
$
Level 3
$
Total
$
Listed securities and
debentures
Net Fair Value
30 June 2017
Financial assets
Listed securities and
debentures
Net Fair Value
180,000
180,000
Level 1
$
Level 2
$
138,000
138,000
-
-
-
-
Measurement of fair value of financial instruments
Level 3
$
-
-
-
-
180,000
180,000
Total
$
138,000
138,000
The Company performs valuations of financial items for financial reporting purposes. Valuation techniques
are selected based on the characteristics of each instrument, with the overall objective of maximising the use
of market-based information. Valuation processes and fair value changes are discussed regularly at Board
meetings. As the Company holds an investment in a ASX listed Company the fair value of the investment is
subject to movements in the share price. A summary of a movement in the share price of the listed investment
is below:
Profit or loss
Equity
200bp increase
$
200bp decrease
$
200bp increase
$
200bp decrease
$
36,000
(36,000)
36,000
(36,000)
200bp increase
$
200bp decrease
$
200bp increase
$
200bp decrease
$
27,600
(27,600)
27,600
(27,600)
30 June 2018
Listed securities and
debentures
30 June 2017
Listed securities and
debentures
Capital Management
Capital is defined as the equity of the Company.
The Company’s objectives when managing capital are to safeguard the Company’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. Refer to Note 1(w) for additional commentary.
The Company’s focus has been to raise sufficient funds through equity to fund exploration and evaluation
activities. The Company monitors capital requirements regularly and there are no external borrowings as at
reporting date and is not subject to externally imposed capital requirements. There were no changes in the
Company’s approach to capital management during the year. The Board considers capital management at each
Board meeting and mitigates risks when identified.
49
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 22: EVENTS AFTER REPORTING DATE
The Company completed a placement of 31,846,669 fully paid ordinary shares to sophisticated investors raising
$1,115,429 net of costs.
The Company entered an executive services agreement with John Terpu as Executive Chairman. The terms and
conditions have been included in the Remuneration Report.
In September 2018 the Company entered into a transaction to acquire several exploration licences from Central
Australia Rare Earths Pty Ltd, a wholly owned subsidiary of Strategic Minerals plc, a AIM listed Company.
Subject to the completion of due diligence and completion of the transaction the consideration will consist
of $100,000 cash and 1 million shares in the Company. At the date of this report, the transaction is subject to
completion.
Apart from the above, there has not been any other matter or circumstance that has arisen after the reporting
date that has significantly affected, or may significantly affect, the operations of the Company, the results of
those operations, or the state of affairs of the Company in future financial periods.
NOTE 23: LEASES
Operating leases as lessee
As Per Note 19, the Company has entered a lease agreement to lease an office building. The lease has been
assessed to be an operating lease. The future minimum lease payments are as follows:
Minimum lease payments due
Within 1 year
$
1-5 years
$
After 5 years
$
Total
$
30-Jun-18
30-Jun-17
66,924
247,929
-
314,853
-
-
-
-
No lease expense payments where incurred during the year. The new rental contract has a non-cancellable term
of 3 years.
NOTE 24: SHARE BASED PAYMENTS
During the period, options were issued to the Senior Advisor upon entering the consulting arrangement with
the Company. The options where not issued as consideration for services provided.
Share options and weighted average exercise prices are as follows for the reporting periods presented:
Weighted average
exercise price ($)
Option Fair Value
$
Outstanding at 30 June 2017
Granted
Forfeited / Exercised
Outstanding at 30 June 2018
Exercisable at 30 June 2017
Exercisable at 30 June 2018
-
11,800,000
-
11,800,000
-
11,800,000
-
35,000
-
35,000
-
35,000
50
Notes to the Financial Statements
For the year ended 30 June 2018
NOTE 24: SHARE BASED PAYMENTS (continued)
No options were on issue at 30 June 2017. No options were exercised in 2018. The $35,000 is included in
consulting fees in the statement of profit or loss and other comprehensive income.
The fair values of options granted were determined using the Black-Scholes option pricing model. There was
no performance based, nor vesting conditions attached to the Options.
The following principal assumptions were used in the valuation:
Valuation assumptions
Grant date
Share price at date of grant
Volatility
Expiry date
Dividend yield
Risk free investment rate
Fair value at grant date
Exercise price at date of grant
Exercisable from
Weighted average remaining contractual life
14-May-18
$ 0.025
74%
31-Dec-19
0
1.50%
0.011
$ 0.020
14-May-18
1.5 yrs
The underlying expected volatility was determined by reference to historical data of the Company’s shares over
a period of time. No special features inherent to the options granted were incorporated into measurement of
fair value.
51
Directors’ Declaration
Independent Auditor’s Report
To the Members of Great Southern Mining Limited (formerly “Forte Consolidated Limited”)
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Great Southern Mining Limited (“the Company”) which
comprises the statement of financial position as at 30 June 2018, the statement of profit or loss and
other comprehensive income, the statement of changes in equity and the statement of cash flows for
the year then ended, and 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 Company is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Company’s financial position as at 30 June 2018 and of its
financial performance for the year then ended; 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 Company 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 indicates the existence of a material
uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers
53
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. 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.
Key Audit Matter
How our audit addressed the key audit matter
Carrying value of exploration and evaluation
expenditure
(Note 12)
The Company has capitalised exploration and
evaluation expenditure of $3,455,352 as at 30
June 2018 in relation to its Queensland and
Western Australia projects.
Our audit procedures determined that the
carrying value of exploration and evaluation
expenditure was a key audit matter as it was an
area which required the most audit effort,
required the most communication with those
charged with governance and was determined to
be of key importance to the users of the financial
statements.
Our procedures included but were not limited
to the following:
We obtained an understanding of the key
processes associated with management’s
review of the carrying value of exploration
and evaluation expenditure;
We considered the Directors’ assessment
of potential indicators of impairment;
We obtained evidence that the Company
has current rights to tenure of its areas of
interest;
We substantiated a sample of additions to
exploration expenditure during the year;
announcements
We enquired with management and
and
reviewed ASX
minutes of Directors’ meetings to ensure
that the Company had not decided to
discontinue exploration and evaluation at
its areas of interest; and
We examined the disclosures made in the
financial report.
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 annual report for the year ended 30 June 2018, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
54
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Company
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our 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 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
judgement 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 Company’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 Company’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 Company to cease to continue as a going concern.
55
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.
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 with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period 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 REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30
June 2018.
In our opinion, the Remuneration Report of Great Southern Mining Limited for the year ended 30 June
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.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
27 September 2018
D I Buckley
Partner
56
ASX Additional Information
Additional information as required by the Australian Stock Exchange Limited Listing Rules and not disclosed
elsewhere in this report is set out below.
1.
1.1
Shareholder Information
As at 25 September 2018 the Company had:
259 holders of Ordinary Fully Paid Shares.
1 holder of unlised options.
Voting Rights
Subject to any rights or restrictions for the time being attached to any class or classes (at present there are
none) at general meetings of shareholders or classes of shareholders:
(a)
(b)
(c)
each shareholder entitled to vote, may vote in person or by proxy, attorney or representative;
on a show of hands, every person present who is a shareholder or a proxy, attorney or representative
of a shareholder has one vote; and
on a poll, every person present who is a shareholder or a proxy, attorney or representative of a
shareholder shall, in respect of each Fully Paid Share held, or in respect of which he/she has appointed
a proxy, attorney or representative, have one vote for the share, but in respect of partly paid Shares
shall have a fraction of a vote equivalent to the proportion which the amount paid up bears to the total
issue price for the Share.
1.2
Distribution of Shares (as at 25 September 2018)
The number of shareholders holding less than a marketable parcel is 68 based on the closing market price at 25
September 2018.
No.
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-over
Total
Fully Paid Shares **
Options *
1,649
16,854
503,262
3,145,509
273,808,398
277,745,672
0
0
0
0
11,800,000
11,800,000
* The listed options issued at the date of this report are unquoted securities. Mr Mark Barnaba holds 100% of
these securities.
** The amount includes 15,000,000 fully paid ordinary shares subject to escrow for twelve months. 100% of the
class of these securities is held by Valleybrook Investments Pty Ltd. The escrow period ends 5 April 2019.
1.3
Substantial Shareholders
The following shareholders are recorded as substantial shareholders:
Name
Fully Paid Shares Number
VALLEYBROOK INVESTMENTS PTY LTD
& OTHERS *
DANNY TAK TIM CHAN & OTHERS
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
Total
105,667,717
64,020,490
15,454,188
185,142,395
* The amount includes 15,000,000 fully paid ordinary shares subject to escrow noted above.
%
38.04
23.05
5.56
57
ASX Additional Information
1.4 Twenty Largest Holders of Listed Shares (as at 25 September 2018)
VALLEYROSE PTY LTD
DANNY TAK TIM CHAN
Name
VALLEYBROOK INVESTMENTS PTY LTD *
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS PTY LTD
ANYSHA PTY LTD
GETMEOUTOFHERE PTY LTD
NAUTICAL HOLDINGS WA PTY LTD
MR MARK BARNABA
SUNSET CAPITAL MANAGEMENT PTY LTD
BNP PARIBAS NOMINEES PTY LTD
MR ROBERT ANTHONY MARTIN
KIWI BATTLER PTY LTD
MRS CARMELA FIRRIOLO
KAY BAY SUPER PTY LTD
ORBIT DRILLING PTY LTD
MR STACEY HUBERT CARTER
SUNSHORE HOLDINGS PTY LTD
MR PETER LESLIE CLARK
KATHLEEN BOZANIC
ANDREW JAMES PAUL CARUSO
COOLTRAS PTY LTD
MR KEVIN DANIEL LEARY & MRS HELEN PATRICIA LEARY
P&E QUADE PTY LTD
TOTAL
Fully Paid Ordinary Shares
Number
Percentage %
55,459,902
50,672,990
35,207,815
15,454,188
13,347,500
12,500,105
4,550,000
4,427,030
4,375,000
4,000,000
3,746,562
2,666,667
2,452,089
2,212,500
2,000,000
1,817,226
1,333,333
1,333,333
1,200,000
1,200,000
1,200,000
1,010,068
1,000,000
1,000,000
21.11
19.29
13.40
5.88
5.08
4.76
1.73
1.68
1.67
1.52
1.44
1.01
0.93
0.84
0.76
0.69
0.51
0.51
0.46
0.46
0.46
0.38
0.38
0.38
224,216,308
85.34
* Holder also has 15,000,000 unquoted fully paid ordinary shares subject to escrow. Total holding including
escrowed shares is 105,667,717 or 38.04%.
1.5
Share Buy-Backs
There is no current on-market buy-back scheme.
1.6
Securities Purchased On-market
On 29 June 2018 the Shareholders of the Company approved the long term incentive plan to be adopted.
No options over ordinary shares in the Company were or have since been granted under this program up to
the date of this report. No securities have been purchased on-market (including any related to an employee
incentive scheme).
2.
Other Information
Great Southern Mining Limited, incorporated and domiciled in Australia, is a public listed Company limited by
Shares.
58
ASX Additional Information
3.
Tenement Schedule
Tenement No.
Registered Holder
Forte
Equity
Area
Application/
Grant Date
Expiry Date
Queensland
EPM 18986
EPM 25196
EPM 25755
EPM 26527
EPM 26810
Western Australia
Great Southern Mining Limited
100% 47 blocks
13 Dec 2012
12 Dec 2022
Great Southern Mining Limited
100%
3 blocks
3 Mar 2014
Great Southern Mining Limited
100% 24 blocks
8 Apr 2015
Great Southern Mining Limited
100% 28 blocks
23 Aug 2017
Great Southern Mining Limited
100% 58 blocks
17 July 2018
2 Mar 2020
7 Apr 2020
22 Aug 2022
16 July 2023
ML 38/1256
Great Southern Mining Limited
100%
1 block
3 Sep 2012
2 September 2033
4.
Other Additional Information
Corporate Governance:
The Company’s Corporate Governance Statement for 30 June 2018 as approved by the Board can be
viewed as www.gsml.com.au
Company Secretary:
The name of the Company Secretary is Mark Petricevic.
Address and telephone details of the Company’s Registered Office:
Suite 4, 213 Balcatta Rd
Balcatta WA 6021
T: 08 9240 4111
Share Register:
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Telephone: (within Australia): 1300 554 474
Telephone: (outside Australia): +61 (02) 8280 7761
Facsimile: (02) 9287 0303
Review of Operations:
A review of operations is contained in the Directors Report.
59
ABN 37 148 168 825
Great Southern Mining Limited
(Formerly “Forte Consolidated Limited)