Jindalee Resources Limited
Annual Report 2017

Plain-text annual report

A B N 5 2 0 6 4 1 2 1 1 3 3 A N N U A L R E P O R T 2 0 1 7 CORPORATE DIRECTORY Board and Management Auditor Justin Mannolini B.Com/LL (Hons), LLM (Law) BDO Audit (WA) Pty Ltd (Non-Executive Chairman) Lindsay Dudfield BSc (Managing Director) Patricia Farr GradCertProfAcc, GradDipACG, GAICD, AGIA/ACIS (Executive Director/Company Secretary) Greg Ledger B.Com CA (Company Secretary) Principal Registered Office Level 2 9 Havelock Street WEST PERTH WA 6005 Telephone: 61 8 9321 7550 Facsimile: 61 8 9321 7950 Email: enquiry@jindalee.net Web: www.jindalee.net 38 Station Street SUBIACO WA 6008 Solicitors Kings Park Corporate Lawyers Level 2, 45 Richardson Street WEST PERTH WA 6005 Share Registry Advanced Share Registry 110 Stirling Highway NEDLANDS WA 6009 Telephone: 61 8 9389 8033 Facsimile: 61 8 9262 3723 Bankers National Australia Bank Limited 100 St Georges Terrace PERTH WA 6000 Stock Exchange Listing The Company’s shares are listed by the Australian Securities Exchange Limited (“ASX”) - Code JRL. The home exchange is Perth. Terry Peachey (Senior Consultant), Lindsay Dudfield, Trish Farr, Greg Ledger and Justin Mannolini. Board and Managment (left to right) i i JINDALEE RESOURCES LIMITED CONTENTS Chairman’s Report Review of Activities Directors’ Report Corporate Governance Statement Financial Statements Directors’ Declaration Auditors’ Independence Declaration Auditors’ Report Additional Information 2 4 11 19 21 50 51 52 56 1 ANNUAL REPORT 2017CHAIRMAN’S REPORT Dear Fellow Shareholder I am pleased to present the Chairman’s Report for Jindalee Resources Limited for 2017. We may look back at the previous financial year as the low point for the junior listed resource sector. While capital market conditions continue to be challenging, and investors still reluctant to fund greenfield exploration, many commodity prices have now begun to stabilise and in some cases increase modestly. This reflects the “new normal” outlook for less aggressive, but more sustainable growth in China. However, few are expecting a return to the boom conditions experienced in the last decade. The so-called “Trump trade” in the early part of calendar 2017 saw a brief surge of investor interest in resources, as many bet that President Trump would spend heavily in the area of infrastructure development. The nimble took advantage of this initial euphoria to raise capital. However a much more measured view of the potential of the new US administration to spark growth in the world’s largest economy has now taken hold, and commodity prices, and resources stocks, appear to be trading on something more closely approximating a fundamental basis. That being said, until central banks globally return monetary policy settings to a more neutral stance, we will all have to wait and wonder whether we are truly beyond the GFC – or setting ourselves up for another one. While last year I wrote of a “race to the bottom” in global interest rates (which has historically been constructive for commodity prices), this year the talk has been of increased rates. The reality is that fiscal policy has been mainly about that – talk – and monetary policy everywhere is still very loose. For a small company like Jindalee, finding value in this kind of market is extremely difficult. We have continued to review many projects and proposals that while having superficial appeal, on closer examination either don’t stack up technically, or do not offer the kind of return on investment that we seek on behalf of our shareholders. The better prospects tend to attract substantial competition, often from buyers better resourced than Jindalee, and we prefer to avoid the risk of overpaying in those situations. However I am pleased to report that through prudent management of our project interests, and by taking advantage of opportunities to monetise those interests where appropriate, we have maintained a very low cash burn rate and retain a sizeable cash buffer at year end. We have also acquired a greater understanding of the potential of the Prospect Ridge Magnesite project in North-western Tasmania and hope to further develop that understanding in the current financial year. We will continue to opportunistically acquire projects such as this which offer long term optionality for minimal outlay. Once again I would like to thank key management team members Lindsay Dudfield and Trish Farr and consultant Terry Peachey for their hard work and focus over the past year. While not always reflected in individually material transactions, there has been considerable activity “behind the scenes” to leverage our landholdings in Australia and where possible to acquire low-cost but strategic positions in interesting geological neighbourhoods. This tight financial discipline, coupled with an even tighter capital structure, means that Jindalee shareholders continue to enjoy excellent leverage to any value-adding opportunities we secure. On the subject of management, in September 2017, we were pleased to welcome Mr Pip Darvall as Jindalee’s new Chief Executive Officer. Pip is a qualified geologist with extensive experience across a range of commodities and sectors, many with direct relevance to Jindalee and its project portfolio. He will work alongside Lindsay Dudfield to enhance our project evaluation capacity. In this kind of environment, one of the most valuable assets a company can possess is a loyal and patient shareholder base, which Jindalee is privileged to enjoy. I thank all shareholders who continue to have faith in our ability to deliver a step change in the value of the Company, which will continue to be the Board’s focus in the 2018 financial year. Justin Mannolini Non-Executive Chairman 2 JINDALEE RESOURCES LIMITED“creating wealth for shareholders” HIGHLIGHTS Multi-commodity exposure1 Well funded2 Tight capital structure3 Experienced motivated management4 Track record of wealth creation5 1 Jindalee offers shareholders exposure to gold, base metals, magnesite, diamonds, iron ore and uranium 2 At 30 June 2017 Jindalee held cash & shares worth $5.4M* 3 Jindalee has only 34.9M shares on issue, providing great leverage for shareholders 4 Directors and management combine more than 60 years of technical and commercial experience, and are significant shareholders in the Company 5 Jindalee shareholders have received priority entitlements to several IPO’s (including Energy Metals, Anchor Resources and Alchemy Resources) and were paid a 55c special dividend in July 2010 * in summary, at 30 June 2017 Jindalee had no debt, had $3.4M in cash and held shares in listed companies worth approximately $2.0M, equivalent to $0.15 per share. 3 ANNUAL REPORT 2017 REVIEW OF ACTIVITIES Since listing in July 2002 Jindalee’s primary objective has been, and continues to be, to create wealth for our shareholders. Our strategy to grow Jindalee and create wealth for our shareholders is simple – we identify and acquire prospective ground or advanced projects, add value through additional exploration activity to bring the project to decision point and, where appropriate, either: (a) continue exploration on a 100% basis, (b) introduce partners to fund the higher risk and/or expensive stages of exploration, or (c) fund further exploration via a dedicated company in which Jindalee retains a significant interest (and Jindalee shareholders have the opportunity to invest directly) Figure 1. Jindalee Lead Projects To date this strategy has been very successful and Jindalee shareholders have received priority entitlements to former DIRECT INTERESTS subsidiary Energy Metals when it was spun out in 2005, as well as other IPO’s listing on Jindalee properties, including Anchor MAGNESITE Resources and Alchemy Resources. Jindalee has also returned $19 million in cash to shareholders via a $0.55 fully franked special Prospect Ridge (Jindalee 100%) dividend paid in July 2010, following the sale of 70% of our stake in Energy Metals to China Guangdong Nuclear Power Company. The Prospect Ridge Project comprises a single granted Exploration Licence (EL5/2016) located 55km southwest of Burnie Jindalee’s counter-cyclic strategy seeks to take advantage in NW Tasmania (Figure 2). Jindalee holds a 100% beneficial of high quality opportunities that can be acquired for minimal interest in the licence. The project covers the Arthur River and cost at low points in the cycle. To that end the Company was Lyons River magnesite deposits, noted by Geoscience Australia very active during the period and lodged a number of strategic as containing the third largest inventory of magnesite Economic tenement applications over areas with good potential for a Demonstrated Resources in Australia (refer www.ga.gov.au). broad range of commodities including magnesite, diamonds, gold, nickel and rare earths. Magnesite is the primary source of magnesia, which is mainly used in agriculture, mineral processing, paper manufacture Jindalee also continues to provide shareholders with indirect and refractory industries. Magnesia is also used to produce exposure to a range of commodities through our investee magnesium (Mg), a light metal widely used in the aerospace, companies, including uranium (through Energy Metals) and gold automotive and electronics industries. Both magnesite and and copper (through Alchemy Resources). Further information magnesium are on the EU’s list of 20 critical materials. on some of our projects and investee companies follow in this report. The project has been explored for over 40 years by companies including Mineral Holdings Australia, CRAE (now Rio Tinto), Jindalee’s strong balance sheet (around $5.4 million in cash and TasMag, Crest Magnesium and more recently by Beacon Hill shares at 30 June 2017) places the Company in a strong position Resources Plc. Beacon Hill undertook extensive pre-development to add value to the projects already in our portfolio and to activities at the Arthur River deposit, including drilling, resource acquire further high quality opportunities over the coming period. estimation, hydrological studies, environmental and Aboriginal 4 JINDALEE RESOURCES LIMITED REVIEW OF ACTIVITIES Heritage studies and metallurgical testwork. They also released neutralisation and the production of feed stock, fertilizers, the results from a preliminary scoping study1. This work has and some cosmetics. The calcined magnesia product is also provided an excellent foundation from which Jindalee can an intermediate stage in the production of a range of other further progress the project toward development. magnesia products. In addition to the calcination testwork, the metallurgical program will also examine the further use of flotation, both prior to the calcination stage and after calcination, as a method of maximising the grade of the calcined magnesia product. Results of the metallurgical program are expected later in the year. Outside of the Arthur River deposit, the project also includes a second significant magnesite occurrence at Lyons River, where drilling by CRAE in the 1980’s returned wide, high-grade intercepts including 200m @ 43.0% MgO from DDLR1, and 180m @ 42.0% MgO from DDLR2, highlighting the scope to create a much larger project than envisaged to date. DIAMONDS Aries (Jindalee 100%) Jindalee’s Aries Project is an uncontested Exploration Licence application (E80/5027) located in the central Kimberley region of Western Australia, approximately 270km east of Derby and 230km west of Rio Tinto’s Argyle diamond mine. Figure 2. Prospect Ridge Project. Location plan and simplified The project covers the Aries kimberlite cluster, including the Aries, geology. Athena, Helena and Persephone diamondiferous kimberlite pipes. Although significant exploration was undertaken in the Since grant of the licence in November 2016, Jindalee has period from 1986 to 2005, Jindalee believes that there is very completed the compilation of the extensive historical database good potential to find additional diamondiferous pipes and for the project and commenced a program of metallurgical alluvial diamond deposits in the area. Encouragingly, 95% of the testwork, designed to optimise the processing route for the diamonds recovered from the project have been gem quality. production of commercial grade magnesia products for both oxide and fresh magnesite ores. To this end, two bulk metallurgical composite samples from the Arthur River deposit were collected, comprising ~30kg of oxidised mineralisation and ~70kg of largely fresh magnesite. The two samples (each averaging >40% MgO) were collected from historic drill core and are considered to be representative of typical oxide and fresh mineralisation within the upper 70m of the deposit. The samples will be calcined (heated to between 700°C and 1000°C) to produce caustic-calcined magnesia (CCM). Applications for CCM include water treatment, acid 5 ANNUAL REPORT 2017REVIEW OF ACTIVITIES Figure 3. Aries Project. Location plan. Australia. These new project have potential for the discovery of not only gold, but possibly base metal and other speciality metal deposits. A selection from these newly acquired project areas with gold potential follows: Yindi Project (Jindalee 100%) The Yindi Project comprises an uncontested Exploration Licence application (E28/2708) located 135km NE of Kalgoorlie and applied for in August 2017. The Yindi Project covers the southern end of the highly endowed Laverton Tectonic Zone and abuts Apollo Consolidated’s (ASX: AOP) Rebecca Project where Apollo has recently reported highly encouraging gold intercepts from sulphidic felsic gneiss at the Lode 161 prospect², including 17.8m @ 15.95g/t Au from 142m and 17.8m @ 15.95g/t Au from 142m (both intercepts from diamond hole RHD-04) and 49m @ 4.57g/t Au from 166m in RHD-05. These intercepts were downdip of an earlier RC hole (RCLR-161) which recorded 42m @ 7.75g/t Au from 61m. Lode 161 is an emerging discovery under transported cover and the mineralisation is not well understood; however given the presence of abundant sulphides in a gneissic host it is likely that shearing is an important control on mineralisation. Interpretation of regional magnetic data shows magnetic units (dismembered greenstones?) are present on E28/2708, suggesting mineralising structures may trend into the tenement. There is no record that these zones of interest have been drill tested. Access negotiations with the Traditional Owners through the Kimberley Land Council are continuing. The Company has been actively compiling the historical data and looks forward to commencing work as soon as E80/5027 is granted. Jindalee looks forward to commencing work at Yindi as soon as E28/2708 is granted. GOLD In June 2017 Kin Mining NL (ASX: KIN) announced that it had acquired Jindalee’s 11% interest in the Cardinia JV, via the issue of 1M KIN fully paid shares. Through our Kin Mining shareholding, Jindalee will retain an indirect interest in the Cardinia ground, as well as gaining exposure to the broader potential represented by Kin Mining’s Leonora gold project (LPG). Over the year, Jindalee has continued to successfully apply one of our key value adding strategies through the selective application for new tenements covering prospective ground in the richly-mineralised Eastern Goldfields districts of Western Figure 4. Yindi Project. Location plan. 6 JINDALEE RESOURCES LIMITED REVIEW OF ACTIVITIES New Bore Project (Jindalee 100%) Kenya Project (Jindalee 100%) Jindalee’s New Bore Project is located 15km SW of Laverton in Jindalee’s Kenya Project is located 170km northeast of Kalgoorlie the Eastern Goldfields region of WA and comprises one wholly- in the Eastern Goldfields region of WA and comprises two granted owned Exploration Licence application (E38/3211) lodged late and wholly-owned Exploration Licences (E’s 39/1998 & 39/2005). December 2016. E38/3211 was subject to several competing E39/1998 abuts the northern boundary of the mining lease applications with Jindalee’s application winning priority following containing Saracen Minerals’ 0.2Moz Safari Bore gold deposit, a ballot conducted in March 2017. situated 3km along-strike to the south, and is 5km northwest of The New Bore project covers the nose of a folded sequence located a further 2km north of E39/1998. of mafics, ultramafics and BIF’s and includes the historic Rats Find gold workings. The project is located 10km NE of Dacian Available historical open file exploration information is being Resources’ (ASX: DCN) proposed Mt Morgans 2.5Mtpa gold compiled for this project ahead of the commencement of field Saracen’s Deep South underground mine, whilst E39/2005 is treatment plant and is considered highly prospective for programs. gold mineralisation. Available historical open file exploration information is being compiled for this project. Salt Creek Project (Jindalee 100%) Jindalee’s Salt Creek Project is located 65km southeast of Kalgoorlie in the Eastern Goldfields region of WA and comprises one wholly-owned Exploration Licence application (E25/562) lodged in December 2016. This tenement abuts the eastern boundary of the mining lease containing Silver Lakes’ 1.2Mtpa Randall’s mill. Salt Creek covers magnetic features which may be prospective for gold mineralization. Available historical open file exploration information is being compiled for this project. Tokay Project (Jindalee 100%) The Tokay Project is located 130km southeast of Meekatharra, WA and comprises one wholly-owned Exploration Licence (E57/1061) applied for in November 2016. The tenement abuts Horizon Gold’s (ASX: HRN) Gum Creek project and is interpreted to cover the Tokay and Wilson shear zones, which are associated with gold mineralization to the north. The tenement is also prospective for base metals. E57/1061 is subject to competing applications with priority likely to be determined by ballot. 7 ANNUAL REPORT 2017REVIEW OF ACTIVITIES IRON ORE NICKEL Western Creek (Jindalee 100%) North Sinclair Project (Jindalee 100%) The Western Creek project comprises a single Exploration The North Sinclair Project comprises a wholly-owned Exploration Licence (E52/3520) applied for in February 2017 and located Licence (E36/895) applied for in October 2016 and located 35km approximately 10km WSW of BHP’s Mt Whaleback operations in southeast of Leinster in the Eastern Goldfields region of WA. The the eastern Pilbara, and abutting BHP’s tenure. The tenement Project is situated 15km north along-strike from Talisman Mining’s covers ground previously held by Atlas Iron (ASX: AGO), and Sinclair nickel mine and 10km southwest of Saracen Minerals’ includes the Western Creek CID (detrital channel iron) deposit Waterloo nickel deposit, and includes the historic Sinclair North where Atlas has reported an inferred resource of 79Mt @ 56% Fe and Firefly nickel prospects. The project is also prospective for gold. (50% Fe cut-off).³ Available historical open file exploration information is being Jindalee’s application was subject to competing applications compiled for this project. from three other parties, including Rio Tinto. Ballots to determine priority were held mid-July 2017 with E52/3250 gaining priority over approximately 19km², including the Western Creek deposit. RARE EARTHS The Company will now look to expedite the grant of E52/3250 so that field work can commence. Cummins Range (Jindalee 100%) Joyners (Jindalee 20% free carried) The Cummins Range project comprises a single Exploration Licence (E80/5091) applied for in May 2017 and located The Joyners project is a joint venture with GWR Group Limited and approximately 125km SW of Halls Creek in the southeastern forms a part of GWR’s much larger Wiluna West project. GWR Kimberley, WA. The tenement includes the Cummins Range rare has earned an 80% interest in the joint venture Mining Lease with earth oxide (REO) deposit, previously explored by Kimberley Rare Jindalee maintaining a 20% equity position, free-carried through Earths Limited (KRE). In February 2012 KRE estimated an inferred to completion of a Bankable Feasibility Study. The joint venture resource of 4.9Mt @ 1.74% TREO (total rare earth oxides) at a 1% tenement contains previously published indicated and inferred cut-off. 4⁴ iron oxide resources at Joyners North. No work was reported on the project during the period. three other parties with priority likely to be determined by ballot. Jindalee’s application is subject to competing applications from 8 JINDALEE RESOURCES LIMITEDREVIEW OF ACTIVITIES INDIRECT INTERESTS GOLD AND BASE METALS Alchemy Resources (Jindalee 5.1% of issued capital) Jindalee is Alchemy Resources’ (ASX: ALY) third largest shareholder, providing shareholders with exposure to Alchemy’s high quality portfolio of projects, including Alchemy’s existing Gascoyne region gold and copper-gold projects, the 100% owned Karonie gold project in WA and a joint venture with Heron Resources over gold and base metal prospective properties in central NSW. Alchemy’s Bryah Basin copper project is located to the west of Sandfire Resources’ Doolgunna project and covers the extensions of the Narracoota Volcanics, the unit which hosts Sandfire’s high grade DeGrussa copper-gold mine. Independence Group (ASX: IGO), a well-regarded and successful nickel, base metal and gold producer and explorer is farming into Alchemy’s base metal-prospective Bryah Basin tenements. In June 2017 Alchemy announced that it had raised $1.67M (before costs) via a share placement and subsequent rights issue. The company is now sufficiently funded to accelerate exploration at both the Karonie and Overflow projects. Further information on Alchemy’s activities can be found in their announcements and on their website, www.alchemyresources.com.au. Alchemy also has a joint venture agreement in place with URANIUM Billabong Gold Pty Ltd, owner of the nearby Plutonic Gold Mine, with Billabong responsible for the ongoing exploration of the Gascoyne project tenements, not covered by the joint venture with IGO. This joint venture includes a number of existing gold prospects and occurrences, as well as other areas considered prospective for the discovery of further gold deposits. The Karonie project abuts Salt Lake Mining’s 0.5Moz Aldiss project and features several prospects where previous drilling has returned significant bedrock gold intersections, including 8m @ 3.37g/t at Esplanade, 3m @ 14.57g/t at Batavia and 10m @ 2.55g/t at Taupo. The Karonie project is also directly along strike from Breaker Resources’ (ASX: BRB) Lake Roe project, including the exciting Bombora discovery. Bombora is hosted by dolerites adjacent to the Claypan Shear, with this structure extending SE for a further 40km through Alchemy’s tenements. The joint venture with Heron Resources includes six Exploration Licences covering a combined 674km². The most advanced project is the Overflow project in the Cobar district, where a recent drilling by Alchemy returned encouraging gold-silver Energy Metals (Jindalee 6.7% of issued capital) Jindalee holds approximately 14 million Energy Metals shares, giving shareholders continued exposure to the development of the Bigrlyi uranium-vanadium deposit and the potential of Energy Metals’ other uranium projects. Energy Metals (ASX: EME) controls 8 projects (total area >4,000 km²) located in the Ngalia Basin in the Northern Territory (NT) and in Western Australia (WA), with the majority of projects containing uranium mineralization or defined resources. Exploration has largely been concentrated on the main Bigrlyi Project in NT (53.3% owned by Energy Metals), where significant uranium resources have been defined and a prefeasibility study completed. More recently, increasing attention has been turned to other wholly- owned prospects in the region, where there is demonstrated potential to define additional Bigrlyi-style resources. Further information on Energy Metals’ activities can be found in Energy Metals ASX announcement and on their website, www. intercepts, including 18m @ 2.1g/t Au & 111g/t Ag from 245m and energymetals.net 3m @ 7.3g/t Au & 43g/t Ag from 286m. Further drilling to test a strong EM anomaly down plunge of these intercepts is planned. 9 ANNUAL REPORT 2017REVIEW OF ACTIVITIES OUTLOOK At 30 June 2017, Jindalee held cash and marketable securities worth approximately $5.4M. These assets, combined with our tight capital structure (34.9M shares on issue), provide a strong base for leverage into new opportunities as the resources cycle turns. Jindalee’s strategy is to identify and acquire projects with the potential to transform the Company and this continues to be our ongoing primary focus. The recent acquisition of the Yindi and North Sinclair projects are examples of strategic projects that Jindalee has been able to secure for minimal cost, and the Company expects to identify further high quality opportunities in the period ahead. Notes: Competent Person Statement: The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Terrence Peachey, who is a geological consultant to the Company and is a member of the Australian Institute of Geoscientists. Mr Peachey has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves (The JORC code).’ Mr Peachey consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Forward-Looking Statements: This document may include forward- looking statements. Forward-looking statements include, but are not limited to statements concerning Jindalee Resources Limited’s (Jindalee) planned exploration program and other statements that are not historical facts. When used in this document, the words such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should”, and similar expressions are forward-looking statements. Although Jindalee believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. 1. 2. 3. 4. Reference: ASX Announcement by Beacon Hill Resources dated 2nd May 2012 titled,” Positive Preliminary Scoping Study Results for Arthur River Magnesite Project”. Reference: Apollo Consolidated announcement to ASX dated 25 August 2017 and titled, “Apollo Hits 17.84m @ 15.95g/t Au & 49m @ 4.57g/t Au at 161 Lode” Reference: Atlas Iron Limited (ASX: AGO) 2016 Annual Report to shareholders lodged with ASX on 20 October 2016 Reference: Kimberley Rare Earths announcement to ASX dated 13 February 2012 and titled, “Cummins Range update” 1 0 JINDALEE RESOURCES LIMITEDDIRECTORS’ REPORT The Directors present their report on the consolidated entity In line with the Company’s business strategy, during the period (referred to hereafter as the Group) consisting of Jindalee management also evaluated numerous advanced projects Resources Limited and the entities it controlled at the end of, or in both Australia and overseas, with a view to securing an during the year ended 30 June 2017. opportunity capable of growing the Group and creating wealth for Shareholders, and this continues to be the Company’s Directors primary focus. The following persons were directors of Jindalee Resources The net assets of the Group have fallen by $257,905 from $5,775,532 Limited during the whole of the financial year and up to the date at 30 June 2016 to $5,517,627 at 30 June 2017 principally due to of this report unless noted otherwise: impairment of exploration assets and administration costs offset Lindsay Dudfield Justin Mannolini Patricia Farr Principal activities by a gain from the sale of the Group’s interest in the Cardinia joint venture. The Directors believe the Group is in a strong financial position to continue its exploration endeavours. The principal activity during the year of Jindalee Resources Limited was mineral exploration. During the year there was no There has not arisen in the interval between the end of the change in the nature of this activity. financial year and the date of this report any item, transaction Events since the end of the financial year Financial results or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations, the results of those operations, or the state of affairs of the Group in future The consolidated loss of the Group after providing for income financial years. tax for the year ended 30 June 2017 was $385,296 (2016: loss $1,056,621). Dividends On 22 August 2017 pursuant to the Company’s Employee Share Option Plan, 400,000 unlisted options exercisable at $0.40 and expiring 30 June 2022 were issued to employees of the Company. No dividends have been declared since the end of the previous Likely developments and expected results of operations financial year and no dividends have been recommended by the Directors. The Directors are not aware of any developments that might have a significant effect on the operations of the Group in Significant changes in the state of affairs subsequent financial years not already disclosed in this report. During the year there has been no significant change in the state of affairs of the Group. Operations and financial review The principal activity of the Group is mineral exploration. The Group holds interests in tenements in Tasmania and Western Australia prospective for magnesite, gold, diamonds, nickel and iron ore, with most of these tenements wholly owned. The Group also has indirect interests in uranium, gold and base metals through investee companies. 1 1 ANNUAL REPORT 2017DIRECTORS’ REPORT Environmental regulation The Group is subject to significant environmental regulation in respect of its exploration activities. Tenements in Western Australia are granted subject to adherence to environmental conditions with strict controls on clearing, including a prohibition on the use of mechanised equipment or development without the approval of the relevant government agencies, and with rehabilitation required on completion of exploration activities. These regulations are controlled by the Department of Mines, Industry Regulation and Safety. Jindalee Resources Limited conducts its exploration activities in an environmentally sensitive manner and the Group is not aware of any breach of statutory conditions or obligations. Greenhouse gas and energy data reporting requirements The Directors have considered compliance with both the Energy Efficiency Opportunity Act 2006 and the National Greenhouse and Energy Reporting Act 2007 which requires entities to report annual greenhouse gas emissions and energy use. The Directors have assessed that there are no current reporting requirements for the period ended 30 June 2017, however reporting requirements may change in the future. Information on Directors J Mannolini B.Com/LL (Hons), LLM (Law), GAICD. Non-Executive Chairman Mr Mannolini was appointed to the Jindalee Board as a Non-Executive Director in September 2013 and as Chairman in July 2016. Mr Mannolini is a partner in the Corporate Advisory Group of Australian law firm Gilbert + Tobin. He was an Executive Director with Macquarie Capital, the investment banking division of the Macquarie Group from March 2013 to May 2016 and was responsible for cross-industry coverage of the Western Australian market. Prior to joining Macquarie, Mr Mannolini was Managing Director and head of Gresham Advisory Partners’ Experience and expertise Perth office, and before that, a partner in the mergers and acquisitions group of Australian law firm Freehills. In May 2016 Mr Mannolini was appointed to the board of the Northern Australia Infrastructure Facility, a $5B fund set up by the Australian Government to encourage population growth and economic development in northern Australia. As a lawyer and investment banker, Mr Mannolini has more than 20 years experience in corporate finance ranging across industry sectors and product lines, including mergers and acquisitions transactions and general strategic advisory mandates for companies in the resources sector Other current directorships None Former directorships in last 3 years None Special responsibilities Chairman Interests in shares and options Ordinary Shares – Jindalee Resources Limited 250,000 1 2 JINDALEE RESOURCES LIMITEDL Dudfield BSc. Managing Director (resigned as Executive Chairman effective 1 July 2016) Mr Dudfield is a qualified geologist with over 37 years experience exploring for gold and base Experience and expertise metals in Australia and abroad, including close involvement with a number of greenfields discoveries. Mr Dudfield is a member of the AusIMM, SEG, AIG and GSA. He is a founding director Other current directorships Former directorships in last 3 years of Jindalee Resources and has been Managing Director for 15 years. Energy Metals Limited - Non-Executive Director Alchemy Resources Limited – Non-Executive Director None Special responsibilities Managing Director Interests in shares and options Ordinary Shares – Jindalee Resources Limited 11,980,844 P Farr GradCertProfAcc. GradDipACG. GAICD AGIA/ACIS Executive Director/Joint Company Secretary Ms Farr is an experienced Chartered Secretary with over 19 years experience in the exploration and mining industry in the areas of corporate governance, compliance and administration. Ms Farr has provided Company secretarial services to several ASX listing companies including Energy Experience and expertise Metals Limited and Musgrave Minerals Limited. Mrs Farr is a graduate member of the Australia Institute of Company Directors, Governance Institute of Australia (formerly Chartered Secretaries Australia) and the Institute of Chartered Secretaries and Administrators. Mrs Farr was appointed to the Jindalee Board in 2008. Other current directorships None Former directorships in last 3 years Special responsibilities None None Interests in shares and options Ordinary Shares – Jindalee Resources Limited 406,533 Company Secretary Information Mr Greg Ledger was appointed Company Secretary on 4 April 2002 and has held that position, as well as other accounting and managerial roles since that date. Mr Ledger is a Chartered Accountant and holds a Bachelor of Commerce Degree from the University of Western Australia. Ms Farr was appointed joint Company Secretary on 1 July 2010. She is an experienced Chartered Secretary having provided Company Secretarial services to several ASX listed companies and unlisted companies, the majority of which operate in the mineral resources sector in Australia. Ms Farr is a graduate member of the Australian Institute of Company Directors and Governance Institute of Australia (formerly Chartered Secretaries Australia). 1 3 ANNUAL REPORT 2017DIRECTORS’ REPORTMeetings of Directors The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2017 the numbers of meetings attended by each Director. L Dudfield J Mannolini P Farr Number Held Whilst in Office Number Attended 5 5 5 5 5 5 As at the date of this report, the Group did not have an Audit Committee of the Board of Directors. The Board considers that due to the Group’s size, an Audit Committee’s functions and responsibilities can be adequately and efficiently discharged by the Board as a whole, operating in accordance with the Group’s mechanisms designed to ensure independent judgement in decision making. Retirement, election and continuation in office of directors Ms Patricia Farr is the director retiring by rotation who, being eligible, may offer herself for re-election at Annual General Meeting. AUDITED REMUNERATION REPORT The directors are pleased to present Jindalee Resources Limited 2017 remuneration report which sets out remuneration information for the Company’s non-executive directors, executive directors and other key management personnel. The report contains the following sections: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) Key management personnel disclosed in this report Remuneration governance and the use of remuneration consultants Executive remuneration policy and framework Relationship between remuneration and the Group’s performance Non-executive director remuneration policy Voting and comments made at the Company’s 2016 Annual General Meeting Details of remuneration Service agreements Details of share-based compensation and bonuses Equity instruments held by key management personnel Loans to key management personnel Other transactions with key management personnel (a) Key management personnel disclosed in this report J J Mannolini Non-Executive Chairman (appointed Chairman effective 1 July 2016) L G Dudfield Managing Director (resigned as Executive Chairman effective 1 July 2016) P A Farr Executive Director/Company Secretary For further details on each director see page 12-13. 1 4 JINDALEE RESOURCES LIMITEDDIRECTORS’ REPORT (b) Remuneration governance and use of remuneration Board members are allocated superannuation guarantee consultants contributions as required by law, and do not receive any other retirement benefits. From time to time, some individuals may The Company does not have a formal remuneration policy and choose to sacrifice their salary or consulting fees to increase has not established a separate remuneration committee. Due to payments towards superannuation. the early stage of development and small size of the Company a separate remuneration committee was not considered to All remuneration paid to directors and specified executives is add any efficiency to the process of determining the levels valued at the cost to the Group and expensed. Options are of remuneration for directors and key executives. The Board valued using the Black-Scholes methodology. considers that it is more appropriate to set aside time at a Board meeting each year to specifically address matters that would (d) Relationship between remuneration and the Group’s ordinarily fall to a remuneration committee such as reviewing performance remuneration, recruitment, retention and termination procedures and evaluating senior executives remuneration packages and The policy setting the terms and conditions for the executive incentives. directors, was developed and approved by the Board and is considered appropriate for the current exploration phase of In addition, all matters of remuneration will continue to be in the Group’s development. Emoluments of Directors are set by accordance with the Corporations Act requirement, especially reference to payments made by other companies of similar size with regard to related party transactions. That is, none of the and industry, and by reference to the skills and experience of directors participate in any deliberations regarding their own directors. Fees paid to directors are not linked to the performance remuneration or related issues. of the Group. This policy may change once the exploration phase is complete and the Company is generating revenue. Independent external advice is sought from remuneration At present the existing remuneration policy is not impacted by consultants when required, however no advice has been sought the Group’s performance including earnings and changes in during the period ended 30 June 2017. shareholder wealth (dividends, changes in share price or returns of capital to shareholders). The Board has not set short term The Corporate Governance Statement provides further performance indicators, such as movements in the Company’s information on the Company’s remuneration governance. share price, for the determination of director emoluments as the Board believes this may encourage performance which is not (c) Executive remuneration policy and framework in the long-term interests of the Company and its shareholders. The Board has structured its remuneration arrangements in such In determining executive remuneration, the Board aims to ensure a way it believes is in the best interests of building shareholder that remuneration practices are: wealth in the longer term. The Board believes participation in · Competitive and reasonable, enabling the Company the Company’s Employee Share Option Plan motivates key to attract and retain key talent management and executives with the long-term interests of · · · Aligned to the Company’s strategic and business shareholders. objectives and the creation of shareholder value Transparent and easily understood, and Acceptable to shareholders. All executives receive consulting fees or a salary, part of which may be taken as superannuation, and from time to time, options. Options issued to directors are subject to approval by Shareholders. The Board reviews executive packages annually by reference to the executive’s performance and comparable information from industry sectors and other listed companies in similar industries. 1 5 ANNUAL REPORT 2017DIRECTORS’ REPORTThe following table shows the share price and the market capitalisation of the Group at the end of each of the last five financial years. Share Price Market Capitalisation Dividends (cents per share) 2013 $0.18 $6.26M - 2014 $0.165 $5.74M - 2015 $0.17 $5.91M - 2016 $0.23 $8.03M - 2017 $0.21 $7.33M - (e) Non-executive director remuneration policy On appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms including remuneration, relevant to the office of director. The Board policy is to remunerate non-executive directors at commercial market rates for comparable companies for their time, commitment and responsibilities. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting and is currently set at $200,000 per annum. Fees for non-executive directors are not linked to the performance of the Group. Non-executive directors’ remuneration may also include an incentive portion consisting of options, subject to approval by Shareholders. (f) Voting and comments made at the Company’s 2016 Annual General Meeting Jindalee received greater than 99% of “yes” votes on its remuneration report for the 2016 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. (g) Details of remuneration The following table sets out details of the remuneration received by the Group’s key management personnel for the current and previous financial year measured in accordance with the requirements of the accounting standards. Short-term benefits Post- employment benefits Share-based payment Remuneration consisting of options Non-Executive Fees Consulting Fees annuation Options Directors Cash Salary, Super- Director/Chairman J J Mannolini 2016 2017 Executive Directors L G Dudfield 2016 P A Farr 2017 2016 2017 $ 20,000 50,000 - - - - $ - - 135,713 115,158 96,000 99,692 $ 1,900 4,750 - - 9,120 9,471 $ - - - - - - Shares $ 20,000 - - - - - Total $ 41,900 54,750 135,713 115,158 105,120 109,163 % - - - - - - 1 6 JINDALEE RESOURCES LIMITEDDIRECTORS’ REPORT (h) Service Agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. The service agreements specify the components of remuneration, benefits and notice periods. L G Dudfield Mr Dudfield was appointed a director on 22 January 1996 and is Managing Director. Mr Dudfield is remunerated pursuant to the terms and conditions of a consultancy agreement entered into with Mr Dudfield and Jopan Management Pty Ltd trading as Western Geological Services. During the financial year ended 30 June 2017, Mr Dudfield was paid consulting fees of $115,158. Unless extended for a further period, the current consultancy agreement will expire in June 2019. The agreement may be terminated by either party on the giving on 90 days notice or earlier in the event of a default not remedied within 14 days. Mr Dudfield is not entitled to any termination benefits. J J Mannolini Mr Mannolini was appointed a Non-Executive Director on 30 September 2013 and appointed Chairman on 1 July 2016. Mr Mannolini’s directors’ fees have been set at $50,000 plus statutory superannuation of $4,750 per annum in accordance with his letter of appointment. Mr Mannolini’s appointment is contingent upon satisfactory performance and successful re-election by shareholders of the Company as and when required by the Constitution of the Company and the Corporations Act. Mr Mannolini is not entitled to any termination benefits. P A Farr Ms Farr was appointed as a director on 29 August 2008. Ms Farr is paid a salary of $120,000 per annum plus statutory superannuation pursuant to the terms and conditions of an ongoing employment contract. Due to reduced hours during the financial year Ms Farr was paid a salary and superannuation of $109,163 for the year ended 30 June 2017. Ms Farr’s employment contract may be terminated by either party on the giving of one month’s notice. Upon termination of the contract for any reason the Company will pay leave entitlements due to Ms Farr. (i) Details of share-based compensation and bonuses Options over shares in Jindalee Resources Limited are granted under the Employee Share Option Plan. Participation in the plan and any vesting criteria, is at the Board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits. Any options issued to directors of the Company are subject to shareholder approval. (i) Details of share-based compensation and bonuses (continued) Details of options over ordinary shares in the Company provided as remuneration to each director of the Company are set out below. All options are fully vested on grant date. Name L G Dudfield J J Mannolini P A Farr Grant Date Vesting & exercise date Expiry date Exercise Price Value per option at Grant Date % vested 26/11/2014 26/11/2014 30/06/2017 28/11/2013 28/11/2013 30/06/2017 26/11/2014 26/11/2014 30/06/2017 $0.50 $0.50 $0.50 $0.01644 $0.07 $0.01644 100% 100% 100% 1 7 ANNUAL REPORT 2017DIRECTORS’ REPORT The fair value of services received in return for share options granted to employees is measured by reference to the fair value of options granted. The estimate of the fair value of the services is measured based on Black-Scholes option valuation methodology. The life of the options and early exercise option are built into the option model. No bonuses were paid during the year and there is currently no bonus scheme in place. All options on issue expired unexercised on 30 June 2017. Further information on the fair value of share options and assumptions is set out in Note 18 to the financial statements. (j) Equity instruments held by key management personnel The following tables detail the number of fully paid ordinary shares and options over ordinary shares in the Company that were held during the financial year and the previous financial year by key management personnel and their associated related parties. Balance at the start of the year Options/ Shares granted as compensation Received during the year on the exercise of options Number of options vested during year Number of options forfeited during the year Other changes during the year Balance at the end of the year Vested and exercisable Unvested 2017 Name L G Dudfield Ordinary fully paid shares 11,919,416 Unlisted Options 1,000,000 (ASX Code JRLAK) P A Farr Ordinary fully paid shares Unlisted Options (ASX Code JRLAK) J J Mannolini Ordinary fully paid shares Unlisted Options (ASX Code JRLAK) Securities Policy 306,533 500,000 100,000 500,000 - - - - - - - - - - - - - - - - - - - 61,428 11,980,844 1,000,000 - 500,000 - 500,000 - - - - - - 306,533 - 100,000 - - - - - - - - - - - - - The Company has implemented a policy on trading in the Company’s securities designed to ensure that all directors, senior management and employees of the Company act ethically and do not use confidential inside information for personal gain. The policy states acceptable and unacceptable times for trading in Company securities and outlines the responsibility of directors, senior management and employees to ensure that trading complies with the Corporations Act 2001, the Australian Securities Exchange (ASX) Listing Rules and Company Policy. A copy of this policy was lodged with the ASX and is available on the Company’s website. Any transaction conducted by Directors with regards to shares of the Company requires notification to the ASX. Each Director has entered into an agreement to provide any such information with regards to Company dealings directly to the Company Secretary promptly to allow the Company to notify the ASX within the required reporting timeframes. 1 8 JINDALEE RESOURCES LIMITEDDIRECTORS’ REPORTShares provided on exercise of options During the year, no ordinary shares in the Company were provided as a result of the exercise of remuneration options. For details on the valuation of the options, including models and assumptions used, please refer to Note 18. There were no alterations to the terms and conditions of options granted as remuneration since their grant date. (k) Loans to key management personnel There were no loans to individuals or members of key management personal during the financial year or the previous financial year. (l) Other transactions with key management personnel During the year the Group paid a total of $115,158 to Western Geological Services (a division of Jopan Management Pty Ltd), the fees being for the provision of technical and management services provided to the Group by Mr Lindsay Dudfield. Mr Dudfield’s spouse is the major shareholder of and the sole director and company secretary of Jopan Management Pty Ltd. End of Audited Remuneration Report Shares under option Unissued ordinary shares of the Company under option at the date of this report are as follows: Grant Date 22/08/2017 Number 400,000 Date vested & exercisable Expiry Date Exercise Price 22/08/2017 30/06/2022 $0.40 No option holder has any right under the options to participate in any other share issue of the Company or any other entity. Shares Issued on Exercise of Options There were no shares issued on exercise of options during the year and up to the date of this report. Directors and Officers insurance Jindalee Resources Limited paid a premium during the year in respect of directors’ and officers’ liability insurance policy, insuring the directors and officers of the company against a liability incurred whilst acting in the capacity of a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the policy as such disclosure is prohibited under the terms of the contract of insurance. Corporate Governance Statement The Company’s 2017 Corporate Governance Statement has been released as a separate document and is located on the Company’s website at http://jindalee.net/corporate-governance/ 1 9 ANNUAL REPORT 2017DIRECTORS’ REPORTProceedings on behalf of the Company No person has applied to the Court under section 237 of the 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 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. Non-audit services The Company from time to time may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company is important. The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor as set out below did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: · · the non-audit services have been reviewed by the Board to ensure they do no impact on the impartiality and objectivity of the auditor; and none the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. During the year ended 30 June 2017 and in the previous financial year there were no fees paid or payable for non-audit services provided by the auditor of Jindalee Resources Limited. Auditor’s Independence Declaration A copy of the auditor’s independence declaration as required by section 307C of the Corporations Act 2001 is included on page 51. This report is signed in accordance with a resolution of the Directors. L G DUDFIELD Managing Director Perth 7 September 2017 2 0 JINDALEE RESOURCES LIMITEDDIRECTORS’ REPORTCONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017 Revenue from continuing operations Other income Employee benefits expense Share-based payments Depreciation expense Exploration expenditure Impairment of exploration assets Impairment of available for sale financial assets Tenancy and operating expenses Other administration expenses Corporate and regulatory expenses Loss before income tax Income tax benefit Loss after income tax Note 2017 $ 2016 $ 4 4 18 12 13 11 98,480 130,009 368,886 (176,786) - (6,140) (64,162) (332,533) - (89,015) (123,252) (60,774) - (148,242) (20,000) (6,374) (183,439) (154,510) (425,578) (92,995) (95,818) (59,674) (385,296) (1,056,621) 5 - - (385,296) (1,056,621) Loss attributable to owners of Jindalee Resources Limited (385,296) (1,056,621) Other comprehensive income/(loss) Items that may be reclassified to profit or loss Revaluation of investments taken to equity Other comprehensive income/(loss) for the year 127,391 127,391 2,700 2,700 Total comprehensive loss for the year attributable to the ordinary equity holders of the Company (257,905) (1,053,921) Loss per share attributable to the ordinary equity holders of the Company Basic loss per share (cents per share) Diluted loss per share (cents per share) 7 7 (1.01) (1.01) (3.03) (3.03) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 2 1 ANNUAL REPORT 2017 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Total Current Assets NON-CURRENT ASSETS Available for sale financial assets Other receivables Property, plant and equipment Exploration and evaluation expenditure Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Dividend payable Provision for annual leave Total Current Liabilities NON-CURRENT LIABILITIES Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Accumulated losses Reserves TOTAL EQUITY Note 2017 $ 2016 $ 9 10 11 10 12 13 14 8 3,282,998 4,171,556 67,589 46,558 3,350,587 4,218,114 1,985,841 1,489,458 138,413 36,299 134,707 - 20,424 145,842 2,295,260 1,655,724 5,645,847 5,873,838 45,998 73,485 8,737 128,220 13,599 73,485 11,222 98,306 - - 128,220 98,306 5,517,627 5,775,532 15 16 17 7,227,254 7,227,254 (3,809,492) (3,424,196) 2,099,865 1,972,474 5,517,627 5,775,532 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 2 2 JINDALEE RESOURCES LIMITEDCONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017 Cash flows from operating activities Payments in the course of operations Interest received Note 2017 $ 2016 $ (507,010) 111,788 (599,439) 134,488 Net cash outflow from operating activities 6 (395,222) (464,951) Cash flows from investing activities Payments for exploration and evaluation Payments for property, plant and equipment Payment of bonds Payments for purchase of equity investments (332,908) (22,015) (138,413) - (85,206) (6,818) - (7,500) Net cash outflow from investing activities (493,336) (99,524) Cash flows from financing activities Payment of dividend Net cash outflow from financing activities - - (2,593) (2,593) Net decrease in cash and cash equivalents (888,558) (567,068) Cash and cash equivalents at the beginning of the financial year 4,171,556 4,738,624 Cash and cash equivalents at the end of the financial year 9 3,282,998 4,171,556 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 2 3 ANNUAL REPORT 2017CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017 Consolidated Contributed equity Share- based payment reserve Available for sale investments revaluation reserve Retained earnings/ accumulated losses Total equity $ $ $ $ $ Balance at 1 July 2015 7,207,254 1,969,774 Total comprehensive loss for the year: Loss for the year Other comprehensive income Revaluation of investments Total comprehensive loss for the year Transactions with owners in their capacity as owners Share-based payments - - - 20,000 - - - - - - (2,367,575) 6,809,453 (1,056,621) (1,056,621) 2,700 - 2,700 2,700 (1,056,621) (1,053,921) - - 20,000 Balance at 30 June 2016 7,227,254 1,969,774 2,700 (3,424,196) 5,775,532 Total comprehensive loss for the year: Loss for the year Other comprehensive income Revaluation of investments Total comprehensive loss for the year Transactions with owners in their capacity as owners Share-based payments - - - - - - - - - (385,296) (385,296) 127,391 - 127,391 127,391 (385,296) (257,905) - - - Balance at 30 June 2017 7,227,254 1,969,774 130,091 (3,809,492) 5,517,627 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 2 4 JINDALEE RESOURCES LIMITEDNOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 1. CORPORATION INFORMATION These financial statements of Jindalee Resources Limited for the year ended 30 June 2017 were authorised for issue in accordance with a resolution of directors on 7 September 2017. The financial statements cover the Group of Jindalee Resources Limited and it’s controlled entities. Jindalee Resources Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Group are described in Note 3. Unless otherwise stated, policies adopted in the preparation of the financial statements are consistent with those of the previous year. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In order to assist in the understanding of the accounts, the following summary explains the material accounting policies that have been adopted in the preparation of the accounts. (a) Statement of Compliance These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. Compliance with IFRS The consolidated financial statements of Jindalee Resources Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). New and amended accounting standards and interpretations adopted by the company The following standards and interpretations relevant to the operations of the Company and effective from 1 July 2016 have been adopted. The adoption of these standards did not have any impact on the current period or any prior period and is not likely to affect future periods. · AASB 2014-9: Amendments to Australian Accounting Standards Amendments to – Equity Method in Separate Financial Statements · AASB 2015-1: Amendments to Australian Accounting Standards - Annual Improvements to Australian Accounting Standards 2012 – 2014 · AASB 2015-2: Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to AASB 101 New accounting standards and interpretations The following new and amended accounting standards and interpretations relevant to the operations of the Company have been published but are not mandatory for the current financial year. The Company has decided against early adoption of these standards, and has not yet determined the potential impact on the financial statements from the adoption of these standards and interpretations. 2 5 ANNUAL REPORT 2017NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 The key new standards and interpretations which may impact the Company in future years are detailed below: AASB 9: Financial Instruments New or revised requirement Application date of standard 1 Jan 2018 Application date for Company 1 Jul 2018 AASB 9 replaces AASB 139: Financial Instruments: Recognition and Measurement. The objective of this Standard is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows. AASB 15: Revenue from Contracts with Customers 1 Jan 2018 1 Jul 2018 The objective of this Standard is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. AASB 2016-5: Amendments to Australian Accounting Standards - Classification and 1 Jan 2018 1 Jul 2018 Measurement of Share-based Payment Transactions This Standard amends AASB 2: Share-based Payment, clarifying how to account for certain types of share-based payment transactions. The amendments provide requirements on the accounting for: · The effects of vesting and non-vesting conditions on the measurement of cash- settled share-based payments · Share-based payment transactions with a net settlement feature for withholding tax obligations · A modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. AASB 16: Leases 1 Jan 2019 1 Jul 2019 This Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. This information gives a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of an entity. (c) Basis of Preparation/Accounting The financial statements have been prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. In applying IFRS, management is required to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates. 2 6 JINDALEE RESOURCES LIMITEDNOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. These accounting policies have been consistently applied throughout the period. The significant accounting policies set out below have been applied in the preparation and presentation of the financial statements for the year ended 30 June 2017 and the comparative information. (d) Principles of Consolidation The consolidated financial statements incorporate the assets and liabilities of the subsidiary of Jindalee Resources Limited (“Company” or “Parent Entity”) as at 30 June 2017 and the results of all subsidiaries for the year then ended. Jindalee Resources Limited and its subsidiary together are referred to in the financial statements as the Group or consolidated entity. Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the Group. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group. Investments in subsidiaries are accounted for at cost in the parent entity information disclosures of Jindalee Resources Limited. 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 Jindalee Resources Limited. When the Group ceases to have control, joint 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, jointly controlled entity 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 the amounts previously recognised in other comprehensive income are reclassified to profit or loss. 2 7 ANNUAL REPORT 2017NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or 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. (e) Cash and Cash Equivalents For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand, and deposits repayable on demand with a financial institution. The cash and cash equivalents balance primarily consists of funds on term deposit with original maturity at time of purchase of three months or less that are readily convertible to known amounts of cash and which are subject to minimal risk of changes in value. (f) Trade and Other Receivables Receivables are initially recognised at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Current receivables for GST are due for settlement within 30 days and other current receivables within 12 months. Cash on deposit in respect of environmental bonds is not due for settlement until rights of tenure are forfeited or performance obligations are met. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for doubtful debts) is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the impairment loss is recognized in the statement of profit or loss and other comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of profit or loss and other comprehensive income. (g) Revenue Recognition Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax. Revenue in relation to joint venture agreements is recognised over the period the services are rendered. Revenue from the sale of investments is recorded when all risks and rewards relating to the assets are posted to the third party. (h) Property, Plant and Equipment Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated using the diminishing value and prime cost methods and is brought to account over the estimated economic lives of all property, plant and equipment. The rates used are based on the useful life of the assets and range from 10% to 40%. 2 8 JINDALEE RESOURCES LIMITEDNOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An assets carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Depreciation methods, useful lives and residual values are reassessed at each reporting date. (i) Impairment of Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s values in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds it’s recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). As assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had the impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at the revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (j) Exploration and Evaluation Expenditure The Groups policy with regards to exploration and evaluation expenditure, including the costs of acquiring licences and permits, are capitalised as exploration and evaluation assets on an area of interest basis. Under this method exploration and evaluation expenditure is carried forward on the following basis: i) Each area of interest is considered separately when deciding whether, and to what extent, to carry forward or write off exploration and evaluation costs. ii) Exploration and evaluation expenditure related to an area of interest is carried forward provided that rights to tenure of the area of interest are current and that one of the following conditions is met: - such evaluation costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively, by its sale; or 2 9 ANNUAL REPORT 2017 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 - exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in relation to the area are continuing. Exploration and evaluation costs accumulated in respect of each particular area of interest include only net direct expenditure. (k) Trade and Other Payables Trade payables and other payables are carried at cost and 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 usually paid within 30 days of recognition. (l) Employee Entitlements The Group’s liability for employee entitlements arising from services rendered by employees to reporting date are recognised in other payables. Employee entitlements expected to be settled within one year together with entitlements arising from wages and salaries, and annual leave which will be settled within one year, have been measured at their nominal amount and include related on-costs. The liability for long service leave is recognised in the provision for employee benefits 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 using the projected unit credit method. Consideration is given to the expected future wage 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 currency that match, as closely as possible, the estimated future cash outflows. (m) Share Based Payment Transactions Share based payments Under AASB 2 Share Based Payments, the Group must recognise the fair value of options granted to directors, employees and consultants as remuneration as an expense on a pro-rata basis over the vesting period in the statement of profit or loss and other comprehensive income with a corresponding adjustment to equity. The Group provides benefits to employees (including directors) of the Group in the form of share based payment transactions, whereby employees render services in exchange for shares or rights over shares (“equity-settled transactions”). The cost of these equity-settled transactions with employees (including directors) is measured by reference to fair value at the date they are granted. For Options the fair value is determined using a Black-Scholes model. 3 0 JINDALEE RESOURCES LIMITED NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (n) Earnings Per Share (i) Basic Earnings Per Share Basic earnings per share is determined by dividing the operating loss attributable to the equity holder of the Group after income tax by the weighted average number of ordinary shares outstanding during the financial period. (ii) Diluted Earnings Per Share Diluted earnings per share adjusts the figures used in determination of basic earnings per share by taking into account amounts unpaid on ordinary shares and any reduction in earnings per share that will arise from the exercise of options outstanding during the period. (o) Contributed Equity Issued and paid up capital is recognised at the fair value of the consideration received by the Group. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (p) Income Tax and Other Taxes Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred income tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: · · When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: · When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or 3 1 ANNUAL REPORT 2017 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 · When the deductible temporary difference is associated with investments in subsidiaries, associates or interest in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each statement of financial position date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Goods & Services Tax Revenues, expenses and assets are recognised net of the amount of GST except: · Where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and · Receivables and payables 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 flow 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. (q) Critical Accounting Estimates and Judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances. Accounting for capitalised exploration and evaluation expenditure The Group’s accounting policy is stated at Note 2(j). There is some subjectivity involved in the carrying forward as capitalised or writing off to the statement of profit or loss and other comprehensive income exploration and evaluation expenditure, however management give due consideration to areas of interest on a regular basis and are confident that decisions to either write off or carry forward such expenditure fairly reflect the prevailing situation. Share-based payments The Group measures share-based payments at fair value at the grant date. The fair value is determined using a Black-Scholes model or other valuation technique appropriate for the instrument being valued. 3 2 JINDALEE RESOURCES LIMITEDNOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 Deferred tax balances Deferred tax assets in respect of tax losses are not recognised in the financial statements as management considers that it is currently not probable that future taxable profits will be available to utilise those tax losses. Management reviews on a regular basis the future profitability of the group to consider if tax losses should be recognised and to ensure that any tax losses recognised will be utilised. Impairment of available for sale financial assets The Company determines an impairment loss on the available for sale investments held when there has been a significant or prolonged decline in fair value below original cost. Management exercises judgement in determining what is ‘significant’ or ‘prolonged’ by evaluating, among other factors, whether the decline is outside the normal range of volatility in the asset’s price, a deterioration in the financial health of the company whose securities are held, or problems with the investee company’s operational or financing cash flows. (r) Investment and other financial assets Financial Instruments The Group has exposure to interest rate risk which is the risk that the Group’s financial position will be adversely affected by movements in interest rates. Interest rate risk on cash and short term deposits is not considered to be a material risk due to the short term nature of these financial instruments. The Group has no monetary foreign currency assets or liabilities. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Available for sale financial assets Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit and/or loss are initially recognised at fair value and transaction costs are expensed in the statement of profit or loss and other comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the statement of profit or loss and other comprehensive income as gains and losses from investment securities Subsequent measurement Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Available-for-sale financial assets are subsequently carried at fair value. Gains on available-for-sale financial assets are recognised 3 3 ANNUAL REPORT 2017NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 in other comprehensive income. Details on how the fair value of financial instruments is determined is disclosed in Notes 19 and 22. Impairment The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the statement of profit or loss and other comprehensive income. Impairment losses recognised in the statement of profit or loss and other comprehensive income on equity instruments classified as available-for-sale are recognised in equity. (s) Provisions Provisions are measured at the present value of managements 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. (t) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. (u) Leases Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease. 3 4 JINDALEE RESOURCES LIMITEDNOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 3. SEGMENT INFORMATION Management has determined that the Group has one reportable segment, being mineral exploration in Australia. As the Group is focused on mineral exploration, the Board periodically monitors the Group based on actual versus budgeted exploration expenditure incurred on the Group as a whole. This internal reporting framework is most relevant to assist the Board with making decisions regarding the Group and its ongoing exploration programmes and activities, while also taking into consideration the results of exploration work that has been performed to date. Year ended 30 June 2017 Reconciliation of segment revenue to Group revenue Revenue from external sources Unallocated revenue Total revenue Reconciliation of segment result to Group loss Segment result Unallocated Interest revenue - - Corporate expenses and other costs, net of other income Loss before tax As at 30 June 2017 Reconciliation of segment assets to Group assets Segment assets Intersegment eliminations Total assets Reconciliation of segment liabilities to Group liabilities Segment liabilities Intersegment eliminations Total liabilities Mineral exploration $ - Total $ - 98,480 98,480 (204,594) (204,594) 98,480 (279,182) (385,296) 5,645,847 5,645,847 - 5,645,847 (128,220) (128,220) - (128,220) 3 5 ANNUAL REPORT 2017NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 3. SEGMENT INFORMATION (continued) Year ended 30 June 2016 Reconciliation of segment revenue to Group revenue Revenue from external sources Unallocated revenue Total revenue Reconciliation of segment result to Group loss Segment result Unallocated Interest revenue - - Corporate expenses and other costs Loss before tax As at 30 June 2016 Reconciliation of segment assets to Group assets Segment assets Intersegment eliminations Total assets Reconciliation of segment liabilities to Group liabilities Segment liabilities Intersegment eliminations Total liabilities 4. REVENUE AND INCOME Revenue from continuing operations Interest Other income Gain on disposal of interest in Cardinia JV Other 3 6 Jindalee $ - Total $ - 130,009 130,009 (911,768) (911,768) 130,009 (274,863) (1,056,622) 5,873,838 5,873,838 - 5,873,838 98,306 - 98,306 98,306 2017 $ 2016 $ 98,480 130,009 358,490 10,396 368,886 - - - JINDALEE RESOURCES LIMITEDNOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 5. TAXATION (a) Income tax expense/(benefit) Current tax Deferred tax Deferred income tax expense included in income tax expense/(benefit) comprises: (Decrease)/increase in deferred tax liability Opening balance - deferred tax (asset)/ liability Movement for period Closing Balance – deferred tax (asset)/ liability (b) Numerical reconciliation of income tax expense to prima facie tax payable Loss before income tax: Tax at the Australian tax rate of 27.5% (2016: 28.5%) Tax effect of amounts which are not deductible in calculating taxable income: Non-deductible expenses Tax losses not recognised Share-based payments Total income tax benefit 2017 $ 2016 $ - - - - - - - - - - - - - - - - (385,296) (1,056,621) (105,956) (301,137) 737 105,219 - - - 295,437 5,700 - The franking account balance at year end was $nil (2016: $nil). Jindalee Resources Limited and its wholly owned subsidiary have not implemented the tax consolidation legislation. Jindalee Resources Limited has unrecognised deferred tax assets at year-end of $895,082 (2016: $817,815) representing unrecognised tax losses. In 2017 the Australian Government enacted a change in the income tax rate for small business entities from 28.5% to 27.5%. Jindalee satisfies the criteria to be a small business entity. 3 7 ANNUAL REPORT 2017 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 6. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Loss after income tax Exploration expenditure written off Depreciation Gain on sale of interest in Cardinia JV1 Impairment of available for sale financial assets net of tax Share-based payments Change in operating assets and liabilities during the financial year: (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables Increase/(decrease) in provisions Net cash outflow from operating activities 1 Proceeds of sale satisfied by receipt of shares in Kin Mining NL 7. EARNINGS PER SHARE Loss used in calculation of basic and diluted loss per share Basic loss per share (cents per share) Diluted loss per share (cents per share) 2017 $ 2016 $ (385,296) (1,056,622) 332,533 6,140 (358,490) - - 154,509 6,374 - 425,578 20,000 13,308 (932) (2,485) 4,479 (3,267) (16,002) (395,222) (464,951) 2017 $ 2016 $ (385,296) (1,056,621) (1.10) (1.10) (3.03) (3.03) Weighted average number of ordinary shares used as the denominator in calculating basic loss per share. 34,894,775 34,854,501 Adjustments for calculation of diluted loss per share: - - - Options Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted loss per share 34,894,775 34,854,501 Options on issue were not considered to be dilutive as their impact would have been to increase the loss per share. 8. DIVIDENDS As at 30 June 2017 the Company held $73,485 in unclaimed dividends (2016: $73,485). No dividend has been declared for the year ended 30 June 2017 (2016: nil). 3 8 JINDALEE RESOURCES LIMITED NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 9. CASH AND CASH EQUIVALENTS Term deposits Cash at bank 2017 $ 2016 $ 3,113,431 3,593,696 169,567 577,860 3,282,998 4,171,556 Term deposits include $145,414 deposited as guarantees. The Group’s exposure to interest rate risk is disclosed in Note 19. 10. TRADE AND OTHER RECEIVABLES Current Trade and other receivables Non-current Other receivables (deposits) 2017 $ 2016 $ 67,589 46,558 138,413 - Trade and other receivables are denominated in Australian dollars are interest free with settlement terms of between 7 and 30 days. No trade receivables were past due or impaired as at 30 June 2017 (2016: nil). Due to the short-term nature of these receivables their carrying value is assumed to be their fair value. Please refer to Note 19 for information on credit risk. 11. NON-CURRENT - AVAILABLE-FOR-SALE FINANCIAL ASSETS Shares in listed corporations - - - - - Opening balance Additions1 Revaluation increase/ (decrease) Impairment charge Closing balance 2017 $ 2016 $ 1,489,458 1,904,836 370,000 126,383 7,500 2,700 - (425,578) 1,985,841 1,489,458 The fair value of listed available-for-sale investments has been determined directly by reference to published price quotations in an active market. At 30 June 2017 the market value of the Group’s shareholding in Energy Metals was $1,263,446 (2016: $1,123,063) and Kin Mining NL was $350,000 (2016: $nil). Refer to Note 19 for information on Group’s exposure to price risk. 1On 26 May 2017 the Company executed an agreement with Kin Mining NL (“Kin”) for the sale of the Company’s 11% interest in the Cardinia Project. Consideration for the sale was 1,000,000 ordinary shares in Kin. The sale transaction was subsequently completed on 27 June 2017. On completion date, Kin’s ordinary shares had a fair value of $0.37 /share, being the published price quotation. 3 9 ANNUAL REPORT 2017 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 12. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT Plant and equipment - at cost Less: accumulated depreciation Reconciliation of the carrying amount of property, plant and equipment: Carrying amount Additions and disposals (net) Less: depreciation expense for year Carrying amount Total property, plant and equipment 13. NON-CURRENT ASSETS – EXPLORATION AND EVALUATION EXPENDITURE Balance at beginning of year Exploration expenditure incurred Disposal of interest in JV Exploration expenditure written off Balance at the end of the year 2017 $ 2016 $ 201,532 179,538 (165,233) (159,114) 36,299 20,424 20,424 22,015 (6,140) 36,299 19,979 6,819 (6,374) 20,424 36,299 20,424 2017 $ 145,842 332,908 (11,510) (332,533) 134,707 2016 $ 215,146 85,206 - (154,510) 145,842 The balance carried forward represents projects in the exploration and evaluation phase. Ultimate recoupment of exploration expenditure carried forward is dependent on successful development and commercial exploitation, or alternatively, sale of respective areas. The exploration expenditure written off during the year relates to exploration and evaluation expenditure on tenements surrendered, or to which the Group does not currently have right to tenure. 14. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES Trade payables 2017 $ 2016 $ 45,998 13,599 Trade and other payables are non-interest bearing and are normally settled on 30 day terms. The carrying value of trade and other payables are assumed to be the same as their fair values, due to their short term nature. 4 0 JINDALEE RESOURCES LIMITED NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 15. CONTRIBUTED EQUITY Share capital 2017 $ 2016 $ 34,894,775 ordinary fully paid shares (2016: 34,894,775) 7,227,254 7,227,254 There were no movements in the ordinary share capital of the Company in the reporting period. Ordinary shares participate in dividends. On winding up of the Group any proceeds would be distributed to the number of shares held. At shareholder meetings on a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. 16. ACCUMULATED LOSS Retained earnings at the beginning of the financial year Loss attributable to members of the Group Accumulated losses at the end of the financial year 17. RESERVES Share-based payment reserve Balance at the beginning of the year Share-based payments Balance at the end of the year Available for sale investments revaluations reserve Balance at the beginning of year Revaluation on available for sale investments Balance at the end of the year Total reserves Nature and purpose of the reserves: 2017 $ 2016 $ (3,424,196) (2,367,575) (385,296) (1,056,621) (3,809,492) (3,424,196) 2017 $ 2016 $ 1,969,774 1,969,774 - - 1,969,774 1,969,774 2,700 127,391 130,091 - 2,700 2,700 2,099,865 1,972,474 (i) (ii) The share-based payments reserve is used to recognise the fair value of options issued but not exercised. The available for sale investment revaluation reserve is used to recognise the change in fair value. 4 1 ANNUAL REPORT 2017NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 18. SHARE BASED PAYMENT TRANSACTIONS Share based payments transactions are recognised at fair value in accordance with AASB 2. The adoption of AASB 2 is equity-neutral for equity-settled transactions. The expense in the year was $Nil (2016: $20,000). Employee Share Option Plan Jindalee Resources Limited Employee Share Option Plan (“ESOP”) was established to encourage all eligible directors, executive officers and employees who have been continuously employed by the Group to have a greater involvement in the achievement of the Group’s objectives and to provide an incentive to strive to that end by participating in the future growth and prosperity of the Group through share ownership. The ESOP allows the Group to issue free options to eligible persons. The options can be granted free of charge and are exercisable at a fixed price in accordance with the rules of the ESOP. All options on issue are fully vested at grant date. Set out below are summaries of options granted under the plan: Grant Date Expiry Date 2017 Exercise Price Balance at the start of the year Number Granted during the year Number Exercised during the year Number Expired during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number 26/11/2014 30/06/2017 $0.50 2,600,000 Weighted average exercise price $0.50 - - - - (2,600,000) - - - - - The weighted average remaining contractual life of share options outstanding at the end of the period is Nil (2016: 1 year). Fair Value of Share Options and Assumptions The fair value of services received in return for share options granted to directors is measured by reference to the fair value of options granted. The estimate of the fair value of the services is measured based on a Black-Scholes option valuation methodology. This life of the options and early exercise option are built into the option model. The assumptions used for the options valuation are as follows: Grant Date Exercise Price Expected Life Share Price at Time of Issue Expected Volatility Dividend Yield Risk Free Interest Rate 26/11/2014 $0.50 2.6 years $0.16 60% 0% 2.51% Grant Date Exercise Price Expected Life Share Price at Time of Issue Expected Volatility Dividend Yield Risk Free Interest Rate Option Value $0.01644 Option Value 28/11/2013 $0.50 3 years $0.20 60% 0% 3.31% $0.07 4 2 JINDALEE RESOURCES LIMITEDNOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 19. FINANCIAL AND CAPITAL RISK MANAGEMENT (a) Capital Risk Management The Group manages its capital to ensure that it will be able to continue as a going concern. In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders. In order to achieve this object, the Group seeks to maintain a capital structure that balances risks and returns at an acceptable level and also to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, either through new share issues, or sourcing of debt, the Group considers not only its short-term position but also its long-term operational and strategic objectives. There have been no significant changes to the Group’s capital management objectives, policies and processes in the year nor has there been any change in what the Group considers to be its capital. The capital structure of the Group consists of cash and cash equivalents (Note 9) and equity attributable to equity holders of the Group, comprising issued capital, reserves and retained earnings (accumulated losses) as disclosed in Notes 15, 16 and 17 respectively. (b) Significant Accounting Policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2 of the financial statements. (c) Categories of Financial Instruments Financial Assets Current Cash and cash equivalents Trade and other receivables Total Current Financial Assets Non-current Available for sale financial assets1 Other receivables Total Non-Current Financial Assets Financial Liabilities Current 2017 $ 2016 $ 3,282,998 4,171,556 67,589 46,558 3,350,587 4,218,114 1,985,841 138,413 2,124,254 1,489,458 - 1,489,458 Trade and other payables and provision for dividend Total Current Financial Liabilities 119,483 119,483 87,084 87,084 1Refer to note 22 for details of fair value of available for sale financial assets (d) Credit Risk Exposure As at the reporting date, the Group has no significant concentrations of credit risk. The carrying amount reflected above represents the Group’s maximum exposure to credit risk. 4 3 ANNUAL REPORT 2017NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 19. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued) (e) Interest Rate Risk Exposure The Group’s exposure to interest rate risk arises from assets bearing variable interest rates. The weighted average interest rate on cash holdings was 2.43% at 30 June 2017 (2016: 3.00%). All other financial assets and liabilities are non-interest bearing. The net fair value of the Group’s financial assets and liabilities approximates their carrying value. The Group invests its surplus funds on deposit with Australian banking financial institutions, namely the National Australia Bank and ANZ Bank. For banks and financial institutions, only independently rated parties with a minimum rating of AA- are accepted. The table below summarises the impact of an increase/decrease in interest rates received on cash deposits held at year end on the Group’s pre-tax profit for the year and on equity. The analysis is based on the assumption that rates increased/decreased proportionally by 10% of the current weighted average interest rate with all other variables held constant. Impact on profit and equity Increase of 10% Decrease of -10% (f) Price Risk 2017 $ 9,848 (9,848) 2016 $ 13,001 (13,001) The Group is exposed to equity securities price risk. This arises from investments held by the Group and classified in the statement of financial position as available for sale. The Group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. The table below summarises the impact of an increase/decrease in prices of securities held at year end on the Group’s pre-tax profit for the year and on equity. The analysis is based on the assumption that the prices of all securities increased/decreased by 10% with all other variables held constant. Impact on profit and equity Increase of 10% Decrease of -10% (g) Liquidity Risk 2017 $ 2016 $ 198,584 (198,584) 148,946 (148,946) The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet our financial commitments in a timely and cost-effective manner. The Board reviews the Group’s liquidity position on a regular basis including cash flow statements to determine the forecast liquidity position and maintain appropriate liquidity levels. Note 14 details the Group’s current obligations. There are no unused borrowing facilities from any financial institution. 4 4 JINDALEE RESOURCES LIMITED NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 19. FINANCIAL AND CAPITAL RISK MANAGEMENT (continued) (h) Fair Values The carrying amounts and estimated fair values of financial assets and financial liabilities are as follows: Consolidated Financial Assets Cash and cash equivalents Trade and other receivables Non-current deposits Available for sale financial assets Total Financial Assets Financial Liabilities Trade and other payables Total Financial Liabilities 2017 $ 2016 $ 3,282,998 4,171,556 67,589 138,413 1,985,841 5,474,841 46,558 - 1,489,458 5,707,572 119,483 119,483 87,084 87,084 The methods and assumptions used to estimate the fair value of financial instruments are outlined below: Cash The carrying amount is fair value due to the liquid nature of these assets. Receivables/payables Due to the short-term nature of these financial rights and obligations, their carrying amounts are estimated to represent their fair values. Available for sale financial assets The current bid price as at 30 June 2017 is used to determine the carrying value of the available for sale financial assets and any movement is taken to the reserve. An impairment loss of available for sale financial assets is taken to the statement of profit or loss and other comprehensive income. The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. Refer to Note 22 for further details. 4 5 ANNUAL REPORT 2017NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 20. CONTINGENCIES Contingent Liabilities Claims of Native Title To date the Group has been notified by the Native Title Tribunal of native title claims which cover some of the Group’s licence holdings. Until further information arises in relation to the claims and its likelihood of success, the Group is unable to assess the likely effect, if any, of the claims. Performance Bonds and Security Documents In support of titles granted to or operated by the Group, various securities are submitted to the Department of Mines & Petroleum. These consist of unconditional performance bonds and securities or Form 32 security documents. The Company has no liability outstanding. There are no other contingencies of the Group at balance date. 21. COMMITMENTS Capital Commitments There are no capital expenditure commitments for the Group as at 30 June 2017. Contractual Commitment As at 30 June 2017 the Group has a contractual lease agreement for its registered offices which is due to expire on 15 June 2022. The amount contracted on a per year basis but not included as a liability at 30 June 2017 was $541,437. Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: < 1 year 1-5 years 2017 $ 2016 $ 98,010 443,427 541,437 87,875 - 87,875 22. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS The carrying values of financial assets and liabilities of the Group approximate their fair values. Fair values of financial assets and liabilities have been determined for measurement and / or disclosure purposes. Fair value hierarchy The Group classifies assets and liabilities carried at fair value using a fair value hierarchy that reflects the significance of the inputs used in determining that value. The table following analyses financial instruments carried at fair value by the valuation method. The different levels in the hierarchy have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). 4 6 JINDALEE RESOURCES LIMITEDNOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 22. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued) Recurring fair value measurements Level 1 Level 2 Level 3 $ $ $ Total $ 30 June 2017 Available-for-sale financial assets 1,985,841 Total as at 30 June 2017 1,985,841 30 June 2016 Available-for-sale financial assets 1,489,458 Total as at 30 June 2016 1,489,458 - - - - - - - - 1,985,841 1,985,841 1,489,458 1,489,458 Due to their short-term nature, the carrying amount of the current receivables and current payables is assumed to approximate their fair value. 23. CONTROLLED ENTITIES % held State of Date of 2017 2016 Controlled Entity Eastmin Pty Limited HiTec Minerals Pty Ltd 2017 100% 100% 2016 Class Incorporation Incorporation 100% Ord 100% Ord WA WA 15/04/2005 13/04/2016 $ 2 100 $ 2 100 Investment at Cost The date of acquisition of the controlled entities was on the date of incorporation. On 8 June 2017, Awesomous Pty Ltd changed its name to HiTec Minerals Pty Ltd. 24. RELATED PARTY TRANSACTIONS (a) Parent entity The parent entity within the Group is Jindalee Resources Limited. (b) Subsidiaries Interests in subsidiaries are set out in Note 23. (c) Key management personnel compensation Short-term employee benefits Post-employment benefits Share-based payments 2017 $ 264,850 14,221 - 279,071 2016 $ 251,713 11,020 20,000 282,733 Refer to the remuneration report contained within the Directors’ Report and Note 18 for further details on compensation to key management personnel. 4 7 ANNUAL REPORT 2017 NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 25. REMUNERATION OF AUDITORS Amounts paid or payable at 30 June to the auditors for: Audit and review of financial statements Total remuneration for audit and other assurance services 26. PARENT ENTITY FINANCIAL INFORMATION 2017 $ 20,400 20,400 2016 $ 20,724 20,724 The following details information related to the parent entity, Jindalee Resources Limited, at 30 June 2017 and 30 June 2016.. The information presented here has been prepared using consistent accounting policies as presented in Note 2. Financial Position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Issued capital Accumulated losses Reserves Total equity Financial Performance Loss for the year Other comprehensive income Total comprehensive loss 2017 $ 2016 $ 2,636,829 2,708,997 5,345,826 3,523,425 1,950,446 5,473,871 128,220 98,306 - - 128,220 98,306 5,217,606 5,375,565 7,227,254 7,227,254 (4,408,488) (4,123,136) 2,398,838 5,217,604 2,271,447 5,375,565 (285,352) (1,050,953) 127,391 2,700 (157,961) (1,048,253) No guarantees have been entered into by Jindalee Resources Limited in relation to the debts of its subsidiary. Jindalee Resources Limited had no commitments or contingent liabilities at year end other than those disclosed in Notes 20 and 21. 4 8 JINDALEE RESOURCES LIMITEDNOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 27. EVENTS OCCURING AFTER THE REPORTING PERIOD There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations, the results of those operations, or the state of affairs of the Group in future financial years. On 22 August 2017 pursuant to the Company’s Employee Share Option Plan, 400,000 unlisted options exercisable at $0.40 and expiring 30 June 2022 were issued to employees of the Company. 4 9 ANNUAL REPORT 2017 DIRECTORS’ DECLARATION JINDALEE RESOURCES LIMITED AND ITS CONTROLLED ENTITIES ACN 064 121 133 DECLARATION BY DIRECTORS In the Directors’ opinion: 1. The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity, accompanying notes, are in accordance with the Corporations Act 2001, and: (a) complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (b) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of its performance for the year ended on that date. 2. In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 3. The directors have been given the declarations as required by section 295A of the Corporations Act 2001. 4. Note 2(a) confirms that the financial statements also comply with International Reporting Standards as issued by the International Accounting Standards Board. This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by: L G DUDFIELD Managing Director 7th day of September 2017 at Perth, Western Australia. 5 0 JINDALEE RESOURCES LIMITED AUDITORS’ INDEPENDENCE DECLARATION Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF JINDALEE RESOURCES LIMITED As lead auditor of Jindalee Resources Limited for the year ended 30 June 2017, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Jindalee Resources Limited and the entities it controlled during the period. Phillip Murdoch Director BDO Audit (WA) Pty Ltd Perth, 7 September 2017 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (WA) 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 40 5 1 ANNUAL REPORT 2017AUDITORS’ REPORT Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia INDEPENDENT AUDITOR'S REPORT To the members of Jindalee Resources Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Jindalee Resources Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (WA) 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 41 5 2 JINDALEE RESOURCES LIMITEDAUDITORS’ REPORT Recoverability of exploration and evaluation expenditure Key audit matter How the matter was addressed in our audit At 30 June 2017, the carrying value of capitalised exploration and evaluation expenditure was $134,707 (30 June 2016: $145,842), as disclosed in Note 2 and 13. In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources (AASB 6), the recoverability of exploration and evaluation expenditure requires significant judgment by management in determining whether there are any facts or circumstances that exist to suggest that the carrying amount of this asset may exceed its recoverable amount. As a result, this is considered a key audit matter. Our procedures included, but were not limited to: · Obtaining a schedule of the areas of interest held by the Group and assessing whether the rights to tenure of those areas of interest remained current at balance date; · · · · Considering the status of the ongoing exploration programmes in the respective areas of interest by holding discussions with management, and reviewing the Group’s exploration budgets, ASX announcements and directors’ minutes; Considering whether any such areas of interest had reached a stage where a reasonable assessment of economically recoverable reserves existed; Considering whether any facts or circumstances existed to suggest impairment testing was required; and Assessing the adequacy of the related disclosures in Note 2 and 13 to the Financial Report. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard 42 5 3 ANNUAL REPORT 2017AUDITORS’ REPORT Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 6 to 11 of the directors’ report for the year ended 30 June 2017. In our opinion, the Remuneration Report of Jindalee Resources Limited, for the year ended 30 June 2017, complies with section 300A of the Corporations Act 2001. 43 5 4 JINDALEE RESOURCES LIMITEDAUDITORS’ REPORT Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit (WA) Pty Ltd Phillip Murdoch Director Perth, 7 September 2017 44 5 5 ANNUAL REPORT 2017ADDITIONAL INFORMATION The following additional information not shown elsewhere in this report is required by the Australian Securities Exchange in respect of listed public companies only. This information is current as at 18 September 2017. Securities Quotation has been granted for 34,894,775 ordinary shares of the Company on the Australian Stock Exchange. Quoted Securities ASX Code JRL Unquoted Securities ASX Code JRLAA Voting Rights Number of Holders Security Description 854 Ordinary Fully Paid Number of Holders Security Description 2 Options expiring 30/06/22 Exercisable at $0.40 Total Securities 34,894,775 Total Securities 400,000 The voting rights attached to each class of security are as follows: · · Ordinary Fully Paid shares – one vote per share held. Options – no voting rights are attached to unexercised options. Distribution Schedule Spread of Holdings - Ordinary Shares (ASX Code: JRL) 1 1,001 5,001 10,001 100,001 TOTAL - - - - - 1,000 5,000 10,000 100,000 99,999,999 Unmarketable Parcel Holders 175 292 140 201 46 854 Units 85,941 868,039 1,112,905 6,320,833 26,507,057 34,894,775 Percentage 0.25% 2.49% 3.19% 18.11% 75.96% 100% The number of shareholders holding less than a marketable parcel of fully paid ordinary shares is 244 based on closing price of $0.265 per share. Substantial Shareholding The Company has received the following notices of substantial holding: · · Kale Capital Corporation Limited in relation to 3,000,000 ordinary shares Teck Australia Pty Ltd in relation to 2,050,000 ordinary shares Register of Securities The Register of securities is held at Advanced Share Registry Limited at unit 2, 150 Stirling Highway, Nedlands, Western Australia. Telephone: 61 8 9389 8033. 5 6 JINDALEE RESOURCES LIMITED ADDITIONAL INFORMATION Buyback No on-market share buy-back is current. Top 20 Shareholders The names of the twenty largest shareholders (ASX Code: JRL) are listed below: Name 1. Mr LG Dudfield 2. 3. 4. 5. 6. 7. 8. 9. Kale Capital Corporation Limited Teck Australia Pty Ltd Yandal Investments Pty Ltd Ayres Rock Holdings Pty Ltd Pillage Investments Pty Ltd TBB NSW Pty Ltd Farr Family SF Pty Ltd DAT Investments Pty Ltd 10. Kevrex Pty Ltd 11. Eric’s Pty Ltd 12. Liberator Holdings Pty Ltd 13. Mr A J Washington 14. Mr Stefan Martin Brun 15. Mr Justin Jerome Mannolini 16. Kagelu Holdings Pty Ltd 17. Mr Cameron Ross Doling Dudfield 18. Miss Lauren Ashleigh Doling Dudfield 19. Mr Fraser Lewis Doling Dudfield 20. Piat Corp Pty Ltd % of Issued Securities 34.33 8.59 5.87 3.30 2.21 1.98 1.63 1.16 1.15 1.15 1.08 1.00 0.87 0.72 0.72 0.63 0.60 0.60 0.60 0.60 Number of Ordinary Shares 11,980,844 3,000,000 2,050,000 1,152,500 770,000 692,581 568,774 404,533 400,000 400,000 377,837 350,350 304,684 250,000 250,000 218,358 210,000 210,000 210,000 210,000 5 7 ANNUAL REPORT 2017 ADDITIONAL INFORMATION Tenement Information Project Prospect Ridge** Planets Cowan Hill Widgie Higginsville Highway Railway Highway Highway Highway Wannaway Widgie Wannaway Highway Highway Highway Salt Creek Yindi Victoria* North Sinclair Camel Bore New Bore Bundie Bore Prairie Downs Western Creek Fire Strike* Millrose Tokay Windimurra Taipan Jeffrey’s Find Killaloe Killaloe Chalice Westonia Aries Cummins Range* Kenya Kenya Mt Fisher Joyners Tenement Reference Locality Status Area (km2) Interest EL05/2016 ELA15/1548 ELA15/1549 ELA15/1552 ELA15/1560 ELA15/1563 ELA15/1564 ELA15/1577 ELA15/1578 ELA15/1580 ELA15/1598 ELA15/1602 ELA15/1614 ELA15/1617 ELA15/1618 ELA15/1619 ELA25/0562 ELA28/2708 ELA28/2711 ELA36/0895 ELA36/0910 ELA38/3211 ELA51/1840 ELA52/3445 ELA52/3520 ELA53/1911 ELA53/1962 ELA57/1061 ELA58/0513 ELA63/1823 ELA63/1832 ELA63/1835 ELA63/1836 ELA63/1839 ELA77/2444 ELA80/5027 ELA80/5091 ELA39/1998 ELA39/20058 ELA53/1898 M53/1078-I TAS WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA Granted Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application Application 51 27 6 30 78 75 3 6 3 36 51 57 15 18 3 3 24 54 69 60 63 9 66 93 72 24 102 66 9 3 18 6 42 42 Application 129 Application Application Granted Granted Granted Granted 90 63 6 3 24 7 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 20% *Tenement held or applied for through JRL’S wholly-owned subsidiary, Eastmin Pty Ltd ** Tenement held or applied for through JRL’s wholly-owned subsidiary, HiTec Minerals Pty Ltd 5 8 JINDALEE RESOURCES LIMITEDLevel 2 9 Havelock Street WEST PERTH WA 6005 Telephone: 61 8 9321 7550 Facsimile: 61 8 9321 7950 Email: enquiry@jindalee.net Web: www.jindalee.net 

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