IronRidge Resources
Annual Report 2014

Plain-text annual report

IRONRIDGE RESOURCES LIMITED AND CONTROLLED ENTITIES ACN: 121 572 192 ANNUAL REPORT 2014 CONTENTS DIRECTORS’ REPORT ...............................................................................................................3 AUDITORS INDEPENDENCE DECLARATION..........................................................................18 INTEREST IN TENEMENTS......................................................................................................19 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME.............................................20 CONSOLIDATED STATEMENT OF FINANCIAL POSITION.....................................................21 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .....................................................22 CONSOLIDATED STATEMENT OF CASH FLOWS ..................................................................23 NOTES TO THE FINANCIAL STATEMENTS............................................................................24 DIRECTORS’ DECLARATION ..................................................................................................46 INDEPENDENT AUDITORS’ REPORT .....................................................................................47 DIRECTORS’ REPORT Your directors submit their report for the year ended 30 June 2014. Directors The names and details of the Company’s directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Nicholas Mather Vincent Mascolo Geoffrey (Stuart) Crow Nicholas Mather –Non Executive Chairman BSc (Hons,Geol), MAusIMM Nick Mather’s special area of experience and expertise is the generation of and entry into undervalued or unrecognised resource exploration opportunities. He has been involved in the junior resource sector at all levels for more than 25 years. In that time he has been instrumental in the delivery of major resource projects that have delivered significant gains to shareholders. As an investor, securing projects and financiers, leading exploration campaigns and managing emerging resource companies Mr Mather brings a wealth of valuable experience. During the past three years Mr Mather has also served as a director of the following listed companies:  DGR Global Limited  Orbis Gold Limited  Aus Tin Mining Limited  Navaho Gold Limited  Bow Energy Limited (resigned 11 January 2012)  Armour Energy Limited  Lakes Oil NL (appointed 7 February 2012)  SolGold plc, which is listed on the London Stock Exchange (AIM) Vincent Mascolo –Executive Director BEng Mining, MAusIMM, MEI Aust Mr Mascolo is a qualified mining engineer with extensive experience in a variety of fields including, gold and coal mining, quarrying, civil-works, bridge-works, water and sewage treatment and estimating. Mr Mascolo has completed his assignment in the Civil and Construction Industry, including construction and project management, engineering, quality control and environment and safety management. He is also a member of both the Australian Institute of Mining and Metallurgy and the Institute of Engineers of Australia. During the past three years Mr Mascolo has also served as a director of the following listed companies:  DGR Global Limited Stuart Crow –Non Executive Director Mr Crow has more than 27 years’ experience in all aspects of corporate finance and investor relations in Australia and international markets, and has owned and operated his own businesses in these areas for the last nineteen years. He brings extensive working knowledge of global capital markets and investor relations to the Board. Throughout his career, Stuart has served on a number of boards of public and unlisted companies and has assisted in raising funds for companies of varying size in Australia and International capital markets whilst working for his own firm and before that some of the world’s largest broking firms. During the past three years Mr Crow has also served as a director of the following listed companies:  TNG Limited IronRidge Resources Limited financial report for the year ended 30 June 2014 3 Directors’ Report (continued) As at the date of this report, the interest of the directors in the shares and options of IronRidge Resources Limited were: Nicholas Mather Vince Mascolo Stuart Crow Company secretary Number of ordinary shares 1,303,703 8,310,291 1,000,000 Number of options over ordinary shares 1,500,000 3,000,000 1,500,000 Karl Schlobohm – Company Secretary B.Comm, B.Econ, M.Tax, CA, AICD Karl Schlobohm is a Chartered Accountant with over 20 years’ experience across a wide range of industries and businesses. He has extensive experience with financial accounting, corporate governance, company secretarial duties and board reporting. Over the past 5 years, Mr Schlobohm has contracted into roles as CFO and/or Company Secretary for a number of ASX-listed resource companies including Linc Energy, Discovery Metals and Meridian Minerals. He currently acts as the Company Secretary for ASX-listed DGR Global Limited, Navaho Gold Limited (also acts as non-executive director), Aus Tin Mining Limited, Armour Energy Limited and LSE(AIM)-listed SolGold Plc. Corporate structure IronRidge Resources Limited is a company limited by shares that is incorporated and domiciled in Australia. It was converted to a public company on 22 August 2011. Principal activities IronRidge was originally established to explore for uranium in southern Queensland and over a number of years the Company accumulated a sizeable package of Exploration Permits for Minerals (EPM) and an Exploration Permit for Coal (EPC), focussed mainly in the Surat Basin, in Queensland, Australia. In late 2011 the Company sought to expand its strategy of “Early Mover Advantage” into regions of Africa prospective for iron ore and an experienced team of ex-Rio Tinto geologists engaged to identify and secure a portfolio of assets with the potential to be world class. There was no significant change in the nature of the activities of the Group during the financial year. Dividends No dividends were declared or paid during the financial year. IronRidge Resources Limited financial report for the year ended 30 June 2014 4 Directors’ Report (continued) Review of Operations and Future Developments IronRidge is focused on exploration for and development of large scale bulk commodities. The company is assembling a suite of assets in prospective, under-developed regions – Gabon (Three granted Permis de Recherche for Iron ore) Exploration has commenced and initial sample assay results very encouraging An additional 1400km2 of tenure at Tchibanga was granted. Falcon Data interpretation identifies some 100km of strike zones and multiple drill targets at Tchibanga Proposed drilling program to confirm extent of mineralization. Exploration target of 1.2 Bt, with initial DSO option already indicated SRK estimates upto 500mt of DSO at Mont Pele alone on 2km of strike DRC (Exploitation Permit prospective for iron ore) MoU for 63.5% farm-in for Kasumbalesa Project Exploration target 65 – 260 Mt, with DSO potential Australia (Granted EPMs prospective for Ni/Co and TiO /Fe/Al O ) Extensive auger drilling program undertaken on titanium area in late 2012 Significant exploration upside remains ₂ ₃ ₂ IronRidge Resources Limited financial report for the year ended 30 June 2014 5           Directors’ Report (continued) Review of Operations and Future Developments (continued) The IronRidge projects in Gabon, West Africa, are shown in the following Figure 1. Gabon is one of the richest nations in Africa, with an economy largely based on oil. It is however a recognised region for hosting iron ore, and the stable Gabonese Government is promoting mining investment. The country already has substantial rail and port infrastructure in place. Figure 1: IronRidge Resources Gabon Tenement Locations The Belinga Sud Permis de Recherche (see Figure 2) covers 1,976 km² and hosts hematite in conventional Banded Iron Formations (BIF). It is directly south of the Belinga Iron Ore Deposit (860 Mt @ 63% Fe), and 150 km from the Trans-Gabonese rail line. The tenement contains several exploration targets evident from magnetic anomalies and preliminary exploration, and the potential for an initial direct shipping (DSO) project. IronRidge Resources Limited financial report for the year ended 30 June 2014 6 Directors’ Report (continued) Review of Operations and Future Developments (continued) Figure 2: Belinga Sud Project, Gabon, West Africa The two Tchibanga Permis de Recherche (see Figure 3) covers 3,377km² and is along strike from known iron occurrences. The area has not been subject to any “modern era” exploration. The tenement is proximate to the port of Mayumba. Figure 3: Tchibanga Project, Gabon, West Africa IronRidge Resources Limited financial report for the year ended 30 June 2014 7 Directors’ Report (continued) Review of Operations and Future Developments (continued) IronRidge recently acquired Falcon Gravity Data in the Tchibanga area. Sampling and mapping has confirmed a correlation of the characteristic signatures provided by magnetics, gravity and topography data, including the ability to differentiate between hematite and magnetite resources. Based on the Falcon data IronRidge lodged and was granted an additional 1,400 km2 of tenure giving 100% tenure over the gravity data area (see Figure 4). Noting a strong magnetic and gravity response similar to the known Milingui Iron Ore deposit to the north west of the Tchibanga Permit, IronRidge has completed an initial field exploration program in the Mont Pele area in the south eastern sector of the Tchibanga Permit. This has confirmed the presence of hematite grading up to 62% in banded iron formations (BIF) over a conservative strike length of 10km. Figure 4: Tchibanga – New Exploration Permit and Falcon Gravity Data Coverage Identifying Multiple Drill Targets IronRidge Resources Ltd exploration tenements in Australia are shown in Figure 5. They are clustered in two groups in the area west of Mundubbera in Queensland. The southern group centered on and around Monogorilby which is prospective for TiO2, with accompanying Fe and Al2O3. A drilling program undertaken in late 2011 at Monogorilby revealed that the top 11 metres of the deposit is extensive and homogeneous, averaging >4.5% TiO (max value 13.8%). X-Ray Diffraction (XRD) analysis indicates the mineralogy of the titanium to be rutile and titanium associated with goethite, and preliminary metallurgical test results produced an intermediate product that may be suitable for hydrometallurgical processing. ₂ In late 2012 an extensive auger drilling program confirmed a much larger and thicker quantity of titanium rich tuff underlay the harder laterite material tested in the 2011 drilling program. A resource estimate “in house” indicates over 1.1 Bt assaying +3.2% TiO2. A program to test metallurgical recovery of the titanium is now being commenced. IronRidge Resources Limited financial report for the year ended 30 June 2014 8 Directors’ Report (continued) Review of Operations and Future Developments (continued) A review of earlier work on the Quaggy Prospect during the past year has led to a change in exploration focus and the application for two additional exploration tenements further north at Glencoe. Quaggy presents a strong magnetic feature that can be traced under the overlying laterite and alluvial cover. Soil cover (derived from the underlying gabbro) to the east is strongly anomalous in copper, nickel, cobalt and associated platinum group metals. As shown in Figure 6, these sit over SAM conductors which are stronger to the west at the limit of the survey. The combination of geology, soil geochemistry and underlying conductors demonstrates a potential for a new nickel district similar to that recently discovered by Sirius Resources NL (Nova Prospect) in Western Australia. The Glencoe prospect (under application) to the north of Quaggy presents an even stronger magnetic layered gabbro feature with known Cu, Ni and PGMs than at Quaggy. Figure 5: IronRidge Resources EPMs and Projects in Queensland Figure 6: Peak SAM conductors and soil geochemistry at Quaggy (shown over magnetic image) The loss after income tax for the Group for the year ended 30 June 2014 was $2,425,279. IronRidge Resources Limited financial report for the year ended 30 June 2014 9 Directors’ Report (continued) Significant changes in the state of affairs During the financial year ended 30 June 2014, issued capital increased to $6,661,258 from $4,391,686 as a result of seed capital raisings totaling $1,334,423, net of share issue costs of $41,015, the issue of shares to DGR Global Limited as a result of a partial debt conversion of $100,000, the issue of bonus shares to executives of $617,950 and the issue of shares as a result of other debt conversions totaling $217,200. In the opinion of the Directors, there were no other significant changes in the state of affairs of the Group that occurred during the financial year under review not otherwise disclosed in this report or the financial statements of the Group for the financial year. Environmental regulations and performance The Directors have put in place strategies and procedures to ensure that the Group manages its compliance with environmental regulations. The Directors are not aware of any breaches of any applicable environmental regulations. Proceedings on behalf of company No person has applied to the Court under section 237 of Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Remuneration report (audited) This remuneration report for the year ended 30 June 2014 outlines the remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 (the “Act”) and its regulations. This information has been audited as required by section 308(3C) of the Act. The remuneration report details the remuneration arrangements for key management personnel (“KMP”) who are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the Company, and includes the executive team. Individual key management personnel disclosures The remuneration report is presented under the following sections: 1. 2. Remuneration policy 3. Non-executive director remuneration arrangements 4. 5. Company performance and the link to remuneration 6. 7. 1. Individual key management personnel disclosures Executive contractual arrangements Equity instruments disclosures Executive remuneration arrangements Key management personnel (i) Directors Nicholas Mather Vince Mascolo Stuart Crow (ii) Executives Karl Schlobohm* Priy Jayasuriya* Barry Stoffell Amanda Geard Executive Chairman Executive Director Non-executive Director Company Secretary Chief Financial Officer Chief Geologist, New Opportunities Group Business Generation, New Opportunities Group * Karl Schlobohm, Priy Jayasuriya, Barry Stoffell and Amanda Geard are currently remunerated by DGR Global Limited. There were no changes to KMP after reporting date and before the date the financial report was authorized for issue. IronRidge Resources Limited financial report for the year ended 30 June 2014 10 Directors’ Report (continued) Remuneration report (continued) 2. Remuneration policy IronRidge Resources Limited’s remuneration strategy is designed to attract, motivate and retain employees and NEDs by identifying and rewarding high performers and recognising the contribution of each employee to the continued growth and success of the Group. The Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors and the Executive team. The Board assesses the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum shareholder benefit from the retention of a high quality Board and Executive team. Such officers are given the opportunity to receive their base remuneration in a variety of forms including cash and fringe benefits. It is intended that the manner of payments chosen will be optimal for the recipient without creating undue cost for the Company. Further details on the remuneration of Directors and Executives are set out in this Remuneration Report. The Company aims to reward the Executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company. The Board’s policy is to align Executive objectives with shareholder and business objective by providing a fixed remuneration component and offering long-term incentives. In accordance with best practice corporate governance, the structure of NED and executive remuneration is separate and distinct. 3. Non-executive director remuneration arrangements The board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest caliber, whilst incurring a cost that is acceptable to shareholders. The Company’s specific policy for determining the nature and amount of remuneration of Board members of the Company is as follows: The Constitution of the Company provides that the NEDs are entitled to remuneration as determined by the Company in a general meeting to be apportioned among them in such manner as the Directors agree, and, in default of agreement, equally. The aggregate remuneration per annum will be determined at the next annual general meeting. Additionally, NEDs are entitled to be reimbursed for properly incurred expenses. If a NED performs extra services, which in the opinion of the Directors are outside the scope of the ordinary duties of the Director, the Company may remunerate that Director by payment of a fixed sum determined by the Directors in addition to or instead of the remuneration referred to above. However, no payment can be made if the effect would be to exceed the maximum aggregate amount payable to NEDs. A NED is entitled to be paid travelling and other expenses properly incurred by them in attending Director’s or general meetings of the Company or otherwise in connection with the business of the Company. All Directors have the opportunity to qualify for participation in the Company’s Employee Share Option Plan (“ESOP”), subject to the approval of shareholders. The remuneration of NEDs for the year ended 30 June 2014 is detailed in this Remuneration Report. 4. Executive remuneration arrangements The Company aims to reward the Executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to: align the interests of the Executives with those of shareholders; link reward with the strategic goals and performance of the Company; and ensure total remuneration is competitive by market standards. The remuneration of Executives may from time to time be fixed by the Board. The remuneration will comprise a fixed remuneration component and also may include offering specific short and long-term incentives, in the form of: performance based salary increases and/or bonuses; and/or the issue of options. The remuneration of the Executives employed on a full-time basis by the Company for the year ending 30 June 2014 is detailed in this Remuneration Report. IronRidge Resources Limited financial report for the year ended 30 June 2014 11      Directors’ Report (continued) Remuneration report (continued) 5. Company performance and the link to remuneration During the financial year, the Company has generated losses as its principal activity was mineral exploration. During the year ended 30 June 2014 the Company’s ordinary shares were not traded on any exchange and there were no dividends paid during the year. As the Company is still in the exploration and development stage, the link between remuneration, Company performance and shareholder wealth is tenuous. Share prices are subject to the influence of metals prices and market sentiment toward the sector, and as such increases or decreases may occur quite independent of Executive performance or remuneration. 6. Executive contractual arrangements It is the Board’s policy that employment agreements are entered into with all Executives. The current service agreement with the Executive Director has a notice period of three (3) months. All other employment agreements have one month (or less) notice periods. Executives are entitled to their statutory entitlements of accrued annual leave and long service leave together with any superannuation on termination. No other termination payments are payable. The terms of appointment for NEDs are set out in the letters of appointment. Executive Director The Company has a three (3) year Executive Service Agreement with Alberona Pty Ltd an entity associated with Mr Vincent Mascolo, which took effect on 9 January 2012 for the provision of certain consultancy services. Alberona Pty Ltd will provide Mr Vincent Mascolo as Executive Director of IronRidge Resources Limited. Under the terms of the agreement: Alberona Pty Ltd is entitled to a base fee for the services of Mr Mascolo of $180,000 per annum, increasing to $250,000 per annum on the date the Company’s shares are admitted to quotation on the ASX and increasing to $350,000 from the day the company has a market capitalisation of equal to or greater than $100 million. Both the Company and Alberona Pty Ltd are entitled to terminate the contract upon giving three (3) months written notice; The Company is entitled to terminate the agreement immediately upon the happening of certain events in respect of Alberona Pty Ltd’s solvency or certain acts of misconduct; Mr Mascolo is entitled to a short-term incentive equal to 100% of the base fee over the lifetime of the Executive Service Agreement with Alberona Pty Ltd on meeting the following key performance indicators a) 10% - Compliance with statutory requirements and board reporting; b) 25% - Share price re-rating; c) 25% - Project advancement and or value adding acquisition; d) 30% - Promotional achievement, capital management & successful cash raisings; and e) 10% - No lost time injury and adherence to OHES policies. Mr Mascolo is entitled to a long-term Incentive equal to a maximum of 4% interest in the share capital of the company upon meeting certain key performance indicators as set by the board. Other Executives Employment contracts entered into with Executives contain the following key terms: Event Performance based salary increases and/or bonuses Short and long-term incentives, such as options Resignation/ notice period Serious misconduct Company Policy Board discretion Board discretion 1 month Company may terminate at any time Payouts upon resignation or termination, outside industrial regulations (i.e. ‘golden handshakes’) None IronRidge Resources Limited financial report for the year ended 30 June 2014 12      Directors’ Report (continued) Remuneration report (continued) Remuneration of Directors and Other Key Management Personnel Directors Stephen Everett1 - - 2014 2013 Nicholas Mather - - - - 2014 2013 Vince Mascolo 2014 2013 Stuart Crow2 2014 2013 Total remuneration - - - - 2014 2013 Short term benefits Salary & fees $ Post- employment Superannuation $ Share based payments Equity settled Options $ Shares $ Total $ % Consisting of options - 11,667 50,000 79,167 180,000 179,275 52,500 20,833 282,500 290,942 - - - - - - - - - - - - 19,409 - 38,820 - 19,409 - - - - - 215,200 - - - - 11,667 69,409 79,167 434,020 179,275 71,909 20,833 77,638 - 215,200 - 575,338 290,942 - - 28% - 9% - 27% - 1 Stephen Everett resigned 21 November 2012 2 Stuart Crow was appointed 1 February 2013 Other Key Management Personnel Peter Williams1 - - 2014 2013 Karl Schlobohm2 - - 2014 2013 Priy Jayasuriya2 - - 2014 2013 Barry Stoffell2 2014 2013 - - Amanda Geard2 - - 2014 2013 Total remuneration - - 2014 2013 Short term benefits Post- employment Share based payments Equity settled Total % Consisting of options Salary & fees $ Superannuation $ Options $ Shares $ - 58,498 - - - - - - - - - 58,498 - - - - - - - - - - - - - - 6,470 - 6,470 - 34,744 - 34,744 - 82,428 - - - - - - - 201,375 - 201,375 - $ - 58,498 6,470 - 6,470 - 236,119 - 236,119 - - - 100% - 100% - 15% - 15% - 402,750 - 485,178 58,498 1 Peter Williams resigned 21 November 2012. 2 Karl Schlobohm, Priy Jayasuriya, Barry Stoffell and Amanda Geard are remunerated by DGR Global Ltd. There were no other executives employed or remunerated by the Company or the Group during the years ended 30 June 2014 and 2013. Performance income as a proportion of total remuneration There was no performance based remuneration during the year. IronRidge Resources Limited financial report for the year ended 30 June 2014 13 Directors’ Report (continued) Remuneration report (continued) 7. Equity instruments disclosures Shares and Options issued as part of remuneration for the year ended 30 June 2014 Shares and options may be issued to Directors and Executives as part of their remuneration. The shares and options are not issued based on performance criteria, but are issued to the majority of Directors and Executives of the Company to align comparative shareholder return and reward for Directors and Executives. Shares and Options granted as remuneration Details of shares issued as part of remuneration of directors and other key management personnel in this financial year are as follows: Director shares Key Management Personnel shares Grant date 31/01/2014 Issue price $0.08 20/12/2013 $0.075 The number of ordinary shares granted to directors and other key management personnel as part of compensation during the year ended 30 June 2014 are set out below: Number of shares granted during the year 2014 - 2,690,000 - - - 2,685,000 2,685,000 8,060,000 Directors Nicholas Mather Vince Mascolo Stuart Crow Other Key Management Personnel Karl Schlobohm Priy Jayasuriya Amanda Geard Barry Stoffell Total The terms and conditions of the grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follow: Grant date Vesting date and exercisable date Expiry date Exercise price Director Options 31/01/2014 31/01/2014 31/12/2017 £0.25 Fair value per option at grant date £0.007 Key Management Personnel Options 31/01/2014 31/01/2014 31/12/2017 £0.25 £0.007 Options granted carry no dividend or voting rights. There was no amount paid or payable by the recipients IronRidge Resources Limited financial report for the year ended 30 June 2014 14 Directors’ Report (continued) Remuneration report (continued) 7. Equity instruments disclosures (continued) The number of options over ordinary shares granted to and vested by directors and other key management personnel by as part of compensation during the year ended 30 June 2014 are set out below: Number of options granted during the year 2014 Number of options vested during the year 2014 1,500,000 3,000,000 1,500,000 1,500,000 3,000,000 1,500,000 500,000 500,000 2,685,000 2,685,000 12,370,000 500,000 500,000 2,685,000 2,685,000 12,370,000 Directors Nicholas Mather Vince Mascolo Stuart Crow Other Key Management Personnel Karl Schlobohm Priy Jayasuriya Amanda Geard Barry Stoffell Total Shares issued on exercise of remuneration options There were no options exercised during the year that were previously granted as remuneration (2013: nil). Additional disclosures relating to key management personnel Shareholdings Directors Nicholas Mather Vincent Mascolo Stuart Crow Other Key Management Personnel Karl Schlobohm Priy Jayasuriya Barry Stoffell Amanda Geard Total Balance 1 July 2013 Granted as Compensation Options Exercised Net Change Other Balance 30 June 2014 - 3,317,000 400,000 - 2,690,000 - 200,000 - - - 3,917,000 - - 2,685,000 2,685,000 8,060,000 - - - - - - - - 1,303,703 2,303,291 600,000 1,303,703 8,310,291 1,000,000 92,500 - - - 4,299,494 292,500 - 2,685,000 2,685,000 16,276,494 “Net Change Other” above includes the balance of shares held on appointment / resignation, and shares acquired for cash. There were no shares held nominally at 30 June 2014 (2013: nil). IronRidge Resources Limited financial report for the year ended 30 June 2014 15 Directors’ Report (continued) Remuneration report (continued) Option holdings Current Year Directors Nicholas Mather Vincent Mascolo Stuart Crow Other Key Management Personnel Karl Schlobohm Priy Jayasuriya Barry Stoffell Amanda Geard Total Balance 1 July 2013 Granted Exercised Other Balance 30 June 2014 Vested at the end of the year Vested and exercisable at the end of the year Vested and unexercisable at the end of the year - - - - - - - - 1,500,000 3,000,000 1,500,000 500,000 500,000 2,685,000 2,685,000 12,370,000 - - - - - - - - - - - - - - - - 1,500,000 3,000,000 1,500,000 1,500,000 3,000,000 1,500,000 1,500,000 3,000,000 1,500,000 500,000 500,000 2,685,000 2,685,000 12,370,000 500,000 500,000 2,685,000 2,685,000 12,370,000 500,000 500,000 2,685,000 2,685,000 12,370,000 - - - - - - - There were no options held nominally at 30 June 2014 (2013: nil). Loans to Key Management Personnel There were no loans to Directors or other key management personnel during the year. Other Transactions with Key Management Personnel There were no other transactions or balances with key management personnel during the period. (End of Remuneration Report) IronRidge Resources Limited financial report for the year ended 30 June 2014 16 Directors’ Report (continued) Directors’ Meetings The number of meetings of Directors held during the year and the number of meetings attended by each Director was as follows: Nicholas Mather Vince Mascolo Stuart Crow1 Number of meetings held while in office 6 6 6 Meetings attended 6 6 6 Significant Events after the Balance Date The Directors are not aware of any significant changes in the state of affairs of the Company after the balance date that is not covered in this report. Indemnification and insurance of Directors, Officers and Auditor Each of the Directors and Secretary of the Company has entered into a Deed with the Company whereby the Company has provided certain contractual rights of access to books and records of the Company to those Directors. The Company has insured all of the Directors. The contract of insurance prohibits the disclosure of the nature of the liabilities covered and amount of the premium paid. The Corporations Act does not require disclosure of the information in these circumstances. The Company has not indemnified or insured its auditor. Non-audit Services BDO Audit Pty Ltd did not provide any non-audit services during the year. Auditor’s Independence Declaration The Auditor’s Independence Declaration forms part of the Directors’ Report and can be found on page 18. Signed in accordance with a resolution of Directors: Vincent Mascolo Director Brisbane Date: 31 October 2014 IronRidge Resources Limited financial report for the year ended 30 June 2014 17 Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia DECLARATION OF INDEPENDENCE BY DAMIAN WRIGHT TO THE DIRECTORS OF IRONRIDGE RESOURCES LIMITED As lead auditor of IronRidge Resources Limited for the year ended 30 June 2014, I declare that, to the best of my knowledge and belief, there have been no contraventions of: • • the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. This declaration is in respect IronRidge Resources Limited and the entities it controlled during the period. D P Wright Director BDO Audit Pty Ltd Brisbane, 31 October 2014 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. 18 INTEREST IN TENEMENTS As at the date of this report, the Group has an interest in the following tenements. Tenement % Interest Grant Date Application Date Expiry Date Term EPM 16260 EPM 16261* EPM 18534 EPMA 19164 EPMA 19419 EPMA 25115 Authorisation de prospection G6-525 Authorisation de prospection G6-526 Authorisation de prospection G5-533 100% 100% 100% 100% 100% 100% 12.06.08 28.05.08 12.10.10 30.09.13 26.08.14 08.04.14 11.06.15 7 years 27.05.15* 5 years 11.10.14* 4 years 29.09.15 2 years 25.08.17 3 years 07.04.17 3 years 100% 07.06.12 27.06.16 4 years 100% 07.06.12 27.06.16 4 years 100% 05.12.13 04.12.16 3 years *A renewal application has been lodged in respect of this Exploration Permit. IronRidge Resources Limited financial report for the year ended 30 June 2014 19 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2014 Revenue Administration and consulting expenses Depreciation Employee benefits expenses Exploration costs written-off Legal expenses Interest expense Listing costs expensed Share based payments (Loss) before income tax Income tax expense (Loss) for the year Other comprehensive income Total comprehensive income for the year attributable to the owners of IronRidge Resources Limited Earnings per share Basic earnings per share Diluted earnings per share Notes 2 2014 $ 2013 $ 2,221 1,811 (1,079,918) (4,384) - (10,073) (25,000) (11) (518,453) (789,661) (2,425,279) - (2,425,279) (731,752) (4,377) (52,524) (331,058) (17,445) (1,018) - - (1,136,363) - (1,136,363) - - (2,425,279) (1,136,363) Cents / share Cents / share (2.0) (2.0) (1.2) (1.2) 16 3 4 8 8 The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. IronRidge Resources Limited financial report for the year ended 30 June 2014 20 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2014 Current assets Cash and cash equivalents Trade and other receivables Prepaid IPO costs Total current assets Non-current assets Other financial assets Property, plant and equipment Exploration and evaluation assets Total non-current assets Total assets Current liabilities Trade and other payables Non-Interest-bearing loans Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity attributable to owners of IronRidge Resources Limited Notes 2014 $ 2013 $ 9 10 11 12 13 14 19(e) 27,600 29,424 386,476 443,500 63,103 11,010 1,590,815 1,664,928 2,108,428 1,293,831 9,205 1,303,036 1,303,036 805,392 15 16 6,661,258 171,711 (6,027,577) 29,661 24,525 - 54,186 68,103 15,394 1,021,370 1,104,867 1,159,053 349,529 20,136 369,665 369,665 789,388 4,391,686 - (3,602,298) 805,392 789,388 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. IronRidge Resources Limited financial report for the year ended 30 June 2014 21 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2014 Issued Capital Accumulated Losses $ $ Share based payments reserve $ Balance at 30 June 2012 Loss for the year Other comprehensive income Total comprehensive income for the year Shares issued during the year Share issue costs, net of tax Balance at 30 June 2013 Loss for the year Other comprehensive income Total comprehensive income for the year Shares issued during the year Share issue costs, net of tax Share based payments Balance at 30 June 2014 3,131,190 - - - 1,275,769 (15,273) 4,391,686 - - - 2,310,586 (41,014) - 6,661,258 (2,465,935) (1,136,363) - (1,136,363) - - (3,602,298) (2,425,279) - (2,425,279) - - - (6,027,577) - - - - - - - - - - - - 171,711 171,711 Total Equity $ 665,255 (1,136,363) - (1,136,363) 1,275,769 (15,273) 789,388 (2,425,279) - (2,425,279) 2,310,586 (41,014) 171,711 805,392 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. IronRidge Resources Limited financial report for the year ended 30 June 2014 22 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2014 Notes 2014 $ 2013 $ Cash flows from operating activities Receipts from customers (including GST) Payments to suppliers and employees (including GST) Interest received Interest paid Net cash flows from operating activities Cash flows from investing activities Payments for security deposits Refund of security deposits Payments for investments in available for sale securities Purchase of property, plant and equipment Payments for exploration and evaluation assets Net cash flows from investing activities Cash flows from financing activities Proceeds from the issue of shares Transactions costs on the issue of shares Prepayment of IPO costs Proceeds from borrowings Repayment of borrowings Net cash flows from financing activities 18 11 11 12 15 19(e) Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 9 114,810 (798,468) 2,221 (11) (681,448) (5,000) 10,000 - - (477,461) (472,461) 1,375,438 (25,313) (203,846) 14,115 (8,546) 1,151,848 (2,061) 29,661 27,600 69,435 (314,669) 1,811 (1,018) (244,441) (27,166) - - (449,116) (476,282) 622,750 (10,275) 106,379 (182,600) 536,254 (184,469) 214,130 29,661 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. IronRidge Resources Limited financial report for the year ended 30 June 2014 23 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies Corporate Information The consolidated financial report of IronRidge Resources Limited for the year ended 30 June 2014 was authorised for issue in accordance with a resolution of the directors on 31 October 2014. IronRidge Resources Limited (the Parent) is a public company limited by shares incorporated and domiciled in Australia. The ultimate parent of IronRidge Resources Limited is DGR Global Limited which owns 46% of the ordinary shares. The Group’s registered office is located at Level 27 One One One, 111 Eagle Street, Brisbane, QLD 4000. The nature of the operations and principal activities of the Group are described in the director’s report. Basis of Preparation This financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The Group is considered a for-profit entity for the purpose of Australian Accounting Standards. The financial report covers the Group comprising of IronRidge Resources Limited and its subsidiaries and is presented in Australian dollars. Compliance with IFRS Australian Accounting Standards include Australian Equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial statements and notes of IronRidge Resources Limited comply with International Financial Reporting Standards (IFRS). Going concern The financial statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. The Group has not generated revenues from operations. As such, the Group’s ability to continue to adopt the going concern assumption will depend upon a number of matters including successful closure of its initial public offering, its subsequent successful raisings in the future of necessary funding and the successful exploration and subsequent exploitation of the Group’s tenements. In addition it is dependent upon the majority of the trade creditors agreeing to deferred payment terms. The Directors have an expectation that the closure of its initial public offering will be successful. If market conditions do not lend itself to the completion of an initial public offering, the Directors will have several other strategic and funding opportunities that they will review. In the absence of these matters being successful, there exists a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern with the result that the Group may have to realise its assets and extinguish its liabilities other than in the ordinary course of business, and at amounts different from those stated in the financial statements. No adjustments for such circumstances have been made in the financial statements. Reporting basis and conventions The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied. The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. IronRidge Resources Limited financial report for the year ended 30 June 2014 24 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (a) New Accounting Standards and Interpretations The accounting policies adopted are consistent with those of the previous financial year except as follows: The Company has adopted the following new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2013: Reference AASB 10 AASB 11 AASB 12 AASB 13 AASB 2011-8 AASB 119 AASB 2011-10 AASB 127 AASB 128 AASB 2011-7 AASB 2012-2 AASB 2012-5 AASB 2012-10 AASB 2011-4 Title Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Fair Value Measurements Amendments to Australian Accounting Standards arising from AASB 13 Employee Benefits (September 2011) Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) Separate Financial Statements (Revised) Investments in Associates and Joint Ventures (Reissued) Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle Amendments to Australian Accounting Standards – Transition Guidance and Other Amendments Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirement Application date of standard 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 Application date for the Company 1 July 2013 1 July 2013 1 July 2013 1 July 2013 1 July 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 July 2013 1 July 2013 1 July 2013 1 July 2013 1 July 2013 1 January 2013 1 July 2013 1 January 2013 1 July 2013 1 January 2013 1 July 2013 1 January 2013 1 July 2013 The adoption of the above standards and interpretations did not have any material impact on the current or any prior period and is not likely to materially affect future periods. Australian Accounting Standards and Interpretations that have been recently issued or amended but are not yet effective have not been adopted by the Company for the annual reporting period ending 30 June 2014. None of these is expected to have a significant effect on the financial statements. The Company anticipates that all of the relevant pronouncements will be adopted in the Company’s accounting policies for the first period beginning after the effective date of the pronouncement. Information of new standards, amendments and interpretations that are expected to be relevant to the Company’s financial statements is provided below. Reference AASB 9 AASB 2012-3 AASB 2013-3 AASB 2013-4 AASB 2013-5 Title Financial Instruments Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting Amendments to Australian Accounting Standards – Investment Entities Application date of standard 1 January 2017 1 January 2014 Application date for the Company 1 July 2017 1 July 2014 1 January 2014 1 July 2014 1 January 2014 1 July 2014 1 January 2014 1 July 2014 IronRidge Resources Limited financial report for the year ended 30 June 2014 25 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (continued) (b) Basis of Consolidation The consolidated financial statements comprise the financial statements of IronRidge Resources Limited and its subsidiaries as at and for the period ended 30 June each year (the “Group”). Subsidiaries Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity 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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances, transactions, unrealized gains and losses resulting from intra-group transactions and dividends have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group. Investments in subsidiaries held by IronRidge Resources Limited are accounted for at cost in the separate financial statements of the parent entity less any impairment charges. Dividends received from subsidiaries are recorded as a component of other revenues by the parent entity, and do not impact the recorded cost of the investment. Upon receipt of dividend payments from subsidiaries, the parent will assess whether any indicators of impairment of the carrying value of the investment in the subsidiary exist. Where such indicators exist, to the extent that the carrying value of the investment exceeds its recoverable amount, an impairment loss is recognised. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values. The difference between the above items and the fair value of consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or discount on acquisition. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash generating unit retained. Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and presented within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent. Losses are attributed to the non-controlling interest even if that results in a deficit balance. A change in ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction. IronRidge Resources Limited financial report for the year ended 30 June 2014 26 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (continued) (b) Basis of Consolidation (continued) Joint Arrangements Joint Operations The proportionate interests in the assets, liabilities and expenses of a joint operation activity have been incorporated in the financial statements under the appropriate headings. Joint Ventures Investments in joint ventures are accounted for using the equity method. Under the equity method, the share of the profits or losses of the joint venture is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in joint ventures are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity’s share of net assets of the joint venture. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends receivable from joint venture entities reduces the carrying amount of the investment. Changes in Ownership Interests The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of IronRidge Resources Ltd. When the Group ceases to have control, or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. (c) Business Combinations Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred, and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions as at the acquisition date. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value through profit and loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured. IronRidge Resources Limited financial report for the year ended 30 June 2014 27 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (continued) (d) Operating Segments An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This may include start-up operations which are yet to earn revenues. Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to users of the financial statements. Information about other operating segments that are below the quantitative criteria are combined and disclosed in a separate category for “all other segments”. (e) Cash and Cash Equivalents For the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position. (f) Trade and other receivables Receivables generally have 30-60 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. Collectability of receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect the receivable. Financial difficulties of the debtor or debts more than 90 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate. (g) Financial Instruments Recognition and Initial Measurement 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. Classification and Subsequent Measurement (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest rate method. (ii) (iii) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method. Available-for-sale financial assets Available for sale financial assets comprise investments in listed entities. These investments are recorded at cost. IronRidge Resources Limited financial report for the year ended 30 June 2014 28 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (continued) (g) Financial Instruments (continued) 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 derecognized 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 of loss. (h) Property, Plant & Equipment Property, plant & equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses. The cost of property, plant & equipment constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate portion of fixed and variable costs. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or loss during the financial year in which they are incurred. Depreciation The depreciable amount of all property, plant & equipment is depreciated over their useful life to the Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of assets are: Class of Property, plant & equipment Plant & Equipment Office Equipment Depreciation 10% - 15% Straight line 33.3% Straight line (h) Property, Plant & Equipment (continued) Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive income. Derecognition An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. (i) Exploration and Evaluation Assets Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include overheads or administration expenditure not having a specific nexus with a particular area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and active or significant operations in relation to the area are continuing. A regular review has been undertaken on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. IronRidge Resources Limited financial report for the year ended 30 June 2014 29 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (continued) (i) Exploration and Evaluation Assets (continued) A provision is raised against exploration and evaluation expenditure where the Directors are of the opinion that the carried forward net cost may not be recoverable or the right of tenure in the area lapses. The increase in the provision is charged against the results for the year. Accumulated costs in relation to an abandoned area are written off in full against profit 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. Costs of site restoration are provided over the life of the area 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 structure, waste removal, and rehabilitation of the site in accordance with clauses of mining permits. Such costs have been 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 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 restoration will be completed within one year of abandoning the site. (j) Impairment of Assets At each reporting date, the Group reviews the carrying values of its tangible 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 it recoverable amount is expensed to the profit or loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. (k) Trade and Other Payables Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30-60 days of recognition. (l) Provisions and Employee Benefits Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is possible that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs. IronRidge Resources Limited financial report for the year ended 30 June 2014 30 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (continued) (l) Provisions and Employee Benefits (continued) Employee benefits (i) Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. (ii) Long service leave The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wages and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (m) Leases Leases of property, plant & equipment where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to the Group 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 year. Leased assets are depreciated on a straight line basis over their estimated useful lives where it is likely that the Group will obtain ownership of the asset or over the term of the lease. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses on a straight line basis. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. (n) Share Capital Ordinary shares are classified as equity at the time that they are issued. Costs directly attributable to the issue of new shares or options are shown as a deduction from the equity proceeds, net of any income tax benefit. (o) Share-Based Payments The Group may provide benefits to Directors, employees or consultants in the form of share-based payment transactions, whereby services may be undertaken in exchange for shares or options over shares ("equity- settled transactions"). The fair value of options granted to Directors, employees and consultants is recognised as an employee benefit expense with a corresponding increase in equity (share option reserve). The fair value is measured at grant date and recognised over the period during which the recipients become unconditionally entitled to the options. Fair value is determined using a Black-Scholes option pricing model. An expense is still recognised for options that do not ultimately vest because a market condition was not met. IronRidge Resources Limited financial report for the year ended 30 June 2014 31 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (continued) (o) Share-Based Payments (continued) Where the terms of options are modified, the expense continues to be recognised from grant date to vesting date as if the terms had never been changed. In addition, at the date of the modification, a further expense is recognised for any increase in fair value of the transaction as a result of the change. Where options are cancelled, they are treated as if vesting occurred on cancellation and any unrecognised expenses are taken immediately to the profit or loss. If new options are substituted for the cancelled options and designated as a replacement, the combined impact of the cancellation and replacement options are treated as if they were a modification. (p) Revenue Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Interest Interest revenue is recognized as interest accrues using the effective interest rate method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. All revenue is stated net of the amount of goods and services tax (GST). (q) Income Tax The income tax expense for the period is the tax payable on the current period’s taxable income rate for each jurisdiction adjusted by changes in deferred tax assets liabilities attributable to temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. 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. Deferred tax is calculated at the tax rates expected to apply to the period when the asset is realised or liability is settled. Deferred tax is recognised in the statement of comprehensive income except where it relates to items that may be recognised directly in equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Current tax assets and liabilities are offset where a legally 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 relate 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. IronRidge Resources Limited financial report for the year ended 30 June 2014 32 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (continued) (r) GST Revenues, expenses and assets are recognised net of GST except where GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (s) Earnings per Share Basic earnings per share is calculated as net profit (loss) attributable to members of the parent, adjusted to exclude any costs of servicing equity other than ordinary shares, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account: The after tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and The weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. (t) Comparatives When required by Australian Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (u) Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principle market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. IronRidge Resources Limited financial report for the year ended 30 June 2014 33   NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 1: Summary of Significant Accounting Policies (continued) Accounting Policies (continued) (v) Critical Accounting Estimates and Judgments The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Key estimates – impairment The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Where applicable, value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates. Key judgments – exploration & evaluation assets The Group performs regular reviews on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. These reviews are based on detailed surveys and analysis of drilling results performed to balance date. The Directors have assessed that for the exploration and evaluation assets recognised at 30 June 2014, the facts and circumstances do not suggest that the carrying amount of an asset may exceed its recoverable amount. In considering this the Directors have had regard to the facts and circumstances that indicate a need for an impairment as noted in Accounting Standard AASB 6 “Exploration for and Evaluation of Mineral Resources”. Exploration and evaluation assets at 30 June 2014 were $1,590,815 (2013: $1,021,370). Note 2. Revenue - Interest received - Other revenue Total Revenue (a) Interest revenue from: - At call deposits held with financial institutions Total Interest Revenue Note 3. Profit / (Loss) Included in the profit / (loss) are the following specific expenses: Depreciation - Office equipment - Plant & equipment 2014 $ 2013 $ 2,221 - 2,221 2,221 2,221 1,811 - 1,811 1,811 1,811 800 3,584 799 3,578 IronRidge Resources Limited financial report for the year ended 30 June 2014 34 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 4. Income Tax (a) Components of income tax expense (benefit) Income tax expense (benefit) is made up of: Current tax Deferred tax (b) The prima facie tax on profit / (loss) before income tax is reconciled to the income tax expense as follows: Prima facie tax on profit / (loss) before income tax at 30% (2013: 30%) Add tax effect of: Permanent differences Current tax loss not recognised Current year temporary difference not recognised Deferred tax not recognised Other items Income tax expense Deferred Tax Asset (at 30%) Recognised temporary differences Recognised Unused tax losses Total deferred tax assets recognised Deferred Tax Liability Recognised timing differences Net deferred tax recognised Unrecognised deferred tax assets comprised of: Deferred tax assets: Net unrecognised tax losses Deferred tax assets: Gross unrecognised tax losses 2014 $ 2013 $ - - - - - - (731,230) (340,909) 237,032 494,198 - - - - 21,870 185,958 207,828 (207,828) - 1,704,630 5,682,100 - 237,769 - - 103,140 - 8,320 365,095 373,415 (373,415) - 965,545 3,218,482 In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or Same Business Test must be passed. The majority of losses are carried forward at 30 June 2014 under COT. Deferred tax assets which have not been recognised as an asset, will only be obtained if: (i) (ii) (iii) the Company derives future assessable income of a nature and of an amount sufficient to enable the losses to be realised; the Company continues to comply with the conditions for deductibility imposed by the law; and no changes in tax legislation adversely affect the Company in realising the losses. IronRidge Resources Limited financial report for the year ended 30 June 2014 35 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 5. Key Management Personnel Key Management Personnel Compensation The total remuneration of Key Management Personnel for the Group for the year was as follows: Short term employee benefits Post-employment benefits Share based payments Total 2014 $ 282,500 - 778,016 1,060,516 2013 $ 349,440 - - 349,440 Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the Group’s Key Management Personnel. Note 6. Dividends and Franking Credits There were no dividends paid or recommended during the year or since the end of the year. There are no franking credits available to shareholders of the Company. Note 7. Auditors Remuneration Audit and review of the financial reports of the Group Taxation services Note 8. Earnings per Share (EPS) (a) Earnings Earnings used to calculate basic and diluted EPS (b) Weighted average number of shares and options Weighted average number of ordinary shares outstanding during the year, used in calculating basic earnings per share Weighted average number of dilutive options outstanding during the year Weighted average number of ordinary shares and potential ordinary shares outstanding during the year, used in calculating diluted earnings per share Note 9. Cash and Cash Equivalents Cash at bank 2014 $ 2013 $ 29,000 - 29,000 15,000 3,500 18,500 (2,425,279) (1,136,363) Number of Shares Number of Shares 121,978,246 91,385,693 - - 121,978,246 91,385,693 2014 $ 2013 $ 27,600 27,600 29,661 29,661 IronRidge Resources Limited financial report for the year ended 30 June 2014 36 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 10. Trade and Other Receivables GST refundable 2014 $ 2013 $ 29,424 29,424 24,525 24,525 Receivables are non-interest bearing and are generally on 30-60 day terms. A provision for impairment loss is recognised when there is objective evidence that an individual receivable is impaired. No impairment loss has been recorded for the current and previous financial year. Due to the short term nature of these receivables, their carrying value is assumed to approximate fair value. The maximum exposure to credit risk is the carrying value of receivables. Collateral is not held as security. The receivables are not exposed to foreign exchange risk. No receivables were past due or impaired at 30 June 2014 (2013: nil). 2014 $ 2013 $ Note 11. Other Financial Assets –Non-current Security deposits Investment in shares at cost Note 12. Property, Plant and Equipment Plant & Equipment – at cost Accumulated depreciation Written down value Office equipment – at cost Accumulated depreciation Written down value Total written down value Reconciliation of carrying amounts at the beginning and of the year Plant & Equipment Year ended 30 June 2014 At 1 July 2013 net of accumulated depreciation Additions Disposals Depreciation charge for the year At 30 June 2014 net of accumulated depreciation Year ended 30 June 2013 At 1 July 2012 net of accumulated depreciation Additions Disposals Depreciation charge for the year At 30 June 2013 net of accumulated depreciation $ 13,878 - - (3,584) 10,294 17,456 - - (3,578) 13,878 59,103 4,000 63,103 32,815 (22,521) 10,294 2,401 (1,685) 716 11,010 64,103 4,000 68,103 32,815 (18,937) 13,878 2,401 (885) 1,516 15,394 Office Equipment $ Total $ 1,516 - - (800) 716 2,315 - - (799) 1,516 15,394 - - (4,384) 11,010 19,771 - - (4,377) 15,394 IronRidge Resources Limited financial report for the year ended 30 June 2014 37 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 13. Exploration and Evaluation Assets Exploration and evaluation assets Movements in carrying amounts Balance at the beginning of the year Additions Written-off during the year Balance at the end of the year 2014 $ 2013 $ 1,590,815 1,021,370 1,021,370 579,518 (10,073) 1,590,815 910,496 441,932 (331,058) 1,021,370 The recoverability of the carrying amount of exploration and evaluation assets is dependent on the successful development and commercial exploitation or alternatively, sale of the respective areas of interest. Note 14. Trade and Other Payables Trade creditors Accrued expenses 2014 $ 1,262,164 31,667 1,293,831 2013 $ 172,029 177,500 349,529 Trade and other payables are non-interest bearing and are generally on 30-60 day terms. Due to the short term nature of these payables, their carrying value is assumed to approximate fair value. Note 15. Issued Capital (a) Issued and paid up capital 135,907,155 (2013: 105,934,013) ordinary shares fully paid Share issue costs 2014 $ 2013 $ 6,732,547 (71,289) 6,661,258 4,421,961 (30,275) 4,391,686 Ordinary shares participate in dividends and the proceeds on winding up the Company in proportion to the number of shares held. At shareholder meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on show of hands. (b) Reconciliation of issued and paid-up capital At 1 July 2012 Shares issued for cash ($0.075 per share – 01/05/13 net of issue costs) Shares issued for debt conversion ($0.075 per share – 01/05/13) Shares issued for cash ($0.075 per share – 30/06/13) Share issued for debt conversion ($0.075 per share – 30/06/13) At 30 June 2013 At 1 July 2013 Shares issued for cash ($0.075 per share – 01/07/13) Shares issued for cash ($0.075 per share – 29/10/13) Shares issued for debt conversion ($0.075 per share – 20/12/13) Shares issued for services in lieu of cash ($0.075 per share – 20/12/13) Shares issued for issue costs lieu of cash ($0.075 per share – 20/12/13) Bonus shares issued ($0.075 per share – 20/12/13) Shares issued for cash ($0.08 per share – 20/12/13 net of issue costs) Bonus shares issued ($0.08 per share – 31/01/14) Shares issued for cash ($0.08 per share – 31/01/14 net of issue costs) Shares issued for cash ($0.08 per share – 04/03/14 At 30 June 2014 Number of Shares 88,923,760 7,609,999 7,083,254 760,000 1,557,000 105,934,013 105,934,013 720,000 7,933,333 1,333,333 2,700,000 196,000 5,370,000 4,327,976 2,690,000 809,167 3,893,333 135,907,155 $ 3,131,190 555,477 531,244 57,000 116,775 4,391,686 4,391,686 54,000 595,000 100,000 202,500 14,700 402,750 322,379 215,200 51,576 311,467 6,661,258 IronRidge Resources Limited financial report for the year ended 30 June 2014 38 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 15. Issued Capital (continued) (c) Options As at 30 June 2014, there were 13,270,000 unissued ordinary shares of IronRidge Resources Limited under option held as follows: 13,270,000 unlisted options to take up one ordinary share in IronRidge Resources Ltd at an exercise price of £0.25. The options vested immediately and expire 31 December 2017. (d) Capital Risk Management When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure to ensure the lowest costs of capital available to the Group. The Group’s capital comprises equity as shown in the statement of financial position. The Group is not exposed to externally imposed capital requirements. Note 16 Share Based Payments The expense recognised for share based payments received during the year is shown in the table below: Expense arising from equity settled share-based payment transactions Bonus share issues 2014 $ 789,661 2013 $ - During the year ended 30 June 2014, IronRidge Resources, issued 8,060,000 shares to directors and key management personnel totaling $617,950. No such share issues occurred during the year ended 30 June 2013. Employee share option plan (ESOP) Share options are granted to employees. The employee share option plan is designed to align participants’ interests with those of shareholders by increasing the value of the Company’s shares. When a participant ceases employment after the vesting of their share options, the share options are forfeited after 90 days unless cessation of employment is due to termination for cause, whereupon they are forfeited immediately or death. The Company prohibits KMP from entering into arrangements to protect the value of unvested ESOP awards. Each option can be exercised from vesting date to expiry date for one share with the exercise price payable in cash. Options granted On 31 January 2014, 13,270,000 IronRidge Resources Ltd share options were granted to Directors and employees under the Employee Share Option Plan. The options are to take up one ordinary share in IronRidge Resources at a price of 25 pence. The options vested immediately and are due to expire on 31 December 2017. The following table illustrates the number (no.) and weighted average exercise prices (WAEP) of, and movements in, share based payment share options granted during the year: Outstanding at the beginning of the year Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at the end of the year Exercisable at the end of the year 2014 No. - 13,270,000 - - 13,270,000 13,270,000 2014 WAEP 2013 No. 2013 WAEP - £0.25 - - £0.25 £0.25 - - - - - - - - - - - - - - IronRidge Resources Limited financial report for the year ended 30 June 2014 39  NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 16 Share Based Payments (continued) A value of $171,711 was calculated using the Black Scholes valuation methodology (refer below). Weighted average exercise price Weighted average life of the option Underlying share price Expected share price volatility Risk free interest rate Number of options issued Fair value (black-scholes) per option Total value of options issued IronRidge Resources Ltd ESOP £0.25 3.92 years £0.042 72.736% 1.78% 13,270,000 £0.007 $171,711 Note 17. Accumulated Losses Accumulated losses at the beginning of the year Losses after income tax expense Accumulated losses attributable to members of IronRidge Resources Limited at the end of the year Note 18. Information relating to IronRidge Resources Limited (“the parent entity”) Current assets Total assets Current liabilities Total liabilities Net Assets Issued capital Share based payment reserve Accumulated losses Loss of the parent entity Total comprehensive loss of the parent entity 2014 $ 2013 $ (3,602,298) (2,425,279) (2,465,935) (1,136,363) (6,027,577) (3,602,298) 2014 $ 2013 $ 523,171 3,178,340 1,539,772 1,539,772 1,638,568 6,661,258 171,711 (5,194,401) (2,417,487) (2,417,487) 50,868 2,240,053 321,720 625,281 1,614,772 4,391,686 - (2,776,914) (1,129,849) (1,129,849) The parent does not have any guarantees in relation to the debts of its subsidiaries, contingent liabilities or contractual obligations to purchase fixed assets at 30 June 2014 (2013: nil). Note 19. Cash Flow Reconciliation Loss after income tax Non-cash operating items - Write back of exploration expenditure - - - Depreciation Share based payments IPO costs expensed Changes in operating assets and liabilities* (Increase) decrease in trade and other receivables (Increase) decrease in other current assets Increase (decrease) in trade and other payables* Net cash flows from operating activities (2,425,279) (1,136,363) 10,073 4,383 789,661 518,453 (4,899) (386,476) 812,636 (681,448) 331,058 4,377 - (24,525) - 581,012 (244,441) * Net of amounts relating to exploration and evaluation assets. Non-cash investing and financing activities During the year $100,000 (2013: $500,000) of the loan owing by IronRidge Resources Limited to parent entity DGR Global Limited was converted to equity in IronRidge (refer note 15). During the year a further $217,200 (2013: $148,019) of liabilities were settled by issue of equity (refer note 15). IronRidge Resources Limited financial report for the year ended 30 June 2014 40 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 20. Related Party Disclosures (a) Subsidiaries The consolidated financial statements include the financial statements of IronRidge Resources Limited and the subsidiaries listed in the following table: Name Eastern Exploration Pty Ltd Quiver Coal Pty Ltd IronRidge Botswana Pty Ltd IronRidge Gabon SA (b) Ultimate parent Country of incorporation Equity interest (%) Australia Australia Botswana Gabon 2014 100 100 100 100 2013 100 100 100 100 DGR Global Limited is the ultimate parent, which is incorporated in Australia and owns 46% of IronRidge Resources Limited. (c) Key management personnel Details relating to key management personnel, including remuneration paid, are included in the directors report and note 5. (d) Transactions with related parties The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year: Related party DGR Global Limited (i) Hopgood Ganim Lawyers (ii) Sales to related parties Purchases from related parties Other transactions with related parties - - - - 288,000 300,000 260,185 17,445 - - - - 2014 2013 2014 2013 (i) The Company has a commercial arrangement with DGR Global Limited for the provision of various services, whereby DGR Global Limited provides resources and services including the provision of its administration and exploration staff, its premises (for the purposes of conducting the Company’s business operations), use of existing office furniture, equipment and certain stationery, together with general telephone, reception and other office facilities (‘‘Services’’). In consideration for the provision of the Services, the Group pays DGR Global Limited a monthly management fee. For the year ended 30 June 2014 $288,000 was paid or payable to DGR Global Limited (2013: $300,000) for the provision of the Services. The total amount outstanding at year end was $72,000 (2013: $32,924). (ii) Mr Brian Moller (a Director of ultimate parent entity DGR Global Ltd), is a partner in the Australian firm Hopgood Ganim lawyers. For the year ended 30 June 2014, Hopgood Ganim were paid $260,185 (2013: $17,445) for the provision of legal services to the Group. The services were based on normal commercial terms and conditions. The total amount outstanding at year end was $257,639 (2013: $40,000). The outstanding balances at each relevant year end are unsecured, interest free and settlement occurs in cash. All outstanding amounts payable comprise current liabilities. IronRidge Resources Limited financial report for the year ended 30 June 2014 41 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 20. Related Party Disclosures (continued) (e) Loans from related parties During the year a loan of $97,615 (2013: $365,126) was advanced from DGR Global Limited to IronRidge Resources Limited. During the year $8,546 was repaid in cash (2013: $182,600) and $100,000 was converted to equity (2013: $500,000) resulting in a $9,205 balance owing at year end (2013: $20,136). The loan is unsecured and payable at call however DGR Global Limited have provided a letter of comfort to the Group acknowledging that the loan will only be payable on the earlier of IronRidge Limited obtaining sufficient working capital to warrant repayment, DGR Global Limited and IronRidge Resources Limited agreeing to convert some or all of the loan to equity in the Group or the expiry of twelve months from the balance date. Note 21. Capital Commitments Future Exploration Commitments The Group has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Group. The commitments are as follows: Less than 12 months Between 12 months and 5 years 2014 $ 7,696,990 9,876,000 17,572,990 2013 $ 3,216,188 4,935,836 8,152,024 To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum expenditure requirements are not met, the Group has the option to negotiate new terms or relinquish the tenements. The Group also has the ability to meet expenditure requirements by joint venture or farm-in agreements. Note 22. Financial Risk Management (a) General objectives, policies and processes In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in this note. The Group’s financial instruments consist mainly of deposits with banks, receivables and payables. The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group’s finance function. The Group's risk management policies and objectives are therefore designed to minimise the potential impacts of these risks on the results of the Group where such impacts may be material. IronRidge Resources Limited financial report for the year ended 30 June 2014 42 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 22. Financial Risk Management (continued) The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below: (b) Credit Risk Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the Group incurring a financial loss. This usually occurs when debtors fail to settle their obligations owing to the Group. The Group’s objective is to minimise the risk of loss from credit risk exposure. The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. Credit risk is reviewed regularly by the Board. deposits with financial institutions and available-for-sale financial assets. It arises from exposure to receivables as well as through The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Group and at balance date. The Group’s cash at bank is wholly held with Macquarie Bank Limited. (c) Liquidity Risk Liquidity risk is the risk that the Group may encounter difficulties raising funds to meet financial obligations as they fall due. The objective of managing liquidity risk is to ensure, as far as possible, that the Group will always have sufficient liquidity to meets its liabilities when they fall due, under both normal and stressed conditions. Liquidity risk is reviewed regularly by the Board. The Group manages liquidity risk by monitoring forecast cash flows and liquidity ratios such as working capital. The Group did not have any financing facilities available at balance date. (d) Market Risk Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). The Group does not have any material exposure to market risk other than interest rate risk. Interest rate risk Interest rate risk arises principally from cash and cash equivalents. The objective of interest rate risk management is to manage and control interest rate risk exposures within acceptable parameters while optimising the return. IronRidge Resources Limited financial report for the year ended 30 June 2014 43 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 22. Financial Risk Management (continued) Interest rate risk is managed with a mixture of fixed and floating rate debt. For further details on interest rate risk refer to the tables below: Floating interest rate Fixed interest rate Non- interest bearing 2014 $ 2014 $ 2014 $ Total carrying amount as per the balance sheet 2014 $ Weighted average effective interest rate 2014 % 27,600 - - 27,600 - - Floating interest rate Fixed interest rate 2013 $ 2013 $ 29,661 - - 29,661 - - - - - - - - - - - - - - - - - 29,424 63,103 92,527 27,600 29,424 63,103 120,127 1,293,831 9,205 1,303,036 1,293,831 9,205 1,303,036 Non- interest bearing 2013 $ - 24,525 68,103 92,628 Total carrying amount as per the balance sheet 2013 $ 29,661 24,525 68,103 122,289 349,529 20,136 369,665 349,529 20,136 369,665 0.01% - - - - Weighted average effective interest rate 2013 % 0.3% - - - - (i) Financial assets Cash and cash equivalents Trade and other receivables Other financial assets Total financial assets (ii) Financial liabilities Trade and other payables Non-interest-bearing loans Total financial liabilities (i) Financial assets Cash and cash equivalents Trade and other receivables Other financial assets Total financial assets (ii) Financial liabilities Trade and other payables Non-interest-bearing loans Total financial liabilities Note 23. Operating Segments The Group has identified its operating segment 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 Group is managed primarily on a geographic basis, that is, the location of the respective areas of interest (tenements) in Queensland, and Gabon. Operating segments are determined on the basis of financial information reported to the Board for the Group as a whole. The Group does not yet have any products or services from which it derives an income. Accordingly, management currently identifies the Group as having only one reportable segment, being exploration for base and precious metals. The financial results from this segment are equivalent to the financial statements of the Group. There have been no changes in the operating segments during the year. IronRidge Resources Limited financial report for the year ended 30 June 2014 44 NOTES TO THE FINANCIAL STATEMENTS (continued) For the year ended 30 June 2014 Note 24. Asset Acquisition of Quiver Coal Pty Ltd On 25 July 2012, IronRidge Resources Limited acquired 100% of the net assets of Quiver Coal Pty Ltd, from DGR Global Limited for consideration of $2. The fair value of the net asset of Quiver Coal on acquisition was $2. Note 25. Subsequent Events The Directors are not aware of any significant changes in the state of affairs of the Group or events after the balance date that would have a material impact on the consolidated financial statements. Note 26. Contingent Assets and Liabilities There are no contingent assets and liabilities at 30 June 2014 (2013: none). IronRidge Resources Limited financial report for the year ended 30 June 2014 45 DIRECTORS’ DECLARATION In accordance with a resolution of the Directors of IronRidge Resources Limited, I state that: 1. In the opinion of the Directors: (a) The financial statements and notes of IronRidge Resources Limited for the financial year ended 30 June 2014 are in accordance with the Corporations Act 2001, including: (i) (ii) Giving a true and fair view of its financial position as at 30 June 2014 and performance Complying with the Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001 (b) The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1 (c) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable (d) The remuneration disclosures contained in the Remuneration Report comply with s300A of the Corporations Act 2001. 2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2014. On behalf of the board Vincent Mascolo Director Brisbane Date: 31 October 2014 IronRidge Resources Limited financial report for the year ended 30 June 2014 46 Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia INDEPENDENT AUDITORS’ REPORT To the members of IronRidge Resources Limited Report on the Financial Report We have audited the accompanying financial report of IronRidge Resources Limited, which comprises the consolidated statement of financial position as at 30 June 2014, 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, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility 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 Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. 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 company’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 company’s 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. 47 which has been given to the directors of IronRidge Resources Limited, would be in the same terms if given to the directors as at the time of this auditor’s report. Opinion In our opinion: (a) the financial report of IronRidge Resources Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Emphasis of Matter Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicates that the ability of the consolidated entity to continue as a going concern is dependent upon a number of matters including successful closure of its initial public offering, its subsequent successful raisings in the future of necessary funding and the successful exploration and subsequent exploitation of the Group’s tenements. These conditions, along with other matters set out in Note 1, indicate the existence of a material uncertainty that may cast significant doubt on the consolidated entity’s ability to continue as a going concern and, therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business. Report on the Remuneration Report We have audited the Remuneration Report included in pages 10 to 16 of the directors’ report for the year ended 30 June 2014. 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 In our opinion, the Remuneration Report of IronRidge Resources Limited for the year ended 30 June 2014 complies with section 300A of the Corporations Act 2001. BDO Audit Pty Ltd D P Wright Director Brisbane, 31 October 2014 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees. 48 

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