KINGSTON RESOURCES LIMITED
& its Controlled Entities
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
2018 Annual Financial Report
For the year ended 30 June 2018
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 ................................................................................................. 20
Consolidated Statement of Financial Position ............................................................................................ 21
Consolidated Statement of Profit or Loss and Other Comprehensive Income ........................................... 22
Consolidated Statement of Changes in Equity ........................................................................................... 23
Consolidated Statement of Cash Flows ...................................................................................................... 24
Notes to the Financial Statements .............................................................................................................. 25
Directors’ Declaration ................................................................................................................................ 48
Independent Auditor’s Report .................................................................................................................... 49
Corporate Governance Statement .............................................................................................................. 54
Additional Information ............................................................................................................................... 55
CORPORATE DIRECTORY
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
Mick Wilkes (B Eng (Hons), MBA, GAICD)
Non-Executive 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
Telephone
Email
Website
(02) 8021 7492
info@kingstonresources.com.au
www.kingstonresources.com.au
AUDITORS
Hall Chadwick
Chartered Accountants
SHARE REGISTRY
Link Market Services Pty Ltd
BANKERS
Australia & New Zealand Banking Group Limited
SOLICITORS &
CORPORATE ADVISERS
STOCK EXCHANGE
Cowell Clarke Commercial Lawyers
Ashurst Australia
Listed on the Australian Securities Exchange
The home exchange is in Perth, Western Australia
ASX CODE
KSN – fully paid ordinary shares
- 2 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Chairman’s Letter
Dear Stakeholders
You will be aware that a significant change in focus and clarity of vision has emerged from the work
undertaken during the past two years. In the Annual Report last year we noted our objectives as being to assess
our lithium exploration tenements and to expand our asset base.
In the period since that report we have substantially disposed of our lithium assets, recovering approximately
$2m, and completed a transformational acquisition. That acquisition, along with continuing work on the
project since, will deliver to KSN a 70% interest in the Misima Joint Venture.
We also continued exploration on the Livingstone Gold Project during the year. The exercise of our option to
move to 75% ownership reflects the results of work to date and the expansion of that opportunity.
These two gold projects (Misima and Livingstone) are the foundation on which we are planning to build KSN
into a successful exploration and development company. We do not, however, underestimate the challenges
that always accompany exploration, even in such well recognised gold domains as these.
I recently visited Misima and, despite all my prior knowledge, the wealth of exploration targets within our
tenement was beyond my expectations. The KSN team has done an outstanding job in reigniting this project.
Progress is evident in all aspects of management and operations from logistics, work force recruitment and
training, community and landowner engagement and execution of drilling and trenching programs. It has been
an impressive ramp up in just nine months since the acquisition was completed! As a company we are
conscious of both the opportunities and obligations we have on Misima Island and understand that success
relies on the correct balance in our activities.
Andrew Corbett has again led the KSN team through an intense year and I offer him and his team thanks for
their efforts and congratulations for the achievements.
We were pleased to welcome Mick Wilkes to the Board as a non-executive director in early July. The
appointment of such an experienced and well-respected mining executive to the board reflects our need for the
skills Mick brings and his confidence in our projects.
Shareholder support during this year of transition has been greatly appreciated. We look forward to a year in
which we build value into our assets for the long term benefit of all.
Your sincerely
Anthony S Wehby
Non-Executive Chairman
6 September 2018
- 3 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Directors’ Report
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 2018 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 $5,750,302 (2017: $1,153,471). The increase in the FY18 loss
compared to FY17 is largely the result of the $3,552,901 impairment to the Company’s remaining lithium
exploration assets and the $408,444 loss on the sale of the Mt Cattlin lithium tenements.
Review of Operations
Kingston has had a transformational year to 30 June 2018. A number of significant events during the year have
set the course for Kingston in FY19 and beyond. Of most importance was the acquisition of WCB Resources
Limited, which brought with it a 49% interest in the exciting 2.8Moz Misima Gold Project in Papua New
Guinea. Following this, Kingston exercised its option to acquire 75% of the Livingstone Gold Project in
December 2017. With focus turning to the Misima Gold Project, a strategic review was undertaken to assess
alternatives for the lithium exploration portfolio. This process successfully concluded in June 2018 with the
sale of the Mt Cattlin lithium assets for $600,000, and then shortly after year end the agreed sale of Kingston’s
Bynoe and Arunta lithium assets for a further $1,800,000.
With the strategy turning towards the Misima Gold Project, Kingston conducted an equity placement in
February 2018, successfully raising $4.3m, alongside which an SPP raised a further $255,000. These funds
enabled Kingston to move forward with drilling at Misima which, following several months of mobilisation,
commenced in early May only six months post the acquisition of WCB Resources.
Summary of Acquisitions
WCB Resources Limited (WCB): On 7 November 2017 WCB shareholders voted
overwhelmingly in favour of the merger with KSN. On 17 November 2017, KSN issued
302,601,971 shares to WCB shareholders in exchange for their WCB shares, acquiring 100% of
the company. WCB was subsequently delisted from the TSX.
Livingstone Gold Project: On 8 December 2017, KSN issued 16,413,039 shares to Trillbar
Resources to acquire 75% of the project as per the terms of the option agreement entered into with
Trillbar in December 2016.
Misima Gold Project
Misima Island is located 625km east of Port Moresby in the Solomon Sea. Gold was discovered on the island
in 1888 with small scale underground mining continuing until WWII. Placer Dome Inc (Placer) commenced
exploration in 1977, with production beginning in 1989. Misima was operated as an open pit gold mine from
1989 to 2001, with stockpiled ore treated for the final three years of the operation until 2004.
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
The operation was a success for Placer. It mined 87.5Mt at 1.46g/t Au producing 3.7Moz of gold and 22Moz
of silver. In 1990 the reserve grade stood at 1.26g/t Au, however, the average grade of all ore mined from then
until the completion of milling was 1.56g/t Au, a reserve grade reconciliation of 124%. The mill had nameplate
capacity of 5.5Mtpa, easily workable ore saw a maximum throughput of 6.9Mtpa achieved. Gold recoveries
averaged 91.5% and costs averaged US$218/oz, resulting in an average margin of US$128/oz (37%). At the
time the decision was made to close the mine, the gold price was below US$ 300/oz. The mill was subsequently
decommissioned and removed by 2005. The site has since been rehabilitated, with the PNG Mineral Resource
Authority signing off on the successful rehabilitation in 2012.
Following Kingston’s acquisition of the project, it shifted focus away from the copper potential targeted by
WCB towards the existing gold resource and exploration potential on the island. In November 2017, Kingston
announced a 2.8Moz JORC resource (82.3Mt at 1.1g/t Au), an increase on the existing NI43-101 resource of
2.3Moz (73Mt @ 1.0g/tAu) and by early December 2017, it had field teams back on the ground.
Kingston’s field work delivered early success with the discovery of Ginamwamwa in January 2018, with a
best channel sample of 14m at 12.2g/t and a number of high grade soil samples. Field work remains ongoing
at Ginamwamwa alongside a number of other prospective areas, with a view to preparing them for future
drilling.
Following the successful equity raising in February 2018, Kingston commenced mobilisation for its maiden
10,000m drilling campaign. Drilling commenced in early May 2018. Kingston is very excited to be the first to
carry out exploration drilling for gold on Misima in almost 20 years.
Livingstone Gold Project
Livingstone, located northwest of Meekatharra in Western Australia, is a large exploration project with an
existing JORC2004 Inferred mineral resource of 49,900 ounces of gold and a number of high-grade drilling
intersections that indicate excellent potential for additional discoveries. The project area spans over 30km of
prospective geological strike on the western limb of the highly prospective Bryah Basin.
In FY18, Kingston completed its second drill program at Livingstone targeting the large, previously untested
soil anomaly in the Livingstone’s Find – Stanley area. 152 air-core holes were drilled for a total of 5,836m
during April and May 2018, targeting mineralisation beneath geochemical anomalies identified by auger
sampling in 2017. 77 holes intersected grades in excess of 100ppb Au, of which 18 holes intersected 0.5g/t or
more. Drilling was designed to achieve a quick, first-pass test for primary mineralisation beneath the strongest
soil anomaly areas.
Drilling has highlighted the potential of the main line of historic workings, with mineralisation defined over a
strike length of 2.2km. Early results suggest potential for two or more sub-parallel zones of mineralisation
including the structure previously mined by historic workings and a second, newly discovered zone slightly
further south. Importantly, gold has been identified up to 850m west of the historic shafts and the prospect
remains open along strike, greatly increasing the possible size of the mineralised zone. This prospect area,
which was previously known as Mt Seabrook 1 and 2, has been renamed Kingsley.
Best intersections identified at the Kingsley prospect include1:
5m @ 6.56g/t Au from 49m in KLAC008
3m @ 5.82g/t Au from 8m in KLAC006
5m @ 2.73g/t au from 13m in KLAC030.
1 ASX announcement 21 August 2018
- 5 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Northwest of Kingsley, a new area of gold mineralisation has been confirmed by drilling at the Dampier
prospect. Dampier, first identified in auger sampling by Kingston, is now approximately 500m long with
mineralisation open along strike to the west and east.
Kingston is now preparing to conduct another drilling program at Livingstone following up on these results.
A track-mounted rig capable of drilling RC and Air-core holes will be used for the program.
MINERAL RESOURCES TABLE
Livingstone Gold Project (WA)
Deposit
Resource
Cut-off
Tonnes
Gold
Category
(g/t Au)
(g/t Au)
Au
(oz)
Homestead
Inferred
0.5
989,000
1.57
49,900
Table 1: Livingstone Gold Project mineral resource summary.
This resource estimate is from a JORC2004 resource report prepared by Mr H. Cornelius for Talisman Mining
Ltd in February 2007. Kingston Resources has not completed sufficient validation work for this resource
estimate to meet JORC2012 compliance and it is reported on the basis that the information has not materially
changed. Rounding errors may occur.
Misima Gold Project (PNG)
Deposit
Material
Resource
Cut-off
Tonnes Gold
Silver
Au Moz
Ag Moz
Category
(g/t Au)
(Mt)
(g/t Au)
(g/t Ag)
Umuna
Oxide
Indicated
Inferred
Primary
Indicated
Inferred
Sub-total
Indicated
Total
Oxide
Primary
Sub-total
Ewatinona
Misima Total
Total Misima Mineral Resource
Inferred
Combined
Inferred
Inferred
Inferred
Indicated
Inferred
0.5
0.5
0.5
0.5
0.5
0.5
3.2
5.7
34.0
32.7
37.2
38.4
75.7
1.0
5.6
6.6
37.2
45.0
82.3
0.9
1.0
1.1
1.1
1.1
1.0
1.1
0.9
1.0
1.0
1.1
1.0
1.1
11.7
13.6
4.2
4.7
4.9
6.1
5.5
3.4
3.1
3.2
4.9
5.6
5.3
0.1
0.2
1.2
1.1
1.3
1.3
2.6
0.03
0.2
0.22
1.3
1.5
2.8
1.2
2.5
4.6
5.0
5.8
7.5
13.3
0.1
0.6
0.7
5.8
8.1
13.9
Table 2: Misima Gold Project mineral resource summary, prepared by Mr S. McManus of Skandus Pty Ltd. Rounding
errors may occur.
COMPETENT PERSON’S STATEMENT
The information in this report that relates to Exploration Results, Minerals Resources or Reserves for the
Livingston Gold Project 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.
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
The information in this report that relates to Exploration Results for the Misima Gold Project, PNG, 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.
The information in this report that relates to Minerals Resources or Reserves for the Misima Gold Project is
based on information compiled by Mr Scott McManus, who is a member of the Australian Institute of
Geoscientists. Mr McManus is an independent consultant to 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 McManus consents
to the inclusion in this report of the matters based upon the information in the form and context in which it
appears.
FINANCIAL POSITION
On 13 February 2018, the Company completed a capital raising via placement issuing a total of 194 million
shares at $0.022 raising $4.3m, alongside this a Share Purchase Plan raised a further $255,000 through the
issuance of 11,590,897 shares at $0.022.
At the end of the financial year, the Consolidated Entity had net assets of $15,039,902 (2017: $9,740,370)
and held $4,379,799 in cash (2017: $3,877,551).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than reported above in the Review of Results and Operations, noting in particular the acquisition of
WCB Resources Ltd, 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 5 July 2018, the Company announced it had entered into an agreement to sell its Bynoe and Arunta
Northern Territory lithium assets for a total of $1,800,000 to an Australia private company, Lithium Plus Pty
(see ASX Announcement 5 July 2018, “Kingston Sells NT Lithium Tenements for $1.8m Cash”).
On 10 July 2018, the Company announced the appointment of Mick Wilkes as Non-Executive Director.
On 19 July 2018, Kingston issued senior management 8,237,357 shares on the vesting of FY18 STI
Performance rights (8,237,357 lapsed).
On 29 August 2018, the sale of the NT Lithium tenements (announced by the Company on 5 July 2018) was
completed, with the $1,800,000 settlement proceeds transferred to KSN.
Other than the above, there has been no other matter or circumstance which has arisen since 30 June 2018
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.
- 7 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 the Papua New Guinea Mining Act 1992, 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)
Andrew Corbett – Director (Managing)
Stuart Rechner - Director (Non-Executive)
Andrew Paterson – Director (Executive)
Mick Wilkes - Director (Non-Executive), appointed 6 July 2018
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 Ensurance Ltd (ASX:ENA) and 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 to companies including
investments, divestments and capital raisings. Prior to 2001, Mr Wehby was a
partner in PricewaterhouseCoopers Australia (Coopers & Lybrand) for 19 years.
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 24 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
- 8 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 has been a Director of Strategic Energy Limited (ASX:SER) since 12
September 2014 and was a Director of GB Energy Limited (ASX:GBX) from 20
November 2013 until 28 September 2017. He has held no other listed directorships
in the past three years.
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.
Mick Wilkes, Non-Executive Director (B Eng (Hons), MBA, GAICD)
Term of Office
Non-Executive Director of Kingston Resources Limited since 6 July 2018.
Skills and Experience: Mr Wilkes is a mining engineer with 35 years of broad international experience with
a strong emphasis on operations management and new mine development,
predominantly in precious and base metals across Asia and Australia. He has been
the President and CEO of OceanaGold Corporation (ASX:OCG) since 2011. In
previous roles he was the Executive General Manager of Operations at OZ Minerals
responsible for the development of the Prominent Hill copper/gold project in South
Australia and General Manager of the Sepon gold/copper project for Oxiana based
in Laos. His earlier experience included 10 years in various project development
roles in Papua New Guinea. Mr Wilkes holds a Bachelor of Engineering from the
University of Queensland, a Master of Business Administration from Deakin
University, and is a member of both the Australian Institute of Mining and
Metallurgy, and the Australian Institute of Company Directors.
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
DIRECTORS’ INTERESTS
As at the date of this report 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 Wehby²
Andrew Corbett³
Andrew Paterson
Stuart Rechner ⁴
Michael Wilkes
Fully Paid Ordinary
Shares (KSN)
Unlisted LTI
Options1
3,062,770
14,692,259
4,294,282
1,002,161
-
2,000,000
5,000,000
4,000,000
-
-
¹ Unlisted Long Term Incentive (LTI) Options exercisable at $0.07 each and expiring on 30 June 2019
² Anthony Wehby holds a relevant interest in shares and options as he is a related party to Mrs Rosemary Wehby, who is the
registered holder of the options and shares.
³ 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
⁴ Stuart Rechner holds a relevant interest in the specified number of Shares as a result of being a director of Osmium
Holdings Pty Limited as trustee of Ferndale Superannuation Fund
MEETINGS OF DIRECTORS
The following table sets out the number of meetings of Kingston’s Directors held during the year ended 30
June 2018 and the number of meetings attended by each Director. There were a total of eleven Directors’
meetings for the financial year.
Director
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
Michael Wilkes
Number Eligible to Attend
Number Attended
11
11
11
11
0
11
11
11
11
0
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DIRECTORS’ 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 2018 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)
M Wilkes
J Davies
Y Cai
Non-Executive Director (appointed 6 July 2018)
Non-Executive Chairman (resigned 4 July 2016)
Non-Executive Director (resigned 30 November 2016)
(b)
Remuneration Philosophy
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of
strategic objectives and the creation of value for shareholders, and it is considered to confirm to the market
best practice for the delivery of reward. Since the end of the year, the Board has established a separate
Remuneration and Nomination committee. The Remuneration and Nomination Committee will meet as
required to review remuneration, recruitment, retention and termination procedures and to evaluate senior
executives remuneration packages and incentives.
The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
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. In FY18 Kingston
engaged remuneration consultants to benchmark board and executive management pay for FY19. The
Corporate Governance Statement provides further information on the Company’s remuneration governance.
(c)
Executive remuneration policy and framework
In determining executive remuneration, the Remuneration and Nomination Committee 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 Remuneration and Nomination Committee 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
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
Remuneration and Nomination Committee has not 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.
Net Loss
($5,750,302)
($1,153,471)
($4,587,718)
($2,391,602)
2018
2017
2016
2015
2014
($483,015)
Diluted loss per share (cents/share)
(0.646)
(1.777)
(2.702)
(2.004)
(0.578)
Share price at year end (cents)
2
2
2
2
2
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 no unlisted Options issued during the year as LTI or STI (2017: 27,000,000) . There were
16,474,707 Performance Rights issued during the year as STI and 12,813,661 Performance Rights issued
during the year as LTI (2017: STI .8,280,938, LTI: 5,520,625)
(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 $250,000 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.
(f)
Voting and comments made at the Company’s 2017 Annual General Meeting
Kingston received 99% of “yes” votes (0.1% of “no” votes) on its remuneration report for the 2017 financial
year. The Company did not receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
- 12 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(g)
Remuneration Details for the Year Ended 30 June 2018
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.
S hort-term Benefits
Post-employment
Benefits
Long-term Benefits
Equity-settled S hare-based
Payments
S alary, Fees
and Leave
Director
$
Profit
S hare and
Bonuses
$
Non-
monetary
Other
$
$
Pension
and S uper-
annuation
$
Other
Incentive
Plans
LSL
Performance
Rights/S hares
Options
$
$
$
$
$
Cash-
settled
S hare-
based
Payments
$
Termination
Benefits
Total
$
$
Anthony Wehby¹
2018
2017
Andrew Corbett²
2018
2017
Andrew Paterson³
2018
2017
Stuart Rechner⁴
2018
2017
Yafeng Cai⁵
2018
2017
M atthew Whyte⁶
2018
2017
Jonathan Davies⁷
2018
2017
Total
2018
2017
50,000 -
- -
4,750
-
-
-
-
-
-
-
54,750
50,000 -
- -
4,750
-
-
-
-
32,328
-
-
87,078
246,750 -
- -
23,441
-
-
-
43,657
-
-
-
313,848
235,500 -
- -
22,235
-
-
-
9,660
80,820
-
-
348,215
210,000 -
- -
19,950
-
-
-
37,155
-
-
-
267,105
229,351 -
- -
9,500
-
-
-
8,221
64,656
-
-
311,728
47,400 -
- - -
-
-
-
-
-
-
-
47,400
57,705 -
- - -
-
-
-
-
-
-
-
57,705
- -
- - -
-
-
-
-
-
-
- -
8,581 -
- - -
-
-
-
-
-
-
-
8,581
- -
- - -
-
-
-
-
-
-
- -
42,420 -
- - -
-
-
-
-
-
-
-
42,420
- -
- - -
-
-
-
-
-
-
- -
- -
- - -
-
-
-
-
-
-
- -
554,150
623,557
0
0
0
0
0
0
48,141
36,485
0
0
0
0
0
0
80,812
17,881
0
177,804
0
0
0
0
683,103
855,727
¹ Anthony Wehby was appointed Non-Executive Chairman on 4 July 2016
² Prior to his appointment on 4 July 2016, Andrew Corbett received consultancy payments from the Company
³ Andrew Paterson was appointed Executive Director on 1 March 2017
⁴ Stuart Rechner transitioned from an Executive Director to Non-Executive Director on 4 July 2016. He is remunerated through a related entity.
Refer Note 21 for details on related party transactions. During 2018, Mr Rechner received consultancy payments through a related entity
⁵ Yafeng Cai resigned as Non-Executive Director on 30 November 2016
⁶ Mathew Whyte resigned as Company Secretary on 29 July 2016
⁷ Jonathan Davies resigned as Non-Executive Chairman on 4 July 2016
(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
- 13 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Corbett or six months’ notice by the Company. Mr Corbett is not entitled to any termination benefits other
than accrued pay, leave entitlement or other statutory payments 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 other than accrued pay, leave entitlement or
other statutory payments unless paid at the discretion of directors.
Michael Wilkes
Mr Wilkes was appointed a Non-Executive Director on 6 July 2018. 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 Wilkes 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.
(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 2017 and 2018
reporting periods is as follows:
- 14 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
2018
Balance at Beginning of
Year
Issue Date
No.
Value
No.
Value
No.
Vested and
Exercisable at
End of Year
Vested and
Unexercisable
at End of Year
Grant Details
Exercised
Lapsed
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
STI¹
LTI²
STI¹
LTI²
STI¹
LTI²
STI
LTI
2,000,000
2,000,000
4-Jul-16
4-Jul-16
2,000,000
2,000,000
$
16,657
15,671
-
-
$
-
-
2,000,000
-
No.
-
2,000,000
No.
5,000,000
5,000,000
4-Jul-16
4-Jul-16
5,000,000 41,642
39,178
5,000,000
-
-
-
-
5,000,000
-
-
5,000,000
4,000,000
4,000,000
4-Jul-16
4-Jul-16
4,000,000
4,000,000
33,313
31,343
-
-
-
-
4,000,000
-
-
4,000,000
-
-
-
-
- -
-
-
-
-
-
-
-
-
22,000,000
22,000,000 177,804
-
-
11,000,000
11,000,000
-
-
-
-
-
-
-
-
-
¹ Unlisted STI Options (issued 4 July 2016) exercisable at 4c - expired on 30 June 2018
² Unlisted LTI Options (issued 4 July 2016) exercisable at 7c - expiry on 30 June 2019
2017
Balance at Beginning of
Year
Issue Date
No.
Value
No.
Value
No.
Grant Details
Exercised
Lapsed
-
-
4-Jul-16
4-Jul-16
$
16,657
2,000,000
2,000,000 15,671
-
-
$
-
-
-
-
Vested and
Exercisable at
End of Year
No.
2,000,000
2,000,000
Vested and
Unexercisable
at End of Year
No.
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
Jonathan Davies³
Mathew Whyte³
Yafeng Cai³
STI¹
LTI²
STI¹
LTI²
STI¹
LTI²
STI
LTI
STI
LTI
STI
LTI
STI
LTI
-
-
4-Jul-16
4-Jul-16
5,000,000 41,642
5,000,000 39,178
-
-
-
-
-
-
5,000,000
5,000,000
-
-
4-Jul-16
4-Jul-16
4,000,000 33,313
4,000,000 31,343
-
-
-
-
-
-
4,000,000
4,000,000
-
-
-
-
-
-
-
-
- -
- -
-
-
-
-
-
-
-
-
- -
- -
-
-
-
-
-
-
-
-
- -
- -
-
-
-
-
-
-
-
-
- -
- -
-
-
-
-
-
-
-
-
-
22,000,000 177,804
-
-
-
22,000,000
¹ Unlisted STI Options (issued 4 July 2016) exercisable at 4c - expiry on 30 June 2018
² Unlisted LTI Options (issued 4 July 2016) exercisable at 7c - expiry on 30 June 2019
³ Jonathan Davies resigned as Non-Executive Chairman on 4 July 2016, Mathew Whyte resigned as Director on 21 July 2015 and
Company Secretary on 29 July 2016 and Yafeng Cai resigned as Non-Executive Director on 30 November 2016
Performance Rights Holdings of KMP
The number of performance rights in the Company held by each KMP of the Group during the 2017 and 2018
reporting periods is as follows:
- 15 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
2018
Balance at Beginning of
Year
Issue Date
No.
Value
$
No.
Value
Grant Details
Vested
Lapsed
No.
Balance at
End of Year
-
6,000,000
-
-
-
-
$
-
-
-
-
-
6,000,000
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
STI
LTI³
STI¹
STI²
LTI³
LTI⁴
LTI⁵
STI¹
STI²
LTI³
LTI⁴
LTI⁵
STI
LTI
0
6,000,000
3,216,563
0
10,000,000
2,144,375
0
2,737,500
0
8,000,000
1,825,000
0
0
0
15-Jul-16
19-Dec-16
1-Dec-17
15-Jul-16
19-Dec-16
1-Dec-17
19-Dec-16
1-Dec-17
15-Jul-16
19-Dec-16
1-Dec-17
3,216,563
6,399,266
10,000,000
2,144,375
4,977,207
3,264
12,798
-
5,397
30,859
1,287,000
-
-
-
-
19,305
-
-
-
-
1,929,563
-
-
-
-
-
6,399,266
10,000,000
2,144,375
4,977,207
2,737,500
5,446,184
8,000,000
1,825,000
4,235,921
2,778
10,892
-
5,444
26,263
1,095,000
-
-
-
-
16,425
-
-
-
-
1,642,500
-
-
-
-
-
5,446,184
8,000,000
1,825,000
4,235,921
-
-
-
-
-
-
-
-
-
-
-
-
33,923,438
54,982,016
97,695
2,382,000
35,730 3,572,063
49,027,953
¹ STI Performance Rights issued on 19 December 2016 - partially vested and new shares issued on 31 July 2017. Remained lapsed
² STI Performance Rights issued on 1 December 2017 will be vest as follows:
(a) Up to 50% of the STI Performance Rights will automatically vest if, the 30 day VWAP at 30 June 2018 is between 150% and 200% of $0.019
per Share (see full terms and conditions)
(b) Up to 25% of the STI Performance Rights will vest, at the Board’s discretion, upon the achievement of business development measures,
including the delivery of the Company’s Business Development Plan for 30 June 2018.
(c) Up to 25% of the STI Performance Rights will vest, at the Boards discretion, upon the achievement of operational and management objectives
measured against the Company’s Operational Plan by 30 June 2018.
³ LTI Performance Rights issued on 15 July 2016 will be granted in 2 tranches as follows:
- 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%; and
- 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%.
⁴ LTI Performance Rights issued on 19 December 2016 will vest 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.
⁵ LTI Performance Rights issued on 1 December 2017 will be granted if the Company achieves a market capitalisation greater than $70 million on
or before 30 June 2021. Market capitalisation means the price of the Company’s shares as quoted on ASX multiplied by the total number of Shares
on issue.
⁶ Jonathan Davies resigned as Non-Executive Chairman on 4 July 2016, Mathew Whyte resigned as Director on 21 July 2015 and Company
Secretary on 29 July 2016 and Yafeng Cai resigned as Non-Executive Director on 30 November 2016
2017
Balance at Beginning of
Year
Issue Date
No.
Value
$
No.
Value
Grant Details
Vested
Lapsed
No.
Balance at
End of Year
-
-
15-Jul-16
-
6,000,000
-
-
-
-
$
-
-
-
-
-
6,000,000
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
Jonathan Davies⁴
Mathew Whyte⁴
Yafeng Cai⁴
STI
LTI²
STI¹
LTI²
LTI⁴
STI¹
LTI²
LTI³
STI
LTI
STI
LTI
STI
LTI
STI
LTI
-
-
-
19-Dec-16
15-Jul-16
19-Dec-16
3,216,563
10,000,000
2,144,375
3,264
-
6,397
-
-
-
-
-
-
-
-
-
3,216,563
10,000,000
2,144,375
-
-
-
19-Dec-16
15-Jul-16
19-Dec-16
2,737,500
8,000,000
1,825,000
2,778
-
5,444
-
-
-
-
-
-
-
-
-
2,737,500
8,000,000
1,825,000
-
-
-
-
-
-
-
-
- -
- -
-
-
-
-
-
-
-
-
- -
- -
-
-
-
-
-
-
-
-
- -
- -
-
-
-
-
-
-
-
-
- -
- -
-
-
-
-
-
-
-
-
-
33,923,438
17,883
-
-
-
33,923,438
- 16 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
¹ STI Performance Rights issued on 19 December 2016 will be granted in 3 tranches as follows:
- Up to 30% of the STI Performance Rights will automatically 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 maximum of
30% STI Performance Rights vesting if the share price exceeds 3.8 c
- 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.
² LTI Performance Rights issued on 15 July 2016 will be granted in 2 tranches as follows:
- 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%; and
- 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%.
³ LTI Performance Rights issed on 19 December 2016 will vest 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 Jonathan Davies resigned as Non-Executive Chairman on 4 July 2016, Mathew Whyte resigned as Director on 21 July 2015 and
Company Secretary on 29 July 2016 and Yafeng Cai resigned as Non-Executive Director on 30 November 2016
Share holdings of KMP
The number of ordinary shares in the Company held by each KMP of the Group during the 2017 and 2018
reporting periods is as follows:
2018
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
Balance at
Beginning of
Year
Granted as
Remuneration during
the Year
Issued on Exercise of
Options/Vesting of
Performance Rights during
the Year
Other Changes
during the Year
Balance at End of
Year
2,380,952
9,523,808
476,190
-
- - 681,818 3,062,770
- 1,287,000 681,818 11,492,626
- 1,095,000 - 1,571,190
- - 1,002,161 1,002,161
12,380,950
- 2,382,000 2,365,797 17,128,747
2017
Anthony Wehby
Andrew Corbett
Andrew Paterson
Stuart Rechner
Jonathan Davies¹
M athew Whyte¹
Yafeng Cai¹
Balance at
Beginning of
Year
Granted as
Remuneration during
the Year
Issued on Exercise of
Options/Vesting of
Performance Rights during
the Year
Other Changes
during the Year
Balance at End of
Year
2,380,952
291,971 - - 2,088,981
9,523,808
1,167,883 - - 8,355,925
58,394 - - 417,796
476,190
- - - - -
-
1,270,813 - -
-
1,587,591 - -
-
520,813 - -
12,380,950
4,897,465
(1,270,813)
(1,587,591)
(520,813)
- - 7,483,485
¹ Changes during the year represent holding at the time of ceasing to be a KMP and not necessarily disposed
(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 21 Related Party Transactions.
END OF AUDITED REMUNERATION REPORT
- 17 -
DIRECTORS’ 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
Held at
01 July 17
Issued
Lapsed /
Cancelled
Held at
30 June 2018
28 Aug 15
30 June 19
3 cents
7,058,823
8 July 16
26 Oct 16
30 June 19
30 June 19
7 cents
7 cents
11,000,000
2,500,000
22 Dec 16
22 Dec 19
2.5 cents
5,000,000
23 Aug 18
30 June 21
2.7 cents
7,375,909
-
-
-
-
-
-
-
-
-
-
7,058,823
11,000,000
2,500,000
5,000,000
0
During the year ended 30 June 2017 and 30 June 2018 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.
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)
d)
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
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.
- 18 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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
During the year, the Company was not of a size nor were 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 were the subject of scrutiny at full board meetings. Since the end of the year, the Board has
established a separate Audit and Risk Management Committee to assist the Board to discharge its corporate
governance duties in relation to implementing and maintaining appropriate policies and procedures relating to
risk management, financial reporting, external and internal control and auditing.
NON AUDIT SERVICES
During the year the Company’s auditor provided taxation services to the Company at a total cost of $4,301.
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. Hall Chadwick 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 6 September 2018; and
is signed by Mr Anthony Wehby .
ANTHONY WEHBY
Non-Executive Chairman
Sydney, New South Wales
6 September 2018
- 19 -
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF KINGSTON RESOURCES LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June
2018 there have been no contraventions of:
(i)
the auditor independence requirements as set out in the Corporations Act 2001
in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Hall Chadwick
Level 40, 2 Park Street
Sydney NSW 2000
DREW TOWNSEND
Partner
Date: 6 September 2018
SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN
Liability limited by a scheme approved under Professional Standards Legislation
www.hallchadwick.com.au
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2018
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
Non-current assets held for sale
Property, plant and equipment
Capitalised exploration expenditure
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing liabilities
Provisions
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Share based payment reserve
Foreign currency translation reserve
Total equity
Notes
Consolidated Group
2018
$
2017
$
8
9
10
11
13
22
14
15
16
4,379,799
136,965
284,243
4,361
4,805,368
1,800,000
188,172
8,839,290
41,536
10,868,998
15,674,366
386,007
59,357
64,921
510,285
124,179
124,179
634,464
15,039,902
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
69,244,553
(54,427,748)
267,218
(44,121)
15,039,902
58,262,992
(48,790,572)
267,950
-
9,740,370
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
- 21 -
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Notes
Consolidated Group
2018
$
2017
$
Continuing Operations
Other income
Administration expenses
Employee benefits
Consultant and legal fees
Depreciation and amortisation expenses
Director fees
Share based payments expense
Gain/(Loss) on revaluation of assets at market value
through profit and loss
Impairment of exploration expenditure
Loss on sale of tenements
Other expenses
Foreign Exchange Gain/(Loss)
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
2
3
3, 22
4
Basic loss per share (cents)
Diluted loss per share (cents)
116,635
(568,643)
(613,202)
(412,543)
(1,312)
(102,150)
(268,672)
(17,701)
(3,552,901)
(408,444)
(8,774)
87,405
(5,750,302)
-
(5,750,302)
210,671
(271,147)
(489,735)
(210,845)
(875)
(102,372)
(228,667)
-
-
-
(60,501)
-
(1,153,471)
-
(1,153,471)
-
(5,750,302)
-
(1,153,471)
(0.646)
(0.177)
(0.646)
(0.177)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes.
- 22 -
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Statement of Changes in Equity
Attributable to the shareholders of Kingston Resources Limited
Ordinary
Shares
$
Accumulated
Losses
$
Foreign
Exchange
Reserves
Share based
payment
Reserve
$
Total Equity
$
Balance at 1 July 2016
48,435,160
(47,637,101)
Loss for the year
Other comprehensive income
Issue of Shares
Cost of share issue
Share based payments
Additions to reserves
-
-
(1,153,471)
-
48,435,160
(48,790,572)
10,228,500
(400,668)
-
-
-
-
-
-
Balance at 30 June 2017
58,262,992
(48,790,572)
Balance at 1 July 2017
58,262,992
(48,790,572)
Loss for the half year
Other comprehensive income
-
-
(5,750,302)
-
58,262,992
(54,540,874)
Issue of Shares
Cost of share issue
11,284,574
(303,013)
Share based payments
Transfer from Option Reserve on
Expiry of Options
Additions to reserves
-
-
-
-
-
-
113,126
-
Balance at 30 June 2018
69,244,553
(54,427,748)
-
-
-
-
-
267,950
-
798,058
(1,153,471)
-
(355,413)
10,228,500
(400,667)
267,950
-
267,950
9,740,370
267,950
-
-
9,740,370
(5,750,302)
-
267,950
3,990,068
-
-
112,394
(113,126)
11,284,574
(303,013)
112,394
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(44,121)
(44,121)
-
(44,121)
267,218
15,039,902
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
- 23 -
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Statement of Cash Flows
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
Notes
Consolidated Group
2018
$
2017
$
56,956
59,679
-
(1,603,072)
(1,486,437)
106,377
20,000
83,509
(1,019,237)
(809,351)
19
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 exploration assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares and options
Transaction costs related to issue of shares, convertibles, or options
Proceeds from borrowings
Repayment of borrowings
Net cash provided by financing activities
Net change in cash and cash equivalents held
Cash and cash equivalents at beginning of financial year
Cash contribution from acquisitions
Effect of movement in exchange rate on cash held
Cash and cash equivalents at end of financial year
8
(2,208,900)
(393,690)
-
-
300,000
(2,302,590)
(1,228,288)
(304,907)
-
(35,805)
1,300
(1,567,700)
4,522,995
(303,013)
-
(15,499)
4,204,483
415,456
3,877,551
84,098
2,695
4,379,799
6,010,000
(400,668)
-
-
5,609,332
3,232,281
645,270
-
-
3,877,551
* Acquisitions during the period included non–cash transactions in the form of shares. $6,052,039 worth of shares issued
to shareholders of WCB Resources Ltd in relation to the merger with WCB Resources; $328,260 worth of shares paid to
the Livingstone Vendors in relation to the acquisition of 75% of the Livingstone Gold project.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
- 24 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
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 6 September 2018.
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
2018. 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 12 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.
b)
New Accounting Standards and Interpretations
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group,
together with an assessment of the potential impact of such pronouncements on the Group when
adopted in future periods, are discussed below:
–
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual
reporting periods beginning on or after 1 July 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge
accounting outlined below) and includes revised requirements for the classification and
measurement of financial instruments requirements for financial instruments and hedge
accounting.
- 25 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
The key changes that may affect the Group on initial application include certain
simplifications to the classification of financial assets, simplifications to the accounting of
embedded derivatives, upfront accounting for expected credit loss, and the irrevocable
election to recognise gains and losses on investments in equity instruments that are not held
for trading in other comprehensive income. AASB 9 also introduces a new model for hedge
accounting that will allow greater flexibility in the ability to hedge risk, particularly with
respect to hedges of non-financial items. Should the entity elect to change its hedge policies
in line with the new hedge accounting requirements of the Standard, the application of such
accounting would be largely prospective.
Based on a preliminary assessment performed over each line of business and product type,
the effects of AASB 9 are not expected to have a material effect on the Group.
–
AASB 2014-7: Amendments to Australian Accounting Standards arising from AASB 9
(December 2014)
AASB 2014-7 (issued December 2014) gives effect to the consequential amendments to
Australian Accounting Standards (including Interpretations) arising from the issue of AASB
9: Financial Instruments (December 2014). More significantly, additional disclosure
requirements have been added to AASB 7: Financial Instruments: Disclosures regarding
credit risk exposures of the entity. This Standard also makes various editorial corrections to
Australian Accounting Standards and an Interpretation.
AASB 2014-7 mandatorily applies to annual reporting periods beginning on or after 1
January 2018. Earlier application is permitted, provided AASB 9 (December 2014) is applied
for the same period.
–
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019).
When effective, this Standard will replace the current accounting requirements applicable to
leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee
accounting model that eliminates the requirement for leases to be classified as operating or
finance leases.
The main changes introduced by the new Standard are as follows:
recognition of a right-of-use asset and lease liability for all leases (excluding short-
term leases with a lease term 12 months or less of tenure and leases relating to low-
value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and
Equipment in profit or loss and unwinding of the liability in principal and interest
components;
inclusion of variable lease payments that depend on an index or a rate in the initial
measurement of the lease liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease
components and instead account for all components as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the
Standard to comparatives in line with AASB 108 or recognise the cumulative effect of
retrospective application as an adjustment to opening equity on the date of initial application.
The Group has established an AASB 16 project team and is in the process of completing its
impact assessment of AASB 16. Based on a preliminary assessment performed over each
line of business and lease type, the effect of AASB 16 is not expected to have a material
effect on the Group.
- 26 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
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:
- 27 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
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.
- 28 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 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.
- 29 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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).
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 $5,750,302 (2017: $1,153,471) and negative operating
cash flows of $1,486,437 (2017: $809,351) for the year ended 30 June 2018. The consolidated entity’s net current
asset position as at 30 June 2018 was $4,295,083 (2017: $3,508,650).
During the financial year, on 13 February 2018, the Company completed a placement of shares raising $4.3m,
alongside this a Share Purchase Plan raised a further $255,000. Details to this placement are described in Note 15.
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, as such the Company considers it likely that it may
need to raise equity from time to time as successfully demonstrated in February 2018. However, the Company’s
30 June 2018 cash balance of $4,379,799 leaves it with sufficient funding to continue to meet operational
expenditure requirements, including minimum exploration commitments across its tenement portfolio.
Taking into account the current cash reserves of the Company, the Directors are confident the Company has
adequate resources to continue in its main business activity for the foreseeable future. As a result, the financial
statements have been prepared on the basis of going concern which contemplates continuity of normal business
- 30 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
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 20. 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 $8,839,290 (see Note 22).
- 31 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
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.
- 32 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Group
2018
$
2017
$
2.
OTHER INCOME
Other income
Interest from bank
DMIRS EIS funding
Research and development tax credit
Profit on sale of fixed asset
Other income
Total income
3.
RESULT FOR THE YEAR
Depreciation and amortisation of non-current
assets
Depreciation of:
- plant and equipment
Total depreciation and amortisation
Impairments
56,956
59,679
-
-
-
116,635
1,312
1,312
Impairment of exploration expenditure – Note 22
Total impairments
3,552,901
3,552,901
106,377
-
83,509
785
20,000
210,671
875
875
-
-
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
2018
$
2017
$
Accounting loss before income tax
(5,570,302)
(1,153,471)
Income tax benefit calculated at 30%
(1,581,333)
(346,041)
Non-deductible expenses
Movement in unrecognised temporary differences
Unused tax losses and temporary differences not
recognised as deferred tax assets
Income tax expense (benefit)
137,527
(195,677)
1,639,483
-
398,096
(524,015)
471,960
-
The tax rate used in the above reconciliation is the corporate tax rate of 27.5% payable by Australian corporate entities
on taxable profits under Australian tax law. In 2017 the tax rate was 30%.
(b) Analysis of deferred tax asset
No deferred tax assets have been recognised as yet, other than to offset deferred tax liabilities, as it is currently not
probable that future taxable profit will be available to realise the asset. Potential deferred tax asset on carry forward losses
amount to $2,952,081 (2017: $1,650,475).
- 33 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
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 2018 and 2017 reporting periods are as follows.
Short-term employee benefits
Post- employment benefits
Equity-settled share-based payments
Total
Consolidated Group
2018
$
2017
$
553,750
48,141
80,812
682,703
623,557
36,485
195,685
855,727
Consolidated Group
2018
$
2017
$
6.
AUDITOR REMUNERATION
Remuneration of the auditor of the Company for:
- auditing or reviewing the financial statements
- non-audit services
Total
51,628
4,301
55,929
53,500
-
53,500
7.
LOSS PER SHARE
(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)
(0.646)
(0.646)
(0.177)
(0.177)
890,463,527
653,455,155
($5,750,302)
($1,153,471)
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
2018
$
2017
$
8.
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Total
512,379
3,867,420
4,379,799
47,746
3,829,805
3,877,551
- 34 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 of between
1.5% and 2.3% per annum depending on term (2017: 1.6%).
9.
TRADE AND OTHER RECEIVABLES
Current
Other receivables
Total current trade and other receivables
Credit Risk – Trade and Other Receivables
Consolidated Group
2018
$
2017
$
136,965
136,965
92,142
92,142
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
2018
Other receivables
Total
2017
Other receivables
Total
136,965
136,965
92,142
92,142
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Within
initial
trade
terms
$
-
-
-
-
136,965
136,965
92,142
92,142
10.
FINANCIAL ASSETS
Financial assets at fair value through profit and
loss:
At fair value
Shares in listed entities
Consolidated Group
2018
$
2017
$
284,243
284,243
1,944
1,944
Financial assets at fair value through profit and loss consist of investments in ordinary shares.
- 35 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(i) Listed shares
The fair value of listed shares has been determined directly by reference to published price quotations in an active
market.
Consolidated Group
2018
$
2017
$
11. NON CURRENT ASSETS HELD FOR SALE
Non-current Assets Held for Sale
Capitalised Exploration
Total current trade and other receivables
1,800,000
1,800,000
-
-
Kingston agreed the sale of its Northern Territory lithium assets on 28 June 2018, in order to focus on exploration
activity at Misima and Livingstone.
12. CONTROLLED ENTITIES
Name
Country of
Incorporation
Principal Activity
Beneficial Percentage
Interest Held By
Economic Entity
2017
%
2018
%
Slipstream WANT Pty Ltd
Universal Rare Earths Pty Ltd
Fleurieu Mines Pty Ltd
Westernx Pty Ltd
Centex Resources Ltd (formerly U Energy Pty Ltd)
WCB Resources Limited
WCB Pacific Pty Limited
WCB Australia Pty Limited
WCB PNG Limited
Australia
Australia
Australia
Australia
Australia
Canada
Australia
Australia
Mineral Exploration
Mineral exploration
Mineral exploration
Mineral exploration
Mineral exploration
Mineral exploration
Mineral exploration
Mineral exploration
Papua New Guinea Mineral exploration
WCB PNG Exploration Limited
Papua New Guinea Mineral exploration
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
0-
-
-
-
-
13.
PROPERTY, PLANT AND EQUIPMENT
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
- 36 -
Consolidated Group
2018
$
2017
$
253,441
199,273
-
452,714
252,129
12,413
-
264,542
188,172
188,172
260,586
-
(7,145)
253,441
257,884
875
(6,630)
252,129
1,312
1,312
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(a) Movements in carrying amounts
Balance at 1 July 17
Acquisitions
Disposals
Depreciation
Balance at 30 June 18
Balance at 1 July 16
Acquisitions
Disposals
Depreciation
Balance at 30 June 17
14. TRADE AND OTHER PAYABLES
Trade payables – unsecured
Other payables and accruals
Total
Plant and
equipment
$
Total
$
1,312
199,273
-
12,413
188,172
2,702
-
(515)
(875)
1,312
1,312
199,273
-
12,413
188,172
2,702
-
(515)
(875)
1,312
Consolidated Group
2018
$
2017
$
195,684
190,323
386,007
301,230
98,244
399,474
Given the short term nature of these amounts, their carrying value approximates their fair value.
- 37 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
ISSUED CAPITAL
15.
(a) Movements in contributed equity for the year
Balance at the beginning of the year
- 31 July 2017
- 17 November 2017
- 17 November 2017
- 17 November 2017
- 8 December 2017
- 13 February 2018
- 8 March 2018
Shares issued during the previous financial year:
- 7 July 2016
- 8 July 2016
- 22 December 2016
Consolidated Group
30 June 2018
30 June 2017
Number of Fully
Paid Ordinary
Shares
$
Number of Fully
Paid Ordinary
Shares
$
665,769,985
3,312,751
302,601,971
15,220,351
6,052,035
16,413,039
194,000,000
11,590,897
58,262,992
41,289
6,052,039
225,000
114,989
328,261
4,267,996
255,000
209,079,509
48,435,160
286,190,476
165,000,000
5,500,000
6,010,000
4,125,000
93,500
Less capital raising costs
Total contributed equity
1,214,961,029
(303,013)
69,244,553
-
665,769,985
(400,668)
58,262,992
The Company has issued share capital amounting to 1,214,961,029 (2017: 665,769,985) 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.
On 13 February 2018, the Company raised $4.3m through the placement of 194,000,000 shares at 2.2c. On 8 March 2018, a further 11,590,897 shares were issued at 2.2c under
a Share Purchase Plan announced concurrently with the placement. For details on the remaining shares issued during the year see Note 20.
No unlisted options were issued during the year. 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.
- 38 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
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 20
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.
16. 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 and performance rights. Refer to Note 20 Share-based Payments for
further details.
17. 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, $396,400
relates to minimum expenditure requirements on the Northern Territory lithium tenements for which it has agreed
but not yet completed the sale; for expenditure later than one year and less than five years these tenements comprise
$1,194,485 of the total commitment. 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
2018
$
2017
$
Not later than one year
Later than one year and less than five years
464,400
1,358,803
522,950
1,621,011
The Group has entered into a three year finance lease for the purchase of exploration equipment on Misima Island.
The future minimum lease payments are as follows:
- 39 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Finance lease commitment
Consolidated Group
2018
$
2017
$
Not later than one year
Later than one year and less than five years
59,357
124,179
-
-
The Group is a party to rental leases for its office premises. The future minimum lease payments are as follows:
Operating lease commitment
Consolidated Group
2018
$
2017
$
Not later than one year
Later than one year and less than five years
37,125
13,600
14,742
16,725
18. 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. Thus, segmented disclosures
are not required.
19. 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.
Consolidated Group
2018
$
2017
$
(5,750,302)
(1,153,471)
1,312
268,672
3,552,901
17,701
408,444
(87,406)
(19,909)
13,144
27.222
81,595
169
(1,486,437)
875
228,667
-
-
(785)
71
-
51,779
63,513
-
(809,351)
Reconciliation of Loss from Ordinary Activities to
Net Cash Flows from Operating Activities
Loss for the year
Non-cash flows in loss
Depreciation
Share-based payments
Impairment of exploration expenditure
Revaluation of assets at FVTPL
Loss on sale
Unrealised fx (gain)/losses
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
Exchange rate impact on balances
Net cash flows from operating activities
- 40 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(b) Non-cash Investing Activities
During the year Kingston acquired WCB Resources Limited and exercised its option to acquire 75% of the
Livingstone Gold Project. See Note 20 for details of the share based consideration provided for these acquisitions.
20. 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 2018.
Share options:
Date of grant Share-based payment Number granted
Value
8 July 2016
26 Oct 2016
LTI Options
LTI Options
Performance Rights:
11,000,000
2,500,000
$86,192
$12,882
$203,7984
Share price on
issue
$0.019
$0.021
Exercise
Price
$0.07
$0.07
Expiry
30 June 2019
30 June 2019
Date of grant Share-based payment
15 July 2016
20 Nov 2016
19 Dec 2016
1 Dec 2017
1 Dec 2017
LTI Performance Rights¹
LTI Performance Rights¹
LTI Performance Rights2
STI Performance Rights3
LTI Performance Rights4
Number granted
24,000,000
5,000,000
5,520,625
16,474,707
12,813,661
Value
-
-
$16,468
$32,949
$79,445
Expiry
30 June 2019
30 June 2019
30 June 2020
31 July 2018
30 June 2021
1 These Performance Rights will be granted in 2 tranches as follows:
-
-
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 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
3 These Performance Rights will be granted in 3 tranches as follows (subject to satisfaction of the applicable
Performance Hurdles and Vesting Conditions):
-
Up to 50% of the STI Performance Rights will vest if, the share price as quoted on ASX at the close of
trading on 30 June 2018 is 150% to 200% of $0.019 per share. Shares will vest on a sliding scale with 8.5%
vesting at 150% ($0.0285), and the maximum of 50% vesting at 200% ($0.038) or greater.
Up to 25% 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
2018.
Up to 25% 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
2018.
-
-
4 These Performance Rights will be granted if the Company achieves a market capitalisation greater than $70 million
on or before 30 June 2021. Market capitalisation means the price of the Company’s shares as quoted on ASX
multiplied by the total number of Shares on issue
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%.
On 31 July 2017 Kingston issued senior management 3,312,751 shares on the vesting of FY17 STI Performance
rights (4,968,187 lapsed).
- 41 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
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
2018
2017
Number of
Options
27,000,000
Weighted Average
Exercise Price
$
$0.06
Number of
Options
Weighted Average
Exercise Price
$
13,500,000
13,500,000
13,500,000
$0.04
$0.07
$0.07
27,000,000
-
27,000,000
27,000,000
$0.06
-
$0.06
$0.06
(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 acquisition1
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 shares2
Number
granted
180,000,000
Value
Exercise Price
Expiry
-
-
Nil (Vesting Conditions)
30 June 2019
1 On 22 December 2016, Kingston granted Trillbar Resources Pty Ltd 5,000,000 options (exercisable at 2.5c, expiry
22 December 2019) in partial consideration for an option over the Livingstone Gold Project.
2 On 15 July 2016, Kingston granted Slipstream Resources Pty Ltd, 180,000,000 Milestone Shares in partial
consideration for the acquisition of Slipstream WANT.
There were no options exercised during the year ended 30 June 2018 (2017: nil).
Ordinary shares:
-
-
-
-
On 17 November 2017 Kingston granted 15,220,351 Kingston shares in settlement of WCB Resources
liabilities. The shares were valued at $0.015 per share (total value of $225,000).
On 17 November 2017 Kingston granted 6,052,035 Kingston shares as advisor fees in the merger with WCB
Resources. The shares were valued at $0.019 per share (total value $114,989).
On 17 November 2017 Kingston granted 302,601,971 Kingston shares to shareholders of WCB Resources
Limited to acquire the shares in WCB Resources Limited. The shares were valued at $0.02 per share (total
value $6,052,039.
On 8 December 2017 Kingston granted 16,413,039 Kingston shares to Trillbar Resources to acquire a 75%
interest in E52/3403 (the Livingston Gold Project). The shares were valued at $0.02 per share (total value
$328,261).
21. 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. Other transactions include:
– A consulting fee of $2,400 was paid to S. Rechner, a Director of the company, for geological and legal
services provided.
- 42 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(b) Directors’ Interests
As at 30 June 2018 the relevant interests of each of the Directors, held either directly or indirectly through their
associates, in the securities of Kingston are as follows:
Fully Paid
Ordinary Shares
(KSN)
3,062,770
14,692,259
4,294,282
1,002,161
-
Director
Unlisted LTI Options1
Anthony Wehby²
Andrew Corbett³
Andrew Paterson
Stuart Rechner ⁴
Michael Wilkes⁵
¹ Unlisted Long Term Incentive (LTI) Options exercisable at $0.07 each and expiring on 30 June 2019
² Anthony Wehby holds a relevant interest in shares and options as he is a related party to Mrs Rosemary Wehby, who is the
registered holder of the shares and options.
³ 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
2,000,000
5,000,000
4,000,000
-
-
⁴ Stuart Rechner holds a relevant interest in the specified number of Shares as a result of being a director of Osmium Holdings Pty
Limited as trustee of Ferndale Superannuation Fund
⁵ Michael Wilkes appointed on 6 July 2018
22. CAPITALISED EXPLORATION EXPENDITURE
Notes
Consolidated Group
2018
$
2017
$
Opening Balance
Transfer from other non-current assets
Acquisition of Slipstream WANT
Acquisition of Livingstone Gold Project
Acquisition of WCB Resources
Foreign exchange adjustment
Exploration assets sold
Impairment of assets
Transfer to non-current assets held for sale
Capitalised exploration expenditure
Total exploration expenditure capitalised
6,230,407
328,261
6,453,600
75,489
(1,008,444)
(3,552,901)
(1,800,000)
2,112,878
8,839,290
-
208,811
4,425,000
132,783
-
-
-
-
-
1,463,813
6,230,407
A review of the Group’s exploration assets was undertaken at the end of FY18 and directors decided to impair the
carrying value of capitalised exploration expenditure in the amount of $3,552,901. This brings the value of the
Northern Territory lithium assets to market value as reflected by the agreed sale price and eliminates the carrying
value of the Greenbushes tenement.
23.
FINANCIAL INSTRUMENTS
The Group’s principal financial instruments comprise receivables, payables, FVTPL financial assets, cash and
short-term deposits and a finance lease.
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.
- 43 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(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 2018 or 30 June 2017.
(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
Consolidated Group
2018
$
2017
$
4,379,799
4,379,799
3,877,551
3,877,551
Impact on post tax profit / (loss) and equity
+ 2% in interest rate
- 2% in interest rate
87,596
(87,596)
77,551
(77,551)
(d) Foreign currency risk
The Group is not exposed to significant financial risks from movements in foreign exchange rates. 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. 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.
- 44 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(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
Interest bearing liabilities
Total financial liabilities
2018
2017
Footnote Net Carrying
Value
$
Fair
Value
$
Net Carrying
Value
$
Fair
Value
$
(i)
(i)
(ii)
(i)
4,379,799
136,965
284,243
4,801,007
4,379,799
136,965
284,243
4,801,007
3,877,551
92,142
1,944
3,971,638
3,877,551
92,142
1,944
3,971,638
386,007
183,536
386,007
386,007
183,536
386,007
399,474
-
399,474
399,474
-
399,474
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.
(iii) Interest bearing liabilities are carried at amortised cost.
- 45 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
24.
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
Contractual commitments
Parent Entity
2018
$
2017
$
4,495,353
10,986,926
15,482,279
3,969,693
6,197,829
10,167,522
428,239
-
428,239
462,987
-
462,987
69,244,554
(54,457,732)
58,262,994
(48,826,409)
267,218
15,054,040
267,950
9,704,535
(5,744,449)
-
(5,744,449)
(1,152,973)
-
(1,152,973)
There is no contractual commitments for the parent entity during the financial year. Refer to
note 17 for exploration commitments.
25.
BUSINESS COMBINATIONS
On 17 November 2017, the Group acquired 100% of the issued capital of WCB Resources Limited, a gold and
copper exploration Company based in Papua New Guinea, for a purchase consideration of $6,052,039 and
settlement of a pre-existing relationship amounting to $545,219. The consideration paid was mainly allocated to
an exploration asset which was acquired. Net assets acquired totalled $6,921,508
Purchase consideration (KSN shares):
Less:
Current Assets
Exploration expenditure
Payables
Non Current liabilities
Identifiable assets acquired and liabilities
Goodwill
Fair Value
$
6,052,039
168,703
7,323,069
(25,045)
(545,219)
6,921,508
(869,469)
The acquisition is part of the Group’s overall strategy to enhance its minerals exploration and development
portfolio.
- 46 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2018
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Through acquiring 100% of the issued capital of WCB Resources Limited, the Group has obtained control of the
company.
The purchase was satisfied by the issue of 302,601,971 ordinary shares at an issue price of $0.02 each. The issue
price was based on the market price on the date of purchase.
26.
SUBSEQUENT EVENTS
On 5 July 2018, the Company announced it had entered into an agreement to sell its Bynoe and Arunta Northern
Territory lithium assets for a total of $1,800,000 to an Australia private company, Lithium Plus Pty (see ASX
Announcement 5 July 2018, “Kingston Sells NT Lithium Tenements for $1.8m Cash”).
On 10 July 2018 the Company announced the appointment of Mick Wilkes as Non-Executive Director.
On 19 July 2018 Kingston issued senior management 8,237,357 shares on the vesting of FY18 STI Performance
rights (8,237,357 lapsed).
On 29 August 2018 the sale of the NT Lithium tenements as announced by the Company on 5 July 2018 was
completed, with the $1,800,000 settlement consideration subsequently transferred to KSN.
Other than the above, there has been no other matter or circumstance which has arisen since 30 June 2018 that
has significantly affected or may significantly affect:
a) Kingston Resources Limited’s operations in future financial years; or
b)
c) Kingston Resources Limited’s state of affairs in future financial years.
the results of those operations in future financial years; or
- 47 -
KINGSTON RESOURCES LIMITED
& its Controlled Entities
2018 ANNUAL REPORT
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 21 to 47, and the Remuneration disclosures that are contained
in page 11 to 17 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 2018 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 11 to 17 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
6 September 2018
- 48 -
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
KINGSTON RESOURCES LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Kingston Resources Limited and Controlled Entities (the Group),
which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated
statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
comprising a summary of significant accounting policies and other explanatory information, and the directors’
declaration.
In our opinion:
a.
the accompanying financial report of Kingston Resources Limited and Controlled Entities is in
accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
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 auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss after
tax of $5,750,302 during the year ended 30 June 2018 and had net operating cash outflows of $1,486,437
for the year then ended. As stated in Note 1, these events or conditions, along with other matters as set
forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN
Liability limited by a scheme approved under Professional Standards Legislation
www.hallchadwick.com.au
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
KINGSTON RESOURCES LIMITED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the year ended 30 June 2018. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key Audit Matter
How Our Audit Addressed the Key Audit Matter
Capitalised Exploration Expenditure
to Note 22
“Capitalised Exploration
Refer
Expenditure”
At 30 June 2018, the Group had capitalised
exploration assets of $8,839,290. The Group’s
accounting policy in respect of exploration and
evaluation assets is outlined in Note 1(m).
This is a key audit matter because the carrying value
of the assets are material to the financial statements
and significant judgement is applied in determining
whether an indicator of impairment exists in relation
to capitalised exploration and expenditure assets in
accordance with Australian Accounting Standard
AASB 6 “Exploration for and Evaluation of Mineral
Resources”.
Our Procedures included, amongst others:
• We confirmed the existence and tenure of the
exploration assets in which the Group has a
contracted interest by obtaining confirmation of
title from the relevant government agency.
• We obtained executed agreements evidencing
the Group’s interest in those exploration assets
and confirmed the currency and good standing
of those agreements.
In assessing whether an
indicator of
impairment exists in relation to the Group’s
exploration assets in accordance with AASB 6
– Exploration for and Evaluation of Mineral
Resources, we:
•
•
•
•
examined the minutes of the Group’s
board meetings and updates from the
Group’s exploration partners;
tested the significant inputs in the Group’s
cash flow forecasts for consistency with
their
the
exploration assets.
future activity
regarding
discussed with management the Group’s
ability and intention to undertake further
exploration activities.
• We tested a sample of additions of capitalised
supporting
expenditure
to
exploration
documentation.
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
KINGSTON RESOURCES LIMITED
Acquisition of WCB Resources Limited
Refer to Note 25 “Business Combinations”
During the year the Group acquired WCB Resources
Limited (WCB) for gross purchase consideration of
$6,052,039. This was considered a significant
acquisition for the Group.
Accounting for this transaction is a complex and
judgemental exercise, requiring management to
determine the fair value of acquired assets and
liabilities, in particular determining the allocation of
purchase consideration to goodwill and separately
identifiable intangible assets.
It is due to the size of the acquisition and the
estimation process involved in accounting for it that
this is a key area of audit focus.
Our procedures included, amongst others:
• We
reviewed
the sale and purchase
terms and
to understand key
agreement
conditions;
• We assessed whether the acquisition met the
in
criteria of a business combination
accordance with
relevant accounting
the
standard;
• Assessing the fair value of assets and liabilities
recorded in the purchase price allocation by
obtaining the closing balance sheet of the
acquire as at the acquisition date.
• Assessing the value of the consideration paid
for the purchase
• We assessed the adequacy of the Group’s
disclosures in respect of business acquisitions.
• We performed a Fair Value Assessment of Net
Identifiable Assets using guidance per AASB 3
“Business Combinations: and AASB 138
“Intangible Assets” where we obtained a copy
of WCB group’s balance sheet as at 30
November 2017 and reviewed the purchase
consideration allocation.
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 included
in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report and our
auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly
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 ability of the Group to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
KINGSTON RESOURCES LIMITED
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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
–
–
–
–
–
–
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the
direction, supervision and performance of the Group audit. We remain solely responsible for our audit
opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
KINGSTON RESOURCES LIMITED
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the remuneration report included in pages 11 to 17 of the directors’ report for the year ended
30 June 2018. 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
Auditor’s Opinion
In our opinion, the remuneration report of Kingston Resources Limited, for the year ended 30 June 2018,
complies with s 300A of the Corporations Act 2001.
Hall Chadwick
Level 40, 2 Park Street
Sydney, NSW 2000
DREW TOWNSEND
Partner
Dated: 6 September 2018
CORPORATE GOVERNANCE STATEMENT
2018 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 third edition of 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.
The Company’s Corporate Governance Statement for the financial year ending 30 June 2018 was approved by the Board
on 6 September 2018. The Corporate Governance Statement can be located on the Company’s website
www.kingstonresources.com.au
54
ADDITIONAL INFORMATION
2018 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 31 August 2018.
SHAREHOLDER INFORMATION
Distribution of Ordinary Shares at 31 August 2018
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)
591
621
32
97
143
1,484
There are 318 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 31 August 2018
Contributed Equity (ASX code – KSN)
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
SLIPSTREAM RESOURCES INVESTMENTS PTY LTD
FARJOY PTY LTD
SANDFIRE RESOURCES NL
CITICORP NOMINEES PTY LIMITED
JP MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR SCOTT ARCHIE FERGUSON
CARPENTARIA CORPORATION PTY LTD
WINCHESTER INVESTMENTS GROUP PTY LIMITED
10. MR JAMES BRUCE SIMPSON
11.
TRILLBAR RESOURCES PTY LTD
12. SOARAWAY DEVELOPMENT PTY LTD
13. ALBIANO HOLDINGS PTY LTD
14. EQUITY TRUSTEES LIMITED
15. MILAMAR GROUP PTY LTD
16.
TLG TRADING PTY LTD
17. YUCAI AUSTRALIA PTY LTD
18. DONE NOMINEES PTY LIMITED
19. MASALAI HOLDINGS PTY LTD
20. MRS LAURA LYNCH
Top 20 Total
Other Shareholders
Total on Issue
- 55 -
Holding
%
135,000,000
11.04
120,621,402
113,499,999
50,422,203
42,209,878
40,709,113
23,571,500
23,203,074
22,768,112
22,000,000
21,913,039
18,567,922
17,190,000
13,183,711
11,492,626
11,000,000
10,773,250
10,714,284
10,194,412
10,125,000
9.86
9.28
4.12
3.45
3.33
1.93
1.90
1.86
1.80
1.79
1.52
1.41
1.08
0.94
0.90
0.88
0.88
0.83
0.83
729,159,525
494,038,858
59.61
40.39
1,223,198,383
100.00
23,650,000
ADDITIONAL INFORMATION
2018 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Substantial Shareholders at 31 August 2018
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 – 120,621,402 fully paid ordinary shares
Slipstream Resources Investments Pty Ltd – 135,000,000 fully paid ordinary shares
Sandfire Resources NL – 113,499,999 fully paid ordinary shares
Number of Holders of Each Class of Securities at 31 August 2018
As at 31 August 2018, the Company had 1,223,198,383 fully paid ordinary shares held by 1,484 individual shareholders
and:
-
-
-
-
7,058,823 unlisted options (KSNLTUO1) held by six individual option holders;
13,500,000 unlisted options (KSNLTUO2) held by five individual option holders;
5,000,000 unlisted options (KSNLTUO4) held by one individual option holder;
7,375,909 unlisted options (KSNLTUO6) held by three individual options holders.
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.
The Company has currently 6,862,645 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 2019
$0.07
Employee Options
Shareholder Options
7,375,909
5,000,000
30 June 2021
$0.27
22 December 2019 $0.025
Performance Rights
29,000,000
30 June 2019
Nil (Vesting Conditions)
Performance Rights
Performance Rights
5,350,568
5,520,625
31 July 2019
Nil (Vesting Conditions)
30 June 2020
Nil (Vesting Conditions)
Performance Rights
12,813,661
30 June 2021
Nil (Vesting Conditions)
Performance Rights
5,530,568
30 June 2022
Nil (Vesting Conditions)
Total Unlisted Securities on Issue 85,629,586
- 56 -
ADDITIONAL INFORMATION
2018 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
4.
ON MARKET BUY BACK
The Company does not currently have an on market buy back in operation.
- 57 -
ADDITIONAL INFORMATION
2018 ANNUAL REPORT
5.
TENEMENT SCHEDULE
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Tenement
Project/Name
EL1747
Misima (earn in to 70%)
Subtotals PNG
Tenement
Project/Name
E 70/4822
Greenbushes
E 52/3403
Livingstone
E 52/3586
Livingstone
Subtotals WA
Status
Live
Status
Pending
Live
Pending
Ownership
Area km2
49%
180
180
Ownership
Area km2
100 %
75%
100%
6
203
17
226
Tenement
Project/Name
Status
Ownership
Area km2
EL 31091
EL 31092
EL 31132
EL 31133
EL 31134
Charlotte
West Arm
Wingate North
Bynoe A
Bynoe B
EL 31136
Bynoe South C
EL 31150
EL 31151
EL 31200
EL 31205
Bynoe South D
Bynoe South A
Bynoe SW A
Bynoe SW BA
EL 31206
Bynoe SW BB
EL 31207
EL 31137
EL 31138
EL 31148
EL 31242
EL31212
EL31213
EL31214
EL31285
EL31419
EL31485
EL31534
EL31535
EL31553
Bynoe SW BC
Utopia
Spotted Wonder
Barrow Ck A
Barrow Ck
Bundey
Milton
Powell
Echo Dam
Bynoe
Bynoe
Boxhole
Trackrider
Spotted Wonder
Subtotals NT
Total KSN tenure
Live
Live
Live
Live
Pending
Pending
Live
Live
Live
Pending
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
LIve
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%
15
18
193
23
13
77
3
26
54
27
30
19
200
73
173
236
344
287
107
130
94
14
171
108
22
2,457
2,863
- 58 -