For personal use only
ABOUT HANNANS LTD
Hannans Ltd (ASX:HNR) is an exploration company with a focus on nickel, gold and lithium
in Western Australia. Hannans(cid:146) major shareholder is leading Australian specialty minerals
company Neometals Ltd. 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, Gr(cid:228)ngesberg Iron, Lovisagruvan and Element
25. Shareholders at various times since listing have included Rio Tinto, Anglo American,
OM Holdings, Craton Capital and BlackRock.
For more information, visit www.hannansreward.com and search for (cid:145)Hannans(cid:146) on Twitter.
ANNUAL REPORT
FOR THE FINANCIAL YEAR ENDED
30 JUNE 2018
Corporate Directory ............................................................................................... 1
Directors(cid:146) Report .................................................................................................... 3
Independence Declaration to the Directors of Hannans Ltd ........................ 29
Directors(cid:146) Declaration .......................................................................................... 30
Independent Audit Report to the Members of Hannans Ltd ........................ 31
Consolidated Statement of Profit and Loss and Comprehensive Income .. 36
Consolidated Statement of Financial Position................................................. 37
Consolidated Statement of Changes in Equity ................................................ 38
Consolidated Statement of Cash Flows............................................................ 40
Notes to the Consolidated Financial Statements ........................................... 41
For personal use only
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(cid:146)s Terrace
Mr Jonathan Murray
REGISTERED OFFICE
Perth, Western Australian 6000
Telephone
1300 787 272
EXECUTIVE DIRECTOR
Level 11, 216 St Georges Terrace
Website
www.computershare.com.au
Mr Damian Hicks
Perth, Western Australia 6000
NON-EXECUTIVE DIRECTORS
POSTAL ADDRESS
Mr Markus Bachmann
PO Box 1227
AUDITORS
Ernst & Young
11 Mounts Bay Road
Mr Clay Gordon
Ms Amanda Scott
West Perth, Western Australia 6872
Perth, Western Australia 6000
CONTACT DETAILS
LAWYERS
COMPANY SECRETARY
Telephone
+61 (8) 9324 3388
Steinepreis Paganin
Mr Ian Gregory
Email
info@hannansreward.com
Level 4, The Read Buildings
Website
www.hannansreward.com
16 Milligan Street
ABN
52 099 862 129
Perth, Western Australia 6000
SOCIAL NETWORK SITES
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 8 1
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DIRECTORS(cid:146) 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 2018.
Dear Shareholders,
We continue our efforts to develop Hannans into a West Australian based mining company through exploration
success, project acquisition or joint venture.
Our current and principal focus centres on exploration for lithium at the Mt Holland project located 400kms
east of Perth and 150kms south of Southern Cross.
The Mt Holland area has a global following due to the decision by the world(cid:146)s largest producer of lithium,
the New York Stock Exchange listed SQM to invest into the Mt Holland Lithium Project owned by Australian
listed company Kidman Resources Ltd. Earl Grey is a world class hard rock lithium deposit and will underpin
a fully integrated lithium business.
Hannans is exploring the margins of two granites that may be source of the pegmatites hosting the
lithium mineralisation at Earl Grey. Our aim is to discover another economic lithium deposit at Mt
Holland and if we do, the value of your Company is likely to increase significantly.
Hannans also holds a 20% free-carried interest in the Forrestania Gold project. Our joint venture
partner Classic Minerals Ltd has been successful this year with a number of high grade gold results.
Whilst drilling activities continue, Hannans shareholders remain exposed to future exploration
success. Hannans is free carried until a decision to mine has been made. Whilst solid progress
continues to be made by our joint venture partner, we do not anticipate a funding requirement
within the next 12 months.
The nickel price and sentiment for nickel stocks generally is thought to be in an upward trend
due to the perceived increase in demand for the nickel required in rechargeable batteries.
Whilst we started a joint venture process for the Company(cid:146)s Forrestania and Queen Victoria
Rocks nickel projects, no arrangement has been formalised. We remain hopeful agreement
can be reached by the end of the year.
Hannans completed a capital raising in November 2017 at a price of 1.27 cents per share.
Our sincere thanks to all shareholders who participated in the raising. We acknowledge
the support provided by Euroz Securities in Perth and Arlington Group Asset Management
in London.
Your Board will continue to investigate potential acquisition opportunities that have
potential to add to stakeholder value. We believe we have the necessary technical
and corporate support to successfully execute and implement a major transaction.
Once again, and on behalf of my fellow Directors, we thank you for continued
interest and support.
Yours sincerely,
Jonathan Murray
Chairman
2 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
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DIRECTORS(cid:146) 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
¶
¶
¶
¶
¶
¶
¶
¶
¶
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(cid:146) 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 mineral 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 future funding.
Hannans needs to fund continued exploration and 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 8 | 3
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DIRECTORS(cid:146) REPORT
OPERATIONAL AND FINANCIAL REVIEW
Hannans(cid:146) focus throughout the year has been on lithium at its Mt Holland Project in the Yilgarn region of Western Australia. This has
included interpreting data sets from a combination of geophysics (airborne magnetics and radiometrics), geochemistry (from RAB,
aircore and reverse circulation drilling) and geology (from field mapping and the logging of drill samples).
Hannans(cid:146) joint venture partner Classic Minerals Ltd (ASX:CLZ) has been actively exploring for gold at Forrestania and has made a
number of encouraging gold intercepts. Hannans holds a 20% free-carried interest in gold rights at the Forrestania Gold Project,
meaning Hannans shareholders are exposed to exploration success without the need to fund additional costs, until a decision to mine
has been made.
Exploration completed by Hannans and its joint venture partners during the year ended 30 June 2018 is set out below:
July 2017
(cid:127) Gold at Forrestania
Joint venture partner extended high-grade gold zones at the Lady Magdalene deposit.
August 2017
(cid:127) Gold at Forrestania
Joint venture partner completed reverse circulation (RC) drilling at Lady Ada and commenced additional
drilling at Lady Magdalene. Drilling targeted high-grade extensions along strike and down dip at both Lady
Ada and Lady Magdalene.
September 2017
(cid:127) Lithium at Mt Holland
Phase 2 drilling commenced targeting a geological position like that hosting the Earl Grey lithium deposit.
Drilling comprised six traverses of rotary air blast (RAB) drilling (approximately 3,000 metres) to validate
the phase 1 soil anomalies. Drill holes were terminated at the interface of the softer weathered (oxidised)
rock and the hard fresh rock (the expected average depth was 50 metres). Samples were taken from the
last four metres of each drill hole, as this is the most reliable zone to assess whether the fresh rock
contains pegmatites hosting lithium.
October 2017
(cid:127) Lithium at Mt Holland
Drilling appeared to have intersected a fertile peraluminous granite which is important when exploring for
pegmatites hosting lithium. An updated interpretation of the (cid:145)margin(cid:146) of the granite intrusion was
prepared to aid future exploration targeting.
Exploration was focussed approximately 4km west of the interpreted margin of the granite intrusion
located on the eastern side of Hannans tenement E77/2219. Accurately mapping the margin of the
granite is important because it is this distance (i.e. 4km) from the margin that appears to be the distance
necessary to allow for cooling of the pegmatites sourced from the granite, and for differential
crystallization of exotic minerals including spodumene (an important lithium mineral). Much of the area
within the Hannans tenure is covered by windblown sands and thick scrub so identifying outcropping rocks
(including granites and pegmatites) is challenging.
Assay results from the phase 2 drilling were received. Six traverses of drilling were completed with the
holes spaced at 50 and 100 metre intervals. The holes were drilled to recognisable material and drilling
depths averaged 50 metres. Much of the material in the holes appeared to be oxidized granite only (i.e.
not pegmatitic rocks) as evidenced by the quartz, kaolinitic clays and occasional mica. If the partially
oxidized bottom of hole samples is representative of the underlying granite, then the granite is
interpreted to be peraluminous and can therefore be considered fertile.
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DIRECTORS(cid:146) REPORT
December 2017
(cid:127) Gold at Forrestania
Drilling by joint venture partner at Lady Ada returned high-grade gold results.
(cid:127) Lithium at Mt Holland
A major new ground position was secured at Mt Holland East adjacent to the potential source of a globally
significant lithium deposit. The highly prospective new tenure has not previously been the subject of
systematic exploration, is free of native title claims and is located outside the Jilbadgi Nature Reserve.
January 2018
(cid:127) Lithium at Mt Holland
Phase 3 reverse circulation (RC) drilling commenced at Mt Holland West. The initial program comprised
approximately 15 RC holes to depths ranging from 100 (cid:150) 200 metres. The RC holes were focussed on
testing the lithium soil anomalies generated in Hannans(cid:146) first two phases of drilling.
A detailed airborne geophysical survey at Mt Holland East project was completed. Flight lines were spaced
50 metres apart for a total survey of ~7,500 line kilometres covering ~260km2. The survey generated
detailed magnetic and radiometric data that assisted with mapping rock units to focus future field
activities. An initial reconnaissance field trip was completed and samples from outcropping rocks were
collected to gain a better understanding of the underlying geology.
February 2018
(cid:127) Gold at Forrestania
Drilling by joint venture partner at Lady Ada returned high-grade gold results highlighting the potential to
expand the current Mineral Resource Estimate at the Forrestania Gold Project. Drilling at Lady Magdalene
commenced with the goal of uncovering high-grade gold mineralisation between existing drill lines.
March 2018
(cid:127) Gold at Forrestania
Joint venture partner completed two diamond drill holes at the Lady Magdalene gold deposit. Drilling
confirmed high grade cross cutting gold structures like what occurs at Lady Ada located 700 metres south.
Several mineralisation controls have been identified that upgrade the depth and strike potential of the
2km-long Lady Magdalene/Lady Ada gold camp.
(cid:127) Lithium at Mt Holland
A major new target zone was identified at Mt Holland East. The target zone represents the intersection of
(north-south) structures and complex (east-west) dyke system within proximity of margins of granite
plutons, considered a favourable setting for mineral deposition. The target zone was identified from the
recently completed detailed airborne geophysical survey.
Phase 3 reverse circulation (RC) drilling at Mt Holland West intersected pegmatites however no significant
lithium assays were returned. The program comprised 16 RC drill holes for 1,866 metres in total. The deep
weathering (up to 80 metres) combined with strong oxidation and leaching of minerals made it very
difficult to identify lithium minerals in the samples. The depth of weathering of the western granitic pluton
was greater than anticipated and there was negligible sub-outcrop of granitic rocks. These facts made it
difficult to achieve satisfactory outcomes from the first reconnaissance drill program.
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DIRECTORS(cid:146) REPORT
April 2018
(cid:127) Gold at Forrestania
Joint venture partner commenced a RC drill program at Van Uden West.
May 2018
(cid:127) Gold at Forrestania
Joint venture partner made compelling new gold discovery made at Van Uden West with best results
including 12m at 5.75 g/t gold from 59m in VUWRC002. The new discovery was covered by a thin veneer
of transported sands and clays effectively masking the gold mineralisation from surface detection.
July 2018
(cid:127) Lithium at Mt Holland
Phase 4 reverse circulation (RC) of 14 RC holes was completed. Holes were spaced at approximately 200
metre intervals along an east-west line and the average hole depth was 120m. It appeared that
pegmatites were intersected in most of the holes drilled.
Tenement applications at Mt Holland East were granted and a programme of work for phase 1 drilling
(aircore) was lodged.
(cid:127) Gold at Forrestania
Joint venture partner uncovered three potential cross-cutting quartz veins at Lady Magdalene similar in
orientation to the high-grade Lady Ada deposit. The Lady Magdalene main ore zone yielded further thick
zones of gold mineralisation.
Exploration Expenditure
In line with the Group(cid:146)s accounting policy,
Hannans expensed $505,967 on
mineral exploration activities in 2018
(2017: $804,102) relating to its
non-JORC compliant mineral projects
which included an impairment of
$28,000 relating to the capitalise
exploration activities. These
amounts exclude all administration
and transaction costs.
Mineral Exploration Activities in 2018
Geological activities
Geochemical activities
Geophysical activities
Drilling
Field supplies
Field camp and travel
Drafting activities
Annual tenement rent & rates
Tenement administration
Tenement application fees
Impairment
TOTAL MINERAL EXPLORATION ACTIVITIES
$
72,057
17,104
82,622
165,415
42,025
30,314
6,585
24,414
22,163
15,268
28,000
%
14%
3%
16%
33%
8%
6%
1%
5%
4%
3%
6%
505,967
100%
6 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
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DIRECTORS(cid:146) REPORT
Corporate
Hannans completed one major capital raising during the year to fund exploration activities at Mt Holland and working capital. A summary of
the corporate activities for the 2017/2018 financial year is set out below:
September 2017
December 2017
(cid:127) Gold at North Ironcap
Received $160,000 form long term debtor.
October 2017
(cid:127) Price Query
ASX questioned the strong rise in price and volume of
trading in Hannans shares. Hannans confirmed it was
compliant with the Listing Rules.
(cid:127) Annual General Meeting
All resolutions put to the shareholders were passed by
a show of hands and a majority of proxy votes cast
were in favour of all resolutions.
November 2017
(cid:127) Option Issue
Issued options to directors that were approved at the
AGM.
(cid:127) Capital Raising
Announced exclusive offer to Hannans Shareholders to
purchase new shares at a 20% discount via Share
Purchase Plan (SPP) to raise up to $2.5M. Arlington
Group Asset Management and Euroz Securities were
appointed as Joint Lead Managers to the capital raise.
Funds to be allocated to exploration for lithium at
Forrestania / Mt Holland, due diligence on potential
acquisitions and working capital.
(cid:127) Option Exercise
8,333,334 unlisted options were exercised, and
3,683,334 unlisted options expired unexercised.
(cid:127) Oversubscribed Capital Raising
$3.6 Million raised at issue price of 1.27 cents per
share pursuant to Share Purchase Plan (SPP) and
Placement.
January 2018
(cid:127) Gold at North Ironcap
Received ~$163,000 from long term debtor.
June 2018
(cid:127) Lithium at Mt Holland and Nickel at Forrestania
Released a summary presentation of these two key
projects.
(cid:127) Nickel at Forrestania
After giving due consideration to the improving market
sentiment for nickel demand associated with
rechargeable batteries, engaged experienced
consulting firm Newexco Services to prepare target
generation report prior to concluding joint venture
process.
(cid:127) Gold at North Ironcap
Received final instalment from long term debtor.
(cid:127) Options Exercise
4,162,500 unlisted options were exercised.
H A N N A N S A N N U A L R E P O R T 2 0 1 7 7
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DIRECTORS(cid:146) REPORT
8 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
Goals Scorecard 2015 (cid:150) 2018
Starting with the Annual General Meeting 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 Outcomes on an annual basis. The table below highlights
Hannans achievements relative to the stated Goals:
Item
Shareholder
Returns
Stated Goal AGM
2015
Implement a strategy
giving shareholders the
opportunity to recover
their investment
Joint Venture
Projects
Monitor joint venture
partners(cid:146) activities
Sole funded
projects
Secure joint venture
partners
Corporate
Protect rights and
finalise outcomes
on the North Ironcap
transactions
Outcome to Date
Hannans share price was
0.3 cents on 24 November 2015,
1.8 cents on 24 November 2016,
1.6 cents on 24 November 2017 and
1.8 cents on 24 August 2018.
Hannans has a joint venture over
certain tenements at Forrestania with
Classic Minerals Ltd (ASX:CLZ). The joint
venture partner has been very active
and Hannans has released the results of
their exploration activities to the ASX.
Hannans has a joint venture for nickel,
lithium and gold at Lake Johnston with
Element 25 Ltd (ASX: E25) (previously
called Montezuma Mining Company
Ltd). Hannans is free-carried. The joint
venture partner has completed minimal
work on the project during the year.
Hannans will seek to clarify E25(cid:146)s
intentions with regards this project.
Hannans has elected to sole fund its
lithium exploration activities at Mt
Holland. Capital was raised in
November 2017 specifically for this
purpose. There is the potential to create
a great deal of value for shareholders at
Mt Holland with the focus on lithium.
This project currently gives Hannans its
greatest leverage.
Hannans continues to seek joint venture
partners for the Forrestania and Queen
Victoria Rocks nickel projects. The
Company expects outcomes on these
processes this year.
Hannans has now received full payment
for the North Ironcap gold rights. This
matter is now closed.
Hannans divested its Swedish portfolio
in September 2016 via an in specie
distribution into Critical Metals Ltd. It is
anticipated that this company will list
on the ASX late 2018 thereby realising
the first stage of value creation for
Hannans shareholders that received
shares via the in specie distribution.
Hannans will reset its three year Goals at the Annual General Meeting in 2018.
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DIRECTORS(cid:146) REPORT
PROJECTS
Figure 1. Location Map: Hannans(cid:146) Forrestania Mt Holland Project.
Lithium at Mt Holland
The Mt Holland Lithium Project is located adjacent to Earl Grey, one of the most significant hard rock lithium deposits in the world, jointly
owned by New York Stock Exchange listed SQM and ASX listed Kidman Resources Ltd. Earl Grey will underpin a world-class long-life
integrated lithium project1. Hannans(cid:146) exploration goal at Mt Holland is to discover a lithium deposit comparable to Earl Grey.
Hannans(cid:146) major shareholder is Neometals Ltd, a
leading Australian specialty minerals company
and minority owner of the producing Mt Marion
lithium mine.2
As noted the Earl Grey lithium deposit (shown in
Figure 2) is one of the most significant hard rock
lithium deposits in the world. The Bounty mine
produced more than 1.3M oz of gold and hosts
significant lithium mineralisation. Hannans(cid:146)
Mt Holland project is prospective for lithium
and gold.
The black dashed lines (shown in Figure 2)
represent N-S structures identified from the
recent airborne geophysical survey. The purple
N-S structures represent known ultramafic units.
The E-W Dyke contains a complex series of
dykes within the MHE project. The dykes may be
using structural weaknesses that have some
bearing on pegmatite mineralisation, however
there is no suggestion that the dykes and
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 9
pegmatites are linked genetically.
Figure 2. Plan view of Hannans Mt Holland Lithium Project.
1 Refer kidmanresources.com.au
2 Neometals Ltd (neometals.com.au) owns 36% of Hannans
For personal use only
DIRECTORS(cid:146) REPORT
Lithium at Mt Holland (cont(cid:146)d)
Hannans(cid:146) exploration activities are focused on two areas Mt Holland West and Mt Holland East. Both
projects cover tenure 4km from the interpreted margin of a granite intrusion that may be the source of the
pegmatites hosting the lithium at Earl Grey. This distance (i.e. 4km) appears to be the distance necessary
to allow for cooling of the pegmatites sourced from the granite and for differential crystallization of exotic
minerals including lithium minerals.
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DIRECTORS(cid:146) REPORT
Nickel at Forrestania
The Forrestania Nickel project joins the southern
portion of Hannans(cid:146) Mt Holland West Project. The
main area of nickel prospectivity is the interpreted
northern extension of the western ultramafic unit
that hosts the Fly Fox and Spotted Quoll high grade
nickel sulphide mines owned by Western Areas Ltd
(ASX:WSA). Hannans main nickel target is called the
Stormbreaker Prospect, which covers 10kms of strike
in this prospective area.
There is significant supporting infrastructure in the
Forrestania region, with good road access and an
existing electricity network primarily due to past and
present mining operations. Located to the south of
the Stormbreaker Prospect area is the 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.
Gold at Forrestania
Hannans Ltd (ASX: HNR) owns a 20% interest in the
Forrestania Gold Project (FGP). Joint venture partner
Classic Minerals Ltd (ASX:CLZ) is funding all
exploration and owns an 80% interest in gold rights
on specific Hannans tenements. For more
information on the FGP please refer to
www.classicminerals.com.au. Hannans' interest in
the FGP joint venture is free-carried, meaning the
Company is not required to fund any exploration
activities for gold until a decision to mine has been
made. Hannans shareholders remain exposed to the
upside on the FGP joint venture tenements without the requirement to fund exploration. For the avoidance of doubt Hannans Ltd owns a
100% interest in all non-gold rights on the FGP joint venture tenements and a 100% interest in all mineral rights on non-joint venture
tenements (generally comprising Mt Holland East).
ANNUAL RESOURCE STATEMENTS
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 and 30 June 2018.
JULY 2016 (cid:150) JUNE 2018
Forrestania Gold Project3
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
79,936
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
136,936
Competent Person(cid:146)s Statements (cid:150) 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 (cid:145)JORC Australian code for reporting of Exploration Results, Mineral Resources and Ore Reserves(cid:146). Mr Fry consents to the inclusion in this report of the
matters based on information in the form and context in which it appears.
3 Refer to Classic Minerals Ltd (ASX: CLZ) ASX announcement on 1 March 2017 for further information.
H A N N A N S R E W A R D A N N U A L R E P O R T 2 0 1 5 11
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DIRECTORS(cid:146) 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 Hicks was a founding Director of
Hannans Ltd and appointed to the position
of Managing Director on 5 April 2007 and
appointed as
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(cid:146)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.
During the past 3 years Mr Hicks did not serve as a director on
other listed companies.
Mr Clay Gordon, Non-Executive Director
(Appointed 5 October 2016)
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(cid:146) experience in
roles (operational, management
senior
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, founding Managing Director of ASX listed Primary
Gold Limited and currently as the Group Geologist of a private
mining investment company, Adaman Resources Pty Ltd. 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
Institute of
Geoscientists.
the Australian
During the past 3 years Mr Gordon has also served as a director
of the following other listed companies:
* Denotes current directorship
¶ Primary Gold Ltd
(appointed 28 February 2013; resigned 7 March 2016)
Mr Murray is a partner at law firm
Steinepreis Paganin, based
in Perth,
Western Australia. He has significant
experience
in equity capital market
transactions, mergers and acquisitions and
corporate governance and
providing
to public companies.
strategic advice
Mr Murray graduated
from Murdoch
University in 1996 with a Bachelor of
in
Laws
and
Accounting) and was appointed as a partner of Steinepreis
Paganin in 2001. He is also a member of FINSIA (formerly the
Securities Institute of Australia).
Commerce
(majoring
During the past 3 years Mr Murray has also served as a director of
the following other listed companies:
* Denotes current directorship
¶ Vietnam Industrial Investments Limited*
(appointed 19 January 2016)
¶ Peak Resources Limited* (appointed 22 February 2011)
Mr Markus Bachmann, Non-Executive Director
(Appointed 2 August 2012)
Mr Bachmann graduated with Honours
((cid:147)cum laude(cid:148)) 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(cid:146)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(cid:146)s (cid:147)Outstanding
Achievement Awards(cid:148) 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.
12 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
DIRECTORS(cid:146) REPORT
DIRECTORS (cont(cid:146)d)
COMPANY SECRETARY
Ms Amanda Scott
(Appointed Non-Executive Director on 29 November 2016,
previously appointed director of subsidiaries on 29 March 2014)
Mr Ian Gregory
(Appointed 5 April 2007)
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(cid:146)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.
In 2016, Ms Scott created Scandinavian-based consultancy Scott
Geological providing geological and exploration services to a
number of clients from around the world.
During the past 3 years Ms Scott did not serve as a director on
other listed companies.
Director(cid:146)s Relevant Interest in Shares and Options
is a professionally well-
Mr Gregory
connected
Company
and
Director
Secretary with over 30 years(cid:146) experience
in the provision of company secretarial
and business administration services in a
variety
including
exploration, mining, mineral processing,
oil and gas, banking and insurance.
industries,
of
Mr Gregory holds a Bachelor of Business
degree from Curtin University and is a
Fellow of the Governance Institute of
Australia, the Financial Services Institute of Australia and a
Member of the Australian Institute of Company Directors.
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. He has also
served on the National Council of GIA.
At the date of this report the following table sets out the current Directors(cid:146) relevant interests in shares and options of Hannans Ltd and the
changes since 30 June 2018.
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
Amanda Scott
7,007,217
12,205,132
72,697,917
2,362,204
1,260,001
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
14,737,500
14,197,917
10,500,000
15,833,333
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(i)
These shares are held by Craton Capital Funds of which Mr Bachmann is a founding partner and Chief Executive Officer.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 13
For personal use only
DIRECTORS(cid:146) 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(cid:150)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(cid:146)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(cid:146)s policy for determining the nature and amount of remuneration for Board members and senior executives is as follows:
¶
¶
¶
¶
¶
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 Executive Director and executives receive a superannuation guarantee contribution required by the government where
applicable, 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(cid:150)Scholes and Monte Carlo methodology where relevant.
The Board policy is to remunerate non(cid:150)executive directors at market rates for comparable companies for time, commitment and
responsibilities. The Board determines payments to the non(cid:150)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(cid:150)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 $250,000 which may be divided among the Non-Executive
Directors in the manner determined by the Board and Company from time to time. Fees for Non(cid:150)Executive Directors are not linked
to the performance of the Company. The 2017 remuneration report was approved at the last Annual General Meeting held on
27 October 2017.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders investment objectives and
directors and executive performance. The Company facilitates this through the issue of options from time to time to the directors and
executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in
increasing shareholder wealth. The Company currently has no performance based remuneration component built into director and executive
remuneration packages.
The Board does not consider earnings during the current and previous financial years when determining, and in relation to, the nature and
amount of directors(cid:146) remuneration. Refer below for a summary of the Group(cid:146)s earnings and the Company(cid:146)s market performance for the past
5 years.
Summary of 5 Years earnings and market performance as at 30 June
Profit/(Loss) ($)
Share price (c)
Market capitalisation
(Undiluted) ($)
2018
2017
2016
2015
2014
(1,379,271)
11,663,780
(964,387)
(29,120,403)
(1,015,324)
1.4
1.5
1.6
0.2
0.5
27,724,264
25,239,608
15,531,324
1,443,932
3,609,831
14 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED) (cont(cid:146)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 12 and 13.
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
$
Options
(iii)
$
Long
term
benefits
(iv)
$
Other
benefits
$
Total
$
Value
options as
proportion of
remuneration
%
2018
Directors
Damian Hicks (v)
218,000
Jonathan Murray (vi)
Markus Bachmann (vi)
Clay Gordon (vi)
Amanda Scott (vi)
Total
2017
Directors
Damian Hicks
Jonathan Murray
Markus Bachmann
Clay Gordon (vii)
Amanda Scott (viii)
Olof Forslund (ix)
20,000
20,000
20,000
20,000
298,000
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
2,312
2,311
2,311
2,311
2,311
(cid:150)
(cid:150)
(cid:150)
1,900
(cid:150)
11,556
1,900
120,000
179,497
2,274
11,400
12,000
3,000
12,000
9,000
7,000
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
2,274
2,274
1,676
1,332
604
(cid:150)
(cid:150)
(cid:150)
855
(cid:150)
Total
(i)
(ii)
(iii)
163,000
179,497
10,434
12,255
Short Term Other benefits include annual leave accrued and taken
during the year was nil (2017: $10,512) 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 the forgiveness of 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.
The amounts included are issued under Hannans(cid:146) Employee Share
Option Plan (ESOP) approved by shareholder in November 2014
and Hannans(cid:146) Director Equity Option Plan (DEQ) approved by
shareholder in September 2016. The amounts are non-cash items
that are subject to vesting conditions. Refer to note 8 for more
information.
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
289,830
72,458
72,457
72,458
72,457
579,660
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
71,967
29,216
24,391
(cid:150)
1,686
29,216
7,419
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
156,476
7,419
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
510,142
94,769
94,768
96,669
94,768
891,116
392,557
43,490
29,665
13,676
12,873
36,820
529,081
56.8%
76.5%
76.5%
75.0%
76.5%
65.0%
18.3%
67.2%
82.2%
0.0%
13.1%
79.3%
29.6%
(iv)
(v)
Long term benefits include benefits increment in unpaid long
service leave (2017: $7,419). On 26 July 2017, the balance of the
long service leaves was paid to Mr Hicks.
After a further review of Mr Hicks(cid:146) 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.
(vi) After a further review of Non-Executive Directors(cid:146) fees, the Board
resolved to increase these fees to $20,000 per annum starting from
1 July 2017.
(vii) Mr Gordon was appointed director on 5 October 2016.
(viii) On 29 November 2016, Ms Scott was appointed as a Non-Executive
Director of the Company.
(ix) 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 8 | 15
For personal use only
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED) (cont(cid:146)d)
C.
Service agreements
Executive Director
Mr Hicks commenced employment with Hannans Ltd on 3 December 2003 and entered into an employment agreement as Managing
Director of the Company on 21 December 2009.
On 29 November 2016, Mr Hicks was appointed as the Executive Director of the Group. After a further review of Mr Hicks(cid:146) 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. Under the new contract Mr Hicks is not entitles to any annual leave or
long service leave.
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. Starting from 1 July 2017 Non-Executive Directors fees is $20,000 per annum for each Non-executive Director.
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(cid:150)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.
If approved by shareholders, 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 84,000,000
unlisted options were issued. As at 30 June 2018, 55,268,750 options (2017: 39,532,584) were held by Directors and Non-Executives.
Options
issued
during the
year
No.
Issue date
Fair
value
per
options
at issue
date
Vesting
date
Exercise
price
Expiry
date
Vested
during the
year
No.
Lapsed/
Exercised
during the
year
No.
Directors
Damian Hicks (i)
Financial
year
2015
2015
2015
2017
(cid:150)
(cid:150)
(cid:150)
(cid:150)
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
21 Nov 19
15 Sep 17
0.9 cents
15 Sep 17
2.7 cents
15 Sep 20
(cid:150)
(cid:150)
(cid:150)
(cid:150)
2018
14,000,000
27 Oct 17
1.0 cents
27 Oct 17
2.6 cents
27 Oct 20
14,000,000
2018
14,000,000
27 Oct 17
1.0 cents
27 Oct 18
2018
14,000,000
27 Oct 17
1.2 cents
27 Oct 19
(ii)
(iii)
27 Oct 21
27 Oct 22
(cid:150)
(cid:150)
16 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
3,166,667
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
For personal use only
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED) (cont(cid:146)d)
D.
Share(cid:150)based compensation (cont(cid:146)d)
Directors
Jonathan Murray
Markus Bachmann
Clay Gordon
Amanda Scott
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/
Exercised
during the
year
No.
2015
2015
2015
2017
2018
2018
2018
2015
2015
2015
2017
2018
2018
2018
2018
2018
2018
2015
2015
2015
2018
2018
2018
(cid:150)
(cid:150)
(cid:150)
(cid:150)
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
21 Nov 19
15 Sep 17
0.9 cents
15 Sep 17
2.7 cents
15 Sep 20
(cid:150)
(cid:150)
(cid:150)
(cid:150)
3,500,000
27 Oct 17
1.0 cents
27 Oct 17
2.6 cents
27 Oct 20
3,500,000
3,500,000
27 Oct 17
1.0 cents
27 Oct 18
3,500,000
27 Oct 17
1.2 cents
27 Oct 19
(ii)
(iii)
27 Oct 21
27 Oct 22
(cid:150)
(cid:150)
(cid:150)
(cid:150)
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
21 Nov 19
15 Sep 17
0.9 cents
15 Sep 17
2.7 cents
15 Sep 20
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
3,500,000
27 Oct 17
1.0 cents
27 Oct 17
2.6 cents
27 Oct 20
3,500,000
3,500,000
27 Oct 17
1.0 cents
27 Oct 18
3,500,000
27 Oct 17
1.2 cents
27 Oct 19
(ii)
(iii)
27 Oct 21
27 Oct 22
(cid:150)
(cid:150)
3,500,000
27 Oct 17
1.0 cents
27 Oct 17
2.6 cents
27 Oct 20
3,500,000
3,500,000
27 Oct 17
1.0 cents
27 Oct 18
3,500,000
27 Oct 17
1.2 cents
27 Oct 19
(ii)
(iii)
27 Oct 21
27 Oct 22
(cid:150)
(cid:150)
(cid:150)
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
21 Nov 19
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
3,500,000
27 Oct 17
1.0 cents
27 Oct 17
2.6 cents
27 Oct 20
3,500,000
3,500,000
27 Oct 17
1.0 cents
27 Oct 18
3,500,000
27 Oct 17
1.2 cents
27 Oct 19
(ii)
(iii)
27 Oct 21
27 Oct 22
(cid:150)
(cid:150)
500,000
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
500,000
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
3,166,667
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(i)
(ii)
(iii)
At the direction of Mr Hicks, 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.
Exercise price will be calculated from the volume weighted average share price for the five (5) trading days before and five (5)
trading days after 27 October 2018 PLUS a premium of 50%.
Exercise price will be calculated from the volume weighted average share price for the five (5) trading days before and five (5)
trading days after 27 October 2019 PLUS a premium of 50%.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 17
For personal use only
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED) (cont(cid:146)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
2018
Damian Hicks (i)
Jonathan Murray (i)
Markus Bachmann (i)
Clay Gordon (i)
Amanda Scott
Balance at
1 July
No.
Granted as
remuneration
No.
Received on
exercise of
options
No.
6,416,667
9,736,629
63,797,917
(cid:150)
1,260,001
81,211,214
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
500,000
500,000
(cid:150)
(cid:150)
Net other
change
No.
590,550
1,968,503
8,400,000
2,362,204
(cid:150)
Balance at
30 June
No.
7,007,217
12,205,132
72,697,917
2,362,204
1,260,001
1,000,000
13,321,257
95,532,471
(i)
The Directors participated in Hannans(cid:146) Share Purchase Plan completed in December 2017.
Options of Hannans Ltd
Key management personnel
2018
Damian Hicks (i)
Jonathan Murray (ii)
Markus Bachmann
Clay Gordon
Amanda Scott
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
(cid:150) 42,000,000
(cid:150)
(42,000,000)
(cid:150)
14,000,000
28,000,000
4,737,500 10,500,000
(500,000)
4,197,917 10,500,000
(500,000)
(cid:150) 10,500,000
8,500,000 10,500,000
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
14,737,500
7,737,500
7,000,000
14,197,917
7,197,917
7,000,000
10,500,000
3,500,000
7,000,000
(3,166,667) 15,833,333
8,833,333
7,000,000
17,435,417 84,000,000
(1,000,000) (45,166,667) 55,268,750
41,268,750
56,000,000
(i)
(ii)
Mr Hicks received 42,000,000 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.
The options include those held directly, indirectly and beneficially by KMP.
18 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
DIRECTORS(cid:146) REPORT
REMUNERATION REPORT (AUDITED) (cont(cid:146)d)
E.
Additional information (cont(cid:146)d)
Loans to KMP and their related parties
There were no loans to KMP and their related parties during the year.
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 $9,757 (2017: $36,354) to the Group
during the year. The amounts paid were on arm(cid:146)s length commercial terms. Mr Murray(cid:146)s director(cid:146)s fees are also paid to Steinepreis Paganin.
At 30 June 2018 the Group owed $924 (2017: Nil) to Steinepreis Paganin.
Corporate Board Services Pty Ltd (CBS), of which Mr Damian Hicks is a director, provided accounting and compliance services amounting to
$150,000 (2017: $150,000) to the Group during the year. The amounts paid were on arm(cid:146)s length commercial terms. At 30 June 2018 there
was no amount outstanding owed to CBS. During the year, Hannans invoiced $3,700 for expenses paid on behalf CBS. At 30 June 2018 CBS
owed $924 (2017: Nil) to the Group.
Amberley Minerals Pty Ltd, of which Mr Clay Gordon is a director, did not provide geological services to the Group during the year (2017:
$12,690). At 30 June 2018 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
Amanda Scott
Board Meetings
Held while
Director
Attended
Circular
Resolutions
Passed
4
4
4
4
4
4
4
3
4
4
8
8
8
8
8
Total
12
12
11
12
12
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DIRECTORS(cid:146) 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
E77/2207-I
E77/2219-I
E77/2220-I
E77/2239-I
E77/2303
100
100
100
100
100
1
1
1
1
1
P77/4290
P77/4291
E77/2488
E77/2489
E77/2498
Project: Forrestania
E77/2460
Project: Queen Victoria Rocks
1
1
E15/1416
Project: Lake Hope
E63/1865
100
100
100
100
100
100
100
100
NOTE:
1
Reed Exploration Pty Ltd (REX) is a wholly owned subsidiary of Hannans Ltd. REX is the registered holder of the tenements.
REX holds a 100% interest in all minerals excluding gold. REX holds a 20% free-carried interest in the gold rights.
TENEMENTS UNDER APPLICATION
Applications for tenements have been submitted are as follows:
Tenement Number
Tenement Number
Tenement Number
Project: Lake Hope
E63/1897
Project: Forrestania
E77/2468
E77/2469
E77/2520
E77/2545
E77/25460
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%)
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DIRECTORS(cid:146) 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 2018
Ordinary fully paid shares at the date of this report^
Number of shares
1,980,304,538
1,980,304,538
At a general meeting of shareholders:
(a)
(b)
on a show of hands, each person who is a member or sole proxy has one vote; and
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 12 unlisted option holders holding 125,022,513 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
Issued at 2.6 cents, expiring 27 October 2020
Issue price will be VWAP* for five (5) trading days before and five (5) trading days
after 27 October 2018 PLUS a premium of 50%, expiring 27 October 2021
Issue price will be VWAP* for five (5) trading days before and five (5) trading days
after 27 October 2019 PLUS a premium of 50%, expiring 27 October 2022
Exercised at 0.8 cents, expiring 20 November 2017
Expired at 0.8 cents, expiring 20 November 2017
Exercised at 0.4 cents, expiring 3 June 2018
Balance at 30 June 2018
Total number of options outstanding at the date of this report
* VWAP = Volume Weighted Average Price
Substantial Shareholders
Hannans Ltd has the following substantial shareholders as at 3 September 2018:
Number of options
57,201,681
28,000,000
28,000,000
28,000,000
(8,333,334)
(3,683,334)
(4,162,500)
125,022,513
125,022,513
Name
Number of shares
Percentage of issued capital
Neometals Investments Pty Ltd
706,209,483
35.66%
Range of Shares as at 3 September 2018
Range
Total Holders
1 (cid:150) 1,000
1,001 (cid:150) 5,000
5,001 (cid:150) 10,000
10,001 (cid:150) 100,000
100,001 (cid:150) 9,999,999
Total
121
201
184
1,053
952
2,511
Units
33,113
689,683
1,552,614
51,840,428
1,926,188,700
1,980,304,538
% Issued Capital
0.00%
0.03%
0.08%
2.62%
97.27%
100.00%
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DIRECTORS(cid:146) REPORT
CAPITAL (cont(cid:146)d)
Unmarketable Parcels as at 3 September 2018
Minimum $500.00 parcel at $0.014 per unit
35,715
Minimum parcel size
Holders
966
Units
12,976,103
Top 20 holders of Ordinary Shares as at 3 September 2018
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Neometals Investments Pty Ltd
J P Morgan Nominees Australia Limited
MCA Nominees Pty Ltd
Equity & Royalty Investments Ltd
Anglo American Exploration
Marfield Pty Limited
Mr Bruce Drummond + Mrs Judith Drummond
Redland Plains Pty Ltd
CSB Investments (Wa) Pty Ltd
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
Mr Michael Sydney Simm
Acacia Investments Pty Ltd
Mrs Andrea Murray
Mossisberg Pty Ltd
HSBC Custody Nominees (Australia) Limited - A/C 2
Allua Holdings Pty Ltd
Mr Daryl Ponsford
Anglo American Exploration BV
Redland Plains Pty Ltd
Units
706,209,483
137,665,359
87,401,545
60,000,003
60,000,000
26,896,651
23,000,000
21,668,669
20,182,432
18,466,564
18,020,602
16,500,001
15,083,502
10,775,956
10,577,744
10,006,573
10,000,000
8,100,000
7,389,162
7,291,232
% of Issued
Capital
35.66%
6.95%
4.41%
3.03%
3.03%
1.36%
1.16%
1.09%
1.02%
0.93%
0.91%
0.83%
0.76%
0.54%
0.53%
0.51%
0.51%
0.41%
0.37%
0.37%
Total of Top 20 holders of ORDINARY SHARES
1,275,235,478
64.38%
On-market buy back
There is no current on-market buy-back.
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DIRECTORS(cid:146) 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 $1,481,828.
During the year total exploration expenditure expensed by the Group amounted to $505,967 (2017: $804,102). The exploration expenditures
relate to non JORC compliant mineral resource projects and this has been expensed in accordance with the Group(cid:146)s accounting policy. The
administration expenditure incurred amounted to $1,335,430 (2017: $1,094,012). This has resulted in an operating loss after income tax for
the year ended 30 June 2018 of $1,379,271 (2017: $11,663,780 gain).
As at 30 June 2018 cash and cash equivalents totalled $4,082,079.
Summary of 5 Year Financial Information as at 30 June
Cash and cash equivalents ($)
4,082,079
1,481,828
1,425,160
2018
2017
2016
2015
345,497
2014
695,163
Net assets/equity ($)
6,788,307
4,043,759
903,218
73,563
29,189,786
Exploration expenditure expensed ($)
(505,967)
(804,102)
(29,998)
(387,160)
(534,311)
Exploration and evaluation
expenditure capitalised ($)
No of issued shares
No of options
Share price ($)
(28,000)
2,688,000^
(97,599)
(161,630)
(577,164)
1,980,304,538
125,022,513
1,682,640,560
57,201,681
970,707,755
102,712,500
721,966,133
36,050,000
721,966,133
Nil
0.014
0.015
0.016
0.002
0.005
Market capitalisation (Undiluted) ($)
27,724,264
25,239,608
15,531,324
1,443,932
3,609,831
^
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 2018
Highest
Lowest
Latest
Price (cents)
3.3
1.1
1.4
Date
16 Jan 2018
28 Jul, 31 Aug, 11 Oct 2017
3 September 2018
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DIRECTORS(cid:146) REPORT
ANNOUNCEMENTS
ASX Announcements for the year and to the date of this report
Date
Announcement Title
Date
Announcement Title
28/08/2018
Mt Holland Lithium Update
22/11/2017
New Closing Date for SPP
06/08/2018
Gold at Forrestania
10/11/207
Share Purchase Plan (SPP) Offer
31/07/2018
4th Quarter Activities Report
7/11/2017
Capital Raising to Support Growth Strategy
31/07/2018
4th Quarter Cashflow Report
25/07/2018
Gold at Forrestania
23/07/2018
Mt Holland Lithium Update
03/07/2018
Appendix 3Y
7/11/207
6/11/207
6/11/207
1/11/207
Cleansing Notice
Appendix 3Ys
Issue of Options
1st Quarter Activities Report
14/06/2018
Mt Holland and Forrestania Projects
31/10/207
1st Quarter Cashflow Report
4/06/2018
Updated Capital Structure
27/10/207
AGM Results
16/05/2018
High-Grade Gold at Forrestania
27/10/207
AGM Presentation
30/04/2017
3rd Quarter Cashflow Report
25/10/207
Forrestania Lithium Project
30/04/2017
3rd Quarter Activities Report
25/10/207
Reinstatement to Official Quotation
23/03/2018
2KM Long Gold Camp
24/10/207
Request for voluntary suspension
22/03/2018
Mt Holland East Major Target
24/10/207
Suspension from Official Quotation
2/03/2018
Half Year Financial Report
20/10/207
Trading halt
1/03/2018
Forrestania Gold Project
16/10/2017
Response to ASX Price & Volume Query
9/02/2018
Forrestania High Grade Gold
27/09/2017
2017 Annual Report
1/02/2018
2nd Quarter Activities Report
27/09/2017
Appendix 4G
31/01/2018
2nd Quarter Cashflow Report
27/09/2017
Notice of Annual General Meeting
16/01/2018
Mt Holland Lithium
19/09/207
Forrestania Lithium Project
15/12/2017
Appendix 3Y
28/08/2017
Release of shares from escrow
14/12/2017
Major Lithium Ground Position
24/08/2017
Forrestania Drilling Update
13/12/2017
Change of Substantial Holder
3/08/2017
13,000m drilling program for gold at FGP
13/12/2017
Forrestania High Grade Gold
31/07/2017
4th Quarter Activities Report
11/12/2017
Oversubscribed Capital Raising
28/07/2017
4th Quarter Cashflow Report
24/11/2017
Exercise of Options
25/07/2017
High Grade Gold
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DIRECTORS(cid:146) 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 (cid:145)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(cid:146)s capital markets. The Principles and
Recommendations can be viewed at www.asx.com.au. The Board has assessed the Group(cid:146)s current practice against the Principles and
Recommendations and other than the matters specified below under (cid:147)If Not, Why Not(cid:148) Disclosure, all the best practice recommendations
of the ASX Corporate Governance Council have been applied.
Please refer to the Company(cid:146)s website (www.hannansreward.com) for Hannans(cid:146) 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(cid:146)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 2018 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(cid:146)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. There are no
independent directors on the Board. Details of their skills, experience and expertise and the period of office held by each
Director have been included in the Directors(cid:146) Report. The number of Board meetings and the attendance of the Directors are
set out in the Directors(cid:146) Report.
The Board considers that the composition of the existing Board is appropriate given the scope and size of the Group(cid:146)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.
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DIRECTORS(cid:146) REPORT
CORPORATE GOVERNANCE STATEMENT (cont(cid:146)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(cid:146)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(cid:146)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(cid:146)s affairs. It is not considered necessary to have a separate risk committee.
7.2 The Board should review the entity(cid:146)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(cid:146)s affairs.
The Board has a number of mechanisms in place to ensure management(cid:146)s objectives and activities are aligned by the Board.
These include but are not limited to the following:
¶ Board approval of a strategic plan, which
¶
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(cid:146) 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(cid:146)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(cid:146)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(cid:146)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(cid:146)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.
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DIRECTORS(cid:146) REPORT
CORPORATE GOVERNANCE STATEMENT (cont(cid:146)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(cid:146)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(cid:146)s expense obtain independent
professional advice to properly discharge their responsibilities.
Executive Director (ED) and Group Finance Officer Certifications
The ED and Group Finance Officer provide the following declaration to the Board in respect of each quarter, half and full year financial
period:
¶
¶
¶
¶
that Hannans financial records have been properly maintained;
that Hannans(cid:146) 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(cid:146) 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.
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(cid:146)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(cid:146)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.
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DIRECTORS(cid:146) REPORT
COMPLIANCE (cont(cid:146)d)
Share options
As at the date of this report, there were 125,022,513 options on issue to purchase ordinary shares at a range of exercise prices (125,022,513
at the reporting date). Refer to the remuneration report for further details of the options outstanding.
At a General Meeting held on 27 October 2017 shareholders approved the issue of related party option to the Directors in three (3) tranches.
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)
a wilful breach of duty, and
(b)
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 $11,556.
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(cid:150)Audit Services
During the year Ernst & Young, the Group auditor, did not performed other non-audit services in addition to its statutory duties.
Auditor(cid:146)s independence declaration
The auditor(cid:146)s independence declaration as required under section 307C of the Corporations Act 2001 is included on page 29.
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
Jonathan Murray
Non-Executive Chairrman
Perth, Australia this 6th day of September 2018
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INDEPENDENCE DECLARATION TO THE DIRECTORS OF
HANNANS LTD
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DIRECTORS(cid:146) DECLARATION
The Directors declare that:
(a)
(b)
in the Directors(cid:146) 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(cid:146) 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 2018; 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 2018.
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
Jonathan Murray
Non-Executive Chairman
Perth, Australia this 6th day of September 2018
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INDEPENDENT AUDIT REPORT TO THE MEMBERS OF
HANNANS LTD
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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
for the financial year ended 30 June 2018
Revenue
Other income
Other income
Net gain from settlement of transaction
Gain on disposal of exploration and evaluation assets
Employee and contractors expenses
Depreciation expense
Consultants expenses
Interest expense
Occupancy expenses
Marketing expenses
Exploration and evaluation expenses
Other expenses
Note
5(a)
5(b)
5(c)
25
5(d)
5(e)
5(f)
2018
$
38,924
423,202
(cid:150)
(cid:150)
(879,560)
(1,270)
(226,429)
(cid:150)
(4,000)
(11,745)
(505,967)
(212,426)
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)
(Loss)/Income from continuing operations before income tax expense
(1,379,271)
11,663,780
Income tax benefit/(expense)
(Loss)/Income 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
(cid:150)
(cid:150)
(1,379,271)
11,663,780
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
322,150
(52,270)
269,880
(cid:150)
269,880
Total comprehensive (loss)/income for the year
(1,379,271)
11,933,660
Net (loss)/income attributable to the parent entity
(1,379,271)
11,663,780
Total comprehensive (loss)/income attributable to the parent entity
(1,379,271)
11,933,660
(Loss)/Profit per share:
Basic (cents per share)
Diluted (cents per share)
The accompanying notes form part of the financial statements.
(0.07)
(0.07)
0.78
0.77
36 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2018
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total current assets
Non(cid:150)current assets
Other receivables
Property, plant and equipment
Other financial assets
Exploration and evaluation expenditure
Total non(cid:150)current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Provisions
Other financial liabilities
Total current liabilities
Non(cid:150)current liabilities
Other financial liabilities
Total non(cid:150)current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of the financial statements.
Note
2018
$
2017
$
10
11
12
13
11
14
15
16
17
17
18
19
20
4,082,079
1,481,828
41,965
6,950
256,883
65,999
4,130,994
1,804,710
56,000
1,056
79,672
2,660,000
2,796,728
6,927,722
124,690
(cid:150)
14,725
139,415
(cid:150)
(cid:150)
139,415
56,000
2,326
(cid:150)
2,688,000
2,746,326
4,551,036
244,317
103,115
96,290
443,722
63,555
63,555
507,277
6,788,307
4,043,759
40,840,777
37,296,618
838,321
297,378
(34,890,791)
(33,550,237)
6,788,307
4,043,759
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 37
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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 8 | 39
For personal use only
CONSOLIDATED STATEMENT OF CASH FLOWS
for the financial year ended 30 June 2018
Cash flows from operating activities
Receipts from customers
Payments for exploration and evaluation
Payments to suppliers and employees
Interest received
Note
2018
$
2017
$
(cid:150)
(562,336)
(970,085)
19,502
88,671
(795,148)
(876,926)
23,351
Net cash used in operating activities
29(b)
(1,512,919)
(1,560,052)
Cash flows from investing activities
Proceed on sale of tenements
Payment on sale of tenements to minority interest holder
Payment for property, plant and equipment
Cash forgone on disposal of subsidiaries
Cash acquired from acquisition of subsidiary
Payments for acquisition of subsidiary
Net cash 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
Net cash provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate fluctuations on cash held
611,013
(80,000)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
600,000
(120,000)
(1,892)
(250,000)
1,000,000
(121,521)
521,013
1,106,587
3,621,635
83,317
(112,795)
3,592,157
2,600,251
1,481,828
(cid:150)
(cid:150)
270,833
(7,125)
263,708
(189,757)
1,675,160
(3,575)
Cash and cash equivalents at the end of the financial year
29(a)
4,082,079
1,481,828
The accompanying notes form part of the financial statements.
40 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
1.
General Information
The consolidated financial statements of Hannans Ltd (Company or Hannans) and its subsidiaries (collectively, the Group) for the year
ended 30 June 2018 were authorised for issue in accordance with a resolution of the Directors on 5 September 2018.
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 27.
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 32.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2018
and the comparative information presented in these financial statements for the year ended 30 June 2017.
(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(cid:146)s annual consolidated financial statements for the year ended 30 June 2017. All other new
standards and interpretations effective from 1 July 2017 were adopted with the main impact being disclosure changes. Changes
to accounting policies due to the adoption of these standards and interpretations are not considered significant for the Group.
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 2018:
Reference / Title
AASB 9
Financial Instruments
Application date of standard
Application date for Group
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 (cid:145)expected loss(cid:146) 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.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 41
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
2.
Statement of significant accounting policies (cont(cid:146)d)
(b)
New Accounting Standards for Application in the Current Financial Year and Future Periods (cont(cid:146)d)
New standards issued but not yet effective (cont(cid:146)d)
Reference / Title
AASB 9 (cont(cid:146)d)
Financial Instruments
Application date of standard
Application date for Group
1 January 2018
1 July 2018
Summary
(cont(cid:146)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:
·
The change attributable to changes in credit risk are presented in other comprehensive income (OCI)
The remaining change is presented in profit or loss
·
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(cid:146)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 (cid:150) 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
The assessment is ongoing. The preliminary result to date indicates a change in disclosure with no material
remeasurement impact at 1 July 2018.
42 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
2.
Statement of significant accounting policies (cont(cid:146)d)
(b)
New Accounting Standards for Application in the Current Financial Year and Future Periods (cont(cid:146)d)
New standards issued but not yet effective (cont(cid:146)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(cid:151)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 (cid:150) 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(cid:146)s current principal activities being that of exploration and evaluation, adoption of
AASB 15 is not expected to have a significant impact. The Group(cid:146)s revenue recognition policy will be
reviewed to ensure compliance with AASB 15 upon adoption.
AASB 2016-5
Amendments to Australian Accounting Standards
(cid:150) Classification and Measurement of Share-based
Payment Transactions
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.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 43
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
2.
Statement of significant accounting policies (cont(cid:146)d)
(b)
New Accounting Standards for Application in the Current Financial Year and Future Periods (cont(cid:146)d)
New standards issued but not yet effective (cont(cid:146)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
·
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.
· A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly
to other financial liabilities.
· 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.
· AASB 16 contains disclosure requirements for lessees.
Lessor accounting
· 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.
· AASB 16 also requires enhanced disclosures to be provided by lessors that will improve information
disclosed about a lessor(cid:146)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(cid:151)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.
44 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
2.
Statement of significant accounting policies (cont(cid:146)d)
(c)
Cash and cash equivalents
(e)
Financial assets (cont(cid:146)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
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
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 (cid:145)at fair value
through profit or loss(cid:146), (cid:145)available(cid:150)for(cid:150)sale(cid:146) financial
assets, and (cid:145)loans and receivables(cid:146). 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(cid:150)for(cid:150)sale financial assets
Shares and options held by the Group are classified as
being available(cid:150)for(cid:150)sale and are stated at fair value less
impairment. Gains and losses arising from changes in
fair value are recognised directly in the available(cid:150)for(cid:150)
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(cid:150)for(cid:150)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.
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.
(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(cid:150)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(cid:146)s fair value less
costs to sell and value in use to the asset(cid:146)s carrying
value. Excess of the asset(cid:146)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.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 45
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
2.
Statement of significant accounting policies (cont(cid:146)d)
(i)
Impairment of non-financial assets (cont(cid:146)d)
(i)
Tax (cont(cid:146)d)
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.
(j)
Exploration and evaluation expenditure
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.
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(cid:150)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(cid:150)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(cid:150)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.
46 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
2.
Statement of significant accounting policies (cont(cid:146)d)
(k)
Joint arrangements
Joint ventures
(k)
Joint arrangements (cont(cid:146)d)
Joint operations
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(cid:146)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(cid:146)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(cid:146)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(cid:146)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(cid:146)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 (cid:145)Share of profit of a
joint venture(cid:146) 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.
The Group(cid:146)s recognises its interest in joint operations by
recognising its:
¶ Assets, including its share of any assets held jointly
¶
Liabilities, including its share of any liabilities
incurred jointly
¶ Revenue from the sale of its share of the output
arising from the joint operation
¶ Share of the revenue from the sale of the output by
the joint operation
¶
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.
(m)
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in
Australian Dollars, which is Hannans(cid:146) functional and
presentation currency.
Transactions and balance
Transactions in foreign currencies are initially recorded
in the functional currency (Australian Dollars (AUD)) 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(cid:146)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.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 47
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
2.
Statement of significant accounting policies (cont(cid:146)d)
(m)
Foreign currency translation (cont(cid:146)d)
(n)
Principles of consolidation (cont(cid:146)d)
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.
(n)
Principles of consolidation
The consolidated financial statements comprise the
financial statements of Hannans and its subsidiaries as
at and for the period ended 30 June 2018 (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:
¶ Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee);
¶
¶
Exposure, or rights, to variable returns from its
involvement with the investee; and
The ability to use its power over the investee to
affect its returns.
When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether
it has power over an investee, including:
¶
The contractual arrangement with the other vote
holders of the investee;
¶ Rights arising from other contractual arrangements;
and
¶
The Group(cid:146)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(cid:146)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:
¶ De-recognises the assets (including goodwill) and
liabilities of the subsidiary;
¶ De-recognises the carrying amount of any non-
controlling interests;
¶ De-recognises the cumulative translation
differences recorded in equity;
¶ Recognises the fair value of the consideration
received;
¶ Recognises the fair value of any investment
retained;
¶ Recognises any surplus or deficit in profit or loss;
and
¶ Reclassifies the parent(cid:146)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.
48 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
2.
Statement of significant accounting policies (cont(cid:146)d)
(o)
Plant and equipment
(r)
Share(cid:150)based payments
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 (cid:150) 20.00
Building
2.50
Office equipment
7.50 (cid:150) 66.67
Motor vehicles
16.67 (cid:150) 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.
(q)
Revenue recognition
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.
Service fee
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.
Equity(cid:150)settled share(cid:150)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(cid:146)s best
estimate, for the effects of non(cid:150)transferability, exercise
restrictions, and behavioural considerations.
The fair value determined at the grant date of the
equity(cid:150)settled share(cid:150)based payments is expensed on a
straight(cid:150)line basis over the vesting period, based on the
entity(cid:146)s estimate of shares that will eventually vest.
For cash(cid:150)settled share(cid:150)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 measures 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:
¶
¶
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:
¶
¶
¶
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.
(t)
Segment reporting policy
Operating segments are identified and segment
information disclosed on the basis of internal reports
that are regularly provided to, or reviewed by the
Group(cid:146)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.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 49
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
3.
Critical accounting estimates and judgements
In the application of the Group(cid:146)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 (cid:151) 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 (cid:151) share(cid:150)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.
4.
Subsidiaries
The consolidated financial statements of the Group include:
Name of entity
Parent entity:
Hannans Ltd (i)
Subsidiaries:
HR Equities Pty Ltd (ii)
HR Forrestania 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
2018
2017
% Ownership interest
Exploration
Australia
Equities holding
Exploration
Exploration
Exploration
Exploration
Holding company
Exploration
Exploration
Australia
Australia
Australia
Australia
Australia
Australia
Sweden
Sweden
100
100
100
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
100
100
100
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
^
(i)
(ii)
(iii)
(iv)
On 27 September 2016 the in-specie distribution was completed. Refer to note 25 for further information.
Hannans Ltd (Hannans) is the ultimate parent entity. All the companies are members of the group.
The 100% interest in HR Equities Pty Ltd, HR Forrestania 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.
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.
50 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
5.
Income/(expenses) from operations
(a)
Revenue
Interest revenue
Bank
Loans
Total revenue
(b)
Other Income
Asset sale
Other
Total other income
(c)
Net gain on settlement of transaction
Gain from settlement of transaction
Less: Settlement costs
Total net gain on settlement of transaction
(d)
Employee benefits expense
Salaries and wages
Post employment benefits:
Defined contribution plans
Share(cid:150)based payments:
Equity settled share(cid:150)based payments
Total employee benefits expense
2018
$
2017
$
24,590
14,334
38,924
411,013
12,189
423,202
22,037
11,755
33,792
800,000
87,962
887,962
(cid:150)
(cid:150)
(cid:150)
1,000,000
(90,000)
910,000
298,000
180,871
1,900
12,717
579,660
879,560
195,573
389,161
(e)
Depreciation of non(cid:150)current assets
1,270
11,613
(f)
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)
4,000
(cid:150)
4,000
120,581
(10,660)
109,921
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 51
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
6.
Income taxes (cont(cid:146)d)
The prima facie income tax benefit/(expense) on pre(cid:150)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% (2017: 27.5%)
Effect of expenses that are not deductible in determining taxable profit
Adjustment of prior year balances due to change in tax rate
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%
(2017: 27.5%) 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
2018
$
(1,379,271)
(379,300)
160,000
(cid:150)
219,300
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
2017
$
11,663,780
3,207,540
300
241,921
(cid:150)
(5,078,974)
1,629,213
(cid:150)
(cid:150)
(cid:150)
Statement of
Financial Position
Statement of
Comprehensive Income
2018
$
2017
$
2018
$
2017
$
Deferred Income Tax
Deferred income tax at 30 June
relates to the following
Deferred tax liabilities
Exploration and evaluation assets
(313,223)
(225,907)
(87,316)
(225,907)
Unearned income
Prepayments
Deferred tax assets
Accruals
Prepayments
Provision for employee entitlements
Provision (cid:150) other
Financial assets
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
(1,860)
(4,045)
(461)
(cid:150)
13,255
–
(cid:150)
(cid:150)
2,874
42,551
(cid:150)
4,773,005
5,083,809
11,275
3,877
30,122
(cid:150)
(cid:150)
10,119
1,678
4,463,983
5,078,974
(9,596,366)
(9,373,660)
(cid:150)
(cid:150)
(1,399)
(4,045)
1,980
(3,877)
(30,122)
(cid:150)
2,874
32,432
(1,678)
309,022
4,835
392
(cid:150)
(28,229)
230
(1,532)
(949)
(cid:150)
(39,004)
34,006
(2,339,065)
5,078,974
(222,706)
(2,478,916)
(cid:150)
(cid:150)
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.
52 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
7.
Key management personnel disclosures
(a)
Details of key management personnel
The Directors and Executives of Hannans Ltd during the year were:
Directors
·
·
·
Damian Hicks
Jonathan Murray
Markus Bachmann
·
·
Clay Gordon
Amanda Scott
(b)
Key management personnel compensation
The aggregate compensation made to key management personnel of the Company
and the Group is set out below.
Short(cid:150)term employee benefits
Share based payments
Long(cid:150)term employee benefits
Post(cid:150)employment benefits
Total key management personnel compensation
2018
$
2017
$
309,556
579,660
(cid:150)
1,900
891,116
352,931
156,476
7,419
12,255
529,081
The compensation of each member of the key management personnel of the Group is set out in the Directors Remuneration report
on pages 14 to 19.
8.
Share(cid:150)based payments
The Company has an ownership(cid:150)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(cid:150)executive) are subject to approval by shareholders and attach vesting
conditions as appropriate.
On 3 June 2018 4,162,500 unlisted options exercisable at 0.4 cents expiring on 3 June 2018 were exercised. These unlisted options
were not share based payments to employees of the Group.
The following share(cid:150)based payment arrangements were in existence during the current and comparative reporting periods:
Options series
20 November 2014
20 November 2015
20 November 2016
15 September 2016
27 October 2017
27 October 2018
Number
Grant date
Expiry date
12,016,668
20 November 2014
20 November 2017
7,850,001
20 November 2014
20 November 2018
12,016,664
20 November 2014
20 November 2019
21,155,848
11 November 2016
15 September 2020
28,000,000
28,000,000
27 October 2017
27 October 2018
27 October 2020
27 October 2021
27 October 2019
28,000,000
27 October 2019
27 October 2022
Exercise price
Cents
0.8
0.5
2.9
2.7
2.6
VWAP* for
5 trading days before
and 5 trading days
after 27 October 2018
(+)50% premium
VWAP* for
5 trading days before
and 5 trading days
after 27 October 2019
(+)50% premium
* VWAP = Volume Weighted Average Price
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 14 to 19.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 53
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
8.
Share-based payments (cont(cid:146)d)
The following reconciles the outstanding share options granted at the beginning and end of the financial year:
2018
2017
Weighted
average
exercise price
$
0.019
0.035
(0.009)
(0.008)
0.032
0.032
Number of
options
53,039,181
84,000,000
(8,333,334)
(3,683,334)
125,022,513
125,022,513
Weighted
average
exercise price
$
0.015
0.010
(cid:150)
(cid:150)
0.019
0.019
Number of
options
36,050,000
21,155,848
(4,166,667)
(cid:150)
53,039,181
53,039,181
Balance at beginning of the financial year
Granted during the financial year
Exercised during the financial year
Expired during the financial year
Balance at end of financial year
Exercisable at end of the financial year
(i)
Issued during the financial year
On 27 October 2017 Hannans held a General Meeting shareholders approved the issue of related party options. On
14 November 2016 21,155,848 share options were granted to the directors of the Company. The options terms and conditions
are shown below.
Details
Number of options
Exercise price
Expiry date
Vesting date (ii)
(i)
Tranche 1
Tranche 2
Tranche 3
Total
28,000,000
28,000,000
28,000,000
84,000,000
$0.026
(i)
(i)
27 Oct 2020
27 Oct 2021
27 Oct 2022
27 Oct 2017
27 Oct 2018
27 Oct 2019
Exercise price will be calculated from the volume weighted average share price for the five (5) trading days before and five (5)
trading days after the Vesting Date for each Tranche PLUS a premium of 50%. The Monte-Carlo simulation model was used for
Tranche 2 and 3.
(ii)
Senior executive and employees are entitled to the Options upon working for the Group to the vesting dates. Options that have
vested prior to termination must be exercised within three months or they will lapse, unvested options will lapse immediately on
termination.
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 for Tranche 1. There is no cash settlement of the options.
The weighted average fair value of the options granted during for period was $0.011 (2017: $0.009)
For the year ended 30 June 2018, the Group has recognised $579,660 of share-based payments transactions expense in the
statement of profit or loss (2017: $195,573).
(ii)
Exercised at end of the financial year
During the financial year a total of 8,333,334 (2017: 4,166,667) options over ordinary shares were exercised, comprising of
the following:
·
8,333,334 at 0.8 cents options expiring on 20 November 2017 to raise $66,667.
(iii)
Expired during the financial year
During the financial year a total of 3,683,334 options over ordinary shares were exercised, comprising of the following:
·
No options expired in the prior year.
3,683,334 at 0.8 cents options expiring on 20 November 2017.
(iv) 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 $0.032 (2017: $0.019)
and a weighted average remaining contractual life of 2.76 years (2017: 2.03 years).
54 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
9.
Remuneration of auditors
The auditor of Hannans Ltd is Ernst & Young.
Audit or review of the financial report of the Group
Australia
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)
2018
$
2017
$
32,262
(cid:150)
32,262
3,343
17,148
21,474
41,965
38,110
(cid:150)
38,110
1,722
33,841
221,320
256,883
(i)
(ii)
There were no current trade and other receivables that were past due but not impaired (2017: nil).
Hannans entered into a legally binding unconditional agreement with Mine Builder Pty Ltd (Mine Builder) for the sale of Hannans(cid:146) 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(cid:146) statutory demand. Mine Builder had until 8 March 2017 to pay the claimed amount. If payment was not received by 8 March
2017 Hannans could have applied 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 were made in accordance with the amended timetable.
9 March 2017
$300,000
8 June 2017
8 September 2017
$300,000
$200,000
8 December 2017
$200,000
$200,000
On 13 February 2018 the Company served a statutory demand on Mine Builder for
the outstanding instalments including interest being the balance of the
consideration payable for the acquisition of the North Ironcap Gold Rights. All payments have been received at the date of this report.
8 March 2018
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
Loans to outside entities (iii)
2018
$
2017
$
6,949
1
(cid:150)
6,950
79,672
79,672
660
1
65,338
65,999
(cid:150)
(cid:150)
Total
(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(cid:146)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 2018 amounts to $29,672 (2017: $15,338). The loan is repayable by Errawarra on 1 July 2019. Refer to note
27 for further information.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 55
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
12. Non(cid:150)current other receivables
Other receivables (cid:150) bonds
13.
Property, plant and equipment
Cost
Balance at 1 July 2016
Additions
Disposals
Exchange differences
Transfer to assets held for distribution (i)
Balance at 1 July 2017
Additions
Disposals
Exchange differences
Balance at 30 June 2018
Accumulated depreciation and impairment
Balance at 1 July 2016
Depreciation expense
Disposals on deconsolidation
Exchange differences
Transfer to assets held for distribution (i)
Balance at 1 July 2017
Depreciation expense
Disposals
Exchange differences
Balance at 30 June 2018
Net book value
As at 30 June 2017
As at 30 June 2018
Aggregate depreciation allocated during the year:
Office furniture and equipment
Building
56 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
2018
$
56,000
56,000
2017
$
56,000
56,000
Office furniture
and equipment
at cost
$
78,907
1,892
(61,707)
(cid:150)
(cid:150)
19,092
(cid:150)
(cid:150)
(cid:150)
19,092
69,835
8,638
(61,707)
(cid:150)
(cid:150)
16,766
1,270
(cid:150)
(cid:150)
18,036
2,326
1,056
Building
at cost
$
3,326
(cid:150)
(3,326)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
351
2,975
(3,326)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Total
$
82,233
1,892
(65,033)
(cid:150)
(cid:150)
19,092
(cid:150)
(cid:150)
(cid:150)
19,092
70,186
11,613
(65,033)
(cid:150)
(cid:150)
16,766
1,270
(cid:150)
(cid:150)
18,036
2,326
1,056
2018
$
1,270
(cid:150)
1,270
2017
$
8,638
2,975
11,613
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
14.
Exploration and evaluation expenditure
Balance at beginning of financial year
Capitalised acquisition costs (i)
LESS: Disposal of assets
Balance at end of financial year
2018
$
2017
$
2,688,000
(cid:150)
(cid:150)
2,688,000
(28,000)
2,660,000
(cid:150)
2,688,000
(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(cid:146) 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 was not a business combination as the acquisition of REX did not meet the definition of a (cid:145)business(cid:146) 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:
Purchase consideration
Shares issued
Acquisition costs
Total purchase consideration
Net assets acquired
Cash
Deferred exploration and evaluation expenditure
Total net assets acquired
29 Sep 2016
$
3,566,479
121,521
3,688,000
1,000,000
2,688,000
2,688,000
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
2018
$
22,866
97,700
4,124
124,690
2017
$
148,053
41,000
55,264
244,317
(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.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 57
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
16.
Provisions
Current
Employee benefits (i)
2018
$
2017
$
(cid:150)
(cid:150)
103,115
103,115
(i)
On 26 July 2017, the balance of the annual leave ($42,845) and long service leave ($60,270) provision was paid to Mr Hicks.
Employee
benefits
$
111,067
(7,952)
(cid:150)
(cid:150)
(cid:150)
103,115
(103,115)
(cid:150)
(cid:150)
(cid:150)
Rent (cid:150)
unoccupied
space
$
10,660
(cid:150)
(10,660)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Total
$
121,727
(7,952)
(10,660)
(cid:150)
(cid:150)
103,115
(103,115)
(cid:150)
(cid:150)
(cid:150)
2018
$
2017
$
14,725
14,725
(cid:150)
(cid:150)
96,290
96,290
63,555
63,555
Balance at 1 July 2016
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 2017
Settlement of provision
Utilised during the year
Unwinding of discount rate and
changes in the discount rate
Balance at 30 June 2018
17.
Other financial liabilities
Current
Payroll related liabilities
Non-current
Payroll related liabilities
58 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
18.
Issued capital
1,980,304,538 fully paid ordinary shares (2017: 1,682,640,560)
2018
$
2017
$
40,840,777
40,840,777
37,296,618
37,296,618
Fully paid ordinary shares
Balance at beginning of financial year
1,682,640,560
37,296,618
970,707,755
46,285,309
2018
No.
$
2017
No.
$
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 (cid:150) 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
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Exercise of options to shares - 20 November 2017
8,333,334
Share Purchase Plan - 11 December 2017
Placement of shares - 11 December 2017
Exercise of options to shares - 3 June 2018
Share issue costs
127,480,231
157,687,913
4,162,500
(cid:150)
66,667
1,619,000
2,002,635
16,650
(160,793)
25,000,000
4,166,667
6,250,000
100,000
20,833
25,000
(cid:150)
(13,245,562)
620,833,333
3,566,479
17,032,584
306,587
4,123,264
31,250,000
3,276,957
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
74,219
125,000
45,878
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(7,125)
Balance at end of financial year
1,980,304,538
40,840,777
1,682,640,560
37,296,618
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Option conversions
Date of conversion
No of options
20 November 2017
3 June 2018
TOTAL
8,333,334
4,162,500
12,495,834
Exercise price
per option
0.008 cents
0.004 cents
Expiry date
20 November 2017
3 June 2018
Increase in
contributed equity
$
66,667
16,650
83,317
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 59
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
19.
Reserves
Balance at the beginning of the financial year
Option reserve
Balance at the end of the financial year
The balance of reserves is made up as follows:
Option reserve
Nature and purpose of reserves
Option reserve
2018
$
297,378
540,943
838,321
838,321
838,321
2017
$
118,155
179,223
297,378
297,378
297,378
The option reserve recognises the fair value of options issued and valued using the Black-Scholes and Monte-Carlo simulation
model.
Share options
As at 30 June 2018, options over 125,022,513 (2017: 57,201,681) ordinary shares in aggregate are as follows:
Issuing entity
Hannans Ltd
Hannans Ltd
Hannans Ltd
Hannans Ltd
Hannans Ltd
No of shares
under option
7,850,001
12,016,664
21,155,848
28,000,000
28,000,000
Class of shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Hannans Ltd
28,000,000
Ordinary
Expiry date
of options
20 Nov 2018
20 Nov 2019
15 Sep 2020
27 Oct 2020
27 Oct 2021
27 Oct 2022
Exercise price
of option
0.5 cents each
2.9 cents each
2.7 cents each
2.6 cents each
VWAP* for 5
trading days
before and 5
trading days after
27 October 2018
(+)50% premium
VWAP* for 5
trading days
before and 5
trading days after
27 October 2019
(+)50% premium
Share options are all unlisted, carry no rights to dividends and no voting rights. A total of 84,000,000 (2017: nil) were issued during
the period. A total of 12,495,834 (2017: 66,666,667) were exercised during the period. A total of 3,683,334 (2017: nil) expired
unexercised during the period.
20.
Accumulated losses
Balance at beginning of financial year
(Loss)/Profit attributable to members of the parent entity
(33,550,237)
(1,379,271)
(45,230,366)
11,663,780
Items of other comprehensive income recognised directly in retained earnings
Options exercised
Balance at end of financial year
38,717
16,349
(34,890,791)
(33,550,237)
2018
$
2017
$
60 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
21.
(Loss)/Profit per share
Basic (loss)/profit per share:
Diluted (loss)/profit per share:
(Loss)/Profit for the year
2018
Cents per share
2017
Cents per share
(0.07)
(0.07)
0.78
0.77
The loss and weighted average number of ordinary shares used in the calculation of basic and diluted loss per share are as follows:
(Loss)/Profit for the year
Weighted average number of ordinary shares
for the purposes of basic loss per share
Effects of dilution from:
Share options
Weighted average number of ordinary shares adjusted
for the effect of dilution loss per share
2018
$
2017
$
(1,379,271)
11,663,780
2018
No.
2017
No.
1,845,054,765
1,501,173,559
(cid:150)
14,520,037
1,845,054,765
1,515,693,596
At 30 June 2018 125,022,513 were not included in the diluted earnings per share calculation as they are anti-dilutive.
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(cid:150)cancellable operating leases as at
30 June 2018 are as follows: (i)
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
2018
$
2017
$
169,000
676,000
(cid:150)
845,000
4,000
(cid:150)
(cid:150)
4,000
74,000
456,000
(cid:150)
530,000
3,000
(cid:150)
(cid:150)
3,000
(i)
The Group has an office lease on a month by month basis, expiring 31 December 2018 and with rent payable monthly in advance.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 61
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
23.
Contingent liabilities and contingent assets
The Office of State Revenue ((cid:145)OSR(cid:146)) 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
Operating segments are identified and segment information disclosed on the basis of internal reports that are regularly provided to,
or reviewed by, the Group(cid:146)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. The Group operates in the mineral exploration industry in Australia. The segment information provided to the Board
for the reportable segments is as follows and the financial results from these segments 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 shareholders. The Swedish projects are part of the
Critical Metals group (refer to note 25 for further information).
Revenue analysis by geographic area
Australia
Scandinavia
Consolidated
Result analysis by geographic area
Australia
Sweden
Loss/(Profit) before income tax benefit
Income tax benefit/(expense)
(Loss)/Profit for the year
Assets and liabilities analysis by geographic area
Australia
Scandinavia
Consolidated
Revenue
Total revenue and other income
2018
$
38,924
(cid:150)
38,924
2017
$
33,792
(cid:150)
33,792
2018
$
2017
$
462,126
921,754
(cid:150)
(cid:150)
462,126
921,754
2018
$
2017
$
(1,379,271)
(cid:150)
(1,379,271)
(cid:150)
10,774,861
888,919
11,663,780
(cid:150)
(1,379,271)
11,663,780
Assets
Liabilities
2018
$
2017
$
2018
$
6,927,722
4,551,036
139,415
(cid:150)
(cid:150)
(cid:150)
2017
$
507,277
(cid:150)
6,927,722
4,551,036
139,415
507,277
62 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
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) held the following rights and obligations:
·
·
·
·
Free carried interest in Pahtohavare copper-gold project (under joint venture with Lovisagruvan AB);
Kiruna iron projects;
Swedish lithium exploration prospects, including the historic Varutr(cid:228)sk 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
(cid:150)
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:
·
·
$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(cid:146) 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.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 63
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
26.
Joint operations
Name of project
Lake Johnston (i)
Principal activity
Exploration
Interest
2018
%
15
2017
%
(cid:150)
Forrestania (ii)
The Group(cid:146)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
20
(i)
(ii)
Reed Exploration entered into a joint venture with Montezuma Mining Company Ltd (Montezuma) (ASX: MZM) whereby Reed
Exploration retained a 15% interest in the Lake Johnston Project which is free-carried until a decision to mine has been made,
at which point Reed Exploration may elect to contribute or revert to a 1% net smelter royalty. Montezuma is required to meet
all exploration expenditure to keep the project in good standing.
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(cid:146)s interests in joint operations are disclosed in notes 22 and
26 respectively.
27.
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 26 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(cid:146)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 2019. 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:
64 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
27.
Related party disclosures (cont(cid:146)d)
(c)
Loans to key management personnel and their related parties (cont(cid:146)d)
30 June 2018
Total for KMP
Total for other related parties (i)
Total for key management personnel
and their related parties 2018
30 June 2017
Total for KMP
Total for other related parties (i)
Total for key management personnel
and their related parties 2017
Opening
Balance
$
(cid:150)
65,338
Closing
Balance
$
(cid:150)
79,672
Interest
charged
$
(cid:150)
14,334
65,338
79,672
14,334
(cid:150)
53,582
(cid:150)
65,338
(cid:150)
11,756
53,582
65,338
11,756
Number in
group at
30 June
(cid:150)
1
1
(cid:150)
1
1
(i)
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(cid:146)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.
(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*
$
2018
2017
2018
2017
2018
2017
(cid:150)
(cid:150)
3,700
(cid:150)
(cid:150)
(cid:150)
9,757
36,354
150,000
150,000
(cid:150)
12,690
(cid:150)
(cid:150)
1,827
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
* The amounts are classified as trade receivables and trade payables, respectively.
(e)
Parent entity
The ultimate parent entity in the Group is Hannans Ltd.
28.
Subsequent events
No matters or circumstances have arisen since 30 June 2018 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.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 65
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
29. 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
(b)
Reconciliation of loss for the year to net cash flows from
operating activities
(Loss)/Profit for the year
Profit on disposal of exploration and evaluation assets
Net gain from settlement of transaction
Net gain from sale of tenement
Impairment of available-for-sale investments
Depreciation of non(cid:150)current assets
Equity settled share-based payments
Interest on loan to outside entity
Foreign exchange differences
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(cid:150)cash investing activities
In-specie distribution of Critical Metals Ltd (refer note 25)
Acquisition of exploration and evaluation asset
Non(cid:150)cash financing activities
2018
$
2017
$
1,382,079
2,700,000
4,082,079
781,828
700,000
1,481,828
(1,379,271)
(cid:150)
(cid:150)
(371,013)
3,711
1,270
579,660
(14,334)
(cid:150)
11,663,780
(11,730,140)
(910,000)
(640,000)
640
11,613
195,573
(11,755)
48,589
42,919
16,293
(375,861)
(204,645)
(1,512,919)
(1,560,052)
(cid:150)
(cid:150)
(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.
66 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
30.
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 2018, shares in various other listed mining companies. The use of financial derivatives is
governed by the Group(cid:146)s Board of Directors.
The Group(cid:146)s activities expose it primarily to the financial risks of changes in interest rates, but at 30 June 2018 it is also
exposed to market price risk. The Group does not enter into derivative financial instruments to manage its exposure to interest
rate.
(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(cid:146)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
2017:
2018
Variable rate instruments
Cash flow sensitivity
2017
Variable rate instruments
Cash flow sensitivity
Profit or Loss
1%
increase
1%
decrease
Equity
1%
increase
1%
decrease
30,317
30,317
14,818
14,818
(30,317)
(30,317)
(14,818)
(14,818)
30,317
30,317
14,818
14,818
(30,317)
(30,317)
(14,818)
(14,818)
The following table details the Group(cid:146)s exposure to interest rate risk.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 67
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
30.
Financial risk management objectives and policies (cont(cid:146)d)
(d)
Interest rate risk management (cont(cid:146)d)
Fixed maturity dates
Other financial assets
20.00%
Consolidated
2018
Financial assets:
Cash and cash
equivalents
Trade and other
receivables
Other receivables
(cid:150) non-current
Financial liabilities:
Trade and
other payables
Other financial liabilities
2017
Financial assets:
Cash and cash
equivalents
Trade and other
receivables
Weighted
average
effective
interest
rate
Variable
interest
rate
%
$
0.60%
3,031,651
Less
than 1
year
$
(cid:150)
(cid:150)
79,672
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
2.55%
56,000
3,087,651
79,672
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
14,725
14,725
1.31%
1,481,764
(cid:150)
(cid:150)
65,338
2.30%
56,000
(cid:150)
1,537,764
65,338
Other financial assets
20.00%
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
96,290
96,290
63,555
63,555
1(cid:150)5
years
$
5+
years
$
Non
interest
bearing
$
Total
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
1,050,428
4,082,079
41,965
(cid:150)
41,965
79,672
56,000
(cid:150)
1,092,393
4,259,716
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
124,690
124,690
(cid:150)
14,725
124,690
139,415
64
1,481,828
256,883
256,883
(cid:150)
(cid:150)
65,338
56,000
256,947
1,860,049
244,317
244,317
(cid:150)
159,845
244,317
404,162
Other receivables
(cid:150) non-current
Financial liabilities:
Trade and
other payables
Other financial
liabilities
68 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
30.
Financial risk management objectives and policies (cont(cid:146)d)
(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(cid:146)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(cid:146)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
$
124,690
14,725
139,415
244,317
41,814
286,131
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
54,476
54,476
63,555
63,555
$
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
Total
$
124,690
14,725
139,415
244,317
159,845
404,162
2018
Trade and other payables
Other financial liabilities
2017
Trade and other payables
Other financial liabilities
(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(cid:146)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(cid:150)ratings
assigned by international credit(cid:150)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(cid:146)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 $69 (2017: $6) 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(cid:150)for(cid:150)sale. The increase/decrease net of deferred tax
would be $49 (2017: $5).
(h)
Capital risk management
For the purposes of the Group(cid:146)s capital management, capital includes issued capital and all other equity reserves attributable
to the equity holders of the parent, which at 30 June 2018 was $6,788,307 (30 June 2017: $4,083,759). The Group(cid:146)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 2018 the Group does not hold any external debt funding (30 June 2017: Nil) and is not subject to any externally
imposed covenants in respect of capital management.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 69
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
31.
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)
2018
Assets measured at fair value
Available-for-sale financial assets (note 11):
Quoted equity shares (i)
Unquoted equity shares (ii)
2017
Assets measured at fair value
Available-for-sale financial assets (note 11):
Quoted equity shares (i)
Unquoted equity shares (ii)
6,949
(cid:150)
6,949
660
(cid:150)
660
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
(cid:150)
1
1
(cid:150)
1
1
Total
6,949
1
6,950
660
1
661
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 30(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.
70 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
32.
Parent entity disclosures
The following details information related to the parent entity, Hannans Ltd, at 30 June 2018.
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(cid:150)current assets
Total Assets
Current liabilities
Non(cid:150)current liabilities
Total Liabilities
Total equity of the parent entity comprising of:
Share capital
Reserves
Accumulated losses
Total Equity
2018
$
2017
$
(1,115,848)
(1,741,408)
(cid:150)
(cid:150)
(1,115,848)
(1,741,408)
1,181,779
5,496,732
6,678,511
117,348
(cid:150)
117,348
1,090,336
2,811,668
3,902,004
285,258
63,555
348,813
54,814,869
838,321
51,270,709
297,378
(49,092,027)
(48,014,896)
6,561,163
3,553,191
(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 2018 and
30 June 2017.
(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 2018 and 30 June 2017.
H A N N A N S A N N U A L R E P O R T 2 0 1 8 | 71
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the financial year ended 30 June 2018
72 | H A N N A N S A N N U A L R E P O R T 2 0 1 8
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