Zn discovery in the making
20
17 Annual Report
TABLE OF CONTENTS
DIRECTORS’ REVIEW .....................................................................................................2
OPERATIONAL REVIEW .................................................................................................5
CORPORATE GOVERNANCE STATEMENT ....................................................................15
DIRECTORS’ REPORT ................................................................................................... 23
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME ....................................................................31
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ........................................... 32
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................ 33
CONSOLIDATED STATEMENT OF CASH FLOWS .........................................................34
NOTES TO THE FINANCIAL STATEMENTS .................................................................. 35
DIRECTORS’ DECLARATION ........................................................................................ 57
AUDITOR’S INDEPENDENCE DECLARATION ..............................................................58
INDEPENDENT AUDITOR’S REPORT ..........................................................................59
SHAREHOLDER INFORMATION ..................................................................................63
TENEMENT SCHEDULE ................................................................................................65
INCA MINERALS LTD ANNUAL REPORT 2017 | 1
DIRECTORS’ REVIEW
The Directors are pleased to present the Company’s Annual Report and Financial Statements for the financial year ended
30 June 2017 (report period).
The 2016 – 2017 financial year was highly productive for the Company as it continued its growth through investing shareholder funds
in careful exploration, acquiring prospective projects, and minimising administrative expenditure wherever possible.
The majority of the report period saw Inca complete extensive mapping and sampling programs to identify optimal drill targets
for inclusion in the Company’s planned drill program at Riqueza – the Company’s zinc-silver-lead project in Peru. Some four-square
kilometres were mapped and sampled leading to recognition of a replacement style Zn-Ag-Pb deposit at the Humaspunco-Pinta
prospect and an intrusive-related epithermal style Zn-Ag-Pb-Au-Cu-Mn deposit at the Uchpanga prospect.
Maintaining productive agreements and relationships with local communities in the Company’s project areas remained a high priority
during the report period. Importantly, and through these agreements, community backing and support underpinned progress on
the Company’s application for a permit to undertake drilling at Riqueza. The approval to commence a drilling program of at least
14,000m at Riqueza was obtained toward the latter end of March 2017 whereupon the Company commenced the project’s maiden
drilling campaign. At time of writing the Company has completed 23 drill holes (in excess of 3,650m of drilling) with the vast majority
of the planned drilling program to be conducted throughout 2017/2018.
Both during and immediately post the report period the Company was able to increase its landholding in the Riqueza project area
with the granting of eight additional concessions surrounding the initial project area. Through results-based expansion the Company
now has four distinct and prospective projects in the area: Riqueza, Riqueza West, Palcacandha and Antacocha (pending).
The Company also strengthened its position at its highly prospective Cerro Rayas project through the renegotiation and execution of
new agreements for the assignment and option to acquire the concessions which make up the project. The renegotiation of these
agreements necessitated the Company deferring extensive exploration on the project until the new agreements were fully executed.
Nevertheless, the Company did conduct a number of small rock-chip sampling programs at Cerro Rayas with results confirming the
very-high grade mineralisation. Peruvian authorities have recently announced new drill permitting regulations to streamline and
reduce drill permit granting times. The Company is poised to take advantage of these changes with solid exploration progress
planned for Cerro Rayas in the 2017 / 2018 report period.
During the report period the Company considered other opportunities which included a greenfield cobalt project in Chile and a
brownfield zinc project in northern Peru. The Board will continue to review and, where attractive, pursue opportunities in both Peru
and in other jurisdictions.
Despite the junior exploration sector continuing to face capital market challenges, Inca enjoyed strong support, with the Company
raising $6.3 million in capital (before associated costs) in the report period. A rights issue to existing shareholders was completed at
a significant discount to market immediately prior to announcement while four subsequent placements throughout the report period
were executed at a premium to or at market price. In part, this reflects the strength of the Company’s projects and Board’s strong
desire to recognise and retain shareholder support.
During the report period the Company’s net operating and exploration cash outflows totalled $3.08 million. Of this amount,
$2.5 million (81.2%) represents net operating cash outflows on exploration and $0.58 million (18.8%) net operating cash outflows
on administration. As in previous years, these figures highlight the Company’s genuine focus on investing shareholder funds in
exploration on the Company’s projects while minimising discretionary expenditure.
Financial Year
2014 - 2015
2015 - 2016
2016 - 2017
Total Net Operating
Cash Outflows
Net Operating Cash Outflows
Exploration (%)
Net Operating Cash Outflows
Administration (%)
$3.38 million
$4.54 million
$3.08 million
$2.65 million (78%)
$0.73 million (22%)
$3.85 million (85%)
$0.68 million (15%)
$2.5 million (81%)
$0.58 million (19%)
2| INCA MINERALS LTD ANNUAL REPORT 2017
DIRECTORS’ REVIEW
Throughout the report period the Company’s share price and market capitalisation almost doubled, its top 20 shareholders remained
stable and the Board and senior management remained unchanged and focussed. The Company has now operated in Peru since
2011 and, in so doing, developed experience, knowledge of Peru’s corporate and mining regulations, and an in-country team of
professionals delivering exploration outcomes with effective and productive community support. With base and precious metals
prices forecast to remain strong over the coming years, successful exploration of the Company’s projects should, if accompanied by
discovery, continue to build and demonstrate value.
In planning for the 2017/2018 year, the Company will continue to invest in exploration while remaining cognisant of the global appetite
for resources and the availability and return on investment in competing and available projects. Well informed and careful investment
of shareholder funds, exploration success and communication thereof to stakeholders should promote recognition of the potential
within the Company’s projects and continue to reward shareholders.
Southern approach to the Company’s Riqueza Project in Peru.
INCA MINERALS LTD ANNUAL REPORT 2017 | 3
OPERATIONAL REVIEW
MANAGING DIRECTOR’S SUMMARY
The Company has continued its zinc-focussed exploration strategy in Peru in 2016-2017. With zinc prices at 10-year highs and Peru
rising to the second largest producer of zinc in the world – the Company believes it’s exploring for the right commodity in the
right place at the right time. With six years’ operating experience in Peru, Inca is very well placed to take full advantage of this
rare alignment. The exceptional exploration results of 2016-2017 should lay the foundation for continued successes and shareholder
wealth into 2017-2018.
The Company’s first full year of exploration at Riqueza has been a very pleasing one. At the time of acquisition, the project contained
half a dozen veins and a manto with strong zinc, silver and lead grades. Whilst a glimpse of its potential was revealed in 2015-2016,
the true potential started to materialise in 2016-2017 on the back of repeated discoveries. Throughout the report period the Company
discovered more than a hundred significant occurrences of mineralisation including thirty-six large veins, countless smaller veins, a
minimum of four mantos and half a dozen breccias. The number of prospects containing significant mineralisation or potential to do
so grew this year from two (Humaspunco and Uchpanga) to six (adding Pinta, Pampa Corral, Colina Roja and Alteration Ridge). Whilst
confirming pervasive strong zinc, silver and lead mineralisation at the property, the Company also confirmed the occurrence of strong
gold and copper and increased its land holding from one concession to nine concessions in the area.
The Company firmly believes it has discovered a 5km x 5km intrusive-related mineralised system within the greater Riqueza project
area. Ten mines within 50kms have the same style of mineralisation.
At the beginning of 2017 the Company obtained a very large drill permit (14,000m capacity) to adequately cover the plethora of targets
it had generated. Phase 1 drilling, at just two of the six prospects (Humaspunco and Uchpanga), was completed with mineralisation
known to depths of 400m. Whilst grades were variable, the vast majority of surface targets were confirmed and a host of new targets
identified.
The Company also explored its Cerro Rayas Project, and whilst drilling was underway at Riqueza, the less heralded Cerro Rayas
produced some outstanding zinc grades in rock chip sampling (>40% Zn). With Cerro Rayas now destined for drilling in 2018, Inca plans
to be drilling at two zinc-focussed projects in the near and exciting future.
Ross Brown
INCA MINERALS LTD ANNUAL REPORT 2017 | 5
OPERATIONS REPORT
EXPLORATION HIGHLIGHTS
The Company’s exploration portfolio in Peru grew materially in 2016-2017. On the basis of positive exploration results, the Company’s
Riqueza Project expanded into a multi-project, regional-scale exploration play, to comprise four adjoining projects, Riqueza, Riqueza
West, Palcacandha and Antacocha―collectively forming the Greater Riqueza Project area.
Figure 1: Regional plan showing the location of the Greater Riqueza and Cerro Rayas projects. The Central Au-Ag epithermal and Mississippi Valley
Type mineralised belt is indicated (dashed yellow lines) with regional faults (solid yellow lines) and ten of the nearest mines located to Inca’s projects.
The Greater Riqueza and Cerro Rayas projects occur within Peru’s central epithermal-Mississippi Valley Type Au-Ag-Cu-Zn-Pb mineral
belts. Within 50km’s of Inca’s projects there are ten mines which are replacement, skarn and/or intrusive-hosts deposits. The type of
mineralisation that occurs at both Greater Riqueza and Cerro Rayas is the same as that occurring at these mines.
6| INCA MINERALS LTD ANNUAL REPORT 2017
OPERATIONS REPORT
GREATER RIQUEZA PROJECT
Commencing in year 2015-2016, a multiple phase reconnaissance mapping and surface program and systematic vein sampling program
at Riqueza was completed during the report period. The Company materially increased the prospectivity of the project, lifting its
status beyond several exploration benchmarks. Inca forged Riqueza from a single-concession, dual-prospect, Zn-Ag-Pb project to a
nine-concession, six-prospect, Zn-Ag-Pb-Au-Cu regional project.
The Company believes it has identified a very large intrusive-related mineralised system comprising Zn-Ag-Pb replacement
mineralisation at the Humaspunco and Pinta prospects, epithermal Au-Ag-Cu-Mn±Zn±Pb at the Uchpanga, Colina Roja and Alteration
Ridge prospects, and skarn Cu at the Pampa Corral Prospect. These different, but related, forms of mineralisation cover an approximate
area of 5km x 5kms making it one of the largest exploration projects currently being evaluated in Peru.
Figure 2: Project-scale plan showing location of the five prospects that are key areas of interest at the Greater Riqueza Project.
INCA MINERALS LTD ANNUAL REPORT 2017 | 7
OPERATIONS REPORT
HUMASPUNCO-PINTA PROSPECTS (RIQUEZA PROJECT)
The combined Humaspunco-Pinta prospect area hosts replacement-style Zn-Ag-Pb mineralisation. This mineralisation occurs as near
vertical veins (of which there are four different sets based on orientation and structural association - NS, EW, irregular and curvilinear),
near horizonal to gently sloping mantos and discrete breccia chimneys (or pipes). Humaspunco, in particular, was the principal focus
of reconnaissance exploration in 2016-2017. Many dozens of outcrops containing Zn-Ag-Pb mineralisation were identified among the
hundred-plus past mine workings that festoon the Humaspunco Hill site. Such work culminated in the generation of multiple drill
targets. A large first-category Declaracion Impacto Ambiental (DIA) drill permit was obtained with a capacity of 14,000m of drilling
and over 3kms of trenching.
Phase 1 drilling (parts 1 and 2) resulted in a total of 19 holes being drilled at the prospect from eight drill platforms for a total of
3,229.35 metres. The average hole depth at Humaspunco was just under 170m. The principal targets were the EW-trending set of
mineralised veins and to a lesser extent, the manto sequence. All targets were intersected and new mineralised bodies (veins, mantos
and breccias) were discovered. The mineralised intervals were characteristically highly weathered with strong Fe-oxide and gossan
development. Zn typically occurs as smithsonite (zinc carbonate) with sphalerite (Zn-sulphide), common in outcrop, but uncommon
in drill core. Pb typically occurs as relic aggregates and/or rims of galena (Pb-sulphide). The gangue material is calcite and barite. With
some notable exceptions, the Zn, Ag and Pb grades of the veins in drilling were below the grades achieved (for the same targets) in
grab and channel-sampling. Zn grades of the veins intersected in Phase 1 drilling varied from trace to +10%. Ag and Pb grades of the
veins were also variable.
Figure 3: Examples of mineralised veins identified in holes RDDH-001 and RDDH-002. A, B, C Galena and smithsonite within calcite-barite gangue
material in vein HV-09; D Fe-oxides with relic galena in vein HV-06; E Veinlets of galena with calcite-barite concordant with bedding and cross-cutting
bedding in a new vein.
8| INCA MINERALS LTD ANNUAL REPORT 2017
OPERATIONS REPORT
A
B
C
D
Figure 4: Examples of mineralised veins and mantos identified in holes RDDH-004 and RDDH-011. A, B Highly gossanous manto with relic galena
and calcite-barite gangue; C, D Highly gossanous vein with relic galena and calcite-barite gangue. Where weathering is particularly well-developed
sphalerite is generally missing and smithsonite is also partially or completely dissolved.
A
B
C
D
Figure 5: Examples of mineralised mantos in holes RDDH-013 and RDDH-014. A, B Highly gossanous manto with relic galena and calcite-barite gangue;
C, D Highly gossanous vein with relic galena and calcite-barite gangue. Where weathering is particularly well developed, sphalerite is generally missing
and smithsonite is also partially or completely dissolved.
INCA MINERALS LTD ANNUAL REPORT 2017 | 9
OPERATIONS REPORT
A key development in Phase 1 drilling at Humaspunco was the recognition of mineralisation associated with the Callancocha Structure.
Indeed, the Callancocha Structure is now believed to host “rafted” sections of manto and EW vein mineralisation as well as NS vein
and disseminated mineralisation. The structure is elevated in terms of prospectivity and will be subject to further drilling in the Phase
2 program.
Figure 6: EW Cross section across the Callancocha Structure, showing drill holes RDDH-004
RDDH-010, RDDH-011 and RDDH-012 (the latter projecting at an angle out of the page).
(projecting out of the page),
10| INCA MINERALS LTD ANNUAL REPORT 2017
OPERATIONS REPORT
UCHPANGA PROSPECT (RIQUEZA PROJECT)
Uchpanga is located in the southern part of the Riqueza Project (Figure 2). It hosts a 750m long gossan (outcropping highly weathered
sulphide layer) and a series of historic mine workings, the largest of which is Rita Maria at the western end of the prospect.
Phase 1 drilling (parts 1 and 2) resulted in a total of 5 holes being drilled at the prospect from two drill platforms for a total of 430.45
metres. The average hole depth at Uchpanga was just over 86m. The principal target was the high-grade vein (or dyke) hitherto only
known in literature and sampled from mine-site dumps.
PAMPA CORRAL PROSPECT (RIQUEZA PROJECT)
Pampa Corral is a new prospect located south of Humaspunco-Pinta and east of Uchpanga (Figure 2). Two important discoveries were
made at Pampa Corral this year. The first discovery was two intrusive rocks, a monzodiorite and a meta-gabbro. The emplacement of
these “hot rocks” in a limestone-dominant sequence is important in the generation of various forms of mineralisation, including, but
not limited to, replacement mineralisation and skarn mineralisation. The second discovery was Cu mineralisation in limestone along a
margin of the mega-gabbro. This is evidence of skarn mineralisation.
COLINA ROJA AND ALTERATION RIDGE PROSPECTS (PALCACANDHA PROJECT)
Colina Roja and Alteration Ridge are both located in the new Palcacandha Project, immediately south of the original Riqueza Project
(Figure 2). A reconnaissance mapping and sampling program recently commenced at these prospects and will continue through the
report period. Important mineralisation has already been discovered. A sample of a vein in outcrop returned 3.75% Zn, 136g/t Ag and
3.13% Pb (Figure 7).
Figure 7: Various outcrops at Colina Roja showing strong epithermal alteration, veining and sulphide-gossan development. The far-right photo shows
a strongly gossanous-sulphide bearing vein that hosts 3.75% Zn, 136g/t Ag and 3.13% Pb.
INCA MINERALS LTD ANNUAL REPORT 2017 | 11
OPERATIONS REPORT
Figure 8: Satellite image showing the location
of the Humaspunco-Pinta Prospects, the
Uchpanga Prospect and the Pampa Corral
Prospect, all located within the Riqueza
Project; and the Colina Roja Prospect and
Alteration Ridge Prospect, both located in
the Palcacandha Project. The Callancocha
Structure (yellow dashed line) trends NE-SW
across both project areas.
CERRO RAYAS
Cerro Rayas is the Company’s second Zn-focussed project, located approximately 15km north east of Riqueza. It hosts three groups
of old mine workings called Vilcapuquio, Torrepata and Wari (Figure 9). Zn-Pb-Ag mineralisation in these workings is associated
with replacement-style brecciated veins cross cutting a Jurassic-aged limestone sequence. As part of its preliminary due diligence,
Inca undertook a sampling program to confirm mineralisation at the project. The peak Zn value from limited sampling was 41.59%.
Mineralisation at Wari occurs as a near-massive sulphide vein up to 2m across. Vein material returned 32.07% Zn, 349g/t Ag, 20.19%Pb.
Historic (pre-Inca) sampling at Vilcapuquio has recorded peak Zn levels at 25.6%.
12| INCA MINERALS LTD ANNUAL REPORT 2017
OPERATIONS REPORT
Figure 9: Satellite
image
showing the two concessions
that comprise Cerro Rayas and
the location of the three mine
workings at Cerro Rayas.
Exploration will be increased at Cerro Rayas in the next report period with a reconnaissance mapping and sampling program planned
to cover the entire project area and, depending upon results, a drill program which will run concurrently with the drilling at the
Greater Riqueza Project.
DINGO RANGE – WESTERN AUSTRALIA
Located approximately 200kms east of Leinster, Dingo Range comprises five tenements covering part of the Dingo Range Greenstone
Belt. The project is prospective for nickel (Ni) and Au. The Company has farmed-out all non-Ni rights for its tenements to an unlisted
exploration Company.
*****
INCA MINERALS LTD ANNUAL REPORT 2017 | 13
OPERATIONS REPORT
COMPETENT PERSON STATEMENTS
The information in this report that relates to mineralisation occurring on the Greater Riqueza and Cerro Rayas Projects located in Peru,
and the Dingo Range Project located in Western Australia, is based on information compiled by Mr Ross Brown BSc (Hons), MAusIMM, SEG,
MAICD Managing Director, Inca Minerals Limited, who is a Member of the Australasian Institute of Mining and Metallurgy. He has sufficient
experience, which is relevant to the style of mineralisation and types of deposits under consideration, and to the activity which has
been undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves”. Mr Brown is a fulltime employee of Inca Minerals Limited and consents to the report being
issued in the form and context in which it appears.
14| INCA MINERALS LTD ANNUAL REPORT 2017
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Inca Minerals Limited (Inca or
Company) is responsible for the corporate governance of the
Company. In developing its corporate governance policies Inca
has referred to recommendations within the ASX Corporate
Governance Council’s Corporate Governance Principles and
Recommendations 3rd edition (CGPR) and developed the
following policies which can be found on the Company’s
website at www.incaminerals.com.au under the section titled
“Corporate/Corporate Governance”:
The Company’s corporate governance practices during the
financial year ended 30 June 2017 (report period) are reported
below. Where the Company’s corporate governance practices
follow the CPGR the Board has provided appropriate statements
reporting on the adoption of the CPGR. In compliance with the
“if not, why not” reporting framework, where the Company’s
corporate governance practices differ from the relevant CPGR,
the Board has explained its reasons for doing so and any
alternative practice the Company may have adopted.
n Corporate Governance Policy
n Continuous Disclosure Policy
n Code of Conduct & Securities Trading Policy
n Diversity Policy
CORPORATE GOVERNANCE PRINCIPLES
& RECOMMENDATIONS
Principle 1: Lay solid foundations for management and oversight.
1.1
1.2
1.3
1.4
Listed entities should disclose the roles and responsibilities
of its Board and management, those expressly reserved
to the Board and those delegated to management.
Listed entities should undertake appropriate checks
before appointing a person, or putting forward to
security holders a candidate for election as a Director;
and provide security holders with all material information
in its possession relevant to a decision on whether or not
to elect or re-elect a Director.
A
A
Listed entities should have written agreements with each
Director and senior executive setting out the terms of
their appointment.
A
The company secretary of a listed entity should be
accountable directly to the Board, through the chair, on
all matters to do with proper functioning of the Board.
NA
Legend: A = Adopted NA = Not Adopted
ADOPTED / NOT ADOPTED AND COMMENT
The Company has formalised and disclosed on its website
(at www.incaminerals.com.au) the functions reserved to
the Board and those delegated to management within its
Corporate Governance Policy.
The Company undertakes appropriate checks before
appointing a person or putting forward to shareholders
a candidate for election or re-election as a Director and
provides shareholders with all material information in its
possession relevant to a decision on whether to elect or
re-elect a Director.
The Company has set out the terms of appointment in
writing with each Director and senior executive.
The Company did not appoint a Chairperson during the
report period. The Company Secretary is accountable
directly to the Board as to the proper functioning of the
Board.
INCA MINERALS LTD ANNUAL REPORT 2017 | 15
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE PRINCIPLES
& RECOMMENDATIONS
Principle 1: Lay solid foundations for management and oversight. (Ctd)
1.5
Listed entities should:
(a) Have a diversity policy which includes requirements
for the Board or relevant Board committee to
set measurable objectives for achieving gender
diversity and to annually assess and disclose the
objectives and progress towards their achievement;
NA
[1]
(b) Disclose that policy or a summary of it; and
(c) Disclose as at the end of each reporting period the
measurable objectives for achieving gender diversity
set by the Board (or relevant Board committee) in
accordance with the entity’s diversity policy and its
progress towards achieving them, and either:
the respective proportions of men and women on
the Board, in senior management positions and
across the whole organisation (including how the
entity has defined “senior executive” for these
purposes) or
if the entity is a “relevant employer” under the
Workplace Gender Equality Act, the entity’s most
recent “Gender Equality Indicators” as defined
under that Act.
[2]
1.6
1.7
Listed entities should have and disclose a process for
periodically evaluating the performance of the Board,
its committees and individual directors; and disclose
whether a performance evaluation was undertaken in
the reporting period in accordance with that process.
Listed entities should have and disclose a process for
periodically evaluating the performance of its senior
executives; and disclose whether a performance
evaluation was undertaken in the reporting period in
accordance with that process.
A
A
Legend: A = Adopted NA = Not Adopted
ADOPTED / NOT ADOPTED AND COMMENT
The Company has disclosed its Diversity Policy on its
website at www.incaminerals.com.au. The Company’s
Diversity Policy does not mandate setting measurable
objectives for achieving gender diversity as it is impractical
to do so at this time. The proportion of women across
the whole organisation, in senior executive positions,
and on the Board, as at the date of this statement, is as
follows:
• Whole organisation – 50%
•
•
For the purposes of this statement and the Company’s
gender diversity, “senior executive” means a person who
reports directly to the Board or Managing Director and/or
who makes or participates in making decisions that could
significantly affect the Company’s operations.
Senior Executive Positions – 30%
Board – 0%
for
evaluating
the Board and
the
The Company’s processes
its Directors
performance of
are disclosed on
at
www.incaminerals.com.au in the Company’s Corporate
Governance Policy. During the report period these
evaluations took place in accordance with the process
outlined in the Corporate Governance Policy.
the Company’s website
and
Director
for
key
processes
Company’s
the Company’s website
evaluating
The
executives
its Managing
are disclosed on
at
www.incaminerals.com.au in the Company’s Corporate
Governance Policy. During the report period the Board
evaluated the performance of its Managing Director in
accordance with the process outlined in its Corporate
Governance Policy. A similar process, with respect to
certain key executives, was completed by the Managing
Director.
16| INCA MINERALS LTD ANNUAL REPORT 2017
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE PRINCIPLES
& RECOMMENDATIONS
Principle 2: Structure the Board to add value
2.1
2.2
2.3
A
A
A
(a) The Board of a listed entity should have a nomination
committee of at least three members (a majority
of whom are independent directors) chaired by an
independent director and disclose:
The committee charter
•
The committee members; and
•
As at the end of each reporting period,
•
the number of times the committee met
individual
throughout the period and the
attendances of
those
meetings; or
the members at
(b)
If a nomination committee is not established then
disclose that fact and the processes employed to
address board succession issues, and to ensure
the Board has the appropriate balance of skills,
knowledge,
and
diversity to enable it to discharge its duties and
responsibilities effectively.
independence
experience,
Listed entities should have and disclose a board skills
matrix setting out the mix of skills and diversity that
the Board currently has or is looking to achieve in its
membership.
Listed entities should disclose the names of directors
considered by the Board to be independent directors, the
length of each director’s service and, if a director has an
interest, position, association or relationship that might
cause doubt about the independence of that director, but
the Board is of the opinion that it does not compromise
the independence of the director, disclose the nature
of the interest, position, association or relationship in
question and disclose why the Board is of that opinion.
2.4
A majority of a listed entity’s Board should be independent
directors.
NA
2.5
2.6
The Chairperson of a
listed entity should be an
Independent Director and, in particular, should not be
the same person as the CEO of the entity.
Listed entities should have an induction program for
new directors and provide professional development
opportunities for directors to develop and maintain the
skills and knowledge to perform their role as directors
effectively.
NA
A
Legend: A = Adopted NA = Not Adopted
ADOPTED / NOT ADOPTED AND COMMENT
The Company has a small Board consisting of three
Directors inclusive of the Managing Director. The Board
considers it desirable to use the full complement of
knowledge, expertise and experience of all its Directors
in making decisions and performing the functions
usually associated with a Nomination Committee.
The Company’s Corporate Governance Policy and
Diversity Policy disclose (on the Company’s website at
pertaining
www.incaminerals.com.au)
to board succession, skills, knowledge, experience,
independence and diversity.
processes
The Company has disclosed (in its Corporate Governance
Policy and Diversity Policy at www.incaminerals.com.
au) the mix of skills and diversity the Board currently
has and considers desirable in its membership given the
Company’s stage of development.
Two current Directors hold shares in Inca either directly
or beneficially and a third Director is a part owner of the
Company’s former Corporate Advisor during the report
period meaning none of the current three Directors are
considered independent. The Company has disclosed the
names of its Directors, their position, relevant interests or
associations and their length of service in the Company’s
2017 Annual Financial Report.
As discussed above, none of the Company’s Directors
can be considered independent directors. As either
shareholders or
former commercial advisors, the
interests of Inca’s Directors should, in their judgements
and decisions, be directly aligned with those of all other
shareholders.
The Company operated without a Chairperson during the
report period.
The Company has a stable Board comprised of Directors
who have been with the Company since 2012. An
induction program will be provided to any new directors
if and when a new director is appointed. Professional
development opportunities are provided to the Directors
as and when needed.
INCA MINERALS LTD ANNUAL REPORT 2017 | 17
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE PRINCIPLES
& RECOMMENDATIONS
Principle 3: Act ethically and responsibly
3.1
Listed entities should have a code of conduct for its
directors, senior executives and employees and disclose
that code or a summary of it.
Principle 4: Safeguard integrity in corporate reporting
4.1
Listed entities should:
(a) Have an audit committee which:
A
A
(1) Has at least three members, all of whom are
non-executive directors and a majority of
whom are independent directors; and
Is chaired by an independent director, who is
not the chair of the Board, and disclose:
(2)
(3) The charter of the committee;
(4) The relevant qualifications and experience of
(5)
the members of the committee; and
In relation to each reporting period, the number
of times the committee met throughout the
period and the individual attendances of the
members at those meetings; or
(b)
If it does not have an audit committee, disclose that
fact and the processes employed to independently
verify and safeguard the integrity of its corporate
reporting,
the
appointment and removal of the external auditor
and the rotation of the audit engagement partner.
the processes
including
for
ADOPTED / NOT ADOPTED AND COMMENT
The Company has disclosed its Code of Conduct &
Securities Trading Policy on the Company’s website at
www.incaminerals.com.au.
The Company has a small Board consisting of two
Directors and the Managing Director. At this stage,
the Company has not established an Audit Committee
and the Board prefers to use the full complement of
knowledge, expertise and experience of all Directors
in making decisions regarding the Company’s audit and
the Company’s external auditors. All three Directors are
financially literate. One Director has previously worked
as an external auditor, holds three tertiary qualifications
in accounting/auditing including a PhD and is a Fellow
of CPA Australia. On behalf of the Board, this Director
communicates directly and works with the Company’s
auditors during the half-year and full year audits. This
Director chairs the Company’s Board meetings and
deliberations on matters which could be delegated to an
Audit Committee and reports through to the Board on all
matters pertaining to the half-year and full-year external
audits. In June 2012 the Company engaged its current
accountant – a person with considerable experience
as both an external auditor and group accountant in
mineral exploration companies. The Company’s external
auditors were appointed in November 2012. Prior to
their appointment the Board obtained proposals from
reputable audit firms and appointed the Company’s
current auditor after considering their experience with
listed exploration companies operating in foreign and
domestic jurisdictions, the experience and quality of
personnel involved with the Company’s audit, their
internal quality control measures, their approach and
methodology
in conducting the audit, references,
and awareness of professional requirements within
accounting and auditing standards
including those
pertaining to independence, confidentiality and conflicts
of interest. At present, the Board intends to address
rotation of the audit engagement partner in 2017/2018
financial year.
Legend: A = Adopted NA = Not Adopted
18| INCA MINERALS LTD ANNUAL REPORT 2017
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE PRINCIPLES
& RECOMMENDATIONS
Principle 4: Safeguard integrity in corporate reporting (Ctd)
4.2
A
The Board of a listed entity should, before it approves the
entity’s financial statements for a financial period, receive
from its CEO and CFO a declaration that, in their opinion,
the financial records of the entity have been properly
maintained and that the financial statements comply with
the appropriate accounting standards and give a true
and fair view of the financial position and performance of
the entity and that the opinion has been formed on the
basis of a sound system of risk management and internal
control which is operating effectively.
4.3
Listed entities should ensure that its external auditor
attends its AGM and is available to answer questions
from security holders relevant to the audit.
A
Principle 5: Make timely and balanced disclosure
5.1
Listed entities should have a written policy for complying
with its continuous disclosure obligations under the
Listing Rules and disclose that policy or a summary of it.
A
Legend: A = Adopted NA = Not Adopted
ADOPTED / NOT ADOPTED AND COMMENT
Prior to approving the financial statements for the half-
year ended 31 December 2016 and the full year ended
30 June 2017 Inca’s Board received from the Managing
Director and Chief Financial Officer declarations that, in
their opinion, the financial records of the entity have been
properly maintained and that the financial statements
comply with the appropriate accounting standards
and give a true and fair view of the financial position
and performance of the entity and that the opinion
has been formed on the basis of a sound system of risk
management and internal control which is operating
effectively.
During the report period and prior to the Company’s
AGM the Company contacted its external auditors who
agreed to host the Company’s AGM in their offices and
attend the AGM. In accordance with section 250S of
the Corporations Act the external auditor attended the
AGM and the Chair expressly provided the opportunity
for shareholders attending the meeting to ask questions
relevant to the audit. Had there been any written
questions submitted to the auditor (there were none) the
Chair would also have ensured the opportunity for the
external auditor to answer questions as required under
section 250PA of the Corporations Act.
The Company has established written policies for
complying with continuous disclosure obligations under
the ASX Listing Rules which are disclosed within the
Company’s Continuous Disclosure Policy on the Company’s
website at www.incaminerals.com.au.
INCA MINERALS LTD ANNUAL REPORT 2017 | 19
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE PRINCIPLES
& RECOMMENDATIONS
Principle 6: Respect the rights of security holders
6.1
6.2
6.3
6.4
A listed entity should provide information about itself
and its governance via its website.
Listed entities should design and implement an investor
facilitate effective two-way
relations program to
communication with investors.
A
A
Listed entities should disclose the policies and processes
it has in place to facilitate and encourage participation at
meetings of security holders.
Listed entities should provide security holders with
the option to receive communications from, and send
communications to the entity and its share registry
electronically.
A
Principle 7: Recognise and manage risk
7.1
The listed entity’s Board should:
(a) Have a committee or committees to oversee risk,
A
each of which:
(1) Has at least three members, a majority of
(2)
whom are independent directors; and
Is chaired by an independent director, and
disclose:
(3) The charter of the committee;
(4) The members of the committee; and
(5) as at the end of each reporting period,
the number of times the committee met
individual
throughout the period and the
attendances of
those
meetings; or
the members at
If it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s risk
management framework.
(b)
7.2
7.3
The listed entity’s Board or a committee of the Board
should review the entity’s risk management framework
at least annually to satisfy itself that it continues to be
sound and disclose, in relation to each reporting period,
whether such a review has taken place.
Listed entities should disclose if they have an internal
audit function, how the function is structured and what
role it performs or, if it does not have an internal audit
function, that fact and the processes it employs for
evaluating and continually improving the effectiveness of
its risk management and internal control processes.
Legend: A = Adopted NA = Not Adopted
ADOPTED / NOT ADOPTED AND COMMENT
The Company provides information about itself and
its governance to investors via its website at www.
incaminerals.com.au.
The Company has designed and
implemented an
investor relations program to facilitate effective two-
way communication with investors. The program is set
out in the Company’s Continuous Disclosure Policy and
Corporate Governance Policy (in the section entitled
“Shareholder Communication Policy”) as disclosed on its
website at www.incaminerals.com.au.
Refer above – the Company’s Corporate Governance
Policy (containing
its “Shareholder Communication
Policy”) and the Company’s Continuous Disclosure
Policy are both published on the Company’s website at
www.incaminerals.com.au.
Shareholders are given
receive
communications from, and send communications to the
Company and its share registry electronically.
the option
to
Given the size and composition of the current Board,
it believes that no efficiencies are to be gained by
establishing a separate Risk Committee. During the report
period, responsibility for overseeing the Company’s risk
management rested with the Board. The Company’s
Risk Management Policy is disclosed within its Corporate
Governance Policy on the Company’s website at
www.incaminerals.com.au. During the report period
the full Board reviewed and where necessary amended
its risk management matrix and in so doing identified
or confirmed business risks, assessed the likelihood and
materiality of these risks, developed and implemented
measures to mitigate these risks and during the reporting
period the Managing Director reported on and confirmed
that the Company’s economic, social and environmental
risks are being managed effectively.
A
Refer above.
A
The Company does not have an internal audit function.
Refer above (7.1) for further discussion.
20| INCA MINERALS LTD ANNUAL REPORT 2017
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE PRINCIPLES
& RECOMMENDATIONS
Principle 7: Recognise and manage risk (Ctd)
7.4
Listed entities should disclose whether they have any
material exposure to economic, environmental and
social sustainability risks and, if it does, how it manages
or intends to manage those risks
A
Principle 8: Remunerate fairly and responsibly
8.1
Listed entities should:
(a) Have a remuneration committee which:
(1) Has at least three members, a majority of
(2)
whom are independent directors; and
Is chaired by an independent director, and
disclose:
(3) The charter of the committee;
(4) The members of the committee; and
(5) As at the end of each reporting period,
the number of times the committee met
individual
throughout the period and the
attendances of
those
meetings; or
the members at
If it does not have a remuneration committee,
disclose that fact and the processes it employs for
setting the level and composition of remuneration
for directors and senior executives ensuring that
such remuneration is appropriate and not excessive.
(b)
8.2
8.3
Listed entities should separately disclose their policies
and practices regarding the remuneration of non-
executive directors and the remuneration of executive
directors and other senior executives.
Listed entities which have an equity-based remuneration
scheme should have a policy on whether participants are
permitted to enter into transactions (whether through
the use of derivatives or otherwise) which limit the
economic risk of participating in the scheme and disclose
that policy or a summary of it.
Legend: A = Adopted NA = Not Adopted
A
A
A
ADOPTED / NOT ADOPTED AND COMMENT
The Company faces economic, social and environmental
risks that are largely inherent to the global and domestic
economies, the
industry, capital markets and the
jurisdictions in which it operates. These risks were
disclosed on the ASX portal 4 July 2016 in the Company’s
Prospectus. The Board has considered these risks in
relation to a “material exposure threshold”, as required
under the CPGR, and put in place measures to reduce
these risks to tolerable levels and, as defined in CPGR,
there does not appear to be “a real possibility that the
risk could substantively impact the Company’s ability to
create or preserve value for security holders …” in the
foreseeable future.
Given the size and composition of the current Board,
it believes that no efficiencies are to be gained by
establishing a separate Remuneration Committee. During
the report period the Board followed the Company’s
Remuneration Policy as disclosed in the Director’s Report
on p. 7 of the Company’s Annual Financial Report for the
year ended 30 June 2017. In doing so the Board employed
policies and processes designed to ensure equitable and
responsible levels and composition of remuneration to
Directors and senior executives.
During the report period the Board followed the
Company’s Remuneration Policy which is separately
disclosed in the Director’s Report on p. 7 of the Company’s
Annual Financial Report for the year ended 30 June 2017.
The Company does not presently have an equity based
remuneration scheme.
INCA MINERALS LTD ANNUAL REPORT 2017 | 21
ANNUAL FINANCIAL REPORT
DIRECTORS’ REPORT .......................................................................................................................................... 23
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME ...........................................................................................................31
CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................................................................. 32
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................................... 33
CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................................34
NOTES TO THE FINANCIAL STATEMENTS ......................................................................................................... 35
DIRECTORS’ DECLARATION ............................................................................................................................... 57
AUDITOR’S INDEPENDENCE DECLARATION .....................................................................................................58
INDEPENDENT AUDITOR’S REPORT .................................................................................................................59
SHAREHOLDER INFORMATION .........................................................................................................................63
TENEMENT SCHEDULE .......................................................................................................................................65
ANNUAL FINANCIAL REPORT
DIRECTORS’ REPORT
The Directors of Inca Minerals Limited (Inca or Company) present their financial report on the Company and its controlled entities
(Group) for the year ended 30 June 2017.
DIRECTORS
The names of directors in office at any time during or since the end of the financial year are listed hereunder. Directors were in office
since the start of the financial year to the date of this report unless otherwise stated.
n Ross Brown, Managing Director
n Justin Walawski, Director and Company Secretary
n Gareth Lloyd, Director
INFORMATION ON DIRECTORS
ROSS BROWN B.Sc (Hons), M.Aus.IMM.
Managing Director
A geologist by profession, Mr Brown has over 30 years’ experience in mineral exploration in Australia, Asia, Africa and South America
and he has worked in a broad range of commodities, including gold, base metals, uranium, phosphate and diamonds. Mr Brown has
a rare ability in recognising the commercial potential of exploration projects and geological process, and has a proven track record of
bringing technical-based exploration concepts and projects to market.
In 2009 Mr Brown co-founded the gold/copper exploration company, Mystic Sands Pty Ltd, which was established for the purposes
of conducting exploration in Chile, South America. With the assistance of other technical management, Mr Brown was responsible
for the composition of the initial project portfolio. Mystic Sands was purchased by an Australian-listed explorer White Star Minerals
Ltd. As part of the transaction, Sandfire Resources NL became a shareholder of White Star Minerals Ltd.
Mr Brown turned his attention to Peru in 2009 and through his network of Peruvian-based businessmen and geologists assessed the
potential of more than a hundred projects. Mr Brown recognised the great potential of mineral discovery in that country and has
subsequently secured a number of projects for the Company including the Riqueza and Cerro Rayas zinc-silver-lead projects which the
Company is currently exploring and evaluating.
Mr Brown was the co-founder and Managing Director of Urcaguary Pty Ltd (Urcaguary), the Company’s fully owned subsidiary
(formerly called Inca Minerals Limited) and he became the Company’s Managing Director after its takeover of Urcaguary. As at 30
June 2017, and in addition to his position with the Company, Mr Brown remains a Director of Urcaguary and the Company’s other
subsidiary companies. In the previous 3 years, Mr Brown has not been a director of any other ASX listed companies.
Mr Brown has been a member of AusIMM since 1988, and is also a member of GSA, SEG and AICD.
JUSTIN WALAWSKI BBus., P.Grad.Dip., PhD, FCPA, MAICD
Director and Company Secretary
As at 30 June 2017, in addition to his position with Inca, Mr Walawski was also a Director and Company Secretary of Inca’s subsidiary
companies and Facilitator for the AICD’s Company Directors course in areas of financial literacy and financial strategy.
Mr Walawski has previously held positions as Chairman, Deputy Chairman and Chief Executive of the North West Iron Ore Alliance,
Chief Executive of the Association of Mining & Exploration Companies, Chairman of Special Olympics Australia (WA), Chairman of
FAB Industries Pty Ltd and Director of CPA Australia (WA). He is a former member of the ASX’s Supervisory Liaison Committee,
the Federal Australian Government’s Mineral Exploration Action Implementation Committee and the West Australian Government’s
State Tax Reference Committee. In the previous 3 years Mr Walawski has been a director of one other ASX listed company, being IFS
Construction Services Limited (appointed 31 August 2012).
Mr Walawski is a Fellow of CPA Australia, a Member of the AICD and holds undergraduate, post-graduate and doctoral degrees in
accounting/auditing.
INCA MINERALS LTD ANNUAL REPORT 2017 | 23
DIRECTORS’ REPORT
GARETH LLOYD B.Sc (Hons)
Director
As at 30 June 2017, in addition to his position with Inca, Mr Lloyd was also a Director of Inca’s subsidiary companies. Mr Lloyd has
over 30 years’ experience with mining and exploration companies and brings considerable technical, commercial and capital raising
expertise to the Company. A mining engineer by training, he has operating experience in gold, base metals and coal operations in
Australia, South Africa and the United Kingdom.
Mr Lloyd is a part owner of the Element group, a Perth-based boutique advisory and funds management group focused on the
resources sector through which Mr Lloyd provides strategic advice and fund raising services to both listed and unlisted companies
(predominantly mining and exploration companies) using both equity and mezzanine instruments.
Prior to establishing Element (in 2008), Mr Lloyd was an Associate Director at the Rothschild Group where he helped establish the
Golden Arrow Funds I and II, the latter fund becoming the ASX-listed LinQ Resources Fund. At the time of his departure from LinQ,
the fund was one of Australia’s largest listed resource funds with funds under management of over $475m. He has held a number of
senior positions at Australian resource-focused stockbroking firms including Research Director at Hartleys and Resources Analyst at
Eyres Reed. In the previous 3 years, Mr Lloyd has not been a director of any other ASX listed companies.
24| INCA MINERALS LTD ANNUAL REPORT 2017
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW
Principal Activities
The Company’s principal activities during the year were conducting exploration and evaluation work on existing and newly acquired
tenements. Inca’s main focus is the exploration of its Peruvian projects with objectives being to find, develop and/or demonstrate
the potential of projects to others. Inca will continue to seek opportunities for acquiring or farming in to new tenements, and to
divest or joint venture where there is benefit to shareholders.
Operating Results
The operating loss after income tax of the Company for the year ended 30 June 2017 was $1,354,318 (2016: loss of $13,137,190).
Review of Operations
The Company’s current exploration position and other activities appear in announcements released to the Australian Securities
Exchange throughout the year ended 30 June 2017 (report period) and should be read in conjunction with this report.
During the report period, the Company’s operating cash outflows and payments for exploration combined totalled $3.08 million, of
which $2.5 million (81.2%) represents cash outflows on exploration, and $0.58 million (18.8%) represents administration. As in previous
years, these figures highlight the Company’s continued focus on investing shareholder funds in exploration on the Company’s projects
while minimising administrative costs.
Throughout the report period, the Company explored and evaluated its Peruvian projects and in particular the Company’s zinc-silver-
lead (Zn-Ag-Pb) Riqueza Project. The majority of the report period saw the Company undertake and complete extensive mapping and
sampling programs to identify optimal drill targets for inclusion in the Company’s maiden drill program at Riqueza. Some four-square
kilometres were mapped and sampled from three prospect areas leading to recognition of at least two deposit styles at Riqueza:
1. A replacement style Zn-Ag-Pb deposit at the Humaspunco-Pinta prospect comprised of mineralised mantos, veins and breccias
covering a 2000m x 800m area open ended to the south and at depth; and 2. An intrusive-related epithermal style Zn-Ag-Pb-Au-Cu-Mn
deposit at the Uchpanga prospect comprised of a vein (or dyke) and footwall stockwork covering a projected strike of 750m being
that of an outcropping gossan.
Maintaining productive agreements with local communities in the Company’s project areas remained a strong priority during the
report period. Importantly, and through these agreements, community support underpinned progress on the Company’s application
for a permit to undertake drilling at Riqueza. That approval to commence a drilling program of at least 14,000m at Riqueza was
obtained toward the latter end of March 2017 whereupon the Company was pleased to commence the project’s maiden drilling
campaign. At time of writing the Company has completed 23 drill holes totalling in excess of 3,650m of drilling with the majority of
the planned drilling campaign to be conducted throughout 2017/2018.
During the report period, the Company increased its landholding in the Riqueza project area and now has confirmed granting of five
additional concessions surrounding the initial project area with a further three concession applications pending.
The Company’s landholding at its highly prospective Cerro Rayas project was also strengthened through the renegotiation and
execution of new agreements for the assignment and option to acquire the two concessions which make up the project. While
renegotiating these agreements the Company deferred extensive exploration on the project until such time as the agreements were
fully executed. However, the Company did conduct a number of small rock-chip sampling programs at Cerro Rayas and, given the
very-high grade mineralisation, the Company looks forward to solid exploration progress at Cerro Rayas in 2017/2018.
During the report period, the quality of the Company’s projects underpinned strong support from shareholders with the
Company raising a total of $6,315,849 in capital (before associated raising costs) through the issue of 997,764,608 fully paid
ordinary shares. This included a rights issue and placement to raise $2.9 million before associated costs and four further
placements throughout the report period to existing and new shareholders to raise $3.4 million (before associated costs).
A further 50,000,000 fully paid ordinary shares were issued during the report period for non-cash consideration. Of these shares,
10,000,000 were issued as consideration for advisory services, and 40,000,000 were issued as collateral only and, pursuant to the
Controlled Placement Facility agreement with Acuity Capital, for $nil consideration. For financial reporting purposes only, a value
of $440,000, based on the market price of these shares at the time of issue, has been recognised in the financial reports wherever
applicable.
INCA MINERALS LTD ANNUAL REPORT 2017 | 25
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Financial Position
The net assets of the Group were $5,270,227 as at 30 June 2017 ($477,512 as at 30 June 2016).
Significant Changes in the State of Affairs
The Company raised capital of $6,315,849 (before broker commissions and other costs of capital raising) during the financial year via
the issue of 997,764,608 fully paid ordinary shares.
There were no other significant changes in the state of affairs of the Group during the financial year.
Dividends Paid or Recommended
The directors do not recommend the payment of a dividend and no dividends have been paid or declared since the start of the
financial year.
Significant Events After Reporting Date
The Company completed a small capital raising in July 2017 raising $250,000 (after associated raising costs) through the placement
of 18,212,110 fully paid ordinary shares. 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 Company or the state of affairs of the Company in future
financial years.
Likely Developments and Expected Results
The Company expects to maintain the present status and level of operation and hence there are no likely unwarranted developments
in the entity’s operations.
Environmental Issues
The Company is subject to environmental regulation in respect of its exploration activities in Peru. The Company ensures the
appropriate standard of environmental care is achieved and, in doing so, that it is aware of and is in compliance with all environmental
legislation. The directors of the Company are not aware of any breach of environmental legislation for the year.
Proceedings on Behalf of the Company
No person has applied for leave of the Court to bring proceedings on behalf of the Company or intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The
Company was not a party to any such proceedings during the year.
Indemnification of Officers and Insurance Premiums
The consolidated entity has paid premiums to insure the directors against liabilities for costs and expenses incurred by them in
defending legal proceedings arising from their conduct while acting in the capacity of director of the consolidated entity, other than
conduct involving a wilful breach of duty in relation to the consolidated entity.
The premiums paid in respect of Directors’ and Officers’ insurance during the year amounted to $13,265 (2016: $14,554).
Options
At the date of this report, there were no unissued ordinary shares of Inca Minerals Limited under option.
Risk Management
The Board is responsible for ensuring that risks and opportunities are identified in a timely manner and that activities are aligned with
the risks and opportunities identified by the Board.
26| INCA MINERALS LTD ANNUAL REPORT 2017
DIRECTORS’ REPORT
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Meetings of Directors
During the financial year, 11 meetings of directors were held. Attendances by each director during the year were as follows:
Mr Justin Walawski
Mr Ross Brown
Mr Gareth Lloyd
Board Meetings
No. of meetings eligible
to attend
Number attended
11
11
11
11
11
11
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for directors and executives of the Company.
Renumeration Policy
The remuneration policy of Inca Minerals Limited aligns director and executive objectives with shareholder and business objectives
by providing a fixed remuneration component and, where the Board believes it appropriate, may also include specific long-term
incentives based on key performance areas affecting the Company’s ability to attract and retain the best executives and directors to
run and manage the Company.
The remuneration policy setting out 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 ability and experience). The Board reviews executive
packages annually by reference to the economic entity’s performance, executive performance, and comparable information from
industry sectors and other listed companies in similar industries. The performance of the executive directors is measured against the
objective of promoting growth in shareholder value.
The Board may exercise discretion in relation to approving incentives, bonuses, and options. The policy is designed to attract the
highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. Executives
may, where the Board believes it appropriate, participate in employee share and option arrangements.
The Board policy is to remunerate directors at market rates for comparable companies for time, commitment and responsibilities.
The Board determines payments to directors and regularly reviews their remuneration based on market practice, duties and
accountability. Independent external advice is sought when required. No external advice was sought during the report period. The
maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders in a general
meeting (currently $240,000 per annum).
Performance Based Remuneration
There was nil performance based remuneration for the year ended 30 June 2017.
INCA MINERALS LTD ANNUAL REPORT 2017 | 27
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Key Management Personnel Service Agreements
Details of the key conditions of service agreements for key management personnel are as follows:
Ross Brown*
Gareth Lloyd
Commencement
Date
Notice Period Base
Salary
Base Salary
1 March 2012
6 months
$220,000 per annum
14 September 2012
Nil
Justin Walawski**
21 December 2015
6 months
Termination
Payments
Provided***
None
None
None
$50,000 per annum
director fees
$170,000 per annum
$40,000 per annum
director fees
* Mr Brown is engaged as Managing Director under a contract of employment with the Company.
** Mr Walawski is engaged under a contract of employment with the Company under which he receives remuneration of $170,000 per annum
(excluding superannuation) and, is appointed as a director of the Company under which he receives fees of $40,000 per annum (excluding
superannuation).
*** Other than statutory entitlements.
There are no other agreements with key management personnel.
Key Management Personnel Remuneration
(a) Key management personnel compensation
2017
Short-term benefits
Post employment benefits
Non-
monetary
benefits
$
Super-
annuation
$
Retirement
benefits
$
Performance
related
compensation
as % of total
remuneration
Cash salary
and fees
$
Perfor-
mance
Bonus
$
206,000
50,000
210,000
-
466,000
Other
$
3,600
-
3,600
-
7,200
-
-
-
-
-
Name
Directors
Ross Brown
Gareth Lloyd
Justin Walawski
Executives
-
Totals
2016
Short-term benefits
Cash salary
and fees
$
Perfor-
mance
Bonus
$
212,384
50,000
229,710
-
492,094
Other
$
3,600
-
1,800
-
5,400
-
-
-
-
-
Name
Directors
Ross Brown
Gareth Lloyd
Justin Walawski
Executives
-
Totals
-
-
-
-
-
-
-
-
-
-
Non-
monetary
benefits
$
Post employment benefits
Super-
annuation
$
Retirement
benefits
$
Performance
related
compensation
as % of total
remuneration
33,912
4,750
19,950
-
58,612
-
-
-
-
-
20,176
4,750
12,350
-
37,276
-
-
-
-
-
0.0%
531,812
Total
$
243,512
54,750
233,550
-
Total
$
236,160
54,750
243,860
-
-
-
-
-
-
-
-
-
0.0%
534,770
28| INCA MINERALS LTD ANNUAL REPORT 2017
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONTINUED)
Key Management Personnel Remuneration (Continued)
b) Options and rights granted as remuneration
No options or rights were granted as remuneration during the year (2016: $nil).
c) Share Based Payments
No share based payments were issued during the year (2016: $nil).
Key Management Personnel Relevant Interests
The relevant interests of key management personnel in the capital of the Company at the date of this report is as follows:
Director
No of Ordinary Shares
No of Options over Ordinary Shares
Ross Brown
Gareth Lloyd
Justin Walawski
31,411,762
-
2,448,001
-
-
-
The following tables show the movements in the relevant interests of key management personnel in the capital of the Company:
2017
Name
Ross Brown
Gareth Lloyd
Justin Walawski
Totals
2016
Name
Ross Brown
Gareth Lloyd
Justin Walawski
Totals
Opening balance
1 July 2016
Additions
Disposals
Closing balance 30 June
2017
24,274,508
-
1,632,000
25,906,508
7,137,254
-
816,001
7,953,255
Opening balance
1 July 2015
Additions
Disposals
24,274,508
-
1,002,000
25,276,508
-
-
630,000
630,000
-
-
-
-
-
-
-
-
31,411,762
-
2,448,001
33,859,763
Closing balance 30 June
2016
24,274,508
-
1,632,000
25,906,508
END OF REMUNERATION REPORT
NON-AUDIT SERVICES
The Directors are satisfied that the provision of non-audit services during the year is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did
not compromise the external auditor’s independence for the following reasons:
n all non-audit services are reviewed and approved by the Board of Directors prior to commencement to ensure they do not
adversely affect the integrity and objectivity of the auditor; and
n the nature of the services provided does not compromise the general principles relating to auditor independence in accordance
with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.
No non-audit services were provided by the entity’s auditor, Stantons International, as shown at Note 15.
INCA MINERALS LTD ANNUAL REPORT 2017 | 29
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
We have obtained an Auditor’s Independence Declaration. Please refer to “Auditor’s Independence Declaration” included on page
58 of the financial statements.
The Directors’ Report, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors.
Justin Walawski
Director
Dated at Perth this 28th day of September 2017
30| INCA MINERALS LTD ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Management and directors’ fees
Wages and salaries
Administrative expenses
Advertising and promotional costs
Professional fees
Listing and share registry expenses
Depreciation
Impairment of loans
Impairment of Peruvian Value Added Tax receivable
Foreign exchange (loss) / gain
Environmental rehabilitation
Exploration and evaluation expenditure
Plant and equipment written off
(Loss) before income tax
Income tax benefit
(Loss) after income tax
Other comprehensive income
Items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations, net of tax
Total comprehensive (loss)
7
3
Note
2
2017
$
2016
$
14,102
20,546
(94,008)
(199,775)
(469,252)
(70,430)
(91,260)
(69,334)
(8,430)
-
(221,007)
(109,056)
(34,809)
(1,059)
-
(1,354,318)
-
(99,095)
(236,872)
(700,944)
(23,231)
(317,965)
(56,781)
(21,460)
(11,200)
(698,632)
25,766
(98,894)
(10,895,068)
(23,360)
(13,137,190)
-
(1,354,318)
(13,137,190)
-
-
3,938
60,553
(1,350,380)
(13,076,637)
(Loss) for the year attributable to members of Inca Minerals Limited
(1,354,318)
(13,137,190)
Total comprehensive (loss) attributable to members of Inca Minerals
Limited
(1,350,380)
(13,076,637)
Basic and diluted (loss) per share (cents)
12
(0.06)
(1.25)
The accompanying notes form an integral part of these financial statements.
INCA MINERALS LTD ANNUAL REPORT 2017 | 31
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 30 JUNE 2017
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Plant and equipment
Exploration and evaluation expenditure
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
Foreign currency translation reserve
Note
13(b)
5
6
7
8
2017
$
2016
$
3,130,990
23,732
3,154,722
119,292
2,228,409
2,347,701
151,753
141,988
293,741
104,876
334,315
439,191
5,502,423
732,932
145,458
86,738
232,196
155,933
99,487
255,420
232,196
255,420
5,270,227
477,512
9
35,742,124
29,599,029
(30,123,981)
(28,769,663)
(347,916)
(351,854)
TOTAL EQUITY
5,270,227
477,512
The accompanying notes form an integral part of these financial statements.
32| INCA MINERALS LTD ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY AS AT 30 JUNE 2017
2016
Balance at 1 July 2015
Total comprehensive loss for the year
Shares issued during the year
Cost of equity issue
Balance at 30 June 2016
2017
Balance at 1 July 2016
Total comprehensive loss for the year
Shares issued during the year
Cost of equity issue
Balance at 30 June 2017
Contributed
Equity
$
Accumulated
Losses
$
Foreign
Currency
Translation
Reserve
$
Total
$
25,092,164
(15,632,473)
(412,407)
9,047,284
-
(13,137,190)
60,553
(13,076,637)
4,789,550
(282,685)
-
-
-
-
29,599,029
(28,769,663)
(351,854)
4,789,550
(282,685)
477,512
29,599,029
(28,769,663)
(351,854)
477,512
-
(1,354,318)
3,938
(1,350,380)
6,805,850
(662,755)
-
-
-
-
35,742,124
(30,123,981)
(347,916)
6,805,850
(662,755)
5,270,227
The accompanying notes form an integral part of these financial statements.
INCA MINERALS LTD ANNUAL REPORT 2017 | 33
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Peruvian VAT credit received
Note
2017
$
2016
$
(707,977)
(696,098)
7,989
118,141
10,401
-
Net cash (used in) operating activities
13 (a)
(581,847)
(685,697)
Cash flows from investing activities
Payments for exploration expenditures
Payments for plant and equipment
Proceeds from sale of plant and equipment
Payments for security deposits
Proceeds from sale of tenements
Net cash (used in) investing activities
(2,502,421)
(38,202)
1,200
-
5,000
(3,854,747)
(20,350)
-
9,350
10,000
(2,534,423)
(3,855,747)
Cash flows from financing activities
Proceeds from issue of shares (net of share issue costs)
Net cash from financing activities
6,096,745
6,096,745
4,484,514
4,484,514
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the financial year
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
13 (b)
2,980,475
151,753
(1,238)
3,130,990
(56,930)
208,810
(127)
151,753
The accompanying notes form an integral part of these financial statements.
34| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
The financial report covers the Company of Inca Minerals Limited, a listed public company incorporated and domiciled in Australia,
and its controlled entities.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report was authorised for issue on 28 September 2017 by the Board of Directors.
Basis of preparation
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards,
Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing
relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards
ensures that the financial statements and notes also comply with International Financial Reporting Standards.
In the year ended 30 June 2017, the Company has reviewed all of the new and revised Australian Accounting Standards and
Interpretations issued by the AASB that are relevant to its operations and effective for the current annual reporting period. It has
been determined by the Company that there is no impact, material or otherwise, of the new Standards and Interpretations on its
business and therefore, no changes are required to its accounting policies. Material accounting policies adopted in preparation of
this financial report are presented below and have been consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the
measurement at fair value of selected non-current assets, financial assets and financial liabilities
Going Concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities
and the realisation of assets and discharge of liabilities in the normal course of business.
For the year ended 30 June 2017, the consolidated entity incurred after tax losses of $1,354,138 (2016: loss of $13,137,190) and the
consolidated entity had net cash inflows of $2,980,475 (2016: net cash outflows of $56,930).
The Directors believe that it is reasonably foreseeable that the Company and consolidated entity will continue as going concerns and
that it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following
factors:
n The consolidated entity has cash at bank at the reporting date of $3,130,990, net working capital of $2,922,526 and net assets of
$5,270,227;
n The Company completed a capital raising in July 2017 raising $250,000 (before broker commissions and other costs of the capital
raising) through the issue of 18,212,110 fully paid ordinary shares;
n The ability of the Group to raise capital by the issue of additional shares under the Corporation Act 2001; and
n The ability to curtail administration, operational and investing cash outflows as required.
INCA MINERALS LTD ANNUAL REPORT 2017 | 35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounting Policies
The Group has consistently applied the following accounting policies to all periods presented in the financial statements. The Group
has considered the implications of new and amended Accounting Standards applicable for annual reporting periods beginning after 1
July 2016 but determined that their application to the financial statements is either not relevant or not material.
a) Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent, Inca Minerals Limited and all
of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A
list of the subsidiaries is provided in Note 20.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date
on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on
consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity
of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling interests”.
The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a
proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling interests’ proportionate
share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or
loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section
of the statement of financial position and statement of comprehensive income.
b) Revenue Recognition
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
c) Income Tax
The income tax expense / (benefit) tax expense charged to the profit of loss is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore
measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as
unused tax losses.
Current and deferred income tax expense (benefit) is charged or credited directly to equity instead of profit or loss when the tax
related to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully
expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset
or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
36| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
c) Income Tax (Continued)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the year when the asset is realised or the
liability is settled, based on tax rates enacted or substantially enacted at reporting date. Their measurement also reflects the manner
in which management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that
future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax
assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a largely enforceable right of set-off exists and it is intended that net settlement
or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are
offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities related to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or
simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts
of deferred tax assets or liabilities are expected to be recovered or settled.
d) Mining Tenements and Exploration and Evaluation Expenditure
Mining tenements are carried at cost, less accumulated impairment losses.
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These
costs are only carried forward to the extent that they are expected to be recouped through the successful development and/or
sale of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of
economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the year in which the decision to
abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according
to the rate of depletion of the economically recoverable reserves.
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.
Costs of site restoration are provided for over the life of the facility from when exploration commences and are included in the costs
of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste
removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs are determined using estimates
of future costs, current legal requirements and technology on an undiscounted basis.
Any changes in the estimates for the costs are accounted for on a prospective basis. In determining the costs of site restoration, there
is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly,
the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.
INCA MINERALS LTD ANNUAL REPORT 2017 | 37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
e) Financial Instruments
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the
contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes
established by marketplace convention.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value
through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit
or loss immediately. Financial instruments are classified and measured as set out below.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another
party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between
the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid,
including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
Classification and Subsequent Measurement
i. Financial assets at fair value through profit or loss
Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of short term profit
taking, where they are derivatives not held for hedging purposes, or designed as such to avoid an accounting mismatch or to
enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis
in accordance with a documented risk management or investment strategy. Realised and unrealised gains and losses arising from
changes in fair value are included in profit or loss in the period in which they arise.
ii. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market
and are subsequently measured at amortised cost using the effective interest rate method.
iii. Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and
it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortised cost using the
effective interest rate method.
iv. Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated as such or that are not classified in any
of the other categories. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or
determinable payments.
v. Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective
interest rate method.
38| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
e) Financial Instruments (Continued)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair value
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the
requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to
pay to transfer a liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing market participants
at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value.
Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of
assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation
techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is
extracted from either the principal market for the asset or liability (ie the market with the greatest volume and level of activity for the
asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting
period (ie the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability,
after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest
and best use or to sell it to another market participant that would use the asset in its highest and best use. The fair value of liabilities
and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there
is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information
where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and,
where significant, are detailed in the respective note to the financial statements.
Valuation Techniques
In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation techniques to
measure the fair value of the asset or liability. The Group selects a valuation technique that is appropriate in the circumstances and
for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the
specific characteristics of the asset or liability being measured. The valuation techniques selected by the Group are consistent with
one or more of the following valuation approaches:
n Market approach: valuation techniques that use prices and other relevant information generated by market transactions for
identical or similar assets or liabilities.
n
Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single discounted
present value.
n Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or
liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those techniques that
maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data
(such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use
when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are
developed using the best information available about such assumptions are considered unobservable.
INCA MINERALS LTD ANNUAL REPORT 2017 | 39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
e) Financial Instruments (Continued)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value Hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements
into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised
into as follows:
Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date.
Level 2
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
or indirectly.
Level 3
Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques.
These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required
to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on
observable market data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following circumstances:
(i) if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or
(ii) if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (ie transfers
into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred.
f) Impairment of Assets
At each reporting date, the entity reviews the carrying values of its tangible and intangible assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher
of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying
value over its recoverable amount is expensed to profit or loss.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to
its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value,
in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset in 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.
40| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
g) Plant and Equipment
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated
impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying
amount is written down immediately to the estimated recoverable amount and impairment losses are recognised either in profit or
loss or as a revaluation decrease if the impairment losses relate to a revalued asset.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount
from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from
the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in
which they are incurred.
Depreciation
The depreciable amount of all fixed assets, is depreciated on a straight-line basis over the asset’s useful life to the Company
commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of fixed asset
Plant and equipment
Motor vehicles
IT equipment
Leasehold improvements
Depreciation rate
10–33%
20–33%
10-33%
20%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included
in the profit or loss.
h) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and deposits held at call with banks.
i) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable
from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part
of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are
presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which
are disclosed as operating cash flows.
j) Contributed Equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not
included in the cost of the acquisition as part of the purchase consideration.
INCA MINERALS LTD ANNUAL REPORT 2017 | 41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
k) Earnings per Share
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
l) Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal
ownership that are transferred to the economic entity, are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased
property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated
between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments
for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in
which they are incurred.
m) Employee Benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to reporting date.
Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when
the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value
of the estimated future cash outflows to be made for those benefits.
n) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors.
o) Trade and Other Receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of
business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All
other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment.
p) Trade and Other Payables
Trade and other payables represent the liabilities for goods and services received by the entity that remain unpaid at the end of the
reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the
liability.
42| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
q) Foreign Currency Transactions Balances
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which
that entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s functional
currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost
continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported
at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as
a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the
extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised
in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation
currency, are translated as follows:
n assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
n
income and expenses are translated at average exchange rates for the period; and
n retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are
recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial
position. These differences are recognised in profit or loss in the period in which the operation is disposed of.
r) Critical Accounting Estimates and Other Accounting Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
The Company is of the view that there are no critical accounting estimates and judgements in this financial report, other than
accounting estimates and judgements in relation to the carrying value of mineral exploration expenditure.
Key judgements
Deferred exploration and evaluation expenditure
Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. These costs are carried
forward in respect of an area that has not at reporting date reached a stage that permits reasonable assessment of the existence
of economically recoverable reserves, or alternatively, are expected to be sold. Refer to the accounting policy stated in Note 1(d).
INCA MINERALS LTD ANNUAL REPORT 2017 | 43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
s) New Standards and Interpretations Not Yet Adopted
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the
potential impact of such pronouncements on the Group when adopted in future periods, are discussed below:
n AASB 9: Financial Instruments and Associated Amending Standards (applicable for annual reporting periods commencing 1
January 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes
revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition
requirements for financial instruments and simplified requirements for hedge accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification of financial
assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable
election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive
income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk,
particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new
hedge accounting requirements of the Standard, the application of such accounting would be largely prospective.
The directors anticipate that the adoption of AASB 9 will not have a material impact on the Group’s financial instruments.
n AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after
1 January 2018).
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-
based model. Apart from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all
contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to
customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or
services. To achieve this objective, AASB 15 provides the following five-step process:
-
-
-
-
-
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue.
The directors anticipate that the adoption of AASB 15 will not have a material impact on the Group’s revenue recognition and
disclosures.
n AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and
related interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be
classified as either operating leases or finance leases. Lessor accounting remains similar to current practice.
44| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
s) New Standards and Interpretations Not Yet Adopted (Continued)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The main changes introduced by the new Standard are as follows:
-
-
-
-
recognition of the right-to-use asset and liability for all leases (excluding short term leases with less than 12 months of tenure
and leases relating to low value assets);
depreciating the right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the
liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using the
index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for
all components as a lease; and
-
additional disclosure requirements.
The transitional provisions of AASB 16 allow a lease to either retrospectively apply the Standard to comparatives in line with AASB 108
or recognise the cumulative effect of retrospective application as an adjustment to opening equity at the date of initial application.
The directors anticipate that the adoption of AASB 16 will not have a material impact on the Group’s recognition of leases and
disclosures.
t) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the
current financial year.
NOTE 2:
REVENUE
Interest received
Sale of tenements
Sale of assets
Consolidated
2017
$
2016
$
7,902
5,000
1,200
14,102
10,546
-
10,000
20,546
INCA MINERALS LTD ANNUAL REPORT 2017 | 45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3:
(a) Income tax recognised in profit
INCOME TAX
No income tax is payable by the Company as it recorded losses for income tax purposes for the year.
(b) Numerical reconciliation between income tax expense and the loss before income tax.
Loss before income tax
Income tax at 27.5% (2016: 30%)
Tax effect of:
Deferred tax asset not recognised
Movement in unrecognised temporary differences
Tax effect of permanent differences
Income tax benefit
(c) Unrecognised deferred tax balances
Consolidated
2017
$
2016
$
(1,354,318)
(372,437)
(13,137,190)
(3,941,157)
407,870
(35,499)
66
-
2,549,790
1,391,277
90
-
Revenue tax losses available to the Company
23,109,372
21,626,210
Potential tax benefit at 27.5% (2016: 30%)
6,355,077
6,487,863
A deferred tax asset attributable to income tax losses has not been recognised at reporting date as the probability criteria disclosed
in Note 1(c) is not satisfied and such benefit will only be available if the conditions of deductibility, also disclosed in Note 1(c), are
satisfied.
NOTE 4:
No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been
made.
DIVIDENDS
NOTE 5:
TRADE AND OTHER RECEIVABLES
Current
Other receivables
Prepayments
GST and VAT
None of the trade and other receivables are past due date.
Consolidated
2017
$
2016
$
13,379
10,353
-
23,732
14,105
6,374
121,509
141,988
46| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 6:
PLANT AND EQUIPMENT
Plant and
equipment
$
Motor vehicles
$
IT equipment
$
Leasehold
Improvements
$
Total
$
Balance at 1 July 2015
Additions / (disposals) and
writeoffs
Depreciation / writeback
on disposals
Balance at 30 June 2016
At cost
Accumulated depreciation
Balance at 30 June 2016
Balance at 1 July 2016
Additions / (disposals) and
writeoffs
Depreciation / writeback
on disposals
Balance at 30 June 2017
At cost
Accumulated depreciation
Balance at 30 June 2017
121,213
(3,031)
(18,173)
100,009
127,317
(27,308)
100,009
100,009
35,618
(21,403)*
114,224
162,739
(48,515)
114,224
-
-
-
-
1,124
(1,124)
-
-
-
-
-
1,124
(1,124)
-
2,625
-
(1,906)
719
17,760
(17,041)
719
719
2,584
(1,001)
2,302
20,344
(18,042)
2,302
5,529
129,367
-
(3,031)
(1,381)
4,148
6,907
(2,759)
4,148
(21,460)
104,876
153,108
(48,232)
104,876
4,148
104,876
-
38,202
(1,382)
2,766
6,907
(4,141)
2,766
(23,786)
119,292
191,114
(71,822)
119,292
* Inclusive of depreciation capitalised to exploration and evaluation expenditure.
NOTE 7:
Costs carried forward in respect of areas of interest in the following phases:
EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation phase – at cost
Balance at 1 July
Expenditure incurred (including exchange rate movements)
Impairment of exploration and evaluation expenditure
Expenditure written off
Balance at 30 June
NOTE 8:
TRADE AND OTHER PAYABLES (CURRENT)
Trade and other creditors
Accrued liabilities
Consolidated
2017
$
2016
$
334,315
1,895,153
-
8,517,647
2,711,736
-
(1,059)
(10,895,068)
2,228,409
334,315
Consolidated
2017
$
2016
$
114,780
30,678
145,458
95,531
60,402
155,933
None of the payables are past due date.
INCA MINERALS LTD ANNUAL REPORT 2017 | 47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 9:
CONTRIBUTED EQUITY
Consolidated
2017
$
2016
$
a) Paid up capital
2,286,244,757 ordinary shares (30 June 2016: 1,238,480,149 ordinary
shares)
35,742,124
29,599,029
b) Movements in shares on issue
Balance at 30 June 2015
Issued 27 July 2015
Issued 29 July 2015
Issued 29 July 2015
Issued 19 August 2015
Issued 25 May 2016
Issued 30 May 2016
Issued 17 June 2016
Transaction costs from issue of shares
Balance at 30 June 2016
Issued 21 July 2016
Issued 29 July 2016
Issued 12 August 2016
Issued 15 September 2016
Issued 12 October 2016
Issued 24 October 2016
Issued 14 November 2016
Issued 9 February 2017
Transaction costs from issue of shares
Balance at 30 June 2017
c) Movements in options on issue
No, of shares
Paid up capital
646,336,363
215,445,453
75,000,000
10,000,000
130,000,000
79,000,000
35,565,000
47,133,333
-
1,238,480,149
107,497,121
402,144,385
217,095,828
10,000,000
44,227,274
80,000,000
140,000,000
46,800,000
-
2,286,244,757
25,092,164
2,154,454
750,000
100,000
1,300,000
237,000
106,695
141,400
(282,684)
29,599,029
429,988
1,608,578
868,383
50,000
486,500
880,000
1,540,000
942,401
(662,755)
35,742,124
There were nil options issued and nil outstanding options over unissued ordinary shares during the year.
d) Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the Company, to participate in
the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
48| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 10:
a) Key management personnel compensation
INTERESTS OF KEY MANAGEMENT PERSONNEL
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid to each member of the
Company’s key management personnel for the year ended 30 June 2017. The totals of remuneration paid to key management
personnel of the Company during the year are as follows:
Short-term employee benefits (i)
Other payments (ii)
Post-employment benefits (iii)
(i) Includes payments for salaries, director fees and consulting fees.
(ii) Includes allowances.
(iii) Includes superannuation contributions.
b) Key management personnel shareholdings
Consolidated
2017
$
2016
$
466,000
7,200
58,612
531,812
492,094
5,400
37,276
534,770
The number of ordinary shares in Inca Minerals Limited held by key management personnel of the Company during the financial year
is as follows:
2017
Name
2016
Name
Ross Brown
Gareth Lloyd
Justin Walawski
Totals
Ross Brown
Gareth Lloyd
Justin Walawski
Totals
Opening balance 1
July 2016
24,274,508
-
1,632,000
25,906,508
Additions
7,137,254
-
816,001
7,953,255
Opening balance 1
July 2015
Additions
Disposals
24,274,508
-
1,002,000
25,276,508
-
-
630,000
630,000
Disposals
Closing balance 30
June 2017
-
-
-
-
-
-
-
-
31,411,762
-
2,448,001
33,859,763
Closing balance 30
June 2016
24,274,508
-
1,632,000
25,906,508
NOTE 11: RELATED PARTY TRANSACTIONS
Other transactions and balances with directors and other key management personnel.
Corporate Advisory
During the financial year, $12,000 excluding GST (2016: $64,000) was paid to Element Capital Pty Ltd (Element), a company related
to Mr Gareth Lloyd, for the provision of corporate advisory services. Element’s engagement as a corporate advisor to the Company
ceased on 16 August 2016.
INCA MINERALS LTD ANNUAL REPORT 2017 | 49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 12:
a) Basic Earnings Per Share
LOSS PER SHARE
Consolidated
2017
$
2016
$
Loss used in calculating basic earnings per share
(1,354,318)
(13,137,190)
Weighted average number of ordinary shares on issue during the year
used as the denominator in calculating basic loss per share
2,101,128,089
1,049,260,562
Basic loss per share (cents)
(0.06)
(1.25)
b) Diluted loss per share (cents)
Diluted loss per share is the same as basic loss per share as there are no potential ordinary shares that are dilutive.
NOTE 13:
a) Reconciliation of the net loss after income tax to the net cash flows from operating activities
CASH FLOW INFORMATION
Net loss for the year
Depreciation
Impairment of loans receivable
Impairment of Peruvian value added tax
Foreign exchange (gains) / losses
Exploration and evaluation expenditure written off
Inca Minerales S.A.C. capitalised exploration expenditure
Plant and equipment written off
Changes in assets and liabilities
Decrease in trade and other receivables
(Decrease) in trade and other payables
(Decrease) / increase in provisions
Net cash outflow from operating activities
(b) Reconciliation of cash and cash equivalents
Cash balance comprises:
-
cash assets
(c) Non-cash financing activities
Consolidated
2017
$
2016
$
(1,354,318)
(13,137,190)
8,430
-
221,007
109,056
1,059
334,237
-
118,256
(6,825)
(12,749)
(581,847)
21,460
11,200
698,632
(25,766)
10,895,068
522,647
23,360
337,508
(107,660)
75,044
(685,697)
3,130,990
151,753
On 15 September 2016, the Company issued 10,000,000 fully paid ordinary shares at $0.005 per share, as non-cash consideration for
the provision of communication and advisory services.
50| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
EXPENDITURE COMMITMENTS
NOTE 14:
The Group has certain commitments to meet minimum expenditure requirements on the mineral exploration assets in which it has an
interest. These commitments are optional and only required if the Company wishes to maintain its rights of earn-in or rights of tenure.
Outstanding exploration commitments for not later than one year and for between one and five years are as follows:
Not later than one year
Between one and five years
Consolidated
30 June
2017
$
Consolidated
30 June
2016
$
545,546
3,061,706
3,607,252
324,307
2,995,907
3,320,214
The exploration expenditure commitments above include commitments related to agreements for acquisition of interests in
mining concessions pertaining to the Group’s Riqueza and Cerro Rayas projects in Peru. As at 30 June 2017, the Group has met
all its obligations in respect of the agreements and all future exploration commitments are payable at the Group’s discretion and
dependent upon the Group acquiring the exclusive rights to the mining concessions. Key terms of the agreements pertaining to the
Riqueza and Cerro Rayas projects are set out below.
1. A 5 year mining concession transfer option and assignment agreement granting the Group the exclusive option to acquire 100%
interest in a mining concession called Nueva Santa Rita and known as the Riqueza Project. The Group has the exclusive right to
terminate at any time during the transfer option and assignment period and any unpaid amounts are not payable to the vendor.
Other key terms are:
Total Mining Concession Transfer Option & Assignment
(MCTOA) Consideration
US$1,773,000
Timing of Payment of MCTOA Consideration
MCTOA Payment on Execution Date (ED): US$30,000*
MCTOA Payment 6 months from ED: US$20,000*
MCTOA Payment 12 months from ED: US$50,000*
MCTOA Payment 18 months from ED: US$60,000
MCTOA Payment 24 months from ED: US$50,000
MCTOA Payment 30 months from ED: US$63,000
MCTOA Payment 36 months from ED: US$100,000
MCTOA Payment 42 months from ED: US$100,000
MCTOA Payment 48 months from ED: US$150,000
MCTOA Payment 54 months from ED: US$150,000
MCTOA Payment 60 months from ED: US$1,000,000
Mining assignment period
5 years from the Execution Date (17 May 2016)
NSR Royalty
Cancellability
2% NSR. The Group has a 20-year option to buy back 50% of the
NSR for US$1,000,000 leaving a 1% NSR to the vendor.
The Group has the exclusive right to terminate the agreement at
any time during the option and assignment period without cost
or penalty. Any unpaid amounts are not payable to the vendor.
* As at the date of the Directors’ Declaration, the Group has met all applicable commitments under the agreement.
INCA MINERALS LTD ANNUAL REPORT 2017 | 51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
EXPENDITURE COMMITMENTS (CONTINUED)
NOTE 14:
2. During the year, the Group renegotiated a 2.5 year mining concession transfer option and assignment agreement commencing
10 October 2016 granting the Group the exclusive option to acquire 100% interest in a mining concession referred to as La Elegida
I which forms part of the Group’s Cerro Rayas Project. The Group has the exclusive right to terminate at any time during the
transfer option and assignment period and any unpaid amounts are not payable to the vendor. Other key terms are:
Total Mining Concession Transfer Option &
Assignment (MCTOA) Consideration
US$240,000
Timing of Payment of MCTOA Consideration
Mining assignment and purchase option payments (MAPOP):
MAPOP on Commencement Date (CD): US$15,000*
MAPOP on or before 9 months from CD: US$6,000*
MAPOP on or before 12 months from CD: US$20,000
MAPOP on or before 18 months from CD: US$74,000
MAPOP on or before 19 – 30 months from CD: US$5,000 per month
MAPOP on or before 30 months from CD: US$65,000
Mining assignment period
2.5 years from the Commencement Date (10 October 2016)
Cancellability
The Group has the exclusive right to terminate the agreement at any time
during the option and assignment period without cost or penalty. Any unpaid
amounts are not payable to the vendor.
* As at the date of the Directors’ Declaration the Group has met all applicable commitments under the agreement.
3. During the year, the Group negotiated a 2 year mining concession transfer option and assignment agreement commencing 30
June 2017 granting the Group the exclusive option to acquire 100% interest in a mining concession referred to as La Elegida which
forms part of the Group’s Cerro Rayas Project. The Group has the exclusive right to terminate at any time during the transfer
option and assignment period and any unpaid amounts are not payable to the vendor. Other key terms are:
Total Mining Concession Transfer Option &
Assignment (MCTOA) Consideration
US$245,000
Timing of Payment of MCTOA Consideration
Mining assignment and purchase option payments (MAPOP):
MAPOP on Commencement Date (CD): US$51,000*
MAPOP on or before 6 months from CD: US$11,000
MAPOP on or before 12 months from CD: US$90,000
MAPOP on or before 13 – 24 months from CD: US$4,000 per month
MAPOP on or before 24 months from CD: US$45,000
Mining assignment period
2 years from the Commencement Date (30 June 2017)
Cancellability
The Group has the exclusive right to terminate the agreement at any time
during the option and assignment period without cost or penalty. Any unpaid
amounts are not payable to the vendor.
* As at the date of the Directors’ Declaration the Group has met all applicable commitments under the agreement.
52| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 14:
In addition to exploration expenditure commitments the Group has certain operating commitments pertaining to non-cancellable
operating leases and other non-cancellable agreements contracted for but not recognised in the financial statements:
EXPENDITURE COMMITMENTS (CONTINUED)
Not later than one year
Between one and five years
NOTE 15:
AUDITOR’S REMUNERATION
Statutory audit by auditor of the parent company
Audit and review of financial statements of parent entity
Under provision from the prior year
Audit and review of financial statements of subsidiary entity
Statutory audit by auditor of Inca Minerales S.A.C.
Other services by auditor of Inca Minerales S.A.C.
Consolidated
30 June
2017
$
Consolidated
30 June
2016
$
44,903
19,040
63,943
23,103
1,678
950
25,731
11,050
2,600
13,650
73,595
4,500
78,095
24,000
-
950
24,950
11,446
-
11,446
SEGMENT INFORMATION
NOTE 16:
The Company has identified its operating segments based on the internal reports that are reviewed and used by the Board
of directors (chief operating decision makers)
in assessing performance and determining the allocation of resources.
The Company operates in the segments of mineral exploration within Peru and Australia.
The Company is domiciled in Australia. All revenue from external parties is generated from Australia only. Segment revenues are
allocated based on the country in which the party is located. Operating revenues of approximately Nil (2016: Nil) are derived from a
single external party. All the assets are located in Peru and Australia. Segment assets are allocated to countries based on where the
assets are located.
Reportable segments:
Segment revenue
2017
2016
Segment result
2017
2016
Segment assets
2017
2016
Segment liabilities
2017
2016
Depreciation and amortisation expense
2017
2016
Australia
$
Peru
$
Consolidated
$
14,102
20,546
(728,109)
(835,806)
1,125,398
68,456
(100,684)
(112,142)
(2,573)
(3,477)
-
-
14,102
20,546
(626,209)
(12,301,384)
(1,354,318)
(13,137,190)
4,377,025
664,476
(131,512)
(143,278)
(5,857)
(17,983)
5,502,423
732,932
(232,196)
(255,420)
(8,430)
(21,460)
INCA MINERALS LTD ANNUAL REPORT 2017 | 53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 17:
(a) Interest rate risk
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company’s exposure to interest rate risk which is the risk that a financial instruments value will fluctuate as a result of changes
in market interest rates and the effective weighted average interest rate for each class of financial assets and financial liabilities as
set out below:
Weighted
average
interest
rate (%)
Non-interest
bearing
$
Floating
interest rate
$
Fixed interest
maturing
1 year or less
$
Fixed interest
maturing
1 to 5 years
$
Total
$
30 June 2017
Cash and cash
equivalents
30 June 2016
Cash and cash
equivalents
0.18
2,250,133
860,857
20,000
0.27
95,497
36,256
20,000
-
-
3,130,990
151,753
Interest rate sensitivity analysis
At 30 June 2017, if interest rates had changed by 25 basis points during the entire year with all other variables held constant, profit for
the year and equity would have been $4,103 higher/lower (2016: $451), mainly as a result of higher/lower interest income from cash
and cash equivalents.
A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents
management’s assessment of the possible change in interest rates.
(b) Credit risk
The maximum exposure to credit risk at reporting date on financial assets of the Company is the carrying amount, net of any provisions
for doubtful debts, as disclosed in the statement of financial position and notes to the financial statements.
(c) Commodity price risk
The Company is not exposed to commodity price risk as the operations of the Company are not yet at the production stage.
(d) Liquidity risk
The Company manages liquidity risk by monitoring forecast cash flows.
The table below analyses the entity’s financial liabilities into relevant maturity groupings based on the remaining period from the
statement of financial position date to the contractual maturity date. As the amounts disclosed in the table are the contractual
undiscounted cash flows, these balances will not necessarily agree with the amounts disclosed in the statement of financial position.
54| INCA MINERALS LTD ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 17:
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(CONTINUED)
Less than 6
months
$
6 months
to 1 year
$
1 to 5 years
$
Total
$
30 June 2017
Financial liabilities due for payment
Trade and other payables
Financial assets – cash flows realisable
Cash assets
Trade and other receivables
(145,458)
(145,458)
3,130,990
13,379
3,144,369
Net (outflow)/inflow on financial instruments
2,998,911
30 June 2016
Financial liabilities due for payment
Trade and other payables
Financial assets – cash flows realisable
Cash assets
Trade and other receivable
Net (outflow)/inflow on financial instruments
There were no Level 2 or Level 3 financial instruments.
(e) Foreign exchange risk
(155,933)
(155,933)
151,753
141,988
293,741
137,808
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(145,458)
(145,458)
3,130,990
13,379
3,144,369
2,998,911
(155,933)
(155,933)
151,753
141,988
293,741
137,808
The Company is exposed to foreign exchange risk as certain transactions are denominated in United States Dollars and Peruvian
Nuevos Soles as a result of operating in Peru.
(f) Net fair value of financial assets and liabilities
The carrying amounts of financial instruments included in the statement of financial position approximate their fair values due to their
short terms of maturity.
EVENTS SUBSEQUENT TO REPORTING DATE
NOTE 18:
The Company completed a small capital raising in July 2017 raising $250,000 (after associated raising costs) through the placement
of 18,212,110 fully paid ordinary shares. 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 Company or the state of affairs of the Company in future
financial years.
NOTE 19:
There are no contingent liabilities at reporting date.
CONTINGENT LIABILITIES
INCA MINERALS LTD ANNUAL REPORT 2017 | 55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 20:
CONTROLLED ENTITIES
Subsidiaries of Inca Minerals Limited:
Urcaguary Pty Ltd
Inca Minerales S.A.C.
Dos Colinas S.A.C.
Hydra Minerals Ltd
Dingo Minerals Pty Ltd
NOTE 21:
PARENT INFORMATION
Country of
Incorporation
Australia
Peru
Peru
Australia
Australia
Percentage Controlled (%)
2017
100
100
100
100
100
2016
100
100
100
100
100
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Accumulated Losses
Total equity
Financial performance
(Loss) for the year
Other comprehensive income
Total comprehensive income
2017
2016
890,405
4,480,506
5,370,911
(100,684)
-
(100,684)
62,743
526,912
589,655
(112,143)
-
(112,143)
5,270,227
477,512
35,742,124
(30,471,897)
5,270,227
29,599,029
(29,121,517)
477,512
(1,350,380)
(13,076,637)
-
-
(1,350,380)
(13,076,637)
There are no guarantees entered into by the parent entity in relation to the debts of its subsidiaries. There are no contingent liabilities
of the parent entity as at the reporting date.
There are no contractual commitments by the parent entity for the acquisition of property, plant and equipment as at the reporting
date.
NOTE 22:
The principal place of business of the Company is:
COMPANY DETAILS
Inca Minerals Limited
Suite 1, 16 Nicholson Road
Subiaco, WA, 6008
Australia
56| INCA MINERALS LTD ANNUAL REPORT 2017
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
the financial statements and notes, as set out on pages 31 to 56, are in accordance with the Corporations Act 2001 and:
a. comply with Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes
explicit and unreserved compliance with International Financial Reporting Standards (IFRS);
b. give a true and fair view of the financial position as at 30 June 2017 and of the performance for the year ended on that
date of the consolidated entity;
2. the Directors have been given the declarations required by s295A of the Corporations Act 2001 that:
a. the financial records of the Company for the financial year have been properly maintained in accordance with s286 of
the Corporations Act 2001;
b. the financial statements and notes for the financial year comply with Accounting Standards;
c. the financial statements and notes for the financial year give a true and fair view;
3.
in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the Directors:
Justin Walawski
Director
Dated at Perth this 28th day of September 2017
INCA MINERALS LTD ANNUAL REPORT 2017 | 57
AUDITOR’S INDEPENDENCE DECLARATION
Inca Minerals Limited For the year ended 30 June 2017
AUDITOR’S INDEPENDENCE DECLARATION UNDER S 307C OF THE CORPORATIONS ACT 2001 TO THE
DIRECTORS OF INCA MINERALS LIMITED
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
28 September 2017
The Directors
Inca Minerals Limited
Suite 1, 16 Nicholson Road
Subiaco WA 6008
Dear Sirs
RE: INCA MINERALS LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Inca Minerals Limited.
As Audit Director for the audit of the financial statements of Inca Minerals Limited for the year ended
30 June 2017, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours faithfully,
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
Liability limited by a scheme approved
under Professional Standards Legislation
58| INCA MINERALS LTD ANNUAL REPORT 2017
38
INDEPENDENT AUDITOR’S REPORT
Inca Minerals Limited For the year ended 30 June 2017
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCA MINERALS LIMITED
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Report on the Audit of the Financial Report Opinion
We have audited the financial report of Inca Minerals Limited (the Company and its subsidiaries (“the
Group”), which comprises the consolidated statement of financial position as at 30 June 2017, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group's financial position as at 30 June 2017 and of its
financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor's Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the time
of this auditor's report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Liability limited by a scheme approved
under Professional Standards Legislation
INCA MINERALS LTD ANNUAL REPORT 2017 | 59
39
INDEPENDENT AUDITOR’S REPORT
Inca Minerals Limited For the year ended 30 June 2017
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCA MINERALS LIMITED (CONTINUED)
Key Audit Matters
How the matter was addressed in the audit
Carrying Value of Capitalised Exploration and
Evaluation Expenditure
As at 30 June 2017, Capitalised Exploration and Evaluation
expenditure totals $2,228,409 (refer to Note 7 of the financial
report).
The carrying value of Capitalised Exploration and Evaluation
expenditure is a key audit matter due to:
•
•
•
requirements of
The significance of the total balance (40% of total
assets);
The necessity to assess management’s application of
the
the accounting standard
Exploration for and Evaluation of Mineral Resources
(“AASB 6”), in light of any indicators of impairment that
may be present; and
The assessment of significant judgements made by
management in relation to the Capitalised Exploration
and Evaluation Expenditure.
Issued Share Capital
Group’s Contributed Equity
The
$35,742,124. During the reporting period, 1,047,764,608
ordinary shares were issued resulting in an increase in
issued share capital of $6,143,095 (net of capital raising
costs).
amounted
to
Inter alia, our audit procedures included the following:
i. Assessing the Group’s right to tenure over exploration
assets by corroborating the ownership of the relevant
licences
to government
registries and relevant third party documentation;
for mineral
resources
ii. Reviewing the directors’ assessment of the carrying
value of the exploration and evaluation expenditure,
ensuring the veracity of the data presented and that
management has considered the effect of potential
impairment indicators, commodity prices and the
stage of the Group’s projects against AASB 6;
iii. Evaluation of Group documents for consistency with
the intentions for the continuing of exploration and
evaluation activities in certain areas of interest, and
corroborated with enquiries of management. Inter alia,
the documents we evaluated included:
▪ Minutes of meetings of the board and
management;
▪ Announcements made by the Group to the
Australian Securities Exchange; and
▪ Cash flow forecasts; and
iv. Consideration of the requirements of accounting
standard AASB 6. We assessed
financial
statements in relation to AASB 6 to ensure appropriate
disclosures are made.
the
Inter alia, our audit procedures included the following:
i. Obtaining an understanding of
the underlying
transactions;
ii. Verifying all issued capital movements to the relevant
Issued Share Capital is a key audit matters due to:
ASX announcements;
•
•
the quantum of share capital issued during the year;
and
the varied nature of the movements during the year
iii. Vouching proceeds from capital raisings to bank
supporting
other
relevant
and
statements
documentation;
We have spent significant audit effort on ensuring the issued
share capital was appropriately accounted for and disclosed.
iv. Verifying underlying capital raising costs and ensuring
these costs were appropriately recorded;
v. Ensuring consideration for services provided are
measured in accordance with AASB 2 Share-Based
Payments and agreed the related costs to relevant
supporting documentation; and
vi. Ensuring the requirements of the relevant accounting
standards and disclosures achieve fair presentation
and reviewing the financial statements to ensure
appropriate disclosures are made.
Other Information
The directors are responsible for the other information. The other information comprises the information included in
the Group's annual report for the year ended 30 June 2017, but does not include the financial report and our
auditor's report thereon.
60| INCA MINERALS LTD ANNUAL REPORT 2017
40
Inca Minerals Limited For the year ended 30 June 2017
INDEPENDENT AUDITOR’S REPORT
Inca Minerals Limited For the year ended 30 June 2017
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCA MINERALS LIMITED (CONTINUED)
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCA MINERALS LIMITED (CONTINUED)
Key Audit Matters
How the matter was addressed in the audit
Carrying Value of Capitalised Exploration and
Evaluation Expenditure
As at 30 June 2017, Capitalised Exploration and Evaluation
expenditure totals $2,228,409 (refer to Note 7 of the financial
report).
The carrying value of Capitalised Exploration and Evaluation
expenditure is a key audit matter due to:
Inter alia, our audit procedures included the following:
i. Assessing the Group’s right to tenure over exploration
assets by corroborating the ownership of the relevant
licences
for mineral
resources
to government
registries and relevant third party documentation;
The significance of the total balance (40% of total
ii. Reviewing the directors’ assessment of the carrying
•
•
•
assets);
The necessity to assess management’s application of
the
requirements of
the accounting standard
Exploration for and Evaluation of Mineral Resources
(“AASB 6”), in light of any indicators of impairment that
may be present; and
The assessment of significant judgements made by
management in relation to the Capitalised Exploration
and Evaluation Expenditure.
value of the exploration and evaluation expenditure,
ensuring the veracity of the data presented and that
management has considered the effect of potential
impairment indicators, commodity prices and the
stage of the Group’s projects against AASB 6;
iii. Evaluation of Group documents for consistency with
the intentions for the continuing of exploration and
evaluation activities in certain areas of interest, and
corroborated with enquiries of management. Inter alia,
the documents we evaluated included:
▪ Minutes of meetings of the board and
management;
▪ Announcements made by the Group to the
Australian Securities Exchange; and
▪ Cash flow forecasts; and
iv. Consideration of the requirements of accounting
standard AASB 6. We assessed
the
financial
statements in relation to AASB 6 to ensure appropriate
disclosures are made.
Issued Share Capital
$35,742,124. During the reporting period, 1,047,764,608
ordinary shares were issued resulting in an increase in
issued share capital of $6,143,095 (net of capital raising
The
Group’s Contributed Equity
amounted
to
Inter alia, our audit procedures included the following:
i. Obtaining an understanding of
the underlying
transactions;
ii. Verifying all issued capital movements to the relevant
costs).
•
•
and
Issued Share Capital is a key audit matters due to:
ASX announcements;
the quantum of share capital issued during the year;
iii. Vouching proceeds from capital raisings to bank
statements
and
other
relevant
supporting
the varied nature of the movements during the year
documentation;
We have spent significant audit effort on ensuring the issued
share capital was appropriately accounted for and disclosed.
iv. Verifying underlying capital raising costs and ensuring
these costs were appropriately recorded;
v. Ensuring consideration for services provided are
measured in accordance with AASB 2 Share-Based
Payments and agreed the related costs to relevant
supporting documentation; and
vi. Ensuring the requirements of the relevant accounting
standards and disclosures achieve fair presentation
and reviewing the financial statements to ensure
appropriate disclosures are made.
Other Information
auditor's report thereon.
The directors are responsible for the other information. The other information comprises the information included in
the Group's annual report for the year ended 30 June 2017, but does not include the financial report and our
Our opinion on the financial report does not cover the other information and accordingly we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control
as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair
view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
40
INCA MINERALS LTD ANNUAL REPORT 2017 | 61
41
INDEPENDENT AUDITOR’S REPORT
Inca Minerals Limited For the year ended 30 June 2017
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCA MINERALS LIMITED (CONTINUED)
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in Internal control that we identify during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in
the audit of the consolidated financial report of the current period and are therefore key audit matters. We describe
these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 9 of the directors’ report for the year ended 30
June 2017. The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of Inca Minerals Limited for the year ended 30 June 2017 complies with
section 300A of the Corporations Act 2001.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
62| INCA MINERALS LTD ANNUAL REPORT 2017
42
Inca Minerals Limited For the year ended 30 June 2017
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCA MINERALS LIMITED (CONTINUED)
SHAREHOLDER INFORMATION
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in Internal control that we identify during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in
the audit of the consolidated financial report of the current period and are therefore key audit matters. We describe
these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 9 of the directors’ report for the year ended 30
June 2017. The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion on the Remuneration Report
section 300A of the Corporations Act 2001.
In our opinion, the Remuneration Report of Inca Minerals Limited for the year ended 30 June 2017 complies with
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
The shareholder information set out below is applicable as at 2 October 2017 unless otherwise stated.
CAPITAL STRUCTURE
The Company currently has issued capital of 2,304,456,867 fully paid ordinary shares. The Company currently has no other class of
security or options on issue.
VOTING RIGHTS
The Company’s Constitution provides that at a meeting of shareholders and on a show of hands, each shareholder present in person
and each other person present as a proxy, attorney or representative of a shareholder has one vote. On a poll, each shareholder
present in person has one vote for each fully paid ordinary share held by the shareholder and each person as a proxy, attorney or
representative of a shareholder has one vote for each fully paid ordinary share held by the shareholder that person represents.
TWENTY LARGEST SHAREHOLDERS
The names and details of the twenty largest quoted shareholdings are as follows:
Rank
Shareholder
Number of
Shares
% Total Issued
Capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
20
Merrill Lynch (Australia) Nominees Pty Ltd
Zhian Zhang
J P Morgan Nominees Australia Limited
Divya Jindal
Citicorp Nominees Pty Limited
Alexander Wort
Stephen Chewter
Acuity Capital Investment Management Pty Ltd
Ross Brown*
BNP Paribas Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
Terence Risby & Dawn Risby
Grinz Pty Ltd
Keith G McDonald Pty Ltd
Andrew Fisher
Darryl White
Stephen Chewter & Margaret Chewter
Stephen Flynn
Loris Fisher & Peter Fisher
Ferguson Superannuation Pty Ltd
Norvale Pty Ltd
Total
* Company Director and includes related superannuation fund shareholding.
218,623,397
181,200,000
76,225,938
65,336.448
59,922,333
58,000,000
39,642,858
37,153,927
31,411,762
26,051,751
25,245,199
21,501,000
20,787,814
20,000,003
20,000,000
17,840,591
16,513,000
16,000,000
15,500,000
15,000,000
15,000,000
996,956,021
9.49
7.86
3.31
2.84
2.60
2.52
1.72
1.61
1.36
1.13
1.10
0.93
0.90
0.87
0.87
0.77
0.72
0.69
0.67
0.65
0.65
43.26
42
INCA MINERALS LTD ANNUAL REPORT 2017 | 63
SHAREHOLDER INFORMATION
DISTRIBUTION OF EQUITY SECURITIES
Analysis of number of equity holders by size of holding:
Spread of Holdings
Number of Holders
Number of Shares
% Total Issued Capital
1 –
1,001 –
5,001 –
1,000
5,000
10,000
10,001 –
100,000
> 100,000
Total
217
86
102
802
1299
2,506
63,303
271,042
888,425
42,772,216
2,260,461,881
2,304,456,867
0.003%
0.012%
0.038%
1.856%
98.091%
100.00%
Based on $0.006 per share as the market price at the close of business on 2 October 2017 there were 1026 shareholders holding less
than a marketable parcel of shares (a total of 26,408,398 shares).
SUBSTANTIAL SHAREHOLDERS
The Company has received the requisite notices from two substantial shareholders being:
1. Resource Capital Fund VI as the beneficial holder of 216,510,590 fully paid ordinary shares in the Company (9.39% of issued
capital) with the Registered Holder being Merrill Lynch (Australia) Nominees Pty Limited. A Form 603 was announced 26 April
2017 on the ASX portal.
2. Zhian Zhang as the holder of 181,200,000 fully paid ordinary shares in the Company (7.86% of issued capital). A Form 604 was
announced 16 November 2016 on the ASX portal.
SECURITIES SUBJECT TO ESCROW
There are no Company securities subject to voluntary escrow.
64| INCA MINERALS LTD ANNUAL REPORT 2017
TENEMENT SCHEDULE
Tenement Identification
Country/
State
Project
Peru
Riqueza
Mining
Concession
Name
Nueva Santa
Rita
Code
Mining Public
Registry
Number
Ownership
Titleholder
010045501
20006530
Earning 100%1
Inca Minerales S.A.C.
Riqueza West
Rita Maria
Antacocha
Antacocha I
Antacocha II
Maihuasi
Palcacandha
Uchpanga
Uchpanga II
Uchpanga III
Picuy
Cerro Rayas
La Elegida
La Elegida I
010171016
010249916
010249716
010249816
010170916
010251716
010251616
010171116
010109205
590004010
11247112
Granted
Granted
Granted
11247103
Granted
Granted
11247107
11101219
11160272
100%
100%2
100%2
100%2
100%
100%2
100%2
100%
Inca Minerales S.A.C.
Inca Minerales S.A.C.
Inca Minerales S.A.C.
Inca Minerales S.A.C.
Inca Minerales S.A.C.
Inca Minerales S.A.C.
Inca Minerales S.A.C.
Inca Minerales S.A.C.
Earning 100%1
Inca Minerales S.A.C.
Earning 100%1
Inca Minerales S.A.C.
Country/
State
Project
Tenement Identification
Tenement
Number
(WA)
Mining
Concession
Name
Code
Mining
Public
Registry
Ownership
Titleholder
WA
Dingo Range
EL37/1124
EL53/1352
EL53/1377
N/A
N/A
N/A
N/A
N/A
100% Nickel Rights
N/A
N/A
100% Nickel Rights
N/A
N/A
100% Nickel Rights
EL53/1380
N/A
N/A
N/A
100% Nickel Rights
EL53/1407
N/A
N/A
N/A
100% Nickel Rights
Bullseye
Mining Ltd
Bullseye
Mining Ltd
Bullseye
Mining Ltd
Bullseye
Mining Ltd
Bullseye
Mining Ltd
Note 1:
Inca Minerales S.A.C. (IMS) is a wholly owned subsidiary of Inca Minerals Limited. IMS has the exclusive right to earn 100% of
these concessions under executed Mining Option and Assignment Agreements (refer to Note 14 to the Financial
Statements).
Note 2: Concessions granted and allocation of a Mining Public Registry number pending.
INCA MINERALS LTD ANNUAL REPORT 2017 | 65
ZN DISCOVERY IN THE MAKING
UNIT 1 / 16 NICHOLSON ROAD
SUBIACO WA 6008
PHONE: +61 (0) 8 6145 0300
EMAIL: INFO@INCAMINERALS.COM.AU