KINGSTON RESOURCES LIMITED
& its Controlled Entities
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
Annual Financial Report
For the year ended 30 June 2019
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 ................................................................................................................................ 49
Independent Auditor’s Report .................................................................................................................... 50
Corporate Governance Statement .............................................................................................................. 55
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
COMPANY SECRETARY
Rozanna Lee
REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS
201/110 Pacific Highway
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
BANKERS
Australia & New Zealand Banking Group Limited
SOLICITORS
Cowell Clarke Commercial Lawyers
Ashurst Australia
STOCK EXCHANGE
Listed on the Australian Securities Exchange
The home Exchange is in Perth, Western Australia
ASX CODE
KSN
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Chairman’s Letter
Dear Stakeholders
Welcome to our new shareholders who came onto the KSN register since our last AGM; and a very sincere
thank you for the support of all shareholders who participated in our Placement and Rights Issue raisings across
the months of May to August.
Since 30 June 2018 KSN has raised cash of $8.3m from equity issues, of which $3.1m will be recorded as a
2020 transaction, and $2.3m from the sale of assets. At the date of this letter we have approximately $7m in
available funds and are executing our plans to deploy the majority on exploration at the Misima Project, where
our interest is expected to rise to 77%, based on exploration spend through to 30 June 2019.
Next month we are planning to have a second diamond drill rig operating on Misima, allowing us to pursue
two streams of activity designed to maximize value. We will continue the exciting regional targets program
developed using the results of work completed in the past 12 months. Concurrently we will have a program
of extensional and infill drilling, designed to validate the current 2.8moz resource to move us closer to being
able to report a JORC compliant reserve. This program will initially focus on the near-surface Ewatinona
inferred resource.
At Livingstone we have recently completed an RC drilling program designed to contribute towards a maiden
JORC compliant resource at the Kingsley prospect. We look forward to announcing the results of that program
when they become available.
Managing Director Andrew Corbett will report on operational issues elsewhere in the Annual Report. I wish
to acknowledge here his commitment to KSN, to our staff and contractors, and to the people of Misima Island.
This has been another active year, requiring a flexible and considered approach to many complex issues. On
behalf of the board I thank Andrew and his team for their efforts.
I also thank my fellow Board members for the contribution of their guidance, expertise and experience so
readily shared. Andrew Paterson resigned as Chief Geological Officer and Executive Director in June; we
thank Andrew for his contribution to KSN and wish him well in the future.
We remain confident in the quality of our projects; both Livingstone and Misima are highly prospective
opportunities and are excited to be stepping up exploration activity. This is key to maximizing the value of our
assets and delivering the best return to shareholders. We eagerly anticipate reporting results from our work
over the coming months.
Once again, thank you for your support.
Your sincerely
Anthony S Wehby
Non-Executive Chairman
17 September 2019
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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 2019 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 $2,240,006 (2018: $5,750,302). The reduced FY19 loss relative
to FY18 is due to the impairments to the Company’s lithium exploration assets reported in FY18.
Review of Operations
Over the year to 30 June 2019, Kingston significantly advanced its gold exploration assets. At the flagship
2.8Moz Misima Gold Project, drilling through the first half of the financial year was focused on the Umuna
deposit, with Kingston successfully identifying extensions to the high grade central zone of Umuna. Best holes
from this program include:
40m @ 3.17 g/t Au and 10.88 g/t Ag, from 234m in GDD013, including
o 6m @ 14.06 g/t and 13.33 Ag,
27m @ 1.08g/t Au, 4.09g/t Ag from 129m in GDD008, including
o 4m @ 2.11g/t Au and 2.60g/t Ag
o 8m @ 2.04g/t Au and 6.50g/t Ag
In the second half of the financial year, drilling was able to turn towards the new targets identified through the
2018 mapping and geochemical programs. This drilling delivered particularly encouraging results at Quartz
Mountain. To date, best holes from this program include:
20m @ 1.81g/t Au, from 78m in GDD035, including
o 3m @ 7.48g/t Au
6.6m @ 1.94g/t Au, from 7.5m, and 2.0m @ 1.65g/t Au, from 31m, GDD037
2.5m @ 1.99g/t Au, from 85m, and 8m @ 2.6 g/t Au, from 133.7m, GDD029
3.2m @ 2.41g/t Au, from 90m, GDD030
1.5m @ 2.89g/t Au, from 41.3m, 7.7m @ 1.02g/t Au, from 81.3m, and 7m @ 2.24g/t
Au, from 102m, and 2m @ 4.18g/t Au, from 132.2m, GDD032
4m @ 2.17g/t, from 82m, GDD033
Alongside completion of the Quartz Mountain program, further targets are to be drilled at Misima North and
Umuna East in the six months to December 2019. These targets have been chosen for their prospectivity for
near surface mineralisation. New shallow deposits are likely to have the biggest impact on project economics
by boosting cash flow in the early years of the operation while access to the main 2.6Moz Resource at Umuna
is established.
At Livingstone, the air-core drilling program carried out late 2018 was particularly successful leading to the
discovery of significant gold mineralisation at Kingsley. Kingsley is a new zone of high grade, near surface
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
mineralisation approximately 10km west of the existing Livingstone Resource. Best results from this program
include:
4m @ 76.25g/t Au from 88m in KLAC206,
28m @2.26g/t including 8m @5.57g/t from surface in KLAC198,
5m @ 6.56g/t Au from 49m, including 1m @ 21.8g/t from 49m in KLAC008
4m @ 3.49g/t Au from 4m and 24m @ 1.06g/t Au from 24m in KLAC184
The Company sold the remainder of its lithium exploration assets in July 2018 for $1,800,000.
Kingston conducted an equity placement in May 2019, raising $4.3m, alongside an entitlement offer raising a
total of $4,023,372 of which $938,670 is reported in the financial statements for the year to 30 June 2019, with
the balance raised in August. These funds allow Kingston to move forward with Misima, drilling the near-
surface targets at Quartz Mountain, Misima North and Umuna East Side, as well as drilling Livingstone to
progress Kingsley towards a maiden Resource.
Project Summary
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.
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. 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.
Subsequently Misima became the target of copper exploration under WCB Resources Ltd. Following
Kingston’s acquisition of WCB Resource, the focus returned to gold. In November 2017, Kingston announced
a 2.8Moz JORC resource (82.3Mt at 1.1g/t Au), and by early December 2017, it had field teams back on the
ground. Kingston commenced drilling in 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.
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 and is the focus of current
drilling by Kingston.
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 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 and Minerals Resources for the Livingston
Gold Project is based on information compiled by Mr Stuart Rechner BSc (Geology) MAIG, a Competent
Person who is a member of the Australian Institute of Geoscientists. Mr Rechner is a Director of the Company.
Mr Rechner has sufficient experience that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken 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”.
Mr Rechner 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 Exploration Results for the Misima Gold Project, PNG, is based
on information compiled by Mr Stuart Rechner BSc (Geology) MAIG, a Competent Person who is a member
of the Australian Institute of Geoscientists. Mr Rechner is a Director of the Company. Mr Rechner has
sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and
to the activity being undertaken 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”. Mr Rechner
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 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 10 May 2019, the Company completed a capital raising via placement issuing a total of 276 million
shares at $0.016 raising $4.3m, together with this an Entitlement Offer raised a further $938,670 through the
issuance of 58,666,858 shares at $0.016.
At the end of the financial year, the Consolidated Entity had net assets of $18,836,609 (2018: $15,039,902)
and held $5,197,394 in cash (2018: $4,379,799).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than reported above in the Review of Results and Operations, there were no significant changes in the
state of affairs of the Company during the reporting period.
MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
On 1 July 2019 it was announced that 7,058,823 3c options expired, 13,500,000 7c options expired, and
29,000,000 performance rights expired on 30 June 2019.
On 25 July 2019 5,698,978 STI performance rights vested.
On 19 August 2019, the Company completed the placement of the shortfall from the Entitlement Offer
announced on 3 May 2019. The shortfall of 192,793,865 shares was placed at the Entitlement Offer price of
$0.016 per share raising $3,084,702 dollars before fees.
Other than the above, there has been no other matter or circumstance which has arisen since 30 June 2019
that has significantly affected or may significantly affect:
a)
b)
c)
Kingston Resources Limited’s operations in future financial years; or
the results of those operations in future financial years; or
Kingston Resources Limited’s state of affairs in future financial years.
DIVIDENDS OR DISTRIBUTIONS
No dividends were paid during the financial year and the directors do not recommend the payment of a
dividend.
FUTURE DEVELOPMENTS AND EXPECTED RESULTS
The Group will continue its evaluation of its mineral projects and undertake generative work to identify and
potentially acquire new resource projects. Due to the nature of the business, the result is not predictable.
ENVIRONMENTAL REGULATIONS
The mineral tenements granted to the Company pursuant to the Western Australia Mining Act 1978, Northern
Territory Mineral Titles Act 2010 and the Papua New Guinea Mining Act 1992, are granted subject to various
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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)
Mick Wilkes - Director (Non-Executive), appointed 6 July 2018
Andrew Paterson – Director (Executive), resigned 20 June 2019
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 25 years. Mr Corbett has senior corporate, operational and mine
management experience combined with an in-depth understanding of global equity
markets, business development and corporate strategy within the mining sector. His
prior roles include General Manager at Orica Mining Services based in Germany and
Portfolio Manager of the Global Resource Fund at Perpetual Investments as well as
mine management and operations roles with contractor and owner-mining
operations.
Stuart Rechner, Non-Executive Director (BSc, LLB, MAIG, GAICD)
Term of Office:
Executive Director of Kingston Resources Limited since 23 February 2015, Non-
Executive Director from 4 July 2016.
Skills and Experience: Mr Rechner is an experienced company director and geologist with a background in
project generation and acquisition in Australia and overseas. Mr Rechner holds
degrees in both geology and law and is a member of the Australian Institute of
Geoscientists and the Australian Institute of Company Directors. For over ten years
Mr Rechner was an Australian diplomat responsible for the resources sector with
postings to Beijing and Jakarta.
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
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.
Andrew Paterson, Executive Director (MAIG, GAICD)
Term of Office
Executive Director of Kingston Resources Limited until 20 June 2019.
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.
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
Stuart Rechner ⁴
Mick Wilkes⁵
Andrew Paterson⁶
Fully Paid Ordinary
Shares (KSN)
Unlisted LTI
Options1
9,739,899
3,000,000
15,525,532
7,500,000
1,169,188
3,000,000
2,800,000
3,000,000
-
-
¹ Unlisted Long Term Incentive (LTI) Options exercisable at $0.027 each and expiring on 30 June 2021
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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. He also has a relevant interest in the Shares as the registered holder
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 and Options as a result of being a director of Osmium Holdings
Pty Limited as trustee of Ferndale Superannuation Fund, which is the registered holder of those Shares and Options
⁵ Mick Wilkes holds a relevant interest in the specified number of Shares and Options as a result of being a director of Osmium Holdings
Pty Limited, which is the registered holder of those Shares and Options. He was appointed on 6 July 2018
⁶ Andrew Paterson resigned on 20 June 2019. As such, no holdings are shown at date of this report
MEETINGS OF DIRECTORS
The number of Directors’ meetings and Committee meetings, and the number of meetings attended by each of
the Directors who was a member of the Board and the relevant Committee, held during the year ended 30 June
2019 were:
Board Meetings
Audit and Risk Committee
Remuneration and
Nomination Committee
Meetings
held while a
Director
Number
attended
Meetings
held while a
Director
Number
attended
Meetings
held while a
Director
Number
attended
8
8
8
8
8
8
8
8
8
6
2
-
2
2
-
2
-
2
2
-
3
-
2
3
-
3
-
2
3
-
Anthony Wehby
Andrew Corbett
Mick Wilkes
Stuart Rechner
Andrew Paterson*
*Resigned on 20 June 2019
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 2019 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)
M Wilkes
C Drew
A Paterson Executive Director (resigned on 20 June 2019)
Non-Executive Director (appointed 6 July 2018)
Chief Financial Officer (appointed as CFO on 10 July 2018)
(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. The Board has established a separate Remuneration and Nomination
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
committee. The Remuneration and Nomination Committee meets 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, including
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 and this work
was updated in 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.
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 four financial years.
2019
2018
2017
2016
Net Loss
($2,240,006)
($5,750,302)
($1,153,471)
($4,587,718)
Diluted loss per share (cents/share)
(0.176)
Share price at year end (cents)
1.3
(0.646)
2.4
(1.777)
1.9
(2.702)
1.9
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DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 34,375,909 unlisted Options issued during the year (FY18: 0). There were 24,196,363 Performance
Rights issued during the year as LTI (FY18 12,813,661). There were 18,216,818 Performance Rights issued
during the year as STI (FY18 16,474,707).
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.
(e)
Voting and comments made at the Company’s 2018 Annual General Meeting
Kingston received over 99% of “yes” votes (0.04% of “no” votes) on its remuneration report for the 2018
financial year.
(f)
Remuneration Details for the Year Ended 30 June 2019
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.
- 12 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Short-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
LS L
Performance
Rights/S hares
Options
$
$
$
$
$
Cash-
settled
S hare-
based
Payments
$
Termination
Benefits
Total
$
$
Anthony Wehby
2019
2018
Andrew Corbett
2019
2018
Andrew Paterson¹
2019
2018
Stuart Rechner²
70,000 -
- -
6,650
-
-
-
13,212
33,896 - -
123,758
50,000 -
- -
4,750
-
-
-
- -
- -
54,750
270,000 -
- -
25,650
-
-
-
72,246
84,741 - -
452,637
246,750 -
- -
23,441
-
-
-
43,657 -
- -
313,848
244,349 -
- -
23,213
-
-
-
66,092
73,442 - -
407,096
210,000 -
- -
19,950
-
-
-
37,155 -
- -
267,105
2019
60,225 -
- -
-
-
-
-
10,381
33,896 - -
104,502
2018
M ick Wilkes³
2019
2018
Chris Drew⁴
2019
Total
2019
2018
47,000 -
- -
-
-
-
-
- -
- -
47,000
54,235 -
-
-
-
-
-
10,381
33,896 - -
98,512
- -
- -
-
-
-
-
- -
- -
-
215,000 -
- -
20,424
-
-
-
38,948
61,521 - -
335,893
913,809
553,750
0
0
0
0
0
0
75,937
48,141
0
0
0
0
0
0
211,260
321,392
80,812
0
0
0
0
0
1,522,398
682,703
¹ Andrew Paterson resigned on 20 June 2019
² 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
³ Mick Wilkes was appointed on 6 July 2018
⁴ Chris Drew was appointed CFO on 10 July 2018
(g)
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 Managing Director on 4 July 2016. Mr Corbett is remunerated pursuant to the
terms and conditions of an employment agreement entered into with Mr Corbett on 4 July 2016 and has no
fixed term. The agreement may be terminated by either party on the giving on three months’ notice by Mr
Corbett or six months’ notice by the Company. Mr Corbett is not entitled to any termination benefits 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.
- 13 -
DIRECTORS’ REPORT
Michael Wilkes
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
Chris Drew
Mr Drew was appointed as Chief Financial Officer on 10 July 2018 (he was the Commercial Manger from 22
June 2016). Mr Drew is remunerated pursuant to the terms and conditions of an employment agreement entered
into with Mr Drew on 1 October 2016 and has no fixed term. The agreement may be terminated by either party
on the giving on three months’ notice by Mr Drew or six months’ notice by the Company. Mr Drew is not
entitled to any termination benefits other than accrued pay, leave entitlement or other statutory payments unless
paid at the discretion of directors.
Andrew Paterson
Mr Paterson was appointed as Executive Director on 1 March 2017 and resigned on 20 June 2019. He was the
Chief Geological Officer from 3 June 2016. Mr Paterson was remunerated pursuant to the terms and conditions
of an employment agreement entered into with Mr Paterson on 3 June 2016 and had no fixed term. The
agreement could be terminated by either party on the giving on three months’ notice by Mr Paterson or 6
months’ notice by the Company. Mr Paterson was not entitled to any termination benefits other than accrued
pay, leave entitlement or other statutory payments unless paid at the discretion of directors.
(h) Equity Interests of KMP
Options holdings of KMP
The number of options over ordinary shares held by each KMP of the Group during the 2018 and 2019
reporting periods is as follows:
2019
Balance at Beginning
of Year
Issue Date
No.
Value
No.
Value
No.
Grant Details
Exercised
Lapsed
$
$
Vested and
Exercisable at
End of Year
No.
Vested and
Unexercisable
at End of Year
No.
Anthony Wehby
Andrew Corbett
Andrew
Paterson³
Stuart Rechner
M ick Wilkes⁴
Chris Drew
LTI¹
LTI²
LTI¹
LTI²
LTI¹
LTI²
LTI¹
LTI²
LTI¹
LTI²
LTI¹
LTI²
-
2,000,000
09-Nov-18
04-Jul-16
33,896
3,000,000
2,000,000 15,671
-
-
-
-
- 2,000,000
3,000,000
-
-
5,000,000
09-Nov-18
04-Jul-16
7,500,000 84,741
5,000,000 39,178
-
-
-
-
- 5,000,000
7,500,000
-
-
4,000,000
09-Nov-18
04-Jul-16
6,500,000 73,442
4,000,000 31,343
-
-
- 6,500,000
- 4,000,000
-
-
-
-
09-Nov-18
3,000,000 33,896
- -
-
-
-
-
-
-
3,000,000
-
-
-
09-Nov-18
3,000,000 33,896
- -
-
-
-
-
-
-
3,000,000
-
-
2,000,000
23-Aug-18
04-Jul-16
6,000,000 61,521
2,000,000 31,782
-
-
-
-
- 2,000,000
6,000,000
-
13,000,000
42,000,000 439,366
-
- 19,500,000
22,500,000
¹ Unlisted LTI Options (issued on 23 August 2018 and 9 November 2018) exercisable at 2.7c - expiry on 30 June 2021
² Unlisted LTI Options (issued 4 July 2016) exercisable at 7c - expired on 30 June 2019
³ Andrew Paterson resigned on 20 June 2019. The LTI options held at the time of his resignation are shown as lapsed on this date
⁴ Mick Wilkes was appointed on 6 July 2018
- 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
04-Jul-16
04-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
04-Jul-16
04-Jul-16
5,000,000
5,000,000
41,642
39,178
-
-
-
-
5,000,000
-
-
5,000,000
4,000,000
4,000,000
04-Jul-16
04-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
Performance Rights Holdings of KMP
The number of performance rights in the Company held by each KMP of the Group during the 2018 and 2019
reporting periods is as follows:
2019
Balance at Beginning of
Year
Issue Date
No.
Value
$
No.
Value
$
Grant Details
Vested
Lapsed
No.
Balance at
End of Year
Anthony Wehby
Andrew Corbett
Andrew Paterson⁷
Stuart Rechner
M ick Wilkes
Chris Drew
STI
LTI³
LTI⁶
STI¹
STI²
LTI³
LTI⁴
LTI⁵
LTI⁶
STI¹
STI²
LTI³
LTI⁴
LTI⁵
LTI⁶
STI
LTI⁶
STI
LTI⁶
STI¹
STI²
LTI³
LTI⁴
LTI⁵
LTI⁶
-
6,000,000
15-Jul-16
- 09-Nov-18
-
6,000,000
1,742,045
-
-
13,212
-
-
-
- -
- 6,000,000
-
-
-
-
1,742,045
6,399,266
01-Dec-17
- 09-Nov-18
10,000,000
15-Jul-16
2,144,375 19-Dec-16
4,977,207
01-Dec-17
- 09-Nov-18
6,399,266
6,719,318
10,000,000
2,144,375
4,977,207
6,719,318
12,798
21,287
-
5,397
30,859
50,959
3,199,633
-
-
-
-
-
76,791 3,199,633
- -
- 10,000,000
- -
- -
- -
-
6,719,318
-
2,144,375
4,977,207
6,719,318
5,446,184
01-Dec-17
- 09-Nov-18
15-Jul-16
8,000,000
19-Dec-16
1,825,000
4,235,921
01-Dec-17
5,446,184
6,146,932
8,000,000
1,825,000
4,235,921
10,892
19,473
-
5,444
26,263
2,723,092
-
-
-
65,354 2,723,092
6,146,932
- 8,000,000
- 1,825,000
-
4,235,921
-
-
-
-
-
- 09-Nov-18
6,146,932
46,619
6,146,932
-
-
- 09-Nov-18
- -
1,368,750
10,381
-
-
- -
- -
-
1,368,750
-
- 09-Nov-18
- -
1,368,750
10,381
-
-
- -
- -
-
1,368,750
4,629,257
01-Dec-17
4,629,257
9,258
2,314,629
55,551
2,314,628
-
23-Aug-18
5,350,568
7,166
-
4,000,000
15-Jul-16
4,000,000
-
-
5,350,568
4,000,000
-
1,551,250
3,600,533
19-Dec-16
01-Dec-17
23-Aug-18
1,551,250
4,627
-
3,600,533
5,350,568
22,323
31,782
-
-
- -
1,551,250
3,600,533
5,350,568
62,808,993
103,722,174
339,121
8,237,354
197,696 54,592,138
40,892,682
¹ STI Performance Rights issued on 1 December 2017 partially vested on 18 July 2018 - remainder lapsed.
- 15 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
² STI Performance Rights issued on 23 August 2018 and 9 November 2018 will vest as follows: (a) Up to 50% of STI Performance Rights will
automatically vest if the Company’s June 2019 VWAP is between 120% to 150% of the Company’s June 2018 VWAP; and (b) Up to 50% of the
STI Performance Rights will vest, at the Board’s discretion, upon the achievement of operational performance measures before 30 June 2019.
All STI Performance Rights that have not vested by 31 July 2019 will automatically lapse and be forfeited.
³ LTI Performance Rights issued on 15 July 2016 lapsed on 30 June 2019.
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.
⁵ LTI Performance Rights issued on 1 December 2017 will vest if the Company achieves a market capitalisation* greater than $70 million on or
before 30 June 2021.
⁶ LTI Performance Rights issued on 23 August 2018 and 9 November 2018 will automatically vest if the Company achieves a market capitalisation*
greater than $70 million on or before 30 June 2022.
⁷ Andrew Paterson resigned on 20 June 2019.
* Market capitalisation means the price of the Company’s shares as quoted on ASX multiplied by the total number of Shares on issue.
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.
- 16 -
DIRECTORS’ REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Share holdings of KMP
The number of ordinary shares in the Company held by each KMP of the Group during the 2018 and 2019
reporting periods is as follows:
2019
Anthony Wehby
Andrew Corbett
Andrew Paterson²
Stuart Rechner
Mick Wilkes³
Chris Drew⁴
Balance at
Beginning of
Year
Granted as
Remuneration
during the Year
Issued on Exercise of
Options/Vesting of
Performance Rights
during the Year
Other (Net)
Changes during
the Year¹
Balance at End
of Year
3,062,770
11,492,626
1,571,190
1,002,161
-
-
17,128,747
-
-
-
-
-
-
-
-
3,199,633
2,723,092
-
-
2,314,629
6,677,129
833,273
(4,294,282)
167,027
2,800,000
4,311,703
9,739,899
15,525,532
-
1,169,188
2,800,000
6,626,332
8,237,354
10,494,850
35,860,951
¹ Changes during the year represent holding at the time of becoming or ceasing to be a KMP and not necessarily acquired or disposed
² Andrew Paterson resigned on 20 June 2019
³ Mick Wilkes was appointed on 6 July 2018
⁴ Chris Drew was appointed as CFO on 10 July 2019
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
-
12,380,950
-
-
-
-
-
-
1,287,000
1,095,000
-
681,818
681,818
-
1,002,161
3,062,770
11,492,626
1,571,190
1,002,161
2,382,000
2,365,797
17,128,747
(i)
Loans to key management personnel
There were no loans to individuals or members of KMP during the financial year or the previous financial
year.
(j)
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 18
Issued
Lapsed /
Cancelled
Held at
30 June 2019
22 Dec 16
22 Dec 19
2.5 cents
5,000,000
-
23 Aug 18
30 June 21
9 Nov 18
30 June 21
13 May 19
31 Dec 19
13 May 19
31 Dec 20
2.7 cents
2.7 cents
0.1 cents
0.1 cents
-
-
7,375,909
23,000,000
2,000,000
2,000,000
-
-
-
5,000,000
7,375,909
23,000,000
2,000,000
2,000,000
During the year ended 30 June 2018 and 30 June 2019, 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
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.
NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP
The Group has considered the implications of new or amended Accounting Standards which have become
applicable for the current financial reporting period as set out below:
AASB 15 Revenue from contracts with customers
The Group has adopted AASB 15 revenue from contracts with customers with an initial application date of 1
July 2018. The Group has applied AASB 15 retrospectively with the cumulative effect of initially applying the
standard recognised in opening retained earnings. The cumulative effect of initially applying the standard was
nil, so no adjustment was required to net profit or opening retained earnings on transition as the group was not
subject to any revenue from contracts with customers.
AASB 9 Financial Instruments
The Group has adopted AASB 9 Financial Instruments with an initial application date of 1 July 2018. The
Group has applied AASB 9 retrospectively with the cumulative effect of initially applying the Standard
recognised in retained earnings. The cumulative effect of initially applying the standard was nil, so no
adjustment was required to net profit or opening retained earnings on transition.
NON AUDIT SERVICES
During the year the Company’s auditor provided taxation and accounting services to the Company at a total
cost of $31,733.
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 17 September 2019; and
is signed by Mr Anthony Wehby .
ANTHONY WEHBY
Non-Executive Chairman
Sydney, New South Wales
17 September 2019
- 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
In accordance with section 307C of the Corporations Act 2001, I am pleased to
provide the following declaration of independence to the directors of Kingston
Resources Limited. As the lead audit partner for the audit of the financial report of
Kingston Resources Limited for the year ended 30 June 2019, I declare that, to the
best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of 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: 17 September 2019
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 2019
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
2019
$
2018
$
8
9
10
11
13
22
14
15
16
5,197,394
70,917
1,943
4,420
5,274,674
-
123,385
13,963,407
42,094
14,128,886
19,403,560
396,113
68,424
44,989
509,526
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
57,425
57,425
566,951
18,836,609
124,179
124,179
634,464
15,039,902
74,817,881
(56,537,006)
683,229
(127,495)
18,836,609
69,244,553
(54,427,748)
267,218
(44,121)
15,039,902
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 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Notes
Consolidated Group
2019
$
2018
$
Continuing Operations
Other income
Administration expenses
Employee benefits
Consultant and legal fees
Depreciation and amortisation expenses
Director fees
Share based payments expense
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)
113,500
(381,384)
(453,220)
(192,546)
-
(199,473)
(891,274)
116,635
(568,643)
(613,202)
(412,543)
(1,312)
(102,150)
(268,672)
-
(17,701)
-
-
(71,975)
(163,634)
(2,240,006)
-
(2,240,006)
(3,552,901)
(408,444)
(8,774)
87,405
(5,750,302)
-
(5,750,302)
-
(2,240,006)
-
(5,750,302)
(0.176)
(0.646)
(0.176)
(0.646)
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 2019
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
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)
Share based
payment
Reserve
$
267,950
-
-
Total Equity
$
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
Balance at 1 July 2018
69,244,553
(54,427,748)
(44,121)
267,218
Loss for the full year
Other comprehensive income
-
-
(2,240,006)
-
-
-
-
-
15,039,902
(2,240,006)
-
69,244,553
(56,647,754)
(44,121)
267,218
12,799,896
Issue of Shares
Cost of share issue
Share based payments
Transfer from Option Reserve on
Expiry of Options
Additions to reserves
5,703,184
(129,856)
-
-
-
-
-
-
130,748
-
-
-
-
-
-
546,759
(130,748)
5,703,184
(129,856)
546,759
-
-
(83,374)
-
(83,374)
Balance at 30 June 2019
74,817,881
(56,537,006)
(127,495)
683,229
18,836,609
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 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Consolidated Statement of Cash Flows
Cash flows from operating activities
Continued operations
Interest received
Receipts from other income
Payments to suppliers and employees
Net cash used in operating activities
Cash flows from investing activities
Payment for exploration and evaluation
Payment for acquisition of exploration assets
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
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
Notes
Consolidated Group
2019
$
2018
$
63,290
16,842
(1,508,326)
(1,428,194)
56,956
59,679
(1,603,072)
(1,486,437)
19
(4,993,488)
-
2,103,597
(2,889,891)
(2,208,900)
(393,690)
300,000
(2,302,590)
5,322,670
(129,859)
(59,753)
5,133,058
814,973
4,379,799
-
2,622
5,197,394
4,522,995
(303,013)
(15,499)
4,204,483
415,456
3,877,551
84,098
2,694
4,379,799
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 2019
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 17 September 2019.
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
2019. 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)
Changes in Accounting Policies
New and amended Standards adopted by the Group
The Group has considered the implications of new or amended Accounting Standards which have become
applicable for the current financial reporting period as set out below:
AASB 15 Revenue from contracts with customers
The Group has adopted AASB 15 revenue from contracts with customers with an initial application date of 01 July
2018. The Group has applied AASB 15 retrospectively with the cumulative effect of initially applying the standard
recognised in opening retained earnings. The cumulative effect of initially applying the standard was nil, so no
adjustment was required to net profit or opening retained earnings on transition as the group was not subject to
any revenue from contracts with customers.
- 25 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
AASB 9 Financial Instruments
The Group has adopted AASB 9 Financial Instruments with an initial application date of 1 July 2018. The Group
has applied AASB 9 retrospectively with the cumulative effect of initially applying the Standard recognised in
retained earnings. The cumulative effect of initially applying the standard was nil, so no adjustment was required
to net profit or opening retained earnings on transition.
c)
New Accounting Standards and Interpretations
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June
2019. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the consolidated entity, are set out below.
AASB 16 Leases
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 liability for all leases (excluding short-term leases with less than
12 months 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.
Although the directors anticipate that the adoption of AASB 16 will impact the Group's financial statements, the
impact is not likely to be material where applicable.
New Conceptual Framework for Financial Reporting
A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable for
annual reporting periods beginning on or after 1 January 2020. This release impacts for-profit private sector entities
that have public accountability that are required by legislation to comply with Australian Accounting Standards
and other for-profit entities that voluntarily elect to apply the Conceptual Framework. Phase 2 of the framework
is yet to be released which will impact for-profit private sector entities. The application of new definition and
recognition criteria as well as new guidance on measurement will result in amendments to several accounting
standards. The issue of AASB 2019-1 Amendments to Australian Accounting Standards – References to the
Conceptual Framework, also applicable from 1 January 2020, includes such amendments. Where the consolidated
entity has relied on the conceptual framework in determining its accounting policies for transactions, events or
conditions that are not otherwise dealt with under Australian Accounting Standards, the consolidated entity may
need to revisit such policies. The consolidated entity will apply the revised conceptual framework from 1 July
2020 and is yet to assess its impact.
d)
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
- 26 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
e)
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable any accumulated
depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash
flows that will be received from the assets employment and subsequent disposal.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the group and the cost of
the item can be measured reliably. All other repairs and maintenance are charged to profit or loss on the statement
of profit or loss and other comprehensive income.
Depreciation
The depreciable amount of all fixed assets is depreciated using the diminishing value method commencing from
the time the asset is held ready for use.
The depreciation rates used for each class of depreciable asset are:
Class of Fixed Assets
Office, furniture and equipment
Vehicles and machinery
Depreciation Rate
5-40%
13-33%
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.
- 27 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
f)
Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis,
depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an
orderly (ie unforced) transaction between independent, knowledgeable and willing market participants at the
measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to
determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific
asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined
using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of
observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (ie
the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a
market, the most advantageous market available to the entity at the end of the reporting period (ie the market that
maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after
taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use
the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest
and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the
respective note to the financial statements.
g)
Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions to the instrument. For financial assets, this is the date that the Group commits itself to either the purchase
or sale of the asset (ie trade date accounting is adopted).
Financial instruments (except for trade receivables) are initially measured at fair value plus transaction costs,
except where the instrument is classified "at fair value through profit or loss", in which case transaction costs are
expensed to profit or loss immediately. Where available, quoted prices in an active market are used to determine
fair value. In other circumstances, valuation techniques are adopted.
Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant
financing component or if the practical expedient was applied as specified in AASB 15.63.
Classification and subsequent measurement
Financial liabilities
Financial instruments are subsequently measured at:
-
-
amortised cost; or
fair value through profit or loss.
A financial liability is measured at fair value through profit and loss if the financial liability is:
-
a contingent consideration of an acquirer in a business combination to which AASB 3: Business
Combinations applies;
- 28 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
-
-
held for trading; or
initially designated as at fair value through profit or loss.
All other financial liabilities are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of
the financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through
the expected life of the instrument to the net carrying amount at initial recognition.
A financial liability is held for trading if:
-
-
-
it is incurred for the purpose of repurchasing or repaying in the near term;
part of a portfolio where there is an actual pattern of short-term profit taking; or
a derivative financial instrument (except for a derivative that is in a financial guarantee contract or a
derivative that is in a effective hedging relationships).
Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not
part of a designated hedging relationship are recognised in profit or loss.
The change in fair value of the financial liability attributable to changes in the issuer's credit risk is taken to other
comprehensive income and are not subsequently reclassified to profit or loss. Instead, they are transferred to
retained earnings upon derecognition of the financial liability. If taking the change in credit risk in other
comprehensive income enlarges or creates an accounting mismatch, then these gains or losses should be taken to
profit or loss rather than other comprehensive income.
A financial liability cannot be reclassified.
Financial assets
Financial assets are subsequently measured at:
-
-
-
amortised cost;
fair value through other comprehensive income; or
fair value through profit or loss.
Measurement is on the basis of two primary criteria:
-
-
the contractual cash flow characteristics of the financial asset; and
the business model for managing the financial assets.
A financial asset that meets the following conditions is subsequently measured at amortised cost:
-
-
the financial asset is managed solely to collect contractual cash flows; and
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding on specified dates.
A financial asset that meets the following conditions is subsequently measured at fair value through other
comprehensive income:
-
-
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding on specified dates;
the business model for managing the financial assets comprises both contractual cash flows collection
and the selling of the financial asset.
By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value
through other comprehensive income are subsequently measured at fair value through profit or loss.
The Group initially designates a financial instrument as measured at fair value through profit or loss if:
-
it eliminates or significantly reduces a measurement or recognition inconsistency (often referred to as
“accounting mismatch”) that would otherwise arise from measuring assets or liabilities or recognising the
gains and losses on them on different bases;
- 29 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
-
-
it is in accordance with the documented risk management or investment strategy, and information about
the groupings was documented appropriately, so that the performance of the financial liability that was
part of a group of financial liabilities or financial assets can be managed and evaluated consistently on a
fair value basis;
it is a hybrid contract that contains an embedded derivative that significantly modifies the cash flows
otherwise required by the contract.
The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time
option on initial classification and is irrevocable until the financial asset is derecognised.
Equity instruments
At initial recognition, as long as the equity instrument is not held for trading and not a contingent consideration
recognised by an acquirer in a business combination to which AASB 3:Business Combinations applies, the Group
made an irrevocable election to measure any subsequent changes in fair value of the equity instruments in other
comprehensive income, while the dividend revenue received on underlying equity instruments investment will still
be recognised in profit or loss.
Regular way purchases and sales of financial assets are recognised and derecognised at settlement date in
accordance with the Group's accounting policy.
Derecognition
Derecognition refers to the removal of a previously recognised financial asset or financial liability from the
statement of financial position.
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (ie when the obligation in the contract is discharged, cancelled
or expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a
substantial modification to the terms of a financial liability is treated as an extinguishment of the existing liability
and recognition of a new financial liability.
The difference between the carrying amount of the financial liability derecognised and the consideration paid and
payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
Derecognition of financial assets
A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the asset is
transferred in such a way that all the risks and rewards of ownership are substantially transferred.
All of the following criteria need to be satisfied for derecognition of financial asset:
-
-
-
the right to receive cash flows from the asset has expired or been transferred;
all risk and rewards of ownership of the asset have been substantially transferred; and
the Group no longer controls the asset (ie the Group has no practical ability to make a unilateral decision
to sell the asset to a third party).
On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying
amount and the sum of the consideration received and receivable is recognised in profit or loss.
On derecognition of a debt instrument classified as at fair value through other comprehensive income, the
cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or
loss.
On derecognition of an investment in equity which was elected to be classified under fair value through other
comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve
is not reclassified to profit or loss, but is transferred to retained earnings.
Impairment
The Group recognises a loss allowance for expected credit losses on:
-
-
financial assets that are measured at amortised cost or fair value through other comprehensive income;
lease receivables;
- 30 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
-
-
-
contract assets (eg amounts due from customers under construction contracts);
loan commitments that are not measured at fair value through profit or loss; and
financial guarantee contracts that are not measured at fair value through profit or loss.
Loss allowance is not recognised for:
-
-
financial assets measured at fair value through profit or loss; or
equity instruments measured at fair value through other comprehensive income.
Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial
instrument. A credit loss is the difference between all contractual cash flows that are due and all cash flows
expected to be received, all discounted at the original effective interest rate of the financial instrument.
The Group uses the general approach to impairment, as applicable under AASB 9: Financial Instruments:
Under the general approach, at each reporting period, the Group assesses whether the financial instruments are
credit-impaired, and if:
-
-
the credit risk of the financial instrument has increased significantly since initial recognition, the Group
measures the loss allowance of the financial instruments at an amount equal to the lifetime expected credit
losses; or
there is no significant increase in credit risk since initial recognition, the Group measures the loss
allowance for that financial instrument at an amount equal to 12-month expected credit losses.
Recognition of expected credit losses in financial statements
At each reporting date, the Group recognises the movement in the loss allowance as an impairment gain or loss in
the statement of profit or loss and other comprehensive income.
The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that
asset.
Assets measured at fair value through other comprehensive income are recognised at fair value, with changes in
fair value recognised in other comprehensive income. Amounts in relation to change in credit risk are transferred
from other comprehensive income to profit or loss at every reporting period.
For financial assets that are unrecognised (eg loan commitments yet to be drawn, financial guarantees), a provision
for loss allowance is created in the statement of financial position to recognise the loss allowance.
h)
Impairment of Non-Financial Assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the
asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the
statement of 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.
i)
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.
- 31 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
j)
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.
k)
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.
l)
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.
m) Revenue and Other Income
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
Research and development credits are treated as Other Income and recognised to the extent that the related
expenditure has been expensed in the Statement of Profit and Loss and Other Comprehensive Income. Research
and development credits that pertain to expenditure on any capitalised amounts remaining on the Statement of
Financial Position are deferred accordingly to be recognised in-line with expensing of those items.
All revenue is stated net of the amount of goods and services tax (GST).
n)
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.
o)
Goods and Services Tax (GST)
- 32 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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.
p)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
q)
Going Concern
The consolidated entity has incurred operating losses of $2,240,006 (2018: $5,750,302) and negative operating
cash flows of $1,428,194 (2018: $1,486,437) for the year ended 30 June 2019. The consolidated entity’s net current
asset position as at 30 June 2019 was $4,785,148 (2018: $4,295,083) including $5,197,394 in cash (2018:
$4,379,799).
During the financial year on 10 May 2019, the Company completed a placement issuing a total of 276 million
shares at $0.016 raising $4.3m, alongside this an Entitlement Offer raised a further $938,670 through the issuance
of 58,666,858 shares at $0.016. 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.
Post year-end in August 2019 the Company raised a further $3.1m through the placement of the shortfall from the
Entitlement Offer, placing 192,793,865 shares at $0.016.
The Company’s 30 June 2019 cash balance of $5,197,394 leaves it with sufficient funding to continue to meet
operational expenditure requirements, including minimum exploration commitments across its tenement portfolio.
Nevertheless, the nature of an exploration company is to have negative cash flow from operations, as such the
Company considers it likely that it may need to raise equity from time to time as successfully demonstrated in
February 2018, May 2019, and August 2019.
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
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.
r)
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.
- 33 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 $13,963,407 (see Note 22).
The Group has applied AASB 6 Exploration for and Evaluation of Mineral Resources.
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.
- 34 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
2.
OTHER INCOME
Other income
Interest from bank
DMIRS EIS funding
Consulting fees
Profit on sale of available for sale financial assets
Total income
3.
DEPRECIATION AND ASSET
IMPAIRMENTS
Depreciation and amortisation of non-current
assets
Depreciation of:
- plant and equipment
Total depreciation and amortisation
Impairments
Impairment of exploration expenditure
Total impairments
Consolidated Group
2019
$
2018
$
63,290
14,921
13,991
21,298
113,500
56,956
59,679
-
-
116,635
-
-
-
-
1,312
1,312
3,552,901
3,552,901
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
2019
$
2018
$
Accounting loss before income tax
(2,240,006)
(5,570,302)
Income tax benefit calculated at 27.5%
(616,002)
(1,581,333)
Non-deductible expenses
Movement in unrecognised temporary differences
Unused tax losses and temporary differences not
recognised as deferred tax assets
Income tax expense (benefit)
305,559
1,599,062
(1,288,619)
-
137,527
(195,677)
1,639,483
-
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.
(b) Analysis of deferred tax asset
No deferred tax assets have been recognised 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
$3,510,046 (2018: $2,952,081).
- 35 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
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 2019 and 2018 reporting periods are as follows.
Short-term employee benefits
Post-employment benefits
Equity-settled share-based payments
Total
Consolidated Group
2019
$
2018
$
913,809
75,937
532,652
1,522,398
553,750
48,141
80,812
682,703
Consolidated Group
2019
$
2018
$
6.
AUDITOR REMUNERATION
Remuneration of the auditor of the Company for:
- auditing or reviewing the financial statements
- non-audit services
Total
33,526
31,733
65,259
51,628
4,301
55,929
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)
(0.176)
(0.176)
(0.646)
(0.646)
1,272,659,816
890,463,527
($2,240,006)
($5,750,302)
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
2019
$
2018
$
8.
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Total
1,947,394
3,250,000
5,197,394
512,379
3,867,420
4,379,799
- 36 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
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 (2018: 1.5-2.3%).
9.
TRADE AND OTHER RECEIVABLES
Current
Other receivables
Total current trade and other receivables
Consolidated Group
2019
$
2018
$
70,917
70,917
136,965
136,965
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 Group applies the AASB 9 general approach to measuring expected credit losses, which permits the use of the lifetime
expected loss provision for all other receivables. Under the general approach a nil expected loss rate was applied to all
receivables as at 30 June 2019 and 30 June 2018.
10.
FINANCIAL ASSETS
Financial assets at fair value through profit and
loss:
At fair value
Shares in listed entities
Consolidated Group
2019
$
2018
$
1,943
1,943
284,243
284,243
Financial assets at fair value through profit and loss consist of investments in ordinary shares.
(i) Listed shares
The fair value of listed shares has been determined directly by reference to published price quotations in an active
market.
11. NON CURRENT ASSETS HELD FOR SALE
Non-current Assets Held for Sale
Capitalised Exploration
Total current trade and other receivables
Consolidated Group
2019
$
2018
$
-
-
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.
- 37 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
12. CONTROLLED ENTITIES
Name
Country of
Incorporation
Principal Activity
Beneficial Percentage
Interest Held By
Economic Entity
2018
%
2019
%
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 Pacific Pty Limited
WCB Australia Pty Limited
WCB PNG Limited
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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
Gallipoli Exploration (PNG) Limited
Papua New Guinea Mineral exploration
100
100
100
100
100
100
100
100
100
70
100
100
100
100
100
100
100
100
100
49
13.
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment – at cost
Exchange rate adjustment on opening balance
Acquisitions for the year
Disposals
Closing balance
Accumulated depreciation
Opening balance
Exchange rate adjustment on opening balance
Depreciation for the year
Accumulated Depreciation on disposal
Closing balance – accumulated depreciation
Net book value – plant and equipment
Total property, plant and equipment, net
Consolidated Group
2019
$
2018
$
452,714
2,678
-
-
455,392
264,542
147
67,318
-
332,007
123,385
123,385
253,441
-
199,273
-
452,714
252,129
-
12,413
-
264,542
188,172
188,172
- 38 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(a) Movements in carrying amounts
Balance at 1 July 18
Acquisitions
Disposals
Depreciation
Movement due to exchange rate
Balance at 30 June 19
Balance at 1 July 17
Acquisitions
Disposals
Depreciation
Balance at 30 June 18
14. TRADE AND OTHER PAYABLES
Trade payables – unsecured
Other payables and accruals
Total
Plant and
equipment
$
Total
$
188,172
-
-
(67,318)
2,531
123,385
1,312
199,273
-
(12,413)
188,172
188,172
-
-
(67,318)
2,531
123,385
1,312
199,273
-
(12,413)
188,172
Consolidated Group
2019
$
2018
$
483,205
(87,092)
396,113
195,684
190,323
386,007
Given the short term nature of these amounts, their carrying value approximates their fair value.
- 39 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
ISSUED CAPITAL
15.
(a) Movements in contributed equity for the year
Balance at the beginning of the year
- 18 July 2018
- 29 April 2019
- 6 May 2019
- 7 May 2019
- 9 May 2019
- 5 June 2019
Shares issued during the previous financial year:
- 31 July 2017
- 17 November 2017
- 17 November 2017
- 17 November 2017
- 8 December 2017
- 13 February 2018
- 8 March 2018
Less capital raising costs
Total contributed equity
Consolidated Group
30 June 2019
30 June 2018
Number of Fully
Paid Ordinary
Shares
$
Number of Fully
Paid Ordinary
Shares
$
1,214,961,029
8,237,354
164,062,500
2,250,000
90,350,000
28,900,000
58,666,858
69,244,553
197,696
2,625,000
36,000
1,445,600
460,218
938,670
665,769,985
58,262,992
3,312,751
302,601,971
15,220,351
6,052,035
16,413,039
194,000,000
11,590,897
41,289
6,052,039
225,000
114,989
328,261
4,267,996
255,000
1,567,427,741
(129,856)
74,817,881
-
1,214,961,029
(303,013)
69,244,553
The Company has issued share capital amounting to 1,567,427,741 (2018: 1,214,961,029) 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 10 May 2019, the Company completed a capital raising via placement issuing a total of 276,000,000 shares at $0.016 raising $4.3m, alongside this an Entitlement Offer
raised a further $938,670 through the issuance of 58,666,858 shares at $0.016. For details on the remaining shares issued during the year see Note 20.
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.
- 40 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(b) 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.
(c) 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. 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
2019
$
2018
$
Not later than one year
Later than one year and less than five years
102,000
210,241
464,400
1,358,803
In April 2018 the Group entered into a three year finance lease for the purchase of exploration equipment on
Misima Island. The future minimum lease payments are as follows:
- 41 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Finance lease commitment
Consolidated Group
2019
$
2018
$
Not later than one year
Later than one year and less than five years
68,424
57,425
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
2019
$
2018
$
Not later than one year
Later than one year and less than five years
54,775
42,822
37,125
13,600
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
2019
$
2018
$
(2,240,006)
-
891,274
-
-
(21,298)
162,445
(65,880)
-
10,236
(296,725)
-
(1,428,194)
(5,750,302)
1,312
268,672
3,552,901
17,701
408,444
(87,406)
(19,909)
13,144
27,222
81,595
189
(1,486,437)
Reconciliation of Loss from Ordinary Activities to
Net Cash Flows from Operating Activities
Loss for the year
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, provisions and accruals
Exchange rate impact on balances
Net cash flows from operating activities
- 42 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
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 2019.
Share options:
Date of grant Share-based payment Number granted
Value
28 Aug 2018
LTI Options
7,375,909
$75,629
09 Nov 2018
LTI Options
23,000,000
$259,871
13 May 2019
LTI Options
13 May 2019
STI Options
2,000,000
2,000,000
-
-
$335,500
Share price on
issue
$0.022
Exercise
Price
$0.027
Expiry
30 June 2021
$0.024
$0.017
$0.017
$0.027
30 June 2021
$0.001
31 December 2019
$0.001
31 December 2020
Performance Rights:
Date of grant Share-based payment
19 Dec 2016
1 Dec 2017
28 Aug 2018
28 Aug 2018
9 Nov 2018
9 Nov 2018
8 April 2019
LTI Performance Rights1
LTI Performance Rights2
LTI Performance Rights3
STI Performance Rights4
LTI Performance Rights3
STI Performance Rights4
LTI Performance Rights5
Number granted
3,695,625
8,577,740
5,350,568
5,350,568
11,198,863
6,719,318
1,500,000
Value
$11,024
$53,182
$31,782
$7,166
$84,932
$21,287
-
Expiry
30 June 2020
30 June 2021
30 June 2022
31 July 2019
30 June 2022
31 July 2019
8 April 2021
1 These Performance Rights will be granted if the Company achieves a market capitalisation* greater than $50
million on or before 30 June 2020.
2 These Performance Rights will be granted if the Company achieves a market capitalisation greater than $70 million
on or before 30 June 2021.
3 These Performance Rights will be granted if the Company achieves a market capitalisation greater than $70 million
on or before 30 June 2022.
4 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 120% to 150% of the June 2018 VWAP.
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
2019.
5 These Performance Rights have been granted to key employees as a retention incentive. 50% will grant if the
holders remain employed as at 8 April 2020, the remaining 50% will be granted if the holders are employed as at
8 April 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 2018 Kingston issued senior management 8,237,354 shares on the vesting of FY18 STI Performance
rights (8,237,354 lapsed).
- 43 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
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 beginning of period
Issued during the period
Expired during the period
Outstanding at year-end
Exercisable at year-end
2019
2018
Number of
Options
13,500,000
34,375,909
13,500,000
34,375,909
30,375,909
Weighted Average
Exercise Price
$
$0.07
$0.024
$0.07
$0.024
$0.027
Number of
Options
27,000,000
13,500,000
13,500,000
13,500,000
Weighted Average
Exercise Price
$
$0.06
$0.04
$0.07
$0.07
(ii) Other share-based payments granted to third parties.
Share options:
Date of grant
Share-based payment
22 Dec 2016
Options on acquisition1
Number
granted
5,000,000
Value
$39,282
$39,282
Share price on
issue
$0.017
Exercise
Price
$0.025
Expiry
22 Dec 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.
There were no options exercised during the year ended 30 June 2019 (2018: nil).
Ordinary shares:
-
-
On 29 April 2019, Kingston granted 7,812,500 shares in settlement of placement fees to DELPHI
Unternehmensberatung AG. The shares were valued at $0.016 per share (total value of $125,000).
On 9 May 2019, Kingston granted 1,500,000 shares in settlement of marketing and advisory fees to S3
Consortium Pty Ltd. The shares were valued at $0.016 per share (total value $21,818)
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. There were no other transactions
with Key management personnel.
(b) Directors’ Interests
As at 30 June 2019 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
Stuart Rechner ⁴
Mick Wilkes⁵
Andrew Paterson⁶
Fully Paid
Ordinary Shares
(KSN)
9,739,899
15,525,532
1,169,188
2,800,000
-
Unlisted LTI Options1
3,000,000
7,500,000
3,000,000
3,000,000
-
¹ Unlisted Long Term Incentive (LTI) Options exercisable at $0.027 each and expiring on 30 June 2021
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. He also has a relevant interest in the Shares as the registered holder.
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
- 44 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
⁵ Michael Wilkes appointed on 6 July 2018
⁶ Andrew Paterson resigned on 20 June 2019
22. CAPITALISED EXPLORATION EXPENDITURE
Notes
Consolidated Group
2019
$
2018
$
Opening Balance
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
8,839,290
-
-
-
-
-
-
5,124,117
13,963,407
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
An impairment assessment was undertaken of the Group’s exploration assets at the end of FY19. Nothing has
come to the Company’s attention to indicate that amounts recorded as Capitalised Exploration Expenditure as at
30 June 2019 are not reasonable, require impairment, or do not meet the requirements of AASB 6.
Of the total $13,963,407 capitalised exploration expenditure, $12,128,846 is attributable to the Misima Gold
Project, $1,717,713 is attributable to the Livingstone Gold Project, and $116,848 is other projects.
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.
(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.
- 45 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
(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 2019 or 30 June 2018.
(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
2019
$
2018
$
5,197,394
5,197,394
4,379,799
4,379,799
Impact on post tax profit / (loss) and equity
+ 2% in interest rate
- 2% in interest rate
103,948
(103,948)
87,596
(87,596)
(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.
(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
2019
2018
Footnote Net Carrying
Value
$
Fair
Value
$
Net Carrying
Value
$
Fair
Value
$
(i)
(i)
(ii)
5,197,394
70,917
1,943
5,270,254
5,197,394
70,917
1,943
5,270,254
4,379,799
136,965
284,243
4,801,007
4,379,799
136,965
284,243
4,801,007
- 46 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Financial liabilities
Trade and other payables
Interest bearing liabilities
Total financial liabilities
2019
2018
Footnote Net Carrying
Value
$
Fair
Value
$
Net Carrying
Value
$
Fair
Value
$
(i)
396,113
125,849
521,962
396,113
125,849
521,962
386,007
183,536
569,543
386,007
183,536
569,543
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.
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
2019
$
2018
$
5,048,911
13,603,406
18,652,317
4,495,353
10,986,926
15,482,279
190,528
-
190,528
428,239
-
428,239
74,817,881
(57,039,322)
69,244,554
(54,457,732)
683,229
18,481,788
267,218
15,054,040
(2,712,587)
-
(2,712,587)
(5,744,449)
-
(5,744,449)
There are no contractual commitments for the parent entity during the financial year. Refer to
note 17 for exploration commitments.
- 47 -
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2019
KINGSTON RESOURCES LIMITED
& its Controlled Entities
26.
SUBSEQUENT EVENTS
On 1 July 2019 it was announced that 7,058,823 3c options expired, 13,500,000 7c options expired, and
29,000,000 performance rights expired on 30 June 2019.
On 25 July 2019 5,698,978 STI performance rights vested.
On 19 August 2019 the Company completed the placement of the shortfall from its Entitlement Offer announced
on 3 May 2019. The shortfall of 192,793,865 shares was placed at the Entitlement Offer price of $0.016c per
share raising $3,084,702 before fees.
Other than the above, there has been no other matter or circumstance which has arisen since 30 June 2019 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
- 48 -
KINGSTON RESOURCES LIMITED
& its Controlled Entities
2019 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 48, and the Remuneration disclosures that are contained
in page 10 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 2019 and of its
performance, for the financial year ended on that date;
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
(iii) complying with International Financial Reporting Standards as disclosed in Note 1.
(b)
(c)
the remuneration disclosures that are contained in page 10 to 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 Managing Director and Chief Financial Officer.
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
17 September 2019
- 49 -
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE OWNERS OF
KINGSTON RESOURCES LIMITED
Report on 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 2019, 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 to the
consolidated financial statements, including a summary of significant accounting policies and other
explanatory information and the directors’ declaration.
In our opinion the accompanying financial report of Kingston Resources Limited and Controlled Entities is in
accordance with the Corporations Act 2001, including;
a.
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
b.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those Standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement. 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 require 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 if 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(q) in the financial report, which indicates that the Group incurred a net loss
after tax of $2,240,006 during the year ended 30 June 2019 and had net operating cash outflows of
$1,428,194 for the year then ended. As stated in Note 1(q), these events or conditions, along with other
matters as set forth in Note 1(q), 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 OWNERS 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 2019. 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 2019, the Group had capitalised
exploration assets of $13,963,407. The Group’s
accounting policy in respect of exploration and
evaluation assets is outlined in Note 1(n).
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
the relevant PNG government
agency.
from
• 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 OWNERS OF
KINGSTON RESOURCES LIMITED
Key Audit Matter
How Our Audit Addressed the Key Audit Matter
Share-Based Payments
Refer to Note 20 “Share-Based Payments”
During the year ended 30 June 2019, the Company
issued performance options and shares
to
employees including key management personnel,
which were accounted for as share-based payments
under AASB 2: Share Based Payments.
Our audit procedures included but not limited to:
• Evaluating management’s assessment of the
valuation and recognition of the performance
options and shares.
and
Share-based payments are a complex accounting
area including assumptions utilised in the fair value
calculations
the
performance options and shares issued during the
year. There is a risk in the financial report that
amounts are
recognised and/or
inappropriately disclosed.
judgments
incorrectly
regarding
Refer to Note 1 of the financial report for a
description of the accounting policy and significant
estimates and
these
transactions.
judgements applied
to
• Obtaining an understanding of the key terms and
conditions of the performance options and shares
by inspecting relevant agreements.
• Holding discussions with management
to
payments
share-based
understand
arrangements
evaluating
and
place
management’s assessment of the likelihood of
meeting the performance condition attached to
the options.
the
in
• Recalculating the estimated fair value of the
performance options using the Black-Scholes
including
option
assessing the reasonableness of the key inputs
used in the Company’s valuation model.
valuation methodology,
in
respect of
• Reviewing the adequacy of the Company’s
the accounting
disclosures
treatment of share-based payments
the
financial statements, including the significant
judgments involved, and the accounting policy
adopted
in
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 2019, 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.
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE OWNERS OF
KINGSTON RESOURCES LIMITED
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.
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.
KINGSTON RESOURCES LIMITED
ABN 44 009 148 529
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE OWNERS OF
KINGSTON RESOURCES LIMITED
–
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.
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 12 to 19 of the directors’ report for the year ended
30 June 2019.
In our opinion, the remuneration report of Kingston Resources Limited for the year ended 30 June 2019 complies
with s 300A of the Corporations Act 2001.
Auditor’s Opinion
The directors of the Company are responsible for the preparation and presentation of the remuneration report
in accordance with s 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.
Hall Chadwick
Level 40, 2 Park Street
Sydney, NSW 2000
DREW TOWNSEND
Partner
Dated: 17 September 2019
CORPORATE GOVERNANCE STATEMENT
2019 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 2019 was approved by the Board
on 12 September 2019. The Corporate Governance Statement can be located on the Company’s website
www.kingstonresources.com.au
55
ADDITIONAL INFORMATION
2019 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 30 August 2019.
SHAREHOLDER INFORMATION
Distribution of Ordinary Shares at 30 August 2019
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)
725
655
31
92
146
1,649
There are 444 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 30 August 2019
Contributed Equity (ASX code – KSN)
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
WINCHESTER INVESTMENTS GROUP PTY LIMITED
DELPHI UNTERNEHMENSBERATUNG AKTIENGESELLSCHAFT
FARJOY PTY LTD
SLIPSTREAM RESOURCES INVESTMENTS PTY LTD
SANDFIRE RESOURCES NL
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
PASAGEAN PTY LIMITED
CARPENTARIA CORPORATION PTY LTD
10. MR SCOTT ARCHIE FERGUSON
11.
TRILLBAR RESOURCES PTY LTD
12. SOARAWAY DEVELOPMENT PTY LTD
13. ALBIANO HOLDINGS PTY LTD
14. MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
15. BERNE NO 132 NOMINEES PTY LTD
16. EVACAP PTY LTD
17. EGMONT PTY LTD
18. MILAMAR GROUP PTY LTD
19. TLG TRADING PTY LTD
20. YUCAI AUSTRALIA PTY LTD
Top 20 Total
Other Shareholders
Total on Issue
- 56 -
Holding
%
205,000,000
11.61
164,062,500
151,871,402
135,000,000
113,499,999
76,293,820
33,139,230
25,000,000
23,203,074
22,570,127
21,913,039
18,567,922
17,190,000
16,470,254
15,625,000
14,500,000
12,500,000
11,792,626
11,000,000
10,773,250
9.29
8.60
7.64
6.43
4.32
1.88
1.42
1.31
1.28
1.24
1.05
0.97
0.93
0.88
0.82
0.71
0.67
0.62
0.61
1,099,972,243
665,948,341
62.29
37.71
1,765,920,584
100.00
23,650,000
ADDITIONAL INFORMATION
2019 ANNUAL REPORT
KINGSTON RESOURCES LIMITED
& its Controlled Entities
Substantial Shareholders at 30 August 2019
The names of the substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
Winchester Investments Group Pty Limited – 205,000,000 fully paid ordinary shares
Delphi Unternehmensberatung Aktiegesellshaft – 164,062,500 fully paid ordinary shares
Farjoy Pty Ltd – 151,871,402 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 30 August 2019
As at 30 August 2019, the Company had 1,765,920,584 fully paid ordinary shares held by 1,649 individual shareholders
and:
-
-
-
4,000,000 unlisted options (KSNSTUO1 and KSNSTU02) held by two individual option holders;
5,000,000 unlisted options (KSNLTU04) held by one individual option holder; and
30,375,909 unlisted options (KSNLTUO6) held by eight individual option 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 6,862,645 securities subject to voluntary escrow which were released from escrow on 17 November
2018. The Company has no restricted securities at 30 August 2019.
3. UNQUOTED SECURITIES
Holder
#Options over Ordinary
Shares
Expiry Date
Exercise Price
Director and Employee Options
30,375,909
30 June 2021
$0.27
Shareholder Options
Employee Options
Employee Options
Performance Rights
Performance Rights
5,000,000
2,000,000
2,000,000
3,695,625
8,577,740
22 December 2019 $0.025
31 March 2020
$0.001
31 December 2020 $0.001
30 June 2020
Nil (Vesting Conditions)
30 June 2021
Nil (Vesting Conditions)
Performance Rights
16,549,431
30 June 2022
Nil (Vesting Conditions)
Performance Rights
1,500,000
8 April 2021
Nil (Vesting Conditions)
Total Unlisted Securities on Issue 69,698,705
- 57 -
ADDITIONAL INFORMATION
2019 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.
5.
TENEMENT SCHEDULE
Tenement
Project/Name
Misima
EL1747
Subtotals PNG
Tenement
E 70/4822
Greenbushes
E 52/3403
Livingstone
Livingstone
E 52/3667
Subtotals WA
Tenement
Project/Name
Status
Ownership
Status
Live
Ownership
70%
Pending
100 %
Live
Pending
75%
75%
Project/Name
Status
Ownership
EL31534
Boxhole
Trackrider
EL31535
Subtotals NT
Total KSN tenure
Live
Live
100%
100%
- 58 -