ABOUT HANNANS LTD
Hannans Ltd (ASX:HNR) is an exploration company with a focus on nickel, gold and lithium in Western Australia.
Hannans’ major shareholder is leading Australian specialty minerals company Neometals Ltd. Hannans has a
strategic relationship with West Australian based mining services company Australian Contract Mining. Since listing
on the ASX in 2003 Hannans has signed agreements with Vale Inco, Rio Tinto, Anglo American, Boliden, Warwick
Resources, Cullen Resources, Azure Minerals, Neometals, Tasman Metals, Grängesberg Iron, Lovisagruvan and
Montezuma Mining Company. Shareholders at various times since listing have included Rio Tinto, Anglo American,
OM Holdings, Craton Capital and BlackRock. For more information, please visit www.hannansreward.com.
ANNUAL REPORT
FOR THE FINANCIAL YEAR ENDED
30 JUNE 2017
Corporate Directory .....................................................................................1
Directors’ Report .........................................................................................3
Independence Declaration to the Directors of Hannans Ltd ......................31
Directors’ Declaration ................................................................................32
Independent Audit Report to the Members of Hannans Ltd .....................33
Consolidated Statement of Profit and Loss and Comprehensive Income ..38
Consolidated Statement of Financial Position ...........................................39
Consolidated Statement of Changes in Equity...........................................40
Consolidated Statement of Cash Flows .....................................................42
Notes to the Consolidated Financial Statements .......................................43
CORPORATE DIRECTORY
BOARD OF DIRECTORS
PRINCIPAL OFFICE
Level 11, 216 St Georges Terrace
SHARE REGISTRY
Computershare
NON-EXECUTIVE CHAIRMAN
Perth, Western Australia 6000
Level 11, 172 St George’s Terrace
Mr Jonathan Murray
REGISTERED OFFICE
Perth, Western Australian 6000
Telephone
1300 787 272
EXECUTIVE DIRECTOR
Level 11, 216 St Georges Terrace
Website
Mr Damian Hicks
Perth, Western Australia 6000
www.computershare.com.au
NON-EXECUTIVE DIRECTORS
POSTAL ADDRESS
Mr Markus Bachmann
PO Box 1227
AUDITORS
Ernst & Young
Mr Clay Gordon
Ms Amanda Scott
West Perth, Western Australia 6872
11 Mounts Bay Road
Perth, Western Australia 6000
CONTACT DETAILS
COMPANY SECRETARY
Telephone
+61 (8) 9324 3388
LAWYERS
Mr Ian Gregory
Email
admin@hannansreward.com
Steinepreis Paganin
ABN
52 099 862 129
16 Milligan Street
Website
www.hannansreward.com
Level 4, The Read Buildings
SOCIAL NETWORK SITES
Perth, Western Australia 6000
Twitter
@hannansreward
LinkedIn
Hannans Reward
Instagram
HannansReward
H A N N A N S A N N U A L R E P O R T 2 0 1 7 1
DIRECTORS’ REPORT
The Directors of Hannans Ltd (Hannans or the Company) submit their
annual financial report of the Group being the Company and its controlled
entities for the financial year ended 30 June 2017.
Dear Shareholders,
We’re aiming to develop into a West Australian mining company via
exploration success, acquisition or merger.
Hannans shareholders have been exposed to exploration success within the
last twelve months via drilling for lithium, gold and nickel at the Forrestania
and Queen Victoria Rocks Projects in Western Australia. Importantly the
prices for each of these commodities are rising with gold, nickel and lithium
all testing new highs.
The Forrestania Project containing lithium, nickel and gold targets is
Hannans’ flagship asset. We have ground adjoining the SQM (NYSE:SQM) –
Kidman Resources Ltd (ASX:KDR) joint venture where they are developing a
lithium mine and concentrate facility. SQM is a Santiago-based world leader
in specialty businesses including lithium and solar salts, potassium nitrate
and iodine. From a Hannans perspective our next phase drilling campaign
for lithium will take place in September 2017.
Hannans has decided to seek a partner for its nickel exploration projects at
Forrestania and Queen Victoria Rocks. This is a recent decision and will
enable partners with expertise and capital to advance these projects while
Hannans focuses its resources in other areas.
Hannans has a joint venture partner rapidly advancing a gold project at
Forrestania and we are expecting an updated JORC compliant mineral
resource to be released by our partner during the next Quarter. Hannans
holds a 20% free-carried interest in this gold project, meaning that
shareholders are exposed to exploration and development success without
the requirement to fund any of the costs. We also have a joint venture
partner exploring for lithium at Lake Johnston. Hannans holds a 15% free-
carried interest in the Lake Johnston Project.
We have been reviewing many assets with the aim of moving towards
mining via acquisition or merger activity. The market is very competitive for
high quality assets in Western Australia however we will continue to work
towards securing the right project for shareholders.
During the year Hannans completed a number of corporate initiatives
including the acquisition of Reed Exploration Pty Ltd from leading speciality
metals company Neometals Ltd (ASX:NMT) and the in-specie distribution of
the
Ltd
assets
(www.criticalmetals.eu). The aim is to relist Critical Metals on the ASX as
soon as practicable.
Critical Metals
company’s
Swedish
into
We also welcomed two new non-executive directors to our Board including
Clay Gordon and Amanda Scott and several new major shareholders who
have been instrumental supporting Hannans throughout the year.
Hannans is well placed to make an exploration discovery and or acquisition
within the next twelve months.
you have
any questions please don’t hesitate
If
visit
www.hannansreward.com, follow us on Twitter (@hannansreward), stay
updated on LinkedIn (Hannans Reward), review our images on Instagram
(HannansReward) or contact me.
to
Best regards,
Jonathan Murray
Non-Executive Chairman
2 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
STRATEGIC PLAN
VISION
Our vision is to build a successful exploration and production company.
MISSION
Our mission is to develop a company that has a material interest in a portfolio of mineral projects that are
being rapidly progressed whether they are exploration, development or production assets.
We recognise that a professional, knowledgeable and ethical team of directors, employees and consultants
is the key to our business.
Our focus is to provide shareholders with excellent return on investment by managing our people, projects
and capital in an entrepreneurial and responsible manner. We aim to generate free cash from our activities
and return that cash to shareholders.
GOALS
People
Projects
Capital
(cid:119)
(cid:119)
(cid:119)
(cid:119)
(cid:119)
(cid:119)
(cid:119)
(cid:119)
(cid:119)
To attract and retain a professional, knowledgeable and ethical team of
experts whilst empowering staff at all levels.
To continually build an understanding of our strategic partners’ needs
and wants and thereafter conduct business in a fair, transparent and
ethical manner.
To access prospective mineral exploration and development
opportunities in Australia.
To implement an effective acquisition program that secures access to
projects that have the potential to host significant economic deposits.
To add value by identifying, accessing and exploring projects that have
potential to host significant economic deposits and then seek partners
to diversify project risk.
To retain a financial interest in projects but not necessarily an
operational responsibility.
To conduct our affairs in a responsible manner taking into account
various stakeholder rights and beliefs.
To create shareholder wealth as measured by the potential of our
projects, the strength of our balance sheet and share price.
To maintain sufficient funding and working capital to implement
exploration and development programs through the peaks and troughs
in sentiment and commodity prices fluctuations.
Ultimately, Hannans is aiming to identify a world-class deposit.
Successful implementation of the strategic plan would see Hannans develop a portfolio of projects that it is
sole funding, contributing to funding to maintain a joint venture interest, holding a free carried interest, a
royalty interest or an equity interest in the company that owns the project.
The ability to implement the strategic plan is determined by Hannans ability to access funding. Hannans
needs to continually fund the development of its project pipeline through equity raisings, project sales,
joint venture expenditure and royalties.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 3
DIRECTORS’ REPORT
OPERATIONAL AND FINANCIAL REVIEW
Hannans’ focus throughout the year has been nickel, lithium and gold exploration in the Goldfields region of Western
Australia.
We completed deep diamond drill testing of nickel sulphide targets at both the Forrestania and Queen Victoria Rocks’
projects and shallow aircore drilling to identify pegmatites hosting lithium mineralisation at the Forrestania Project.
Joint venture partner Classic Minerals Ltd (ASX:CLZ) completed diamond drilling and reverse circulation (RC) drilling for gold
to extend known high-grade gold mineralisation and increase JORC compliant mineral resources at Forrestania. Hannans
holds a 20% interest in this project which is free-carried until a decision to mine has been made.
Joint venture partner Montezuma Mining Company Ltd (ASX:MZM) reviewed historic data and completed field verification
that confirmed the lithium potential of the Lake Johnston project. Hannans holds a 15% interest in this project which is
free-carried until a decision to mine has been made.
Exploration completed by Hannans and its joint venture partners during and after the 2016/2017 financial year is set out
below:
July 2016
(cid:127) Nickel at Forrestania
Hannans completed diamond drill testing of two discrete nickel sulphide targets within the Stormbreaker
Prospect, which is considered underexplored for the existence of high grade massive nickel sulphide
deposits at depth. The targets had been generated following extensive geological, geochemical and
geophysical surveys and interpretations over the prior eighteen months. Drilling intersected the Western
Ultramafic (WUM) stratigraphy that hosts high grade nickel sulphide mines owned by Western Areas Ltd
(ASX:WSA). The character of the WUM as seen in two holes suggests a continuity and rapid thickening of
the WUM in the north of the prospect. This may represent a channelised flow containing ore-grade
mineralisation of the style seen elsewhere at Forrestania. Future drilling of the WUM will therefore be
targeted down dip of the existing intersections on several selected drill traverses.
December 2016
(cid:127) Nickel at Queen Victoria Rocks (QVR)
Hannans completed diamond drill testing to determine if high grade nickel is located at the base of the
interpreted lava channel in the strongly anomalous ultramafic units within the Spargos Prospect. Drilling
hole conductors that may
was followed by downhole geophysical surveys (DHEM) searching for off
represent accumulations of massive nickel sulphide mineralisation. The Spargos Prospect has all the
geological characteristics of a system that one could expect to be well mineralised. While disseminated
low grade nickel sulphide mineralisation was first identified within the Spargos prospect by Spargos
Exploration NL in 1971, the identification of significant massive high-grade nickel has so far eluded
explorers.
-
February 2017
(cid:127) Lithium at Lake Johnston
Joint venture partner Montezuma Mining Company Ltd advised Hannans that first pass target generation
had identified significant potential for lithium mineralisation where historic drilling intersected wide
intercepts (>100m) of pegmatites. No lithium assays were undertaken and no pulps remain for re-assay.
Surface auger geochemistry also showed elevated lithium levels proximal to outcropping pegmatites.
March - April 2017
(cid:127) Gold at Forrestania
Joint venture partner Classic Minerals Ltd (ASX:CLZ) reported a gold resource at the Lady Ada and Lady
Magdalene deposits in accordance with the JORC Code, 2012 Edition, both of which are part of the Joint
Venture tenure. Classic Minerals advised Hannans that it planned to complete a drill program targeting
high grade gold extensions beneath the Lady Ada and Lady Magdalene deposits and that it had reached
an agreement to toll treat ore from the project at the Lakewood Processing Plant in Kalgoorlie.
4 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
March - July 2017
(cid:127) Nickel at QVR
Hannans completed a comprehensive review of recent and historic diamond drilling and all historic
geophysical surveys at the QVR nickel sulphide project. Thirteen down-hole electromagnetic (DHEM)
surveys were reviewed, nine surveys had anomalies associated with them and four were interpreted to
be sufficiently encouraging to justify drill testing and or additional surveys to validate potential drill
targets. The highest priority off-hole DHEM target (Priority 1) modelled a moderately high conductance
plate which was considered consistent with a massive sulphide source. The second highest priority off-
hole DHEM target (Priority 2) was interpreted to be located below diamond hole QVD11 drilled by
previous explorers in 2005. Two lower priority off-hole DHEM targets required validation with additional
DHEM surveys prior to drill testing.
Hannans tested the Priority 1 target at QVR with new diamond hole QVD15. After terminating hole QVD15
at 367m two DHEM surveys using the latest technology were completed, one in QVD15 and a re-survey
within historic hole QVD13. Hannans consultants logged the drill core, interpreted the two DHEM surveys
completed XRF analysis on sections of the drill core and completed thin section analysis. Despite a
thorough analysis of the drill core and interpretation of the latest DHEM survey results the Priority 1 target
was unable to be explained by any rocks intersected in the drilling. With the benefit of this information
historic hole QVD13 was re-surveyed to further validate the Priority 1 target. The DHEM response was re-
modelled and the DHEM target was re-confirmed. No further drilling will be completed until a better
explanation is established for the DHEM anomaly in QVD013 and results from QVD015.
Platinum group element (PGE) anomalism within the Spargos Prospect suggests that the targeted area is
highly fertile for nickel sulphides and this is evident from historic drilling which has encountered nickel
sulphides in the ultramafic rocks.
It is evident from the interpretation and modelling of Hannans diamond drill holes QVD13, 14 and 15 that
the most prospective basal contact has not been systematically explored and that the Spargos Prospect is
complex, folded and faulted.
May - July 2017
(cid:127) Lithium at Forrestania
Hannans completed 240 holes for a total of 3,093 metres of aircore drilling to assess the lithium
prospectivity of the northern portion of the Forrestania Project.
Drilling was located approximately 4km west of two granite intrusions mapped within Hannans’ tenure.
The high-grade Earl Grey lithium deposit is located approximately 4km east of the same granite intrusions.
This distance (i.e. 4km) appears to be the distance necessary to allow for cooling of the intruding
pegmatites sourced from the granite intrusions and for differential crystallization of exotic minerals
including spodumene (an important lithium mineral).
There is minimal historic information in the immediate area of interest, and therefore the exploration
approach implemented was broad reconnaissance traverses of aircore drilling to help define the geology
and to provide improved geochemical information.
The shallow reconnaissance aircore drilling program successfully identified two anomalous trends. When
considered with the air magnetic data the anomalies form an annulus at about 3 to 4 km distance around
the interpreted granite, as expected for mineralized pegmatites derived from the granite.
Aircore holes were generally limited to a depths of 12 metres to give a cost effective first pass
geochemical sample. The samples were all highly oxidized and there were very few chips of large enough
size to allow identification of the rock types. Muscovite was evident in most of the anomalous samples as
well as kaolinite and quartz, which could be representative of pegmatites.
July - August 2017
(cid:127) Gold at Forrestania
Joint venture partner Classic Minerals Ltd advised that drilling at the Lady Ada and Lady Magdalene
prospects had returned high-grade gold results from outside the current Scoping Study pit design –
highlighting significant potential to expand the current Mineral resource estimates. A 13,000 metre RC
drilling program commenced, targeting high-grade extensions along strike and down dip of both the Lady
Ada and Lady Magdalene deposits.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 5
DIRECTORS’ REPORT
Exploration Expenditure
In line with the Group’s accounting policy, Hannans expensed $804,102 on
mineral exploration activities in 2017 (2016: $29,998) relating to its non-JORC
compliant mineral projects and did not capitalise exploration activities as it
completed the in-specie distribution of the JORC compliant mineral resources
at the Rakkuri Iron Project and Pahtohavare Copper-Gold Project (2016: $97,599).
These amounts exclude all administration and transaction costs.
Mineral Exploration Activities in 20171
Geological activities
Geochemical activities
Geophysical activities
Drilling
Field supplies
Field camp and travel
Drafting activities
Feasibility studies
Rehabilitation
Annual tenement rent & rates
Tenement administration
Tenement application fees2
TOTAL MINERAL EXPLORATION ACTIVITIES
$
118,774
86,267
113,480
499,096
16,447
18,602
5,515
5,388
6,300
10,975
10,171
(86,913)
%
15%
11%
14%
62%
2%
2%
1%
1%
1%
1%
1%
(11)%
804,102
100%
Corporate
1
2
The mineral exploration activities consist of Australian and Swedish activities
until the completion of in-specie distribution on 27 September 2016.
Relates to reversal of application for concession in Sweden.
Hannans completed two major corporate transactions throughout
the year, being the acquisition of Reed Exploration Pty Ltd from
Neometals Ltd and the in-specie distribution of the Swedish
projects into Critical Metals Ltd. A summary of the corporate
activities for the 2016/2017 financial year is set out below:
specie Distribution approved by shareholders, was subsequently
completed and all shareholders on the Hannans share register
on 20 September 2016 received shares in Critical Metals Ltd.
The acquisition of 100% of Reed Exploration Pty Ltd (REX) from
Neometals was completed.
Update on Neometals Transaction (July – August 2016)
Corporate Update (October 2016)
Hannans lodged the Notice of Meeting and Independent Expert’s
Report in respect of the strategic collaboration with Neometals Ltd
with the ASX and ASIC for review and subsequently announced that
the General Meeting of shareholders to approve the transaction
was held on 15 September 2016. A prospectus was also lodged
with ASIC to enable the in-specie distribution of shares in Critical
Metals Ltd to Hannans shareholders.
General Meeting, In-specie Distribution and Completion of
Neometals Transaction (September 2016)
Hannans announced that all General Meeting resolutions put to the
shareholders were passed by a show of hands. Accordingly, the In-
Hannans announced the appointment of Mr Clay Gordon, a new
non-executive director and confirmed that exploration would be
focused on nickel, gold and lithium particularly in the world-
class Forrestania – Mt Holland region of Western Australia.
Following the approval by shareholders to convert outstanding
liabilities into equity the Balance Sheet was cleared of all
material liabilities, and furthermore the Supreme Court litigation
with Avalon Minerals Ltd was settled with no financial impact
on Hannans. Hannans confirmed that corporate activity
including project acquisition and divestment will remain a
priority to drive shareholder returns.
6 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
Compliance (cont’d)
International Precious Metals & Commodities Show
(November 2016)
Hannans made presentations in Frankfurt and Munich as part of a
strategy to introduce new investors onto the ASX register and foster
interest in Hannans existing listing on the Frankfurt Borse. The
Hannans website was launched in German.
Annual General Meeting and Changes to the Board of Directors
(November 2016)
All resolutions at the Annual General Meeting were passed by a show
of hands. Hannans announced the appointment of a Chairman,
Executive Director and Ms Amanda Scott, a new Non-Executive
Director.
Interest in Nickel-Gold-Lithium Project (December 2016)
Hannans sold its Lake Johnston exploration database to Montezuma
Mining Company Ltd (ASX:MZM) in consideration for which Hannans
received a 15% interest in Montezuma’s Lake Johnston Nickel-Gold-
Lithium Project. Hannans’ interest is free-carried through to a Decision
to Mine. Lake Johnston is home to advanced nickel and lithium
projects owned by Poseidon Nickel Ltd (ASX:POS). Sale of the
exploration database enabled Hannans shareholders to share in
success achieved by Montezuma without the requirement to fund
exploration.
AMEC Investor Briefing (March 2017)
Hannans made a presentation to attendees at an Association of
Mining & Exploration Companies investor seminar.
Compliance
The list of compliance documents lodged with the ASX during the
2016/2017 financial year is available on page 26.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 7
Goals 2017 – Scorecard
Starting with the Annual General Meeting held in 2015 the Company published its Goals for
2016. Introduction of the Scorecard enables the Directors, Management and Shareholders to
remain focussed on the Goals and the results on an annual basis. The table below highlights
Hannans’ achievements relative to the stated Goals:
Item
Shareholder
Returns
Stated Goal AGM
2015
Outcome to Date
Implement a strategy
giving shareholders the
opportunity to recover
their investment
Hannans is focussed on Western
Australia gold, nickel and lithium
projects and moving towards
development and mining.
Joint Venture
Projects
Monitor joint venture
partners’ activities
Sole funded
projects
Secure joint venture
partners
Corporate
Protect rights and
finalise outcomes
on the North Ironcap
transactions
Hannans share price was 0.3 cents on
24 November 2015, 1.8 cents on 24
November 2016 and at the date of this
report 1.3 cents.
Hannans divested the Pahtohavare
copper-gold project located in Sweden
into Critical Metals Ltd in September
2016.
Joint venture partner Classic Minerals
Ltd (ASX: CLZ) is drill testing high-grade
gold resouces at Forrestania. Hannans
holds a 20% free-carried interest.
Joint venture partner Montezuma
Mining Company Ltd (ASX: MZM) is
completing early stage exploration
activities for lithium at Lake Johnston.
Hannans holds a 15% free-carried
interest.
Hannans divested the Discovery Zone
and Rakkurijoki projects located in
Sweden into Critical Metals in
September 2016.
Hannans has commenced a process to
attract high quality joint venture
partners to the Forrestania and Queen
Victoria rocks nickel sulphide projects.
Hannans signed a Deed of
Acknowledgement with the purchaser
of the North Ironcap gold deposit which
established an amended payment
schedule. Hannans has received several
payments from the purchaser and final
settlement is expected late in 2017.
DIRECTORS’ REPORT
8 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
KEY PROJECTS
Figure 1. Location Map: Hannans’ Forrestania, Lake Johnston and Queen Victoria Rocks Precious & Base Metals Projects
This short report will focus on the Forrestania and Queen Victoria Rock Projects. For information on the Lake Johnston Project please refer to
www.hannansreward.com.
Forrestania Nickel, Gold and Lithium Project
The Forrestania project is located 120km south of Southern Cross and 80km east of Hyden in Western Australia (Figure 1). The southern
portion of the Forrestania project is approximately 7km north of Western Areas Limited’s Flying Fox nickel mine, and the northern portion
adjoins the SQM-Kidman Resources Ltd Earl Grey lithium project.
There is significant supporting infrastructure in the Forrestania-Mt Holland project area, with good road access and an existing electricity
network primarily due to present and past mining operations. Located to the south of the project area is Western Area Ltd’s Cosmic Boy nickel
concentrator, which can process 600,000 tonnes per annum of ore, with the potential to expand to 1,000,000 tonnes per annum. A new
lithium mine and concentrator is also being developed close to the north-eastern corner of the project by the SQM-Kidman Resources joint
venture.
The Forrestania gold project contains a 136,750 ounce gold resource. Hannans owns a 20% interest in this resource which is free-carried until
a decision to mine has been made. (Please refer to the ASX release made by Classic Minerals Ltd dated 2 May 2017 for full details of the
mineral resource and compliance with the JORC Code, 2012 Edition).
The project consists of five granted exploration licences and two prospecting licences and all the tenements are held 100% by Reed
Exploration Pty Ltd (Reed) a wholly owned subsidiary of Hannans.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 9
DIRECTORS’ REPORT
Forrestania Nickel, Gold and Lithium Project (cont’d)
PROJECT GEOLOGY
The following is a detailed description of the project geology that geoscientists will find very useful in gaining an understanding of the project
geology.
The Stormbreaker prospect lies within the Archaean Forrestania greenstone belt which trends north to northwest. Regional mapping has
identified two distinct lithostratigraphic units within the greenstone belt, a mafic-ultramafic metavolcanic suite and a sequence of immature
clastic sediments which overlie the older mafic-ultramafic sequence. These units are folded into a regional northerly plunging synform, with
the sedimentary rocks forming the core of the synform. The mafic-ultramafic rocks to the east of the sediments are steeply west dipping
while those to the west of the sediments are shallowly east dipping. The two sequences differ somewhat in their composition.
The greenstones are predominantly altered mafic and ultramafic flows with intercalated BIF, cherts and at stratigraphically higher levels, fine
grained clastic sediments.
The western ultramafic belt consists
predominantly of high-magnesium basalts
with variolitic texture (detailed below). The
basaltic sequence is overlain to the east by a
BIF unit, which is in turn overlain by the main
pelitic sediment sequence. The younger
sediments are dominantly pelitic and
psammitic schists, with minor iron rich
garnetiferous units, thin BIF lenses and bands
of graphitic schist.
The western ultramafic belts hosts the Flying
Fox deposit and has been interpreted as an
east younging succession of four distinct
lithological packages. Zone 1 comprises of
quartzo-feldspathic sedimentary rocks
intercalated with minor basaltic rocks. These
footwall sedimentary rocks are directly
overlain by a cumulate-rich compound
komatiite flow sequence Zone 2comprises the
cumulate komatiites which host an irregular
halo of disseminated sulphides that directly
overlies massive sulphides. Zone 3 comprises
of a komatiite basalt thin flow sequence,
where non-cumulate komatiites and high
magnesium basalts dominate. Zone 4
comprises of hanging wall sedimentary rocks.
This lithostratigraphic sequence is interpreted
to continue to the north beneath a granite sill
based on aeromagnetic interpretation.
10 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
QUEEN VICTORIA ROCKS PROJECT, WESTERN AUSTRALIA
The Queen Victoria Rocks (QVR) project is located approximately 50km to the southwest of Coolgardie in Western Australia. Access to the
southern portion of the project is via the unsealed Victoria Rock road, which passes through the tenement. There is significant supporting
infrastructure in the Queen Victoria Rocks project area, with good road access due to its close proximity to the town of Coolgardie and the
numerous current and historic mining operations of the Coolgardie district. The Queen Victoria Rocks project consists of one granted
Exploration Licence. The tenement is held 100% by Reed Exploration Pty Ltd a wholly owned subsidiary of Hannans.
PROJECT GEOLOGY
The following is a detailed description of the project geology that geoscientists will find very useful in gaining an understanding of the project
geology.
The QVR project is located over Archaean greenstone lithologies, forming part of the southern portion of the Bullabulling Domain, which forms
the western-most domain of the Kalgoorlie Terrane. These lithologies occur within a relatively narrow belt of greenstone, which lie adjacent
to the regionally extensive Ida Fault which passes through the project area. Approximately 9.5km to the south of the Prince of Wales
workings, aeromagnetic data suggests that the Ida Fault splays in to two separate structures; one trending southwest and the other to the
southeast within Hannans tenure. Proterozoic dykes cut the Archaean stratigraphy in several areas.
Within the project area the greenstone lithologies
consist of mafic and ultramafic rocks, interbedded
with meta-sedimentary units, which are likely to
represent interflow sediments. Sulphide-rich shales,
which have a ferruginous surface expression, have
been previously mapped and interpreted as BIF units.
In the western parts of the greenstone sequence, a
much thicker sediment package occurs and is
predominantly made up of medium to coarse
grained quartz-rich meta-sediments, in particular
quartz-biotite schists, along with numerous shale
units. To the west, the greenstone belt is flanked by
the Woolgangie Monzogranite, while to the east, the
regionally extensive Burra Monzogranite dominates.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 11
DIRECTORS’ REPORT
ANNUAL RESOURCE STATEMENTS
On 27 September 2016, Hannans completed an in-specie distribution of Critical Metals Ltd to its shareholders. All the Swedish JORC resources
and exploration targets are owned by Scandinavian Resources AB and Kiruna Iron AB which are wholly owned subsidiaries of Critical Metals
Ltd.
Hannans through the joint venture with Classic Minerals Ltd holds a 20% interest in the following JORC resources for the year ended 30 June
2017.
JULY 2016 – JUNE 2017
Forrestania Gold Project1
JORC Compliant Indicated and Inferred Mineral Resource Table
Prospect
Lady Ada
Lady Magdalene
TOTAL
Tonnes
283,543
1,828,740
2,112,283
Indicated
Grade (Au g/t)
1.78
1.08
1.17
Ounces (Au)
16,204
63,732
79,734
Tonnes
259,359
2,450,140
2,709,499
Inferred
Grade (Au g/t)
2.25
1.50
1.57
Ounces (Au)
18,763
118,173
136,937
Competent Person’s Stateme nts – Forrestania Gold Project
The information contained in the JORC Compliant Resource Table relates to information compiled or reviewed by Edward S. K. Fry who is a member of the Australasian Institute of Mining and Metallurgy (AusIMM) and is a
consultant exploration geologist for Classic Minerals Ltd. Mr Fry has sufficient experience of relevance to the styles of mineralisation and the types of deposit under consideration, and to the activities undertaken to
qualify as Competent Persons as defined in the 2012 edition of the ‘JORC Australian code for reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Fry consents to the inclusion in this report of the
matters based on information in the form and context in which it appears.
JULY 2015 – JUNE 2016
Kiruna Iron Project
JORC Compliant Indicated Mineral Resource Table
Prospect
Ekströmsberg
TOTAL
Mt
30.4
30.4
JORC Compliant Inferred Mineral Resource Table
Prospect
Rakkurijoki
Vieto
Renhagen
Harrejaure
Ekströmsberg
TOTAL
Mt
74.5
14.0
26.3
16.2
41.6
172.6
TOTAL
Indicated & Inferred
JORC Compliant Exploration Target2 Tables
Hub 1 – Kiruna Hub
Tonnage Range
(Mt)
4-8
15-30
19-38
Grade Range
(Fe%)
30-35
45-55
37.5-45
Prospect
Laukkujärvi
Tjåorika
Total Hub 1
TOTAL
Hub 1 & 2
Fe (%)
52.0
52.0
Fe (%)
39.7
35.7
32.1
43.4
52.0
41.5
Mt
203.0
P (%)
Unavailable
–
P (%)
0.28
0.14
0.21
0.04
Unavailable
–
S (%)
Unavailable
–
S (%)
0.89
1.46
0.03
0.01
Unavailable
–
Fe (%)
43.1
Hub 2 – Lannavaara Hub
Prospect
Paljasjärvi
Total Hub 2
Tonnage Range
(Mt)
40-60
40-60
Grade Range
(Fe%)
30-40
30-40
Mt
59-98
Fe (%)
33.6-42.5
Competent Person’s Stateme nts – Kiruna Iron Project
(cid:119)
The mineral resource estimate for Rakkurijoki and Rakkurijärvi is effective from 13 January 2012 and has been prepared by Mr Thomas Lindholm, MSc of GeoVista AB, Luleå, Sweden acting as an independent
“Competent Person”. Mr Lindholm is a Fellow of the Australasian Institute of Mining and Metallurgy (Membership No. 230476). Mineral resources for Rakkurijoki and Rakkurijärvi have been prepared and
categorised for reporting purposes by Mr Lindholm, following the guidelines of the JORC Code. Mr Lindholm is qualified to be a Competent Person as defined by the JORC Code on the basis of training and
experience in the exploration, mining and estimation of mineral resources of gold, base metal and iron deposits. Mr Lindholm consents to the inclusion in the report of the matters based on the information in
the form and context in which it appears.
1 Refer to Classic Minerals Ltd (ASX: CLZ) ASX announcement on 1 March 2017 for further information.
2 The JORC Exploration Targets have been subjected to diamond drill testing, ground geophysics and interpretation by the Geological Survey of Sweden, reviewed by Mr Thomas
Lindholm, of GeoVista AB. The potential quantity and grade of the exploration targets is conceptual in nature, there has been insufficient interpretation to define a JORC Mineral Resource
and it is uncertain if further interpretation will result in the determination of a JORC Mineral Resource.
12 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
Competent Person’s Stateme nts – Kiruna Iron Project (cont’d)
(cid:119)
(cid:119)
(cid:119)
(cid:119)
The mineral resource estimate for Puoltsa is effective from 13 January 2012 and has been
prepared by Mr Thomas Lindholm, MSc of GeoVista AB, Luleå, Sweden acting as an independent
“Competent Person”. Mr Lindholm is a Fellow of the Australasian Institute of Mining and
Metallurgy (Membership No. 230476). The mineral resource of Puoltsa has been prepared and
categorised for reporting purposes by Mr Lindholm, following the guidelines of the JORC Code. Mr
Lindholm is qualified to be a Competent Person as defined by the JORC Code on the basis of
training and experience in the exploration, mining and estimation of mineral resources of gold,
prepared and categorised for reporting purposes by Dr Wheatley, following the guidelines of the
JORC Code. Dr Wheatley is qualified to be a Competent Person as defined by the JORC Code on the
basis of training and experience in the exploration, mining and estimation of mineral resources of
gold, base metal and iron deposits. Dr Wheatley consents to the inclusion in the report of the
matters based on the information in the form and context in which it appears.
The mineral resource estimate for Vieto is effective from 26 July 2011 and has been prepared by
Mr Geoffrey Reed of Minarco-MineConsult acting as an independent “Competent Person”. Mr
Geoffrey Reed is a Member of the Australasian Institute of Mining and Metallurgy (CP)
(Membership No. 205422). The mineral resource of Vieto has been prepared and categorised for
reporting purposes by Mr Reed, following the guidelines of the JORC Code. Mr Reed is qualified to
be a Competent Person as defined by the JORC Code on the basis of training and experience in the
exploration, mining and estimation of mineral resources of gold, base metal and iron deposits. Mr
Reed consents to the inclusion in the report of the matters based on the information in the form
and context in which it appears.
The mineral resource estimate for Renhagen and Harrejaure is effective from 13 January 2012 and
has been prepared by Mr Geoffrey Reed of Minarco-MineConsult acting as an independent
“Competent Person”. Mr Geoffrey Reed is a Member of the Australasian Institute of Mining and
Metallurgy (CP) (Membership No. 205422). Mineral resources of Renhagen and Harrejaure have
been prepared and categorised for reporting purposes by Mr Reed, following the guidelines of the
JORC Code. Mr Reed is qualified to be a Competent Person as defined by the JORC Code on the
basis of training and experience in the exploration, mining and estimation of mineral resources of
gold, base metal and iron deposits. Mr Reed consents to the inclusion in the report of the matters
based on the information in the form and context in which it appears.
(cid:119)
(cid:119)
(cid:119)
(cid:119)
base metal and iron deposits. Mr Lindholm consents to the inclusion in the report of the matters
based on the information in the form and context in which it appears.
The mineral resource estimate for Ekströmsberg is effective from 22 July 2011 and has been
prepared by Dr Christopher Wheatley of Behre Dolbear International Ltd, UK, acting as an
independent “Competent Person”. Dr Wheatley is a member of the Institute of Materials Minerals
and Mining (Membership No. 450553). The mineral resource of Ekströmsberg has been
The information in this document that relates to JORC Exploration Targets is based on information
reviewed by Mr Thomas Lindholm of GeoVista AB, Luleå, Sweden acting as an independent
“Competent Person”. Mr Lindholm is a member of the Australasian Institute of Mining and
Metallurgy (Membership No. 230476). Mr Lindholm is qualified to be a Competent Person as
defined by the JORC Code on the basis of training and experience in the exploration, mining and
estimation of mineral resources of gold, base metal and iron deposits. Mr Lindholm consents to
the inclusion in the report of the matters based on the information in the form and context in
which it appears.
The information in this document that relates to exploration results for the Rakkuri Iron Project is
based on information compiled by Ms Amanda Scott, a Co mpetent Person who is a Member of the
Australian Institute of Mining and Metallurgy (Membership No. 990895). Ms Amanda Scott is a
full-time employee of Hannans Ltd. Ms Amanda Scott has sufficient experience, which is relevant
to the style of mineralisation and types of deposits under consideration and to the activity which
has been undertaken to qualify as a Competent Person as defined in the 2012 edition of the
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC
Code). Ms Amanda Scott consents to the inclusion in the report of the matters based on her
information in the form and context in which it appears.
Note all Kiruna Iron Project Resource Estimates and Exploration Target Estimates have been
prepared and reported under the 2004 JORC Code. The company confirms that all material
assumptions and technical parameters underpinning the estimates continue to apply and have not
materially changed. 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
announcements.
Pahtohavare Copper-Gold Project
The Pahtohavare Inferred Mineral Resource and Exploration Target Estimate figures are shown below.
Area
Central
Southeast
South
COMBINED
Resource
Category
Inferred
Inferred
Inferred
Inferred
Mt
1.4
0.8
0.1
2.3
Cu (%)
Au (g/t)
Cu Eq (%)
Mining Scenario
Material
1.8
1.7
1.3
1.7
0.6
0.5
0.6
0.6
2.4
2.1
1.9
2.3
Open Cut
Open Cut + Underground
Underground
Oxide
Sulphide
Sulphide
Table 1. JORC Inferred Resource-Pahtohavare Project. (Open pit resources calculated using a Whittle optimised cut-off grade of 0.56% CuEq 3 for oxide material and 0.43%
CuEq3 for sulphide material. Underground resources calculated using a 1.48% CuEq 3).
Accompanying Statements: JORC Inferred Resource – Pahtohavare
1.
2.
3.
4.
5.
6.
7.
8.
The effective date of the Mineral Resource is 12 July 2013.
Mineral Resources are reported in relation to a conceptual pit shell. Mineral Resources are not Ore Reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative
accuracy of the estimate.
The quantity and grade of reported Inferred Mineral Resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred Mineral Resources as an Indicated or
Measured Mineral Resource; and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category.
Copper equivalent (CuEq) grades were calculated using metal prices of USD3.56 per pound of copper (Cu), and USD1,510 per troy ounce of gold (Au), along with metal recoveries of 90% for Au and 65% for Cu
in sulphide material and 80% for Au and 50% of Cu in oxide material.
Open pit Mineral Resources are reported above the Whittle pit shell and above a cu t-off grade of 0.56% CuEq for oxide material and 0.43% CuEq for sulphide material.
Underground Mineral Resources are reported below the Whittle pit shell, and above a cut-off grade of 1.48% CuEq for sulphide material.
Mineral Resources for the Pahtohavare project has been classified according to the JORC Code (2012) by Ben Parsons (MAusIMM (CP)), an independent Competent Person as defined by JORC.
The Mineral Resource estimate has not been affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
Competent Person’s Stateme nts – Pahtohavare
(cid:119)
(cid:119)
(cid:119)
(cid:119)
The information in this document that relates to exploration results for the Pahtohavare Project is based on information compiled by Ms Amanda Scott, a Competent Person who is a Member of the Australian
Institute of Mining and Metallurgy (Membership No. 990895). Amanda Scott is a full-time employee of Hannans Ltd. Ms Amanda Scott has sufficient experience, which is relevant to the style of mineralisation
and types of deposits under consideration and to the activity which has been undertaken to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code). Ms Amanda Scott consents to the inclusion in the report of the matters based on her information in the form and context in which it appears.
The information in this document that relates to the Pahtohavare Mineral Resource and Exploration Target is based on information compiled by Mr Benjamin Parsons, a Competent Person who is a Member and
Chartered Professional of the Australasian Institute of Mining and Metallurgy (Membership No. 222568). Mr Benjamin Parsons is a full time employee of SRK Consulting, and has no interest in, and is entirely
independent of Hannans Ltd. Mr Benjamin Parsons has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in JORC 2012. Mr Benjamin Parsons consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The information in this document that relates to the Pahtohavare Mineral Resource and Exploration Target is based on information compiled by Mr Johan Bradley, a Competent Person who is a Chartered
Geologist with the Geological Society of London (Membership No. 1014008), and a European Geologist (EurGeol). Mr Johan Bradley is a full time employee of SRK Consulting, and has no interest in, and is
entirely independent of Hannans Ltd. Mr Johan Bradley has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in JORC 2012. Mr Johan Bradley consents to the inclusion in the report of the matters based on his information in the form and context in which i t
appears.
Note all Resource Estimates, Exploration Target Estimates and Exploration Results within this report pertaining to the Pahtohavare Project have been prepared and reported under the 2012 JORC Code. The
company confirms that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. 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 announcements.
Governance Arrangement s and Internal Controls – Mineral Resources
Hannans Ltd has ensured that the mineral resource estimates quoted above are subject to governance arrangements and internal controls. The resource estimates have all been externally derived by various
independent consulting organisations whose staff have exposure to best practice in modelling and estimation techniques. In 2011 the iron resource estimates were reviewed by an independent consulting
organisation who reviewed the quality and suitability of the data underlying the mineral resource estimates, including a site visit. The Pahtohavare resource estimate was similarly completed and reviewed by the
same independent consulting organisation that completed the 2011 review of iron resources. These reviews have not identified any material issues. In turn, Hannans’ management has carried out numerous internal
reviews of the underlying data and mineral resource estimates to ensure that they have been classified and reported in accordance with the JORC Code; the 2004 Edition for the iron resources and the 2012 Edition for
the Pahtohavare resource. Hannans reports its mineral resources on an annual basis in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code)
2012 Edition. Competent Persons named by Hannans are Members or Fellows of the Australasian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists, and qualify as Competent Persons
as defined in the JORC Code.
3 Copper equivalent (CuEq) has been calculated using metal selling prices of USD3.56 / lb for Cu and USD1,510 / Oz for Au, along with metal recoveries of 90% for Au and 65% for Cu in
sulphide material and 80% for Au and 50% of Cu in oxide material. The following equations were used:
(cid:119)
(cid:119)
Oxide: CuEq = (1.12 x Au (ppm) grade) + (0.98 x Cu% grade)
Sulphide: CuEq = (0.97 x Au (ppm) grade) + (0.99 x Cu% grade)
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 13
DIRECTORS’ REPORT
DIRECTORS
The names and particulars of the Directors of the Company during the financial year and until the date of the report are:
Mr Jonathan Murray, Non-Executive Chairman
(Appointed 29 November 2016,
previously appointed Non-Executive Director on 22 January 2010)
Mr Damian Hicks, Executive Director
(Appointed on 29 November 2016,
previously apointed Managing Director on 11 March 2002)
Mr Murray is a partner at law firm
Steinepreis Paganin, based
in Perth,
Western Australia. Since joining the firm
in 1997, he has gained significant
experience in advising on initial public
offers and secondary market capital
commercial
raisings,
forms of
acquisitions
and
providing general corporate and strategic
advice.
divestments
and
all
Mr Murray graduated
from Murdoch
University in 1996 with a Bachelor of Laws and Commerce
(majoring in Accounting). He is also a member of FINSIA
(formerly the Securities Institute of Australia).
During the past 3 years Mr Murray has also served as a director of
the following other listed companies:
* Denotes current directorship
(cid:119) Vietnam Industrial Investments Limited*
(appointed 19 January 2016)
(cid:119) Peak Resources Limited* (appointed 22 February 2011)
Mr Hicks was a founding Director of
Hannans Ltd and appointed to the position
of Managing Director on 5 April 2007 and
appointed as an Executive Director on 29
November 2016. He formerly held the
position of Executive Director and Company
is also Executive
Secretary. Mr Hicks
Director
subsidiary
of
companies.
the Group’s
Mr Hicks holds a Bachelor of Commerce
(Accounting and Finance) from the University of Western
Australia, is admitted as a Barrister and Solicitor of the Supreme
Court of Western Australia, holds a Graduate Diploma in Applied
Finance & Investment from FINSIA, a Graduate Diploma in
Company Secretarial Practice from Chartered Secretaries Australia
and is a Graduate of the Australian Institute of Company Directors
course.
Mr Hicks is a Non-Executive Director of funds management
company, Growth Equities Pty Ltd. During the past 3 years Mr
Hicks did not serve as a director on other listed companies.
Mr Markus Bachmann, Non-Executive Director
(Appointed 2 August 2012)
Mr Clay Gordon, Non-Executive Director
(Appointed 5 October 2016)
Mr Bachmann graduated with Honours
(“cum laude”) from the University of
Berne, Switzerland and began his
corporate finance career in 1993.
In 2001, Mr Bachmann was Senior
Portfolio Manager with Coronation Fund
Managers in Cape Town when it was
awarded the Standard & Poor’s Award for
Manager of the Best Performing Large
Cap Equity Unit Trust in South Africa.
In 2003, Mr Bachmann was founding partner of Craton Capital
and is the Chief Executive Officer. Craton Capital was awarded
Fund Manager of the Year at the Mining Journal’s “Outstanding
Achievement Awards” announced in London during December
2010 for the Craton Capital Precious Metal Fund. The award is the
most prestigious fund award in the mining industry. Craton
Capital has offices in Johannesburg, South Africa and in Zurich,
Switzerland.
During the past 3 years Mr Bachmann did not serve as a director
on other listed companies.
Mr Clay Gordon was appointed a director
of Hannans in 2016. Mr Gordon obtained a
Bachelor of Applied Science (Geology) and
a Master of Science (Mineral Economics)
and has more than 25 years’ experience in
senior roles (operational, management
and corporate) within large and small
resource companies active in a range of
commodities within Australia, Africa and
South East Asia. He was founding Non-
Executive Director of ASX listed Phoenix
Gold Limited and founding Managing Director of ASX listed
Primary Gold Limited. Mr Gordon was also founder and CEO of
Mining Assets Pty Ltd, a private company involved in the
assessment and marketing of mineral projects. He is a Member of
the Australasian Institute of Mining and Metallurgy and the
Australian Institute of Geoscientists.
During the past 3 years Mr Gordon has also served as a director
of the following other listed companies:
* Denotes current directorship
(cid:119) Primary Gold Ltd
(appointed 28 February 2013; resigned 7 March 2016)
14 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
DIRECTORS (cont’d)
Ms Amanda Scott
(Appointed Non-Executive Director on 29 November 2016,
previously appointed director of subsidiaries on 29 March 2014)
Mr Olof Forslund, Non-Executive Director
(Appointed 2 August 2012, Resigned 5 October 2016)
Ms Scott was appointed a director of
Scandinavian Resources AB, Kiruna Iron AB
and Scandinavian Iron AB in 2014 and has
been the Exploration Manager for Hannans
Ltd and its subsidiary companies since 2008.
Ms Scott played an integral role in the
development of the Company’s nickel, gold,
iron and manganese portfolio and is credited
with the discovery of high grade iron
mineralisation at the Jigalong Project in the
East Pilbara region on Western Australia.
Ms Scott was also a key person responsible for developing the
Rakkuri Iron Project and advancing the Pahtohavare Copper-Gold
Project in Sweden. Ms Scott holds a Bachelor of Science
(Geology) from Victoria University of Wellington, and is a
Member of the Australian Institute of Mining & Metallurgy.
During the past 3 years Ms Scott did not serve as a director on
other listed companies.
Mr Forslund is a geophysicist and has
extensive international experience in
the mineral exploration
industry,
particularly in the development and
application of geophysical instruments
and radar technology. His assignments
have covered activities in Sweden,
Japan,
Germany,
Belgium, Italy, France, Canada and the
USA.
Korea,
South
Mr Forslund commenced with SGU in 1966 and during the
period 2003 – 2007 Mr Forslund was Regional Manager of
the Geological Survey of Sweden’s Mineral Resources
Information Office in Mala, Sweden (www.sgu.se). SGU’s
branch office Mala serves as a ‘one-stop’ information office
for all those conducting exploration in Sweden. Mr Forslund
founding shareholder and President of MALÅ
was a
GeoScience (www.malags.com) between 1994 and 1998.
MALÅ is currently the global leader in the design and
manufacture of Ground Penetrating Radar (GPR) systems.
During the past 3 years Mr Forlund did not serve as a director on
other listed companies.
Director’s Relevant Interest in Shares and Options
At the date of this report the following table sets out the current Directors’ relevant interests in shares and options of Hannans Ltd and the
changes since 30 June 2017.
Director
Ordinary Shares
Options over Ordinary Shares
Current
Holding
Net Increase/
(decrease)
Current
Holding
Net Increase/
(decrease)
Damian Hicks
Jonathan Murray
Markus Bachmann (i)
Clay Gordon (ii)
Amanda Scott (ii)
6,416,667
9,736,629
63,797,917
–
1,260,001
–
–
–
–
–
–
4,737,500
4,197,917
–
8,500,000
–
–
–
–
–
(i)
(ii)
These shares are held by Craton Capital Funds of which Mr Bachmann is a founding partner and Chief Executive Officer.
Mr Gordon and Ms Scott were appointed as a Non-executive Director on 5 October 2016 and 29 November 2016 respectively.
COMPANY SECRETARY
Mr Ian Gregory
(Appointed 5 April 2007)
Mr Gregory holds a Bachelor of Business from Curtin University. Prior to founding his own business in 2005 Mr
Gregory was the Company Secretary of Iluka Resources Ltd (6 years), IBJ Australia Bank Ltd Group (12 years) and the
Griffin Group of Companies (4 years). Mr Gregory currently consults on company secretarial and governance matters
to a number of listed and unlisted companies and is a past Chairman of the Western Australian Branch Council of
Governance Institute of Australia.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 15
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
The remuneration report is set out under the following main headings:
A.
B.
C.
D.
E.
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share–based compensation
Additional information
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
A.
Principles used to determine the nature and amount of remuneration
The whole Board forms the Remuneration Committee. The remuneration policy has been designed to align director and executive
objectives with shareholder and business objectives by providing a fixed remuneration component with the flexibility to offer specific long
term incentives based on key performance areas affecting the Group’s financial results. The Board believes the remuneration policy to be
appropriate and effective in its ability to attract and retain the best directors and executives to manage the Group.
The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives is as follows:
(cid:119)
(cid:119)
(cid:119)
(cid:119)
(cid:119)
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by
the Board. All executives receive a base salary (which is based on factors such as length of service and experience) and
superannuation. The Board reviews executive packages annually and determines policy recommendations by reference to executive
performance and comparable information from industry sectors and other listed companies in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and
retain the highest calibre of executives and reward them for performance that results in long term growth in shareholder wealth.
The Managing Director and executives receive a superannuation guarantee contribution required by the government, which is
currently 9.5% of base salary and do not receive any other retirement benefits.
All remuneration paid to directors and executives is valued at the cost to the Group and expensed. Options are valued using the
Black–Scholes methodology where relevant.
The Board policy is to remunerate non–executive directors at market rates for comparable companies for time, commitment and
responsibilities. The Board determines payments to the non–executive directors and reviews the remuneration annually, based on
market practice, duties and accountability. Independent external advice is sought when required. No independent external advise
was sought during the year. The maximum aggregate amount of fees that can be paid to Non–Executive Directors is subject to
approval by shareholders at the Annual General Meeting. The approved maximum aggregate amount that may be paid to Non-
Executive Directors as remuneration for each financial year is set at $250,000 which may be divided among the Non-Executive
Directors in the manner determined by the Board and Company from time to time. Fees for Non–Executive Directors are not linked
to the performance of the Company. The 2016 remuneration report was approved at the last Annual General Meeting held on
25 November 2016.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders investment objectives and
directors and executive performance. The Company facilitates this through the issue of options from time to time to the directors and
executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in
increasing shareholder wealth. The Company currently has no performance based remuneration component built into director and executive
remuneration packages.
The Board does not consider earnings during the current and previous financial years when determining, and in relation to, the nature and
amount of directors’ remuneration. Refer below for a summary of the Group’s earnings and the Company’s market performance for the past
5 years.
Summary of 5 Years earnings and market performance as at 30 June
Profit/(Loss) ($)
Share price (c)
Market capitalisation
(Undiluted) ($)
2017
2016
2015
2014
2013
11,663,780
(964,387)
(29,120,403)
(1,015,324)
(2,544,386)
1.5
1.6
0.2
0.5
1.5
25,239,608
15,531,324
1,443,932
3,609,831
10,604,492
16 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
B. Details of remuneration
Details of remuneration of the Directors and key management personnel (as defined in AASB 124 Related Party Disclosures) of Hannans are
set out in the table below.
The key management personnel of Hannans and the Group are listed on page 14 and 15.
Given the size and nature of operations of Hannans, there are no other employees who are required to have their remuneration disclosed in
accordance with the Corporations Act 2001.
Short Term
Post-employment
Equity
Salary
& fees
$
Other
benefits
(i)
$
D&O
insurance
(ii)
$
Superan-
nuation
$
Other
benefits
(iii)
$
Options
(iv)
$
2017
Directors
Damian Hicks (vi)
120,000
179,497
2,274
11,400
Jonathan Murray (vii)
Markus Bachmann (vii)
Clay Gordon (viii)
Amanda Scott (ix)
Olof Forslund (vii)(x)
12,000
3,000
12,000
9,000
7,000
–
–
–
–
–
2,274
2,274
1,676
1,332
604
–
–
–
855
–
163,000
179,497
10,434
12,255
Total
2016
Directors
Damian Hicks (vi)
120,000
10,470
2,166
11,400
Jonathan Murray (vii)
Markus Bachmann (vii)
Olof Forslund (vii)
Executives
12,000
12,000
12,000
Amanda Scott (ix)
(Director of subsidiaries)
115,489
–
–
–
–
2,165
2,165
2,165
–
–
–
Total
(i)
(ii)
Short Term Other benefits include annual leave accrued and taken
during the year of $10,512 (2016: $10,470) for Damian Hicks. On
26 July 2017, the balance of the annual leave was paid to Mr Hicks.
On 15 September 2016 Hannans held a General Meeting and
shareholders approved to forgive Mr Hicks' outstanding loan
amount of $168,985.
For accounting purposes Directors & Officers Indemnity Insurance is
required to be recorded as remuneration. No director receives any
cash benefits, simply the benefit of the insurance coverage for the
financial year.
(iii) A Swedish company paying employees for work is required to pay
Swedish Social Security Contribution (SSC) which is a framework of
publicly funded social provision, ranging from pensions and
healthcare
to parental allowances and employment-related
insurance. SSC is calculated on the basis of paid salaries and issued
benefits. No employee receives any cash benefit, simply the
benefit of social provision by the Swedish government. SSC
benefits for Ms Scott in 2016 was $26,192. Ms Scott ceased
employment with the company and no SSC payments were
required from 1 February 2016 onwards.
The amounts included are under Hannans’ Employee Share Option
Plan (ESOP) approved by shareholder in November 2014 and
Hannans’
Equity Option Plan (DEQ) approved by
shareholder in September 2016 are non-cash items that are subject
to vesting conditions. Refer to note 8 for more information.
Director
(iv)
Long
term
benefits
(v)
$
7,419
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
71,967
29,216
24,391
–
1,686
29,216
1,780
1,780
1,780
156,476
7,419
11,272
925
–
–
–
–
Other
benefits
$
Total
$
Value
options as
proportion of
remuneration
%
–
–
–
–
–
–
–
–
–
–
–
–
–
392,557
43,490
29,665
13,676
12,873
36,820
529,081
156,233
15,945
15,945
15,945
171,648
375,716
18.3%
67.2%
82.2%
0.0%
13.1%
79.3%
29.6%
7.2%
11.2%
11.2%
11.2%
6.6%
7.4%
(v)
(vi)
(vii)
Long term benefits include benefits increment for the year in unpaid long
service leave of $7,419 (2016: $925). On 26 July 2017, the balance of the
long service leaves was paid to Mr Hicks.
In an effort to assist the Company with managing its cash flow and to
enable tax planning for the Group, Mr Hicks deferred a part of his salary
from 1 April 2013 to 31 March 2015. During the 2016 year, a payment of
$39,437 was made to Mr Hicks in relation to his deferred salary. Mr Hicks’
salary payment resumed on 1 July 2015 at a reduced rate of $120,000 per
annum.
In an effort to assist the Company with managing its cash flow,
Mr Murray, Mr Bachmann and Mr Forslund have deferred their Non-
Executive Director fee from 1 January 2014 to 30 June 2016. The deferred
amount for the 2016 period of $36,000 is included in the above
remuneration (equivalent of $12,000 per director). A total payment of
$36,000 for the deferred Non-Executive Directors fees from 1 July 2015 to
30 June 2016 were made to the Non-Executive Directors on 7 July 2016.
The Non-Executive Directors fees resumed on 1 July 2016.
(viii) Mr Gordon was appointed director on 5 October 2016.
(ix) On 29 November 2016, Ms Scott was appointed as a Non-Executive
Director of the Company.
(x) Mr Forslund resigned on 5 October 2016.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 17
2,166
16,529
26,192
11,272
271,489
10,470
10,827
27,929
26,192
27,884
925
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
C.
Service agreements
Executive Director
Mr Hicks commenced employment with Hannans Ltd on 3 December 2003.
Mr Hicks entered into an employment agreement as Managing Director of the Company on 21 December 2009. The remuneration package
comprised $230,000 per annum (exclusive of statutory superannuation entitlements), reimbursement of work related expenses, provision
of a motor vehicle, a remuneration increase of 5% per annum and provision for a performance based bonus as determined by the Board.
Either party can terminate the arrangement with three months written notice and payment by the Company of all statutory annual and
long service leave entitlements. Mr Hicks’ salary was increased to $258,648 per annum on 1 July 2012. Whilst Mr Hicks’ employment
agreement has not been amended since execution as from 1 July 2015 he is receiving a salary equivalent to $120,000 per annum plus
statutory superannuation and will remain at that level until 30 June 2017. It is the Boards intention to finalise a new employment
agreement with Mr Hicks’ in the future that will take into consideration market conditions and Mr Hicks’ outstanding entitlements pursuant
to the employment agreement entered into on 21 December 2009.
On 10 March 2013 Mr Hicks and his family relocated to Malå and were provided with accommodation. The Board considered the relocation
to be necessary for Mr Hicks to fulfil his role of Managing Director considering Hannans’ major projects were located in Scandinavia. Mr
Hicks entered into an employment agreement with Hannans subsidiary Scandinavian Resources AB in accordance with visa requirements to
work and reside in Sweden. Prior to relocating to Sweden the Board finalised Mr Hicks’ salary arrangement on the basis that he would
receive the same (no less and no more) remuneration as if he had remained residing in Australia. As a consequence of Mr Hicks relocating
to Sweden Hannans became liable for significantly higher employment tax obligations including Swedish social security contributions.
Mr Hicks returned to Australia on 1 April 2015 and his employment agreement with Scandinavian Resources AB ended.
In an effort to assist the Company with managing its cash flow, Mr Hicks deferred $204,170 in salary entitlements during the period 1 April
2013 to 31 March 2015 (please refer to note 15). On 15 June 2016 $39,437 was paid to Mr Hicks for his accrued salary and a further
$31,549 was made on 7 July 2016 as part payment.
Mr Hicks has accrued annual leave of $42,845 (2016: $43,165) and accrued long service leave of $60,270 (2016: $52,851) as at 30 June
2017. Mr Hicks has not received the salary entitlements provided for in his employment agreement since 1 July 2012 and has not been
provided with a motor vehicle since 1 April 2015. On 31 March 2010 Mr Hicks was provided with a $300,000 loan to exercise 1.5 million
Hannans options. The Company has agreed to suspend interest charged, principal repayments and interest payments until further notice.
The loan repayment date was extended by two (2) years to 31 March 2017.
On 15 September 2016 Hannans held a General Meeting and shareholders approved the issue of ordinary shares in lieu of Mr Hicks’
outstanding salary of $141,474, together with one free attaching option for each ordinary shares issued. The ordinary shares were issued at
a deemed price of 1.8 cents per share (issue price equal to the volume weighted average sale price of shares sold on ASX during the 40
trading days after the date of the General Meeting). On 14 November 2016 the shares and options were issued to Mr Hicks. During the
General Meeting the shareholders also approved to forgive the outstanding loan amount of $168,985. The loan is unrecoverable and was
derecognised as a receivable as at 30 June 2016. Refer to the Notice of General Meeting released on ASX dated 12 August 2016 for further
information.
On 29 November 2016, Mr Hicks was appointed as the Executive Director of the Group. After a further review of Mr Hicks’ contract with the
Company, the Board resolved from 1 July 2017 to increase his fees to $198,000 per annum for executive services and $20,000 per annum
for services related specifically to his role as a director of the Board.
Non-Executive Directors
Remuneration and other terms of employment for the Non-executive Directors are formalised in service agreements. The Non-executive
directors are employed on a rolling basis with no specified fixed terms. They are remunerated on a fixed remuneration basis, exclusive of
superannuation. As from 1 July 2015 Non-Executive Directors accrued fees of $12,000 each per annum for each Non-executive Director.
In an effort to assist the Company with managing its cash flow, Mr Murray, Mr Bachmann and Mr Forslund have deferred their
Non-Executive Director fee from 1 January 2014 to 30 June 2016. The total deferred fees for the period of $36,000 is included in note 15. A
total payment of $36,000 for the deferred Non-Executive Directors fees from 1 July 2015 to 30 June 2016 was made to the Non-Executive
Directors on 7 July 2016.
On 15 September 2016 Hannans held a General Meeting and shareholders approved the issue of ordinary shares in lieu of the Non-
Executive Directors outstanding fee of $165,113, together with one free attaching option for each ordinary share issued. The ordinary shares
were issued at a deemed price of 1.8 cents per share (issue price equal to the volume weighted average sale price of shares sold on ASX
during the 40 trading days after the date of the General Meeting). On 14 November 2016 the shares and options were issued. Refer to the
Notice of General Meeting released on ASX dated 12 August 2016 for further information.
After a further review of Non-Executive Directors’ fees, the Board resolved to increase these fees to $20,000 per annum starting from 1 July
2017.
18 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
Major provisions of the agreements relating to the Non-executive directors are set out below.
Name
Non-Executive Directors
Jonathan Murray
Markus Bachmann
Clay Gordon
Amanda Scott
Termination Notice Period
By HANNANS
By Director
Termination payments*
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
1 month
* Termination payments (other than for gross misconduct) are calculated on current remuneration at date of termination and are inclusive of the notice period.
Executive
Remuneration and other terms of employment for the executive is formalised in an employment agreement. The executive is employed on
a rolling basis with no specified fixed terms. Major provisions of the agreements relating to the executive are set out below.
Termination Notice Period
Name
Director | Damian Hicks
Engagement
Consultant
By HANNANS
By Employee
Termination payments*
12 months
3 months
3 months
Share–based compensation
* Termination payments (other than for gross misconduct) are calculated on current remuneration at date of termination and are inclusive of the notice period.
D.
Options are issued to directors and executives as part of their remuneration. The options are not based on performance criteria, but are issued
to align the interests of directors, executives and shareholders. During the year, a total of 21,155,848 unlisted options were issued. As at
30 June 2017, 39,532,584 options (2016: 23,500,000) were held by Directors and Non-Executives.
Options
issued
during the
year
No.
Financial
year
Issue date
Fair
value
per
options
at issue
date
Vesting
date
Exercise
price
Expiry
date
Vested
during
the year
No.
Lapsed
during
the year
No.
2015
2015
2015
2017
2015
2015
2015
2017
2015
2015
2015
2017
2015
2015
2015
2015
2015
2015
–
–
–
20 Nov 14
0.3 cents
20 Nov 14
0.8 cents
20 Nov 17
20 Nov 14
0.3 cents
20 Nov 15
0.5 cents
20 Nov 18
–
–
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
3,166,667
7,859,667
15 Sep 17
0.9 cents
15 Sep 17
2.7 cents
15 Sep 20
7,859,667
–
–
–
20 Nov 14
0.3 cents
20 Nov 14
0.8 cents
20 Nov 17
20 Nov 14
0.3 cents
20 Nov 15
0.5 cents
20 Nov 18
–
–
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
500,000
3,237,500
15 Sep 17
0.9 cents
15 Sep 17
2.7 cents
15 Sep 20
3,237,500
–
–
–
20 Nov 14
0.3 cents
20 Nov 14
0.8 cents
20 Nov 17
20 Nov 14
0.3 cents
20 Nov 15
0.5 cents
20 Nov 18
–
–
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
500,000
2,697,917
15 Sep 17
0.9 cents
15 Sep 17
2.7 cents
15 Sep 20
2,697,917
–
–
–
–
–
–
20 Nov 14
0.3 cents
20 Nov 14
0.8 cents
20 Nov 17
20 Nov 14
0.3 cents
20 Nov 15
0.5 cents
20 Nov 18
–
–
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
3,166,666
20 Nov 14
0.3 cents
20 Nov 14
0.8 cents
20 Nov 17
20 Nov 14
0.3 cents
20 Nov 15
0.5 cents
20 Nov 18
–
–
20 Nov 14
0.3 cents
20 Nov 16
2.9 cents
20 Nov 19
500,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Directors
Damian Hicks
Jonathan Murray
Markus Bachmann
Amanda Scott (i)
Olof Forslund (ii)
(i)
(ii)
Ms Scott was appointed as a Non-executive Director on 29 November 2016 respectively.
Mr Forslund retired as a Non-executive Director on 5 October 2016.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 19
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
E.
Additional information
Performance income as a proportion of total compensation
No performance based bonuses have been paid to directors or executives during the financial year.
Key management personnel equity holdings
Fully paid ordinary shares of Hannans Ltd
Key management personnel
2017
Damian Hicks (i)
Jonathan Murray
Markus Bachmann
Clay Gordon (ii)
Amanda Scott (ii)
Olof Forslund (iii)
Balance at
1 July
No.
Granted as
remuneration
No.
6,416,667
6,499,129
61,082,353
–
260,001
–
7,859,667
3,237,500
2,697,917
–
–
–
Received on
exercise of
options
No.
–
–
–
–
1,000,000
–
Net other
change
No.
Balance at
30 June
No.
(7,859,667)
–
6,416,667
9,736,629
17,647
63,797,917
–
–
–
–
1,260,001
N/A
74,258,150
81,211,214
Mr Hicks received 7,859,667 fully paid ordinary shares during the year. At the direction of Mr Hicks, the shares were issued to
Acacia Investments Pty Ltd (Acacia). Mr Hicks is neither a director, shareholder or beneficiary of Acacia or any trust where
Acacia is the trustee.
Mr Gordon and Ms Scott were appointed as a Non-executive Director on 5 October 2016 and 29 November 2016 respectively.
Mr Forslund retired as a Non-executive Director on 5 October 2016.
(7,842,020)
13,795,084
1,000,000
(i)
(ii)
(iii)
Options of Hannans Ltd
Key management personnel
2017
Damian Hicks (i)
Jonathan Murray (ii)
Markus Bachmann
Clay Gordon (iii)
Amanda Scott (iii)
Olof Forslund (iv)
Balance
at
1 July
No.
Granted as
remune-
ration
No.
Options
exercised
No.
Net other
change
No.
Balance at
30 June
No.
Exercisable
No.
Not
exercisable
No.
Vested at 30 June
9,500,000
7,859,667
1,500,000
3,237,500
1,500,000
2,697,917
–
9,500,000
1,500,000
–
–
–
–
–
–
–
(1,000,000)
–
(17,359,667)
–
17,359,667
–
–
–
–
–
4,737,500
4,737,500
4,197,917
4,197,917
–
–
8,500,000
8,500,000
N/A
N/A
23,500,000 13,795,084
(1,000,000) (17,359,667) 17,435,417
34,795,084
–
–
–
–
–
N/A
–
(i)
(ii)
(iii)
(iv)
Mr Hicks received 7,859,667 unlisted options during the year. At the direction of Mr Hicks, the options were issued to Acacia
Investments Pty Ltd (Acacia). Mr Hicks is neither a director, shareholder or beneficiary of Acacia or any trust where Acacia is the
trustee.
Mr Murray holds 840,000 in trust for unrelated third parties.
Mr Gordon and Ms Scott were appointed as a Non-executive Director on 5 October 2016 and 29 November 2016 respectively.
Mr Forslund retired as a Non-executive Director on 5 October 2016.
The options include those held directly, indirectly and beneficially by KMP.
20 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (cont’d)
E.
Additional information (cont’d)
Loans to KMP and their related parties
On 15 September 2016 Hannans held a General Meeting and shareholders approved to forgive the outstanding loan amount of $168,985.
The Board determined that the loan is non-recoverable and was derecognised as a receivable as at 30 June 2016. Refer to the Notice of
General Meeting released on ASX dated 12 August 2016 for further information.
Other transactions and balances with KMP and their related parties
Director transactions
Steinepreis Paganin, of which Mr Jonathan Murray is a partner, provided legal services amounting to $36,354 (2016: $39,974) to the Group
during the year. The amounts paid were on arm’s length commercial terms. Mr Murray’s director’s fees are also paid to Steinepreis Paganin.
At 30 June 2017 there was no amount outstanding owed to Steinepreis Paganin (2016: $7,226).
Corporate Board Services Pty Ltd, of which Mr Damian Hicks is a director, provided accounting and compliance services amounting to
$150,000 (2016: nil) to the Group during the year. The amounts paid were on arm’s length commercial terms. At 30 June 2017 there was no
amount outstanding owed to Corporate Board Services Pty Ltd.
Amberley Minerals Pty Ltd, of which Mr Clay Gordon is a director, provided geological services amounting to $12,690 (2016: nil) to the Group
during the year. The amounts paid were on arm’s length commercial terms. At 30 June 2017 there was no amount outstanding owed to
Amberley Minerals Pty Ltd.
End of Remuneration Report
Directors Meetings
The following tables set information in relation to Board meetings held during the financial year.
Board Member
Damian Hicks
Jonathan Murray
Markus Bachmann
Clay Gordon (i)
Amanda Scott (i)
Olof Forslund (ii)
Board Meetings
Held while
Director
Attended
Circular
Resolutions
Passed
2
2
2
1
1
1
2
2
2
1
1
1
2
2
2
2
2
–
Total
4
4
4
3
3
1
(i)
(ii)
Mr Gordon and Ms Scott were appointed as a Non-executive Director on 5 October 2016 and 29 November 2016 respectively.
Mr Forslund resigned as a Non-Executive Director on 5 October 2016.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 21
DIRECTORS’ REPORT
PROJECTS
The Projects are constituted by the following tenements:
Tenement
Interest
Tenement
Interest
Tenement
Interest
Tenement Number
% Note
Tenement Number
% Note
Tenement Number
% Note
Project: Forrestania
Project: Forrestania
Project: Lake Johnston
E77/2207-I
E77/2219-I
E77/2220-I
E77/2239-I
100
100
100
100
1,2
1,2
1,2
1,2
E77/2303
P77/4290
P77/4291
100
100
100
1,2
1,2
1,2
E63/1365
Project: Queen Victoria Rocks
E15/1416
100
100
1
1
NOTE:
1
2
On 15 September 2016 Hannans held a General Meeting and shareholders approved the issue of 620,833,333 Hannans shares to
Neometals Limited in consideration of the acquisition of 100% of the share capital in Reed Exploration Pty Ltd (Reed Exploration).
Reed Exploration owns the balance 80% interest in the Lake Johnston Project and Queen Victoria Rocks Project and the non-gold
rights at the Forrestania Project. Following the completion of the acquisition on 29 September 2016, Hannans owns 100% of the Lake
Johnston Project and Queen Victoria Project, and 100% of the non-gold mineral rights and 20% of the gold rights (free carried) at the
Forrestania Project.
Reed Exploration Pty Ltd is the registered holder and has a 100% interest in non-gold rights and a 20% interest in gold rights.
TENEMENTS UNDER APPLICATION
Applications for tenements have been submitted are as follows:
Tenement Number
Tenement Number
Tenement Number
Project: Forrestania
E77/2460
E77/2468 (subject to a ballot)
E77/2469 (subject to a ballot)
CORPORATE STRUCTURE
The corporate structure of Hannans group is as follows:
Hannans Ltd
(ASX: HNR)
HR Forrestania Pty Ltd
(100%)
HR Equities Pty Ltd
(100%)
Reed Exploration Pty Ltd
(100%)
On 15 September 2016 Hannans held a General Meeting and shareholders approved the equal reduction of capital and a pro rata in-specie
distribution of 99,987,442 Critical Metals shares to Hannans Shareholder and issue of 620,833,333 Hannans shares to Neometals Ltd in
consideration of the acquisition of 100% of the issued share capital of Reed Exploration Pty Ltd. On 27 September 2016 the in-specie
distribution was completed and on 29 September 2016 the acquisition of Reed Exploration Pty Ltd was completed. Refer to the Notice of
General Meeting released on ASX dated 12 August 2016 for further information.
22 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
CAPITAL
Hannans Ltd issued capital is as follows:
Ordinary Fully Paid Shares
At the date of this report there are the following number of Ordinary fully paid shares
Ordinary fully paid shares at 30 June 2017
Ordinary fully paid shares at the date of this report^
Number of shares
1,682,640,560
1,682,640,560
^
620,833,333 ordinary shares issued as consideration for the acquisition of Reed Exploration Pty Ltd from Neometals Ltd is subject to
escrow. The shares will be released from escrow on 29 September 2017.
At a general meeting of shareholders:
on a show of hands, each person who is a member or sole proxy has one vote; and
(a)
(b) on a poll, each shareholder is entitled to one vote for each fully paid share.
Shares Under Option
At the date of this report there are a total of 11 unlisted option holders holding 57,201,681 unissued ordinary shares in respect of which
options are outstanding. The unlisted options do not carry voting rights at a general meeting of shareholders.
Balance at the beginning of the year
Movements of share options during the year
Exercised at 0.4 cents, expiring 3 June 2018
Exercised at 0.5 cents, expiring 20 November 2018
Issued at 2.7 cents, expiring 15 September 2020
Balance at 30 June 2017
Total number of options outstanding at the date of this report
Substantial Shareholders
Hannans Ltd has the following substantial shareholders as at 25 September 2017:
Number of options
102,712,500
(62,500,000)
(4,166,667)
21,155,848
57,201,681
57,201,681
Name
Gold Mines of Kalgoorlie Pty Ltd
MCA Nominees Pty Ltd
Range of Shares as at 25 September 2017
Number of shares
Percentage of issued capital
709,833,333
86,220,443
42.19%
5.12%
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 9,999,999
Total
Range
Total Holders
103
210
196
776
690
Units
29,650
720,153
1,648,754
37,136,903
1,643,105,100
1,975
1,682,640,560
% Issued Capital
0.00%
0.04%
0.10%
2.21%
97.65%
100.00%
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 23
DIRECTORS’ REPORT
CAPITAL (cont’d)
Unmarketable Parcels as at 25 September 2017
Minimum $500.00 parcel at $0.014 per unit
35,715
Minimum parcel size
Holders
859
Units
10,170,802
Top 20 holders of Ordinary Shares as at 25 September 2017
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Gold Mines of Kalgoorlie Pty Ltd
Gold Mines of Kalgoorlie Pty Ltd
MCA Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Equity & Royalty Investments Ltd
Anglo American Exploration
Kilkenny Limited
Marfield Pty Limited
Mr Bruce Drummond + Mrs Judith Drummond
CSB Investments (WA) Pty Ltd
Acacia Investments Pty Ltd
Mr William Scott Rankin
Allua Holdings Pty Ltd
Mrs Andrea Murray
HSBC Custody Nominees (Australia) Limited - A/C 2
Citicorp Nominees Pty Limited
Mr Robert Zupanovich
Mr Michael Sydney Simm
Mr Colin Anthony Bailey
Mr Alexander Fairbairn Russell
Units
% of Issued
Capital
620,833,333
36.90%
89,000,000
86,220,443
69,486,934
60,000,003
60,000,000
36,121,600
23,672,157
23,000,000
20,000,000
15,016,835
10,925,730
10,000,000
9,594,854
9,529,566
9,340,806
8,350,000
8,340,127
8,000,000
8,000,000
5.29%
5.12%
4.13%
3.57%
3.57%
2.15%
1.41%
1.37%
1.19%
0.89%
0.65%
0.59%
0.57%
0.57%
0.56%
0.50%
0.50%
0.48%
0.48%
Total of Top 20 Holders of ORDINARY SHARES
1,185,432,388
70.49%
On-market buy back
There is no current on-market buy-back.
24 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were the exploration and evaluation of mining tenements with the objectives of
identifying economic mineral deposits.
FINANCIAL REVIEW
The Group began the financial year with cash reserves of $1,425,160.
During the year total exploration expenditure expensed by the Group amounted to $804,102 (2016: $29,998). The exploration expenditures
relate to non JORC compliant mineral resource projects and this has been expensed in accordance with the Group’s accounting policy. The
administration expenditure incurred amounted to $1,094,012 (2016: $1,112,895). On 27 September 2016 the Company completed the in-
specie distribution and realised a profit on disposal of the asset of $11,730,140. This has resulted in an operating profit after income tax for
the year ended 30 June 2017 of$11,663,780 (2016: $964,387 loss).
As at 30 June 2017 cash and cash equivalents totalled $1,481,828.
Summary of 5 Year Financial Information as at 30 June
Cash and cash equivalents ($)
1,481,828
1,425,160
2017
2016
2015
345,497
2014
2013
695,163
1,809,204
Net assets/equity ($)
4,043,759
903,218
73,563
29,189,786
30,363,102
Exploration expenditure expensed ($)
(804,102)
(29,998)
(387,160)
(534,311)
(2,896,893)
Exploration and evaluation
expenditure capitalised ($)
No of issued shares
No of options
Share price ($)
2,688,000^
(97,599)
(161,630)
(577,164)
(837,196)
1,682,640,560
57,201,681
970,707,755
102,712,500
721,966,133
36,050,000
721,966,133
Nil
706,966,133
300,000
0.015
0.016
0.002
0.005
0.015
Market capitalisation (Undiluted) ($)
25,239,608
15,531,324
1,443,932
3,609,831
10,604,492
^
On 15 September 2016 Hannans held a General Meeting and shareholders approved the issue of 620,833,333 Hannans shares to
Neometals Ltd in consideration of the acquisition of 100% of the issued share capital of Reed Exploration Pty Ltd. On 29 September
2016 the acquisition of Reed Exploration Pty Ltd was completed. The capitalised exploration and evaluation expenditure related to the
acquisition of Reed Exploration Pty Ltd (refer to note 14 for further information).
Summary of Share Price Movement for Year ended 30 June 2017
Highest
Lowest
Latest
Price (cents)
2.7
0.9
1.4
Date
20 – 21 Jul 2016
14 Jun 2017
25 September 2017
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 25
DIRECTORS’ REPORT
ANNOUNCEMENTS
ASX Announcements for the year and to the date of this report
Date
Announcement Title
Date
Announcement Title
28/08/2017
Release of shares from escrow
25/11/2016
AGM Presentation
24/08/2017
Forrestania Drilling Update
21/11/2016
Ceasing to be a substantial holder
3/08/2017
13,000m drilling program for gold at FGP
16/11/2016
New Share Issue
1/08/2017
4th Quarter Activities Report
31/07/2017
4th Quarter Cashflow Report
25/07/2017
High Grade Gold
3/11/2016
3/11/2016
Ceasing to be a substantial holder
International Precious Metals &
Commodities Show
1/11/2016
1st Quarter Activities Report
20/06/2017
Response to ASX Query
1/11/2016
1st Quarter Cashflow Report
13/06/2017
Issue of Shares
20/10/2016
Notice of Annual General Meeting
1/06/2017
Change of Registered Office
10/10/2016
Ceasing to be a substantial holder
31/05/2017
Lithium Drilling
5/10/2016
Corporate Update
2/05/2017
Diamond drilling in progress at QVR
30/09/2016
Change in substantial holding - ERI
1/05/2017
3rd Quarter Activities Report
30/09/2016
Change in substantial holding from NMT
27/04/2017
3rd Quarter Cashflow Report
30/09/2016
Appendix 4G
12/04/2017
Forrestania Gold Drilling
30/09/2016
2016 Annual Report
31/03/2017
AMEC Investor Briefing Presentation
29/09/2016
Strategic Collaboration Completion
31/03/2017
QVR Nickel Targets
29/03/2017
Forrestania Lithium
27/09/2016
In-Specie Distribution Completed
15/09/2016
Voting Results from General Meeting
17/03/2017
Half-Year Financial Report
15/09/2016
In-specie Presentation
14/03/2017
Gold Resource at Forrestania
15/09/2016
General Meeting Presentation
8/02/2017
Initial Director's Interest Notice
15/08/2016
Updated Capital Structure
1/02/2017
2nd Quarter Activities Report
12/08/2016
Notice of General Meeting
27/01/2017
2nd Quarter Cashflow Report
11/08/2016
Update on Neometals Transaction
21/12/2016
Interest in Nickel-Gold-Lithium Project
1/08/2016
4th Quarter Activities Report
13/12/2016
Appendix 3B
29/07/2016
4th Quarter Cashflow Report
13/12/2016
Exercise of Options
27/07/2016
Drilling at Forrestania
8/12/2016
Updated Capital Structure
27/07/2016
Update on Neometals Transaction
2/12/2016
Change in substantial holding
22/07/2016
Change in substantial holding
2/12/2016
Drilling at Spargos Prospect for Nickel
20/07/2016
Exercise of options
29/11/2016
Board Changes
25/11/2016
AGM results
19/07/2016
Response to ASX Price Query
15/07/2016
Exercise of options
25/11/2016
Spargos Nickel Prospect
8/07/2016
Becoming a substantial holder
26 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
CORPORATE GOVERNANCE STATEMENT
The Board of Directors is responsible for the corporate governance of the Company. The Board guides and monitors the business affairs of
the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.
The ASX document ‘Corporate Governance Principles and Recommendations 3rd Edition' published by the ASX Corporate Governance Council
applies to listed entities with the aim of enhancing the credibility and transparency of Australia’s capital markets. The Principles and
Recommendations can be viewed at www.asx.com.au. The Board has assessed the Group’s current practice against the Principles and
Recommendations and other than the matters specified below under “If Not, Why Not” Disclosure, all the best practice recommendations
of the ASX Corporate Governance Council have been applied.
Please refer to the Company’s website (www.hannansreward.com) for Hannans’ Governance Statements and Policies.
In relation to departures by the Company from the best practice recommendations, Hannans makes the following comments:
Principle 1: Lay solid foundations for management and oversight
1.5 A listed entity should have a diversity policy which includes requirements for the board to set measurable objectives for
achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them.
The Board is responsible for establishing and monitoring on an annual basis the achievement against gender diversity
objectives and strategies, including the representation of women at all levels of the organisation.
The proportion of women within the Group as at 30 June 2017 was as follows:
Employee
0%
Management
0%
Board of Hannans
20%
The Company has five directors, one executive director (who is contracted to the Company) and no managers. The Board has
determined that the composition of the current Board represents the best mix of Directors that have an appropriate range of
qualifications and expertise, can understand and competently deal with current and emerging business issues and can
effectively review and challenge the performance of management. The Company has not set or disclosed measurable
objectives for achieving gender diversity. Due to the size of the Company, the Board does not deem it practical to limit the
Company to specific targets for gender diversity. Every candidate suitably qualified for a position has an equal opportunity of
appointment regardless of gender, age, ethnicity or cultural background.
1.6 Companies should disclose, in relation to each reporting period, whether a performance evaluation of the Board was
undertaken in the reporting period in accordance with that process.
Evaluation of the Board is carried out on a continuing and informal basis. The Company will put a formal process in place as
and when the level of operations justifies it. No performance evaluation was undertaken in the reporting period.
1.7 Companies should disclose, in relation to each reporting period, whether a performance evaluation of its senior executives
was undertaken in the reporting period in accordance with that process.
Evaluation of the senior executives is carried out on a continuing and informal basis. The Company will put a formal process in
place as and when the level of operations justifies it. No performance evaluation was undertaken in the reporting period.
Principle 2: Structure the Board to add value
2.1 The Board should establish a nomination committee
The Board as a whole will decide on the choice of any new director upon the creation of any new Board position and if any
casual vacancy arises. Decisions to appoint new directors will be minuted. The Board will identify candidates and assess their
skills in deciding whether an individual has the potential to add value to the Company. The Board may also seek independent
advice to assist with the identification process. The Board considers that this process is appropriate given the size and the
complexity of the Group’s affairs. Until the situation changes the Board will carry out any necessary nomination committee
functions.
2.4 The majority of the Board should be independent directors
The Board consists of one Non-Executive Chairman, three Non-Executive Directors and an Executive Director of which one (1)
director is considered independent, being Mr Clay Gordon. Details of their skills, experience and expertise and the period of
office held by each Director have been included in the Directors’ Report. The number of Board meetings and the attendance
of the Directors are set out in the Directors’ Report.
The Board considers that the composition of the existing Board is appropriate given the scope and size of the Group’s
operations and the skills matrix of the existing Board members. The Board will continue to monitor whether this remains
appropriate as the scope and scale of its activities evolves and expands.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 27
DIRECTORS’ REPORT
CORPORATE GOVERNANCE STATEMENT (cont’d)
2.5 The Chair of the Board should be an independent director and, in particular, should not be the same person as the Managing
Director/Chief Executive Officer
The current Chair of the Company is Mr Jonathan Murray. Mr Murray does not satisfy the ASX Corporate Governance Principles
and Recommendations definition of an independent director however the Board considers Mr Murray’s role as Non-Executive
Chairman essential to the success of the Group in its current stage, wherein the Group continues to refine its focus on the
strategic development of the business. Over time, it is proposed that the Chair position will transition to an independent non-
executive director.
Principle 4: Safeguard integrity of corporate reporting
4.1 The Board should establish an audit committee
The Board as a whole meets with the auditor to identify and discuss the areas of audit focus, appropriateness of the
accounting judgement or choices exercised by management in preparation of the financial statements. The Board may also
seek independent advice as and when required to address matters pertaining to appointment, removal or rotation of auditor.
The Board considers that this process is appropriate given the size and the complexity of the Group’s affairs. It is not
considered necessary to have a separate audit committee.
Principle 7: Recognise and manage risk
7.1 The Board should establish a risk committee
The Company is constantly monitoring risks associated with the economy, industry and company due to their role as
professional fund managers, lawyers, in-country specialists and shareholders with a view to managing risks and identifying
threats. This process is on-going. The preparation of the Board pack and its timely distribution is a key element of this process
along with monthly cash flow budgets, management discussions and informal communications between the Board and
management via telephone, email and in person. The Board considers that this process is appropriate given the size and
complexity of the Group’s affairs. It is not considered necessary to have a separate risk committee.
7.2 The Board should review the entity’s risk management framework and disclose at each reporting period
The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are
aligned with the risks and opportunities identified by the Board.
The Company believes that it is crucial for all Board members to be part of this process, and as such the Board has not
established a separate risk management committee. The Board considers that this process is appropriate given the size and
the complexity of the Group’s affairs.
The Board has a number of mechanisms in place to ensure management’s objectives and activities are aligned by the Board.
These include but are not limited to the following:
(cid:119) Board approval of a strategic plan, which
(cid:119)
Implementation of Board approved operating plans
and Board monitoring of the progress against
budgets that is reviewed at every board meeting.
encompasses strategy statements designed to meet
stakeholders’ needs and manage business risk.
7.3 The Company should establish an internal audit function
The Company reviews its risk and internal control processes on a continual informal basis and work alongside auditors at half
year and year end reviews to identify the Company’s risks, systems and procedures. The Company may also seek
independent advice to assist with the identification of risks and processes if and when required. The Board considers that this
process is appropriate given the size and the complexity of the Group’s affairs. It is not considered necessary to have an
internal audit function. Nonetheless it remains committed to effective management and control of these factors.
7.4 The Company should disclose whether it has any material exposure to economic, environmental and social sustainability
risks and how it manages or intends to manage those risks
The nature of the Group’s exploration operations are such that it could be seen to be constantly exposed to economic,
environmental and social risks. The Board and Management have respect for the rights and beliefs of all stakeholders and it is
part of the Group’s culture to have open, honest and constant two way communication with stakeholders and to operate fully
within the laws of the jurisdictions the Group operates within. The Group maintains high standards with regards its
environmental and social practices and is constantly striving to improve its engagement and information processes. The Board
and Management will continue to monitor these risks to the Group.
28 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
DIRECTORS’ REPORT
CORPORATE GOVERNANCE STATEMENT (cont’d)
Principle 8: Remunerate fairly and responsibly
8.1 The Board should establish a remuneration committee
The Board as a whole may appoint an independent working group comprising consultants, Directors and/or the Company
Secretary to review and make recommendations to the board in relation to the remuneration framework as well as identify
candidates and assess their skills in deciding whether an individual has the potential to add value to the Company. The Board
considers that this process is appropriate given the size and the complexity of the Group’s affairs. It is not considered
necessary to have a separate nomination or remuneration committee. Until the situation changes the Board of Hannans will
carry out any necessary remuneration committee functions.
Independent Professional Advice
Directors of the Company are expected to exercise considered and independent judgement on matters before them and may need to seek
independent professional advice. A director with prior written approval from the Chairman may, at the Group’s expense obtain independent
professional advice to properly discharge their responsibilities.
Executive Director (ED) and Group Accountant Certifications
The ED and Group Accountant provide the following declaration to the Board in respect of each quarter, half and full year financial period:
(cid:119)
(cid:119)
(cid:119)
(cid:119)
that Hannans financial records have been properly maintained;
that Hannans’ financial statements, in all material respects, are complete and present a true and fair view of the financial condition
and operational results of Hannans and the Group and are in accordance with the relevant accounting standards;
that the financial statements are founded on a sound system of risk management and internal compliance and control which
implements the policies adopted by the Board; and
that Hannans’ risk management and internal compliance and control systems are operating effectively in all material respects.
COMPLIANCE
Significant Changes in State of Affairs
Other than those disclosed in this annual report no significant changes in the state of affairs of the Group occurred during the financial year.
Significant Events after the Balance Date
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the Group, the results of those operations, or state of affairs of the Group in future financial years.
(a)
On 15 September 2017 the Company received $200,000 from Mine Builder Pty Ltd as part payment for the acquisition of the North
Ironcap Gold Rights.
Likely developments and Expected Results
The Group expects to maintain the present status and level of operations and hence there are no likely developments in the Group’s
operations.
Environmental Regulation and Performance
The Group is subject to significant environmental regulation in respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it’s aware of and is in
compliance with all environmental legislation. The Directors of the Group are not aware of any breach of environmental legislation for the
year under review.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 29
DIRECTORS’ REPORT
COMPLIANCE (cont’d)
Share options
As at the date of this report, there were 57,201,681 options on issue to purchase ordinary shares at a range of exercise prices (57,201,681 at
the reporting date). Refer to the remuneration report for further details of the options outstanding.
At a General Meeting held on 15 September 2016 shareholders approved the issue of ordinary shares to the Managing Director, Non-
Executive Directors and Company Secretary in lieu of outstanding fees valued at of $306,587, together with one free attaching option for each
ordinary shares issued. The ordinary shares were issued at a deemed price of 1.8 cents per share (issue price equal to the volume weighted
average sale price of shares sold on ASX during the 40 trading days after the date of the General Meeting). On 14 November 2016 the shares
and options were issued.
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate.
Insurance of Directors and Officers
During or since the end of the financial year, the Company has paid premiums insuring all the Directors of Hannans Ltd against costs incurred
in defending conduct involving:
(a)
(b)
a wilful breach of duty, and
a contravention of sections 182 or 183 of the Corporations Act 2001,
as permitted by section 199B of the Corporations Act 2001.
The total amount of insurance contract premiums paid was $10,434.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to
indemnify Ernst & Young during or since the financial year.
Dividends
No dividends were paid or declared during the financial year and no recommendation for payment of dividends has been made.
Non–Audit Services
During the year Ernst & Young, the Group auditor, did not performed other non-audit services in addition to its statutory duties.
Auditor’s independence declaration
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included on page 31.
Signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors
Damian Hicks
Executive Director
Perth, Australia this 27th day of September 2017
30 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
INDEPENDENCE DECLARATION TO THE DIRECTORS OF
HANNANS LTD
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 31
DIRECTORS’ DECLARATION
The Directors declare that:
(a)
(b)
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable;
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001,
including compliance with Australian Accounting Standards and International Financial Reporting Standards as disclosed in note 2 to the
financial report and giving a true and fair view of the financial position and performance of the Group for the financial year ended
30 June 2017; and
(c)
the Directors have been given the declarations required by s.295A of the Corporations Act 2001 for the financial year ended
30 June 2017.
Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Damian Hicks
Executive Director
Perth, Australia this 27th day of September 2017
32 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF
HANNANS LTD
34 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 35
36 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 37
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
COMPREHENSIVE INCOME
for the financial year ended 30 June 2017
Revenue
Other income
Other income
Net gain from settlement of transaction
Gain on disposal of exploration and evaluation assets
Gain on disposal of shares
Employee and contractors expenses
Depreciation expense
Consultants expenses
Interest expense
Occupancy expenses
Marketing expenses
Exploration and evaluation expenses
Write off exploration and evaluation expenses
Other expenses
Note
5(a)
5(b)
5(c)
25
5(d)
5(e)
5(f)
2017
$
33,792
887,962
910,000
11,730,140
–
(389,161)
(11,613)
(208,213)
(4)
(109,921)
(12,293)
(804,102)
–
(362,807)
2016
$
203,181
251,301
–
–
325
(345,241)
(18,175)
(232,925)
(1,630)
(133,354)
(4,699)
(29,998)
(123,945)
(529,227)
Income/(loss) from continuing operations before income tax expense
11,663,780
(964,387)
Income tax benefit/(expense)
Income/(loss) from continuing operations attributable
to members of the parent entity
Other comprehensive income for the year
Items that may be reclassified subsequently to profit or loss
Reclassification of FCTR to profit and loss on disposal of foreign operations
Foreign currency translation differences for foreign operations
Total items that may be reclassified subsequently to profit or loss
Items that will not be reclassified to profit or loss
Total other comprehensive income for the year
–
–
11,663,780
(964,387)
322,150
(52,270)
269,880
–
269,880
–
43,470
43,470
–
43,470
Total comprehensive income/(loss) for the year
11,933,660
(920,917)
Net income/(loss) attributable to the parent entity
Total comprehensive income/(loss) attributable to the parent entity
11,663,780
11,933,660
(964,387)
(920,917)
Gain/(loss) per share:
Basic (cents per share)
Diluted (cents per share)
The accompanying notes form part of the financial statements.
38 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
0.78
0.77
(0.13)
(0.13)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2017
Note
2017
$
2016
$
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Assets held for distribution
Total current assets
Non–current assets
Other receivables
Property, plant and equipment
Other financial assets
Exploration and evaluation expenditure
Total non–current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Provisions
Other financial liabilities
Liabilities directly associated with the assets held for distribution
Total current liabilities
Non–current liabilities
Other financial liabilities
Total non–current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Reserves directly associated with the assets held for distribution
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of the financial statements.
10
11
26
12
13
11
14
15
16
17
26
17
18
19
19
20
1,481,828
1,425,160
256,883
65,999
1,804,710
–
71,079
1,301
1,497,540
1,631,931
1,804,710
3,129,471
56,000
2,326
–
2,688,000
2,746,326
4,551,036
244,317
103,115
96,290
443,722
–
443,722
63,555
63,555
507,277
4,043,759
56,000
12,047
53,582
–
121,629
3,251,100
830,230
121,727
32,472
984,429
1,243,569
2,227,998
119,884
119,884
2,347,882
903,218
37,296,618
46,285,309
297,378
–
118,155
(269,880)
(33,550,237)
(45,230,366)
4,043,759
903,218
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 39
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H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 41
CONSOLIDATED STATEMENT OF CASH FLOWS
for the financial year ended 30 June 2017
Cash flows from operating activities
Receipts from customers
Receipt/(payments) for exploration and evaluation
Payments to suppliers and employees
Interest received
Interest paid
Note
2017
$
88,671
(795,148)
(876,926)
23,351
–
2016
$
328,095
7,329
(927,917)
6,300
(1,541)
Net cash used in operating activities
30(b)
(1,560,052)
(587,734)
Cash flows from investing activities
Payments for exploration and evaluation
Proceed on sale of tenements
Payment on sale of tenements to minority interest holder
Proceeds on sale of investment securities
Proceeds on sale of fixed assets
Amounts received from outside entities
Payment for property, plant and equipment
Release of security bonds
Cash forgone on disposal of subsidiaries
26
Cash acquired from acquisition of subsidiary
Payments for acquisition of subsidiary
Net cash (used)/received by investing activities
Cash flows from financing activities
Proceeds from issues of equity securities
Proceeds from exercise of options
Payment for share issue costs
Repayment of borrowings/finance leases
–
(97,599)
600,000
(120,000)
–
–
–
(1,892)
–
(250,000)
1,000,000
(121,521)
1,106,587
–
5,420
5,420
16,391
188,289
(518)
98,567
–
–
–
210,550
–
1,743,300
270,833
(7,125)
–
25,000
(60,503)
(2,971)
Net cash provided by/(used in) financing activities
263,708
1,704,826
Net increase/(decrease) in cash and cash equivalents
(189,757)
1,327,642
Cash and cash equivalents at the beginning of the financial year
30(a)
1,675,160
Effects of exchange rate fluctuations on cash held
(3,575)
345,497
2,021
Cash and cash equivalents at the end of the financial year
30(a)
1,481,828
1,675,160
The accompanying notes form part of the financial statements.
42 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
1.
General Information
The consolidated financial statements of Hannans Ltd (the Company or Hannans) and its subsidiaries (collectively, the Group) for the
year ended 30 June 2017 were authorised for issue in accordance with a resolution of the Directors on 27 September 2017.
Hannans is a for profit company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the
Australian Securities Exchange.
The nature of the operations and principal activities of the Group are mineral exploration and project development which is further
described in the Directors' Report. Information on other related party relationships is provided in note 28.
2.
Summary of significant accounting policies
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board. The financial report includes the financial statements of the Hannans Ltd and its subsidiaries.
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board.
(a)
Basis of preparation
The financial report has been prepared on an accruals basis and is based on historical cost, except for certain financial assets
and liabilities which are carried at fair value. Cost is based on the fair values of the consideration given in exchange for assets.
All amounts are presented in Australian dollars, unless otherwise noted.
Separate financial statements for Hannans as an individual entity are no longer presented as the consequence of a change to
the Corporations Act 2001, however, required financial information for Hannans as an individual entity is included in note 33.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2017
and the comparative information presented in these financial statements for the year ended 30 June 2016.
(b) New Accounting Standards for Application in the Current Financial Year and Future Periods
New standards, interpretations and amendments adopted by the Group during the financial year
The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed
in the preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2016, except for the
adoption of new standards and interpretations effective as of 1 July 2016 as detailed below. The nature and the impact of each
new standard or amendment are described below:
(cid:119)
(cid:119)
AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint
Operations
The amendments require an entity acquiring an interest in a joint operation, in which the activity of the joint operation
constitutes a business, to apply, to the extent of its share, all of the principles in AASB 3 Business Combinations and
other Australian Accounting Standards that do not conflict with the requirements of AASB 11 Joint Arrangements.
AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of
Depreciation and Amortisation
The amendments clarify the principle in AASB 116 Property, Plant and Equipment and AASB 138 Intangible Assets that
revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is
part) rather than the economic benefits that are consumed through use of the asset. As a result, the ratio of revenue
generated to total revenue expected to be generated cannot be used to depreciate property, plant and equipment and
may only be used in very limited circumstances to amortise intangible assets.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 43
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
2.
Statement of significant accounting policies (cont’d)
(b) New Accounting Standards for Application in the Current Financial Year and Future Periods (cont’d)
(cid:119)
AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting
Standards 2012–2014 Cycle
The amendments clarify certain requirements in:
(cid:120) AASB 5 Non-current Assets Held for Sale and Discontinued Operations – Changes in methods of disposal
(cid:120) AASB 7 Financial Instruments: Disclosures - servicing contracts; applicability of the amendments to AASB 7 to
condensed interim financial statements
(cid:120) AASB 119 Employee Benefits - regional market issue regarding discount rate
(cid:120) AASB 134 Interim Financial Reporting - disclosure of information ‘elsewhere in the interim financial report’
(cid:119)
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101
This Standard amends AASB 101 Presentation of Financial Statements to clarify existing presentation and disclosure
requirements and to ensure entities are able to use judgement when applying the Standard in determining what
information to disclose, where and in what order information is presented in their financial statements. For example,
the amendments make clear that materiality applies to the whole of financial statements and that the inclusion of
immaterial information can inhibit the usefulness of financial disclosures.
New standards issued but not yet effective
The following standards and interpretations have been issued by the AASB but are not yet effective and have not been early
adopted by the Group for the period ended 30 June 2017:
Reference / Title
Application date of standard
Application date for Group
AASB 2014-10
Amendments to Australian Accounting Standards
– Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture*
1 January 2018
1 July 2018
Summary
The amendments clarify that a full gain or loss is recognised when a transfer to an associate or joint venture
involves a business as defined in AASB 3 Business Combinations. Any gain or loss resulting from the sale or
contribution of assets that does not constitute a business, however, is recognised only to the extent of
unrelated investors’ interests in the associate or joint venture.
AASB 2015-10 defers the mandatory effective date (application date) of AASB 2014-10 so that the
amendments are required to be applied for annual reporting periods beginning on or after 1 January 2018
instead of 1 January 2016.
Impact
The adoption of AASB 2014-10 is not expected to significantly impact the information of financial disclosure in
the Group’s financial statements.
AASB 9
Financial Instruments
1 January 2018
1 July 2018
Summary
AASB 9 (December 2014) is a new standard which replaces AASB 139. This new version supersedes AASB 9
issued in December 2009 (as amended) and AASB 9 (issued in December 2010) and includes a model for
classification and measurement, a single, forward-looking ‘expected loss’ impairment model and a
substantially-reformed approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1 January 2018. However, the Standard is
available for early adoption. The own credit changes can be early adopted in isolation without otherwise
changing the accounting for financial instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for classification and measurement of financial assets
compared with the requirements of AASB 139. There are also some changes made in relation to financial
liabilities.
The main changes are described below.
44 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
2.
Statement of significant accounting policies (cont’d)
(b) New Accounting Standards for Application in the Current Financial Year and Future Periods (cont’d)
New standards issued but not yet effective (cont’d)
Reference / Title
AASB 9 (cont’d)
Financial Instruments
Application date of standard
Application date for Group
1 January 2018
1 July 2018
Summary
(cont’d)
Financial assets
(a) Financial assets that are debt instruments will be classified based on (1) the objective of the entity's
business model for managing the financial assets; (2) 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. 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.
(c) 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.
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities are limited to the measurement of liabilities
designated at fair value through profit or loss (FVPL) using the fair value option.
Where the fair value option is used for financial liabilities, the change in fair value is to be accounted for as
follows:
(cid:120)
The change attributable to changes in credit risk are presented in other comprehensive income (OCI)
The remaining change is presented in profit or loss
(cid:120)
AASB 9 also removes the volatility in profit or loss that was caused by changes in the credit risk of liabilities
elected to be measured at fair value. This change in accounting means that gains or losses attributable to
changes in the entity’s own credit risk would be recognised in OCI. These amounts recognised in OCI are not
recycled to profit or loss if the liability is ever repurchased at a discount.
Impairment
The final version of AASB 9 introduces a new expected-loss impairment model that will require more timely
recognition of expected credit losses. Specifically, the new Standard requires entities to account for expected
credit losses from when financial instruments are first recognised and to recognise full lifetime expected
losses on a more timely basis.
Hedge accounting
Amendments to AASB 9 (December 2009 & 2010 editions and AASB 2013-9) issued in December 2013
included the new hedge accounting requirements, including changes to hedge effectiveness testing,
treatment of hedging costs, risk components that can be hedged and disclosures.
Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB
2009-11 and superseded by AASB 2010-7, AASB 2010-10 and AASB 2014-1 – Part E.
AASB 2014-7 incorporates the consequential amendments arising from the issuance of AASB 9 in Dec 2014.
AASB 2014-8 limits the application of the existing versions of AASB 9 (AASB 9 (December 2009) and AASB 9
(December 2010)) from 1 February 2015 and applies to annual reporting periods beginning on after 1 January
2015.
Impact
Management is in the process of determining the impact of this accounting standard.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
2.
Statement of significant accounting policies (cont’d)
(b) New Accounting Standards for Application in the Current Financial Year and Future Periods (cont’d)
New standards issued but not yet effective (cont’d)
Reference / Title
AASB 15
Revenue from Contracts with Customers
Application date of
standard
Application date for
Group
1 January 2018
1 July 2018
Summary
AASB 15 Revenue from Contracts with Customers replaces the existing revenue recognition
standards AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations
(Interpretation 13 Customer Loyalty Programmes, Interpretation 15 Agreements for the
Construction of Real Estate, Interpretation 18 Transfers of Assets from Customers,
Interpretation 131 Revenue—Barter Transactions Involving Advertising Services and
Interpretation 1042 Subscriber Acquisition Costs in the Telecommunications Industry). AASB 15
incorporates the requirements of IFRS 15 Revenue from Contracts with Customers issued by the
International Accounting Standards Board (IASB) and developed jointly with the US Financial
Accounting Standards Board (FASB).
AASB 15 specifies the accounting treatment for revenue arising from contracts with customers
(except for contracts within the scope of other accounting standards such as leases or financial
instruments). The core principle of AASB 15 is that an entity recognises revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in
accordance with that core principle by applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance obligations in the contract
(e) Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
AASB 2015-8 amended the AASB 15 effective date so it is now effective for annual reporting periods
commencing on or after 1 January 2018. Early application is permitted.
AASB 2014-5 incorporates the consequential amendments to a number Australian Accounting
Standards (including Interpretations) arising from the issuance of AASB 15.
AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15 amends
AASB 15 to clarify the requirements on identifying performance obligations, principal versus agent
considerations and the timing of recognising revenue from granting a licence and provides further
practical expedients on transition to AASB 15.
Impact
Given the Group’s current principal activities being that of exploration and evaluation, adoption of
AASB 15 is not expected to have a significant impact. The Group’s revenue recognition policy will be
reviewed to ensure compliance with AASB 15 upon adoption.
46 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
Statement of significant accounting policies (cont’d)
(b) New Accounting Standards for Application in the Current Financial Year and Future Periods (cont’d)
New standards issued but not yet effective (cont’d)
Reference / Title
AASB 16
Leases
Summary
The key features of AASB 16 are as follows:
Lessee accounting
Application date of
standard
Application date for
Group
1 January 2019
1 July 2019
(cid:120)
Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months,
unless the underlying asset is of low value.
(cid:120) A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly
to other financial liabilities.
(cid:120) Assets and liabilities arising from a lease are initially measured on a present value basis. The
measurement includes non-cancellable lease payments (including inflation-linked payments), and also
includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option
to extend the lease, or not to exercise an option to terminate the lease.
(cid:120) AASB 16 contains disclosure requirements for lessees.
Lessor accounting
(cid:120) AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly, a
lessor continues to classify its leases as operating leases or finance leases, and to account for those two
types of leases differently.
(cid:120) AASB 16 also requires enhanced disclosures to be provided by lessors that will improve information
disclosed about a lessor’s risk exposure, particularly to residual value risk.
AASB 16 supersedes:
(a) AASB 117 Leases
(b) Interpretation 4 Determining whether an Arrangement contains a Lease
(c) SIC-15 Operating Leases—Incentives
(d) SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease
The new standard will be effective for annual periods beginning on or after 1 January 2019. Early application
is permitted, provided the new revenue standard, AASB 15 Revenue from Contracts with Customers, has been
applied, or is applied at the same date as AASB 16.
Impact
Management is in the process of determining the impact of this accounting standard.
AASB 2016-2
Amendments to Australian Accounting Standards –
Disclosure Initiative: Amendments to AASB 107
1 January 2017
1 July 2017
Summary
This Standard amends AASB 107 Statement of Cash Flows (August 2015) 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.
Impact
The adoption of AASB 2016-2 is not expected to significantly impact the information of financial disclosure in
the Group’s financial statements.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
Statement of significant accounting policies (cont’d)
(b) New Accounting Standards for Application in the Current Financial Year and Future Periods (cont’d)
New standards issued but not yet effective (cont’d)
Reference / Title
AASB 2016-5
Amendments to Australian Accounting Standards
– Classification and Measurement of Share-based
Payment Transactions
Application date of
standard
Application date for
Group
1 January 2018
1 July 2018
Summary
This Standard amends AASB2 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;
(b) the classification of share-based payment transactions with a net settlement feature for withholding tax
obligations; and
(c) the accounting for a modification to the terms and conditions of a share-based payment that changes the
classification of the transaction from cash-settled to equity-settled.
Impact
Management is in the process of determining the impact of this accounting standard.
(c)
Cash and cash equivalents
(e)
Financial assets (cont’d)
Cash and cash equivalents comprise cash on hand, cash
in banks and investments in money market instruments
with original maturity of less than 3 months, net of
outstanding bank overdrafts.
(d)
Employee benefits
Provision is made for benefits accruing to employees in
respect of wages and salaries and annual leave when it
is probable that settlement will be required and they
are capable of being measured reliably.
Liabilities recognised in respect of employee benefits
expected to be settled within 12 months, are measured
at their nominal values using the remuneration rate
expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits
which are not expected to be settled within 12 months
are measured as the present value of the estimated
future cash outflows to be made by the entity in
respect of services provided by employees up to
reporting date.
(e)
Financial assets
Financial assets are recognised and derecognised on
trade date where purchase or sale of an investment is
under a contract whose terms require delivery of the
investment within the timeframe established by the
market concerned, and are initially measured at fair
value, net of transaction costs.
Subsequent to initial recognition, investments in
subsidiaries are measured at cost.
Other financial assets are classified into the following
specified categories: financial assets ‘at fair value
through profit or loss’, ‘available–for–sale’ financial
assets, and ‘loans and receivables’. The classification
depends on the nature and purpose of the financial
assets and is determined at the time of initial
recognition.
Financial assets at fair value through profit or loss
The Group classifies certain shares as financial assets at
fair value through profit or loss. Financial assets held for
trading purposes are classified as current assets and are
stated at fair value, with any resultant gain or loss
recognised in profit or loss.
Available–for–sale financial assets
Shares and options held by the Group are classified as
being available–for–sale and are stated at fair value less
impairment. Gains and losses arising from changes in
fair value are recognised directly in the available–for–
sale revaluation reserve, until the investment is
disposed of or is determined to be impaired, at which
time the cumulative gain or loss previously recognised
in the available–for–sale revaluation reserve is included
in profit or loss for the period.
Loans and receivables
Subsequent to initial recognition, trade receivables,
loans, and other receivables are recorded at amortised
cost using the effective interest rate method less
impairment.
Debt and equity instruments
Debt and equity instruments are classified as either
liabilities or as equity in accordance with the substance
of the contractual arrangement.
(f)
Financial instruments issued by the Company
Transaction costs on the issue of equity instruments
Transaction costs arising on the issue of equity
instruments are recognised directly in equity as a
reduction of the proceeds of the equity instruments to
which the costs relate. Transaction costs are the costs
that are incurred directly in connection with the issue of
those equity instruments and which would not have
been incurred had those instruments not been issued.
48 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
2.
Statement of significant accounting policies (cont’d)
(g)
Goods and services tax
Revenues, expenses and assets are recognised net of
the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not
recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an
asset or as part of an item of expense; or
ii.
for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables.
Cash flows are included in the cash flow statement on
a gross basis. The GST component of cash flows arising
from investing and financing activities which is
recoverable from, or payable to, the taxation authority
is classified as operating cash flows.
(h)
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying
amounts of its tangible and intangible assets to
determine whether there is any indication that those
assets have suffered an impairment loss. Where the
asset does not generate cash flows that are
independent from other assets, the Group estimates
the recoverable amount of the cash–generating unit to
which the asset belongs. If any such indication exists,
the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if
any), being the higher of the asset’s fair value less
costs to sell and value in use to the asset’s carrying
value. Excess of the asset’s carrying value over its
recoverable amount is expensed to the consolidated
statement of comprehensive income.
Intangible assets with indefinite useful lives and
intangible assets not yet available for use are tested for
impairment annually and whenever there is an
indication that the asset may be impaired.
Recoverable amount 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 which the
estimates of future cash flows have not been adjusted.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (cash–generating unit) 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 (cash–generating
unit) in prior years. A reversal of an impairment loss is
recognised in profit or loss immediately, unless the
relevant asset is carried at fair value, in which case the
reversal of the impairment loss is treated as a
revaluation increase.
(i)
Tax
Current tax
Current tax is calculated by reference to the amount of
income taxes payable or recoverable in respect of the
taxable profit or tax loss for the period. It is calculated
using tax rates and tax laws that have been enacted or
substantively enacted by reporting date. Current tax for
current and prior periods is recognised as a liability (or
asset) to the extent that it is unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the full liability
method in respect of temporary differences arising
from differences between the carrying amount of
assets and liabilities in the financial statements and the
corresponding tax base of those items.
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments in
subsidiaries, branches, associates and joint ventures
except where the entity is able to control the reversal
of the temporary differences and it is probable that the
temporary differences will not reverse in the
foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with these
investments and interests are only recognised to the
extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of
the temporary differences and they are expected to
reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply to the period(s)
when the asset and liability giving rise to them are
realised or settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted by
reporting date. The measurement of deferred tax
liabilities and assets reflects the tax consequences that
would follow from the manner in which the entity
expects, at the reporting date, to recover or settle the
carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation
authority and the entity intends to settle its current tax
assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or
income in the statement of comprehensive income,
except when it relates to items credited or debited
directly to equity, in which case the deferred tax is also
recognised directly in equity, or where it arises from
the initial accounting for a business combination, in
which case it is taken into account in the determination
of goodwill or excess.
Tax consolidation
Legislation to allow groups, comprising a parent entity
and its Australian resident wholly owned entities, to
elect to consolidate and be treated as a single entity for
income tax purposes was substantively enacted on 21
October 2002. The Company and its 100% owned
Australian resident subsidiaries implemented the tax
consolidation legislation on 1 July 2008 with Hannans
as the head entity.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
2.
Statement of significant accounting policies (cont’d)
(j)
Exploration and evaluation expenditure
(k)
Joint arrangements (cont’d)
Exploration and evaluation expenditure incurred is
expensed immediately to the profit and loss where the
applicable area of interest does not contain a JORC
compliant mineral resource. Where the area of interest
contains a JORC compliant mineral resource exploration
and evaluation expenditure is capitalised. These costs
are carried forward only if they relate to an area of
interest for which rights of tenure are current and in
respect of which:
i.
such costs are expected to be recouped through
successful development and exploitation or from
sale of the area; or
ii. exploration and evaluation activities in the area
have not, at balance date, reached a stage which
permits a reasonable assessment of the existence
or otherwise of economically recoverable reserves,
and active operations in, or relating to, the area are
continuing.
Accumulated costs in respect of areas of interest which
are abandoned are written off in full against profit or
loss in the year in which the decision to abandon the
area is made. A regular review is undertaken of each
area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area
of interest.
Notwithstanding the fact that a decision not to abandon
an area of interest has been made, based on the
above, the exploration and evaluation expenditure in
relation to an area may still be written off if considered
appropriate to do so.
(k)
Joint arrangements
Joint ventures
A joint venture is a type of joint arrangement whereby
the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions
about the relevant activities require unanimous consent
of the parties sharing control.
The considerations made in determining significant
influence or joint control is similar to those necessary to
determine control over subsidiaries.
The Group’s investments in joint ventures are
accounted for using the equity method.
Under the equity method, the investment in a joint
venture is initially recognised at cost. The carrying
amount of the investment is adjusted to recognise
changes in the Group’s share of net assets of the joint
venture since the acquisition date. Goodwill relating to
the joint venture is included in the carrying amount of
the investment and is neither amortised nor individually
tested for impairment.
The statement of profit or loss reflects the Group’s
share of the results of operations of the joint venture.
Any change in OCI of those investees is presented as
part of the Group’s OCI. In addition, when there has
been a change recognised directly in the equity of the
joint venture, the Group recognises its share of any
changes, when applicable, in the statement of changes
in equity. Unrealised gains and losses resulting from
transactions between the Group and joint venture are
eliminated to the extent of the interest in the joint
venture.
The aggregate of the Group’s share of profit or loss of a
joint venture is shown on the face of the statement of
profit or loss outside operating profit and represents
profit or loss after tax and non-controlling interests in
the subsidiaries of the joint venture.
The financial statements of the joint venture are
prepared for the same reporting period as the Group.
When necessary, adjustments are made to bring the
accounting policies in line with those of the Group.
After application of the equity method, the Group
determines whether it is necessary to recognise an
impairment loss on its investment in its joint venture.
At each reporting date, the Group determines whether
there is objective evidence that the investment in the
joint venture is impaired.
If there is such evidence, the Group calculates the
amount of impairment as the difference between the
recoverable amount of the joint venture and its carrying
value, then recognises the loss as ‘Share of profit of a
joint venture’ in the statement of profit or loss.
Upon loss of joint control over the joint venture, the
Group measures and recognises any retained
investment at its fair value. Any difference between the
carrying amount of the joint venture upon loss of joint
control and the fair value of the retained investment
and proceeds from disposal is recognised in profit or
loss.
Joint operations
The Group’s recognises its interest in joint operations by
recognising its:
(cid:119) Assets, including its share of any assets held jointly
(cid:119)
Liabilities, including its share of any liabilities
incurred jointly
(cid:119) Revenue from the sale of its share of the output
arising from the joint operation
(cid:119) Share of the revenue from the sale of the output by
the joint operation
(cid:119) Expenses, including its share of any expenses
incurred jointly
(l)
Payables
Trade payables and other accounts payable are
recognised when the entity becomes obliged to make
future payments resulting from the purchase of goods
and services.
50 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
2.
Statement of significant accounting policies (cont’d)
(m)
Foreign currency translation
(n)
Principles of consolidation
Functional and presentation currency
The consolidated financial statements are presented in
Australian Dollars, which is Hannans’ functional and
presentation currency.
Transactions and balance
Transactions in foreign currencies are initially recorded
in the functional currency (Australian Dollars (AUD),
Swedish Krona (SEK) and Great Britain Pound (GBP)) by
applying the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at
the rate of exchange ruling at the reporting date.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rate as at the date of the initial
transaction. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value was
determined.
Differences arising on settlement or translation of
monetary items are recognised in profit or loss with the
exception of monetary items that are designated as
part of the hedge of the Group’s net investment of a
foreign operation. These are recognised in other
comprehensive income until the net investment is
disposed of, at which time, the cumulative amount is
reclassified to profit or loss. Tax charges and credits
attributable to exchange differences on those monetary
items are also recorded in other comprehensive
income.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of
non-monetary items measured at fair value is treated
in line with the recognition of gain or loss on change in
fair value of the item (i.e., translation differences on
items whose fair value gain or loss is recognised in
other comprehensive income or profit or loss are also
recognised in other comprehensive income or profit or
loss, respectively).
Group companies
On consolidation, the assets and liabilities of foreign
operations are translated into dollars at the rate of
exchange prevailing at the reporting date and their
statements of profit or loss are translated at exchange
rates prevailing at the dates of the transactions. The
exchange differences arising on translation for
consolidation are recognised in other comprehensive
income. On disposal of a foreign operation, the
component of other comprehensive income relating to
that particular foreign operation is recognised in profit
or loss.
The consolidated financial statements comprise the
financial statements of Hannans and its subsidiaries as
at and for the period ended 30 June 2017 (the Group).
Control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the
investee and has the ability to affect those returns
through its power over the investee. Specifically, the
Group controls an investee if and only if the Group has:
(cid:119) Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee);
(cid:119) Exposure, or rights, to variable returns from its
involvement with the investee; and
(cid:119)
The ability to use its power over the investee to
affect its returns.
When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether
it has power over an investee, including:
(cid:119)
The contractual arrangement with the other vote
holders of the investee;
(cid:119) Rights arising from other contractual arrangements;
and
(cid:119)
The Group’s voting rights and potential voting
rights.
The Group re-assesses whether or not it controls an
investee if facts and circumstances indicate that there
are changes to one or more of the three elements of
control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases
when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired
or disposed of during the year are included in the
statement of comprehensive income from the date the
Group gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of other
comprehensive income (OCI) are attributed to the
equity holders of the parent of the Group and to the
non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. When
necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions
between members of the Group are eliminated in full
on consolidation.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary,
it:
(cid:119) De-recognises the assets (including goodwill) and
liabilities of the subsidiary;
(cid:119) De-recognises the carrying amount of any non-
controlling interests;
(cid:119) De-recognises the cumulative translation
differences recorded in equity;
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
2.
Statement of significant accounting policies (cont’d)
(n)
Principles of consolidation (cont’d)
(q)
Revenue recognition (cont’d)
(cid:119) Recognises the fair value of the consideration
Service fee
received;
(cid:119) Recognises the fair value of any investment
retained;
(cid:119) Recognises any surplus or deficit in profit or loss;
and
(cid:119) Reclassifies the parent’s share of components
previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be
required if the Group had directly disposed of the
related assets or liabilities.
A list of subsidiaries appears in note 4 to the financial
statements.
(o)
Plant and equipment
Plant and equipment are stated at cost less
accumulated depreciation and impairment loss. Cost
includes expenditure that is directly attributable to the
acquisition of the item.
Depreciation is provided on plant and equipment.
Depreciation is calculated on a straight line or
diminishing value basis so as to write off the net cost of
each asset over its expected useful life to its estimated
residual value. The estimated useful lives, residual
values and depreciation method are reviewed at the
end of each annual reporting period.
The depreciation rates used for each class of
depreciable assets are:
Class of fixed asset
Depreciation rate (%)
Office furniture
10.00 – 20.00
Building
2.50
Office equipment
7.50 – 66.67
Motor vehicles
16.67 – 25.00
(p)
Provisions
The amount recognised as a provision is the best
estimate of the consideration required to settle the
present obligation as a result of a past event at
reporting date, taking into account the risks and
uncertainties surrounding the obligation. Where a
provision is measured using the cashflows estimated to
settle the present obligation, its carrying amount is the
present value of those cashflows.
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, the receivable is recognised as an asset if it
is virtually certain that recovery will be received and
the amount of the receivable can be measured reliably.
Revenue from service fee is recognised when the
service has been rendered in proportion to the stage of
completion. No revenue is recognised if there are
significant uncertainties regarding recovery of the
consideration due and the cost incurred or to be
incurred cannot be reliably measured.
(r)
Share–based payments
Equity–settled share–based payments are measured at
fair value at the date of grant. Fair value is measured
by use of the Black and Scholes model or Monte-Carlo
simulation model. The expected life used in the model
has been adjusted, based on management’s best
estimate, for the effects of non–transferability, exercise
restrictions, and behavioural considerations.
The fair value determined at the grant date of the
equity–settled share–based payments is expensed on a
straight–line basis over the vesting period, based on the
entity’s estimate of shares that will eventually vest.
For cash–settled share–based payments, a liability equal
to the portion of the goods or services received is
recognised at the current fair value determined at each
reporting date.
(s)
Fair value measurement
The Group measure available-for-sale financial assets at
fair value and receivables are measured at amortised
costs at each balance sheet date.
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
(cid:119)
(cid:119)
In the principal market for the asset or liability; or
In the absence of a principal market, in the most
advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the
fair value measurement as a whole:
(cid:119)
(cid:119)
(cid:119)
Level 1: Quoted (unadjusted) market prices in
active markets for identical assets or liabilities;
Level 2: Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is directly or indirectly observable; or
Level 3: Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is unobservable.
(q)
Revenue recognition
(t)
Segment reporting policy
Dividend and interest revenue
Dividend revenue is recognised on a receivable basis.
Interest revenue is recognised on a time proportionate
basis that takes into account the effective yield on the
financial asset.
Operating segments are identified and segment
information disclosed on the basis of internal reports
that are regularly provided to, or reviewed by the
Group’s chief operating decision maker which, for the
Group, is the Board of Directors. In this regard, such
information is provided using similar measures to those
used in preparing the statement of comprehensive
income and statement of financial position.
52 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
3.
Critical accounting estimates and judgements
In the application of the Group’s accounting policies, which are described in note 2, management is required to make judgments,
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 various other factors that are believed to be reasonable
under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain
assets and liabilities within the next annual reporting period are:
Key judgements — exploration and evaluation expenditure
The future recoverability of exploration and evaluation expenditure capitalised on the acquisition of areas of interest and/or capitalised
JORC compliant mineral resource expenditure are dependent on a number of factors, including whether the Group decides to exploit
the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. To the
extent that capitalised acquisition costs and/or capitalised JORC compliant mineral resource expenditure are determined not to be
recoverable in the future, profits and net assets will be reduced in the period in which this determination is made.
Key judgements — share–based payments
The Group 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. The fair value is determined using a Black Scholes and/or Monte-Carlo simulation model. The
related assumptions detailed in note 8. The accounting estimates and assumptions relating to equity-settled share-based payments
would have no impact on the carrying amount of assets and liabilities within the next annual reporting period but may impact
expenses and equity.
Key judgements — assets held for distribution
On 4 March 2016 Hannans announced it entered into a transaction with Neometals Ltd. One of the conditions precedent to the
transaction was that Hannans was to complete a pro rata in-specie distribution of Critical Metals Ltd and its subsidiaries. The shares of
Critical Metals Ltd were to be distributed to the shareholders of the Company. Therefore the operations of Critical Metals Ltd are
classified as a disposal group held for distribution to equity holders of Hannans. The Directors considered the subsidiary met the criteria
to be classified as held for distribution at 30 June 2016 for the following reasons:
(cid:119)
(cid:119)
(cid:119)
(cid:119)
Critical Metals Ltd was available for immediate distribution and could be distributed to shareholders in its current condition;
the actions to complete the in-specie distribution were initiated and completed within one year;
the shareholders approved the distribution on 15 September 2016; and
the secretarial procedures and procedural formalities for the distribution were completed prior to 27 September 2016.
Refer to note 25 and 26 respectively for further information on the disposal of asset on 27 September 2016 and at 30 June 2016.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
4.
Subsidiaries
The consolidated financial statements of the Group include:
Name of entity
Parent entity:
Hannans Ltd (i)
Subsidiaries:
HR Forrestania Pty Ltd (ii)
HR Equities Pty Ltd (ii)
Reed Exploration Pty Ltd (iii)
Critical Metals Ltd^ (iv)
Scandinavian Resources Pty Ltd^ (iv)
SR Equities Pty Ltd^ (iv)
Scandinavian Resources AB^ (iv)
Kiruna Iron AB^ (iv)
Principal
Activities
Country of
incorporation
2017
2016
% Ownership interest
Exploration
Australia
Exploration
Equities holding
Exploration
Exploration
Holding company
Exploration
Exploration
Australia
Australia
Australia
Australia
Australia
Australia
Sweden
Sweden
100
100
100
–
–
–
–
–
100
100
–
100
100
100
100
100
^
(i)
(ii)
(iii)
On 27 September 2016 the in-specie distribution was completed. Refer to note 26 for further information on subsidiaries held as assets held for
distribution.
Hannans Ltd (Hannans) is the ultimate parent entity. All the companies are members of the group.
The 100% interest in HR Forrestania Pty Ltd, HR Equities Pty Ltd and Reed Exploration Pty Ltd are held by the parent entity.
On 29 September 2016 the Company completed the acquisition of 100% of the shares in REX. The Company issued 620,833,333 fully paid
ordinary shares to Neometals Ltd.
(iv) On 15 September 2016 Hannans held a General Meeting and shareholders approved the equal reduction of capital and a pro-rata in-specie
distribution of 99,987,442 shares in Critical Metals Ltd to existing Hannans shareholders. The in-specie distribution was completed on 27
September 2016.
2017
$
2016
$
22,037
11,755
–
33,792
800,000
87,962
887,962
5,998
3,582
193,601
203,181
–
251,301
251,301
Refer to page 22 for the Corporate Structure.
5.
Income/(expenses) from operations
(a)
Revenue
Interest revenue
Bank
Loans
Service fees
Total revenue
(b)
Other Income
Prospect transaction fees
Other
Total other income
54 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
5.
Income/(expenses) from operations (cont’d)
(c)
Net gain on settlement of transaction
Gain from settlement of transaction
Less: Settlement costs
Total net gain on settlement of transaction
(d)
Gain on disposal of shares
Proceeds on disposal of shares (net of broker fees)
Less: Carrying fair value of shares disposed
Total gain on disposal of shares
(e)
Employee benefits expense
Salaries and wages
Post employment benefits:
Defined contribution plans
Share–based payments:
Equity settled share–based payments
Total employee benefits expense
2017
$
2016
$
1,000,000
(90,000)
910,000
–
–
–
–
–
–
5,420
(5,095)
325
180,871
281,028
12,717
21,438
195,573
389,161
42,775
345,241
(f)
Depreciation of non–current assets
11,613
18,175
(g)
Operating lease rental expenses:
Minimum lease payments
Rent provision (refer note 16)
Total operating lease rental expenses
6.
Income taxes
Income tax recognised in profit or loss
Current income tax
Current income tax charge
Overprovision of current tax in prior year
Deferred tax
Release of deferred tax assets previously recognised to offset a deferred
tax liability arising on unrealised gains on available-for-sale investments
Total tax benefit/(expense)
120,581
(10,660)
109,921
278,455
(145,101)
133,354
–
–
–
–
–
–
–
–
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
6.
Income taxes (cont’d)
The prima facie income tax benefit/(expense) on pre–tax accounting loss from operations reconciles to the income tax expense in
the financial statements as follows:
Profit/(Loss) from operations
Income tax benefit calculated at 27.5% (2016: 28.5%)
Effect of tax rates in foreign jurisdictions
Effect of expenses that are not deductible in determining taxable profit
Adjustment of prior year balances due to change in tax rate
Effect of FCTR expensed to P&L (Swedish entities)
Effect of net deferred tax asset not recognised as deferred tax assets
Capital losses not recognised
Effect of net deferred tax asset recognised
Income tax benefit/(expense) attributable to operating loss
The tax rate used in the above reconciliation is the corporate tax rate of 27.5%
(2016: 28.5%) payable by Australian corporate entities on taxable profits under
Australian tax law. There has been no change in the corporate tax rate when
compared with the previous reporting period.
Deferred tax related to items charged or credited directly to
Other Comprehensive Income during the year:
Unrealised loss on available-for-sale investments
2017
$
11,663,780
3,207,540
–
300
241,921
–
–
(5,078,974)
1,629,213
–
–
–
2016
$
(964,387)
(274,850)
(9,779)
78,721
–
129,233
76,675
–
–
–
–
–
Statement of
Financial Position
Statement of
Comprehensive Income
2017
$
2016
$
2017
$
2016
$
(225,907)
(461)
–
(853)
(225,907)
392
11,275
3,877
30,122
–
10,119
1,678
39,504
3,647
31,654
949
49,123
(32,328)
(28,229)
230
(1,532)
(949)
(39,004)
34,006
4,463,983
5,078,974
6,803,049
(2,339,065)
–
5,078,974
(9,373,660)
(6,894,744)
–
–
–
135
(65,291)
(899)
(7,063)
(45,899)
(10,834)
(40,391)
125,402
–
(2,478,916)
–
44,840
–
Deferred Income Tax
Deferred income tax at 30 June
relates to the following
Deferred tax liabilities
Exploration and evaluation assets
Unearned income
Deferred tax assets
Accruals
Prepayments
Provision for employee entitlements
Provision – other
Capital raising costs
Revaluation reserve
Revenue tax losses
Capital losses
Deferred tax assets not brought to account
as realisation is not probable
Deferred tax assets not recognised
Deferred tax (income)/expense
Tax consolidation
Relevance of tax consolidation to the Group
Legislation to allow groups, comprising a parent entity and its Australian resident wholly owned entities, to elect to consolidate and
be treated as a single entity for income tax purposes was substantively enacted on 21 October 2002. The Company and its 100%
owned Australian resident subsidiaries have implemented the tax consolidation legislation.
56 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
7.
Key management personnel disclosures
(a)
Details of key management personnel
The Directors and Executives of Hannans Ltd during the year were:
Directors
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Damian Hicks
Jonathan Murray
Markus Bachmann
Clay Gordon (appointed 5 October 2016)
(cid:120)
(cid:120)
Amanda Scott (appointed 29 November 2016,
previously appointed director of Swedish subsidiaries)
Olof Forslund (resigned 5 October 2016)
(b)
Key management personnel compensation
The aggregate compensation made to key management personnel of the Company
and the Group is set out below.
Short–term employee benefits
Share based payments
Long–term employee benefits
Post–employment benefits
Total key management personnel compensation
2017
$
2016
$
352,931
156,476
7,419
12,255
529,081
292,786
27,884
925
54,121
375,716
The compensation of each member of the key management personnel of the Group is set out in the Directors Remuneration report
on pages 16 to 21.
8.
Share–based payments
The Company has an ownership–based compensation arrangement for employees of the Group.
Each option issued under the arrangement converts into one ordinary share of Hannans on exercise. No amounts are paid or payable
by the recipient on receipt of the option. Options neither carry rights to dividends nor voting rights. Options may be exercised at any
time from the date of vesting to the date of their expiry. The number of options granted is at the sole discretion of the Directors.
Incentive options issued to Directors (executive and non–executive) are subject to approval by shareholders and attach vesting
conditions as appropriate.
The following unlisted options were issued during the year and are not share based payments to employees of the Group.
Options series
10 March 2016
3 June 2016
Number
31,250,000
41,662,500
Grant date
Expiry date
10 March 2016
10 March 2018
19 May 2016
3 June 2018
Exercise price
Cents
0.4
0.4
On 24 June 2016 6,250,000 unlisted options exercisable at 0.4 cents expiring on 3 June 2018 were exercised.
The following share–based payment arrangements were in existence during the current and comparative reporting periods:
Options series
20 November 2016
20 November 2015
20 November 2014
15 September 2016
Number
Grant date
Expiry date
12,016,664
20 November 2014
20 November 2019
12,016,668
20 November 2014
20 November 2018
12,016,668
20 November 2014
20 November 2017
21,155,848
11 November 2016
15 September 2020
Exercise price
Cents
0.8
0.5
2.9
2.7
Details of options over ordinary shares in the Company provided as remuneration to each director during the year are set out in the
Directors Remuneration report on pages 16 to 21. Further information on remuneration to Hannans’ directors are set out in note 28.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
8.
Share-based payments (cont’d)
The following reconciles the outstanding share options granted at the beginning and end of the financial year:
2017
2016
Weighted
average
exercise price
$
0.015
0.010
–
–
0.019
0.019
Number of
options
36,050,000
21,155,848
(4,166,667)
–
53,039,181
53,039,181
Weighted
average
exercise price
$
0.015
–
–
–
0.012
0.007
Number of
options
36,050,000
–
–
–
36,050,000
24,033,336
Balance at beginning of the financial year
Issued during the financial year (i)
Exercised during the financial year
Expired during the financial year
Balance at end of the financial year (ii)
Exercisable at end of the financial year
(i)
Issued during the financial year
On 14 November 2016, 21,155,848 share options were granted to directors and senior executives of the Group. The options
terms and conditions are shown below.
Details
Number of options
Exercise price (i)
Expiry date
Vesting date
15 Sep 2020
21,155,848
$0.027
20 Nov 2019
20 Nov 2016
(i)
The option exercised price is equal to 150% of the volume weighted average sale price of shares sold on ASX during the 40 trading days
after the date of the General Meeting being 1.8 cents per share.
The fair value of the options granted is issued and valued at the date of grant taking into account the terms and conditions
upon which the options were granted using a Black Scholes model. There is no cash settlement of the options.
The weighted average fair value of the options granted during for the year ended 30 June 2017 was $0.009 (2016: $0.015)
For the year ended 30 June 2017, the Group has recognised $195,573 of share-based payments transactions expense in the
statement of profit or loss (2016: $42,775).
(ii)
Exercised at end of the financial year
During the financial year a total of 4,166,667 options over ordinary shares were exercised, comprising of the following:
(cid:120)
No options were exercised in the prior year.
4,166,667 at 0.5 cents options expiring on 20 November 2018 to raise $20,833.
(iii) Balance at end of the financial year
The share options outstanding at the end of the financial year had a weighted average exercise price of $0.019 (2016: $0.012)
and a weighted average remaining contractual life of 2.03 years (2016: 2.39 years).
58 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
9.
Remuneration of auditors
The auditor of Hannans Ltd is Ernst & Young.
Audit or review of the financial report of the Group
Australia
Sweden
Tax compliance services in relation to the Group
10.
Current trade and other receivables
Accounts receivable (i)
Net goods and services tax (GST) receivable
Other receivables (ii)
2017
$
2016
$
38,110
–
–
38,110
1,722
33,841
221,320
256,883
31,930
8,327
27,774
68,031
2,023
33,262
35,794
71,079
(i)
(ii)
There were no current trade and other receivables that were past due but not impaired (2016: nil).
Hannans entered into a legally binding unconditional agreement with Mine Builder Pty Ltd (Mine Builder) for the sale of Hannans’ interest in
gold rights on Mining Lease M77/544 for $800,000. The consideration for the gold rights was to be paid via four cash instalments between
March 2015 and December 2015. Mine Builder has requested additional time to make the payments pursuant to the binding unconditional
agreement.
Hannans issued a statutory demand against Mine Builder on 21 October 2016 for the outstanding debt in the sum of approximately $1.16
million which includes interest. Mine Builder's application to set aside Hannans' statutory demand was heard in the Supreme Court of Western
Australia in February 2017. On 16 February 2017 the Supreme Court handed down its decision to dismiss Mine Builder Pty Ltd's application to set
aside Hannans’ statutory demand. Mine Builder had until 8 March 2017 to pay the claimed amount. If payment is not received by 8 March 2017
Hannans can apply for a winding up order against Mine Builder in the Federal Court.
Due date
Amount
On 9 March 2017 the Company signed a Deed of Acknowledgement of Debt with
Mine Builder Pty Ltd resetting the timetable for payments for the acquisition of the
North Ironcap Gold Rights and undertaking not to wind up Mine Builder if the
payments are made in accordance with the amended timetable. Due to the
historical uncertainty of receiving payments from Mine Builder the balance of the
outstanding amount not yet received of $400,000 will be accounted for during the
period where payments are received.
9 March 2017
8 June 2017
8 September 2017
8 December 2017
8 March 2018
$300,000
$300,000
$200,000
$200,000
$200,000
Other receivables consists of $200,000 in relation to the ongoing Mine Builder Pty Ltd (Mine Builder) matter which was received on 15
September 2017.
11.
Other financial assets
Current
Available-for-sale investments
Quoted equity shares (i)
Unquoted equity shares (ii)
Loans
Loans to outside entities (iii)
Total
Non-current
Loans
Loan to outside entity (iii)
Total
2017
$
2016
$
660
1
65,338
65,999
–
–
1,300
1
–
1,301
53,582
53,582
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
2017
$
2016
$
11.
Other financial assets (cont’d)
(i)
(ii)
(iii)
Investments in listed entities include the following:
(a) 20,000 ordinary fully paid shares in Brighton Mining Group Ltd; and
(b) 20,000 ordinary fully paid shares in Lithex Resources Ltd.
Hannans Ltd holds 1 share at $1 in Equity & Royalty Investments Ltd. Equity & Royalty
Investments Ltd has 100 million ordinary shares on issue. The principal activity of the
Company is the investment in equity and royalties in other companies with the
objective of realising gains through equity and generating an income stream through
the royalties.
Errawarra Resouces Ltd (Errawarra), of which Mr Damian Hicks, Mr Jonathan Murray,
and Mr Markus Bachmann are the Directors, was provided with a loan facility of
$50,000 at an interest rate of 20% per annum. The loan is secured against Errawarra’s
rights, title and interest in the agreement executed between Errawarra, Reid Systems
Inc and Reid Systems (Australia) Pty Ltd. Errawarra has fully drawndown on the loan
facility. Interest accrued to 30 June 2017 amounts to $15,338. The loan is repayable by
Errawarra on 1 July 2018. Refer to note 28 for further information.
12. Non–current other receivables
Other receivables – bonds
13.
Property, plant and equipment
Cost
Balance at 1 July 2015
Additions
Disposals
Exchange differences
Transfer to assets held for distribution (i)
Balance at 1 July 2016
Additions
Disposals
Exchange differences
Balance at 30 June 2017
56,000
56,000
56,000
56,000
Motor Vehicles
at cost
Office furniture
and equipment
at cost
$
$
55,357
–
285,657
–
Building
at cost
$
12,428
–
Total
$
353,442
–
(56,048)
(107,928)
(9,102)
(173,078)
691
–
–
–
–
–
–
1,234
(100,056)
78,907
1,892
(61,707)
–
19,092
–
–
3,326
–
(3,326)
–
–
1,925
(100,056)
82,233
1,892
(65,033)
–
19,092
60 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
13.
Property, plant and equipment (cont’d)
Accumulated depreciation and impairment
Balance at 1 July 2015
Depreciation expense
Disposals on deconsolidation
Exchange differences
Transfer to assets held for distribution (i)
Balance at 1 July 2016
Depreciation expense
Disposals
Exchange differences
Balance at 30 June 2017
Motor Vehicles
at cost
Office furniture
and equipment
at cost
$
$
52,088
3,054
(55,710)
568
–
–
–
–
–
–
262,297
15,044
(108,436)
986
(100,056)
69,835
8,638
(61,707)
–
16,766
Building
at cost
$
9,376
77
(9,102)
–
–
351
2,975
(3,326)
–
–
Total
$
323,761
18,175
(173,248)
1,554
(100,056)
70,186
11,613
(65,033)
–
16,766
(i)
On 2 March 2016 the Group announced that it has entered into a binding terms sheet with Neometals Limited. The transaction is conditional
upon the satisfaction of conditions precedent. One of the conditions is for the Group to complete an in-specie distribution of the Scandinavian
subsidiaries. In accordance with AASB 5 the assets held for the distribution are disclosed accordingly. Refer to note 25 and 26 for further
information.
Net book value
As at 30 June 2016
As at 30 June 2017
–
–
9,072
2,326
2,975
–
12,047
2,326
Aggregate depreciation allocated during the year:
Motor vehicles
Office furniture and equipment
Building
14.
Exploration and evaluation expenditure
Balance at beginning of financial year
Capitalised acquisition costs (i)
Exploration expenditure during the period
Foreign currency translation movement during the period
LESS: Write off costs
LESS: Transfer to assets held for distribution (ii)
Balance at end of financial year
2017
$
–
8,638
2,975
11,613
2016
$
3,054
15,044
77
18,175
–
1,356,340
2,688,000
–
–
–
–
2,688,000
–
97,599
17,648
(123,945)
(1,347,642)
–
(i)
On 4 March 2016 the Company announced a strategic collaboration with Neometals Ltd (Neometals). The Company agreed to proceed with the
acquisition of Neometals’ subsidiary, Reed Exploration Pty Ltd (REX) via the issue of 620,833,333 ordinary shares. REX owns the Forrestania,
Lake Johnston and Queen Victoria Rocks precious and base metals portfolio and at settlement was required to have $1 million cash at bank
with no debts.
On 29 September 2016 the transaction was completed and the Company acquired 100% of the shares in REX. The Company issued
620,833,333 fully paid ordinary shares to Neometals Ltd. The fair value of the asset acquired based on an independent valuation report
prepared by BDO was determined to be $3.688 million based on the comparable transaction method. On acquisition, REX held a cash balance
of $1 million. The acquisition costs of $121,521 were also incurred.
The transaction is not a business combination as the acquisition of REX did not meet the definition of a ‘business’ as defined in the Australian
Accounting Standards. The substance and intent was for the Company to acquire the exploration and evaluation assets of REX for the purpose
of expanding the Group's assets. The net assets acquired at the date of acquisition were:
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
14.
Exploration and evaluation expenditure (cont’d)
Purchase consideration
Shares issued
Acquisition costs
Total purchase consideration
Net assets acquired
Cash
Deferred exploration and evaluation expenditure
Total net assets acquired
2017
$
3,566,479
121,521
3,688,000
1,000,000
2,688,000
3,688,000
(ii)
On 2 March 2016 the Group announced that it has entered into a binding terms sheet with Neometals Limited. The transaction is conditional
upon the satisfaction of conditions precedent. One of the conditions is for the Group to complete an in-specie distribution of the Scandinavian
subsidiaries. In accordance with AASB 5 the assets held for the distribution are disclosed accordingly. Refer to note 26 for further information.
The recoverability of the carrying amount of the capitalised acquisition costs is dependent upon successful development and
commercial exploitation, or alternatively, sale of the respective areas of interest.
15.
Current trade and other payables
Trade payables (i)
Accruals
Other payable
(i)
The average credit period on purchases of goods and services is 30 days. No interest is
charged on the trade payables for the first 30 to 60 days from the date of invoice.
Thereafter, interest is charged at various penalty rates. The consolidated entity has
financial risk management policies in place to ensure that all payables are paid within
the credit timeframe.
16.
Provisions
Current
Employee benefits (i)
Rent - unoccupied space (ii)
2017
$
148,053
41,000
55,264
244,317
2016
$
494,170
290,678
45,382
830,230
103,115
–
103,115
111,067
10,660
121,727
(i)
(ii)
On 26 July 2017, the balance of the annual ($42,845) and long service leave ($60,270) provision was paid to Mr Hicks.
The provision was recognised on the basis that Hannans currently occupies and subleases part of its Perth office premises as a portion of the
space is surplus to the requirements of the Group. The provision for the unoccupied space is calculated based on the difference between the
Company’s full operating office lease commitment to the end of the lease term on 14 December 2016 and the current occupied and subleased
space discounted to present value as of 30 June 2016.
62 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
16.
Provisions (cont’d)
Balance at 1 July 2015
Increase in provision
Utilised during the year
Unwinding of discount rate and
changes in the discount rate
Transfer to assets held for distribution
Balance at 1 July 2016
Decrease in provision
Utilised during the year
Unwinding of discount rate and
changes in the discount rate
Balance at 30 June 2017
17.
Other financial liabilities
Current
Payroll related liabilities
Finance lease liabilities
Non-current
Payroll related liabilities
Finance lease liabilities
Employee
benefits
Rent –
unoccupied
space
$
167,168
39,680
(90,503)
–
(5,278)
111,067
(7,952)
–
–
103,115
$
155,760
–
(133,842)
(11,258)
–
10,660
–
(10,660)
–
–
2017
$
96,290
–
96,290
63,555
–
63,555
Total
$
322,928
39,680
(224,345)
(11,258)
(5,278)
121,727
(7,952)
(10,660)
–
103,115
2016
$
32,474
–
32,474
119,884
–
119,884
18.
Issued capital
1,682,640,560 fully paid ordinary shares (2016: 970,707,755)
37,296,618
37,296,618
46,285,309
46,285,309
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
18.
Issued capital (cont’d)
Fully paid ordinary shares
Balance at beginning of financial year
970,707,755
46,285,309
721,966,133
44,577,512
2017
No.
$
2016
No.
$
Placement of shares – 9 March 2016
Placement of shares – 23 May 2016
Share Purchase Plan – 26 May 2016
Placement of shares – 3 June 2016
Exercise of options to shares – 21 June 2016
Exercise of options to shares - 11 July 2016
Exercise of options to shares - 19 July 2016
Exercise of options to shares - 15 August 2016
In-specie distribution to shareholders - 20
September 2016
Acquisition of Reed Exploration Pty Ltd - 29
September 2016
Issue of shares and options to directors in lieu of
outstanding fees – 14 November 2016
Issue of shares and options to company secretary
in lieu of outstanding fees - 14 November 2016
Exercise of options to shares - 9 December 2016
Issue of shares as part payment - 12 June 2017
Share issue costs
–
–
–
–
–
–
–
–
–
–
62,500,000
17,666,665
73,999,957
88,325,000
6,250,000
250,000
212,000
887,999
393,300
25,000
25,000,000
4,166,667
6,250,000
100,000
20,833
25,000
–
(13,245,562)
620,833,333
3,566,479
17,032,584
306,587
4,123,264
31,250,000
3,276,957
–
74,219
125,000
45,878
(7,125)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(60,502)
Balance at end of financial year
1,682,640,560
37,296,618
970,707,755
46,285,309
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Option conversions
Date of conversion
No of options
11 July 2016
19 July 2016
15 August 2016
9 December 2016
TOTAL
25,000,000
4,166,667
6,250,000
31,250,000
66,666,667
Exercise price
per option
0.4 cents
0.5 cents
0.4 cents
0.4 cents
Expiry date
3 June 2018
20 November 2018
3 June 2018
10 March 2018
Increase in
contributed equity
$
100,000
20,833
25,000
125,000
270,833
64 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
19.
Reserves
Balance at the beginning of the financial year
Option reserve
Foreign currency translation differences
Reserves of assets held for distribution
Balance at the end of the financial year
The balance of reserves is made up as follows:
Option reserve
Foreign currency translation reserve
Nature and purpose of reserves
Option reserve
2017
$
118,155
179,223
–
297,378
–
297,378
297,378
–
297,378
2016
$
(237,970)
42,775
43,470
(151,725)
269,880
118,155
118,155
(269,880)
(151,725)
Foreign currency translation reserve
The option reserve recognises the fair value of options issued
and valued using the Black-Scholes and Monte-Carlo
simulation model.
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
Share options
As at 30 June 2017, options over 57,201,681 (2016: 102,712,500) ordinary shares in aggregate are as follows.
Issuing entity
Hannans Ltd
Hannans Ltd
Hannans Ltd
Hannans Ltd
Hannans Ltd
Hannans Ltd
No of shares
under option
12,016,668
7,850,001
12,016,664
–
4,162,500
21,155,848
Class of shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Exercise price
of option
0.8 cents each
0.5 cents each
2.9 cents each
0.4 cents each
0.4 cents each
1.8 cents each
Expiry date
of options
20 Nov 2017
20 Nov 2018
20 Nov 2019
10 Mar 2018
03 Jun 2018
15 Sep 2020
Share options are all unlisted, carry no rights to dividends and no voting rights. A total of 21,155,848 were issued during the period.
A total of 66,666,667 were exercised during the period.
20.
Accumulated losses
Balance at beginning of financial year
Profit/(Loss) attributable to members of the parent entity
Items of other comprehensive income recognised directly in retained earnings
Options exercised
Balance at end of financial year
2017
$
2016
$
(45,230,366)
11,663,780
(44,265,979)
(964,387)
16,349
–
(33,550,237)
(45,230,366)
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
21.
Profit/(Loss) per share
Basic profit/(loss) per share:
Diluted profit/(loss) per share:
Profit/(Loss) for the year
2017
Cents per share
2016
Cents per share
0.78
0.77
(0.13)
(0.13)
The loss and weighted average number of ordinary shares used in the calculation of basic and diluted loss per share are as follows:
Profit/(Loss) for the year
Weighted average number of ordinary shares
for the purposes of basic loss per share
Effects of dilution from:
Share options
2017
$
2016
$
11,663,780
(964,387)
2017
No.
2016
No.
1,501,173,559
757,044,977
14,520,037
6,997,625
Weighted average number of ordinary shares adjusted
for the effect of dilution loss per share
The Company does not have authorised capital nor par value in respect of its issued shares.
1,515,693,596
764,042,602
22.
Commitments for expenditure
Exploration, evaluation & development (expenditure commitments)
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
Future minimum rentals payable under non–cancellable operating leases as at
30 June 2017 are as follows: (i)
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
2017
$
2016
$
74,000
456,000
–
530,000
252,860
252,860
–
505,720
3,000
109,032
–
–
–
–
3,000
109,032
(i)
The Group has an office lease on a month by month basis, expiring 31 December 2017 and with rent payable monthly in advance.
66 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
23.
Contingent liabilities and contingent assets
The Office of State Revenue (‘OSR’) has informed the Company that it has raised a Duties Investigation regarding the restructure
involving the Mineral Rights Deed between the Company and Errawarra Resources Ltd. OSR has requested preliminary supporting
information to assess the duty on the transaction. The Company does not consider it probable a stamp duty liability will arise.
24.
Segment reporting
During the year the Group operated in the mineral exploration industry in Australia and Sweden. For management purposes, the
Group is organised into one main operating segment which involves the exploration of minerals in Australian and Sweden. All of the
Group’s activities are interrelated and discrete financial information is reported to the Board (Chief Operating Decision Maker) as a
single segment. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial
results from this segment are equivalent to the financial statements of the Group as a whole. On 15 September 2016 Hannans held a
General Meeting and shareholders approved the equal reduction of capital and a pro rata in-specie distribution of Critical Metals
shares to Hannans shareholder. The Swedish projects are part of Critical Metals group. The in-specie distribution was completed on
27 September 2016 (refer to note 25 for further information).
Revenue analysis by geographic area
Revenue
Total revenue and other income
Australia
Scandinavia
Consolidated
2017
$
33,792
–
33,792
2016
$
116,514
86,667
203,181
2017
$
921,754
–
921,754
Result analysis by geographic area
Australia
Sweden
Loss before income tax benefit
Income tax benefit/(expense)
Profit/(loss) for the year
Assets and liabilities analysis by geographic area
Australia
Scandinavia
Consolidated
2016
$
354,567
100,240
454,807
2016
$
(771,796)
(192,591)
(964,387)
(964,387)
–
2017
$
10,774,861
888,919
11,663,780
11,663,780
–
11,663,780
(964,387)
Assets
Liabilities
2017
$
4,551,036
–
4,551,036
2016
$
1,619,169
1,631,931
3,251,100
2017
$
507,277
–
507,277
2016
$
1,104,313
1,243,569
2,347,882
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
25.
Disposal of subsidiaries
On 15 September 2016 Hannans held a General Meeting and shareholders approved the equal reduction of capital and a pro-rata in-
specie distribution of 99,987,442 shares in Critical Metals Ltd (a subsidiary of Hannans Ltd) to existing Hannans shareholders. The in-
specie distribution was completed on 27 September 2016.
Critical Metals Ltd and its subsidiaries, Scandinavian Resources Pty Ltd, SR Equities Pty Ltd, Scandinavian Resources AB and Kiruna Iron
AB, (Critical Metals group) hold the following rights and obligations:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Free carried interest in Pahtohavare copper-gold project (under joint venture with Lovisagruvan AB);
Kiruna iron projects;
Swedish lithium exploration prospects, including the historic Varuträsk lithium deposit; and
A precious and base metals exploration portfolio.
(a)
Details of the disposal
The carrying amount of the major classes of assets and liabilities were as follows:
Current assets
Cash and cash equivalents
Other financial assets
Non-current assets
Capitalised exploration and evaluation expenditure
Total assets
Current liabilities
Trade and other payables
Provisions
Loans
Other financial liabilities
Non-current liabilities
Loans (i)
Other financial liabilities
Total liabilities
Net assets distributed to shareholders
30 Sep 2016
$
250,000
36,738
1,293,544
1,580,282
–
2,476
228,723
13,540
90,000
1
334,740
1,245,542
(i)
In May 2013, Hannans entered into a Heads of Agreement (HoA) with Avalon Minerals Limited for the sale of the Discovery Zone copper-iron
prospect in Sweden for $4 million. On 10 May 2013, Hannans made an application with the Inspectorate to transfer the tenements to Avalon which
was granted on 23 May 2013. On 1 October 2013, Hannans reached an agreement with Avalon that varied the HOA. The variation deleted and
replaced clause 3 of the original HOA with the following:
(cid:120)
(cid:120)
$1 million upon successful completion of a rights issue by Avalon or no later than 31 October 2013; and
$3 million when the Mining Inspectorate of Sweden has formally granted the Discovery Zone Exploitation Concession to Avalon.
On 8 October 2013 Hannans confirmed that Avalon has paid $1 million pursuant to the varied HOA.
On 28 September 2016 the parties to the Discovery Zone transaction executed a Deed of Termination, Settlement and Release meaning that all
legal disputes and court actions between the respective companies have been settled with no financial impact on the continuing Hannans’ group,
without an admission of liability by either party and this matter is now resolved. The $1 million classified as payable was reversed.
Fair value of subsidiaries disposed
Less: Net assets distributed to shareholders
Less: Reclassification of foreign exchange reserve (prior year)
Gain on disposal
30 Sep 2016
$
13,245,562
(1,245,542)
(269,880)
11,730,140
The fair value of the exploration and evaluation assets disposed was based on an independent valuation report prepared by an
independent technical expert, SRK Consulting. The fair value was determined to be USD 10.12 million (equivalent to A$13.25 million).
The preferred value was driven primarily by the market based methods and adjusted by the Geoscience Rating method and MEEE,
where appropriate.
A gain of $11,730,140 was recognised on the disposal.
68 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
26.
Assets and liabilities held for distribution
Subsequent to year end, Hannans announced that it had completed an equal reduction of capital and a pro rata in-specie distribution
of Critical Metals shares to Hannans shareholder. As at 30 June 2016, these assets were classified as a disposal group held for
distribution.
The major classes of assets and liabilities classified as held for distribution as at 30 June are as follows:
Assets
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Capitalised exploration and evaluation expenditure
Assets held for distribution
Liabilities
Trade and other payables (i)
Provisions
Other liabilities (ii)
Liabilities held for distribution
Net assets held for distribution
(i)
2016
$
250,000
34,289
–
1,347,642
1,631,931
1,000,000
5,278
238,291
1,243,569
388,362
In May 2013, Hannans entered into a Heads of Agreement (HOA) with Avalon Minerals Limited (Avalon, ASX: AVI) for the sale of the Discovery
Zone copper-iron prospect in Sweden for $4 million. On 10 May 2013, Hannans made an application with the Inspectorate to transfer the
tenements to Avalon which was granted on 23 May 2013.
On 1 October 2013, Hannans reached an agreement with Avalon that varies the HOA. The variation deleted and replaced clause 3 of the
original HOA with the following:
(cid:119)
(cid:119)
$1 million upon successful completion of a rights issue by Avalon or no later than 31 October 2013; and
$3 million when the Mining Inspectorate of Sweden has formally granted the Discovery Zone Exploitation Concession to Avalon.
On 8 October 2013 Hannans confirmed that Avalon has paid $1 million pursuant to the varied HOA.
The HOA provided that if the Discovery Zone exploration concession is not granted or not granted within 2 years of the first payment date
(being 1 October 2015) or a later date to be agreed by the parties, the Group is required to refund the first $1 million received from Avalon
and Avalon will be required to transfer title in the Discovery Zone back to the Group. The HOA provides that the Company can transfer a project
of equivalent value to Avalon. There is no requirement in the HOA for the Group to make a cash payment to Avalon.
If the Discovery Zone exploration concession is granted, the Group will receive a further $3 million within five business days of the exploitation
concession being granted.
On 9 October 2015 Hannans received a Refund Notice from Avalon pursuant to the HOA. The Refund Notice has been presented on the basis
that the Discovery Zone exploitation concession application has not been granted within the time stipulated in the HOA.
On 21 October 2015 Hannans was made aware that the Discovery Zone exploitation concession application had been dismissed by the Mining
Inspectorate of Sweden and Avalon can no longer transfer the application back to the Group as required by the HOA. A consequence of this
dismissal is that the Group has lost title to its Discovery Zone copper-gold project, Rakkurijärvi iron project and Tributary Zone copper-gold
prospect. Hannans considers this to be a very serious matter and has in addition to reserving its rights, requested Avalon provide a written
explanation of the circumstances that lead to the dismissal as a matter of urgency.
Avalon then lodged an appeal with the Swedish Administrative Court against the decision of the Mining Inspectorate of Sweden to dismiss the
Discovery Zone exploitation concession application registered in the name of Avalon’s wholly owned Swedish subsidiary company, Avalon
Minerals Adak AB. On 3 June 2016 the Swedish Administrative Court dismissed the appeal by Avalon. Avalon had three weeks from 3 June
2016 to lodge an appeal to the Swedish Superior Administrative Court against the decision. Avalon did not submit an appeal within the three
weeks and the decision to dismiss the Discovery Zone exploitation concession application made by the Mining Inspectorate of Sweden is final.
The Discovery Zone exploitation concession application was removed from further processing and the underlying permit expired.
On 11 November 2015 Avalon issued Hannans with a Statutory Demand in relation to the 50% recovery of the expenditure incurred on the
Discovery Zone Exploitation Concession application. Hannans’ submitted an application to set aside a statutory demand issued by Avalon and
believe that there is a genuine dispute about the existence of the alleged debt. Hannans’ application was heard by Master Sanderson in the
Supreme Court of Western Australian on 22 March 2016 and a decision on the application was handed down on 3 May 2016. The Supreme
Court of Western Australia set aside a statutory demand served on Hannans by Avalon and the court ordered Avalon to pay Hannans’ costs.
On 8 June 2016 Avalon served Hannans with a Writ issued out of the Supreme Court of Western Australia numbered CIV 1945 of 2016 claiming
$1 million pursuant to an agreement entered into by Hannans, its wholly owned subsidiary Kiruna Iron AB, Avalon Minerals Limited and its
wholly owned subsidiary Avalon Minerals Adak AB. On 4 July 2016 Hannans filed and served Avalon with a Defence and Counterclaim for $9
million and a Summary Judgement Application in respect of Avalon’s claim. The Summary Judgement Application was heard on 6 September
2016.
On 28 September 2016 the parties to the Discovery Zone transaction executed a Deed of Termination, Settlement and Release meaning that all
legal disputes and court actions between the respective companies have been settled with no financial impact on the continuing Hannans’
group, without an admission of liability by either party and this matter is now resolved.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
26.
Assets and liabilities held for distribution (cont’d)
(ii)
On 24 November 2015 the Company announced that the joint venture partner, Lovisagruvan AB (LOVI) has formally notified the Company of its
decision to proceed to Stage 2 of the joint venture. As part of their Stage 2 commitment LOVI will provide the Company with a SEK 3 million
(equivalent to AUD 476,577 as at 30 June 2016) interest free working capital facility which can only be drawn down in two equal instalments.
Each instalment must be repaid within 12 months from the drawdown date.
The Company received the first loan instalment of SEK 1.5 million (equivalent to AUD 238,289) on 29 January 2016. The amount is repayable by
29 January 2017.
27.
Joint operations
Name of project
Pahtohavare (i)
Lake Johnston (ii)
Principal activity
Exploration
Exploration
Interest
2017
%
–
–
2016
%
65
20
Forrestania (ii)(iii)
The Group’s interest in assets employed in the above joint operation is included in the consolidated financial statements. The interest
in Pahtohavare has been capitalised and forms part of the total assets however the interest in Lake Johnston does not form part of
the total assets as the expenditure exploration and evaluation is expensed.
Exploration
20
–
(i)
On 27 March 2015 Hannans Ltd announced a joint operation with Lovisagruvan AB (a Swedish mining company) over its
Pahtohavare Copper-Gold Project, located near Kiruna, northern Sweden. The terms of the joint venture are as follows:
Consideration:
(cid:120)
(cid:120)
Initial payment of SEK 1 million within seven days of signing the agreement.
Provide the Group with an interest free working capital facility to the value of SEK 4 million if the joint venture
proceeds to Stage 2.
Stage Funding:
(i)
(ii)
Stage 1: Lovisagruvan AB (LOVI) pays Hannans SEK 1 million, complete drilling and metallurgical test work within six
months to earn 20% interest in Pahtohavare. LOVI is required to provide written notification to the Group if it wishes to
continue in the joint venture.
Stage 2: LOVI prepares to lodge an exploitation concession and environmental permit for Pahtohavare and provide the
Group with an interest free working capital facility to the value of SEK 3 million on normal commercial terms to earn
further 15% in Pahtohavare.
(iii)
Stage 3: Received exploitation concession and environmental permit approval and provide the Group with a Bankable
Feasibility Study to earn further 16% in Pahtohavare.
(iv)
Stage 4: LOVI delivers the Feasibility Study to the Group to earn further 24% in Pahtohavare.
On 24 November 2015 the Company announced that LOVI has formally notified the Company of its decision to proceed to
Stage 2 of the joint venture. As part of their Stage 2 commitment LOVI will prepares to lodge an exploitation concession and
environmental permit for Pahtohavare and provide the Group with an interest free working capital facility to the value of SEK 3
million on normal commercial terms to earn further 15% in Pahtohavare. The Company received the first loan instalment of
SEK 1.5 million (equivalent to AUD 238,290) on 29 January 2016. The amount is repayable by 29 January 2017.
On 15 September 2016 Hannans held a General Meeting and shareholders approved the equal reduction of capital and a pro
rata in-specie distribution of Critical Metals shares to Hannans shareholder. Kiruna Iron AB is part of Critical Metals group. The
in-specie distribution was completed on 27 September 2016.
(ii)
On 24 June 2014 Hannans Ltd announced a joint operation with NeoMetals Ltd (ASX: NMT) (previously Reed Resources Ltd
(ASX: RDR)) over its Lake Johnston nickel sulphide project, located west of Norseman in Western Australia. Hannans has
retained 20% interest, free carried through to a Decision to mine.
On 15 September 2016 Hannans held a General Meeting and shareholders approved the issue of 620,833,333 Hannans shares
to Neometals Limited in consideration of the acquisition of 100% of the share capital in Reed Exploration Pty Ltd (Reed
Exploration). Reed Exploration owns the balance 80% interest in the Lake Johnston Project and Queen Victoria Rocks Project
and the non-gold rights at the Forrestania Project. Following the completion of the acquisition on 29 September 2016,
Hannans owns 100% of the Lake Johnston Project and Queen Victoria Project, and 100% of the non-gold mineral rights and
20% of the gold rights (free carried) at the Forrestania Project as at the date of this report.
(iii)
Reed Exploration entered into a joint venture with Classic Minerals Ltd (Classic) (ASX: CLZ) whereby Reed Exploration retained
a 20% interest in the Forrestania gold rights which is free-carried until a decision to mine has been made. Classic is required
to meet all exploration expenditure to keep the project in good standing.
Contingent liabilities and capital commitments
The capital commitments and contingent liabilities arising from the Group’s interests in joint operations are disclosed in notes 22 and
23 respectively.
70 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
28.
Related party disclosures
(a)
Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 4 to the financial statements.
Equity interests in joint operations
Details of interests in joint operations are disclosed in note 27 to the financial statements.
(b)
Key management personnel (KMP) remuneration
Details of key management personnel remuneration are disclosed in note 7 to the financial statements.
(c)
Loans to key management personnel and their related parties
Errawarra Resources Ltd (Errawarra), of which Mr Damian Hicks is the Chairman and Mr Jonathan Murray and Mr Markus
Bachmann are the Non-Executive Directors, received a loan amounting to $50,000. The loan is secured against 100% of
Errawarra’s rights, title and interest in the agreement executed between Errawarra, Reid Systems Inc and Reid Systems
(Australia) Pty Ltd dated on or about 9 February 2016. The interest rate on the outstanding loan amount is at 20% per annum
and the loan repayment date is on 1 July 2018. The loan is disclosed in note 11 as a non-current financial asset.
Details regarding the aggregate of loans made, guaranteed or secured by any entity in the Group to key management
personnel and their related parties, and the number of individuals in each group, are as follows:
30 Jun 2017
Total for KMP (i)
Total for other related parties (ii)
Total for key management personnel
and their related parties 2017
30 Jun 2016
Total for KMP (i)
Total for other related parties (ii)
Total for key management personnel
and their related parties 2016
Opening
Balance
$
–
53,582
53,582
168,985
–
Closing
Balance
$
–
65,338
65,338
–
53,582
168,985
53,582
Interest
charged
$
Number in
group at
30 June
–
11,756
11,756
–
3,582
3,582
–
1
1
–
1
1
(i)
(ii)
On 15 September 2016 Hannans held a General Meeting and shareholders approved to forgive the outstanding loan
amount of $168,985 to Damian Hicks. The loan is unrecoverable and was derecognised as a receivable as at 30 June
2016.
The Company provided a loan facility of $50,000 at an interest rate of 20% per annum to Errawarra Resources Ltd
(Errawarra), of which Mr Damian Hicks, Mr Jonathan Murray and Mr Markus Bachmann are the Directors. The loan is
secured against Errawarra’s rights, title and interest in the agreement executed between Errawarra, Reid Systems Inc
and Reid Systems (Australia) Pty Ltd. Errawarra made a loan drawdown of $25,000 on 10 February 2016 and a further
loan drawdown of $25,000 on 9 March 2016.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
28.
Related party disclosures (cont’d)
(d)
Transactions with other related parties
The following table provides the total amount of transactions that have been entered into with related parties for the relevant
financial year.
Director transactions
Steinepreis Paganin
Corporate Board Services
Amberley Minerals Pty Ltd
Sales to
related parties
$
Purchases
from related
parties
$
Amounts
owed by
related
parties*
$
Amounts
owed to
related
parties*
$
2017
2016
2017
2016
2017
2016
–
–
–
–
–
–
36,354
43,971
150,000
–
12,690
–
–
–
–
–
–
–
–
7,226
–
–
–
–
* The amounts are classified as trade receivables and trade payables, respectively.
(e)
Parent entity
The ultimate parent entity in the Group is Hannans Ltd.
29.
Subsequent events
The following matters or circumstances have arisen since 30 June 2017 that may significantly affect the operations of the Group, the
results of those operations, or the state of affairs of the Group in future financial years.
(a)
On 15 September 2017 the Company received $200,000 from Mine Builder Pty Ltd as part payment for the acquisition of the
North Ironcap Gold Rights. Refer to note 10 for further information.
30. Notes to the statement of cash flows
(a)
Reconciliation of cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents
includes cash on hand and in banks and investments in money market
instruments, net of outstanding bank overdrafts. Cash and cash equivalents
at the end of the financial year as shown in the statement of cash flows is
reconciled to the related items in the statement of financial position as
follows:
Cash and cash at bank
Term deposit
Cash at bank attributable to assets held for distribution
2017
$
2016
$
781,828
700,000
1,481,828
–
1,481,828
109,417
1,315,743
1,425,160
250,000
1,675,160
72 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
30. Notes to the statement of cash flows (cont’d)
(b)
Reconciliation of loss for the year to net cash flows from
operating activities
Profit/(Loss) for the year
Profit on disposal of exploration and evaluation assets
Net gain from settlement of transaction
Net gain from sale of tenement
Write off exploration and evaluation expenses
Impairment of available-for-sale investments
Depreciation of non–current assets
Gain on disposal of shares
Gain on sale or disposal of assets
Broker fees on shares sold
Equity settled share-based payments
Interest on loan to outside entity
Finance charges on leased assets
Foreign exchange differences
Forgiveness of loan to related party
Changes in net assets and liabilities, net of effects from acquisition and
disposal of businesses:
Decrease in assets:
Trade and other receivables
Decrease in liabilities:
Trade and other payables and provisions
Net cash from operating activities
Non–cash investing activities
In-specie distribution of Critical Metals Ltd (refer note 25)
Acquisition of exploration and evaluation asset
Non–cash financing activities
2017
$
2016
$
11,663,780
(11,730,140)
(910,000)
(640,000)
–
640
11,613
–
–
–
195,573
(11,755)
–
48,589
–
(964,387)
–
–
–
123,945
(900)
18,175
(325)
(16,043)
30
42,775
(3,582)
90
23,125
168,985
16,293
(19,466)
(204,645)
(1,560,052)
39,844
(587,734)
(13,245,562)
2,688,000
–
–
During the current year, the Group did not enter into any non-cash financing activities which are not reflected in the consolidated
statement of cash flows.
31.
Financial risk management objectives and policies
(a)
Financial risk management objectives
The Group manages the financial risks relating to the operations of the Group.
The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative
purposes although it holds, at 30 June 2017, shares in various other listed mining companies. The use of financial derivatives is
governed by the Group’s Board of Directors.
The Group’s activities expose it primarily to the financial risks of changes in interest rates, but at 30 June 2017 it is also
exposed to market price risk. The Group does not enter into derivative financial instruments to manage its exposure to interest
rate.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
31.
Financial risk management objectives and policies (cont’d)
(b)
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 2 to the financial statements.
(c)
Foreign currency risk management
The Group is not exposed to any significant currency risk on receivable, payable or borrowings. All loans are denominated in
the Group’s functional currency.
(d)
Interest rate risk management
The Group is exposed to interest rate risk as it places funds at both fixed and floating interest rates. The risk is managed by
maintaining an appropriate mix between fixed and floating rate products which also facilitate access to money.
Cash flow sensitivity analysis for variable rate instruments
A change of 1 per cent in interest rates at the reporting date would have increased 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
2016:
2017
Variable rate instruments
Cash flow sensitivity
2016
Variable rate instruments
Cash flow sensitivity
Profit or Loss
1%
increase
1%
decrease
Equity
1%
increase
1%
decrease
14,818
14,818
14,252
14,252
(14,818)
(14,818)
(14,252)
(14,252)
14,818
14,818
14,252
14,252
(14,818)
(14,818)
(14,252)
(14,252)
The following table details the Group’s exposure to interest rate risk.
Fixed maturity dates
Weighted
average
effective
interest
rate
Variable
interest
rate
%
$
1.31%
1,481,764
–
20.00%
–
–
2.30%
56,000
Less
than 1
year
$
–
–
65,338
1,537,764
65,338
–
–
–
–
–
–
96,290
96,290
1–5
years
$
5+
years
$
Non
interest
bearing
$
Total
$
–
–
–
–
–
63,555
63,555
–
–
–
64
1,481,828
256,883
256,883
–
65,338
56,000
–
256,947
1,860,049
–
–
–
244,317
244,317
–
159,845
244,317
404,162
Consolidated
2017
Financial assets:
Cash and cash
equivalents
Trade and other
receivables
Other financial assets
Other receivables
– non-current
Financial liabilities:
Trade and
other payables
Other financial liabilities
74 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
31.
Financial risk management objectives and policies (cont’d)
(d)
Interest rate risk management (cont’d)
Fixed maturity dates
Weighted
average
effective
interest
rate
Variable
interest
rate
%
$
Less
than 1
year
$
1–5
years
$
5+
years
$
Non
interest
bearing
$
Total
$
1.73%
1,425,087
–
–
2.49%
56,000
–
–
1,481,087
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
34,472
34,472
–
119,884
119,884
–
–
–
–
–
–
–
–
73
1,425,160
71,079
71,079
0
–
56,000
–
71,152
1,552,239
830,230
–
830,230
154,356
830,230
984,586
Consolidated
2016
Financial assets:
Cash and cash
equivalents
Trade and other
receivables
Other receivables
– non-current
Loans
Financial liabilities:
Trade and
other payables
Other financial liabilities
(e)
Liquidity risk
The Group manages liquidity risk by maintaining sufficient cash to meet the operating requirements of the business and
investing excess funds in highly liquid, high security short term investments. The Group’s liquidity needs can be met through a
variety of sources, including cash generated from operations and issue of equity instruments.
The following table details the Group’s non-derivative financial instruments according to their contractual maturities. The
amounts disclosed are based on contractual undiscounted cash flows.
Less than
6 months
6 months
to 12 months
1 to 2 years
Greater than
2 years
2017
Trade and other payables
Other financial liabilities
$
244,317
41,814
286,131
2016
Trade and other payables
830,230
Other financial liabilities
–
830,230
$
–
54,476
54,476
–
32,472
32,472
$
–
63,555
63,555
–
59,942
59,942
$
–
–
–
59,942
59,942
Total
$
244,317
159,845
404,162
830,230
152,356
982,586
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
31.
Financial risk management objectives and policies (cont’d)
(f)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where
appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its
counterparties are continuously monitored. The Group measures credit risk on a fair value basis.
The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having
similar characteristics. The credit risk on liquid funds is limited because the counterparties are banks with high credit–ratings
assigned by international credit–rating agencies.
The Group currently does not have any material debtors apart from GST receivable which is claimed at the end of each quarter
during the year.
It is a policy of the Group that creditors are paid within 30 days.
(g) Market price risk
Market risk is the potential for loss arising from adverse movements in the level and volatility of equity prices.
The Group’s investments subject to price risk are listed on the Australian Securities Exchange as detailed in note 11. A 1 per
cent increase at reporting date in the equity prices would increase the market value of the securities by $6 (2016: $13) and
an equal change in the opposite direction would decrease the value by the same amount. The increase/decrease would be
reflected in equity as these financial instruments are classified as available–for–sale. The increase/decrease net of deferred tax
would be $5 (2016: $9).
(h)
Capital risk management
For the purposes of the Group’s capital management, capital includes issued capital and all other equity reserves attributable
to the equity holders of the parent, which at 30 June 2017 was $3,883,759 (30 June 2016: $903,218). The Group’s objective
when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns for
shareholders.
At 30 June 2017 the Group does not hold any external debt funding (30 June 2016: Nil) and is not subject to any externally
imposed covenants in respect of capital management.
32.
Fair value measurement
The fair value of financial assets and financial liabilities of the Group approximated their carrying amount. It does not include fair
value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable
approximation of fair value. The table below analyses financial instruments carried at fair value by value measurement hierarchy.
Quantitative disclosures fair value measurement hierarchy
as at 30 June
Quoted
prices in
active
market
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobser-
vable inputs
(Level 3)
2017
Assets measured at fair value
Available-for-sale financial assets (note 11):
Quoted equity shares (i)
Unquoted equity shares (ii)
2016
Assets measured at fair value
Available-for-sale financial assets (note 11):
Quoted equity shares (i)
Unquoted equity shares (ii)
76 | H A N N A N S A N N U A L R E P O R T 2 0 1 7
660
–
660
1,300
–
1,300
–
–
–
–
–
–
–
1
1
–
1
1
Total
660
1
661
1,300
1
1,301
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2017
32.
Fair value measurement (cont’d)
The management assessed that cash and short-term deposits, trade receivables, trade payables and other current liabilities
approximate their carrying amounts largely due to the short term maturities of these instruments.
The fair value of the financial assets is included at the amount at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the
fair value:
(i)
Fair value of available-for-sale financial assets is derived from quoted market prices in active markets. Refer note 31(g) for
market price risk impact.
The historical cost has been used to fair value unquoted ordinary shares. There is no market for the share and the value of the
share does not warrant further discount or valuation.
(ii)
The estimated recoverable amount of the capitalised exploration and evaluation expenditure is classified as level 3 and is sensitive to
the movements in the iron ore and copper prices. The valuation methodology undertaken by the Group was determined with
reference to comparable exploration companies in the industry and their respective contained iron and copper resource multiples.
Refer note 14 for further information.
33.
Parent entity disclosures
The following details information related to the parent entity, Hannans Ltd, at 30 June 2017.
The information presented here has been prepared using consistent accounting policies as presented in note 2.
Results of the parent entity
Loss for the year
Other comprehensive income
Total comprehensive income/(loss) for the year
Financial position of parent entity at year end
Current assets
Non–current assets
Total Assets
Current liabilities
Non–current liabilities
Total Liabilities
Total equity of the parent entity comprising of:
Share capital
Reserves
Accumulated losses
Total Equity
2017
$
2016
$
(1,741,408)
(502,418)
–
–
(1,741,408)
(502,418)
1,090,336
2,811,668
3,902,004
285,258
63,555
348,813
1,621,269
121,632
1,742,901
780,861
119,884
900,745
51,270,709
297,378
47,013,839
118,155
(48,014,896)
(46,289,838)
3,553,191
842,156
(a)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had not entered into any guarantees in relation to the debts of its subsidiaries as at 30 June 2017 and
30 June 2016.
(b)
Commitments for the acquisition of property, plant and equipment by the parent entity
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2017 and 30 June 2016.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 | 77