Annual Report 2017 Corporate Directory Australian Business Number 51 105 991 740 Directors Brian Gilbertson (Non-executive Chairman) Paul Murray (Non-executive Director) Priyank Thapliyal (Executive Director) Mr Sungwon Yoon (Non-executive Director) Andrew Bell (Non-executive Director) Executives Priyank Thapliyal Chief Executive Officer Melissa North Company Secretary and Chief Financial Officer Principal Office Level 10 16 St Georges Terrace Perth WA 6000 Telephone: (08) 9346 5500 (08) 9481 5933 Facsimile: info@jupitermines.com Email: Share Registry Link Market Services Level 12, QV1 Building, 250 St Georges Terrace, Perth WA 6000 Telephone: 1300 554 474 Fax: Email: Website: www.linkmarketservices.com.au (02) 9287 0303 registrars@linkmarketservices.com.au Auditors Grant Thornton Audit Pty Ltd Level 1, 10 Kings Park Road, West Perth WA 6005 Telephone: (08) 9480 2000 Facsimile: Email: Website: www.grantthornton.com.au (08) 9322 7787 info.wa@au.gt.com CONTENTS Chairman’s Letter Review of Operations Annual Financial Report Directors’ Report Auditor’s Independence Declaration Statement of Consolidated Profit or Loss and Other Comprehensive Income Statement of Consolidated Financial Position Statement of Consolidated Changes in Equity Statement of Consolidated Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Audit Report 1 2 5 6 12 13 14 15 16 17 52 53 Chairman’s Letter Dear Shareholders, The financial year ending 28 February 2017 has undoubtedly been a record year in the history of Jupiter Mines Limited. The Tshipi Borwa manganese mine, with its low cost base and record production, is now one of the five largest manganese operations globally and one of the three largest in South Africa. It has performed remarkably in the financial year, taking advantage of the upturn of the manganese market. Tshipi made its first shareholder distribution of ZAR1 billion at the end of the financial year. This distribution resulted in the return of half of the original capital to the shareholders. In the Central Yilgarn, the Board reviewed both the Mount Ida Magnetite and Mount Mason Hematite Projects during the year. With the iron ore market still unstable, both projects remain on care and maintenance. Jupiter is now considering strategic options and should the manganese market continue in the current light, the coming year will hopefully see further value delivered to shareholders. Yours Faithfully, Jupiter Mines Limited Brian Gilbertson Chairman JUPITER MINES LIMITED 2017 ANNUAL REPORT 1 Review of Operations Jupiter Mines Limited (“Jupiter” or the “Company”) has an interest in two areas: a 49.9% share in Tshipi é Ntle Manganese Mining (“Tshipi”), which operates the Tshipi Borwa Manganese mine in South Africa; and in Australia, the Central Yilgarn Iron Project (“CYIP”), which includes the Mount Ida Magnetite Project and Mount Mason Hematite Project. TSHIPI BORWA MANGANESE MINE The Tshipi Borwa mine has a life of mine in excess of 60 years. The plant and infrastructure has been developed for an annual production capacity of 3.6 million tonnes, with a rail siding that can accommodate up to 2 trains at a time, being loaded in 3 to 4 hours. Figure 2 – Tshipi Borwa pit Figure 1. Tshipi Kalahari Manganese Project Location Map During the year, the manganese price recovered considerably, and combined with tight cost controls, Tshipi comfortably exceeded its production and profitability targets, generating a cash balance of over ZAR 1.5 billion at year end. Figure 3 –Tshipi Borwa plant With no external debt to be repaid, it was announced in November 2016 that Tshipi would distribute ZAR 1 billion to its shareholders. This distribution represented approximately 50% of the capital investment originally made to develop the mine. For the financial year ended 28 February 2017, Tshipi sold approximately 2.3 million tonnes of manganese ore. For the coming 2018 financial year, Tshipi is targeting production of 3 million tonnes. In light of the record 2017 year and 2018 targets, the Board resolved in January 2017 to consider strategic options with regards to Tshipi, to enhance shareholder value. After seeing a clear increase in the manganese market during the year, Jupiter again commissioned an independent valuation of its stake in Tshipi according to valuation and accounting standards as at 28 February 2017. The preferred valuation of the investment was 2 JUPITER MINES LIMITED 2017 ANNUAL REPORT Review of Operations Figure 4 –Tshipi Borwa TSHIPI BORWA (continued) concluded to be $889,156,478. The Board has resolved to reverse the impairment recorded in 2016 of $143,641,903. This together with the original investment amount, movement in the shareholder loan and accumulated share of profit in Tshipi, the investment balance as at 28 February 2017 is $345,556,557 (2016: 178,818,142). Under the equity accounting standards which the investment is accounted for, a further revaluation to the $889,156,478 valuation amount is not permitted. Further information on the valuation and investment balance is provided at Note 18. The reversal of the 2016 impairment has been shown on the Statement of Consolidated Profit or Loss and Other Comprehensive Income. It is a non-cash item with no impact on cash flow. JUPITER MARKETING During the financial year, Jupiter Kalahari S.A. gave notice to exit the OM Tshipi (S) Pte Ltd joint venture, which previously marketed and sold all the ore produced from Tshipi, and accordingly appointed Jupiter as its permitted nominee to purchase its 49.9% share of the ore produced from Tshipi. In order to facilitate this, Jupiter was registered as an external company in South Africa (“Jupiter SA”). Jupiter SA has been carrying out the sale and export of Jupiter’s share of Tshipi’s Figure 5. CYIP Project Location Map manganese ore. Due to the limited administrative operations of Jupiter in South Africa, Tshipi and Jupiter concluded that Tshipi would carry out certain functions to facilitate sales by Jupiter SA to third parties; hence the Tshipi trade receivable balance is shown in the Related Party disclosure in Note 28. For the financial year to 28 February 2017, sales of $155,555,500 were recorded by Jupiter. CENTRAL YILGARN IRON PROJECTS The Central Yilgarn Iron Project (“CYIP”) area is located 130km by road northwest of the town of Menzies. The CYIP consists of the smaller DSO project (Mount Mason) and the flagship long-life Magnetite Project (Mount Ida). Both projects are planned around existing infrastructure in the region, including the Leonora to Esperance railway line, and the Port of Esperance. With iron ore prices remaining unstable, both the Mount Ida Magnetite Project and Mount Mason Hematite Project remain on care and maintenance. Jupiter once again commissioned an independent valuation of its iron ore assets in line with valuation and accounting standards. The valuation recommended the Mount Ida Magnetite Project to be valued at $12,000,000 and the Mount Mason DSO Hematite Project valued at $600,000. However in light of the reduction of the iron ore price since the year-end date, the Board decided to not reverse previous impairments recognised. These projects will remain on care and maintenance until economic conditions improve. MOUNT IDA MAGNETITE PROJECT The flagship Mount Ida Magnetite Project has the reserves to be a tier one long-life magnetite mine. Jupiter suspended work on the Mount Ida Feasibility Study in November 2012, and the project remains on care and maintenance. No work has been undertaken on this project in this financial year. JUPITER MINES LIMITED 2017 ANNUAL REPORT 3 Review of Operations MOUNT MASON DSO HEMATITE PROJECT The Mount Mason high-grade hematite mineralisation is located approximately 12km northwest of the Mount Ida Magnetite Project. It has the potential to be a low cost start-up, near term project with a short payback period. It is envisaged that the proposed Mount Mason Project, upon completion, would lead to mining at the Mount Ida magnetite deposit. Jupiter suspended optimisation of the Mount Mason Feasibility Study at the end of 2014, and the project remains on care and maintenance. No work has been undertaken on this project in this financial year. SCHEDULE OF MINERAL TENEMENTS LEASE NAME STATUS APPLIED DATE GRANT DATE EXPIRY DATE CURRENT AREA CURRENT COMMITMENT RENT CURRENT HOLDERS G37/36 General Granted 3/04/2009 17/01/2011 16/01/2032 358.62 Ha Purpose – Graten Well G29/21 Mt Mason Granted 22/05/2009 23/03/2010 22/03/2031 95.00 Ha G29/23 Mt Mason Granted 5/05/2012 7/02/2013 6/02/2034 1,256.73 Ha L29/116 Mt Mason Granted 7/06/2012 3/01/2013 2/01/2034 25.48 Ha L29/117 Mt Mason Granted 7/06/2012 7/12/2012 6/12/2033 90.14 Ha L29/118 Mt Mason Granted 7/06/2012 9/11/2012 8/11/2033 11.67 Ha L29/119 Mt Mason Granted 28/08/2012 30/07/2013 29/07/2034 52.76 Ha L29/120 Mt Mason Granted 30/09/2012 7/02/2013 6/02/2034 1,720.05 Ha L29/121 Mt Mason Granted 30/09/2012 30/07/2013 29/07/2034 64.31 Ha L29/123 Mt Mason Granted 25/11/2012 26/03/2013 25/03/2034 23.13 Ha L29/132 Mt Mason Granted 17/06/2016 08/11/2016 27/11/2028 300.00 Ha - - - - - - - - - - - $5,241.10 Jupiter Mines Ltd (100%) $1,434.50 Jupiter Mines Ltd (100%) $18,965.5 Jupiter Mines Ltd (100%) $392.60 Jupiter Mines Ltd (100%) $1,371.10 Jupiter Mines Ltd (100%) $181.20 $800.30 Jupiter Mines Ltd (100%) Jupiter Mines Ltd (100%) $10,860.50 Jupiter Mines Ltd (100%) $981.50 $362.40 Jupiter Mines Ltd (100%) Jupiter Mines Ltd (100%) $4,394.60 Jupiter Mines Ltd (100%) M29/408 Mt Mason Granted 6/02/2006 28/11/2007 27/11/2028 300.00 Ha $30,100.00 $5,132.05 Jupiter Mines Ltd (100%) G29/22 Mt Ida Granted 11/01/2011 6/09/2012 5/09/2033 9,634.00 Ha L29/100 Mt Ida Granted 11/01/2011 11/11/2011 10/11/2032 775.00 Ha L29/106 Mt Ida Granted 18/03/2011 20/06/2012 19/06/2033 119.44 Ha L29/78 Mt Ida Granted 1/09/2009 24/06/2010 23/06/2031 6,341.00 Ha L29/79 Mt Ida Granted 12/01/2010 24/08/2010 23/08/2031 6,886.00 Ha - - - - - $145,428.10 Jupiter Mines Ltd (100%) $11,702.50 Jupiter Mines Ltd (100%) $1,752.00 Jupiter Mines Ltd (100%) $3,170.50 Jupiter Mines Ltd (100%) $3,443.00 Jupiter Mines Ltd (100%) L29/81 Mt Ida Granted 13/05/2010 12/09/2011 11/09/2032 26,020.34 Ha - $13,010.50 Jupiter Mines Ltd (100%) L29/99 Mt Ida Granted 12/11/2010 24/02/2012 23/02/2033 64,550.49 Ha - $32,275.50 Jupiter Mines Ltd (100%) L36/214 Mt Ida Granted 5/09/2012 17/06/2013 16/06/2034 19,703.86 Ha - $9,852.00 Jupiter Mines Ltd (100%) L36/215 Mt Ida Granted 20/10/2012 1/08/2013 31/07/2034 29,849.54 Ha - $14,925.00 Jupiter Mines Ltd (100%) L36/216 Mt Ida Granted 20/10/2012 1/08/2013 31/07/2034 17,632.43 Ha - $8,816.50 Jupiter Mines Ltd (100%) L36/217 Mt Ida Granted 20/10/2012 1/08/2013 31/07/2034 5,882.25 Ha - $2,941.50 Jupiter Mines Ltd (100%) L37/203 Mt Ida Granted 3/05/2010 27/06/2011 26/06/2032 68,952.89 Ha - $34,476.50 Jupiter Mines Ltd (100%) L57/45 Mt Ida Granted 5/09/2012 19/08/2013 18/08/2034 8,703.48 Ha - $4,352.00 Jupiter Mines Ltd (100%) L57/46 Mt Ida Granted 05/09/2012 05/12/2014 04/12/2035 31,741.86 Ha - $15,871.00 Jupiter Mines Ltd (100%) L29/122 Mt Ida Granted 30/09/2012 03/04/2014 2/04/2035 6,590.72 Ha - $3,295.50 Jupiter Mines Ltd (100%) M29/414 Mt Ida Granted 11/01/2011 25/11/2011 24/11/2032 6,461.00 Ha $646,000.00 $110,143.00 Jupiter Mines Ltd (100%) L29/131 Mt Ida Granted 12/02/2015 17/12/2015 16/12/2036 541.07 Ha - $8,184.20 Jupiter Mines Ltd (100%) 4 JUPITER MINES LIMITED 2017 ANNUAL REPORT ABN 51 105 991 740 Financial Report to Shareholders 2017 FOR THE YEAR ENDED 28 FEBRUARY 2017 CONSOLIDATED ENTITY Directors’ Report In accordance with a resolution of Directors, the Directors present their Report together with the Financial Report of Jupiter Mines Limited (Jupiter) and its wholly owned subsidiaries (together referred to as the Consolidated Entity) for the financial year ended 28 February 2017 and the Independent Auditor’s Report thereon. Directors The Directors of Jupiter at any time during or since the end of the financial year are as follows: Non-Executive – Brian Patrick Gilbertson – Paul Raymond Murray – Andrew Bell – Soo-Cheol Shin (resigned 31 March 2016) – Sungwon Yoon (appointed 31 March 2016) Executive – Priyank Thapliyal Additional information is provided below regarding the current Directors. Brian Patrick Gilbertson MSc, MBL (Chairman: Non-Executive Director) Mr Gilbertson was appointed a Director on 22 June 2010. Mr Gilbertson has extensive experience in the global natural resources industry. He was Managing Director of Rustenburg Platinum Mines Limited in the 1980’s, a period during which the company gained recognition as the world’s foremost producer of platinum. In the 1990’s, as Executive Chairman of Gencor Limited, he led the restructuring of the South African mining industry into the post-Apartheid era, transforming Gencor Limited into a focused mineral and mining group. During this period he held ultimate responsibility for Impala Platinum Holdings, for Samancor Limited (the world’s largest producer of manganese and chrome ore and alloys) and for Trans-Natal Coal Corporation (a major coal producer and exporter). Important new initiatives included the Hillside and Mozal aluminium smelters, the Columbus stainless steel plant, and the purchase of the international mining assets (Billiton plc) of the Royal Dutch Shell Group. In 1997, Gencor Limited restructured its non-precious metals interests as Billiton plc. With Mr Gilbertson as Executive Chairman, Billiton plc raised US$1.5 billion in an initial public offering on the LSE, taking the company into the FTSE 100. Separately, Mr Gilbertson worked to merge the gold operations of Gencor and Gold Fields of South Africa, creating Gold Fields Limited, a leader in the world gold mining industry. He served as its first Chairman until October 1998. In 2001, Billiton plc merged with BHP Limited to create what is widely regarded as the world’s premier resources company, BHP Billiton plc. Mr Gilbertson was appointed its second Chief Executive on 1 July 2002. In late 2003, Mr Gilbertson led mining group Vedanta Resources plc (Vedanta) to the first primary listing of an Indian company on the London Stock Exchange in the second largest IPO of the year (US$876 million). He served as Chairman of Vedanta until July 2004. He was appointed President of Sibirsko-Uralskaya Aluminium Company (SUAL), the smaller aluminium producer in Russia and led that company into the US$30 billion merger with RUSAL and the alumina assets of Glencore International A.G., creating the largest aluminium company in the world. Mr Gilbertson established Pallinghurst Advisors LLP and Pallinghurst (Cayman) GP L.P. during 2006 and 2007 respectively, to develop opportunities on behalf of a group of natural resource investors, which currently own 86% of Jupiter. Mr Gilbertson is a British and South African citizen. He has not been a Director of any other ASX listed company in the past three years. 6 JUPITER MINES LIMITED 2017 ANNUAL REPORT Directors’ Report Paul Raymond Murray FFin, CPA (Independent Non-Executive Director, Remuneration Committee Chairman, Audit Committee Chairman) Mr Murray was appointed as a Director on 20 August 2003. Mr Murray has served on the Board and consulted to a number of ASX listed resource exploration companies. With a business career spanning 50 years, he has also been responsible for the successful listing on the ASX of a number of public companies. Mr Murray has been a Director of Great Western Minerals Limited, Consolidated Western Areas Limited and Global Mineral Resources Limited. Andrew Bell B.A. (Hons), M.A., LLB (Hons) (Independent Non-Executive Director, Audit Committee Member, Remuneration Committee Member) Mr Bell was appointed as a Director of Jupiter on 19 May 2008. Mr Bell is Chairman of Red Rock Resources plc, a company listed on the AIM market of the London Stock Exchange Ltd. He was a natural resources analyst in London in the 1970s, then specialised in investment and investment banking covering the Asian region. He has been involved in the resource and mining sectors in Asia since the 1990s, and has served on the Boards of a number of listed resource companies. Mr Bell has been a Director of Star Striker Limited (formerly Resource Star Limited) (ASX: SRT) Mr Bell is presently on the following Boards: • Red Rock Resources plc, (AIM: RRR) since 2005 • Chairman of Regency Mines plc (AIM: RGM) since 2004 Priyank Thapliyal Metallurgical Engineer, B Tech, M Eng, MBA (Western Ontario, Canada) (Executive Director, Audit Committee Member, Remuneration Committee Member) Mr Thapliyal was appointed as a Non-Executive Director of Jupiter on 4 June 2008. He was appointed as Chief Executive Officer on 15 July 2013. Mr Thapliyal has been charged with implementing the Pallinghurst Resources Steel Making Materials strategy through Jupiter. Mr Thapliyal, a founding partner of Pallinghurst Advisors LLP, joined Sterlite Industries in 2000 as a US$100 million firm. Priyank Thapliyal acted as deputy to Anil Agarwal (founder and chairman of Vedanta) and was responsible for spearheading the main strategic developments that resulted in the listing of Vedanta on the London Stock Exchange (“LSE”) in December 2003. The listing has been credited for transforming Vedanta from an Indian copper smelting company in 2000 to the current multi-billion dollar revenue LSE-listed global company. A significant part of this value uplift soon after listing was attributable to the US$50 million acquisition of a controlling stake in Konkola Copper Mines in Zambia in November 2004, which was initiated and led by Mr Thapliyal. Priyank was a former mining and metals investment banker with CIBCWM, Toronto Canada and is a qualified Metallurgical Engineer, MBA (Western Ontario, Canada) and former Falconbridge employee. Mr Thapliyal has not been a Director of any other ASX listed companies in the past three years. Soo-Cheol Shin (Non-Executive Director) Mr Shin was appointed as a Director of Jupiter on 19 March 2012. Mr Shin holds a Bachelor of Arts in Public Administration and joined POSCO in 1989. Mr Shin has held a variety of positions throughout his career including Project Manager, POSCO Australia Pty Ltd; Team Leader, Coal Procurement Group; Team Leader, Steel Making Raw Materials Procurement Group and Group Leader, Raw Materials Transportation Group. He was appointed Managing Director of POSCO Australia in February 2012. JUPITER MINES LIMITED 2017 ANNUAL REPORT 7 Directors’ Report Mr Shin has extensive experience in the management of natural resource projects both international and within Australia. Mr Shin subsequently resigned from the Jupiter Board on 31 March 2016. Sungwon Yoon, MBA (Vanderbilt, the US) (Non-Executive Director) Mr Yoon was appointed as a Director of Jupiter on 31 March 2016. Mr Yoon is the Managing Director of POSCO Australia Pty Ltd, a major shareholder of the Company. After joining POSCO in 1992, Mr Yoon has focused on the steel making raw materials during his career. He has over 20 years’ experience in various roles and responsibilities across POSCO’s raw materials procurement, investment, strategy and transportation. Before assuming the Managing Director role of POSCO Australia in March 2016, Mr Yoon was the General Manager of the POSCO coal procurement group. Company Secretary Ms Melissa North BCom, CA has been the Company Secretary since November 2012. Ms North is also the Chief Financial Officer of Jupiter. Ms North has an extensive background in finance management and business advisory with groups such as Grant Thornton and Chime Communications (London). Significant Changes in the State of Affairs There have been no significant changes in the state of affairs of the Company. Principal Activities The principal activities of Jupiter during the year have been the development and operation of its Tshipi Manganese Mine in South Africa. Review of Results and Operations The consolidated results of Jupiter for the year ended 28 February 2017 was a profit of $200,099,335 after a $5,619,368 tax expense (2016: Loss of $172,396,327 after a $4,609 tax expense). Further details of the results of the Consolidated Entity are set out in the accompanying financial statements in this Annual Report. A summary of announcements made by Jupiter during the year ended 28 February 2017 is set out below: Date 4 April 2016 16 June 2016 16 June 2016 13 July 2016 Announcement and Activities The Company released “Director Appointment & Resignation”. The Company released the “Notice of 2016 Annual General Meeting & Sample Proxy”. The Company released the “Annual Report 2016”. The Company released “Results of 2016 AGM” and “Jupiter Mines 2016 AGM Presentation”. 17 October 2016 The Company announced “Tshipi CEO & CFO Appointment”. 21 November 2016 The Company announced “Jupiter to Distribute US$55 million to Shareholders”. 1 December 2016 The Company released “Mining Journal Article “Something’s Cooking at South32”. 19 December 2016 The Company released the “Interim Financial Report – Half Year Ended 31 August 2016”. 10 January 2017 The Company announced “Jupiter Mines Shareholder Information Session”. 23 January 2017 The Company released “Share Buy-Back Announcement”, “Jupiter Mines Shareholder Presentation” and “Tshipi Manganese Mine – Update Video”. 25 January 2017 The Company released the “Buy-back Offer Booklet and Sample Forms”. 8 JUPITER MINES LIMITED 2017 ANNUAL REPORT Directors’ Report Dividends No dividends were paid or declared during the year by Jupiter. Financial Position At 28 February 2017, Jupiter held $84,709,260 in cash and cash equivalents compared with $37,369,518 at 28 February 2016 and had a carrying value of exploration expenditure of $11,632,006 compared with $10,384,000 at 28 February 2016. Significant Events After Reporting Date These financial statements were authorised for issue on 26 June 2017 by Director Brian Gilbertson. Jupiter undertook an equal access share buy-back, offering to buy-back 6% of issued capital. The offer period closed on 7 March 2017. Subsequently on 13 March 2017, 134,190,158 shares were cancelled, and $70,635,693.20 proceeds were paid to shareholders. On 14 March 2017, the Company announced the appointment of Bank of America Merrill Lynch to investigate strategic options to realise shareholder value from the Tshipi manganese mine. The exit of the OM Tshipi (S) Pte Ltd joint venture was completed on 11 April 2017 and proceeds of US$2,300,000 have been received by Jupiter Kalahari S.A. Likely Developments The operations at the Tshipi Borwa Manganese Mine are expected to continue in a similar manner to present. The Directors still intend Jupiter to proceed with the development of Jupiter’s Mount Ida Magnetite and Mount Mason DSO Hematite projects should this be economically viable. Environmental Regulations and Performance Jupiter’s operations are subject to general environmental regulation under the laws of the States and Territories of Australia and South Africa. The various exploration interests held by Jupiter impose future environmental obligations for site remediation following sampling and drilling programs. The Board is aware of these requirements and management is charged with ensuring compliance. The Directors are not aware of any breaches of these environmental regulations and licence obligations during the year. Options and Rights As at 28 February 2017, there were nil (28 February 2016: nil) options over unissued shares in the capital of Jupiter. No options were granted during the financial year. No options were exercised during the financial year. Since 28 February 2017 to the date of this Annual Report, nil options have been exercised and no options have been granted. Nil (28 February 2016: Nil) options lapsed or were vested during the financial year. JUPITER MINES LIMITED 2017 ANNUAL REPORT 9 Directors’ Report Meetings – Attendance by Directors Board Meetings The number of Directors’ meetings and the number of meetings attended by each of the Directors of Jupiter during the financial year under review are: Director Brian Gilbertson Paul Murray Priyank Thapliyal Andrew Bell Soo-Cheol Shin Sungwon Yoon Committee Meetings Number of meetings held during tenure of the Director Number of meetings attended 4 4 4 4 4 4 4 4 4 4 0 4 The number of committee meetings and the number of meetings attended by each of the Directors of Jupiter during the financial year under review are: Director Paul Murray Priyank Thapliyal Andrew Bell Directors’ Interests Audit Committee meetings attended Audit Committee meetings held during tenure Remuneration Committee meetings attended Remuneration Committee meetings held during tenure 2 2 2 2 2 1 0 0 0 0 0 0 Particulars of Directors’ interests in securities as at the date of this report are as follows: Director Brian Gilbertson 1 Paul Murray Priyank Thapliyal 2 Andrew Bell 3 Soo-Cheol Shin 4 Sungwon Yoon 5 Ordinary Shares Options over Ordinary Shares - 1,260,000 24,858,963 - - - - - - - - - 1 Brian Gilbertson as the Chairman of Pallinghurst Resources Limited (listed on the JSE and BSX) has a relevant interest in Pallinghurst Steel Feed Dutch (B.V.) (PSF). PSF is the registered owner of 421,042,093 Ordinary Shares in the Company. 2 Priyank Thapliyal is a Director of PSF and therefore has a relevant interest in PSF. PSF is the registered owner of 421,042,093 Ordinary Shares in the Company. 3 Andrew Bell as the Chairman and Director of Red Rock Resources plc has a relevant interest in Red Rock Resources plc (RRR). RRR is the registered owner of 27,324,375 Ordinary Shares in the Company. 4 Soo-Cheol Shin was the Managing Director of POSCO Australia Pty Ltd, has a relevant interest in POSCO Australia Pty Ltd (POSCO) and POSCO Australia GP PTY LTD (POSA GP). POSCO is the registered owner of 66,249,191 Ordinary Shares and POSA GP is the registered owner of 323,461,584 shares in the Company. 5 Sungwon Yoon is the Managing Director of POSCO Australia Pty Ltd, has a relevant interest in POSCO Australia Pty Ltd (POSCO) and POSCO Aus- tralia GP PTY LTD (POSA GP). POSCO is the registered owner of 66,249,191 Ordinary Shares and POSA GP is the registered owner of 323,461,584 shares in the Company. 10 JUPITER MINES LIMITED 2017 ANNUAL REPORT Directors’ Report Unissued shares under option Up until the date of this report, there are no further unissued shares under option. Shares issued during or since the end of the year as a result of exercise During or since the end of the financial year, the Company did not issue any ordinary shares as a result of the exercise of options. Contracts with Directors There are no agreements with any of the Directors. Indemnification and Insurance of Officers and Auditors Since the end of the previous financial year, Jupiter has paid premiums to insure the Directors and Officers of the Consolidated Entity. Details of the nature of the liabilities covered and the amount of premium paid in respect of Directors’ and Officers’ insurance policies preclude disclosure to third parties. Jupiter has not paid any premiums in respect of any contract insuring its auditor against a liability incurred in that role as an auditor of Jupiter. In respect of non-audit services, Grant Thornton Audit Pty Ltd, Jupiter’s auditor has the benefit of an indemnity to the extent Grant Thornton Audit Pty Ltd reasonably relies on information provided by Jupiter which is false, misleading or incomplete. No amount has been paid under this indemnity during the financial year ending 28 February 2017 or to the date of this Report. Non-Audit Services The Board of Directors is satisfied that the provision of non-audit services during the financial year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons: • all non-audit services are reviewed and approved by the Audit Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and • the nature of the services provided does not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. The following fees were paid or payable to Grant Thornton Australia Limited for non-audit services provided during the year ended 28 February 2017: Taxation and other services $34,125 (2016: $27,575) Auditor’s Independence Declaration The Lead Auditor’s Independence Declaration for the year ended 28 February 2017 has been received and can be found on the following page of the Annual Report. Proceedings on behalf of Jupiter No person has applied for leave of Court to bring proceedings on behalf of Jupiter or intervene in any proceedings to which Jupiter is a party for the purpose of taking responsibility on behalf of Jupiter for all or any part of those proceedings. Jupiter was not a party to any such proceedings during the year. The Consolidated Entity was not a party to any such proceedings during the reporting year. Brian Gilbertson Perth 26 June 2017 JUPITER MINES LIMITED 2017 ANNUAL REPORT 11 12 Statement of Consolidated Profit or Loss and Other Comprehensive Income FOR THE YEAR ENDED 28 FEBRUARY 2017 Revenue Cost of sales Gross Profit Other income Depreciation and amortisation expense Finance costs Director and secretarial costs Impairment of exploration and evaluation asset Reversal of impairment/(impairment) of investment in joint venture entities Impairment of available-for-sale financial assets Insurance costs Legal and professional costs Travel and entertaining costs Occupancy costs Consultancy fees Administration expenses Employee benefits expense Foreign exchange gain/(loss) Other expenses Share of profit/(loss) from joint venture entities using the equity method Profit/(Loss) before income tax Income tax expense Net profit/(loss) attributable to members of parent entity Other comprehensive income/(loss) Consolidated Group Note February 2017 $ February 2016 $ 2 2 2 3 3 17 18 12 18 4 155,555,500 (146,298,513) 9,256,987 2,688,212 (13,774) (473,691) (259,330) - - - 1,952,309 (28,534) (15,771) (420,188) - (4,778,484) 143,641,903 (143,641,903) - (80,222) (329,351) (73,731) (314,918) (181,642) (52,608) (529,667) 11,005,386 (38,886) 41,474,035 205,718,703 (751,500) (90,661) (318,738) (2,537) (1,113,574) (100,241) (57,280) (244,512) (15,810,622) (33,326) (6,936,157) (172,391,718) (5,619,368) 200,099,335 (4,609) (172,396,327) Net fair value gain on revaluation of financial assets 22 Other comprehensive gain for the period, net of tax 180,488 180,488 - - Total comprehensive profit/(loss) for the period 200,279,823 (172,396,327) Overall Operations Basic profit/(loss) per share Diluted profit/(loss) per share 8 8 0.0902 0.0902 (0.0756) (0.0756) The Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. JUPITER MINES LIMITED 2017 ANNUAL REPORT 13 Statement of Consolidated Financial Position AS AT 28 FEBRUARY 2017 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Assets held for sale Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Available for sale financial assets Property, plant and equipment Intangible assets Investments using the equity method Other non-current assets Exploration and evaluation assets Deferred tax asset TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liability TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY Consolidated Group Note February 2017 $ February 2016 $ 9 10 1 1 16 12 14 15 18 16 17 4 19 20 4 21 22 84,709,260 9,956,038 2,726,219 26,708,028 124,099,545 387,294 327,015 7,329 345,556,557 - 11,632,006 488,030 358,398,231 482,497,776 3,517,007 18,972 3,535,979 3,537,977 3,537,977 7,073,956 37,369,518 239,663 - 933,429 38,542,610 206,706 726,782 9,496 181,544,361 44,199,366 10,384,000 - 237,070,711 275,613,321 426,446 42,879 469,325 - - 469,325 475,423,820 275,143,995 526,639,293 180,488 (51 ,395,961) 526,639,293 - (251,495,298) 475,423,820 275,143,995 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 14 JUPITER MINES LIMITED 2017 ANNUAL REPORT Statement of Consolidated Changes in Equity FOR THE YEAR ENDED 28 FEBRUARY 2017 Balance at 1 March 2015 Profit/(loss) attributable to members of parent entity Total other comprehensive profit/(loss) for the year Total comprehensive loss for the year Dividends paid or provided for Ordinary Issued Capital $ 526,639,293 - - - - Balance as at 28 February 2016 526,639,293 Profit attributable to members of parent entity Total other comprehensive profit for the year Total comprehensive profit for the year Dividends paid or provided for - - - - Balance as at 28 February 2017 526,639,293 Options Reserve $ - - - - - - - - - - - Financial Assets Reserve $ Accumulated Losses $ Total - - - - - - - (79,098,970) 447,540,323 (172,396,327) (172,396,327) - - (172,396,327) (172,396,327) - - (251,495,298) 275,143,995 200,099,335 200,099,335 180,488 180,488 - - - - 180,488 180,488 - 180,488 (51,395,961) 475,423,820 The Statement of Changes in Equity should be read in conjunction with the accompanying notes. JUPITER MINES LIMITED 2017 ANNUAL REPORT 15 Statement of Consolidated Cash Flows FOR THE YEAR ENDED 28 FEBRUARY 2017 Consolidated Group Note February 2017 $ February 2016 $ CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Interest received Other income Net cash used in operating activities 26(a) 15 1 1 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of intangible assets Sale of motor vehicles Payments for exploration and evaluation of mining reserves Sale of held for sale assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loan repayments Net cash used in financing activities Net increase decrease in cash and cash equivalents held Cash and cash equivalents at beginning of financial period Effect of exchange rates on cash holdings in foreign currencies Cash and cash equivalents at the end of the financial period (1,280,756) 719,693 294,287 (266,776) (11,606) 39,545 (873,670) - (845,731) (2,211,044) 1,048,428 543,008 (619,608) (13,599) - (1,160,428) 390,000 (784,027) 48,452,249 48,452,249 - - 47,339,742 (1,403,635) 37,369,518 38,773,153 - - 84,709,260 37,369,518 The Statement of Cash Flows should be read in conjunction with the accompanying notes. 16 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies These consolidated financial statements and notes represent those of Jupiter Mines Limited (“Jupiter”) and its Controlled Entities (the “Consolidated Group” or “Group”). The separate financial statements of the parent entity, Jupiter Mines Limited, have not been presented within this financial report as permitted by the Corporations Act 2001. The financial statements were authorised and issued by the Board of Directors on 26 June 2017. Basis of Preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated. The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. All amounts in the financial report have been rounded to the nearest dollar. Tables may not cast in all instances due to rounding. Jupiter Mines Limited is a for-profit entity for the purpose of preparing the financial statements. (a) Principles of Consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Jupiter Mines Limited at the end of the reporting year. A controlled entity is any entity over which Jupiter Mines Limited has the power to govern the financial and operating policies so as to obtain benefits from its activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered. A list of controlled entities is contained in Note 13 to the financial statements. In preparing the consolidated financial statements, all inter-Group balances and transactions between entities in the Consolidated Group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. Business Combinations The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of: (a) fair value of consideration transferred, (b) the recognised amount of any non-controlling interest in the acquire, and (c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately. JUPITER MINES LIMITED 2017 ANNUAL REPORT 17 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) (b) Interests in Joint Ventures The Group acquired an interest in Tshipi é Ntle Manganese Mining Proprietary Limited (“Tshipi”), a joint venture entity, in October 2010. The Group’s accounting policy for joint ventures was considered by the Directors as part of the deliberation on the Tshipi acquisition, and had not been formally considered or articulated previously. Associates are those entities over which the Group is able to exert significant influence but which are not subsidiaries. A joint venture is an arrangement that the Group controls jointly with one or more other investors, and over which the Group has rights to a share of the arrangement’s net assets rather than direct rights to underlying assets and obligations for underlying liabilities. Investments in associates and joint ventures are accounted for using the equity method. Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is not recognised separately and is included in the amount recognised as investment. The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. (c) Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses. Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to items that are recognised outside profit or loss. Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future years in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. 18 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) (d) Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. The cost of fixed assets constructed within the Consolidated Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial year in which they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the Consolidated Group commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Depreciation Rate Office equipment Furniture & fittings Motor vehicles Leasehold improvements Buildings 33.33% 33.33% 12.50% 20.00% 10.00% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. (e) Exploration and Evaluation Expenditure The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits are likely either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of uncertainty depending on sub-classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the Statement of Profit or Loss and Other Comprehensive Income in the year when the new information becomes available. JUPITER MINES LIMITED 2017 ANNUAL REPORT 19 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) (f) Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the Consolidated Group, are classified as finance leases. Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the year. Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses in the years in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the lease term. (g) Financial Assets Recognition and initial measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately. Classification and subsequent measurement Finance instruments are subsequently measured at fair value, amortised cost using the effective interest rate method, or cost. Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method. Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss. The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of Accounting Standards specifically applicable to financial instruments. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. 20 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) Loans and receivables are included in current assets, where they are expected to mature within 12 months after the end of the reporting period. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost. Held-to-maturity investments are included in non-current assets where they are expected to mature within 12 months after the end of the reporting period. All other investments are classified as current assets. (ii) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value with changes in such fair value (i.e. gains or losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. Available-for-sale financial assets are included in current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as non-current assets. (iii) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Impairment of Financial Assets At the end of each reporting period, the Group assess whether there is objective evidence that a financial asset has been impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a “loss event”) having occurred, which has an impact on the estimated future cash flows of the financial asset(s). In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point. In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions that correlate with defaults. For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the allowance account. When the terms of the financial assets that would otherwise have been past due or impaired have been renegotiated, the group recognises the impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events have occurred are duly considered. JUPITER MINES LIMITED 2017 ANNUAL REPORT 21 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) (h) Impairment of Non-Financial Assets At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. (i) Employee Benefits Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows. (j) Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. (k) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, less credit card facilities used. Bank overdrafts are shown as short-term borrowings in liabilities. (l) Trade and Other Receivables Trade receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect the receivable. (m) Revenue and Other Income Revenue from the sale of goods is recognised when significant risks and rewards of the saleable product have transferred to the customer. Risks and rewards are considered passed to the customer upon delivery to the customer’s control. This generally occurs when the product is physically transferred onto a vessel. Revenue from inventory sales is measured at fair value of consideration received/receivable. Revenue is stated after deducting sales taxes, duties and levies. The price is determined on a provisional basis at the date of sale (cost insurance and freight). Adjustments to the sale price may occur based on variances in the metal or moisture content of the ore up to the date of final pricing. The period between provisional invoicing and final pricing is typically between 2 and 3 months. Accordingly, the fair value of the original revenue and associated receivable is adjusted each reporting period by reference to the best estimate of the actual metal and moisture content. The changes in fair value are recorded as an adjustment to revenue. Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument. All revenue is stated net of the amount of goods and services tax (GST). 22 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) (n) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in the statement of comprehensive income in the period in which they are incurred. (o) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers. (p) Trade and Other Payables Trade and other payables are carried at cost and due to their short time nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial period that are unpaid and arise when Jupiter becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition. (q) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period. (r) Critical Accounting Estimates and Judgements The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Key estimates – Impairment of non-financial assets The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Key estimates – Options The fair value of services received in return for options granted are measured by reference to the fair value of options granted. The estimate of the fair value of the services received is measured based on the Black Scholes option-pricing model. The contractual life of the options is used as an input into the model. Expectations of early exercise are incorporated into the model as well. The expected volatility is based on the historic volatility of peer Group entities (calculated on the weighted average remaining life of the share options), adjusted for any expected changes to volatility due to publicly available information. JUPITER MINES LIMITED 2017 ANNUAL REPORT 23 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) Key judgements – Exploration and evaluation expenditure The Group’s accounting policy for exploration and evaluation expenditure results in certain items of expenditure being capitalised for an area of interest where it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to the statement of comprehensive income. (s) Share based payments Under AASB 2 share based payments, the Company is required to determine the fair value of options issued to employees as remuneration and recognise as an expense in the statement of comprehensive income. This standard is not limited to options and also extends to other forms of equity-based remuneration. (t) Foreign Currency Translation (i) Functional and presentation currency The functional and presentation currency of Jupiter and its subsidiaries is Australian dollars ($). The presentation and functional currency for the interest in Tshipi is the South African Rand. The results are translated into Australian dollars for disclosure in Jupiter’s consolidated accounts. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. (ii) Translation of interest in Joint Venture functional currency to presentation currency The results of the South African Joint Venture interest are translated into Australian dollars using an average rate over the period of the transactions. Assets and liabilities are translated at exchange rates prevailing at reporting dates. (u) Adoption of New and Revised accounting standards and interpretations During the current period, Jupiter adopted all of the new and revised Australian Accounting Standards and Interpretations applicable to its operations which became mandatory. The adoption of these standards has impacted the recognition, measurement and disclosure of certain transactions. The adoption of these standards was applied for the entire reporting period unless otherwise stated. These new pronouncements have had no significant impact on the group for this reporting period. New and revised standards that are effective for these financial statements A number of new and revised standards became mandatory and are effective for annual periods beginning on or after 1 January 2015. Information on these new standards which could impact on the Group are presented below: AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement. 24 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) AASB 2012-3 is applicable to annual reporting periods beginning on or after 1 January 2014. The adoption of these amendments has not had a material impact on the Group as the amendments merely clarify the existing requirements in AASB 132. AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets These narrow-scope amendments address disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 Impairment of Assets to require disclosures about the recoverable amount of impaired assets. The IASB noticed however that some of the amendments made in introducing those requirements resulted in the requirement being more broadly applicable than the IASB had intended. These amendments to IAS 36 therefore clarifies the IASB’s original intention that the scope of those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of disposal. AASB 2013-3 makes the equivalent amendments to AASB 136 Impairment of Assets and is applicable to annual reporting periods beginning on or after 1 January 2015. The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements. AASB 2014-1 Amendments to Australian Accounting Standards (Part A: Annual Improvements 2010–2012 and 2011–2013 Cycles) Part A of AASB 2014-1 makes amendments to various Australian Accounting Standards arising from the issuance by the IASB of International Financial Reporting Standards Annual Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle. Among other improvements, the amendments arising from Annual Improvements to IFRSs 2010-2012 Cycle: • clarify that the definition of a ‘related party’ includes a management entity that provides key management personnel services to the reporting entity (either directly or through a group entity); and • amend AASB 8 Operating Segments to explicitly require the disclosure of judgements made by management in applying the aggregation criteria. Among other improvements, the amendments arising from Annual Improvements to IFRSs 2011-2013 Cycle clarify that an entity should assess whether an acquired property is an investment property under AASB 140 Investment Property and perform a separate assessment under AASB 3 Business Combinations to determine whether the acquisition of the investment property constitutes a business combination. Part A of AASB 2014-1 is applicable to annual reporting periods beginning on or after 1 July 2014. The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements. (v) New accounting standards for Application in Future Periods Certain new accounting standards and interpretations have been published that are not mandatory for 28 February 2016 reporting periods and have not yet been applied in the financial report. Jupiter’s assessment of the impact of these new standards and interpretations is set out below: AASB 9 Financial Instruments AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are: (a) Financial assets that are debt instruments will be classified based on (1) the objective of the entity’s business model for managing the financial assets; and (2) the characteristics of the contractual cash flows. JUPITER MINES LIMITED 2017 ANNUAL REPORT 25 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) (b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. (c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. (d) Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows: • The change attributable to changes in credit risk are presented in other comprehensive income (OCI); and • The remaining change is presented in profit or loss. If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss. Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into AASB 9: • Classification and measurement of financial liabilities; and • Derecognition requirements for financial assets and liabilities. Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7 and AASB 2010-10. AASB 2010-8 Amendments to Australian Accounting Standards –Deferred Tax: Recovery of Underlying Assets These amendments address the determination of deferred tax on investment property measured at fair value and introduce a rebuttable presumption that deferred tax on investment property measured at fair value should be determined on the basis that the carrying amount will be recoverable through sale. The amendments also incorporate AASB Interpretation 121 Income Taxes – Recovery of Revalued Non-Depreciable Assets into AASB 112. This may not have an impact on the group, dependent upon any possible property transactions undertaken. AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations These amendments impacts on the use of AASB 11 when acquiring an interest in a joint operation. The effective date is annual reporting periods beginning on or after 1 January 2016. When these amendments are first adopted for the year ending 31 December 2016, there will be no material impact on the transactions and balances recognised in the financial statements. AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The amendments address a current inconsistency between AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and Joint Ventures (2011). The amendments clarify that, on a sale or contribution of assets to a joint venture or associate or on a loss of control when joint control or significant influence is retained in a transaction involving an associate or a joint venture, any gain or loss recognised will depend on whether the assets or subsidiary constitute a business, as defined in AASB 3 Business Combinations. Full gain or loss is recognised when the assets or subsidiary constitute a business, whereas gain or loss attributable to other investors’ interests is recognised when the assets or subsidiary do not constitute a business. The effective date is for annual reporting periods beginning on or after 1 January 2016. 26 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 1: Summary of Significant Accounting Policies (continued) When these amendments are first adopted for the year ending 31 December 2016, there will be no material impact on the financial statements. This Standard amends IFRS 9 to require application for annual periods beginning on or after 1 January 2015, rather than 1 January 2013. Early application of IFRS 9 is still permitted. IFRS 9 is also amended so that it does not require the restatement of comparative-period financial statements for the initial application of the classification and measurement requirements of IFRS 9, but instead requires modified disclosures on transition to IFRS 9. AASB 15 Revenue from Contracts with Customers AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations: • • • • establishes a new revenue recognition model changes the basis for deciding whether revenue is to be recognised over time or at a point in time provides new and more detailed guidance on specific topics (e.g. multiple element arrangements, variable pricing, rights of return, warranties and licensing) expands and improves disclosures about revenue The effective date is for annual reporting periods beginning on or after 1 January 2018. The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and bal- ances recognised in the financial statements when it is first adopted for the year ending 28 February 2018. AASB 16 Leases AASB 16: • • • • • replaces AASB 117 Leases and some lease-related Interpretations requires all leases to be accounted for “on-balance sheet” by lessees, other than short-term and low value asset leases provides new guidance on the application of the definition of lease and on sale and lease back accounting largely retains the existing lessor accounting requirements in AASB 117 requires new and different disclosures about leases The effective date is for annual reporting periods beginning on or after 1 January 2019. When this Standard is first adopted for the year ending 28 February 2019, there will be no material impact on the transactions and balances recognised in the financial statements. Note 2: Revenue Sales revenue Cost of sales Gross Profit Interest received Other revenue Other Income Consolidated Group February 2017 $ 155,555,500 (146,298,513) 9,256,987 1,250,140 1,438,072 2,688,212 February 2016 $ - - - 1,047,578 904,731 1,952,309 During the financial year, Jupiter Kalahari S.A. gave notice to exit the OM Tshipi (S) Pte Ltd joint venture, which previously marketed and sold all the ore produced from Tshipi, and accordingly appointed Jupiter as its permitted nominee to purchase its 49.9% share of the ore produced from Tshipi. Jupiter SA has been carrying out the sale and export of Jupiter’s share of Tshipi’s manganese ore. For the financial year to 28 February 2017, sales of $155,555,500 and cost of sales of $146,298,513 were recorded by Jupiter (February 2016: nil). For further details, please refer to the Review of Operations. JUPITER MINES LIMITED 2017 ANNUAL REPORT 27 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 3: Profit/(Loss) from Ordinary Activities Expenses Finance costs Rental expense on operating leases: Operating lease rental Depreciation of non-current assets: Leasehold improvements Plant and equipment Furniture and fittings Amortisation of non-current assets: Intangibles Total Depreciation and amortisation expense Superannuation expense Impairment: Exploration interests Investment in joint venture entities Financial assets Total Impairment (reversal)/expense Note 4: Income Tax Expense Consolidated Group February 2017 $ February 2016 $ 473,691 314,918 - - - 13,774 13,774 25,124 - (143,641,903) - (143,641,903) 15,771 1,113,574 8,651 2,643 780 16,460 28,534 21,229 4,778,484 143,641,903 751,500 149,171,887 The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective tax rate of Jupiter Mines at 30% (2016: 30%) and the reported tax expense in the profit or loss are as follows: Tax expense comprises: (a) Current tax Add: Deferred income tax relating to origination and reversal of temporary differences - Origination and reversal of timing differences - Utilisation of unused tax losses - Recognition of previously unrecognised deferred tax assets - Other non-deductible expenses - Share of loss in joint venture entities - Deferred taxes not recognised - Recoupment of prior-year tax losses not previously brought to account Tax Expense 28 JUPITER MINES LIMITED 2017 ANNUAL REPORT Consolidated Group February 2017 $ 2,569,420 February 2016 $ 4,609 350,534 5,421,204 (2,721,790) - - - - 5,619,368 4,609 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 4: Income Tax Expense (continued) (b) Accounting profit before tax Domestic tax rate for Jupiter Mines Limited at 30% (2016: 30%) Tax rate differential Other expenditure not allowed or allowable for income tax purposes Reversal of impairments Deferred Tax Asset losses not brought to account Recoupment of prior year tax losses not previously brought to account Deferred Tax Asset temporary differences not previously brought to account Deferred Tax Asset losses not previously brought to account Share of profit/(loss) in equity accounted investments Income tax expense Deferred taxes arising from temporary differences and unused tax losses can be summarised as follows: Deferred Tax Assets (Liabilities) Liabilities Property, plant and equipment Exploration Other Balance as at 28 February 2017 Assets Trade and other receivables Pension and other employee obligations Provisions Other Unused tax losses Balance as at 28 February 2017 Net Deferred Tax Liabilities Consolidated Group February 2017 $ 205,718,703 February 2016 $ (172,391,718) 61,715,611 (813,141) 267,539 (43,092,571) 1,876,450 (51,717,515) 148,874 242,134 10,805,259 (5,421,204) (4,507,905) 3,072,860 43,092,571 (373,446) (11,612,730) 5,619,368 - 1,931,973 4,609 Recognised in Profit and Loss During the Year Closing Balance February 2017 (64,201) (3,472,501) (1,275) (3,357,977) 93,397 5,692 12,600 2,896 373,446 488,030 (64,201) (3,472,501) (1,275) ( 3,357,977) 93,397 5,692 12,600 2,896 373,446 488,030 (3,049,947) ( 3,049,947) JUPITER MINES LIMITED 2017 ANNUAL REPORT 29 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 5: Interests of Key Management Personnel (a) Names and positions held of economic and parent entity key management personnel in office at any time during the financial year are: Key Management Person Position Mr B P Gilbertson Mr A Bell Mr P R Murray Mr P Thapliyal Mr S C Shin Mr S W Yoon Ms M North Chairman – non-executive Director – non-executive Director – non-executive Director – executive Director – non-executive Director – non-executive CFO & Company Secretary (b) The totals of remuneration paid to KMP of the Company and the Group during the year are as follows: Short-term employee benefits Post-employment benefits Consolidated Group February 2017 $ February 2016 $ 185,750 14,040 199,790 180,250 14,040 194,290 (c) Options and Rights Holdings Number of Options Held By Key Management Personnel There were no options held by Key Management Personnel for the year ended 28 February 2017 or 28 February 2016. (d) Shareholdings Number of Shares held by Key Management Personnel Key Management Personnel Balance 1 March 2016 Received as Remuneration Options Exercised Net Change Other Balance 28 February 2017 Mr P R Murray 1,260,000 Mr P Thapliyal1 24,858,963 Total 26,118,963 - - - - - - 15,000 1,275,000 - 24,858,963 15,000 26,133,963 1 Priyank Thapliyal is a Director of PSF and therefore has a relevant interest in PSF. PSF is the registered owner of 421,042,093 Ordinary Shares. Number of Shares held by Key Management Personnel Key Management Personnel Balance 1 March 2015 Received as Remuneration Options Exercised Net Change Other Balance 28 February 2016 Mr P R Murray 1,260,000 Mr P Thapliyal1 24,858,963 Total 26,118,963 - - - - - - - - - 1,260,000 24,858,963 26,118,963 1 Priyank Thapliyal is a Director of PSF and therefore has a relevant interest in PSF. PSF is the registered owner of 421,042,093 Ordinary Shares. 30 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 6: Auditors’ Remuneration Amounts paid or payable to the auditors of the Company and charged as an expense were: Consolidated Group February 2017 $ February 2016 $ 78,935 18,022 96,957 34,125 34,125 131,082 92,187 45,028 137,215 27,575 27,575 164,790 Audit and review of the financial statements - Auditors of Jupiter Mines Limited - Auditors of subsidiary or related entities Remuneration for audit and review of financial statements Other Non-Audit Services - Taxation and other services Total other service remuneration Total Auditors’ Remuneration Note 7: Dividends No dividends were declared or paid in the year. Note 8: Earnings per Share Reconciliation of earnings to net profit/(loss) for the year Net profit/(loss) 205,718,704 (172,396,327) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS and dilutive EPS Profit/(loss) per share No. No. 2,281,835,383 $0.0902 2,281,835,383 ($0.0756) Options are not included in the calculation, and could potentially dilute basic earnings per share in the future should they be exercised. There is no dilutive potential for ordinary shares as the exercise of options to ordinary shares would have the effect of decreasing the loss per ordinary share and would therefore be non-dilutive. Note 9: Current Assets – Cash Cash at bank and in hand Short-term bank deposits Restricted cash Consolidated Group February 2017 $ 68,981,719 99,060 15,628,481 84,709,260 February 2016 $ 668,435 36,701,083 - 37,369,518 The effective interest rate on short-term bank deposits was 0.14%; (February 2016: 2.79%) the term deposits range between 30 and 90 days. Restricted cash represents funds that were held in trust for payment of the equal access share buy-back proceeds to shareholders on 13 March 2017. JUPITER MINES LIMITED 2017 ANNUAL REPORT 31 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 10: Current Assets – Trade and other receivables CURRENT GST Receivables Trade Debtors Sundry Debtors Consolidated Group February 2017 $ February 2016 $ 10,620 - 9,945,418 9,956,038 48,769 50,539 140,355 239,663 - Allowance for impairment loss: The Group’s exposure to bad debts is not significant. - Fair value and credit risk: Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. - Foreign exchange risk: Details regarding the foreign exchange and interest rate risk exposure are disclosed in Note 29. - Sundry debtors related to amounts receivable from Tshipi é Ntle Manganese Mining Proprietary Limited for sale of manganese ore made on behalf of the Company. Refer to Note 28. Note 11: Current Assets – Assets Held for Sale Assets held for sale comprise: OM Tshipi (S) Pte Limited - Receivable on exit of joint venture Total Assets Held for Sale Consolidated Group February 2017 $ February 2016 $ 2,726,219 2,726,219 - - Note 12: Non-Current Assets – Financial Assets Available for sale financial assets comprise : Listed investments, at fair value - Shares and options in listed corporations 387,294 206,706 Available-for-sale financial assets consist of investments in ASX listed company’s ordinary shares, and therefore they have no fixed maturity date or coupon rate. The fair value of listed available-for-sale investments has been determined directly by reference to published price quotations in an active market. This resulted in a net gain on revaluation of $180,488 for the 2017 financial year, which was recognised in the Financial Assets Reserve. In the comparative 2016 financial year there was a net loss of $751,500, which was expensed in the profit or loss. 32 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 13: Controlled Entities Controlled entities consolidated Notes Country of Incorporation Percentage Owned (%)* 2017 2016 Parent Entity: - Jupiter Mines Limited Subsidiaries of Jupiter Mines Limited: - Future Resources Australia Limited - Central Yilgarn Pty Limited - Broadgold Pty Limited - Jupiter Kalahari S.A. - Jupiter Mines Limited (Incorporated in Australia) External Profit Company *Percentage of voting power is in proportion to ownership Principal Activities: Australia Australia Australia Australia (a) (b) Luxembourg South Africa 100 100 100 100 100 100 100 100 100 - (a) During the period all Controlled Entities with the exception of Jupiter Kalahari S.A were dormant. (b)During the period, the Company was registered as a South African branch company for the purposes of its manganese ore marketing activities. Note 14: Non-Current Assets – Property, plant and equipment PLANT AND EQUIPMENT Leasehold Improvements At cost Accumulated depreciation Plant and equipment At cost Accumulated depreciation Disposals Furniture and fittings At cost Accumulated depreciation Net carrying value Consolidated Group February 2017 $ February 2016 $ 110,923 (110,923) - 3,940,671 (3,567,113) (46,543) 327,015 195,740 (195,740) - 327,015 110,923 (110,923) - 3,940,671 (3,213,888) - 726,783 195,740 (195,740) - 726,782 JUPITER MINES LIMITED 2017 ANNUAL REPORT 33 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 14: Non-Current Assets – Property, plant and equipment (continued) Movements in Carrying Amounts Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current financial period: Consolidated Group: Balance at 1 March 2015 Additions Disposals Depreciation expense Balance at 28 February 2016 Additions Disposals Depreciation expense Balance at 28 February 2017 Leasehold Improvements $ 8,648 - - (8,648) - - - - - Plant and Equipment $ 1,094,076 - - (367,294) 726,782 - (46,543) (353,224) 327,015 Furniture and Fittings $ 779 - - (779) - - - - - Total $ 1,103,504 - - (376,721) 726,782 - (46,543) (353,224) 327,015 Note 15: Non-Current Assets – Intangible Assets Consolidated Group February 2017 $ February 2016 $ Computer Software At cost Accumulated amortisation Net carrying value Movements in carrying amounts Balance at 1 March 2015 Additions Amortisation expense Balance at 28 February 2016 Additions Amortisation expense Balance at 28 February 2017 338,112 (330,783) 7,329 326,506 (317,010) 9,496 Total $ 12,356 13,600 (16,460) 9,496 11,606 (13,773) 7,329 Intangible assets have finite useful lives. The current amortisation charges for intangible assets are included under depreciation and amortisation expense per the statement of comprehensive income. All software is amortised over 3 years. 34 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 16: Other Assets CURRENT Deposits Loans NON-CURRENT Loans Consolidated Group February 2017 $ February 2016 $ 429,396 26,278,632 26,708,028 933,429 - 933,429 - 44,199,366 Loan notes: These loans have no fixed repayment date. The interest-bearing loan was fully repaid during the year. The remaining loans are interest free. $11,563,477 of the foreign exchange gain (February 2016: $15,810,622 loss) shown in the Statement of Consolidated Profit of Loss and Other Comprehensive Income relates to the movement in exchange rates of the South African Rand against the Australian Dollar. The loans are held in South African Rand. – Related party receivables: For terms and conditions of related party receivables refer to Note 28. – Fair value: Details’ regarding fair value is disclosed in Note 29. – Foreign exchange and interest rate risk: Details’ regarding foreign exchange and interest rate risk exposure is disclosed in Note 29. – Credit risk: The maximum exposure to credit risk at the reporting date is the higher of the carrying value of each class of receivable. No collateral is held as security. Refer to Note 29. Note 17: Non-current assets – Exploration and evaluation assets Opening Balance Additions Impairment Closing Balance Costs carried forward in respect of the following areas of interest: – Mount Mason – Mount Ida Consolidated Group February 2017 $ 10,384,000 1,248,006 - 11,632,006 296,830 1 1 ,3 35,1 76 11,632,006 February 2016 $ 13,600,000 1,952,484 (5,168,484) 10,384,000 200,000 10,184,000 10,384,000 At 28 February 2017, the future recoverability of capitalised exploration and evaluation expenditure was assessed and the Board received an independent external valuation of the Mount Ida Magnetite and Mount Mason DSO Hematite projects, which provided a value of $12,000,000 and $600,000 respectively. The valuation was based on a resource multiple based on market capitals of listed peers with similar assets. However due to the decline of the iron ore price since the year-end date, the Board decided not to reverse any previously recognised impairments. Capitalised costs amounting to $873,670 (February 2016: $1,160,428) have been included in cash flows from investing activities in the statement of cash flows. JUPITER MINES LIMITED 2017 ANNUAL REPORT 35 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 17: Non-current assets – Exploration and evaluation assets (continued) Fair Value of Exploration and Evaluation Assets Non-financial instruments measured at fair value in the statement of financial position are grouped into three (3) levels of a fair value hierarchy. The three (3) levels are defined based on the observability of significant inputs to the measurement, 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 or indirectly; • Level 3: unobservable inputs for the asset or liability The following table shows the Levels within the hierarchy of non-financial assets measured at fair value on a recurring basis at 28 February 2017: 28 February 2017 Exploration and evaluation • Mount Mason • Mount Ida Level 1 $ Level 2 $ Level 3 $ Total $ - - - 296,830 11,335,176 11,632,006 - - - 296,830 11,335,176 11,632,006 The fair value of the Group’s exploration and evaluation assets above is estimated based on a market based assessment performed by an independent, professionally-qualified valuer. The significant inputs and assumptions are developed in close consultation with management. The valuation processes and fair value changes are reviewed by the Board of Directors and Audit Committee at each reporting date. The valuation was carried out using a market based assessment that incorporates a review of comparable iron ore companies and projects in Australia, which includes listed DSO and Magnetite projects. Note 18: Investments Using the Equity Method Set out below are the Joint Ventures of the Group as at 28 February 2017, in which in the opinion of the Directors, are material to the Group. The entities listed below have share capital consisting solely of ordinary shares, which are held directly by the Group. The country of incorporation or registration is also their principal place of business, and the proportion of the Group’s ownership interest is the same as the proportion of voting rights held. These entities are held through a fully controlled entity, Jupiter Kalahari S.A. Name of Entity Tshipi é Ntle Manganese Mining Proprietary Limited Ownership interest held by the Group 2017 2016 Country of Incorporation Nature of Relationship Measurement Method South Africa 49.9% 49.9% Joint Venture Joint Venture OM Tshipi (S) Pte Ltd* Singapore 33.3% 33.3% Joint Venture Joint Venture * See Note 11. Jupiter gave notice to exit the OM Tshipi (S) Pte Ltd joint venture on 1 March 2016. The exit was completed on 11 April 2017. 36 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 18: Investments Using the Equity Method (continued) Summarised Financial Information Tshipi é Ntle Manganese Mining Proprietary Limited Opening carrying value of joint venture Decrease of shareholder loan Share of profit/(loss) using the equity method Impairment of carrying value of investment Reversal of impairment of carrying value of investment OM Tshipi (S) Pte Ltd Opening carrying value of joint venture Share of profit using the equity method Receivable on exit of joint venture transferred to Assets Held for Sale (Note 11) Total investments using the equity method February 2017 $ February 2016 $ 178,818,142 (18,377,523) 41,474,035 - 143,641,903 345,556,557 2,726,219 - (2,726,219) - 345,556,557 337,542,541 (7,638,810) (7,443,686) (143,641,903) - 178,818,142 2,218,689 507,529 - 2,726,219 181,544,361 In accordance with the Group’s accounting policies and processes, the Group performs its impairment testing annually at 28 February. Non-financial assets are reviewed at each reporting period to determine whether there is an indication of impairment. When indicators of impairment exist, a formal estimate of the recoverable amount is made. For the year-end, the Group commissioned an independent valuation of its 49.9% share of its investment in Tshipi é Ntle Manganese Mining Proprietary Limited (“Tshipi’). The valuation, which also included a Competent Persons Report, recommended a preferred valuation of the Tshipi Borwa asset to be $889,156,478. The Board therefore resolved to reverse the investment in Tshipi of $143,643,903 that was recorded in the 2016 financial year. Under the equity method accounting standards however, an investment of this type is unable to be recognised at a fair value higher than previously recognised. Therefore the carrying value of the Tshipi investment at year end is $345,556,557, taking into account the reversal of the previous impairment, movement of shareholder loans, and accumulated share of profit. Further details relating to the valuation and reversal of the impairment are as follows: a) Methodology Impairment is recognised when the carrying amount exceeds the recoverable amount. The recoverable amount being the value in use of the cash-generating unit (“CGU”) has been estimated using the discounted cash flows method based on the Group’s recoverable minerals. Value in use is estimated based on discounted cash flows using market based commodity price, estimated quantities of recoverable minerals, production levels, operating costs and capital requirements. When Life of Mine (LOM) plans fully utilise the existing mineral resource and the Group have demonstrated an ability to replenish resources, an estimated replenishment rate has been applied to unmined resources. The estimates in the value in use calculation are considered to be level 3 measurements as they are derived from valuation techniques that include inputs that are not based on observable market data. The Group considers the inputs and the valuation approach to be consistent with the approach taken by similar market participants. Estimates of quantities of recoverable minerals, production levels, operating costs and capital requirements are sourced from the Group planning and budgeting process, capacity levels and mining plans for the following year. The 2018 budget and mine plan were developed in the context of the current manganese price environment. JUPITER MINES LIMITED 2017 ANNUAL REPORT 37 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 18: Investments Using the Equity Method (continued) Significant judgements and assumptions are made by the Group to determine value in use. This includes assessing variable key assumptions such as manganese market prices, cost structures, production utilisation and capacity, available minerals and discount rates. Any change in these variable assumptions can cause adverse changes in one or more of the assumptions used to estimate value in use. Further to the above, and the recovery of the manganese price market, the Board have resolved to reverse the 2016 impairment in Tshipi of $143,643,903. b) Key Assumptions Commodity prices The Tshipi Borwa valuation is particularly sensitive to the manganese price. The independent valuation used information from a range of sources to forecast the manganese price. The manganese price assumptions used were within a range of US$2.60 per dry metric tonne unit (“dmtu”) to US$5.00 per dmtu over the life of mine. Discount rate The future cash flows of the CGU are discounted by the estimated real after tax weighted average cost of capital (WACC), pursuant to the Capital Asset Pricing Model. This has been estimated based on the Tshipi WACC rate as the Tshipi mining operation is the Group’s primary asset. Production activity and operating and capital costs Life of mine production activity and operating and capital cost assumptions are based on the Group’s latest budget, including the five year budget and separately estimated LOM plan. Discounted cash flows include expected cost improvements and sustaining capital requirements. Estimated production is assumed consistent with the capacity of the Tshipi mine taken into account while assuming a constant recovery rate. Resources and reserves Resource and Reserve tonnes were based on JORC 2012. Note 19: Current liabilities – Trade and other payables CURRENT Unsecured liabilities Trade payables Sundry payables and accrued expenses Consolidated Group February 2017 $ February 2016 $ 133,949 3,383,058 3,517,007 8,287 418,159 426,446 Fair Value: Due to the short term nature of these payables, their carrying value is assumed to approximate to their fair value. 38 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 20: Current and non-current provisions SHORT-TERM PROVISIONS Short-term employee benefits Note 21: Issued capital Paid up capital: 2,281,835,383 (2016: 2,281,835,383) fully paid ordinary shares (a) Ordinary shares At the beginning of the reporting period At reporting date Consolidated Group February 2017 $ February 2016 $ 18,972 42,879 21(a) 526,639,293 526,639,293 526,639,293 526,639,293 526,639,293 526,639,293 Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. The ordinary shares have no par value. At the beginning of the reporting period At reporting date (b) Capital Management Consolidated Group February 2017 Number of Shares 2,281,835,383 2,281,835,383 February 2016 Number of Shares 2,281,835,383 2,281,835,383 Management controls the capital of the Group in order to maintain an appropriate debt to equity ratio, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern. The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year. JUPITER MINES LIMITED 2017 ANNUAL REPORT 39 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 22: Reserves Financial assets reserve Consolidated Group February 2017 $ 180,488 February 2016 $ - The financial assets reserve records amounts relating to the revaluation of available for sale financial assets. See also Note 12. Note 23: Capital and Leasing Commitments Operating Lease Commitments Non-cancellable operating leases contracted for but not capitalised in the financial statements Payable – minimum lease payments - Not later than 12 months - Between 12 months and 5 years NOTE: (a) This is made up of: Consolidated Group February 2017 $ February 2016 $ 51,790 13,039 64,829 296,862 64,828 361,691 1. Non-cancellable lease of 2 years however it can be subleased (with prior consent of Lessor). Amounts include rent, outgoings and cleaning with 4.5% annual rent review increase. It does not take into account reduced guarantees or returned deposits or incentives. Figures based on 12 months (1-Mar-17 to 28-Feb-18) and between 12 months and 5 years (1-Mar-18 to 31 May-18) which is the end of the lease. The expense recognised for the operating lease was $314,918 (2016: nil). (b) The property lease is non-cancellable for two years, with rent payable monthly in advance. Expenditure Commitments In order to maintain current rights of tenure to mining tenements, the Company and Group are required to perform minimum work to meet the requirements specified by various State governments. These obligations can be reduced by selective relinquishment of exploration tenure or application for expenditure exemptions. Due to the nature of the Company and Group’s operations in exploring and evaluating areas of interest, it is very difficult to forecast the nature and amount of future expenditure. It is anticipated that expenditure commitments for the next twelve months will be tenement rentals of $473,760 (2016: $478,933) and exploration expenditure of $676,100 (2016: $676,100). Note 24: Contingent Liabilities Contingent Liabilities The parent entity has provided guarantees to third parties in relation to the performance and obligations of controlled entities in respect of banking facilities. At reporting date, the value of these guarantees and facilities are $57,884 (2016: $629,041). Total utilised at reporting date was $57,884 (2016: $629,041). Contingent Assets No contingent assets exist as at 28 February 2017 or 28 February 2016. 40 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 25: Segment Reporting The Group operates in the mining industry. The Group has identified its operating segments based on the internal reports that are reviewed and used by the chief operating decision makers (the Board of Directors and key management) in assessing performance and determining the allocation of resources. The Group segments are structured primarily on the basis of its exploration and production interests. These are considered to be the Central Yilgarn Iron Exploration Project (Iron Ore), which is located in Australia, the producing Tshipi Project (Manganese) which is located in South Africa, and Jupiter’s South African branch which carries the sale of Jupiter’s share of manganese ore. Information is not readily available for allocating the remaining items of revenue, expenses, assets and liabilities, or these items are not considered part of the core operations of any segment. Any transactions between reportable segments have been offset for these purposes. (i) Segment Performance 28 February 2017 CYIP – Iron Ore (Australia) Sales Cost of sales Marketing fee income Employee benefits Travel and entertaining costs Legal and professional costs Finance costs Unrealised foreign exchange loss Reversal of impairment of exploration interests Share of profit from joint venture entities using the equity method Total Corporate and Unallocated Net profit before tax from continuing operations 28 February 2016 Jupiter Mines Tshipi – Manganese - Manganese (South Africa) (South Africa) $ $ 155,555,500 (146,298,513) 1,245,317 (266,209) (63,765) (83,950) (452,912) (448,122) - - - - - - - - Total 155,555,500 (146,298,513) 1,245,317 (266,209) (63,765) (83,950) (452,912) (448,122) - - 143,641,903 143,641,903 41,474,035 41,474,035 9,187,345 185,115,938 194,303,283 $ - - - - - - - - - - - CYIP – Iron Ore (Australia) $ Jupiter Mines Tshipi – Manganese - Manganese (South Africa) (South Africa) $ $ 11,415,420 205,718,703 Total Impairment of exploration interests (4,778,484) Share of loss from joint venture entities using the equity method Total Corporate and Unallocated Net loss before tax from continuing operations - (4,778,484) - - - (143,641,903) (148,420,387) (6,936,157) (6,936,157) (150,578,060) (155,356,544) (17,035,134) (172,391,678) JUPITER MINES LIMITED 2017 ANNUAL REPORT 41 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 25: Segment Reporting (continued) (ii) Segment assets and liabilities 28 February 2017 Trade and other receivables CYIP – Iron Ore (Australia) $ - Property, plant and equipment 327,019 Other current assets Investments using the equity method - - Exploration and evaluation assets 11,632,006 Jupiter Mines Tshipi – Manganese - Manganese (South Africa) (South Africa) $ $ Total 9,876,666 - - - 9,876,666 327,019 26,278,632 26,278,632 345,556,557 345,556,557 - - 11,632,006 (3,253,864) Trade and other payables - (3,253,864) Total 11,959,025 6,622,802 371,835,189 390,417,016 Corporate and Unallocated Assets Total Assets Corporate and Unallocated Liabilities Total Liabilities 28 February 2016 CYIP – Iron Ore (Australia) $ Jupiter Mines Tshipi – Manganese - Manganese (South Africa) (South Africa) $ $ 88,826,896 482,497,776 (3,820,092) (7,073,955) Total Property, plant and equipment 726,782 Other non-current assets Investments using the equity method Exploration and evaluation assets Total Corporate and Unallocated Assets Total Assets Corporate and Unallocated Liabilities Total liabilities - - 10,384,000 11,110,782 - - - - - - 44,199,366 181,544,361 726,782 44,199,366 181,544,361 - 10,384,000 255,743,727 236,854,509 38,758,812 275,613,321 469,325 469,325 42 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 25: Segment Reporting (continued) (iii) Segment Cash Flows 28 February 2017 Net cash provided by/(used in) operating activities Net cash provided by/(used in) investing activities Net cash provided by/(used in) financing activities CYIP – Iron Ore (Australia) $ - (845,731) - Net increase/(decrease) in cash held (845,731) Corporate and Unallocated Cash and cash equivalents at beginning of financial period Effects of exchange rates on cash holdings in foreign currencies Cash and cash equivalents at end of financial period 28 February 2016 Net cash provided by/(used in) operating activities Net cash provided by/(used in) investing activities Net cash provided by/(used in) financing activities - (784,027) - Net increase/(decrease) in cash held (784,027) Corporate and Unallocated Cash and cash equivalents at beginning of financial period Effects of exchange rates on cash holdings in foreign currencies Cash and cash equivalents at end of financial period Jupiter Mines Tshipi – Manganese - Manganese (South Africa) (South Africa) $ $ Total - - - - - - - - - - - (845,731) 48,452,249 48,452,249 48,452,249 47,606,518 (266,776) 37,369,518 - 84,709,260 - (784,027) - (784,027) (619,608) 38,773,153 - 37,369,518 - - - - JUPITER MINES LIMITED 2017 ANNUAL REPORT 43 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 26: Cash Flow Information (a) Reconciliation of Cash Flow from Operations to Profit/(Loss) after Income Tax Profit/(loss) after income tax 200,099,335 (172,396,327) Consolidated Group February 2017 $ February 2016 $ Non-cash flows included in profit/(loss) after tax: Depreciation and amortisation Impairment of exploration interests (Reversal of impairment)/impairment of investment in joint venture entities Impairment of available-for-sale financial assets Interest accrued and not yet paid Unrealised foreign exchange (gain)/loss Share of (profit)/loss from joint venture entities using equity method Loss on sale of motor vehicles Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries: (Increase)/decrease in other debtors - note (c) Increase/(decrease) in trade payables and other creditors Increase/(decrease) in provisions Cash outflows from operations (b) Credit Standby Arrangements with Banks Credit facility Unused credit facility 13,774 - 28,534 4,778,484 (143,641,903) 143,641,903 - (587,961) (11,585,162) (41,474,035) 6,998 (9,872,723) 6,798,808 (23,907) (266,776) - - 751,500 (472,050) 15,816,316 6,936,157 - 96,781 191,809 7,285 (619,608) - - (c) During the financial year, Jupiter has registered a branch in South Africa. This branch has undertaken the sale of Jupiter's share of Tshipi manganese ore. Due to the limited administrative operations of Jupiter South Africa, Tshipi and Jupiter arranged that Tshipi would carry out certain functions to facilitate sales by the branch to 3rd parties, resultant in the trade receivable that has been reported at $9,876,666. This amount represents the net amount of the Branch's sales of manganese ($155,555,500) less cost of purchases and administrative costs ($145,678,834). Note 27: Events After the Reporting Date These financial statements were authorised for issue on 26 June 2017 by Director Brian Gilbertson. Jupiter undertook an equal access share buy-back, offering to buy-back 6% of issued capital. The offer period closed on 7 March 2017. Subsequently on 13 March 2017, 134,190,158 shares were cancelled, and $70,635,693.20 proceeds were paid to shareholders. On 14 March 2017, the Company announced the appointment of Bank of America Merrill Lynch to investigate strategic options to realise shareholder value from the Tshipi manganese mine. The exit of the OM Tshipi (S) Pte Ltd joint venture was completed on 11 April 2017 and proceeds of US$2,300,000 have been received in Jupiter Kalahari S.A. 44 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 28: Related Party Transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Transactions with related parties: (a) Key Management Personnel Consulting fees paid to Andrew Bell Consultants, a company in which Mr A Bell has a beneficial interest. Consulting fees paid to Mr P Murray Expenses reimbursed to Pallinghurst Advisors LLP, a company in which Mr B Gilbertson has a beneficial interest. Expenses reimbursed to Mr P Thapliyal. (b) Group companies Loans receivable from Tshipi é Ntle Manganese Mining Proprietary Limited Trade amounts receivable from Tshipi é Ntle Manganese Mining Proprietary Limited Consolidated Group February 2017 $ February 2016 $ 35,750 33,000 31,142 132,895 30,250 33,000 71,526 168,357 26,278,632 44,199,366 9,876,666 - Note 29: Financial Instruments The Group’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: Financial Assets Cash and cash equivalents Trade and other receivables Available-for-sale financial assets Other current assets Other non-current assets Financial Liabilities Trade and other payables Consolidated Group February 2017 $ February 2016 $ 84,709,260 9,956,038 387,294 26,278,632 - 121,331,224 3,517,007 3,517,007 37,369,518 239,663 206,706 - 44,199,366 82,015,253 426,446 426,446 Financial Risk Management Policies The Directors monitor the Group’s financial risk management policies and exposures and approves financial transactions. The Directors’ overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising potential adverse effects on financial performance. Its functions include the review of credit risk policies and future cash flow requirements. JUPITER MINES LIMITED 2017 ANNUAL REPORT 45 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 29: Financial Instruments (continued) Specific Financial Risk Exposures and Management The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk consisting of interest rate risk, liquidity risk and equity price risk. (a) Credit Risk Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group. Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring of the financial stability of significant customers and counterparties), ensuring to the extent possible, that customers and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment. Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or in entities that the Directors have otherwise cleared as being financially sound. Credit Risk Exposures The maximum exposure to credit risk by class of recognised financial assets at reporting date, excluding the value of any collateral or other security held, is equivalent to the carrying value and classification of those financial assets (net of any provisions) as presented in the statement of financial position. Credit risk also arises through the provision of financial guarantees, as approved at Board level, given to parties securing the liabilities of certain subsidiaries (refer Note 24 for details). Trade and other receivables that are neither past due or impaired are considered to be of high credit quality. Aggregates of such amounts are as detailed in Note 10. There are no amounts of collateral held as security in respect of trade and other receivables. The Group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the Consolidated Group. Credit risk related to balances with banks and other financial institutions is managed by investing cash with major financial institutions in both cash on deposit and term deposit accounts. Interest rates on major deposits that are re-invested are at a fixed rate on a monthly basis. (b) Liquidity risk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms: – preparing forward looking cash flow analysis in relation to its operational, investing and financing activities; – monitoring undrawn credit facilities; – obtaining funding from a variety of sources; – maintaining a reputable credit profile; – managing credit risk related to financial assets; – only investing surplus cash with major financial institutions; and comparing the maturity profile of financial liabilities with the realisation profile of financial assets. The Group has no significant exposure to liquidity risk due to the level of cash and cash equivalents detailed at Note 9. The Group manages liquidity risk by monitoring immediate and forecast cash requirements and ensuring adequate cash reserves are maintained. The tables below reflect an undiscounted contractual maturity analysis for financial liabilities. Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates. 46 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 29: Financial Instruments (continued) Within 1 Year 1 to 5 Years Over 5 Years Total 2017 $ 2016 $ 2017 $ 2016 $ 2017 $ 2016 $ 2017 $ 2016 $ Consolidated Group Financial liabilities due for payment Trade and other payables Total expected outflows Financial assets – cash flows realisable 3,517,007 426,446 3,517,007 426,446 Cash and cash equivalents Trade and other receivables Assets held or available for sale 84,709,260 37,369,518 9,956,038 239,663 387,294 206,706 Other current assets 26,278,632 - - - Other non-current assets Total anticipated inflows Net (outflow)/ inflow on financial instruments (c) Market Risk 121,331,224 37,815,887 - 44,199,366 117,814,217 37,389,441 - 44,199,366 - - - - - - - - - - - - 44,199,366 - - - - - - - - - - 3,517,007 426,446 - 3,517,007 426,446 -84,709,260 37,369,518 - 9,956,038 239,663 - 387,294 206,706 - 26,278,632 - - - 44,199,366 - 121,331,224 82,015,253 - 117,814,217 81,588,807 Market risk arises from the Groups use of interest bearing and foreign currency financial instruments. It is the risk that the fair value of future cash flows of a of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange (currency risk) or other market factors (other price risk). (i) Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The financial assets and financial liabilities with exposure to interest rate risk are detailed below: Financial Assets Cash and cash equivalents Other current assets Other non-current assets Financial Liabilities Short term borrowings Long term borrowings Consolidated Group February 2017 $ February 2016 $ 84,709,260 26,278,632 - 110,987,891 - - 37,369,518 - 44,199,366 81,568,884 - - The Group is also exposed to earnings volatility on floating rate instruments. JUPITER MINES LIMITED 2017 ANNUAL REPORT 47 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 29: Financial Instruments (continued) (ii) Foreign exchange risk Jupiter operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Australian Dollar and South African Rand. Jupiter’s exposure to currency risk is on cash, trade receivables, and borrowings. Foreign currency risk is the risk of exposure to transactions that are denominated in a currency other than the Australian dollar. The carrying amounts of the Group’s financial assets and liabilities are denominated in two different currencies as set out below: AUD 20,758,232 ZAR 2,389 - 26,278,632 EUR 27,591 - USD Total $ 63,921,048 84,709,260 - 26,278,632 28 February 2017 Financial Assets Other Current Assets (iii) Other price risk Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices largely due to demand and supply factors for commodities. As the Group does not derive revenue from sale of products, the effect on profit and equity as a result of changes in the price risk is not considered material. The fair value of the mining projects will be impacted by commodity price changes (predominantly iron ore, nickel and uranium) and could impact future revenues once operational. However, management monitors current and projected commodity prices. (iv) Summarised sensitivity analysis The following table summarises the sensitivity of the Jupiter Group’s financial assets and financial liabilities to interest rate risk and foreign exchange risk. Management have reviewed interest rate and foreign exchange risk and determined the rates applied to be appropriate. Interest Rate Risk Foreign Exchange Risk 28 February 2017 Carrying Amount $ Profit $ Other Equity$ Profit $ Other Equity $ -50 bps +50 bps -10% Profit $ Other Equity $ +10% Profit $ Other Equity $ Financial Assets Cash and cash equivalents Cash and cash equivalents 84,709,260 (42,355) 42,355 Receivables 9,956,038 Available-for-sale financial assets 387,294 - - Other current assets Financial Liabilities Trade and other payables Total increase/ (decrease) 26,278,632 (13,139) 3,517,007 - (55,494) - - - - - - - 13,139 - 55,494 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 48 JUPITER MINES LIMITED 2017 ANNUAL REPORT Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 29: Financial Instruments (continued) (v) Fixed Interest Rate Maturing WAEIR Floating Interest Rate Within Year 1 to 5 Years Over 5 Years Non-Interest Bearing Total 2017 2016 % % 2017 $ 2016 $ 2017 $ 2016 $ 2017 $ 2016 $ 2017 $ 2016 $ 2017 $ 2016 $ 2017 $ 2016 $ Financial Assets: Cash and Deposits Receivables Other Financial Assets Other Current Assets Other Non- Current Assets Total Financial Assets Financial Liabilities: Trade and sundry payables Total Financial Liabilities 0.14 2.79 84,610,200 668,435 99,060 36,701,083 - - - - - - - - - - - - - - - - - - - - - - - - - - 84,610,200 668,435 99,060 36,701,083 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 84,709,260 37,369,518 - 9,956,038 239,663 9,956,038 239,663 - 387,294 206,706 387,294 206,706 -26,278,632 - 26,278,632 - - - 44,199,366 - 44,199,366 -36,621,964 44,645,735 121,331,224 82,015,253 - 3,517,007 426,446 3,517,007 426,446 - 3,517,007 426,446 3,517,007 426,446 WAEIR = Weighted Average Effective Interest Rate (d) Net Fair Value The net fair values of cash and cash equivalents and non-interest bearing monetary financial assets and liabilities approximates their carrying value. The net fair value of financial assets and financial liabilities is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles. Listed equity investments have been valued by reference to market prices prevailing at reporting date. Financial Assets Cash at bank (i) Trade and other receivables (i) Assets available for sale (ii) Other current assets Other non-current assets Financial Liabilities February 2017 February 2016 Carrying Amount $ Net Fair Value $ Carrying Amount $ Net Fair Value $ 84,709,260 84,709,260 37,369,518 37,369,518 9,956,038 9,956,038 387,294 387,294 26,278,632 26,278,632 - - 121,331,224 121,331,224 239,663 206,706 - 44,199,366 82,015,253 239,663 206,706 - 44,199,366 82,015,253 Trade and other payables (i) 3,517,007 3,517,007 426,446 426,446 The fair values in the above table have been determined based on the following methodology: (i) Cash and cash equivalents, trade and other receivables and trade and other payables are short-term investments in nature whose carrying value is equivalent to fair value. Trade and other payables exclude amounts provided for annual leave which is not considered a financial instrument. JUPITER MINES LIMITED 2017 ANNUAL REPORT 49 Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 29: Financial Instruments (continued) (ii) For listed available-for-sale financial assets, closing quoted bid prices at the end of the reporting period are used. Unlisted available-for-sale financial assets are recorded at cost. Financial Instruments Measured at Fair Value The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following levels: – quoted prices in active markets for identical assets or liabilities (Level 1); – 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) (Level 2); and – inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). Group – as at 28 February 2017 Financial Assets Assets available for sale Exploration and evaluation assets Level 1 $ Level 2 $ Level 3 $ Total $ 387,294 - - 11,632,006 - - 387,294 11,632,006 Included in Level 1 of the hierarchy are listed investments. The fair values of these financial assets have been based on the closing quoted bid prices at reporting date, excluding transaction costs. Note 30: Parent Company Information ASSETS Current Assets Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed Equity Reserves Accumulated Losses TOTAL EQUITY FINANCIAL PERFORMANCE Profit/(loss) for the period Other comprehensive gain/(loss) TOTAL COMPREHENSIVE PROFIT/(LOSS) 50 JUPITER MINES LIMITED 2017 ANNUAL REPORT Consolidated Group February 2017 $ February 2016 $ 84,794,394 267,879,275 352,673,650 240,095 3,537,977 3,778,072 348,895,578 526,639,293 180,488 (177,924,203) 348,895,578 159,441,232 180,488 159,621,720 38,145,690 237,467,631 275,613,321 449,965 - 449,965 237,017,666 526,639,293 - (289,621,627) 237,017,666 (196,416,739) (751,500) (197,168,239) Notes to the Consolidated Financial Statements FOR THE YEAR ENDED 28 FEBRUARY 2017 Note 30: Parent Company Information (continued) Contractual Commitments As at 28 February 2017 the parent company had exploration contractual commitments of $696,100. The Company also had operating lease commitments of $64,828. Refer to Note 23. Contingent Liability Refer to Note 24. Note 31: Company Details The registered office and principal place of business of Jupiter is: Jupiter Mines Limited Level 10 16 St Georges Terrace Perth WA 6000 JUPITER MINES LIMITED 2017 ANNUAL REPORT 51 Directors’ Declaration The Directors of Jupiter Mines Limited declare that: 1. the financial statements, notes and the additional disclosures included in the Directors Report designated as audited, of the consolidated entity are in accordance with the Corporations Act 2001 including: (a) complying with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) give a true and fair view of the financial position as at 28 February 2017 and of the performance for the year ended on that date of the company and consolidated entity; 2. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1. 3. There are reasonable grounds to believe that Jupiter Mines Limited will be able to pay its debts as and when they become due and payable. 4. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 28 February 2017. Signed on behalf of the Board of Directors Brian Gilbertson Perth 26 June 2017 52 JUPITER MINES LIMITED 2017 ANNUAL REPORT 53 54