KINGSTON RESOURCES LIMITED
& its Controlled Entities
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
2017 Annual Financial Report
For the year ended 30 June 2017
For personal use only
CONTENTS
Contents
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Page No.
Corporate Directory ...................................................................................................................................... 2
Chairman’s Letter ......................................................................................................................................... 3
Directors’ Report .......................................................................................................................................... 4
Lead Auditor’s Independence Declaration ................................................................................................. 18
Consolidated Statement of Profit or Loss and Other Comprehensive Income ........................................... 19
Consolidated Statement of Financial Position ............................................................................................ 20
Consolidated Statement of Changes in Equity ........................................................................................... 21
Consolidated Statement of Cash Flows ...................................................................................................... 22
Notes to the Financial Statements .............................................................................................................. 23
Directors’ Declaration ................................................................................................................................ 46
Independent Auditor’s Report .................................................................................................................... 47
Corporate Governance Statement .............................................................................................................. 51
Additional Information ............................................................................................................................... 52
For personal use only
CORPORATE DIRECTORY
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Corporate Directory
DIRECTORS
Anthony Wehby, (FCA, MAICD)
Non-Executive Chairman
Andrew Corbett, (B Eng (Mining, Hons), MBA)
Managing Director
Stuart Rechner, (BSc, LLB, MAIG, GAICD)
Non-Executive Director
Andrew Paterson (MAIG, GAICD)
Executive Director
COMPANY SECRETARY
Rozanna Lee
REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS
Suite 205, 283 Alfred Street North
North Sydney NSW 2060
AUSTRALIA
AUDITORS
SHARE REGISTRY
BANKERS
SOLICITORS &
CORPORATE ADVISERS
Telephone
Email
Website
(02) 8021 7492
info@kingstonresources.com.au
www.kingstonresources.com.au
Grant Thornton Audit Pty Ltd
Chartered Accountants
Level 17, 383 Kent St
Sydney NSW 2000
Link Market Services Pty Ltd
Level 12
250 St Georges Terrace
Perth WA 6000
Australia & New Zealand Banking Group Limited
Level 1, 1275 Hay Street
West Perth WA 6005
Cowell Clarke Commercial Lawyers
Level 5
63 Pine St
Adelaide SA 5000
STOCK EXCHANGE
Listed on the Australian Securities Exchange
The home exchange is in Perth, Western Australia
ASX CODE
KSN – fully paid ordinary shares
- 2 -
For personal use only
CHAIRMAN’S LETTER
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Chairman’s Letter
Dear Stakeholders
I am pleased to introduce the Annual Report and Financial Statements for the year ended 30 June 2017.
When KSN shareholders voted in July 2016 to approve the significant changes to the Company we embarked
on a process to build KSN into a successful exploration company. Our approach has been to assess and test
the potential within our portfolio and to pursue opportunities to grow that portfolio.
We began with a portfolio of promising lithium targets and adequate funding to rapidly assess their potential.
As reported throughout the year and elsewhere in the Annual Report, we carried out a range of lithium
exploration programs in Western Australia and Northern Territory. The results of this work now form the
basis for developing our programs for 2018 and beyond.
The KSN team, led by Andrew Corbett, also evaluated a range of investment opportunities throughout the
year. As a result of that work we were very pleased to enter into an option agreement to acquire an interest
in the Livingstone Gold Project. Initial exploration work on this project indicates exciting potential which
will be pursued in the coming year.
Expansion of our asset base remains a priority for board and management and we continue to seek value by
applying a disciplined commercial approach to project opportunities.
The first year of the new KSN has been demanding on our small team and I take this opportunity to thank
them for their efforts and to congratulate them on what has been achieved for the Company.
We are grateful to all our shareholders for your support and encouragement and we look forward to a
successful 2018, which is already shaping up to be one of exciting challenges.
Your sincerely
Anthony S Wehby
Non-Executive Chairman
29 August 2017
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For personal use only
DIRECTORS’ REPORT
2017 ANNUAL REPORT
Directors’ Report
KINGSTON RESOURCES LIMITED
& its Controlled Entities
The Directors present their report together with the financial report of the Consolidated Entity (or ‘Group’),
being Kingston Resources Limited (‘Kingston” or the “Company’) and its subsidiaries, for the financial year
ended 30 June 2017 and the independent auditor’s report thereon.
PRINCIPAL ACTIVITIES
The Company is an Australian-based Company listed on the ASX. The principal activity of the Group during
the period was mineral exploration.
OPERATING RESULTS AND REVIEW OF OPERATIONS FOR THE YEAR
Operating Results
Kingston reported a statutory after tax loss of $1,153,471 (2016: $4,587,718), the reduced FY17 loss
compared to FY16 reflects the absence of any asset impairments (2016 $4,365,531).
Review of Operations
Kingston Resources had an active and exciting year to 30 June 2017. On 4 July 2016, shareholder approval
was received for a $6.85m capital raising and the concurrent acquisition of a portfolio of lithium exploration
assets. New board and management appointments were also made. Following this transaction, Kingston
holds lithium exploration licenses across four key project areas, three of which were advanced significantly
during FY17. Aligned with its lithium/gold/copper focus, Kingston also completed the purchase of an option
to acquire the Livingstone Gold project in December 2016. Initial sampling and auger drilling at
Livingstone’s Find has delivered very encouraging results. Both the Slipstream and Livingstone acquisitions
and activity for the year are summarised below.
Summary of Acquisitions
• Slipstream WANT: On 4 July 2016, KSN received EGM approval for its $6.85m capital raising
and concurrent acquisition of Slipstream WANT Pty Ltd. Slipstream WANT owned 20 lithium
exploration tenements, 2 of which were granted, 18 were in the application stage. Consideration
for the acquisition was 165m KSN shares plus $500,000 in cash. There were also Milestone shares
provided, which would see KSN issue the vendor 90m shares if a 5Mt resource of >1% Li20 was
discovered on the tenements, plus a further 90m shares if a 15Mt resource of >1% Li20 was
discovered. The Milestone shares will expire on 30 June 2019.
• Livingstone: On 21 December 2016, KSN completed the acquisition of an option to purchase a
75% interest in the Livingstone Gold Project from Trillbar Resources. In consideration for the
option, KSN paid the vendors 5.5m KSN shares and 5m 2.5c KSN options expiring in three years.
KSN has 12 months to exercise the option. In order to exercise the option, KSN is required to have
spent a minimum of $200,000 on exploration on the project. If KSN exercises the option, it will
pay the vendor a further $300,000 in KSN equity issued at a 10% discount to the 20 day VWAP
prior to the date of exercise.
Lithium Exploration Review
Bynoe / Wingate Projects: These projects cover 497 km2 of the extensive Bynoe and Wingate tin-tantalum-
lithium pegmatite fields where Core Exploration Limited (ASX:CXO) and Liontown Resources Limited
(ASX:LTR) have had encouraging early exploration success. Through FY17, Kingston completed initial
mapping and sampling programs, and a joint geophysics program with regional neighbours, Core
Exploration Limited and Liontown Resources Limited. This was followed up with a drill program completed
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For personal use only
DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
in June 2016, which delivered a best intersection of 12m at 1.43% Li2O from 121m. Follow up geochemical
sampling has helped further refine targets in the area and Kingston is also trialling the use of Deep Ground
Penetrating Radar (DPGR) which it believes has the potential to deliver significant value as a targeting tool
in the region. DPGR promises to help accurately distinguish pegmatites from surrounding country rock under
cover. Pegmatites’ lack of contrasting density, magnetic susceptibility, or conductivity makes them difficult
to identify using conventional geophysical techniques. Kingston anticipates further fieldwork, including
DPGR programs to be concluded in the six months to December 2017 ahead of a second drilling campaign in
Bynoe.
North Arunta Project: The North Arunta region is known to host tin / tantalum rich pegmatites, a strong
indicator that the extensive pegmatites in the area may be LCT type pegmatites, which host lithium
mineralisation in other hard rock pegmatite fields. Initial fieldwork, including mapping and geochemical
sampling was undertaken during the period with a number of high grade rock chips and soil anomalies
identified. Two priority areas have been identified within the Spotted Wonder prospect, Delmore and Tank
Hill. Kingston is progressing approvals for an RC program to test these targets.
Mount Cattlin Project: This project lies 15 km south west of the Mt Cattlin lithium mine owned by Galaxy
Resources Limited (ASX:GXY). The tenements cover the Annabelle Volcanics, which host Lithium-
Cesium-Tantalum (LCT) pegmatites and are considered prospective for lithium mineralisation. During the
year Kingston completed its initial fieldwork programs, successfully identifying a significant lithium-in-soil
anomaly at the Deep Purple Prospect. An initial small scale drill program was completed in January 2017,
with a best intersection of 5m at 1.11% Li2O from 7m. Kingston intends to work towards a follow up
program in the region once further fieldwork has been completed.
The Greenbushes tenement lies immediately south of Talison Lithium’s Greenbushes mine, the largest hard
rock lithium mine in the world. This tenement remains in application.
Gold Exploration Review
Livingstone, located northwest of Meekatharra in Western Australia, is an advanced exploration project with
an existing JORC2004 Inferred mineral resource of 49,900 ounces and a number of high-grade drilling
intersections that indicate excellent potential for additional discoveries.
An initial 2190m drill program on the smaller scale Homestead and Winja prospects was completed in March
2017. Best results at Homestead include:
• 7m @ 12.59g/t from 35m
• 3m @ 5.81g/t from 30m
• 12m @ 2.46g/t from 87m
And best results at Winja include:
• 18m @ 3.03g/t from 45m, including 7m @ 5.14g/t
These results highlight the potential for these prospects to host structurally controlled zones of significant
gold grades.
An auger program was carried out over the large scale Livingstone’s Find anomaly. The drilling, conducted
over an area of approximately 17km2, revealed high-tenor gold anomalies extending more than 2km across
each of the Stanley and Mt Seabrook prospects. The results include gold values in excess of 1,000ppb or 1g/t
Au. At the Mt Seabrook area, which includes two lines of old workings known as Mt Seabrook No.1 and
No.2, auger drilling defined a large area of gold anomalism greater than 50ppb Au. The Mt Seabrook
anomaly covers an area of over 2km long and up to 800m wide with a peak assay of 1.74g/t Au. The Mt
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For personal use only
DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Seabrook workings were sampled in 2016 by Kingston, with grab samples returning assays as high as
75.65g/t Au. In the Stanley area, a second major anomaly has been defined, extending east-west for over
3km with a width of up to 350m. Kingston intends to follow this auger program up with aircore drilling in
FY18.
FINANCIAL POSITION
On 4 July 2016, the Company completed a capital raising issuing a total of 326.2 million shares at $0.021
raising $6.85m, of which 40 million shares ($840,000) were issued in May 2016, with the balance being
issued in July 2016.
At the end of the financial year the Consolidated Entity had net assets of $9,740,370, (2016: $798,058) and
$3,877,551 in cash (2016: $645,270).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than reported above in the Review of Results and Operations, there were no significant changes in the
state of affairs of the Company during the reporting period.
MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
On 1 July 2017, the Company moved its registered address to Suite 205 / 283 Alfred St, North Sydney,
NSW.
Other than the above, there has been no other matter or circumstance which has arisen since 30 June 2017
that has significantly affected or may significantly affect:
a)
b)
c)
Kingston Resources Limited’s operations in future financial years; or
the results of those operations in future financial years; or
Kingston Resources Limited’s state of affairs in future financial years.
DIVIDENDS OR DISTRIBUTIONS
No dividends were paid during the financial year and the directors do not recommend the payment of a
dividend.
FUTURE DEVELOPMENTS AND EXPECTED RESULTS
The Group will continue its evaluation of its mineral projects and undertake generative work to identify and
potentially acquire new resource projects. Due to the nature of the business, the result is not predictable.
ENVIRONMENTAL REGULATIONS
The mineral tenements granted to the Company pursuant to the Western Australia Mining Act 1978,
Northern Territory Mineral Titles Act 2010 and South Australian Mining Act 1971 are granted subject to
various conditions which include standard environmental requirements. The Company adheres to these
conditions and the directors are not aware of any environmental laws that are not being complied with.
INFORMATION ON THE DIRECTORS
The Directors of the Company at any time during or since the end of the financial year are:
Anthony Wehby – Chairman (Non-Executive), appointed 4 July 2016
Andrew Corbett – Director (Managing), appointed 4 July 2016
Stuart Rechner - Director (Non-Executive since 4 July 2016), appointed 23 February 2015
Andrew Paterson – Director (Executive) appointed 1 March 2017 (Chief Geological Officer from 3
June 2016)
Yafeng Cai - Director (Non-Executive), appointed 7 December 2012, resigned 30 November 2016
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DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Jonathan Davies - Chairman (Non-Executive), resigned 4 July 2016
Directors have been in office since the start of the financial year to the date of this report unless otherwise
stated.
Anthony Wehby, Chairman (FCA, MAICD)
Term of Office:
Non-Executive Chairman of Kingston Resources Limited since 4 July 2016.
Skills and Experience: Mr Wehby is a highly experience board member and chairman. He is also a
Director of Royal Rehab and was previously Chairman of Tellus Resources
Limited, Non-Executive Chairman of Aurelia Metals Limited and a Director of
Harmony Gold (Aust) Pty Ltd. Since 2001, Mr Wehby has maintained a financial
consulting practice, focusing on strategic advice
including
investments, divestments and capital raisings. Prior to 2001, Mr Wehby was a
partner in PricewaterhouseCoopers Australia (Coopers & Lybrand) for 19 years.
to companies
Mr Wehby is a Fellow of the Institute of Chartered Accountants in Australia and a
Member of the Australian Institute of Company Directors.
Andrew Corbett, Managing Director (B Eng (Mining, Hons), MBA)
Term of Office:
Managing Director of Kingston Resources Limited since 4 July 2016.
Skills and Experience: Mr Corbett has been appointed as Managing Director and CEO of the Company.
Andrew is a highly experienced mining engineer and has operated in the mining
industry for over 23 years. Mr Corbett has senior corporate, operational and mine
management experience combined with an in-depth understanding of global equity
markets, business development and corporate strategy within the mining sector.
His prior roles include General Manager at Orica Mining Services based in
Germany and Portfolio Manager of the Global Resource Fund at Perpetual
Investments as well as mine management and operations roles with contractor and
owner-mining operations.
Stuart Rechner, Non-Executive Director (BSc, LLB, MAIG, GAICD)
Term of Office:
Executive Director of Kingston Resources Limited since 23 February 2015, Non-
Executive Director from 4 July 2016.
Skills and Experience: Mr Rechner is an experienced company director and geologist with a background
in project generation and acquisition in Australia and overseas. Mr Rechner holds
degrees in both geology and law and is a member of the Australian Institute of
Geoscientists and the Australian Institute of Company Directors. For over ten years
Mr Rechner was an Australian diplomat responsible for the resources sector with
postings to Beijing and Jakarta.
Mr Rechner is currently a Director of GB Energy Limited (ASX:GBX) since 20
November 2013 and a Director of Strategic Energy Limited (ASX:SER) since 12
September 2014. He has held no other listed directorships in the past three years.
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DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Andrew Paterson, Executive Director (MAIG, GAICD)
Term of Office
Executive Director of Kingston Resources Limited since 1 March 2017, Chief
Geological Officer from 3 June 2016.
Skills and Experience: Mr Paterson is a highly-experienced geologist with a track record of creating value
in resources projects. He has held corporate, executive and operational roles in the
gold, nickel sulphide and iron ore industries, including four years managing the
exploration and resource teams for Atlas Iron Limited during its rapid growth
phase between 2008 and 2012. More recently he established a successful
consultancy practice, providing geological expertise to a number of companies in
the WA gold sector. Mr Paterson has a Bachelor of Engineering in Geology and a
Graduate Diploma in Mining, both from the Western Australian School of Mines.
Yafeng Cai, Non-Executive Director (CPA) (resigned 30 November 2016)
Term of Office:
Non-Executive Director of Kingston Resources Limited since 7 December 2012,
resigned 30 November 2016.
Skills and Experience: Mr Yafeng Cai is a Certified Practicing Accountant and has been the Chief
Financial Officer of Yucai Australia Pty Ltd (Yucai) since 2010. Yucai is a
substantial investor in the Company and is ultimately controlled by Soaraway
Development. Mr Cai has a broad range of corporate and commercial experience in
the Australian business and capital sector within a diverse range of industries. Mr
Cai had no other listed directorships in the past three years.
Jonathan Davies, Chairman (BJuris, LLB (UWA)) (resigned 4 July 2016)
Term of Office:
Non-Executive Chairman of Kingston Resources Limited since 7 December 2012,
resigned 4 July 2016.
Skills and Experience: Mr Davies is a Barrister who has been practising for 28 years. He has extensive
legal experience in matters that include commercial, mining and corporate law. Mr
Davies was awarded the law Society of Western Australia Community Service
Award in 2006 and, together with Thomas Percy QC and Malcolm McCusker QC,
was awarded the Australian Lawyers Alliance Civil Justice Award in 2007. Mr
Davies has had no other listed directorships in the past three years.
COMPANY SECRETARY
Rozanna Lee has acted as Company Secretary since 29 July 2016. She holds both commerce and law degrees
from the University of Queensland and is an Associate Member of the Governance Institute of Australia. Ms
Lee provides company secretarial services to a number of public listed companies.
Mathew Whyte resigned as Company Secretary on 29 July 2016.
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DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
DIRECTORS’ INTEREST
As at the date of this report the relevant interest of each of the Directors, held either directly or indirectly
through their associates, in the securities of Kingston are as follows:
Director
Anthony Wehby3
Andrew Corbett5
Andrew Paterson6
Stuart Rechner
Yafeng Cai7
Jonathan Davies4
Fully Paid Ordinary
Shares (KSN)
Unlisted STI
Options1
Unlisted LTI
Options2
2,380,952
10,810,808
1,571,190
-
179,813
-
2,000,000
2,000,000
5,000,000
5,000,000
4,000,000
4,000,000
-
-
-
-
-
-
1. Unlisted Short Term Incentive (STI) Options exercisable at $0.04 each and expiring on 30 June 2018.
2. Unlisted Long Term Incentive (LTI) Options exercisable at $0.07 each and expiring on 30 June 2019.
3. Anthony Wehby holds a relevant interest in Options as he is a related party to Mrs Rosemary Wehby, who is the
registered holder of the options. He has a relevant interest in the shares as the registered holder.
Resigned on 4 July 2016.
4.
5. Andrew Corbett holds a relevant interest in the specified number of Shares and Options as a result of being a director
of Milamar Group Pty Ltd as trustee of Milamar Family Trust, which is the registered holder of those Shares and
Options.
6. Appointed on 1 March 2017
7.
Resigned on 30 November 2016
MEETINGS OF DIRECTORS
The following table sets out the number of meetings of Kingston’s Directors held during the year ended 30
June 2017 and the number of meetings attended by each Director. There were a total of ten Directors’
meetings for the financial year.
Director
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
Jonathan Davies
Yafeng Cai
Number Eligible to Attend
Number Attended
10
10
4
10
0
2
10
10
4
10
0
4
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DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
REMUNERATION REPORT (AUDITED)
This remuneration report outlines the director and executive remuneration arrangements of the Company and
the Group for the year ended 30 June 2017 in accordance with the requirements of the Corporations Act
2001 and its Regulations.
(a)
Key management personnel disclosed in this report
For the purposes of this report, key management personnel (KMP) of the Group are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the Group,
directly or indirectly, including a director (whether executive or otherwise) of the Company.
Details of key management personnel:
Non-Executive Chairman (appointed 4 July 2016)
A Wehby
A Corbett Managing Director (appointed 4 July 2016)
S Rechner Non-Executive Director (transitioned to Non-Executive Director on 4 July 2016)
A Paterson Executive Director (appointed 1 March 2017, Chief Geological Officer from 3 June 2016)
J Davies
Y Cai
Non-Executive Chairman (resigned 4 July 2016)
Non-Executive Director (resigned 30 November 2016)
(b)
Remuneration Philosophy
Kingston does not have a formal remuneration policy and has not established a separate remuneration
committee. The whole Board takes on the function of the remuneration committee with independent advice
sought as required. Due to the early stage of development and small size of the Company a separate
remuneration committee was not considered to add any efficiency to the process of determining the levels of
remuneration for directors and key executives. The Board considers that it is more appropriate to set aside
time at a Board meeting each year to specifically address matters that would ordinarily fall to a remuneration
committee such as reviewing remuneration, recruitment, retention and termination procedures and evaluating
senior executives remuneration packages and incentives.
In addition, all matters of remuneration will continue to be in accordance with the Corporations Act
requirement, especially with regard to related party transactions. That is, none of the directors participate in
any deliberations regarding their own remuneration or related issues.
Independent external advice is sought from remuneration consultants when required, however no advice has
been sought during the period ended 30 June 2017. The Corporate Governance Statement provides further
information on the Company’s remuneration governance.
(c)
Executive remuneration policy and framework
In determining executive remuneration, the Board aims to ensure that remuneration practices are:
• Competitive and reasonable, enabling the Company to attract and retain key talent;
• Aligned to the Company’s strategic and business objectives and the creation of shareholder value;
• Transparent and easily understood; and
• Acceptable to shareholders.
The Board reviews executive packages annually by reference to the executive’s performance and comparable
information from industry sectors and other listed companies in similar industries. The terms and conditions
for the Managing Director are considered appropriate for the current exploration phase of the Group’s
development.
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DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Options and performance rights may be issued to directors subject to approval by shareholders. All
remuneration paid to directors is valued at the cost to the Group and expensed. Options are valued using the
Black-Scholes methodology.
(d)
Relationship between remuneration and the Group’s performance
Directors’ remuneration is set by reference to other companies of similar size and industry, and by reference
to the skills and experience of directors. Fees paid to directors are not linked to the performance of the
Group. This policy may change once the exploration phase is complete and the Company is generating
revenue. At present the existing remuneration policy is not impacted by the Group’s performance including
earnings and changes in shareholder wealth (dividends, changes in share price or returns of capital to
shareholders). The Board has set long-term and short-term performance indicators for the determination of
director remuneration as the Board believes this may encourage performance which is not in the long term
interests of the Company and its shareholders.
The Board has structured its remuneration arrangements in such a way it believes is in the best interests of
building shareholder wealth in the longer term.
The following table shows the net loss, loss per share and share price for the last three financial years.
2017
2016
2015
2014
2013
Net Loss
($1,153,471)
($4,587,718)
($2,391,602)
(483,015)
(1,933,590)
Diluted loss per share (cents/share)
(1.777)
(2.702)
(2.004)
(0.578)
Share price at year end (cents)
2
2
2
2
(3.86)
6
Long-term (LTI) and short-term (STI) incentives may be provided to KMP in the form of Performance
Rights and Options over ordinary shares of the Company and are considered to promote continuity of
employment and provide additional incentive to recipients to increase shareholder wealth. Performance
Rights and Options may only be issued to directors subject to approval by shareholders in general meeting.
There were 13,500,000 unlisted Options issued during the year as LTI and 13,500,000 unlisted Options as
STI (2016:nil) . There were 5,954,063 Performance Rights issued during the year as STI and 27,969,375
Performance Rights issued during the year as LTI.
(e)
Non-Executive Directors remuneration policy
On appointment to the Board, all non-executive directors enter into a service agreement with the Company in
the form of a letter of appointment. The letter summarises the Board policies and terms including
remuneration, relevant to the office of director.
The Board policy is to remunerate non-executive directors at commercial market rates for comparable
companies for their time, commitment and responsibilities.
The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by
shareholders at the Annual General Meeting and is currently set at $150,000 per annum. Fees may also be
paid to non-executive directors for additional consulting services provided to the Company.
Fees for non-executive directors are not linked to the performance of the Group. Non-executive directors’
remuneration may also include an incentive portion consisting of options, subject to approval by
shareholders.
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DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(f)
Voting and comments made at the Company’s 2016 Annual General Meeting
Kingston received 93% of “yes” votes (0.1% of “no” votes) on its remuneration report for the 2016 financial
year. The Company did not receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
(g)
Remuneration Details for the Year Ended 30 June 2017
The following table of benefits and payments details, in respect to the financial year, the components of
remuneration for each member of the KMP of the Group.
Short-term
benefits
Post-employment
benefits
Long-term
benefits
Termination
benefits
Equity-settled share-based
payments
Total
Director
Salary, fees and
leave
Superannuation
LSL
Options
Performance
Rights/Shares*
Anthony Wehby (Non-Executive Chairman)
2017
2016
50,000
-
Andrew Corbett (Managing Director) *^
2017
2016
235,500
38,073
4,750
-
22,235
Stuart Rechner (Non-Executive Director) *
2017
2016
57,705
153,600
-
-
-
-
-
-
-
-
-
Andrew Paterson (Non-Executive Director appointed 1 March 2017
2017
2016
229,351
35,492
9,500
-
-
-
Yafeng Cai (Non-Executive Director) (resigned 30 November 2016)
-
-
-
-
-
-
-
-
32,328
-
-
-
80,820
9,660
-
-
-
-
-
-
87,078
-
347,805
38,073
57,705
153,600
64,656
-
8,221
-
311,728
35,492
2017
2016
8,581
12,708
-
-
-
-
-
-
-
-
-
8,333*
8,581
21,041
Mathew Whyte (Non-Executive Director & Company Secretary) (resigned as director 21 July 2015*)
2017
2016
42,420
100,900
-
-
-
-
Jonathan Davies (Non-Executive Chairman) (resigned 4 July 2016)
2017
2016
-
12,707
-
-
-
-
-
-
-
-
Barry Bourne (Non-Executive Director) (appointed 21 July 2015, retired on 20 November 2015)*
2017
2016
TOTAL
2017
2016
-
35,291
623,557
388,771
-
-
36,485
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,333*
-
-
42,420
100,900
-
21,040
-
35,291
177,804
0
17,881
16,666
855,727
405,437
* These Directors were remunerated through their related entities. Refer to Note 20 for details on related party transactions
^ Prior to his appointment on 4 July 2016, Mr Corbett received consultancy payments from the Company
- 12 -
For personal use only
DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(h)
Service Agreements
Remuneration and other terms of employment for KMP are formalised in service agreements. The service
agreements specify the components of remuneration, benefits and notice periods.
Anthony Wehby
Mr Wehby was appointed Non-Executive Chairman on 4 July 2016. The appointment is contingent upon
satisfactory performance and successful re-election by shareholders of the Company as and when required by
the constitution of the Company and the Corporations Act. Mr Wehby is not entitled to any termination
benefits unless paid at the discretion of directors.
Andrew Corbett
Mr Corbett was appointed as Executive Director on 4 July 2016. Mr Corbett is remunerated pursuant to the
terms and conditions of an employment agreement entered into with Mr Corbett on 4 July 2016 and has no
fixed term. The agreement may be terminated by either party on the giving on three months’ notice by Mr
Corbett or six months’ notice by the Company. Mr Corbett is not entitled to any termination benefits unless
paid at the discretion of directors.
Stuart Rechner
Mr Rechner was appointed as Executive Director on 23 February 2015 and transitioned to a non-executive
role on 4 July 2016. Mr Rechner was remunerated pursuant to the terms and conditions of a consultancy
agreement entered into with Diplomatic Exploration Pty Ltd on 30 March 2015. The consultancy agreement
was terminated with the provision of 12 weeks’ notice. Mr Rechner is not entitled to any termination benefits
unless paid at the discretion of directors.
Andrew Paterson
Mr Paterson was appointed as Executive Director on 1 March 2017 (has been in the role of Chief Geological
Officer since 3 June 2016). Mr Paterson is remunerated pursuant to the terms and conditions of an
employment agreement entered into with Mr Paterson on 3 June 2016 and has no fixed term. The agreement
may be terminated by either party on the giving on three months’ notice by Mr Paterson or 6 months’ notice
by the Company. Mr Paterson is not entitled to any termination benefits unless paid at the discretion of
directors.
Jonathan Davies
Mr Davies was appointed a Non-Executive Director on 7 December 2012 and resigned on 4 July 2016. Mr
Davies was not entitled to any termination benefits.
Yafeng Cai
Mr Cai was appointed a Non-Executive Director on 7 December 2012. The appointment is contingent upon
satisfactory performance and successful re-election by shareholders of the Company as and when required by
the constitution of the Company and the Corporations Act. Mr Cai was not entitled to any termination
benefits.
Mathew Whyte
Mr Whyte was appointed as Company Secretary on 5 September 2011 and resigned on 29 July 2016. Mr
Whyte was also a Director of the Company until his resignation on 21 July 2015. He was renumerated
pursuant to a corporate consultant agreement with Mathew Whyte trading as Whypro Corporate Services
(ABN 53844 654 790) to act as Company Secretary of the Company. The terms included the fee for the
provision of the services (including company secretarial) on arms-length rates. The corporate consultant
agreement was terminated with the provision of 12 weeks’ notice.
- 13 -
For personal use only
DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(i)
Equity Interests of KMP
Options holdings of KMP
The number of options over ordinary shares held by each KMP of the Group during the 2016 and 2017
reporting periods is as follows:
2017
Balance
Granted
Value
Value per
Granted
Value
Value per
Exercised/
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
Jonathan Davies**
Mathew Whyte**
Yafeng Cai**
Total
-
-
-
-
-
-
-
-
01-Jul-16
STI*
2,000,000
5,000,000
4,000,000
-
-
-
-
STI
16,657
41,642
33,313
-
-
-
-
STI
0.008
0.008
0.008
-
-
-
-
LTI*
2,000,000
5,000,000
4,000,000
-
-
-
-
LTI
15,671
39,178
31,343
-
-
-
-
LTI
0.008
0.008
0.008
-
-
-
-
11,000,000
91,612
11,000,000
86,192
Other changes
-
-
-
-
-
-
-
--
Vested and
exercisable at the
end of the year
Vested and un-
exercisable at the
end of the year
4,000,000
10,000,000
8,000,000
-
-
-
-
22,000,000
-
-
-
-
-
-
-
-
*Unlisted STI Options exercisable at 4c (expiry 30/6/18) and LTI Options exercisable at 7c (expiry 30/6/19) issued to senior
management and employees on 4 July 2016
** J Davies resigned on 4 July 2016, M Whyte resigned as Director on 21 July 2015 and Company Secretary on 29 July 2016 and Y
Cai resigned on 30 November 2016
2016
Stuart Rechner**
Balance
01 July 15
-
Granted
-
Jonathan Davies
2,000,000
Mathew Whyte
Yafeng Cai
Total
2,000,000
1,000,000
5,000,000
-
-
-
-
Value
52,800
52,800
26,400
158,400
Exercised
-
Other changes
-
Vested and exercisable
at the end of the year
-
Vested and un- exercisable
at the end of the year
-
-
-
-
-
(2,000,000)*
(2,000,000)*
(1,000,000)*
(5,000,000)
-
-
-
-
-
-
-
-
* KSNOA Listed Options exercisable at $0.07 each expired at 30 June 2016.
** Stuart Rechner previously disclosed he had a relevant interest in 8,099,620 Options as his father, Anthony Rechner, is a director of
Omen Pty Ltd which is a Substantial Shareholder of Kingston. Having considered the matter further, Stuart Rechner has determined
that he has no power to dispose or vote any of the shares held by any of Anthony Rechner or his controlled entities and accordingly
does not have a relevant interest in the Shares held by Anthony Rechner or his controlled entities.
Performance Rights Holdings of KMP
The number of performance rights in the Company held by each KMP of the Group during the 2017 reporting
period (2016: Nil) is as follows:
2017
Balance
Granted
Value
Value per
Granted
Value
Granted
Value
Value per
Vested
Lapsed/
LTI²
LTI
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
Yafeng Cai
Jonathan Davies
Mathew Whyte
Total
01-Jul-16
-
-
-
-
-
-
-
-
STI¹
-
3,216,563
2,737,500
-
-
-
-
STI
-
3,264
2,778
-
-
-
-
STI
-
0.001
0.001
-
-
-
-
6,000,000
10,000,000
8,000,000
-
-
-
-
5,954,063
6,041
24,000,000
-
-
-
-
-
-
-
-
LTI³
-
2,144,375
1,825,000
-
-
-
-
LTI
-
6,397
5,444
-
-
-
-
3,969,375
11,841
STI
-
0.003
0.003
-
-
-
-
Cancelled
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at the
end of the year
6,000,000
15,360,938
12,652,500
-
-
-
-
33,923,438
¹STI Performance Rights will be granted in 3 tranches as follows (subject to satisfaction of the applicable Performance
Hurdles and Vesting Conditions):
-
If, the Share price as quoted on ASX at the close of trading on 30 June 2017 is equal to or greater than $0.028 per Share,
shares will vest on a sliding scale with 6% vesting at 2.8c, and a a maximum of 30% STI Performance rights vesting if
the share price exceeds 3.8cps
- Up to 50% of the STI Performance Rights will vest, at the Board’s discretion, upon the achievement of operational
performance measures, including the delivery of the Company’s Operational Plan for 30 June 2017.
- Up to 20% of the STI Performance Rights will vest, at the Boards discretion, upon the achievement of business
development objectives measured against the Company’s business development plan by 30 June 2017.
²The LTI Performance Rights will be granted in 2 tranches as follows:
-
Tranche 1 (50%) will vest on the establishment by the Company of a JORC Compliant 5 million tonne inferred Mineral
Resource (or greater) of Li2O of a grade of at least 1%;
- 14 -
For personal use only
DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
-
Tranche 2 (50%) will vest on the establishment by the Company of a JORC Compliant 15 million tonne inferred Mineral
Resource (or greater) of Li2O of a grade of at least 1%.
³The LTI Performance Rights will be granted if the Company achieves a market capitalisation greater than $50 million on or
before 30 June 2020. Market capitalisation means the price of the Company’s shares as quoted on ASX multiplied by the total
number of Shares on issue
Share holdings of KMP
The number of ordinary shares in the Company held by each KMP of the Group during the 2016 and 2017
reporting periods is as follows:
2017
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
Yafeng Cai
Jonathan Davies
Mathew Whyte
Total
Balance
01 July 16
291,971
1,167,883
58,394
-
520,813*
1,270,813**
1,587,591***
4,897,465
Acquired
2,088,981
8,355,925
417,796
-
-
-
-
11,489,395
Received on
exercise
-
-
-
-
-
-
-
-
Other changes
-
-
-
-
(520,813)****
(1,270,813)****
(1,587,591)****
(1,791,626)
* Held at the date of resignation 30 November 2016
** Held at the date of resignation 4 July 2016
*** Held at the date of resignation 29 July 2016
**** Represents holding at the time of ceasing to be a KMP and not necessarily disposed
2016
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner*
Yafeng Cai
Jonathan Davies
Mathew Whyte
Barry Bourne**
Total
Balance
01 July 15
-
-
-
33,039,337
-
750,000
1,500,000
2,295,420
37,584,757
Acquired
291,971
1,167,883
58,394
-
520,813
520,813
87,591
-
2,647,465
Received on
exercise
-
-
-
-
-
-
-
-
-
Other changes
-
-
-
(33,039,337)*
-
-
-
2,295,420
(33,039,337)
Held at end of
reporting period
30 June 17
2,380,952
9,523,808
476,190
-
-
-
-
14,595,234
Held at end of
reporting period
30 June 16
291,971
1,167,883
58,394
-
520,813
1,270,813
1,587,591
-
7,192,885
* Stuart Rechner previously disclosed he held a relevant interest in 33,039,337 Shares as his father, Anthony Rechner, is a director of
Omen Pty Ltd which is a Substantial Shareholder of Kingston. Having considered the matter further, Stuart Rechner has determined
that he has no power to dispose or vote any of the shares held by any of Anthony Rechner or his controlled entities and accordingly
does not have a relevant interest in the Shares held by Anthony Rechner or his controlled entities.
** Held at the date of resignation 20 November 2015
(j)
Loans to key management personnel
There were no loans to individuals or members of KMP during the financial year or the previous financial
year.
(k)
Other KMP transactions
There have been no other transactions involving equity instruments other than those described in the tables
above. For details of other transactions with KMP, refer to Note 20 Related Party Transactions.
END OF AUDITED REMUNERATION REPORT
- 15 -
For personal use only
DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
SHARE OPTIONS
At the date of this report the unissued ordinary shares of the Company under option are as follows:
Grant Date
Date of Expiry
Exercise Price
28 Aug 15
8 July 16
8 July 16
26 Oct 16
26 Oct 16
30 Jun 19
30 Jun 18
30 Jun 19
30 Jun 18
30 Jun 19
3 cents
4 cents
7 cents
4 cents
7 cents
22 Dec 16
22 Dec 19
2.5 cents
Held at
01 July 16
7,058,823
-
-
Issued
-
11,000,000
11,000,000
2,500,000
2,500,000
5,000,000
Lapsed /
Cancelled
Held at
30 June 2017
-
-
-
7,058,823
11,000,000
11,000,000
2,500,000
2,500,000
5,000,000
During the year ended 30 June 2016 and 30 June 2017 no ordinary shares in the Company were issued
pursuant to the exercise of options. Apart from as described above, there have been no conversions to, calls
of, or subscriptions for ordinary shares of issued or potential ordinary shares since the reporting date and
before the completion of these financial statements.
No person entitled to exercise an option had or has any right by virtue of the option to participate in any
share issue of any other body corporate.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied to any court pursuant to section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the
purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group
was not a party to any such proceedings during the year.
COMPETENT PERSON’S STATEMENT
The information in this report that relates to Exploration Results, Minerals Resources or Reserves is based on
information compiled by Mr Andrew Paterson, who is a member of the Australian Institute of Geoscientists.
Mr Paterson is a full-time employee of the Company and has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify
as a competent person as defined in the 2012 Edition of the “Australasian Code for reporting of Exploration
Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Paterson consents to the inclusion in this
report of the matters based upon the information in the form and context in which it appears.
INDEMNITIES GIVEN AND INSURANCE PREMIUMS PAID TO AUDITORS AND OFFICERS
The Company has entered into Deeds of Access, Indemnity and Insurance with each Director.
Under these deeds, the Company has undertaken, subject to the restrictions in the Corporations Act, to:
a)
b)
c)
indemnify each Director from certain liabilities incurred from acting in that position under specified
circumstances;
maintain directors’ and officers’ insurance cover (if available) in favour of each Director whilst that
person maintains such office and for seven years after the Director has ceased to be a director;
cease to maintain directors’ and officers’ insurance cover in favour of each Director if the Company
reasonably determines that the type of coverage is no longer available. If the Company ceases to
maintain directors’ and officers’ insurance cover in favour of a Director, then the Company must
notify that Director of that event; and
- 16 -
For personal use only
DIRECTORS’ REPORT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
d)
provide access to any Company records which are relevant to the Director’s holding of office with the
Company, for a period of seven years after the Director has ceased to be a Director.
During the year, the Company paid a premium to insure officers of the Group. The officers of the Group
covered by the insurance policy include all directors and the company secretary.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that
may be brought against the officers in their capacity as officers of the Group, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities
arise out of conduct involving a wilful breach of duty by the officers or the improper use by the officers of
their position or of information to gain advantage for themselves or someone else to cause detriment to the
Group.
Details of the amount of the premium paid in respect of the insurance policies is not disclosed as such
disclosure is prohibited under the terms of the contract.
The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by
law, indemnified or agreed to indemnify any current or former officer or auditor of the Group against a
liability incurred as such by an officer or auditor.
AUDIT COMMITTEE
The Company is not of a size nor are its financial affairs of such complexity to justify a separate audit
committee of the board of directors. All matters that might properly be dealt with by such a committee are
the subject of scrutiny at full board meetings.
NON AUDIT SERVICES
There were no non-audit services provided during the financial year by the auditor.
AUDITORS’ INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required by section 307C of the Corporations Act 2001
is included in this Annual Report. Grant Thornton Audit Pty Ltd continues in office in accordance with
section 327 of the Corporations Act 2001.
Pursuant to section 298(2) Corporations Act, this Directors’ Report:
a)
b)
c)
is made in accordance with a resolution of the Directors; and
is dated 29 August 2017; and
is signed by Mr Anthony Wehby .
ANTHONY WEHBY
Non-Executive Chairman
Sydney, New South Wales
29 August 2017
- 17 -
For personal use only
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Kingston Resources Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Kingston Resources Limited for the year ended 30 June 2017, I declare that, 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.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
A J Archer
Partner - Audit & Assurance
Sydney, 29 August 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
- 18 -
For personal use only
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
as at 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Continuing Operations
Other income
Employee benefits
Consultant and legal fees
Depreciation and amortisation expenses
Director fees
Share based payments expense
Gain/(Loss) on revaluation of assets at fair value
through profit and loss
Impairment of exploration expenditure
Other expenses
Loss before income tax expense
Income tax expense
Loss for the year
Other comprehensive income/(loss)
Other comprehensive income/(loss) – net of tax
Total comprehensive loss for the year
Basic loss per share (cents)
Diluted loss per share (cents)
Notes
Consolidated Group
2017
$
2016
$
2
3
3, 21
4
210,671
(489,735)
(210,845)
(875)
(102,372)
(228,667)
-
-
(331,648)
(1,153,471)
-
(1,153,471)
246,546
-
(216,102)
(453)
(35,415)
(16,666)
24,652
(4,365,531)
(224,749)
(4,587,718)
-
(4,587,718)
-
(1,153,471)
-
(4,587,718)
(0.177)
(0.177)
(2.702)
(2.702)
The financial statements should be read in conjunction with the accompany notes.
- 19 -
For personal use only
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Capitalised exploration expenditure
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Notes
Consolidated Group
2017
$
2016
$
8
9
10
12
21
13
14
15
3,877,551
92,142
1,944
-
3,971,637
1,312
6,230,407
-
6,231,719
10,203,356
399,474
63,512
462,986
462,986
9,740,370
645,270
22,276
1,944
4,948
674,438
2,702
-
208,811
211,513
885,951
87,893
-
87,893
87,893
798,058
58,262,992
(48,790,572)
267,950
9,740,370
48,435,159
(47,637,101)
-
798,058
The financial statements should be read in conjunction with the accompany notes.
- 20 -
For personal use only
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Statement of Changes in Equity
Consolidated Group
Issued Capital
Ordinary
Shares
$
Accumulated
Losses
$
Reserves
$
Total
Equity
$
Balance at 1 July 2015
Loss for the year
Total comprehensive loss for the year
47,311,236
-
47,311,236
(44,401,972)
(4,587,718)
(48,989,690)
1,352,589
-
1,352,589
4,261,853
(4,587,718)
(325,865)
Transactions with shareholders
Issue of share capital
Capital raising costs
Share-based payments lapsed
Balance at 30 June 2016
Balance at 1 July 2016
Loss for the year
Issue of Shares
Cost of share issue
Share based payments
Balance at 30 June 2017
1,238,666
(114,743)
-
48,435,159
-
-
1,352,589
(47,637,101)
-
-
(1,352,589)
-
1,238,666
(114,743)
-
798,058
48,435,159
-
48,435,159
10,228,500
(400,667)
58,262,992
(47,637,101)
(1,153,471)
(48,790,572)
-
-
-
(48,790,572)
-
-
-
798,058
(1,153,471)
(355,413)
-
-
267,950
267,950
10,228,500
(400,667)
267,950
9,740,370
The financial statements should be read in conjunction with the accompany notes.
- 21 -
For personal use only
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Statement of Cash Flows
Notes
Consolidated Group
2017
$
2016
$
Cash flows from operating activities
Continued operations
Interest received
Receipts from other income
Research and development credit
Payments to suppliers and employees
Net cash used in operating activities
18
Cash flows from investing activities
Payment for exploration and evaluation
Payment for acquisition of exploration assets
Payment for acquisition of property, plant and equipment
Payment for funds held on deposit
Proceeds from sale of investments
Proceeds from sale of fixed assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares and options
Capital raising costs
Net cash provided by financing activities
Net change in cash and cash equivalents held
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
8
106,377
20,000
83,509
(1,019,237)
(809,351)
(1,228,288)
(304,907)
-
(35,805)
-
1,300
(1,567,700)
6,010,000
(400,668)
5,609,332
3,232,281
645,270
3,877,551
The financial statements should be read in conjunction with the accompany notes.
9,157
40,222
197,168
(414,648)
(168,101)
(396,194)
(208,811)
(2,295)
(4,948)
34,620
-
(577,628)
1,200,000
(114,743)
1,085,257
339,529
305,741
645,270
- 22 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Notes to the Financial Statements
This financial report includes the consolidated financial statements and notes of Kingston Resources Limited and
controlled entities (‘Consolidated Group’ or ‘Group’).
For the purpose of preparing the consolidated financial statements, the Company is a for-profit entity.
Note 1: Statement of Significant Accounting Policies
The financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards including Australian Accounting Interpretations, other authoritative pronouncements of the
Australian Accounting Standards Board and the Corporations Act 2001. The consolidated financial statements are
presented in the currency of Australian dollars.
Statement of Compliance
Compliance with Australian Accounting Standards ensures that the financial statements and notes of Kingston
Resources Limited and its controlled entities comply with International Financial Reporting Standards (IFRS).
The financial statements were authorised for issue by the directors on 29 August 2017.
Basis of Preparation
The financial statements have been prepared on an accrual basis and are based on historical costs modified by the
revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of
accounting has been applied.
Significant Accounting Policies
a)
Principles of Consolidation
The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June
2017. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement
with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All
subsidiaries have a reporting date of 30 June. A list of controlled entities is contained in Note 11 to the financial
statements.
All transactions and balances between Group companies are eliminated on consolidation, including unrealised
gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales
are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective.
Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are
recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable.
Non-controlling interests, presented as part of equity, represent the portion of a subsidiary’s profit or loss and net
assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the parent and the non-controlling interests based on their respective ownership interests.
- 23 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
b)
(i)
New Accounting Standards and Interpretations
Changes in accounting policy
The following standards and interpretations have been applied for the first time for entities with years ended 30 June
2017 (unless early adopted):
Reference
Title
AASB 2015-4 amends
AASB 128
Investments in Associates and Joint Ventures
Application date
of standard*
Application date
for Group*
1 July 2015
1 July 2015
Investments in Associates and Joint Ventures to ensure that its reporting
requirements on Australian groups with a foreign parent align with those
currently available in AASB 10 Consolidated Financial Statements for such
groups. AASB 128 will now only require the ultimate Australian entity to apply
the equity method in accounting for interests in associates and joint ventures, if
either the entity or the group is a reporting entity, or both the entity and group are
reporting entities.
AASB 2015-3
Amendments to Australian Accounting Standards arising from the Withdrawal of
AASB 1031 Materiality
1 July 2015
1 July 2015
The Standard completes the AASB’s project to remove Australian guidance on
materiality from Australian Accounting Standards.
AASB 2015-4
Amendments to Australian Accounting Standards – Financial Reporting
Requirements for Australian Groups with a Foreign Parent
1 July 2015
1 July 2015
The amendment aligns the relief available in AASB 10 Consolidated Financial
Statements and AASB 128 Investments in Associates and Joint Ventures in
respect of the financial reporting requirements for Australian groups with a
foreign parent
The adoption of new and amended Standards and Interpretations did not impact the financial position or performance
of the Group.
(ii) Accounting Standards issued but not yet effective
The following standards and interpretations have been issued by the AASB but are not yet effective for the period ended
30 June 2017:
• AASB 9 Financial Instruments
• AASB 15 Revenue from Contracts with Customers
• AASB 16 Leases
• ASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15
• AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share
Based Payment Transactions
The Group’s assessment is that there would be no material impact to the financial statements on first time adoption.
c)
Income Tax
The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax
expense (income). Current and deferred income tax expense (income) is charged or credited directly to other
comprehensive income instead of the profit or loss when the tax relates to items that are credited or charged
directly to other comprehensive income.
Current tax
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using
applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets)
are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and its intended that
net settlement or simultaneous realisation and settlement of the respective asset and liability will occur.
- 24 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Deferred tax
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during
the year as well unused tax losses.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where
amounts have been fully expensed but future tax deductions are available. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is
no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax
assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity
or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of
the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets
or liabilities are expected to be recovered or settled.
Tax consolidation
Kingston Resources Limited and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation legislation. Each entity in the Group recognises its own current
and deferred tax liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation.
Current tax liability (assets) and deferred tax assets arising from unused tax losses and tax credits in the
subsidiaries are immediately transferred to the head entity. The Group notified the Australian Taxation Office
that it had formed an income tax consolidated group to apply from 1 July 2003.
d)
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable any
accumulated depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash
flows that will be received from the assets employment and subsequent disposal.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the group and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss on the
statement of profit or loss and other comprehensive income.
Depreciation
The depreciable amount of all fixed assets is depreciated using the diminishing value method commencing from
the time the asset is held ready for use.
The depreciation rates used for each class of depreciable asset are:
Class of Fixed Assets
Office, furniture and equipment
Depreciation Rate
5-40%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. The gains and
losses are included in profit or loss in the statement of profit or loss and other comprehensive income. When
revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to
retained earnings.
- 25 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
e)
Financial Instruments
Initial recognition and measurement
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not
classified as at fair value through profit or loss. Transaction costs related to instrument classified as at fair value
through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and
measured as set out below.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks
and benefits associated with the asset.
Classification and subsequent measurement
Financial assets at fair value through profit and loss
A financial asset is classified in this category if acquired principally for the purpose of selling in the short term
or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of
Financial Instruments. Realised and unrealised gains and losses arising from changes in the fair value of these
assets are included in profit or loss in the period in which they arise.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are stated at amortised cost using the effective interest rate method.
Available-for-sale financial assets
Available-for-sale financial assets include any financial assets that are either designated as such or that are not
classified in any of the categories. They comprise investments in the equity of other entities where there is
neither a fixed maturity nor fixed or determinable payments. They are held at fair value with changes in fair
value taken through the financial assets reserve directly to other comprehensive income.
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantee) are subsequently measured at amortised cost
using the effective interest rate method.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied
to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to
similar instruments and option pricing models.
Impairment
At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has
been impaired. In the case of available-for-sale financial instruments, a significant and prolonged decline in the
value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are
recognised in profit or loss in the statement of profit or loss and other comprehensive income.
The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment
loss through the use of an allowance account. Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying amount of the allowance account are recognised
in profit or loss.
In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss
is recognised directly in the financial assets reserve in other comprehensive income.
f)
Impairment of Non-Financial Assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to
- 26 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to
the statement of profit or loss and other comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
g)
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the group’s entities is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian
dollars which is the parent entity’s functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the
date of the transaction.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where
deferred in equity as a qualifying cash flow or net investment hedge in which case they would be recognised in
other comprehensive income.
h)
Employee Benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by
employees to reporting date. Employee benefits that are expected to be settled wholly within one year have been
measured at the amounts expected to be paid when the liability is settled plus related on costs. Employee
benefits payable later than one year have been measured at the present value of the estimated future cash
outflows to be made for those benefits.
Equity-settled compensation
The Group operates a share-based compensation plan which includes a share option arrangement. The bonus
element over the exercise price of the employee’s services rendered in exchange for the grant of options is
recognised as an expense in the statement of profit or loss and other comprehensive income, with a
corresponding increase to an equity account. The total amount to be expensed over the vesting period is
determined by reference to the fair value of the shares of the options granted. The fair value of options is
ascertained using a Black-Scholes pricing model which incorporates all market vesting conditions, the fair value
of Performance Rights is ascertained using the Monte Carlo method.
i)
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly
liquid investments with original maturities of three months or less.
k)
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
l)
Revenue and Other Income
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
Research and development credits are treated as Other Income and recognised to the extent that the related
expenditure has been expensed in the Statement of Profit and Loss and Other Comprehensive Income. Research
and development credits that pertain to expenditure on any capitalised amounts remaining on the Statement of
Financial Position are deferred accordingly to be recognised in-line with expensing of those items.
All revenue is stated net of the amount of goods and services tax (GST).
- 27 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
m)
Exploration and Development Expenditure
Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable area
of interest. These costs are only capitalised to the extent that they are expected to be recovered through the
successful development of the area or where activities in the area have not yet reached a stage that permits
reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the
decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life
of the area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to
capitalise costs in relation to that area of interest.
Costs of site restoration are provided over the life of the project from when exploration commences and are
included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant,
equipment and building structures, waste removal, and rehabilitation of the site in accordance with local laws
and regulations and clauses of the permits. Such costs have been determined using estimates of future costs,
current legal requirements and technology on an undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations
and future legislation. Accordingly the costs have been determined on the basis that the restoration will be
completed within one year of abandoning the site.
n)
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
statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
o) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
p)
Going Concern
The consolidated entity has incurred operating losses of $1,153,471 (2016: $4,587,718) and negative operating
cash flows of $809,351 (2016: $168,101) for the year ended 30 June 2017. The consolidated entity’s net current
asset position as at 30 June 2017 was $3,508,650 (2016: $586,545).
During the financial year, on 8 July 2016, the Company completed a placement of shares raising $6.01 million.
Details to this placement are described in Note 14. The entity has planned to use these funds largely on
exploration activities, the expenditure of which can be varied and applied discretionarily.
The nature of an exploration company is to be loss making, however, the Company’s cash balance of $3,977,551
leaves it with sufficient funding to continue to meet operational expenditure requirements, including minimum
exploration commitments across its tenement portfolio.
The above circumstances have resulted in the financial statements being prepared on the basis of going concern
which contemplates continuity of normal business activities and the realisation of assets and settlement of
liabilities in the ordinary course of business and at the amounts stated in the financial report.
q)
Joint arrangements and associates
Associates are those entities over which the Group is able to exert significant influence but which are not
subsidiaries.
A joint venture is an arrangement that the Group controls jointly with one or more other investors, and over
which the Group has rights to a share of the arrangement’s net assets rather than direct rights to underlying assets
and obligations for underlying liabilities. A joint arrangement in which the Group has direct rights to underlying
assets and obligations for underlying liabilities is classified as a joint operation.
- 28 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Investments in associates and joint ventures are accounted for using the equity method. Interests in joint
operations are accounted for by recognising the Group’s assets (including its share of any assets held jointly), its
liabilities (including its share of any liabilities incurred jointly), its revenue from the sale of its share of the
output arising from the joint operation, its share of the revenue from the sale of the output by the joint operation
and its expenses (including its share of any expenses incurred jointly).
Any goodwill or fair value adjustment attributable to the Group’s share in the associate or joint venture is not
recognised separately and is included in the amount recognised as investment.
The carrying amount of the investment in associates and joint ventures is increased or decreased to recognise the
Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted
where necessary to ensure consistency with the accounting policies of the Group.
Unrealised gains and losses on transactions between the Group and its associates and joint ventures are
eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the
underlying asset is also tested for impairment.
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events and are
based on current trends and economic data, obtained both externally and within the Group.
Key estimates – Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to
impairment of assets.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by management review using Black
Scholes, Monte Carlo, or an agreed fair value. The related assumptions are detailed in Note 19. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying
amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.
Estimation of useful lives of assets
The estimation of the useful lives of assets has been based on historical experience and manufacturers’ warranties (for
plant and equipment). In addition, the condition of the assets is assessed at least once per year and considered against
the remaining useful life. Adjustments to useful lives are made when considered necessary.
Exploration and evaluation of expenditure
Costs arising from exploration and evaluation activities are carried forward provided the rights to tenure of the area of
the interest are current and such costs are expected to be recouped through successful development, or by sale, or where
exploration and evaluation activities have not, at reporting date, reached a stage to allow a reasonable assessment
regarding the existence of economically recoverable reserves. Costs carried forward in respect of an area of interest that
is abandoned are written off in the year in which the decision to abandon is made. The carrying value of the capitalised
exploration and evaluation expenditure is assessed for impairment whenever facts and circumstances suggest that the
carrying amount of the asset may exceed its recoverable amount. Such capitalised exploration expenditure is carried at
the end of the reporting period at $6,230,407 (see Note 21).
The Group has applied AASB 6 Exploration for and Evaluation of Mineral Resources.
Treatment of acquisitions
The two acquisitions completed in FY17 have been treated as an acquisition of assets rather than a business
combination. This is a result of both Slipstream WANT and Livingstone failing to meet the AASB3 definition of a
business, in particular there were no employees, exploration work underway, or plans to commence exploration. As a
result of this treatment, the acquisition price has been allocated across the assets acquired.
- 29 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 the recoverable amount. Any impairment losses are
recognised in profit or loss on the statement of profit or loss and other comprehensive income.
2.
3.
OTHER INCOME
Other income
Interest from bank
Geoscientist Assistance Program funding
Research and development tax credit
Profit on sale of fixed asset
Other income
Total income
RESULT FOR THE YEAR
Depreciation and amortisation of non-
current assets
Depreciation of:
- plant and equipment
Total depreciation and amortisation
Impairments
Impairment of exploration expenditure – Note 21
Total impairments
Consolidated Group
2017
$
2016
$
106,377
-
83,509
785
20,000
210,671
875
875
-
-
9,157
40,221
197,168
-
-
246,546
453
453
4,365,531
4,365,531
4.
(a)
INCOME TAX
Income tax recognised in profit and loss
The prima facie tax expense (benefit) on operating result is reconciled to the income tax
provided in the statement of profit or loss and other comprehensive income as follows:
Consolidated Group
2017
$
2016
$
Accounting loss before income tax
(1,153,471)
(4,587,718)
Income tax benefit calculated at 30%
(346,041)
(1,376,315)
Non-deductible expenses
Movement in unrecognised temporary differences
Unused tax losses and temporary differences not
recognised as deferred tax assets
Income tax expense (benefit)
398,096
(524,015)
471,960
-
147
1,103,869
272,299
-
- 30 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on
taxable profits under Australian tax law. There has been no change in the corporate tax rate when compared with the
previous reporting period.
(b) Unrecognised deferred tax balances
The following deferred tax assets and liabilities have not been brought to account:
Deferred tax assets (at 30%)
Losses available for offset against future taxable
Provision for expenses
Capital raising costs
Impairment
Mineral Exploration
Legal fees
Deferred tax liabilities (at 30%)
Mineral exploration
Consolidated Group
2017
$
2016
$
1,593,973
29,019
160,003
1,248,318
794,040
-
3,825,353
-
-
1,176,404
4,050
34,423
1,248,318
1,441,643
6,376
3,911,214
-
-
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets
have not been recognised in respect of these items because it is not probable that future taxable profit will be available
against which the Company can utilise the benefits from.
The potential deferred tax assets will only be obtained if:
(i)
the Company derives future assessable income of a nature and an amount sufficient to enable the benefit to
be realised in accordance with Division 170 of the Income Tax Assessment Act 1997;
the Company continues to comply with the conditions for deductibility imposed by the law; and
(ii)
(iii) no changes in tax legislation adversely affect the Company in realising the benefits.
The carry-forward losses prior to the acquisition of Fleurieu Mines and the capital raising have been lost due to the
group not meeting the continuity of ownership test and the same business test.
Tax Consolidation
Effective 1 July 2003, for the purposes of income taxation, the Company and its 100% wholly-owned subsidiaries
formed a tax consolidated group; the head entity of the tax consolidated group is Kingston Resources Limited.
- 31 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
5.
INTERESTS OF KEY MANAGEMENT PERSONNEL
(a)
Key management personnel compensation
Key management personnel (KMP) remuneration has been included in the Remuneration Report section of the
Directors’ Report.
The totals of remuneration paid to KMP of the Group during the 2017 and 2016 reporting periods are as follows.
Short-term employee benefits
Post- employment benefits
Equity-settled share-based payments
Total
6.
AUDITOR REMUNERATION
Grant Thornton Audit Pty Ltd
Remuneration of the auditor of the Company for:
- auditing or reviewing the financial statements
- non-audit services
Total
7.
LOSS PER SHARE
Consolidated Group
2017
$
2016
$
623,557
36,485
195,685
855,727
388,771
-
16,666
405,437
Consolidated Group
2017
$
2016
$
53,500
-
53,500
22,637
-
22,637
(a) Basic loss per share (cents per share)
(b) Diluted loss per share (cents per share)
(c) Weighted average number of ordinary shares on
issue used in the calculation of basic loss per share
Loss used in calculation of basic loss per share
(d)
(0.177)
(0.177)
(2.702)
(2.702)
653,455,155
169,797,134
($1,153,471)
($4,587,718)
There are no dilutive potential ordinary shares as the exercise of options to ordinary shares would have the effect of
decreasing the loss per ordinary share and would therefore be non-dilutive.
Consolidated Group
2017
$
2016
$
8.
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Total
47,746
3,829,805
3,877,551
28,190
617,080
645,270
Cash at bank earns interest at floating rates based on daily deposit rates. The carrying amounts of cash and cash
equivalents represent fair value. Short-term deposits are made for varying periods of between one day and three months,
depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rate
at 1.6% per annum (2016: 2.8%).
- 32 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
9.
TRADE AND OTHER RECEIVABLES
Current
Other receivables
Total current trade and other receivables
Credit Risk – Trade and Other Receivables
Consolidated Group
2017
$
2016
$
92,142
92,142
22,276
22,276
The Group has no significant concentration of credit risk with respect to any single counter party or group of counter
parties other than those receivables specifically provided for as mentioned within this note. The class of assets described
as Other Receivables is considered to be the main source of credit risk related to the Group.
The following table details the Group’s trade and other receivables exposed to credit risk with ageing analysis and
impairment provided thereon. Amounts are considered to be “past due” when the debt has not been settled within the
terms and conditions agreed.
Past due but not impaired (days overdue)
Gross
amount
Past due
and
impaired
<30
31 - 60
61 - 90
> 90
$
$
$
$
$
$
Consolidated Group
2017
Other receivables
Total
2016
Other receivables
Total
92,142
92,142
22,276
22,276
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Within
initial
trade
terms
$
-
-
-
-
92,142
92,142
22,276
22,276
10.
FINANCIAL ASSETS
Financial assets at fair value through profit and
loss:
At fair value
Shares in listed entities
Consolidated Group
2017
$
2016
$
1,944
1,944
1,944
1,944
- 33 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Financial assets at fair value through profit and loss consist of investments in ordinary shares.
(i) Listed shares
The fair value of listed shares has been determined directly by reference to published price quotations in an
active market.
There are no individually material investments.
At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has
been impaired. No impairment was recorded for the 30 June 2017 Financial Year.
11. CONTROLLED ENTITIES
Name
Country of
Incorporation
Principal Activity
Beneficial Percentage
Interest Held By
Economic Entity
2016
%
2017
%
Slipstream WANT Pty Ltd
Universal Rare Earths Pty Ltd
Fleurieu Mines Pty Ltd
Westernx Pty Ltd
U Energy Pty Ltd
Australia
Australia
Australia
Australia
Australia
Mineral Exploration
Mineral exploration
Mineral exploration
Mineral exploration
Mineral exploration
100
100
100
100
100
100
100
100
100
100
12.
PROPERTY, PLANT AND EQUIPMENT
Computing plant and equipment – at cost
Acquisitions for the year
Disposals
Closing balance
Accumulated depreciation
Opening balance
Depreciation for the year
Accumulated Depreciation on disposal
Closing balance – accumulated depreciation
Net book value – computing plant and equipment
Total property, plant and equipment, net
Consolidated Group
2017
$
2016
$
260,586
-
(7,145)
253,441
257,884
875
(6,630)
252,129
1,312
1,312
258,290
2,296
-
260,586
257,431
453
-
257,884
2,702
2,702
- 34 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(a) Movements in carrying amounts
Balance at 1 July 16
Acquisitions
Disposals
Depreciation expense
Balance at 30 June 17
Balance at 1 July 15
Acquisitions
Depreciation expense
Balance at 30 June 16
13. TRADE AND OTHER PAYABLES
Trade payables – unsecured
Other payables and accruals
Total
Computing,
plant and
equipment
$
Total
$
2,702
-
(515)
(875)
1,312
859
2,296
(453)
2,702
2,702
-
(515)
(875)
1,312
859
2,296
(453)
2,702
Consolidated Group
2017
$
2016
$
301,230
98,244
399,474
74,393
13,500
87,893
Given the short term nature of these amounts, their carrying value approximates their fair value.
- 35 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
ISSUED CAPITAL
14.
(a) Movements in contributed equity for the year
Balance at the beginning of the year
- Ordinary shares at 0.021 cents on 7 July 2016
- Ordinary shares at 0.025 cents on 8 July 2016
- Ordinary shares at 0.017 cents on 22 December 2016
Shares issued during the previous financial year:
- Ordinary shares at 0.024 cents on 13 July 2015
- Ordinary shares at 0.017 cents on 28 August 2015
- Ordinary shares at 0.016 cents on 20 November 2015
- Ordinary shares at 0.021 cents on 25 May 2016
Consolidated Group
30 June 2017
30 June 2016
Number of Fully
Paid Ordinary
Shares
$
Number of Fully
Paid Ordinary
Shares
$
209,079,509
286,190,476
165,000,000
5,500,000
48,435,159
6,010,000
4,125,000
93,500
145,944,745
47,311,236
916,666
21,176,472
1,041,626
40,000,000
22,000
360,000
16,666
840,000
Less capital raising costs
Total contributed equity
665,769,985
(400,668)
58,262,991
-
209,079,509
(114,743)
48,435,159
The Company has authorised share capital amounting to 665,769,985 (2016 : 209,079,509) fully paid ordinary shares of no par value. At shareholders’ meetings each fully
paid ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.
Slipstream WANT Acquisition: On 4 July 2017 KSN received EGM approval for a $6.85m capital raising, and concurrent acquisition of Slipstream WANT Pty Ltd.
Consideration for the acquisition was 165m KSN shares plus $500,000 in cash and 180m Milestone Shares. The $6.85m capital raising resulted in the issuance of a total of
336.2m shares at 2.1c, 40m of which were issued in May 2016, with the balance issued on 7 July 2017.
Livingstone Acquisition: On 21 December2017 KSN completed the acquisition of an option to purchase a 75% interest in the Livingstone Gold Project from Trillbar
Resources. In consideration for the option KSN paid the vendors 5.5m KSN shares and 5m 2.5c KSN options expiring in three years.
- 36 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(b) Listed Options
Listed options (ASX code: KSNOA)
Listed options (ASX code: KSNO)
Total listed options
Movements in listed options for the year
Listed options (ASX code: KSNOA)
Balance at the beginning of the year
Listed options issued during the financial year
Listed options expired during the financial year
Total listed options
Listed options (ASX code: KSNO)
Balance at the beginning of the year
Quotation granted during the financial year
Listed options expired during the financial year
Total listed options
Consolidated Group
30 June 2017
30 June 2016
Number of
Options
$
Number of
Options
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,624,769
-
(28,624,769)
-
25,702,500
-
(25,702,500)
-
-
-
-
-
-
-
-
-
-
During the year Kingston issued 32,000,000 unlisted options with a total value of $243,080. Details for these are outlined in Note 19.
Option holders do not have any right, by virtue of the option, to vote, to participate in dividends or to the proceeds on winding up of the Company.
During the financial year no fully paid ordinary shares were issued as a result of the exercise of options. No ordinary shares have been issued since the end of the financial
year as a result of the exercise of options.
- 37 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(c) Options
(i)
For information relating to the Company’s employee and consultant option scheme, including details of
options issued, exercised and lapsed during the financial year and the options outstanding at year end, refer to
Note 19 Share-based Payments.
(ii)
For information relating to share options issued to key management personnel during the financial year, refer
to the Directors’ Report.
(d) Capital Management
Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the
shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going
concern.
The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial
assets. There are no externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing its financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management
debts levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since
the prior year.
15. RESERVES
(a)
Share-based Payment Reserve
The share-based payment reserve records items recognised as expenses on valuation of unlisted employee and
consultant option incentive scheme options. Refer to Note 19 Share-based Payments for further details.
16. COMMITMENTS AND CONTINGENCIES
The Group has certain obligations to perform minimum exploration work and to expend minimum amounts of
money on such work on mining tenements. These obligations may be varied from time to time subject to
approval and are expected to be fulfilled in the normal course of the operations of the Group. These
commitments have not been provided for in the financial report. Due to the nature of the Group’s operations in
exploring and evaluating areas of interest, it is difficult to accurately forecast the nature and amount of future
expenditure beyond the next year. Expenditure may be reduced by seeking exemption from individual
commitments, by relinquishing of tenure or by new joint venture arrangements. Kingston notes that of the
commitments not later than one year, $95,000 relates to minimum expenditure requirements on its remaining
South Australian copper tenements which it has previously written down to zero and has flagged falls outside of
its current strategic direction. Expenditure may be increased when new tenements are granted or joint venture
agreements amended. The minimum expenditure commitment on the tenements is:
Exploration commitment
Consolidated Group
2017
$
2016
$
Not later than one year
Later than one year and less than five years
522,950
1,621,011
627,250
224,833
- 38 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
The Group is a party to a lease on an office building which expires June 30, 2019. The future minimum lease
payments are as follows:
Operating lease commitment
Consolidated Group
2017
$
2016
$
Not later than one year
Later than one year and less than five years
14,742
16,725
26,610
500
17. SEGMENT REPORTING
The group has identified that it has no operating segments disaggregated within the consolidated entity. This has
been determined based on the fact that the board of directors (chief operating decision makers) assesses
performance of the consolidated entity with no further review at a disaggregated level.
The group operates in one segment being Exploration and Evaluation of Minerals in Australia. Thus, segmented
disclosures are not required.
18. CASH FLOW INFORMATION
(a)
Reconciliation to Statement of Cash Flows
For the purposes of the Statement of Cash Flows, cash and cash equivalents are as reported above.
Reconciliation of Loss from Ordinary Activities to
Net Cash Flows from Operating Activities
Loss for the year
Non-cash flows in loss
Depreciation
Director options
Share-based payments
Impairment of exploration expenditure
Reclassify GST to projects
Revaluation of assets at FVTPL
Gain on sale
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables
Decrease in prepayments
(Decrease) in trade payables
(Decrease)/increase in other payables and accruals
Net cash flows from operating activities
Consolidated Group
2017
$
2016
$
(1,153,471)
(4,587,718)
875
-
228,667
-
-
-
(785)
(71)
-
51,779
63,513
(809,351)
453
16,666
2,000
4,365,531
(25,000)
(24,652)
-
(71)
-
63,767
20,923
(168,101)
(b) Non-cash Investing Activities
During the year Kingston acquired Slipstream WANT and the Livingstone Gold Project. See Note 14 for details
of the share based consideration provided for these acquisitions.
- 39 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
19. SHARE-BASED PAYMENTS
(i)
Share options and performance rights are granted to employees and directors of the Company, or any Associated
Body Corporate of the Company.
The following employee share-based payment arrangements existed at 30 June 2017.
Share options:
Date of grant Share-based payment
Number granted
Value
8 July 2016
8 July 2016
26 Oct 2016
26 Oct 2016
STI Options
LTI Options
STI Options
LTI Options
Performance Rights:
11,000,000
11,000,000
2,500,000
2,500,000
Date of grant Share-based payment
15 July 2016
20 Nov 2016
19 Dec 2016
19 Dec 2016
LTI Performance Rights¹
LTI Performance Rights¹
STI Performance Rights²
LTI Performance Rights³
Number granted
24,000,000
5,000,000
8,280,936
5,520,625
$91,612
$86,192
$13,112
$12,882
$203,7984
Value
-
-
$8,402
$16,468
$24,870
1 These Performance Rights will be granted in 2 tranches as follows:
Share price on
issue
Exercise
Price
$0.019
$0.019
$0.021
$0.021
$0.04
$0.07
$0.04
$0.07
Expiry
30 June 2018
30 June 2019
30 June 2018
30 June 2019
Expiry
30 June 2019
30 June 2019
30 June 2017
30 June 2020
-
-
-
-
Tranche 1 comprises 5,000,000 Performance rights, and will vest on the establishment by the Company of a
JORC Compliant 5 million tonne inferred Mineral Resource (or greater) of Li2O of a grade of at least 1%;
Tranche 2 comprises 5,000,000 Performance Rights, and will vest on the establishment by the Company of
a JORC Compliant 15 million tonne inferred Mineral Resource (or greater) of Li2O of a grade of at least
1%.
2 These Performance Rights will be granted in 3 tranches as follows (subject to satisfaction of the applicable
Performance Hurdles and Vesting Conditions):
-
STI Performance Rights will vest if, the Share price as quoted on ASX at the close of trading on 30 June
2017 is equal to or greater than $0.028 per Share, shares will vest on a sliding scale with 6% vesting at 2.8c,
and a a maximum of 30% STI Performance rights vesting if the share price exceeds 3.8cps
Up to 50% of the STI Performance Rights will vest, at the Board’s discretion, upon the achievement of
operational performance measures, including the delivery of the Company’s Operational Plan for 30 June
2017.
Up to 20% of the STI Performance Rights will vest, at the Boards discretion, upon the achievement of
business development objectives measured against the Company’s business development plan by 30 June
2017.
3 These Performance Rights will be granted if the Company achieves a market capitalisation greater than $50
million on or before 30 June 2020. Market capitalisation means the price of the Company’s shares as quoted on
ASX multiplied by the total number of Shares on issue
4 A further 5,000,000 options are on issue to Trillbar Resources Pty Ltd ($39,282). Refer to details in Note 19 (ii)
below.
The principal assumptions used in estimating the value of the STI and LTI options include volatility of 85%
determined with reference to the Company’s historic volatility and the volatility of peer group companies, and a
risk free interest rate of 1.9%.
- 40 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
The number and weighted average exercise prices of share options granted to employees and directors is as follows:
Outstanding at the beginning of
the period
Issued during the period
Expired during the period
Outstanding at year-end
Exercisable at year-end
2017
2016
Number of
Options
-
27,000,000
-
27,000,000
27,000,000
Weighted Average
Exercise Price
$
-
$0.06
-
$0.06
$0.06
Number of
Options
6,000,000
-
6,000,000
-
-
Weighted Average
Exercise Price
$
$0.07
-
$0.07
-
-
(ii) Other share-based payments granted to third parties.
Share options:
Date of grant
Share-based payment
28 Aug 2015
22 Dec 2016
Shareholder option
Options on acquisition6
Number
granted
7,058,823
5,000,000
Value
-
39,282
39,282
Share price on
issue
$0.017
$0.017
Exercise
Price
$0.03
$0.025
Expiry
30 June 2019
22 Dec 2019
Milestone shares:
Date of grant
Share-based payment
15 July 2016 Milestone shares5
Number
granted
180,000,000
Value
Exercise Price
Expiry
-
-
Nil (Vesting Conditions)
30 June 2019
5 On 15 July 2016, Kingston granted Slipstream Resources Pty Ltd, 180,000,000 Milestone Shares in partial
consideration for the acquisition of Slipstream WANT,
6 On 22 December 2016, Kingston granted Trillbar Resources Pty Ltd 5,000,000 options (exercisable at 2.5c until 22
December 2019) in partial consideration for an option over the Livingstone Gold Project.
There were no options exercised during the year ended 30 June 2017 (2016: nil).
20. RELATED PARTY TRANSACTIONS
(a) Key Management Personnel
Key management personnel compensation and transactions have been included in the Remuneration Report
section of the Directors’ Report and Note 5 Interests of Key Management Personnel.
- 41 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(b) Directors’ Interest
As at 30 June 2017 the relevant interests of each of the Directors, held either directly or indirectly through their
associates, in the securities of Kingston are as follows:
Director
Anthony Wehby3
Andrew Corbett5
Andrew Paterson(cid:31)
Stuart Rechner
Yafeng Cai(cid:31)
Jonathan Davies(cid:31)
Fully Paid Ordinary
Shares (KSN)
Unlisted STI
Options1
Unlisted LTI
Options2
2,380,952
9,523,808
476,190
-
-
-
2,000,000
2,000,000
5,000,000
5,000,000
4,000,000
4,000,000
-
-
-
-
-
-
1. Unlisted Short Term Incentive (STI) Options exercisable at $0.04 each and expiring on 30 June 2018.
2. Unlisted Long Term Incentive (LTI) Options exercisable at $0.07 each and expiring on 30 June 2019.
3. Anthony Wehby holds a relevant interest in Options as he is a related party to Mrs Rosemary Wehby, who is the
registered holder of the options. He has a relevant interest in the shares as the registered holder.
Resigned on 4 July 2016.
4.
5. Andrew Corbett holds a relevant interest in the specified number of Shares and Options as a result of being a director
of Milamar Group Pty Ltd as trustee of Milamar Family Trust, which is the registered holder of those Shares and
Options.
6. Appointed on 1 March 2017
7.
Resigned on 30 November 2016
21. CAPITALISED EXPLORATION EXPENDITURE
Notes
Consolidated Group
2017
$
2016
$
Opening Balance
Transfer from other non-current assets
Acquisition of Slipstream WANT
Acquisition of Livingstone Gold Project
Expenditure incurred during the year
Impairment of assets
Total exploration expenditure capitalised
-
208,811
4,425,000
132,783
1,463,813
-
6,230,407
3,930,564
-
-
-
434,967
(4,365,531)
-
A review of the Group’s exploration assets was undertaken at the end of the FY16 and directors decided to impair
the carrying value of capitalised exploration expenditure in the amount of $4,365,531. The drilling program
undertaken by Kingston across the tenements held by Fleurieu and its subsidiaries did not provide further viable
exploration or development opportunities and as such this asset was fully impaired.
Interests in Joint Ventures
The parent entity has entered into the following unincorporated joint operations:
Joint Operations Project
Spencer
Myall Creek
Percentage Interest
25%
50%
Principal Exploration Activities
IOCG
IOCG
The joint operations are not separate legal entities but are contractual arrangements between the participants for
sharing costs and output and do not in themselves generate revenue and profit. Exploration expenditure is the
only activity of the joint operations.
- 42 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
22.
FINANCIAL INSTRUMENTS
The Group’s principal financial instruments comprise receivables, payables, FVTPL financial assets, cash and
short-term deposits.
The main risks arising from the Group’s financial instruments are interest rate risk, credit risk and liquidity risk.
The Company uses different methods to measure and manage different types of risks to which it is exposed.
These included monitoring levels of exposure to interest rate and market forecasts for interest rate. Ageing
analyses and monitoring of specific credit allowances are undertaken to manage credit risk, liquidity risk is
monitored through the development of future rolling cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks are summarised below.
(a) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial
loss to the Group.
Credit risk arises from cash and cash equivalents, trade and other receivables and FVTPL financial assets. The
Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure
equal to the carrying amount net of any provisions for these assets as disclosed in the statement of financial
position and notes to the financial statements.
The Group has adopted a policy of only dealing with creditworthy counter parties as a means of mitigating the
risk of financial loss from defaults. It is the Group’s policy that all customers who wish to trade on credit terms
are subject to credit evaluations including an assessment of their independent credit rating, financial position,
past experience and industry reputation. Risk limits are set for each individual customer in accordance with
parameters set by the Board. These risk limits are regulatory monitored. The Group does not require collateral in
respect of financial assets.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to
bad debts is not significant. At the reporting date there were no significant concentrations of credit risk. Refer to
Note 9 for further information on impairment of financial assets that are past due.
(b)
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an
appropriate liquidity risk management framework for the management of the Group’s short, medium and long-
term funding and liquidity management. The Group manages the liquidity risk by maintaining adequate cash
reserves, and by continuously monitoring forecast and actual cash flows while matching the maturity profiles of
financial assets and liabilities. There are no material financial assets or financial liabilities that are subjected to
liquidity risk as at 30 June 2017 or 30 June 2016.
(c) Interest rate risk
The Group’s current exposure to the risk of changes in market interest rates relate primarily to cash assets rates.
The Group does not account for fixed rate financial assets and liabilities at fair value through profit or loss.
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates. The table
indicates the impact on how profit / (loss) and equity values reported at reporting date would have been affected
by changes in the relevant risk variable that management considers to be reasonably possible. The Group’s main
interest rate risk arises from cash and cash equivalents with variable interest rates.
Financial assets
Cash and cash equivalents
Impact on post tax profit / (loss) and equity
+ 2% in interest rate
- 2% in interest rate
- 43 -
Consolidated Group
2017
$
2016
$
3,877,551
3,877,551
77,551
(77,551)
645,270
645,270
12,905
(12,905)
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(d) Foreign currency risk
The Group is not exposed to significant financial risks from movements in foreign exchange rates.
There are no financial assets and no liabilities denominated in foreign currencies. The Group does not
participate in any type of hedging transactions or derivatives. Therefore, no sensitivity analysis is required.
(e)
Price risk
The Group’s exposure to commodity and equity securities price risk is minimal. Equity securities price risk
arises from investments in equity securities. In order to limit this risk the Group diversifies its portfolio in
accordance with limits set by the Board. The majority of the equity investments are of a high quality and are
publicly traded on the ASX.
The price risk for both listed and unlisted securities is immaterial in terms of a possible impact on profit and loss
or total equity and as such a sensitivity analysis has not been completed.
(f) Fair value
For the financial assets and liabilities disclosed in this note, the fair value approximates their carrying value.
The aggregate fair values and carrying amounts of financial assets and financial liabilities are disclosed in the
statement of financial position and in the notes to and forming part of the financial statements.
Consolidated Group
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
2017
2016
Footnote Net Carrying
Value
$
Fair
Value
$
Net Carrying
Value
$
Fair
Value
$
(i)
(i)
(ii)
(i)
3,877,551
92,142
1,944
3,971,638
3,877,551
92,142
1,944
3,971,638
645,270
22,276
1,944
669,490
645,270
22,276
1,944
669,490
399,474
399,474
399,474
399,474
87,892
87,892
87,892
87,892
The fair values disclosed in the above table have been determined based on the following methodologies:
(i) Cash and cash equivalents, trade and other receivables and trade and other payables are short-term
instruments in nature whose carrying value is equivalent to fair value. Trade and other payables exclude
amounts provided for annual leave, which is not considered a financial instrument.
(ii) For financial assets at fair value through profit and loss, closing quoted bid prices at the end of the reporting
period used. These listed investments are included within level 1 of the hierarchy of financial assets.
- 44 -
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2017
KINGSTON RESOURCES LIMITED
& its Controlled Entities
23.
PARENT COMPANY INFORMATION
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Reserves
Share-based payments
Total equity
Financial performance
Loss for the year
Other comprehensive income / (loss)
Total comprehensive loss
Parent Entity
2017
$
3,969,693
6,197,829
10,167,522
462,987
-
462,987
2016
$
672,494
211,513
884,007
87,894
33,890
121,784
58,262,994
(48,826,409)
48,435,161
(47,672,938)
267,950
9,704,535
-
762,223
(1,152,973)
-
(1,152,973)
(5,266,147)
-
(5,266,147)
Contractual commitments
There is no contractual commitments for the parent entity during the financial year. Refer to
note 16 for exploration commitments.
24.
SUBSEQUENT EVENTS
On 1 July 2017, the Company moved its registered address to Suite 205 / 283 Alfred St, North Sydney, NSW.
Other than the above, there has been no other matter or circumstance which has arisen since 30 June 2016 that
has significantly affected or may significantly affect:
• Kingston Resources Limited’s operations in future financial years; or
• The results of those operations in future financial years; or
• Kingston Resources Limited’s state of affairs in future financial years.
- 45 -
For personal use only
DIRECTORS’ DECLARATION
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Directors’ Declaration
The Directors of the Company declare that:
1.
In the opinion of the Directors of the Company:
(a) the financial statements and notes set out on page 19 to 22, and the Remuneration disclosures that are
contained in page 10 to 15 of the Remuneration Report in the Directors’ Report, are in accordance with the
Corporations Act 2001, including:
(i)
giving true and fair view of the Group’s financial position as at 30 June 2016 and of its
performance, for the financial year ended on that date;
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
(iii) complying with International Financial Reporting Standards as disclosed in Note 1.
(b)
(c)
the remuneration disclosures that are contained in page 10 to 15 of the Remuneration Report in the
Directors’ Report comply with Australian Accounting Standard AASB 124 Related Party Disclosures.
the directors have been given the declaration required by s295A of the Corporations Act 2001 by the
persons undertaking the roles of Executive Director and Company Secretary.
2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
Signed in accordance with a resolution of the Board of Directors.
ANTHONY WEHBY
Non-Executive Chairman
Sydney, New South Wales
29 August 2017
- 46 -
For personal use only
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Directors of Kingston Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Kingston Resources Limited (the Company), and its
subsidiaries (the Group) which comprises the consolidated statement of financial position as at 30
June 2017, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying consolidated financial report of Kingston Resources Limited, is in
accordance with the Corporations Act 2001, including:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
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For personal use only
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial report of the current period. These matters were
addressed in the context of our audit of the consolidated financial report as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Treatment of the Slipstream and Livingstone
Acquisitions
(Notes 21)
During the year ended 30 June 2017 the Group
entered into the acquisitions of Slipstream &
Livingstone exploration projects.
The Slipstream assets were acquired on 4 July 2016.
Acquisition was $500,000 cash as well as
165,000,000 in shares being a total acquisition cost
of $4.6 million.
An option to acquire 75% of Livingstone Gold
tenement was entered into on 21 December 2016.
The acquisition was paid through 5.5 million shares
and 5 million options.
These acquisitions are key audit matters due to
judgements and estimates required in determining
the appropriate accounting, including assessing the
correct accounting treatment estimating the fair value
of net assets acquired and estimating the value of the
purchase consideration.
Exploration and Evaluation Assets – valuation
Note 21
At 30 June 2017 the carrying value of Exploration
and Evaluation Assets was $6.23 million.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the company is
required to assess at each reporting date if there are
any triggers for impairment which may suggest the
carrying value is in excess of the recoverable value.
The process undertaken by management to assess
whether there are any impairment triggers in each
area of interest involves an element of management
judgement.
This area is a key audit matter due to the valuation of
exploration and evaluation assets being a significant
risk.
Our procedures included, amongst others:
• Agreeing transactions to term sheets and option
agreements;
• Considered the accounting standards to determine
if management’s treatment was appropriate;
• Agreeing inputs to the relevant terms within the
term sheet and option agreements;
• Vouching cash payments to bank statements and
supporting documentation;
• Vouching equity transactions to the share capital
register and checked that the correct share price
was used;
• Verifying the mathematical accuracy of the
Livingstone options valuation provided by
management using the Black-Scholes Pricing
Model. The model and assumptions was reviewed
by our valuation specialists with particular
reference to the volatility rate and risk free rate;
and
• Assessing the appropriateness of related
disclosures within the financial statements.
Our procedures included, amongst others:
• Obtaining the management prepared reconciliation
of capitalised exploration and evaluation
expenditure and agreeing to the general ledger;
• Reviewing management’s area of interest
considerations against AASB 6;
• Reviewing the appropriateness of the related
disclosures within the financial statements
• Assessing management assessment of
impairment testing reviewing any key assumptions
to supporting documents.
• Conducting a detailed review of management’s
assessment of trigger events prepared in
accordance with AASB 6 including;
-
Tracing projects to statutory registers,
exploration licenses and third party support to
determine whether a right of tenure existed;
Enquiry of management regarding their
intentions to carry out exploration and
evaluation activity in the relevant exploration
area, including review of managements’
budgeted expenditure;
-
- Understanding whether any data exists to
suggest that the carrying value of these
exploration and evaluation assets are unlikely
to be recovered through development or sale;
• Assessing the appropriateness of the related
disclosures within the financial statements.
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For personal use only
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2017, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description forms part of our
auditor’s report.
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For personal use only
Report on the remuneration report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 19 of the directors’ report for
the year ended 30 June 2017.
In our opinion, the Remuneration Report of Kingston Resources Limited, for the year ended 30
June 2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
A J Archer
Partner - Audit & Assurance
Sydney, 29 August 2017
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For personal use only
CORPORATE GOVERNANCE STATEMENT
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
CORPORATE GOVERNANCE STATEMENT
The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such
Kingston Resources Limited has adopted
the Corporate Governance Principles and
Recommendations which was released by the ASX Corporate Governance Council and became effective for financial
years beginning on or after 1 July 2014.
third edition of
the
The Company’s Corporate Governance Statement for the financial year ending 30 June 2017 was approved by the
Board on 29 August 2017. The Corporate Governance Statement can be located on the Company’s website
www.kingstonresources.com.au
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For personal use only
ADDITIONAL INFORMATION
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Additional Information required by the Australia Stock Exchange Limited Listing Rules and not disclosed elsewhere in
this report.
This additional information was applicable as at 15 August 2017.
SHAREHOLDER INFORMATION
Distribution of Ordinary Shares at 15 August 2017
Distribution
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
No. of Shareholders
(ASX code – KSN)
438
495
35
102
140
1,210
There are 462 holders of less than a marketable parcel of the Company’s fully paid ordinary shares.
Statement of Top 20 Shareholders of the Quoted Equity Securities at 15 August 2017
Contributed Equity (ASX code – KSN)
Name
Holding
%
1.
2.
3.
4.
5.
6.
7.
8.
9.
SLIPSTREAM RESOURCES INVESTMENTS PTY LTD
FARJOY PTY LTD
MR SCOTT ARCHIE FERGUSON
MR SONGNAN HUANG
SOARAWAY DEVELOPMENT PTY LTD
OMEN PTY LTD
MILAMAR GROUP PTY LTD
YUCAI AUSTRALIA PTY LTD
DONE NOMINEES PTY LIMITED
10. E E R C AUSTRALASIA PTY LTD
11.
LUXOR INVESTMENTS PTY LIMITED
12. MANHATTAN CAPITAL PTY LTD
13.
TRILLBAR RESOURCES PTY LTD
14. KRUPA CONSULTING PTY LTD
15. MR CARL DILENA
16. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
17.
TANGRAM PTY LTD
18. MR XIAOSONG ZHAO
19. KEO PROJECTS PTY LTD
20. OMEN PTY LTD
Top 20 Total
Other Shareholders
Total on Issue
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132,000,000
99,040,498
26,400,000
24,801,000
18,567,922
13,477,889
10,810,808
10,773,250
10,714,284
8,823,201
6,266,944
6,000,000
5,500,000
5,177,777
5,000,000
4,956,483
4,717,071
4,436,035
4,338,512
4,280,000
19.73
14.80
3.95
3.71
2.78
2.01
1.62
1.61
1.60
1.32
0.94
0.90
0.82
0.77
0.75
0.74
0.71
0.66
0.65
0.64
406,081,674
263,001,062
60.69
39.31
669,082,736
100.00
2
For personal use only
ADDITIONAL INFORMATION
2017 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Substantial Shareholders at 15 August 2017
The names of the substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
Farjoy Pty Ltd – 99,040,498 fully paid ordinary shares
Slipstream Resources Investments Pty Ltd – 132,000,000 fully paid ordinary shares
Number of Holders of Each Class of Securities at 15 August 2017
As at 15 August 2017, the Company had 669,082,736 fully paid ordinary shares held by 1,210 individual shareholders
and:
-
-
-
-
7,058,823 unlisted options (KSNOP1) held by six individual option holders;
13,500,000 unlisted options (KSNOP2) held by five individual option holders;
13,500,000 unlisted options (KSNOP3) held by five individual option holders;
5,000,000 unlisted options (KSNOP4) held by one individual option holder;
Voting Rights
The Company’s share capital is of one class with the following voting rights:
Ordinary shares
a)
b)
c)
each shareholder entitled to vote, may vote in person or by proxy, attorney or representative;
on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a
shareholder has one vote; and
on a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder
shall, in respect of each fully paid share held, or in respect of which he / she is appointed a proxy, attorney
or representative, have one vote for the share, but in respect of partly paid shares shall have a fraction of a
vote equivalent to the proportion which the amount paid up bears to the total issue price for the share.
2. STATEMENT OF RESTRICTED SECURITIES
The Company had 82,500,000 securities subject to voluntary escrow which were released from escrow on 8 July 2017.
There are no further restricted securities.
3. UNQUOTED SECURITIES
Holder
#Options over Ordinary
Shares
Expiry Date
Exercise Price
Shareholder Options
7,058,823
30 June 2019
$0.03
Director and Employee Options
13,500,000
30 June 2018
$0.04
Director and Employee Options
13,500,000
30 June 2019
$0.07
Shareholder Options
5,000,000
22 December 2019 $0.025
Performance Rights
29,000,000
30 June 2019
Nil (Vesting Conditions)
Performance Rights
5,520,625
30 June 2020
Nil (Vesting Conditions)
Total Unlisted Securities on Issue 71,079,448
4.
ON MARKET BUY BACK
The Company does not currently have an on market buy back in operation.
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For personal use only
ADDITIONAL INFORMATION
2017 ANNUAL REPORT
5.
TENEMENT SCHEDULE
KINGSTON RESOURCES LIMITED
& its Controlled Entities
WATenements Project/Name
Status
Ownership
E 74/570
E 74/571
E 74/589
Mt Cattlin
Mt Cattlin
Mt Cattlin
E 70/4822
Greenbushes
E 52/3403
NT Tenements
EL 31091
EL 31092
EL 31132
EL 31133
EL 31134
EL 31136
EL 31150
EL 31151
EL 31200
EL 31205
EL 31206
EL 31207
EL 31137
EL 31138
EL 31141
EL 31148
EL 31242
EL31212
EL31213
EL31214
EL31285
EL31419
EL31485
EL31534
EL31535
EL31553
Livingstone
Project/Name
Charlotte
West Arm
Wingate North
Bynoe A
Bynoe B
Bynoe South C
Bynoe South D
Bynoe South A
Bynoe SW A
Bynoe SW BA
Bynoe SW BB
Bynoe SW BC
Utopia
Spotted Wonder
Barrow Ck B
Barrow Ck A
Barrow Ck
Bundey
Milton
Powell
Echo Dam
Bynoe
Bynoe
Boxhole
Trackrider
Spotted Wonder
SA Tenements Project/Name
EL 5010
EL 5011
Spencer JV
Myall Creek JV
Live
Live
Live
Pending
Live
Status
Live
Live
Live
Live
Pending
Pending
Live
Live
Live
Pending
Live
Live
Live
Live
Pending
Live
Live
Live
Live
Live
Live
Pending
Pending
Pending
Pending
Pending
Status
Live
Live
100 %
100 %
100 %
100 %
0%
Ownership
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100%
100%
100%
100%
100%
Ownership
25 %
50 %
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