(ACN 100 714 181)
Annual Report
For the year ended 30 June 2016
Page
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Contents
Corporate Directory
Directors’ Report
Auditor’s Independence Report
Directors Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Independent Audit Report
ASX Additional Information
Corporate Governance Statement
Page 2
Corporate Directory
ACN: 100 714 181
ASX Code: KRC
King River Copper shares are listed on the Australian Stock Exchange (ASX)
DIRECTORS
Anthony Barton
(Chairman)
Leonid Charuckyj
(Director)
Greg MacMillan
(Director)
COMPANY SECRETARY
Greg MacMillan
REGISTERED OFFICE
254 Adelaide Tce
Perth WA 6000
Tel:
Fax:
Email: info@kingrivercopper.com.au
(08) 9221 8055
(08) 9325 8088
SOLICITORS
Fairweather Corporate Lawyers
595 Stirling Highway
Cottesloe WA 6011
BANKERS
ANZ Banking Corporation
8 St Georges Tce
Perth WA 6000
SHARE REGISTER
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
AUDITORS
Ernst and Young
11 Mounts Bay Road
Perth WA 6000
INTERNET ADDRESS
www.kingrivercopper.com.au
Page 3
Directors Report
The directors submit their report for King River Copper Limited (“King River” or “the Company”) and its controlled entities for
the year ended 30 June 2016.
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the date of this report are as
follows. The directors were in office for the entire period unless otherwise stated. No director has served as a director of any
other ASX Listed Companies in the past 3 years unless mentioned below.
Anthony Barton
Chairman
Appointed 21st May 2007
Mr Barton has been involved in founding and growing a number of successful listed public companies. He has extensive
experience in capital markets, corporate finance, funds management and venture capital and has had advisory roles in the
incorporation and listing of many Australian based resource companies.
Mr Barton is the founding Executive Chairman of the boutique investment bank Australian Heritage Group. He is a graduate of
the Royal Melbourne Institute of Technology with a Bachelor of Business (Accountancy) degree and has 34 years of commercial
experience having also acted in senior executive and director capacities for two leading Australian stockbroking firms.
Mr Barton is also a non-executive Chairman of Spectrum Resources Limited.
Leonid Charuckyj
Director
Appointed 13th December 2011
Mr. Charuckyj (B.E. and M.Eng-Sc. Melbourne University) has had extensive experience over a broad range of technical,
engineering, management and corporate roles including senior positions in government, public and private industry both in
Australia and overseas. Focus has been on the environmental, pollution control and waste management industries and on the
energy and mining industries amongst others.
This has included such diverse roles as representing Australia as an expert engineering advisor in the Middle East, developing
and commercialising new technologies (both in the public company arena and for major international groups), and managing
all aspects of an industrial minerals development from mine and processing to product development and marketing. Mr
Charuckyj is also a non-executive director of Spectrum Resources Limited.
Gregory MacMillan
Director - Appointed 2nd July 2014
Company Secretary - Appointed 9th August 2012
Greg MacMillan has wide ranging corporate, financial, capital markets and commercial experience over the last 30 years. Greg
has held the positions of director, company secretary, chief financial officer, and corporate finance executive in numerous
companies across the finance, mining and commercial sectors. Greg holds a Bachelor of Business degree, is a Certified Practicing
Accountant and a Chartered Company Secretary.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
King River has established a portfolio of 100% owned tenements covering approximately 769 square kilometres in the East
Kimberley region in Western Australia (“Tenements”). The principal activities of the entities within the Group during the year
were focusing on exploration and development of the Tenements in the East Kimberley region of Western Australia.
OPERATIONS REPORT
Details of the company operations during the year are contained in the Quarterly Operations Reports and Exploration
Update Reports lodged with the ASX. The most recent operations details are included in the Exploration Update lodged with
the ASX on 4 August 2016.
The Company has built a very comprehensive dataset comprising airborne magnetics, ground based gravity, V-TEM, SAM and
IP surveys, surface sampling (soils and rock chips), and some limited drilling. The company has continued exploration on its
tenements during the year with focus on Gold-Silver-Copper exploration including drilling programmes. The focus of the 2016
exploration will be on the new geophysical (VTEM) basement conductor target identified in the north of the Speewah Dome. A
drilling programme has been scheduled before the wet season.
Page 4
Directors Report
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
As at the date of this report, the interests of the directors in the shares of the Company were
Anthony Barton
Chairman
Leonid Charuckyj
Greg MacMillan
Director
Director
Total
Ordinary Shares
Options Over Ordinary Shares
83,190,6801
3,882,8352
34,856,1623
121,929,677
14,548,5191
1,164,8502
5,292,4213
21,005,790
¹ 21,817,018 of the shares and 5,200,001 options are held by Mr AP Barton and Mrs CH Barton as trustee for the Barton Family
Superannuation Fund of which Mr Barton is a director and a beneficiary. 22,072,885 of the shares and 4,039,652 of the options
are held by Australian Heritage Group Pty Ltd as trustee for the Australian Heritage Trust of which Mr Barton is a director and
a beneficiary. 17,856,776 of the shares and 1,457,879 options are held by Inglewood Lodge Pty Ltd of which Mr Barton is a
director and a beneficiary. 15,571,724 of the shares and 3,380,411 options are held by Barton & Barton Pty Ltd of which Mr
Barton is a director. 3,485,1801 of the shares and 400,000 options are held by Universal Oil (Australia) Pty Ltd of which Mr
Barton is a director and a beneficiary. 2,387,097 of the shares and 70,576 options are held by Harvey Springs Estate Pty Ltd of
which Mr Barton is a director and a beneficiary.
2 2,558,801 of the shares and 767,640 options are held by Mr L Charuckyj & Mrs CM Charuckyj as trustee for the ZETA Super
Fund of which Mr Charuckyj is a trustee and beneficiary. 1,173,335 of the shares and 352,000 options are held by Temtor Pty Ltd
of which Mr Charuckyj is a director and beneficiary. 150,699 of the shares and 45,210 options are held by Mr L Charuckyj.
3 12,783,277 of the shares and 1,252,769 of the options are held by GDM Services Pty Ltd as trustee for the GDM Services Trust of
which Mr MacMillan is a director and beneficiary. 22,072,885 of the shares and 4,039,652 of the options are held by Australian
Heritage Group Pty Ltd as trustee for the Australian Heritage Trust of which Mr MacMillan is a director and beneficiary.
CORPORATE STRUCTURE
King River is a company limited by shares that is incorporated and domiciled in Australia. King River has a fully owned
subsidiary Speewah Mining Pty Ltd. The Group has prepared a consolidated financial report incorporating the entity that it
controlled during the financial year, Speewah Mining Pty Ltd a 100% owned subsidiary.
REVIEW OF CONSOLIDATED FINANCIAL CONDITION
The consolidated entity recorded an operating loss after income tax of $187,202 (2015: $252,984 loss). There was no dividend
declared or paid during the year.
CAPITAL STRUCTURE
As at the date of this report the Company had 550,913,554 fully paid ordinary shares. There were also 124,410,168 listed options
over ordinary shares on issue and 5,550,000 unlisted options over ordinary shares on issue (3,800,000 as at 30 June 2015). Details
of the terms of the options are outlined in Note 18 of the consolidated financial statements.
CASH FROM OPERATIONS
The net cash outflow from operations was $113,054 (2015: $299,460). The cash balance at year end was $473,372
LOSS PER SHARE
Basic and diluted loss per share (cents)
Share price (cents)
2016
(0.04)
0.007
2015
(0.10)
0.029
2014
(0.40)
0.12
2013
(12.16)
0.060
2012
(0.49)
0.110
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the financial year the following significant changes were made to the Company’s equity:
•
On the 26th November 2015, the Company issued 30,000,000 ordinary shares at 1 cent as part of a Placement and
82,754,704 ordinary shares at 1 cent as part of a pro-rata non-renounceable rights issue on the basis of 1 new share for
every 1 share held.
•
On 29 June 2016, the Company issued $445,417 Exploration Development Incentive (EDI) tax credits to shareholders on a
pro-rata basis which equated to 0.11 cents per share. The issue of the EDI tax credits resulted in a reduction of the
Company carried forward tax losses of $1,484,722.
Page 5
Directors Report
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On the 7th July 2016, the Company announced a Share Purchase Plan for existing shareholders to be able to purchase up to
$15,000 worth of additional shares at a discounted price of $0.0062. On 3rd August 2016, the company announced the
completion of the Share Purchase Plan which raised $788,230 from the issue of 127,133,897 shares at $0.0062 cent per share.
Other than this there were no significant events following the balance date that affected the company’s equity or state of affairs.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The consolidated entity’s current focus is on exploration of its Copper / Gold prospects referred to in the Operations Report.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The consolidated entity’s environmental obligations are regulated under both State and Federal law. All environmental
performance obligations are monitored by the Board and subjected from time to time to Government agency audits and site
inspections. The consolidated entity has a policy of at least complying with, but in most cases exceeding, it’s statutory
environmental performance obligations. No environmental breaches have occurred or have been notified by any Government
agencies during the year ended 30 June 2016.
SHARES UNDER OPTION
As at the date of this report, there were 129,960,168 unissued ordinary shares under granted options.
Date Options Granted
6-Dec-2012
7-May-2014
25-June-2014
21-July-2015
21-July-2015
Expiry Date
Issue Price of Shares
Number Under Option
30-Nov-2017
30-June-2019
30-June-2019
30-June-2018
30-November-2018
$0.10
$0.20
$0.20
$0.10
$0.10
1,250,000
1,350,000
1,200,000
124,410,168
1,750,000
129,960,168
SHARES ISSUED ON EXERCISE OF OPTIONS
During or since the end of the financial year, there were no options exercised. Refer to Note 18 of the consolidated financial
statements for further details of the options outstanding. Option holders do not have any right, by virtue of the option, to
participate in any issue of the Company or any related body corporate.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has entered into Director and Officer Protection Deeds (“D&O Deed”) with each Director and the Company
Secretary (“Officers”). Under the D&O Deed, the Company indemnifies the Officers to the maximum extent permitted by law
and the Constitution against legal proceedings, damage, loss, liability, cost, charge, expense, outgoing or payment (including
legal expenses on a solicitor/client basis) suffered, paid or incurred by the officers in connection with the Officers being an
officer of the Company, the employment of the officer with the Company or a breach by the Company of its obligations under
the D&O Deed.
Also pursuant to the D&O Deed, the Company must insure the Officers against liability and provide access to all board papers
relevant to defending any claim brought against the Officers in their capacity as officers of the Company. The Company has
paid insurance premiums of $6,300 (2015: $7,400) in respect of liability for any current and future directors, company secretary,
executives and employees of the Company. This amount is payable in total and no specific amount is included in the directors’
remuneration.
ROUNDING
The amounts contained in this report and in the financial report have been rounded to the nearest dollar.
Page 6
Directors Report
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each director of King River Copper Limited, and for the
executives in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this
report, key management personnel (KMP) of the company and the group are defined as those persons having authority and
responsibility for planning, directing and controlling the major activities of the company and the group, directly or indirectly,
including any director (whether executive or otherwise) and company secretary of the company, and includes two executives in
the group.
For the purposes of this report, the term “executive” encompasses the chief executive and senior executives of the company.
Details of key management personnel
(i) Directors
A Barton
L Charuckyj
Chairman
Director
G MacMillan
Director / Company Secretary
(ii) Executives
K Rogers
A Chapman
Chief Geologist
Project Geologist
Other than as detailed above there are no other Executives of the Company.
1. Remuneration Committee
The Remuneration Committee of the Board of Directors of King River is responsible for determining and reviewing
compensation arrangements for the directors and executives. The Remuneration Committee assesses the appropriateness of
the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market
conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and
executive team. Such officers are given the opportunity to receive their base emolument in a variety of forms including cash
and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will
be optimal for the recipient without creating undue cost for the Company.
2. Remuneration Policy
The Company's remuneration policies are reflected in the Charter of the Remuneration Committee. It is the Company’s
objective to provide maximum stakeholder benefit from the retention of high quality Board and executive team by
remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions.
The Company’s remuneration policy is to establish competitive remuneration (including performance incentives) consistent
with long term development and success, to ensure remuneration is fair and reasonable (taking into account all relevant factors,
and within appropriate controls or limits) that performance and remuneration are appropriately linked, that all remuneration
packages are reviewed annually or on an ongoing basis in accordance with management's remuneration packages, and that
retirement benefits or termination payments (other than notice periods) will not be provided or agreed other than in exceptional
circumstances.
It is the Company’s objective that the remuneration policy aligns with achievement of strategic objectives and creation of long
term value for shareholders. The Company does not use specific performance hurdles or conditions in determining
remuneration or short term rewards. The Company assesses each employee annually based upon the individual performance
in carrying out the agreed responsibilities of the employee which have been developed in consideration of the Company’s long
term goals. The performance incentive component is reflected as part of the increase in salary and the issue of equity based
compensation for each employee on an annual basis.
The Company does not have a formal policy to prohibit executives from entering into arrangements to protect the value of
unvested long term incentive awards.
3. Non Executive Director Remuneration
3.1 Fixed Remuneration
The aggregate remuneration to non executive directors will not exceed the maximum approved amount of $150,000. The board
seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain directors of the
highest calibre, whilst incurring a cost which is acceptable by shareholders.
Page 7
Directors Report
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned
amongst directors is reviewed annually. The board considers fees paid to non executive directors of comparable companies
when undertaking the annual review as well as additional time commitment of directors who serve on one or more sub
committees and assistance to the Company with new investment opportunities. Each of the non executive directors during the
financial year received a salary of $40,000 per annum plus superannuation. Non executive directors are encouraged to hold
shares in the Company; these are to be purchased by the director on market. It is considered good corporate governance for
directors to have a stake in the company on whose board he or she sits.
Remuneration of non executive directors for the year ended 30 June 2016 is disclosed in Table 1 under the remuneration section
of this report.
3.2 Variable Remuneration – Short Term Incentives
Non executive directors do not receive performance based bonuses or additional remuneration for their membership of
subsidiary boards or committees.
3.3 Variable Remuneration – Long Term Incentives
During the financial year, the Company had no contractual obligations to provide long term incentives to non executive
directors.
4. Executive Director Remuneration
The company aims to reward executives with a level and mix of remuneration commensurate with their position and
reward executives for company and individual performance;
align the interests of executives with those of shareholders;
link reward with the strategic goals and performance of the company; and
ensure total remuneration is competitive by market standards.
responsibilities within the company so as to:
•
•
•
•
Executive remuneration comprises of:
• base pay and benefits; and
•
long term incentives through equity based compensation.
4.1 Fixed Remuneration
Base pay and benefits
Base pay is structured as a total employment cost package that may be delivered as combination of cash and salary sacrifice
superannuation at the executive’s discretion.
Executives are offered a competitive base pay. Reference is made to industry benchmarks to ensure that the base pay is set to
reflect the market for a comparable role. Base pay is reviewed annually, or upon promotion, to ensure the executive’s pay is
competitive with comparable positions of responsibility. There is no guaranteed base pay increases for any executive contract.
4.2 Variable Remuneration – Long Term Incentives
During the financial year the Company had no contractual obligations to provide long term incentives to the executive director.
4.3 Employment Contracts – Executives - Ken Rogers (Chief Geologist), Andrew Chapman (Project Geologist)
The Company had entered into employment agreements with Messer’s Rogers and Chapman for the provision of technical
geological services based on daily rates for the provision of services. Their services could be terminated by giving a 2 week
notice by either party.
Page 8
Directors Report
5. Remuneration of Key Management Personnel and Executives of the Company
Details of the remuneration of each director of King River, each of the executives of the Company and the consolidated entity
for the year ended 30 June 2016 are set out in the following tables.
Table 1: Remuneration for the year ended 30 June 2016
30 June 2016
Directors
A Barton
L Charuckyj
G MacMillan
Sub Total1
Executives
K Rogers
A Chapman
Sub Total
Total
Short
Term
Post
Employment
Salary &
Superannuation
Share Based
Options
as % of
Fees
$
43,800
43,800
40,000
127,600
60,000
92,895
152,895
280,495
Payments
Total
Total
Options
Shares
$
-
-
-
-
4,567
9,133
13,700
13,700
$
-
-
-
-
-
-
-
-
$
%
43,800
43,800
43,800
131,400
70,267
102,028
172,295
303,695
-
-
-
-
6
9
-
-
$
-
-
3,800
3,800
5,700
-
5,700
9,500
1. Premium for Director’s liability insurance is not included in remuneration table.
Other than disclosed in the table above no director or executive received any compensation in the financial year ended 30 June
2016. None of the remuneration for directors or executives was performance related.
Table 2: Remuneration for the year ended 30 June 2015
30 June 2015
Directors
A Barton
L Charuckyj
G MacMillan
D Carew-Hopkins (Resigned 2/07/14)
Sub Total1
Executives
K Rogers
A Chapman
Sub Total
Total
Short
Term
Post
Employment
Salary &
Superannuation
Share Based
Options
as % of
Fees
$
43,600
43,600
40,000
-
127,200
60,000
137,382
197,382
324,582
Payments
Total
Total
Options
Shares
$
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
$
%
43,600
43,600
43,600
-
130,800
65,675
137,382
203,057
333,857
-
-
-
-
-
-
-
-
-
$
-
-
3,600
-
3,600
5,675
-
5,675
9,275
1.
Premium for Director’s liability insurance is not included in remuneration table.
Other than disclosed in the table above no director or executive received any compensation in the financial year ended 30 June
2015. None of the remuneration for directors or executives was performance related.
Page 9
Directors Report
5.1 Equity Based Compensation – Options 2016
During the year unlisted options exercisable at $0.10 on or before 30 November 2018 were issued to executives of the Company.
500,000 options were issued to Ken Rogers and 1,000,000 to Andrew Chapman. The options were issued as an alternate
remuneration to cash, to provide industry competitive remuneration rates and to encourage long term relationships with the
Company. These options all vested on date of issue.
Table 1: Compensation Options Granted during the year ended 30 June 2016
Fair
Value
Grant
First
Last
Exercise
Exercise
Granted
Grant
Date
Exercise
Expiry
Date
Date
Vested
Vested
No.
Date
($)
Price ($)
Date
No.
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
21-July-15 $0.009
$0.10
30-Nov-18
21-July-15
30-Nov-18
500,000
1,000,000
21-July-15 $0.009
$0.10
30-Nov-18
21-July-15
30-Nov-18 1,000,000
-
-
-
100
100
30 June 2016
Directors
A Barton
L Charuckyj
G MacMillan
Executives
K Rogers
A Chapman
Total
1,500,000
1,500,000
There were no alterations to options terms since grant date and no options were forfeited. Further details of the options are
contained in Note 18.
30 June 2016
Directors
A Barton
Leonid Charuckyj
G MacMillan
Executives
K Rogers
A Chapman
Total
Value of Options
Value of Options
Value of Options
Granted ($)
Exercised ($)
Expired ($)
-
-
-
4,567
9,133
13,700
-
-
-
-
-
-
-
-
-
-
-
-
Other than as detailed above, no Directors or executives were issued compensation options or had compensation options
outstanding in the financial year ended 30 June 2016.
Table 2: Compensation Options Holdings of Key Management Personnel during the year ended 30 June 2016
30 June 2016
Balance at
Granted as
Net
Balance at
Beginning
Remuner-
Options
Change
of Period
ation
Exercised
Other
1 July
2015
600,000
300,000
300,000
-
-
-
550,000
1,600,000
500,000
1,000,000
3,350,000
1,500,000
-
-
-
-
-
-
Directors
A Barton
L Charuckyj
G MacMillan
Executives
K Rogers
A Chapman
Total
Page 10
End of
Period
30 June
Vested at 30 June 2016
Not
2016
Total
Exercisable Exercisable
-
-
-
-
-
-
600,000
300,000
300,000
600,000
300,000
300,000
1,050,000
1,050,000
2,600,000
2,600,000
4,850,000
4,850,000
-
-
-
-
-
-
600,000
300,000
300,000
1,050,000
2,600,000
4,850,000
Directors Report
5.2 Equity Based Compensation – Options 2015
During the year no unlisted options were issued to directors or employees as an alternate remuneration to cash.
Table 1: Compensation Options Granted during the year ended 30 June 2015
Fair
Value
Granted
Grant
Grant
Exercise
Expiry
No.
Date
Date ($)
Price ($)
Date
First
Last
Exercise
Exercise
Date
Date
Vested
Vested
No.
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30 June 2015
Directors
A Barton
Leonid
Charuckyj
G MacMillan
D Carew-
Hopkins
(Resigned
2/07/14)
Executives
K Rogers
A Chapman
Total
30 June 2015
Directors
A Barton
Leonid Charuckyj
G MacMillan
D Carew-Hopkins
Executives
K Rogers
A Chapman
Total
Value of Options
Value of Options
Value of Options
Granted ($)
Exercised ($)
Expired ($)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,410
8,046
8,046
8,046
8,046
-
45,594
Other than as detailed above, no Directors or executives were issued compensation options or had compensation options
outstanding in the financial year ended 30 June 2015.
Table 2: Compensation Options Holdings of Key Management Personnel during the year ended 30 June 2015
30 June 2015
Balance at
Granted as
Net
Balance at
Beginning
Remuner-
Options
Change
of Period
ation
Exercised
Other
End of
Period
30 June
Vested at 30 June 2015
Not
2015
Total
Exercisable Exercisable
Directors
A Barton
L Charuckyj
G MacMillan
1 July
2014
1,850,000
1,050,000
1,050,000
D Carew-Hopkins
1,050,000
(Resigned 2/07/14)
Executives
K Rogers
A Chapman
Total
Page 11
1,300,000
1,600,000
7,900,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,250,000)
(750,000)
(750,000)
(750,000)
600,000
300,000
300,000
300,000
600,000
300,000
300,000
300,000
200,000
100,000
100,000
100,000
400,000
200,000
200,000
200,000
(750,000)
-
(4,250,000)
550,000
550,000
1,600,000
1,600,000
3,650,000
3,650,000
100,000
200,000
800,000
450,000
1,400,000
2,850,000
Directors Report
5.3. Equity Based Compensation – Shares 2016
Table 1: Shareholdings of Key Management Personnel during the year ended 30 June 2016
30 June 2016
Directors
A Barton 1
L Charuckyj 2
G MacMillan 3
D Carew-Hopkins (Resigned 2/07/14)4
Executives
K Rogers
A Chapman
Total
Balance
Granted as
On
Net Change
Balance
1 July 2015
Remuneration
Exercise of
Other
30 June 2016
Ord
Ord
Options
Ord
Ord
Ord
36,371,285
2,912,124
13,231,044
700,000
459,536
-
53,673,989
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,303,759
970,711
4,410,350
(700,000)
48,675,044
3,882,835
17,641,394
-
153,179
612,715
-
-
17,137,999
70,811,988
¹ 17,513,326 of the shares are held by Mr AP Barton and Mrs CH Barton as trustee for the Barton Family Superannuation
Fund of which Mr Barton is a director and a beneficiary. 13,465,501 of the shares are held by Australian Heritage Group Pty
Ltd as trustee for the Australian Heritage Trust of which Mr Barton is a director and a beneficiary. 4,859,596 of the shares are
held by Inglewood Lodge Pty Ltd of which Mr Barton is a director and a beneficiary. 11,268,036 of the shares are held by
Barton & Barton Pty Ltd of which Mr Barton is a director. 1,333,334 of the shares are held by Universal Oil (Australia) Pty Ltd
of which Mr Barton is a director and a beneficiary. 235,251 of the shares are held by Harvey Springs Estate Pty Ltd of which
Mr Barton is a director and a beneficiary.
2 2,558,801 of the shares are held by Mr L Charuckyj & Mrs CM Charuckyj as trustee for the ZETA Super Fund of which Mr
Charuckyj is a trustee and beneficiary. 1,173,335 of the shares are held by Temtor Pty Ltd of which Mr Charuckyj is a director
and beneficiary. 150,699 of the shares are held by Mr L Charuckyj.
3 4,175,893 of the shares are held by GDM Services Pty Ltd as trustee for the GDM Services Trust of which Mr MacMillan is a
director and beneficiary. 13,465,501 of the shares are held by Australian Heritage Group Pty Ltd as trustee for the Australian
Heritage Trust of which Mr MacMillan is a director and beneficiary.
4 D Carew-Hopkins resigned on 2/07/14.
Table 2: Shareholdings of Key Management Personnel during the year ended 30 June 2015
30 June 2015
Directors
A Barton 1
L Charuckyj2
G MacMillan3
D Carew-Hopkins (Resigned 2/07/14)
Executives
K Rogers
A Chapman
Total
Balance
Granted as
On Exercise
Net Change
Balance
1 July 2014
Remuneration
of Options
Ord
Ord
Ord
Other
Ord 4
30 June 2015
Ord
14,879,768
1,456,062
7,976,516
1,000,000
229,768
-
25,542,114
-
-
-
-
-
-
-
-
21,491,517
1,456,062
5,254,528
(300,000)
36,371,285
2,912,124
13,231,044
700,000
-
229,768
-
459,536
-
28,131,875
53,673,989
¹ 13,000,000 of the Shares are held by Mr AP Barton and Mrs CH Barton as trustee for the Barton Family Superannuation Fund
of which Mr Barton is a director and a beneficiary. 10,099,125 of the Shares are held by Australian Heritage Group Pty Ltd as
trustee for the Australian Heritage Trust of which Mr Barton is a director and a beneficiary. 3,644,696 of the Shares are held by
Inglewood Lodge Pty Ltd of which Mr Barton is a director and a beneficiary. 8,451,026 of the Shares are held by Barton & Barton
Pty Ltd of which Mr Barton is a director. 1,000,000 of the Shares are held by Universal Oil (Australia) Pty Ltd of which Mr
Page 12
Directors Report
Barton is a director and a beneficiary. 176,438 of the Shares are held by Harvey Springs Estate Pty Ltd of which Mr Barton is a
director and a beneficiary.
2 1,919,100 of the Shares are held by Mr L Charuckyj & Mrs CM Charuckyj as trustee for the ZETA Super Fund of which Mr
Charuckyj is a trustee and beneficiary. 880,000 of the Shares are held by Temtor Pty Ltd of which Mr Charuckyj is a director and
beneficiary. 113,024 of the Shares are held by Mr L Charuckyj.
3 3,131,919 of the Shares are held by GDM Services Pty Ltd as trustee for the GDM Services Trust of which Mr MacMillan is a
director and beneficiary. 10,099,125 of the Shares are held by Australian Heritage Group Pty Ltd as trustee for the Australian
Heritage Trust of which Mr MacMillan is a director and beneficiary.
5.4 Related Party Transactions
All equity transactions with key management personnel have been entered into at arm’s length.
Australian Heritage Group Pty Ltd (“AHG”), a company of which Mr Anthony Barton, a Director and Mr Greg MacMillan, a
Director and the Company Secretary, have entered into an occupancy and administration agreement with King River Copper in
respect of providing occupancy, administration and bookkeeping services commencing March 2009. The total value of the
occupancy and administration services provided by AHG during the year was $77,623 (2015: $82,200). As at 30th June 2016, there
was an amount of $30,140 outstanding to pay AHG. This amount is included in Note 15. All services provided by companies
associated with directors were provided on commercial terms.
Mr Anthony Barton, a Director of the Company also purchased 179,992 King River Copper shares, received a rights issue of
12,123,767 shares as part of the 26th November 2015 Rights Issue as per Note 16(a) for a total consideration of $122,053 in arm’s
length transactions on market during the year at market rates. . Mr Barton received 14,548,519 listed options as part of the bonus
options issue on 21st July 2015 as per Note 16(a) for nil consideration.
Mr Leonid Charuckyj received 970,711 shares for a total consideration of $9,707 as part of the 26th November 2015 rights issue.
Mr Charuckyj received 1,164,850 listed options as part of the bonus options issue on 21st July 2015 as per Note 16(a) for nil
consideration.
Mr Greg MacMillan received 4,410,350 shares for a total consideration of $44,104 as part of the 26th November 2015 rights issue.
Mr MacMillan received 5,292,421 listed options as part of the bonus options issue on 21st July 2015 as per Note 16(a) for nil
consideration.
End of Remuneration Report
DIRECTORS’ MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the year and the number of
meetings attended by each director was as follows:
Number of Meetings Held
Number of Meetings Attended
Anthony Barton
Leonid Charuckyj
Greg MacMillan
Directors1
Meetings
-
Audit1
Committee Meeting
2
Nomination2
Committee Meeting
-
Remuneration2
Committee Meeting
-
-
-
-
2
-
2
-
-
-
-
-
-
1. During the year the Directors approved 6 circular resolutions which were signed by all Directors of the Company
2. Committee is made up of the full Board. Reference to meeting refers to meeting conducted specifically to deal with the
particular business of that Committee.
COMMITTEE MEMBERSHIP
The role of the Audit, Remuneration and Nomination Committees is carried out by the full Board in accordance with the
appropriate charters. The Board considers that no efficiencies or benefits would be gained by establishing separate committees.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of King River support
and have adhered to the principles of corporate governance. The Company’s corporate governance statement is contained in
the following section of this annual report.
Page 13
Directors Report
INDEMNIFICATION OF AUDITORS
To the extent permitted by law and professional regulations, the Company has agreed to indemnify its auditors, Ernst & Young,
as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
AUDITOR INDEPENDENCE
Section 370C of the Corporation Act 2001 requires our auditors, Ernst & Young, to provide the directors of the Company with
an Independence Declaration in relation to the audit of the consolidated financial report. This Independence Declaration is
disclosed on page 15 of this report and forms part of this directors’ report for the year ended 30 June 2016.
NON AUDIT SERVICES
The Company’s auditors, Ernst & Young, provided no non audit services during the year ended 30 June 2016.
TAX CONSOLIDATION
The Company and its subsidiary form a tax consolidated group.
Signed in accordance with a resolution of the directors.
Greg MacMillan
Director
16 August 2016
Page 14
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of King River Copper
Limited
As lead auditor for the audit of King River Copper Limited for the year ended 30 June 2016, I declare to the best of
my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of King River Copper Limited and the entities it controlled during the financial period.
Ernst & Young
P Teale
Partner
18 August 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:RH:KINGRIVERCOPPER:011
Directors’ Declaration
In accordance with a resolution of the directors of King River Copper Limited, I state that:
In the opinion of the directors:
(a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30th June 2016 and of its performance
for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2(a);
and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable, subject to the matters set out in Note 2(e) to the financial report; and
(d) 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 ending 30th June 2016.
On behalf of the Board
Greg MacMillan
Director
16 August 2016
Page 16
Statement of Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2016
Notes
6(a)
6(b)
6(c)
6(d)
7
Revenue
Other income
Directors’ and employee benefits expenses
Compliance costs
Insurance
Other administration expenses
Loss before income tax expense
Income tax benefit
Net loss for the year after tax
Other Comprehensive Income
Total Comprehensive Loss for the Year
Total Comprehensive Loss for the Year is attributable to:
Owners of King River Copper Limited
Consolidated
2016
$
790
342,093
(147,382)
(113,824)
(15,826)
(253,053)
(187,202)
-
2015
$
4,150
317,556
(130,800)
(136,996)
(16,996)
(289,898)
(252,984)
-
(187,202)
(252,984)
-
-
(187,202)
(252,984)
(187,202)
(187,202)
(252,984)
(252,984)
Loss per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
9
9
(0.04)
(0.04)
(0.10)
(0.10)
The accompanying notes form part of these consolidated financial statements.
Page 17
Statement of Financial Position
AS AT 30 JUNE 2016
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Total Current Assets
Non Current Assets
Deferred exploration expenditure
Plant and Equipment
Other financial assets
Total Non Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Consolidated
Notes
2016
$
2015
$
10
11
14
13
12
15
473,372
23,749
-
497,121
8,690,973
44,828
-
8,735,801
9,232,922
879,750
94,335
50,000
1,024,085
7,472,047
8,009
46,671
7,526,727
8,550,812
146,567
146,567
393,852
393,852
146,567
393,852
9,086,355
8,156,960
16(a)
16(b)
28,367,307
1,526,412
27,266,692
1,510,429
(20,807,364)
(20,620,161)
9,086,355
8,156,960
The accompanying notes form part of these consolidated financial statements.
Page 18
Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated
Notes
2016
$
Cash Flows from Operating Activities
Interest received
Research & Development Tax Rebate
Payments to suppliers and employees
Net cash from / (used in) in operating activities
10
790
342,093
(455,938)
(113,055)
2015
$
2,719
317,556
(619,735)
(299,460)
Cash Flows from Investing Activities
Payment for exploration and evaluation
Payment for Property, Plant & Equipment
Refund of Security Deposits
Net cash used in investing activities
Cash Flows from Financing Activities
Proceeds from issue of shares
Payment of share issue costs
Net cash from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and Cash Equivalents at end of year
10
The accompanying notes form part of these consolidated financial statements.
(1,403,791)
(2,312,507)
(36,818)
46,671
-
-
(1,393,938)
(2,312,507)
1,127,547
(26,932)
1,100,615
(406,378)
879,750
473,372
2,330,733
(74,944)
2,255,789
(356,178)
1,235,928
879,750
Page 19
Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated
$
$
$
Issued
Capital
Equity
Benefits
Reserve
Accumulated
Losses
Total
Equity
$
At 1 July 2014
Loss for the year
Total comprehensive income/loss for the year
Transaction with owners in their capacity as
owners:
Issue of Share Capital –2nd July 2014
Issue of Share Capital – 29th September 14
Issue of Share Capital – 31st October 14
Issue of Share Capital – 19th December 14
Capital Raising Fees net of tax
Issue of Share Capital – 17th March 15
Capital Raising Fees net of tax
Issue of Share Capital – 25th June 15
24,960,903
1,510,429
(20,367,177)
6,104,155
-
-
48,000
620,820
279,180
69,385
(61,482)
1,313,349
(13,462)
50,000
-
-
-
-
-
-
-
-
-
-
(252,984)
(252,984)
(252,984)
(252,984)
-
-
-
-
-
-
-
-
48,000
620,820
279,180
69,385
(61,482)
1,313,349
(13,462)
50,000
Balance at 30 June 2015
27,266,693
1,510,429
(20,620,161)
8,156,961
At 1 July 2015
Loss for the year
Total comprehensive income/loss for the year
Transaction with owners in their capacity as
owners:
Share Based Payments – 21st July 15
Issue of Share Capital –26th November 15: Placement
300,000
Issue of Share Capital – 26th November 15: Rights
Issue
Capital Raising Fees net of tax
827,547
(26,932)
27,266,692
1,510,429
(20,620,161)
8,156,960
-
-
-
-
-
(187,203)
(187,203)
(187,203)
(187,203)
15,983
-
-
-
-
-
-
-
15,983
300,000
827,547
(26,932)
Balance at 30 June 2016
28,367,307
1,526,412
(20,807,364)
9,086,355
The accompanying notes form part of these consolidated financial statements.
Page 20
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
1. CORPORATE INFORMATION
King River Copper (“King River” or “the Company”) is a company domiciled in Australia and publicly listed on the Australian
Stock Exchange (ASX). The Company was incorporated on 28 May 2002. The address of the Company’s registered office is 254
Adelaide Tce, Perth WA 6000. The consolidated financial statements as at and for the year ended 30 June 2016 comprise the
Company and its subsidiary (the “Group”). The nature of the operations and principal activities of the Group are described in
the Directors’ Report.
The consolidated financial report was authorised for issue by the directors on the 15 August 2016 in accordance with a
resolution of the directors.
2. BASIS OF PREPARATION
(a) Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards (AASB’s) and the Corporations Act 2001. The consolidated financial report also complies with International Financial
Reporting Standards (IFRS’s) and interpretations adopted by the International Accounting Standards Board (IASB). The
statement of compliance with International Financial Reporting Standards in accordance with AASB 101.
(b) Basis of measurement
Unless stated otherwise, the consolidated financial statements have been prepared on the historical cost basis.
(c) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with AASBs requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised and in any future periods affected.
(e) Going Concern Basis of Preparation
The Group incurred a net loss after income tax of $187,203 for the year ended 30 June 2016 (2015: $252,984) and a net cash
outflow of $406,377 (2015:$356,178). As at 30 June 2016 the Group had cash and cash equivalents of $473,372 (2015: $879,750)
and a working capital surplus of $350,554 (2015: $630,233 surplus). The Group’s available cash on 9 August 2016 amounted to
$1,114,869.
The Group will require further funding during the next 12 months in order to meet day to day obligations as they fall due and
to progress its exploration projects. Based on the Group’s cash flow forecast the Board of Directors is aware of the Group’s need
to access additional working capital in the next 12 months to enable the Group to continue its normal business activities and to
ensure the realisation of assets and extinguishment of liabilities as and when they fall due, including progression of its
exploration interests.
The directors are satisfied that at the date of signing of the financial report, there are reasonable grounds to believe that the
Group will be able to continue to meet its debts as and when they fall due and that it is appropriate for the financial statements
to be prepared on a going concern basis. The directors have based this on the following pertinent matters:
• The Group has the capacity, if necessary, to reduce its operating cost structure in order to minimise its working
capital requirements;
• The Group retains the ability, if required, to wholly or in part dispose of interests in mineral exploration assets.
• The directors regularly monitor the Group’s cash position and, on an on-going basis, consider a number of strategic
initiatives to ensure that adequate funding continues to be available.
• The Directors have determined that future equity raisings will be required to provide funding for the Group’s
activities and to meet the Group’s objectives.
• The Directors believe that future funding will be available to meet the Group’s objectives and debts as and when they
fall due.
Should the Group not achieve the matters set out above, there is significant uncertainty whether it will be able to continue as a
going concern and therefore whether it will be able to pay its debts as and when they fall due and realise its assets and
extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.
Page 21
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
The financial report does not include any adjustments relating to the recoverability or classification of recorded asset amounts,
or to the amounts or classification of liabilities that might be necessary should the Group not be able to continue as a going
concern.
(f) Changes in accounting policies
From 1 July 2015 the Group has adopted the following Standards and Interpretations, mandatory for annual periods beginning
on or after 1 July 2015 applicable to the group. The application of these Standards and Interpretations’ does not have any
material impact on the financial position or performance of the Group.
Reference
Summary
AASB 2015-3 Materiality
Amendments to Australian Accounting Standards arising from the Withdrawal of AASB
1031 Materiality. The Standard completes the AASB’s project to remove Australian guidance
on materiality from Australian Accounting Standards.
Application
Date for
Group
1 July 2015
AASB 2013-9
Amendments to Australian Accounting Standards – Conceptual Framework, Materiality
and Financial Instruments
1 July 2015
The Standard contains three main parts and makes amendments to a number of Standards
and Interpretations.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB
CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete
references to AASB 1031 and also makes minor editorial amendments to various other
standards.
Part C makes amendments to a number of Australian Accounting Standards, including
incorporating Chapter 6 “Hedge Accounting” into AASB 9 Financial Instruments.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective, have
not been adopted by the Group for the annual reporting period ending 30 June 2016.
The group has reviewed these standards and interpretations, the potential effect of these standards and interpretations is yet to
be fully determined. These are outlined in the following table;
AASB 9
AASB 9 (December 2014) is a new standard which replaces AASB 139. This new version
supersedes AASB 9 issued in December 2009 (as amended) and AASB 9 (issued in December
2010) and includes a model for classification and measurement, a single, forward-looking
‘expected loss’ impairment model and a substantially-reformed approach to hedge accounting.
1 July 2018
AASB 9 is effective for annual periods beginning on or after 1 January 2018. However, the
Standard is available for early adoption. The own credit changes can be early adopted in
isolation without otherwise changing the accounting for financial instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for classification and measurement of
financial assets compared with the requirements of AASB 139. There are also some changes
made in relation to financial liabilities.
The main changes are described below.
Financial assets
a.
Financial assets that are debt instruments will be classified based on (1) the objective of
the entity's business model for managing the financial assets; (2) the characteristics of the
contractual cash flows.
b. Allows an irrevocable election on initial recognition to present gains and losses on
investments in equity instruments that are not held for trading in other comprehensive
income. Dividends in respect of these investments that are a return on investment can be
recognised in profit or loss and there is no impairment or recycling on disposal of the
instrument.
c.
Financial assets can be designated and measured at fair value through profit or loss at
initial recognition if doing so eliminates or significantly reduces a measurement or
recognition inconsistency that would arise from measuring assets or liabilities, or
Page 22
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
recognising the gains and losses on them, on different bases.
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities are limited to the
measurement of liabilities designated at fair value through profit or loss (FVPL) using the
fair value option.
Where the fair value option is used for financial liabilities, the change in fair value is to be
accounted for as follows:
► The change attributable to changes in credit risk are presented in other
comprehensive income (OCI) if doing so will not create an accounting mismatch.
► The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that was caused by changes in the credit
risk of liabilities elected to be measured at fair value. This change in accounting means that
gains or losses attributable to changes in the entity’s own credit risk would be recognised in
OCI. These amounts recognised in OCI are not recycled to profit or loss if the liability is ever
repurchased at a discount.
Impairment
The final version of AASB 9 introduces a new expected-loss impairment model that will
require more timely recognition of expected credit losses. Specifically, the new Standard
requires entities to account for expected credit losses from when financial instruments are
first recognised and to recognise full lifetime expected losses on a more timely basis if there
is a significant increase in credit risk since initial recognition.
Hedge accounting
Amendments to AASB 9 (December 2009 & 2010 editions and AASB 2013-9) issued in
December 2013 included the new hedge accounting requirements, including changes to hedge
effectiveness testing, treatment of hedging costs, risk components that can be hedged and
disclosures.
Consequential amendments were also made to other standards as a result of AASB 9,
introduced by AASB 2009-11 and superseded by AASB 2010-7, AASB 2010-10 and AASB
2014-1 – Part E.
AASB 2014-7 incorporates the consequential amendments arising from the issuance of AASB 9
in Dec 2014.
AASB 2014-8 limits the application of the existing versions of AASB 9 (AASB 9 (December
2009) and AASB 9 (December 2010)) from 1 February 2015 and applies to annual reporting
periods beginning on after 1 January 2015.
AASB 2014-
4
AASB 116 Property Plant and Equipment and AASB 138 Intangible Assets both establish the
principle for the basis of depreciation and amortisation as being the expected pattern of
consumption of the future economic benefits of an asset.
1 July 2016
The IASB has clarified that the use of revenue-based methods to calculate the depreciation of
an asset is not appropriate because revenue generated by an activity that includes the use of an
asset generally reflects factors other than the consumption of the economic benefits embodied
in the asset.
The amendment also clarified that revenue is generally presumed to be an inappropriate basis
for measuring the consumption of the economic benefits embodied in an intangible asset. This
presumption, however, can be rebutted in certain limited circumstances.
AASB 1057
This Standard lists the application paragraphs for each other Standard (and Interpretation),
grouped where they are the same. Accordingly, paragraphs 5 and 22 respectively specify the
application paragraphs for Standards and Interpretations in general. Differing application
paragraphs are set out for individual Standards and Interpretations or grouped where
possible.
The application paragraphs do not affect requirements in other Standards that specify that
certain paragraphs apply only to certain types of entities.
1 July 2016
AASB 2015-
2
The Standard makes amendments to AASB 101 Presentation of Financial Statements arising from
the IASB’s Disclosure Initiative project. The amendments are designed to further encourage
companies to apply professional judgment in determining what information to disclose in the
financial statements. For example, the amendments make clear that materiality applies to the
1 July 2016
Page 23
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
whole of financial statements and that the inclusion of immaterial information can inhibit the
usefulness of financial disclosures. The amendments also clarify that companies should use
professional judgment in determining where and in what order information is presented in the
financial disclosures.
2016-2
This Standard amends AASB 107 Statement of Cash Flows (August 2015) to require entities
preparing financial statements in accordance with Tier 1 reporting requirements to provide
disclosures that enable users of financial statements to evaluate changes in liabilities arising
from financing activities, including both changes arising from cash flows and non-cash
changes.
1 July 2017
AASB 2016-
5
This standard amends AASB 2 Share-based Payment, clarifying how to account for certain types
of share-based payment transactions. The amendments address:
1 July 2018
► The effects of vesting and non-vesting conditions on the measurement of cash-settled
share-based payments
► Classification of Share-based payment transactions with a net settlement feature for
withholding tax obligations
► A modification to the terms and conditions of a share-based payment that changes
the classification of the transaction from cash-settled to equity-settled
AASB 16
The key features of AASB 16 are as follows:
Lessee accounting
1 July 2019
• Lessees are required to recognise assets and liabilities for all leases with a term of
more than 12 months, unless the underlying asset is of low value.
• A lessee measures right-of-use assets similarly to other non-financial assets and lease
liabilities similarly to other financial liabilities.
• Assets and liabilities arising from a lease are initially measured on a present value
basis. The measurement includes non-cancellable lease payments (including
inflation-linked payments), and also includes payments to be made in optional
periods if the lessee is reasonably certain to exercise an option to extend the lease, or
not to exercise an option to terminate the lease.
• AASB 16 contains disclosure requirements for lessees.
Lessor accounting
• AASB 16 substantially carries forward the lessor accounting requirements in AASB
117. Accordingly, a lessor continues to classify its leases as operating leases or
finance leases, and to account for those two types of leases differently.
• AASB 16 also requires enhanced disclosures to be provided by lessors that will
improve information disclosed about a lessor’s risk exposure, particularly to
residual value risk.
AASB 16 supersedes:
(a) AASB 117 Leases
(b) Interpretation 4 Determining whether an Arrangement contains a Lease
(c) SIC-15 Operating Leases—Incentives
(d) SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease
The new standard will be effective for annual periods beginning on or after 1 January 2019.
Early application is permitted, provided the new revenue standard, AASB 15 Revenue from
Contracts with Customers, has been applied, or is applied at the same date as AASB 16.
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial report comprises the financial statements of King River Copper Limited and its controlled entity (the
“Group” or “consolidated entity”). King River Copper Limited’s controlled entity is the wholly owned company Speewah
Mining Pty Ltd. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with its
investee and has ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if
and only if the Group has;
- Power over the investee (eg, existing rights that give it the current ability to direct the relevant activities of the investee)
Page 24
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
- Exposure, or rights, to variable returns from its involvement with the investee, and
- The ability to use its power over the investee to affect its returns.
- When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee including The contractual arrangement
with the other vote holders of the investee
- Rights arising from other contractual arrangements
- The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary
and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or
disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until
the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are
attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries
to bring their accounting policies into line with the Group’s accounting policies. All inter-company balances and transactions
between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation.
Where controlled entities have entered or left the consolidated entity during the year, their operating results have been
included/excluded from the date control was obtained, or until the date control ceased. There are no minority interests in the
equity of the controlled entity.
(b) Income Tax and Other Taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or
paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by the balance sheet date. Deferred income tax is provided for on all
temporary differences at balance date between the tax base of assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss; or
• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference
will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be
utilised.
The carrying amount of deferred income tax assets is reviewed at each financial year end and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at
the balance date.
Page 25
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation
authority.
Tax consolidation legislation
The Company and its’ subsidiary have formed a tax consolidated group. The consolidated financial statements have been
prepared on this basis of the formation of a consolidated group.
The Company and its’ subsidiary have implemented the tax consolidation legislation as of 1 July 2004.
The head entity, King River and the subsidiary in the tax consolidated group continue to account for their own current and
deferred tax amounts. The group has applied the group allocation approach in determining the appropriate amount of current
taxes and deferred taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, King River also recognises the current tax liabilities (or assets) and the
deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax
consolidated group.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation
authority.
(c) Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less an allowance for any uncollectible amounts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off
when identified. An allowance for doubtful debts is raised when there is objective evidence that the Group will not be able to
collect the debt. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered
objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the
present value of estimated future cash flows, discounted at the original effective interest rate.
(d) Plant and Equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment
losses.
Plant and Equipment
Plant and equipment are measured on the cost basis less accumulated depreciation and impairment losses.
Subsequent costs are included in the assets 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 income statement during the financial period in which they are
incurred.
Impairment
Carrying values of assets are reviewed at each financial year end to determine whether there are any objective indicators of
impairment that may indicate the carrying values may not be recoverable in whole or in part.
Where an asset does not generate cash flows that are largely independent it is assigned to cash generating unit and the
recoverable amount test applied to the cash generating unit as a whole.
Recoverable amount is determined as the greater of fair value less costs to sell and value in use. The assessment of value in use
considers the present value of future cash flows discounted using an appropriate pre tax discount rate reflecting the current
market assessments of the time value of money and risks specific to the asset.
An impairment exists if the carrying value of the asset is determined to be in excess of its recoverable amount, in which case the
asset or cash generating unit is written down to its recoverable amount.
Depreciation
The depreciable amount of plant and equipment is depreciated on a straight line basis over their useful lives to the Company
commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
Depreciation Rate
10-50%
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the income statement.
(e) Financial Assets
Page 26
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
Other financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either
financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available for sale
financial assets. The classification depends on the purpose for which the investments were acquired. Designation is re-
evaluated at each financial year end, but there are restrictions on reclassifying to other categories.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through
profit or loss, directly attributable transaction costs.
Recognition and Derecognition
All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the consolidated entity
commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that
require delivery of the assets within the period established generally by regulation or convention in the market place. Financial
assets are derecognised when the right to receive cash flows from the financial assets have expired or been transferred.
(i) Financial assets carried at fair value
If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at
fair value because its fair value cannot be reliably measured, the amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for
a similar financial asset.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or
loss when the loans and receivables are derecognised or impaired. These are included in current assets, except for those with
maturities greater than 12 months after balance date, which are classified as non-current.
(f) Shares in controlled entities
Investments in controlled entities are measured at cost. The Company assesses whether it is necessary to recognise any
impairment loss in the investment in subsidiaries following any significant changes in the underlying assets or operations of the
relevant subsidiary.
(g) Exploration and Evaluation Expenditure
Expenditure on exploration and evaluation
is accounted for
in accordance with the
‘area of
interest' method.
Exploration and evaluation expenditure is capitalised provided the rights to tenure of the area of interest is current
and either:
•
the exploration and evaluation activities are expected to be recouped through successful development and
exploitation of the area of interest or, alternatively, by its sale; or
•
exploration and evaluation activities in the area of interest have not at the reporting date reached a stage that
permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and
active and significant operations in, or relating to, the area of interest are continuing.
When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated
then any capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior
to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment.
Impairment
The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at the cash
generating unit level whenever facts and circumstances suggest that the carrying amount of the asset may exceed
its recoverable amount.
An
impairment exists when
the carrying amount of an asset or cash-generating unit exceeds
its estimated
recoverable amount. The asset or cash-generating unit
is then written down to
its recoverable amount. Any
impairment losses are recognised in the income statement.
(h) Provision for restoration, rehabilitation and environmental expenditures
The Group is required to decommission and rehabilitate mines and processing sites at the end of their producing
lives to a condition acceptable to the relevant authorities.
The expected cost of any approved decommissioning or rehabilitation program, discounted to
its net present
value, is provided when the related environmental disturbance occurs. The cost is capitalised when it gives rise to
future benefits, whether the rehabilitation activity is expected to occur over the life of the operation or at the time of closure. The
capitalised cost
is amortised over
the
life of
the operation and
the
increase
in
the net present value
of
the provision
for
the expected cost
is
included
in
financing expenses. Expected decommissioning and
Page 27
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
rehabilitation costs are based on the discounted value of the estimated future cost of detailed plans prepared for
each site. Where there
is a change
in the expected decommissioning and restoration costs, the value of the
provision and any related asset are adjusted and the effect is recognised in profit or loss on a prospective basis
over the remaining life of the operation.
(i) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short term highly liquid investments.
Bank overdrafts are shown within short term borrowings in current liabilities on the balance sheet.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
(j) Trade and Other Payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the
Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future
payments in respect of the purchase of these goods and services.
(k) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to
any provision is presented in the income statement net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the balance sheet date. If the effect of the time value of money is material, provisions are discounted using a pre-
tax rate that reflects the time value of money and the risks specific to the liability. The increase in the provision resulting from
the passage of time is recognised in finance costs.
(l) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue is
capable of being reliably measured. Interest revenue is recognised as interest accrues using the effective interest method.
(m) 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. In these circumstances the GST is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(n) Share Based Payment Transactions
Equity settled transactions
The Group provides benefits to directors and employees (including senior executives) of the Group in the form of share based
payments, whereby employees render services in exchange for shares or rights over shares (equity settled transactions).
The cost of these equity settled transactions with employees is measured by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value of shares is determined by the price on grant date and of options using the
Black & Scholes model, further details of which are given in Note 18. In valuing equity settled transactions, no account is taken
of any performance conditions, other than conditions linked to the price of the shares of King River (market conditions) if
applicable.
The cost of equity settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent
to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will
ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these
conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period.
Page 28
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a
market condition.
If the terms of an equity settled award are modified, as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification that increases the total fair value of the share based
payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity settled
award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award
is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement
award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original
award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share
dilution in the computation of diluted earnings per share.
(o) Employee Benefits
Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of
the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are
measured at the amounts expected to be paid when the liabilities are settled.
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date using the projected
unit credit method. Consideration is given to expected future wage and salary levels, experience of employee, departures, and
period of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate
bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.
(p) Contributed Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction, net of tax, from the proceeds.
(q) Earnings Per Share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of
servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:
•
•
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as
expenses; and
•
other non discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element. Losses have an anti-dilutive effect. Therefore the basic and diluted earnings for the current and prior period have
remained the same.
(r)
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires
Leases
an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.
(i) Group as a lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are
capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease
payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in profit or loss.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no
reasonable certainty that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments
between rental expense and reduction of the liability.
Page 29
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
(a) Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those
involving estimations, which have the most significant effect on the amounts recognised in the consolidated financial
statements:
(i) Determination of mineral resources and ore reserves
The Group’s policy for estimating its mineral resources and ore reserves requires that the Australian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves 2004 (the ‘JORC code’) be used as a minimum standard.
The information on mineral resources and ore reserves were prepared by or under the supervision of Competent Persons as
defined in the JORC code. The amounts presented are based on the mineral resources and ore reserves determined under the
JORC code. There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that
are valid at the time of estimation may change significantly when new information becomes available.
(ii) Capitalisation of exploration and evaluation expenditure
Under AASB 6 Exploration for and Evaluation of Mineral Resources, the Group has the option to either expense exploration and
evaluation expenditure as incurred, or to capitalise such expenditure (provided certain conditions are satisfied). The Group has
elected, when the conditions in AASB 6 are met, to capitalise these costs.
(iii) Determination of Exploration and evaluation expenditure area of interest;
King River Copper’s accounting policy for exploration and evaluation expenditure results in expenditure being capitalised in
relation to 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 as to future events and circumstances, in particular whether an economically viable extraction
operation can be established and judgements as which areas of tenure comprise the area of interest. 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 profit and
loss.
(b) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events
and are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are
revised and in any future periods affected. The key estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of certain assets and liabilities with the next annual reporting period are:
(i) Share based payment transactions
The Group measures the cost of equity settled transactions with employees and suppliers by reference to the fair value of the
equity instrument at the date at which they are granted. The fair value is determined by using a Black and Scholes model, using
the assumptions detailed in Note 18. The accounting estimates and assumptions relating to equity settled share based payments
would have no impact on the carrying amounts of the assets and liabilities within the next annual reporting period but may
impact income and expenses.
(ii) Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including
whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration
and evaluation asset through sale. To the extent that capitalised exploration and evaluation expenditure is determined not to be
recoverable in the future, profits and net assets will be reduced in the period in which this determination is made. In addition,
exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage that permits
a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent it is determined in the
future that this capitalised expenditure should be written off, profits and net assets will be reduced in the period in which this
determination is made.
(iii) Provision for decommissioning and restoration costs
Decommissioning and restoration costs are a normal consequence of mining, and the majority of this expenditure is incurred at
the end of a mine's life. In determining an appropriate level of provision consideration is given to the expected future costs to
be incurred, the timing of these expected future costs (largely dependent on the life of the mine), and the estimated future level
of inflation. The ultimate cost of decommissioning and restoration is uncertain and costs can vary in response to many factors
including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other mine
sites.
Page 30
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
5. PARENT ENTITY INFORMATION
Parent
2016
$
395,559
8,612,983
9,008,542
132,991
-
132,991
28,367,307
(21,018,168)
1,526,412
8,875,551
2015
$
804,334
7,227,210
8,031,544
83,309
-
83,309
27,266,692
(20,828,886)
1,510,429
7,948,235
(184,666)
(184,666)
(250,517)
(250,517)
Consolidated
2016
$
2015
$
790
4,150
342,093
342,093
317,556
317,556
-
-
(127,599)
(3,800)
(15,983)
(147,382)
(77,623)
(19,137)
(10,228)
(100,513)
(45,552)
(253,053)
(127,200)
(3,600)
-
(130,800)
(82,200)
(19,893)
(47,068)
(94,499)
(46,239)
(289,899)
Current Assets
Non-current Assets
Total Assets
Current Liabilities
Non-current Liabilities
Total Liabilities
Contributed Equity
Accumulated Losses
Option Reserve
Total Equity
Profit / (Loss) for the year
Total Comprehensive loss for the year
6. REVENUES AND EXPENSES
(a) Revenue
Interest
(b) Other Income
Research & Development Tax Rebate
The Research and Development Tax Rebate (R&D) is a tax incentive that
provides a 45% refundable tax offset for eligible R&D expenditure.
(c) Expenses
Depreciation – plant and equipment
Directors’ and employee benefits expenses:
- wages and fees
- superannuation contribution expense
- share based payments (options issued)
(d) Other administration expenses
Administration and book keeping fees
Travel and accommodation
Advertising and promotion
Office expenses
Other expenses
Page 31
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
7. INCOME TAX
The major components of the income tax are:
Statement of Comprehensive Income
Current income tax
Current tax attributable to prior years
Deferred income tax
Relating to origination and reversal of temporary differences
Tax losses foregone in lieu of Exploration Development Incentive tax credits
Deferred tax assets related to current year timing differences not brought to
account as realisation is not considered probable
Income tax benefit reported in the income statement
Reconciliation to Income Tax Expense on Accounting Loss
A reconciliation between tax expense and the product of accounting loss before
tax multiplied by the Company’s applicable income tax rate is as follows:
Accounting loss before income tax
Consolidated
2016
$
2015
$
-
-
(59,375)
(445,417)
504,792
-
(42,857)
42,857
-
(187,203)
(252,984)
Tax benefit at the statutory income tax rate 30%
(56,161)
(75,895)
Non Deductible Expenses
Employee share expenses
Deferred tax assets not brought to account as realisation is not considered
probable
Entertainment
Research & Development adjustment
Share based payment
Other
Income Tax Benefit
Consolidated
Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred tax liabilities
Exploration
Fixed Assets
Deferred tax assets
Capital raising costs
Prepayments
Tax losses
Tax losses foregone in lieu of Exploration Development Incentive tax credits
Provisions
Accrued Expenses
-
153,279
517
(102,628)
4,795
198
-
-
169,676
1,186
(95,267)
-
300
-
Statement of Financial Position
30 June 2016
30 June 2015
$
$
(2,607,292)
(2,241,614)
(1,208)
(873)
69,756
4,623
7,016,711
(445,417)
428
6,000
46,924
4,621
6,732,004
-
1,331
6,000
Net deferred tax asset not recognised’
4,043,601
4,548,393
Page 32
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
The Company and its subsidiary form a tax consolidated group. The consolidated financial statements have been prepared on
this basis of the formation of a consolidated group. The above DTA amounts are not recognised in the accounts on the basis the
Company does not meet the DTA recognition test, as profits are not forecast for the period ended 30 June 2016.
The Company issued $445,417 (2015: nil) Exploration Development Incentive (EDI) tax credits to shareholders which resulted in
a reduction of the Company carried forward tax losses of $1,484,722. The EDI enables eligible exploration companies to create
exploration credits by giving up a portion of their tax losses from greenfields minerals expenditure and distributing these
exploration credits to equity shareholders. Australian resident shareholders that are issued with an exploration credit will be
entitled to a refundable tax offset or additional franking credits. The exploration company’s carry forward losses are reduced
proportionately to reflect the amount of exploration credits created.
8. SEGMENT REPORTING
The Consolidated Entity operates in one geographical area being Australia and one industry, being exploration for the year to
30 June 2016. The Chief Operating Decision Makers are the Board of Directors and management of the Group. There is only one
operating segment identified being exploration activities in Australia based on internal reports reviewed by the Chief Operating
Decision Makers in assessing performance and allocation of resources.
The accounting policies applied for internal reporting purposes are consistent with those applied in the preparation of the
financial statements.
9.
LOSS PER SHARE
Consolidated
2016
$
2015
$
Loss used in calculation of basic and diluted earnings per share
(187,202)
(252,984)
Weighted average number of ordinary shares for the purposes of basic loss
per share
Effect of dilution - share options
Weighted average number of ordinary shares adjusted for effect of dilution
Number
Number
423,779,657
-
423,779,657
245,458,934
-
245,458,934
As at 30 June 2016 the Company has 5,500,000 Directors’ and Employees Options (2015: 3,800,000) and 124,410,167 listed
options (2015: nil) on issue. These options are not considered to be dilutive as the conversion of the options to ordinary shares
will decrease loss per share.
On 3rd August 2016, the Company completed a Share Purchase Plan and issued 127,133,897 shares. There have been no other
transactions involving ordinary shares or potential ordinary shares subsequent to the balance date that would significantly
change the number of ordinary shares or potential ordinary shares outstanding for the reporting period.
10. CASH AND CASH EQUIVALENTS
(i) Cash and cash equivalents balance
Cash at bank and on hand
Short term deposits
Cash at bank earns interest at floating rates based on daily bank deposit rates.
473,372
-
473,372
879,750
-
879,750
Page 33
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
(ii) Reconciliation of net loss after tax to net cash flows from operations
Profit/(Loss) for the year
Share-based payments
Depreciation
Impairment of Capitalised Exploration Expenses
(Increase)/decrease in assets:
−
current receivables
- Other financial assets
Increase/(decrease) in liabilities:
−
- provision
current payables
- deferred tax liabilities
Consolidated
2016
$
(187,202)
15,983
-
-
-
-
2015
$
(252,984)
-
-
-
8,370
(1,431)
58,164
(53,415)
-
-
-
-
Net Cash flow from / (used in) Operating Activities
(113,055)
(299,460)
11. TRADE AND OTHER RECEIVABLES
GST recoverable
23,749
23,749
94,335
94,335
(a) Allowance for impairment loss
Trade and other receivables which are primarily from the ATO are non-interest bearing and are generally paid on 30 day
settlement terms. Trade and other receivables are neither past due nor impaired at 30 June 2016 and 30 June 2015.
(b) Fair value
Due to the short term nature of the other receivables, their carrying value is assumed to approximate their fair value
12. OTHER FINANCIAL ASSETS
Non-current - Term deposit for bank guarantee for rehabilitation bond
-
46,671
The non-current other financial asset term deposit was a security for bank guarantees provided by the Company to the State
Government to support Rehabilitation Bonds on exploration tenements. The funds attracted interest at fixed rates in term
deposits. The Fair Value of Other Financial Assets approximates the Carrying Value. Management have deemed this to be a
level 2 Financial Asset.
13.
PLANT AND EQUIPMENT
Cost
Accumulated depreciation
Net carrying amount
At beginning of year, net accumulated depreciation
Acquired
Disposals
Depreciation charge for the year
At end of year, net accumulated depreciation
The useful life of the assets was estimated between 3 and 20 years for 2016.
68,120
(23,292)
44,828
8,009
36,819
-
-
31,301
(23,292)
8,009
8,009
-
-
-
44,828
8,009
Page 34
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
14. DEFERRED EXPLORATION EXPENDITURE
Costs carried forward in respect of:
Explorations and Evaluations Phase – At Cost
Balance at beginning of the year
Expenditure incurred
Total Exploration Expenditure
Consolidated
2016
$
2015
$
7,472,047
1,218,926
8,690,973
5,267,933
2,204,114
7,472,047
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases are dependent
on the successful development and commercial exploitation or sale of the respective areas. As at 30 June 2016 there are no
indicators of impairment under AASB 6 related to Deferred Exploration Expenditure.
15. TRADE AND OTHER PAYABLES
Trade payables
146,567
393,852
Trade payables and other creditors are non interest bearing and are normally settled on 30 day terms. Due to the short term
nature of these payables, their carrying value is assumed to approximate their fair value.
16. CONTRIBUTED EQUITY AND RESERVES
(a) Contributed Equity - Consolidated
Issued capital at beginning of year as at 1 July 2015
Fully paid ordinary shares carry one vote per share and carry the right to
dividends
Movements in ordinary shares on issue
Issued 26th Nov 15 for Cash in Placement
Issued 26th Nov 15 for Cash in Rights Issue
Transaction Costs on Share Issue net of tax
2016
Number
311,024,953
$
27,266,692
30,000,000
82,754,704
-
300,000
827,547
(26,932)
Issued capital at end of year as at 30 June 2016
423,779,657
28,367,307
Movement in options on issue
Number
Exercise Price
Listed Options on Issue as at 1 July 2015
Issued 21st July 2015 (expiry date 30 Jun 2018, issued for nil consideration)
Listed Options on Issue as at 30 June 2016
Unlisted Options on Issue as at 1 July 2015
Issued 21st July 2015
Options on Issue as at 30 June 2016
-
124,410,168
124,410,168
10 cents
Number
Exercise Price
3,800,000
1,750,000
5,550,000
10 cents
Page 35
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
(a) Contributed Equity - Consolidated
Issued capital at beginning of year as at 1 July 2014
Fully paid ordinary shares carry one vote per share and carry the right to
dividends
Movements in ordinary shares on issue
Issued 2nd July 14 for Cash in Placement
Issued 29th September 14 for Cash in Placement
Issued 31st October 14 for Cash in Placement
Transaction Costs on Share Issue net of tax
Issued 19th December 14 as 35% part payment of Drilling Costs1
Issued 17th March 15 for Cash in Rights Issue Placement
Transaction Costs on Share Issue net of tax
Issued 25th June 15 as 40% part payment of Drilling Costs1
Issued capital at end of year as at 30 June 2015
2015
Number
155,248,174
$
24,960,903
400,005
13,796,005
6,204,006
-
1,541,879
131,334,884
-
2,500,000
311,024,953
48,000
620,820
279,180
(61,482)
69,384
1,313,349
(13,462)
50,000
27,266,692
Movement in options on issue
Number
Exercise Price
Listed Options on Issue as at 1 July 2014
Issued 2nd July 2014
Expired 30/06/15 – Loyalty Bonus Options Issue 6th March 2013
Listed Options on Issue as at 30 June 2015
Unlisted Options on Issue as at 1 July 2014
Expired 31st December 2014
Expired 31st December 2014
Expired 30th June 2015
Options on Issue as at 30 June 2015
62,529,458
160,002
(62,689,460)
-
Number
10,750,000
(750,000)
(1,950,000)
(4,250,000)
3,800,000
20 cents
20 cents
Exercise Price
24 cents
55 cents
10 cents
1The fair value of the share issue at grant date was equal to the fair value of the drilling costs.
Other than the following there were no other significant movements in equity after the 2015 reporting period until the lodgment
of this report.
• On 21st July 2015, , the Company issued 124,410,168 options with an expiry date 30 Jun 2018, the options were issued for nil
consideration as part of a pro-rata bonus options issue to shareholders.
• On 26th November 2015, the Company issued 30,000,000 ordinary shares at 1 cent per share as part of a Placement and
82,754,704 ordinary shares at 1 cent per share as part of a pro-rata non-renounceable rights issue on the basis of 1 new
share for every 1 share held.
• On 3rd August 2016, the company announced the completion of the Share Purchase Plan which raised $788,230 from the
issue of 127,133,897 shares at 0.62 cent per share.
Terms and conditions of contributed equity
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate
in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. On a
show of hands, every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a
poll each share is entitled to one vote.
As per the Corporations Act 2001 the Company does not have authorised capital and ordinary shares do not have a par
value.
Page 36
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
(b) Reserves
Reserves
At 30 June 2014
Share-based payments
At 30 June 2015
Share – based payments
At 30 June 2016
Equity Benefits Reserve
$
1,510,429
-
1,510,429
15,983
1,526,412
Nature and Purpose of Equity Benefits Reserve
This reserve is used to record the value of equity benefits provided to directors, employees and external service providers as
part of their fees and remuneration.
During the year, the following options were issued by the Company:
-
1,750,000 unlisted options exercisable at $0.10 on or before 30th November 2018 were issued to contractors and employees
of the Company. These options all vested immediately.
Consolidated
2016
$
2015
$
17. COMMITMENTS
(a) Exploration Expenditure Commitment
In order to maintain the Company’s interest in mining tenements, the Company is committed to meet the minimum
expenditure conditions under which the tenements were granted.
Within 1 year
759,673
708,733
(b) Operating Lease Commitment
The Company entered an agreement for occupancy and warehouse storage facilities on a monthly basis, the commitments
under these agreements are:
within 1 year
1 - 3 years
Total lease payment during the year was $24,000 (2015 : $24,000)
18. SHARE BASED PAYMENTS
24,000
24,000
24,000
24,000
(a) Recognised share-based payment expenses
The expense recognised in the Statement of Comprehensive Income in relation to share-based payments is disclosed in Note 6.
(b) General terms of share-based payment plans
For the year ended 30 June 2016, 1,750,000 unlisted options exercisable at $0.10 on or before 30th November 2018 were issued to
contractors and employees of the company. These options all vested immediately.
Page 37
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
(c) Summaries of options granted
The following table illustrates the number and weighted average exercise prices (WAEP) and movements in employee share
options issued during the year.
2016
2015
Number
WAEP
Number
WAEP
Options outstanding at the beginning of
the year
Granted during the year
Converted during the year
Expired during the year
Cancelled during the year
3,800,000
1,750,000
0.17
0.10
10,750,000
-
-
-
(6,950,000)
Outstanding at the end of the year
Exercisable at the end of the year
5,550,000
5,550,000
0.15
0.15
3,800,000
2,950,000
0.22
-
0.24
0.17
0.16
There were 5,550,000 options issued or exercisable as at 30 June 2016 (2015: 3,800,000).
On the 21st July 2015, the Company granted 1,750,000 options over ordinary shares to contractors and employees, with an
exercise price of $0.10, exercisable until 30th November 2018. All of these options vested immediately.
(d) Weighted average remaining contractual life
The weighted average remaining contractual life for the options outstanding as at 30 June 2016 is 2.46 years (2015: 3.48 years).
(e) Range of exercise price and weighted average share price at the date of exercise
The exercise price for options outstanding at the end of the year was:
Options
Class J (1,250,000)
Class L (2,550,000)
Class M (1,750,000)
2016
0.10
0.20
0.10
2015
0.10
0.20
-
There were no options exercised during the 2016 financial year.
(f) Weighted average fair value
The weighted average fair value of options granted during the year was $0.15 cents. There were no options granted during the
previous year ended 30 June 2015.
(g) Option pricing model
The fair value of the equity-settled share options granted under the option plan is estimated as at the date of grant using a
Black-Scholes model taking into account the terms and conditions upon which the options were granted.
The following table lists the inputs to the model used for the years ended 30 June 2016 and 30 June 2015. Please note there were
no options granted during the year ended 30 June 2015:
Grant Date
Options Issued
Volatility (%)
Risk free interest rate (%)
Historic share price previous to grant date (cents)
Expected life of options (months)
Options exercise price (cents)
21 July 2015
1,750,000
Total 2015
3,800,000
100
1.99
0.02
40
10
-
-
-
-
-
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not
necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value.
Page 38
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
19. FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise of cash and short term deposits. The Group has various other financial
assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in notes 10, 11, 12 and 15 to the consolidated financial statements.
The Group manages its exposure to a variety of financial risks: market risk (including commodity risk and interest rate risk),
credit risk, liquidity risk and cash flow interest rate risk in accordance with the approved Group policies.
Primary responsibility for the identification and control of financial risks rests with the Board. The Board reviews and agrees
policies for managing each of the risks identified.
The Group uses different methods to measure and manage different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate and foreign exchange risk and assessment of market forecast for interest rate and
foreign exchange. The Group manages credit risk by only dealing with recognised, creditworthy, third parties and liquidity risk
is monitored through the development of future rolling cash flow forecasts.
Commodity price risk
The Group’s policy is to sell its commodity products at current market prices. Once in production the Group expects to have an
exposure to commodity price risk associated with the production and sale of vanadium and fluorite. Presently the Group is not
exposed to commodity price risk.
Interest rate risk
The Group’s current exposure to the risk of changes in market interest rates relate primarily to cash assets rates and is managed
by the Board in accordance with the approved investment policy. This policy defines maximum exposures and credit ratings
limits.
The Group does not account for fixed rate financial assets and liabilities at fair value through profit or loss.
During the financial year the Group has managed its cash assets by entering into a fixed interest term deposits to maximise its
cash balance.
The following table summarises the impact of reasonably possible changes on interest rates for the Consolidated Group as at 30
June 2016. The sensitivity is based on the assumption that interest rate changes by 80 basis points with all other variables held
are constant. The 80 basis points sensitivity is based on reasonably possible changes over a financial year, using the observed
historical trend. The analysis is performed on the same basis for the comparative period.
The Group’s exposure to interest rate risk on post-tax loss arises from higher or lower interest income from cash and cash
equivalents. Please see Note 10 for information on cash balance held with variable and fixed interest rates.
Consolidated
2015
$
879,750
46,671
-
926,421
2,746
(2,746)
2016
$
473,372
-
-
473,372
523
(523)
Financial assets
Cash and cash equivalents
Other Financial Assets
Financial Liabilities
Impact on post tax profit and equity
Post-tax gain/(loss) and equity
80 bp increase
80 bp decrease
Foreign currency risk
The Group has no material transactional foreign currency exposure.
Page 39
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
Credit risk
Credit risk arises in the event that counterparty will not meet its obligations under a financial instrument leading to financial
losses. The Group is exposed to credit risk from its operating activities, financing activities including deposits with banks and
receivables.
The credit risk control procedures adopted by the Group is to assess the credit quality of the institution with whom funds are
deposited or invested, taking into account its financial position and past experiences. Investment limits are set in accordance
with limits set by the Board based on the counterparty credit rating. The limits are assigned to minimise concentration of risks
and mitigate financial loss through potential counterparty failure. The compliance with credit limits is regularly monitored as
part of day-to-day operations. Any credit concerns are highlighted to senior management.
As the Group is yet to commence mining operations it has no significant exposure to customer credit risk. The maximum
exposure to credit risk at the reporting date is the carrying value of each class of financial assets in the Statement of Financial
Position.
Credit Quality of Financial Assets
Consolidated as at 30 June 2016
Cash and cash equivalents
Other Financial Assets
AAA
$
-
-
Trade and Other Receivables
23,749
Consolidated as at 30 June 2015
Cash and cash equivalents
Other Financial Assets
-
-
Trade and Other Receivables
94,335
S&P Credit rating
A1+
$
472,432
-
-
878,810
46,671
-
A1
$
A2
$
-
-
-
-
-
-
-
-
-
-
-
-
Unrated
$
940
-
-
940
-
-
Liquidity risk
The responsibility for liquidity risk management rests with the Board of Directors.
The Group manages liquidity risk by maintaining sufficient cash to meet the operating requirements of the business and
investing excess funds in highly liquid short term investments. The Group’s liquidity needs can be met through a variety of
sources, including: cash generated from interest accrued on cash balances, short and long term borrowings and issue of equity
instruments.
Alternatives for sourcing our future capital needs include our current cash position, future operating cash flow, project debt
financings and equity raisings. These alternatives are evaluated to determine the optimal mix of capital resources for the
Group’s capital needs.
As at 30 June 2016 and 30 June 2015, the Group’s financial liabilities have contractual terms of less than 6 months.
Capital risk management
The Group’s capital comprises share capital, reserves less accumulated losses amounting to $9,086,354 at 30 June 2016 (2015:
$8,156,960). The Group’s capital management objectives are:
•
•
•
To safeguard the business as a going concern;
To maximise potential returns for shareholders through minimising dilution; and
To retain an optimal debt to equity balance in order to minimise the cost of capital.
The Group may issue new shares or sell assets to reduce debts in order to maintain the optimal capital structure.
Page 40
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2016
20. SUBSIDIARY
The consolidated financial statements include the financial statements of King River Copper Limited and its subsidiary:
Speewah Mining Pty Ltd
Country of
% Equity Interest
Incorporation
Australia
2016
100
2015
100
21. EVENTS AFTER THE BALANCE SHEET DATE
On the 7th July 2016, the Company announced a Share Purchase Plan for existing shareholders to be able to purchase up to
$15,000 worth of additional shares at a discounted price of $0.0062. On 3rd August 2016, the company announced the completion
of the Share Purchase Plan which raised $788,230 from the issue of 127,133,897 shares at $0.0062 cent per share.
Other than this there were no other matters or circumstance that arose that has significantly affected, or may significantly affect,
the operations of King River, the results of those operations or the state of affairs of King River in subsequent years that is not
otherwise disclosed in the consolidated financial statements.
22. AUDITORS’ REMUNERATION
The auditors of King River are Ernst & Young.
Amounts received or due and receivable by Ernst & Young for:
An audit or review of the financial report of the entity
Consolidated
2016
$
30,900
30,900
2015
$
31,100
31,100
23. DIRECTORS AND KEY MANAGEMENT PERSONNEL DISCLOSURES
There were no changes to key management personnel between the reporting date and the date the financial report was
authorised for issue.
(a) Compensation of Key Management Personnel
Key Management Personnel
Short-term
Post-employment superannuation
Value of Share based payments
280,495
9,500
13,700
303,695
324,582
9,275
-
333,857
24. RELATED PARTY TRANSACTIONS
All equity transactions with key management personnel have been entered into at arm’s length.
Australian Heritage Group Pty Ltd (“AHG”), a company of which Mr Anthony Barton, is a Director and Mr Greg MacMillan,is
a Director and the Company Secretary, have entered into an occupancy and administration agreement with King River Copper
in respect of providing occupancy, administration and bookkeeping services commencing March 2009. The total value of the
occupancy and administration services provided by AHG during the year was $77,623 (2015: $82,200). As at 30th June 2016, there
was an amount of $30,140 (2015: $7,535) outstanding to pay AHG. Included in Trade payables as disclosed in Note 15. All
services provided by companies associated with directors were provided on commercial terms.
Mr Anthony Barton, a Director of the Company also purchased 179,992 (2015: 6,731,248) King River Copper shares on market
and received a rights issue of 12,123,767 (2015: 14,760,269) shares as part of the 26th November 2015 Rights Issue as per Note
16(a) for a total consideration of $122,053 (2015: $331,289) in arm’s length transactions on market during the year at market
rates. Mr Barton received 14,548,519 (2015: nil) listed options as part of the bonus options issue on 21st July 2015 as per Note
16(a) for nil consideration.
Mr Leonid Charuckyj received 970,711 (2015: 1,456,062) shares for a total consideration of $9,707 (2015: $14,651) as part of the
26th November 2015 rights issue. Mr Charuckyj received 1,164,850 (2015: nil) listed options as part of the bonus options issue on
21st July 2015 as per Note 16(a) for nil consideration.
Mr Greg MacMillan received 4,410,350 (2015: 5,524,528) shares for a total consideration of $44,104 (2015: $79,765) as part of the
26th November 2015 rights issue. Mr MacMillan received 5,292,421 (2015: nil) listed options as part of the bonus options issue on
21st July 2015 as per Note 16(a) for nil consideration.
Page 41
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of King River Copper
Limited
We have audited the accompanying financial report of King River Copper Limited, which comprises the
consolidated statement of financial position as at 30 June 2016, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the year's end or from time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 1(a), the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair
presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:RH:KINGRIVERCOPPER:010
Opinion
In our opinion:
(a) the financial report of King River Copper Limited is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity's financial position as at 30 June 2016
and of its performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2(a).
Emphasis of matter
Without qualifying our opinion, we draw attention to Note 2(e) in the financial report. These conditions
indicate the existence of a material uncertainty that may cast significant doubt about the consolidated
entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to
realise its assets and discharge its liabilities in the normal course of business.
Report on the remuneration report
We have audited the Remuneration Report included in pages 7 to 13 of the directors' report for the year
ended 30 June 2016. The directors of the company are responsible for the preparation and presentation
of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of King River Copper Limited for the year ended 30 June 2016,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
P Teale
Partner
Perth
16 August 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
PT:RH:KINGRIVERCOPPER:010
ASX Additional Information
Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as
follows. The information is current as at 9 August 2016.
(a) Distribution of Equity Securities
The number of shareholders, by size of holding, in each class of share are:
1
1,001
5,001
10,001
100,001
−
−
−
−
−
1,000
5,000
10,000
100,000
and over
Listed Ordinary Shares
Listed Options
Number of
Holders
Number of
Shares
Number of
Holders
Number of
Shares
92
210
209
623
484
1,618
39,925
687,803
1,748,227
25,055,547
523,382,052
550,913,554
181
422
221
524
189
1,537
82,782
1,246,103
1,703,603
18,696,654
102,681,026
124,410,168
There are 839 shareholders holding less than a marketable parcel at a price of $0.015, totalling 9,110,214 shares.
There are 1,267 option holders holding less than a marketable parcel at a price of $0.008, totalling 15,040,475 options.
(b) Twenty Largest Shareholders
The names of the twenty largest holders of quoted shares are:
Listed Ordinary Shares
Number of
Shares
Percentage of
Shares %
31,654,026
15,474,745
11,765,176
11,485,180
10,567,970
10,551,846
10,331,838
10,244,476
9,293,334
9,163,288
7,885,386
7,584,747
7,151,846
6,082,328
5,664,344
5,277,334
5,117,325
4,919,382
4,901,231
4,818,513
5.75%
3.81%
2.14%
2.08%
1.92%
1.92%
1.88%
1.86%
1.69%
1.66%
1.43%
1.38%
1.30%
1.10%
1.03%
0.96%
0.93%
0.89%
0.89%
0.87%
1 HSBC Custody Nominees (Australia) Ltd
2
3
L & E Fisher Nominees Pty Ltd
Barton & Barton Pty Ltd
4 Mr Anthony P Barton & Mrs Corinne H Barton
5
6
Lawrence Crowe Cons Pty Ltd
Sesna Pty Ltd
7 Mr Anthony P Barton & Mrs Corinne H Barton
8 Occasio Holdings Pty Ltd
9 Greatside Holdings Pty Ltd
10
Inglewood Lodge Pty Ltd
11 Australian Heritage Group Pty Ltd
12 The King’s Ransom (VIC) Pty Ltd
13 Miss Victoria Rose Barton
14 L & E Fisher Nominees Pty Ltd
15
Jarden Custodians Ltd
16 Deniliquin Pharmacy NSW Pty Ltd
17 Shayden Nom Pty Ltd
18 Mr Anthony Kastropil
19 Keith William Sheppard
20 Purple Onion Pty Ltd
Page 44
ASX Additional Information
(c) Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
Mr Anthony Barton and Associates
Copulos Group
(d) Voting Rights
Number of Shares
80,497,192
25,628,520
Percentage of
Ordinary Shares %
14.61%
6.05%
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
(e) Twenty Largest Quoted Option Holders
These options all have an exercise price of 10 cents and expire on the 30th June 2018
Listed Options
Number of
Options
Percentage
of Options
%
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
HSBC Custody Nominees (Australia) Ltd
Sesna Pty Ltd
L & E Fisher Nominees Pty Ltd
Barton & Barton Pty Ltd
9,496,208
8,066,509
3,996,870
2,884,000
Mr Anthony P Barton & Mrs Corinne H Barton
2,800,001
Greatside Holdings Pty Ltd
Occasio Holdings Pty Ltd
Mr Anthony P Barton & Mrs Corinne H Barton
The King’s Ransom (VIC) Pty Ltd
Jarden Custodians Ltd
Opalwork Pty Ltd
7.63%
6.48%
3.21%
2.32%
2.25%
2.24%
2.06%
1.93%
1.86%
1.37%
1.33%
1.19%
1.17%
1.16%
1.14%
1.13%
1.13%
1.09%
0.93%
0.86%
2,788,000
2,564,000
2,400,000
2,313,300
1,699,304
1,654,000
1,475,815
1,457,879
1,445,086
1,442,732
1,141,239
1,408,311
1,355,630
1,162,668
2,074,509
12. Mr Anthony Kastropil
13.
14.
15.
16.
17.
18.
19.
20.
Inglewood Lodge Pty Ltd
Australian Heritage Group Pty Ltd
Citicorp Nominees Pty Ltd
National Nominees Ltd
Stolow Pty Ltd
Romanna Pty Ltd
L & E Fisher Nominees Pty Ltd
Australian Heritage Group Pty Ltd
Page 45
ASX Additional Information
(f) Distribution of unquoted option holder numbers
Category (Size of Holding)
No of Option Holders
No of Options
100,001 and over
7
7
5,550,000
5,550,000
(g) Holders of more than 20% of unquoted options
There are no holders, holding more than 20% of the unquoted options on issue.
(h) On-Market Buyback
There is no on-market buy-back scheme in operation for the company’s quoted shares or quoted options.
(i) Schedule of Mining Tenements
Area of Interest
Tenements
Comments
Australia – Western Australia
All of the Tenements are registered in the name of Speewah
Mining Pty Ltd, a wholly owned subsidiary of King River
Copper Limited.
Note:
M = Mining Lease
E = Exploration Licence
L = Miscellaneous Licence
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
East Kimberley
M80/267
M80/268
M80/269
E80/2863
E80/3657
E80/4468
E80/4740
E80/4741
E80/4829
E80/4830
E80/4831
E80/4832
E80/4961
E80/4962
E80/4972
E80/4973
L80/43
L80/47
Page 46
Corporate Governance Statement
1
INTRODUCTION
1.1. Corporate Governance
The Australian Stock Exchange ("ASX") Listing Rules ("Listing Rules") require a listed entity to include in its annual report
a statement on corporate governance practices disclosing the extent to which it has followed the "best practice" corporate
governance recommendations set by the ASX Corporate Governance Council. If the entity has not followed any of the
recommendations, it must identify them and give reasons why. It must state the period during which the
recommendations were followed. For this purpose, Listing Rules Guidance Note 9 sets out the 8 essential corporate
governance principles and the applicable "best practice recommendations".
1.2. Compliance with ASX Listing Rule 4.10.3
Listing Rule 4.10.3 and Guidance Note 9 reflect ASX policy that it is "appropriate to focus on disclosure of corporate governance
practices rather than prescribe adoption of a particular practice". Therefore, an entity's obligation is to highlight areas of
departure from the recommendations: the "if not, why not?" approach.
1.3. The Company's Approach
The Board and senior management of King River Copper ("the Company") are committed to acting responsibly, ethically
and with high standards of integrity as the Company works to create shareholder value. To achieve this goal, the Board
has developed and adopted corporate governance practices and policies that have been implemented throughout
management and governance. This Corporate Governance Statement summarises these practices as they have been
adopted by the Company.
1.4. Adoption by the Board
The Board of the Company has reviewed and considered this Corporate Governance Statement and has adopted it. A
Board resolution to this effect has been passed.
1.5. Summary of Compliance
The Company has complied with 24 of the 26 "best practice recommendations". Non-compliance with Recommendations
2.2 and 4.2 relates to the Board considering it appropriate to not separately constitute an Audit Committee and there not
being an independent Chairman on the Board. The full Board deals with matters that would be dealt with by Audit,
Remuneration and Nomination Committees and it considers the make up of the Board and its Committees are appropriate
given the Company's size and operations and the current directors’ skills and experience.
2 ESSENTIAL PRINCIPLES OF GOOD CORPORATE GOVERNANCE
2.1. Principle 1: Lay Solid Foundations for Management and Oversight
"Recognise and publish the respective roles and responsibilities of the board and management."
Recommendation 1.1: Formalise and disclose the functions reserved to the Board and those delegated to senior executives.
The Directors monitor the business affairs of the Company on behalf of Shareholders and have formally adopted a Board
Charter which is designed to encourage Directors to focus their attention on accountability, risk management and ethical
conduct.
The Board's primary role is the optimisation of Company performance and protection and enhancement of shareholder
value. They develop strategies for the Company, reviews strategic objectives and monitors performance against these
objectives. Its functions and responsibilities include the following;
• setting strategic and policy direction
• monitoring performance against strategy
• identifying principal risks and opportunities and ensuring risk management systems are established and reviewed
• approving and monitoring financial reports
• capital management
• significant business transactions and investments
• appointing senior management and monitoring performance
• remuneration
• development and succession
• continuous disclosure compliance
• ensuring effective shareholder communication
• overseeing the Company's commitment to sustainable development and the environment
• ensuring the Board remains appropriately skilled
• reviewing and approving corporate governance systems
• enhancing and protecting the Company's reputation.
Page 47
Corporate Governance Statement
• establishing and maintaining appropriate ethical standards
The Board is also governed by the Company's Constitution, and on appointment each director is provided with a Director's
Information Kit, which forms part of the terms of their appointment and contains guides to directors’ duties and
responsibilities, the role of the Board and committees, the Constitution and the Company's policies.
The Company has in place formal letters of engagement for its senior management, setting out the responsibilities
specifically delegated to them.
Recommendation 1.2: Disclose the process for evaluating the performance of senior executives.
During each Financial Year an assessment of the performance of each senior executive is undertaken by the Remuneration
Committee and the Board. Individual executives are evaluated against the terms and conditions of their employment and
set policies for senior executive remuneration. Remuneration packages consist of base salary, fringe benefits, incentive
schemes (including performance related bonuses), superannuation and entitlements upon retirement or termination.
Senior executives are evaluated and rewarded for both financial and non-financial performance across a range of indicators
that apply to delivering results across the Company and linked to creating value for shareholders. Annual salary increases
are determined by the following three factors: (a) movement in job salary rates as determined by the Minerals and Energy
Human Resources Conference (“MEHRC”) national survey on like positions and job size; (b) movement in individual
competency values; and (c) movement in individual performance values.
2.2. Principle 2: Structure the Board to Add Value
"Have a board of an effective composition size and commitment to adequately discharge its responsibilities and duties."
Recommendation 2.1: A majority of the board should be independent directors.
The board comprises of Mr Anthony Barton, Mr Leonid Charuckyj and Mr Greg MacMillan as directors. Mr Derek Carew-
Hopkins was also a director during the year, however resigned on the 2nd July 2014. Mr MacMillan was appointed as a
Director the same day. Details of the directors are set out in the Company's annual report. At present, Mr Leonid
Charuckyj is considered to be an independent director in terms of the ASX Corporate Governance Council's definition of
independence. Mr Barton & Mr MacMillan are not considered independent as Mr Barton is a substantial shareholder of the
Company and Mr MacMillan is currently acting as Company Secretary. The board is not made up of a majority of
independent directors, however the company has also adopted certain procedures intended to ensure independent
decision making occurs, including the requirement for directors to absent themselves from discussions in which they have
a conflict of interest and the functioning of the Remuneration and Audit Committees.
Recommendation 2.2: The chairperson should be an independent director.
The chairperson, Mr Barton, is not independent, as outlined above.
Recommendation 2.3: The roles of the chairperson and Chief Executive Officer should not be exercised by the same individual.
The role of chairperson is filled by Mr Anthony Barton and currently the position of Chief Executive Officer is vacant.
Recommendation 2.4: The board should establish a Nomination Committee.
The Board has established a nomination committee comprising of all three Directors. The Board considers that given its
size and that all members of the Board hold non-executive positions in the Company, no efficiencies or other benefits would
be gained by establishing a separate nomination committee. The Board assesses the experience, knowledge and expertise of
potential directors before any appointment is made. The nomination committee deals with matters relating to the renewal
of Board Members and Board Performance. The company has also adopted a Nomination and Remuneration Committee
Charter.
Recommendation 2.5: Companies should disclose the process for evaluating the performance of the board, its committees and individual
directors.
The Remuneration Committee has developed a formal process for performance evaluation of the Board. The Remuneration
Committee reviews the remuneration policies applicable to all Directors and Executive Officers once a year making
recommendations on remuneration packages and terms of employment to the Board.
The company secretary is appointed and removed by the Board. The company secretary works with the Chairman, the
Board and the Board Committees on all governance issues. All Directors have access to the company secretary for the
purpose of obtaining information or advice.
2.3. Principle 3 : Promote ethical and responsible decision-making
Companies should actively promote ethical and responsible decision-making.
Recommendation 3.1: Companies should establish a code of conduct and disclose the code or a summary of the code as to:
•
•
The practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders.
The practices necessary to maintain confidence in the company’s integrity.
Page 48
Corporate Governance Statement
The responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
•
The Company has adopted a Code of Conduct setting the standards expected of officers, employees and contractors. This
demonstrates the Company's commitment to conducting business in an ethical and accountable manner. In essence,
officers, employees and contractors are expected to:
•
•
•
•
•
•
•
•
The Board monitors implementation of the Code. Breaches are reported by employees or contractors to a supervisor and by
act in good faith with the utmost honesty, integrity, objectivity and fairness
not to act improperly, misleadingly or deceptively
not to engage in illegal activity
understand and comply with applicable laws and Company policies
avoid conflicts of interest
be professional, responsible and accountable
respect an individual's rights
deal responsibly with the community.
management or directors to the Board or the chairperson. In addition, the Director's Information Kit provided to each
director contains a guide to the duties and responsibilities of directors and it is expected that Directors will be familiarised
with these or any other documents prepared by the Company to meet corporate governance requirements.
Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The
policy should include requirements for the board to establish measureable objectives for achieving gender diversity for the board to
assess annually both the objectives and the progress in achieving them.
The Company has not yet established a formal diversity policy. The Board has and will where appropriate conduct all
Board appointments in a manner that promotes gender diversity including establishing a structured approach for
identifying a pool of candidates, using external experts where necessary.
Due to the small scale of the Company’s operations and the limited number of employees, the Company has not yet set a
formal policy for achieving gender diversity. The Company will monitor its position and consider establishing a formal
policy as and when the Company develops over time.
Recommendation 3.3: Companies should disclose in each annual report the measureable objectives for achieving gender diversity set by
the board in accordance with the diversity policy and progress towards achieving them.
The Company has not established measurable guidelines in relation to diversity. Due to the small scale of the Company’s
operations and the limited number of employees, the Company has not yet set a formal policy for achieving gender
diversity. The Company will monitor its position and consider establishing a formal policy as and when the Company
develops over time to address equal opportunities in the hiring, training and career advancement of directors, officers and
employees.
Recommendation 3.4: Companies should disclose in each annual report the proportion of women employees in the whole organisation,
women in senior executive position and women on the board.
The gender balance throughout the organisation at 30 June was as follows:
2016
2015
Board
Other Key Management Personnel
All appointments have previously and will continue to be conducted in a manner that promotes gender diversity,
Female
-
-
Total
3
2
Female
-
-
Total
4
3
including establishing a structured approach for identifying a pool of candidates, using external experts where necessary.
2.4. Principle 4: Safeguard Integrity in Financial Reporting
"Have a structure to independently verify and safeguard the integrity of the company's financial reporting."
Recommendation 4.1: The board should establish an audit committee.
The Board has established an Audit Committee consisting of the full board. The Board considers that given its size and that
all members of the Board hold non-executive positions in the Company, no efficiencies or other benefits would be gained by
establishing a separate audit committee.
Recommendation 4.2: Structure the audit committee so that it consists of: only non executive directors; a majority of independent
directors; an independent chairperson, who is not chairperson of the board; and at least three members.
The audit committee is made up of the full board being three non – executive directors. The chairman of the Audit
Committee, Mr MacMillan is not the Chairman of the Board and is a Non-Executive director of the company. Before Mr
MacMillan’s appointment on the 2nd July 2014, Mr Carew-Hopkins was the Chairman for the Audit Committee. He was also
not the Chairman of the Board during this time. Mr Charuckyj was considered an independent director pursuant to the
ASX Corporate Governance Principles.
Page 49
Corporate Governance Statement
The Board considers that given its size and that all members of the Board hold non-executive positions in the Company, no
efficiencies or other benefits would be gained by establishing a separate audit committee or appointing another non-
executive, independent director to the Board.
Recommendation 4.3: The audit committee should have a formal charter.
The Board has adopted an Audit Committee Charter which sets out the duties of the Committee. These include the
following;
• to be the focal point of the communication between the Board, management and the external auditor
• recommend engagement and monitor performance of the external auditor
• review external audit reports and ensure prompt remedial action
• review the effectiveness of management information and internal control, all areas of significant financial risk and risk
management, significant transactions not a normal part of the Company’s business, financial information and ASX
reporting statements
• monitor internal controls and compliance and review the disclosure policy annually.
The audit committee aims to meet at least once every quarter, with further meetings on an as required basis. The charter is
included on the Company’s website which also includes any information on procedures for the selection and appointment
of the external auditor, or rotation of external engagement partners.
2.5. Principle 5: Make Timely and Balanced Disclosure
"Promote timely and balanced disclosure of all material matters concerning the Company."
Recommendation 5.1: Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior executive level for that compliance.
The Company has in place a continuous disclosure policy, "A Guide to Disclosure" which is reviewed at least annually, a
copy of which is included in the Director's Information Kit provided to each director upon appointment, and which forms
part of the terms of their appointment. A copy of the policy is also provided to all Company officers, employees and
agents. The Company has obligations under the Corporations Act and ASX Listing Rules to keep the market fully informed
of information which may have a material effect on the price or value of its securities. The Company discharges these
obligations by releasing information to ASX in the form of an ASX release or disclosure in other relevant documents (e.g.
the Annual Report). In addition, a list of recent announcements is presented in each Board meeting for discussion, minuting
and action if required.
2.6. Principle 6: Respect the Rights of Shareholders
"Respect the rights of shareholders and facilitate the effective exercise of those rights."
Recommendation 6.1: Design and disclose a communications strategy to promote effective communication with shareholders and
encourage effective participation at general meetings.
The Company has in place a communications policy, a copy of which is included in the Director's Information Kit provided
to each director upon appointment. The company is committed to ensuring that trade in securities takes place in an
efficient, competitive and informed market. The communications policy recognises the importance of forthright
communication as a key plank in building shareholder value and that to prosper and achieve the growth the company
must (among other things) earn the trust of employees, customers, suppliers, communities and security holder by being
forthright in its communications and consistent in its fulfilment of obligations.
The key aspects of the policy are:
• diligent compliance with the Company's disclosure and trading policies;
• prompt, transparent compliance with statutory reporting and meeting obligations, including detailed and full
disclosure in relation thereto; and
• effective use of the Company's website, electronic communication and its share registry to keep shareholders up to date
and to deal with enquiries.
The communications policy was adopted in May 2007 and is reviewed annually.
The Company employs a wide range of communication approaches to its members and the broader investment
community. In addition to direct communication with its members, a section of the Company’s website it is dedicated to
its investors. Media releases, investor presentations and interim and full-financial reports are available for review on its
website. These announcements, presentations and reports are placed on the website immediately after they have been
released to ASX. Members with access to email can, through the Company’s website, elect to be placed on an email mailing
list in order to be sent certain corporate information as it is released, including notices of annual general meetings and
Page 50
Corporate Governance Statement
explanatory statements and Annual reports. The Company regularly issues direct mail-outs to all shareholders advising of
its email communication facility to encourage shareholders to be placed on its email mailing list.
As the usage and acceptance of electronic communications in the community increases, the Company continues to
investigate the potential for increased use of electronic means of communicating with its investors and engaging their
involvement in the Company, including shareholder participation in its general meetings.
2.7. Principle 7: Recognise and Manage Risk
"Establish a sound system of risk oversight and management and internal control."
Recommendation 7.1: The board or appropriate committee should establish policies on risk oversight and management, and disclose a
summary of those policies.
The Company has in place a risk oversight and management policy, a copy of which is included in the Director's
Information Kit provided to directors upon appointment and which sets out systems for risk oversight, management and
internal control.
This risk management policy was adopted in May 2007. The key aspects of it are:
•
•
the Board oversees the establishment and implementation of risk management;
the Audit Committee is delegated the function and responsibility to establish, implement and maintain risk
management systems and frameworks; and
•
the Company's senior management are delegated the tasks of management of operational risk and the implementation
of risk management strategies.
The Board approves risk management systems and reviews them and their implementation annually. The Company's risk
profile, assessed and determined on the basis of the Company's businesses in mineral exploration, is reviewed annually.
The Board regularly considers risk management at its meetings.
The Company's risk management systems and control frameworks include the Board's ongoing monitoring of management
and operational performance, a comprehensive system of budgeting, forecasting and reporting to the Board, regular
presentations to the Board by management on the management of risk, approval procedures for significant capital
expenditure above threshold levels, the functioning of the Audit Committee, comprehensive written policies on specific
activities and corporate governance, regular communication between directors on compliance and risk and consultation
and review between the Board and external accountants.
Recommendation 7.2: The Board should require management to design and implement the risk management and internal control
system to manage the Company’s material business risks and report to it on whether those risks are being managed effectively the board
should disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks.
The Board has identified the specific and general risks that the Company is subject to and regularly assess and evaluation
the impact of these and other potential risks on the Company’s operation and business objectives. The risk profile of the
company contains both financial and non-financial factors including material risks arising from pricing, competitive
position, currency movements, operational efficiency, product quality and investments in new projects. Senior
management are responsible for the development of risk mitigation plans and the implementation of risk reduction
strategies and each week the senior management team meets to identify and discuss the types of business risks threatening
the Company as a whole or specific business activity within the Company.
To reduce these risks, the company has in place an experienced Board, regular Board meetings, financial annual audit and
half year review, rigorous appraisal of new investments, and advisers familiar with the company. The Board’s collective
experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational
risks and their management will be recurring items for deliberation at Board Meetings.
The Board is of the view that its risk management systems promote informed and measured decision making on risk issues
bases on a systematic approach to risk identification, assessment, control, review and reporting.
Recommendation 7.3: The Board should disclose whether it has received assurance from the chief executive officer (or equivalent) that
the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and
internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.
The Company Secretary confirms in writing to the Board that the financial reports of the Company for the financial year:
• present a true and fair view, in all material respects, of the company’s financial condition and operational results and are
in accordance with relevant accounting standards;
• the statement given in paragraph (a) above is founded on a sound system of risk management and internal compliance
and control which implements the policies adopted by the Board; and
Page 51
Corporate Governance Statement
• the company’s risk management and internal compliance and control system is operating efficiently and effectively in all
material respects.
2.8. Principle 8: Remunerate Fairly and Responsibly
Recommendation 8.1: The board should establish a Remuneration Committee.
The Company aims to attract and retain high calibre directors and senior executives capable of meeting the leadership and
specific management needs of the Company. A Remuneration Committee was established by the Board in previous years
to focus on this Company objective. The role of the Remuneration Committee is carried out by the full Board.
The Committee's duties include supervising employment and human resources, recommending remuneration for executive
directors and senior employees and for non executive director remuneration within approved limits, assisting executive
directors develop remuneration arrangements and reviewing executive succession and development.
The Committee met once during the Financial Year.
Recommendation 8.2: Clearly distinguish the structure of non executive directors remuneration from that of senior directors and senior
executives.
Executive Directors remuneration packages may comprise of:
(a)
(b)
(c)
The aggregate remuneration to non executive directors will not exceed the maximum amount of $150,000 approved by the
salary and associated superannuation;
fixed directors fees; and
performance based bonuses.
Company’s shareholders. The Company has adopted a Nomination and Remuneration Committee Charter.
Full remuneration disclosure, including superannuation entitlements, and the number of meetings of the Remuneration
Committee is provided by the Company in this annual report. The Remuneration Committee ensures that all equity based
executive remuneration is made within the guidelines set by plans approved by Shareholders.
Departure from Best Practice Recommendations
From 1 July 2014 to 30 June 2015, the Company complied with each of the Eight Essential Corporate Governance Principles
and Best Practice Recommendations published by the ASX Corporate Governance Council, other than in relation to the
table below.
Recommendation
2.1
Notification of
Departure
Majority of the board are
not independent Directors
The Chairman is not
independent
Not established a formal
diversity policy
The Company has not
established measurable
guidelines in relation to
diversity
The Audit Committee;
- is not chaired by an
independent chair
2.2
3.2
3.3
4.2
Page 52
Explanation from Departure
The existing structure is considered appropriate given the small scale
of the Company’s enterprise and the associated economic restrictions
this places on the Company. The Company has also adopted
procedures intended to ensure independent decision making occurs.
The existing structure is considered appropriate given the small scale
of the Company’s enterprise and the associated economic restrictions
this places on the Company. The existing structure is aimed at
maximising the financial position of the Company by keepings its
operating costs to a minimum.
Due to the small scale of the Company’s operations and the limited
number of employees, the Company has not yet set a formal policy
for achieving gender diversity. The Company will monitor its
position and consider establishing a formal policy as and when the
Company develops over time.
Due to the small scale of the Company’s operations and the limited
number of employees, the Company has not yet set a formal policy
for achieving gender diversity. The Company will monitor its
position and consider establishing a formal policy as and when the
Company develops over time to address equal opportunities in the
hiring, training and career advancement of directors, officers and
employees.
The role of the Audit Committee is currently carried out by the full
Board, consisting of two non-independent directors and one
is considered
independent director. The existing
appropriate given the size and financial position of the company.
structure