& Controlled Entities
Annual Report
For the year ended 30 June 2021
Krakatoa Resources Limited
& Controlled Entities
CONTENTS
CORPORATE DIRECTORY ................................................................................................................... 3
DIRECTORS’ REPORT .......................................................................................................................... 4
AUDITOR’S INDEPENDENCE DECLARATION .................................................................................. 20
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
.............................................................................................................................................................. 21
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................................... 22
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................................... 23
CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................ 24
NOTES TO THE FINANCIAL STATEMENTS ...................................................................................... 25
DIRECTORS’ DECLARATION.............................................................................................................. 43
INDEPENDENT AUDITOR’S REPORT ................................................................................................ 44
ASX INFORMATION ............................................................................................................................. 47
SCHEDULE OF MINERAL TENEMENTS ............................................................................................ 49
– 2 –
Krakatoa Resources Limited
& Controlled Entities
CORPORATE DIRECTORY
PRINCIPAL AND REGISTERED OFFICE
Level 11, 216 St Georges Terrace
Perth WA 6000
Tel: +61 8 9481 0389
Fax: +61 8 9463 6103
Email: admin@ktaresources.com
Web: https://ktaresources.com
CHIEF EXECUTIVE OFFICER
Mark Major
DIRECTORS
Colin Locke – Executive Chairman
Timothy Hogan – Non-Executive Director
David Palumbo – Non-Executive Director
COMPANY SECRETARY
David Palumbo
SHARE REGISTRAR
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Tel: +61 8 9323 2000
Fax: +61 8 9323 2033
Web: www.computershare.com.au
AUDITORS
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade
PERTH WA 6000
STOCK EXCHANGE LISTING
Australian Securities Exchange
ASX Code: KTA
– 3 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT
Your directors present the following report on Krakatoa Resources Limited (the “Company”) and
controlled entities (referred to hereafter as the “Group”) for the financial year ended 30 June 2021.
DIRECTORS
The names of directors in office at any time during the financial year and up to the date of this report
are:
- Colin Locke (Executive Chairman)
- Timothy Hogan (Non-Executive Director)
- David Palumbo (Non-Executive Director)
Unless noted above, all directors have been in office since the start of the financial year to the date of
this report.
COMPANY SECRETARY
The following persons held the position of Company secretary during the financial year:
- David Palumbo
PRINCIPAL ACTIVITIES
The principal activity of the Group during the financial year was the acquisition and exploration of
resource based projects.
OPERATING RESULTS
The loss of the Group after providing for income tax amounted to $3,719,276 (2020: $2,650,603).
FINANCIAL POSITION
As at 30 June 2021, the Group had a cash balance of $2,341,691 (2020: $686,170) and a net asset
position of $2,202,721 (2020: $478,986).
DIVIDENDS PAID OR RECOMMENDED
No dividends have been paid, and the directors do not recommend the payment of a dividend for the
financial year ended 30 June 2021.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
No significant changes in the state of affairs occurred during the financial year.
– 4 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
REVIEW OF OPERATIONS
During the financial year, the Company was very active on the exploration front. We had several new
tenements granted, with the majority being associated with what is collectively known as the Mt Clere
project in the Gascoyne region of WA. The Rand project in southern NSW was also granted and
underwent considerable systematic exploration. An additional tenement around the Dalgaranga
project, WA was granted at the end of the financial reporting period which extends the prospectivity of
this project. Exploration work over the Belgravia project focused on the Sugarloaf target which
culminated into development of a deep porphyry drilling opportunity.
The Company completed exploration on all its assets; with several drilling campaigns and extensive
first pass geochemical surveys and reconnaissance exploration. Details of the project specific
exploration operations are provided below.
Mt Clere Project – REE, HMS, Ni, Cu +/- Co, PGE
During the year, several of the Mt Clere Rare Earth Project tenements were granted. The Company
currently controls more than 2,300km2 of prospective land separated over 11 tenements, 3 of which
are still under application.
The project is located approximately 200km northwest of Meekatharra, within the Narrayer terrane,
Gascoyne Region of Western Australia. The Narryer Terrane is thought to represent reworked
remnants of greenstone sequences that are prospective for intrusion-hosted Ni-Cu-(Co)-(PGE's) with
similar mineralisation-styles of the likes of Julimar.
The Project also contains significant opportunities related to rare earth elements, in particular via the
previously identified widespread monazite sands concentrated within the drainage networks of the
northern applications and ion adsorption clay REE targets in extensive laterite areas. Historical work
by BHP and Astro Mining NL confirmed the abundance of monazite a prospective rear earth element
bearing mineral. Other valuable heavy minerals such as zircon and ilmenite with lesser rutile,
leucoxene and xenotime, were recovered in samples from the same area, favourable for large placer
resources of easily recoverable material.
After granting of the initial three licenses in January 2021, the Company sought land access and
heritage clearance to undertake initial reconnaissance exploration, which involved mapping and
geochemical sampling. Once approval was confirmed an extensive stream sediment survey and rock
sampling program was undertaken over the granted tenure during April and May. The results of both
surveys were extremely encouraging, resulting in the Company defining three extensive areas of
interest (AOI) (Figure 1). These AOI recorded highly anomalous rare earth elements, base metals and
pathfinder elements associated with platinum group mineralisation systems.
Highly anomalous discoveries of note from the stream geochemical survey include numerous total
rare earth oxide (TREO) samples including 10,380ppm, 8,126ppm, 7,887ppm TREO over several
catchments, with around 25% being critical magnet REO. In addition there were several anomalous
Ni-Cu-Co-Pb-Cr catchment areas, demonstrating the prospectivity for Ni-Cu-PGE deposits.
Follow up exploration is continuing over these areas of interest and the extensive alluvial terraces,
with reconnaissance drilling planned over the dominant Tower AOI laterites and alluvial terraces,
airborne EM geophysical surveys over the three southern AOI, Errabiddy shear zone and craton
margin areas. The Company will continue to expand the regional geochemical surveys over the newly
granted tenure during the next reporting period.
– 5 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
Figure 1 Krakatoa exploration licenses and applications within the Narryer Terrane, Mt Clere Project, Gascoyne
Region, Western Australia. Highlighting current derived REE anomalies determined from KTA stream sampling
geochemistry analysis, BHP (abundant), Astro’s significant stream sampling abundance monazite, and All Star’s
auger samples.
Belgravia Project – Cu, Au
The Belgravia Project covers an area of 80km2 and is located in the central part of the Molong
Volcanic Belt (MVB), Lachlan Fold Belt, NSW. It contains the same rocks (Fairbridge Volcanics and
Oakdale Formation), or their lateral equivalents, that respectively host the giant Cadia-Ridgeway mine
35km south and Alkane Resources' Boda discovery 65km north. Historical exploration at Belgravia
has failed to adequately consider the regolith and tertiary basalt (up to 40m thick) that obscures much
of the prospective geology. The Project contains six targets with considerable exploration potential for
porphyry Cu-Au and associated skarn mineralisation (Figure 2).
The deep ground penetrating radar ("DGPR") survey identified several critical anomalies associated
with and proximal to previously announced interpreted porphyry-related targets in the Bella region.
Further south of this a total of seven anomalies were identified at Sugarloaf. These anomalies
ultimately form two separate polygons striking over 900m and 500m respectively.
After extensive landowner negotiation the Company was granted permission to complete additional
work programs in the later part of the reporting period, over the sugarloaf target. The Company
completed several soil geochemical survey over the sugarloaf target along with reconnaissance air
core drilling program (37 holes). The results of which reinforced that the Sugarloaf target is a
prominent, structurally bound magnetic low (“demag”) zone spanning 800 x 900 metres (Figure 3).
– 6 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
Within the centre of this demag zone lies a central core which is a discrete magnetic high featuring
anomalous soil metal geochemistry. The high-grade chip result, reporting 5.19g/t gold and 1.73%
copper derived within the NE-SW trending DGPR polygon on the margin of the target zone may
reflect a shallower contact-metasomatic (skarn and carbonate replacement style gold-base metal
deposit.
Figure 2 Belgravia project location map, prospects and major copper & gold mines and deposits on regional
bedrock geology.
– 7 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
Figure 3 Maps showing recent air-core drillholes and soil samples. Background image on left is gridded
(combined 2020-2021) Cu soil geochemistry and, on right RTP magnetics. Note the distinctive ring feature
defined by both the Cu geochemistry and magnetics. The red ellipse marks the central core of multi-element
geochemical anomalism (left) which is coincident with a magnetic high (right), and the yellow circle the
approximate outer extent of the geochemical depletion zone.
The Company considers the economic potential for copper-gold mineralisation associated with a
porphyry may lie at depth (>200m) and the DGPR supports high-grade copper-gold veins potentially
extending upwards from a porphyry source forming a secondary target at shallower levels.
Work programs are ongoing with deep drilling of the Sugarloaf target the current focus on this
tenement.
Rand Project- IRGS (Au) and granite hosted Sn
In October 2020, the Company was granted EL9000, after submitting four applications back in June
2020. The Project covers a combined area of 580km2, which is centred approximately 60km NNW of
Albury in southern NSW and contains a 40km structural corridor with the prospective geology largely
masked by colluvium. Gold mineralisation is associated with emplacement of the I-type Jindera
granite.
Within the tenement lies the historical Bulgandry Goldfield which is prospective for shear-hosted and
intrusion-related gold. Production records from several of the mines within this goldfield such as the
Show Day and Welcome Find reefs show substantial gold grades, including 512oz from 60 tons and
70oz from 74 tons, being extracted from the exposed quartz veins.
Very limited exploration had been undertaken prior to the Company’s involvement. Initially the
Company had Thomson Aviation undertake collection of high-resolution aeromagnetic data over the
entire tenement to commence the greenfields exploration effort at Rand. Following this the Company
completed rock chip sampling and mapping over the historical Bulgandry area which was followed by
the maiden regional soil geochemical survey. Rock chip assays confirmed the potential for economic
grades with gold levels of up to 80.6g/t, 21.7g/t, 17.7g/t and 14.5g/t being reported. The soil survey
resulted in defining multiple large (1-3km) coherent and robust gold anomalies and over twenty
extensive high tenor pathfinder multielement IRGS anomalies (figure 4).
The Company also completed gradient array and dipole-dipole Induced Polarization surveys over the
bullseye area, which assisted with the planning a 2,762-metre air core (AC) drilling program. The AC
drilling returned moderately to strongly anomalous IRGS pathfinder elements with anomalous gold in
– 8 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
several holes within the weathered intrusive units, confirming the IRGS model. In particular,
anomalous gold zones were intersected immediately above robust dipole-dipole IP (chargeable)
anomalies within the intrusive host units, which remain untested.
In addition to the AC drilling a highly successful 1,275 metre reverse circulation (RC) drill program
was undertaken as a reconnaissance first-pass assessment on a small selection of known historical
mine workings within the Bulgandry Goldfields. Nine RC holes were drilled; 8 tested for widths and
gold grades beneath surface workings and one hole tested a new zone of veins mapped and sampled
by the company earlier. Assay results showed significant shallow gold mineralisation including a 40m
intersection grading 0.22g/t gold from 60m (including a 12m section grading 0.52g/t gold). Multiple
subparallel gold zones were encountered at the Goodwood reef mine which remains open down dip
and along strike.
The Company applied for additional exploration licenses within and surrounding the existing Rand
licence. Both applications (ELA6299 and ELA6300) were applied for in early June 2021.
The Company will continue its exploration efforts and expand the soil geochemical survey to close off
several anomalies and infill certain areas in coming period. It will also undertake regional targeting
exploration over several other priority exploration targets which were identified from the magnetic
survey and collation and review of the exploration data. A series of significant magnetic lineaments,
totalling around 8 kilometres and trending East- Northeast were identified over corresponding
historical gold workings at Bulgandry goldfield, with over 90% under some cover. A major drilling
campaign is envisaged over the soil and air core anomalies already identified.
Figure 4 Location of Multi-element and gold soil geochemistry anomalies, with prospect/mine locations over
magnetic image.
– 9 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
Turon Project – Au, +/-Cu
The Turon Project covers an area of 120km2. It is situated approximately 50km east of the Company's
Belgravia Project and 60km northeast of Newcrest Mining's Cadia Valley Operations, in the Hill End
Synclinorial Zone, NSW. The geology at Turon bears many similarities in terms of host-rocks,
structural and mineralisation-style to other high-grade turbidite-hosted gold deposits, including
Fosterville in the Bendigo-Ballarat zone, central Victoria.
Past explorers report numerous significant gold grades from chip and mullock sampling along the
length of the gold workings, including 1,535g/t, 135g/t, 26g/t, 14.6g/t, 12.55g/t and 11.3 g/t Au.
A diamond drill program commenced in August 2020 over several identified targets within the Turon
project. The drilling was designed to test several shallow gold targets situated within the Box Ridge
(Britannia Mine) and Quartz Ridge line of workings which strike over 2.4km and 1.6km respectively.
The two holes were drilled at the Britannia Mine prospects, and intersected multiply and board zones
of significant quartz veining, pervasive sericite alteration and disseminated pyrite-arsenopyrite.
Anomalous gold was intersected in both holes with the peak intersection coming from hole BD002 at
for 1m with 4.82g/t gold from 56m.
Six diamond holes (totalling 1294.5m) were drilled along the 1.6km long line of the historical Quartz
Ridge workings. Drilling intersected multiple zones of significant quartz veining with associated
mineralisation within all holes, including arsenopyrite, pyrite, with chalcopyrite and gold locally
developed. Best results included 2m @ 2.42g/t Au from 101.8m (QRD002), 1m @ 2.68g/t Au from
29.7m (QRD002) and 1m @ 3.1g/t Au from 76m (QRD003) (Figure 5).
Vein widths intersected were to 20m, but commonly around 3m. Veins vary between massive to
strongly laminated typically associated with the reactivating shear zones and commonly characteristic
of nuggety gold systems. Broad arsenic haloes, up to 36m wide, envelop the mineralisation and
quartz veining supporting the presence of deep mantle tapping structures.
Dalgaranga Project – Ta, Rb, Nb, Sn, W, Li, +/- Base metals
The Dalgaranga Project is located 80km northwest of Mount Magnet in Western Australia and lies
within the Dalgaranga Greenstone Belt. The Dalgaranga Greenstone Belt is about 50km long and up
to 20km wide and contains gold mineralisation (Dalgaranga gold mine), a zinc deposit (Lasoda),
graphite deposits, and occurrences of tantalum, beryllium, tin, tungsten, lithium and molybdenum
related to LCT pegmatites.
The presence of Zinnwaldite and Lepidolite, both lithium-bearing micas, has been recognised during
field mapping and confirmed further by assay in several rock chip sampling and drilling programmes
completed by the Company previously. The presence of anomalous rubidium in the mined waste rock
and supported with the drilling highlighted by the discovery of a rubidium, tin and tantalum enriched
71 metre interval with peak Rb values just shy of 5,000ppm support the prospectivity.
During the year, the Company was granted additional tenure and was successful on securing the
rights for the application over additional tenure surrounding the company’s current land holding. A
review of the associated areas and a full compilation of the project available public data on the
Dalgaranga Project Tantalum project was initiated during the reporting period.
Mac Well Project - Au
The Mac Well Project has a land area of 66.9km2 and is located 10km west of the Company's
Dalgaranga Project. The Project contains a 7.5km strike along the prospective Warda Warra
greenstone belt, mostly untested due to a thick transported cover. The Company considers favourable
structural conditions for gold mineralisation are likely within the Mac Well tenement, acknowledging
the significance and prospectivity of the western granite-greenstone contact, as evidenced by the
Western Queen Mine.
– 10 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
Figure 5 Quartz Ridge Line of workings, historical mines with drilling and rock chip results.
Competent Persons Statement
The information in this announcement is based on and fairly represents information compiled by Mr Mark Major, Chief
Executive Officer and Senior Geologist, who is a Member of the Australian Institute of Geoscientists and employed by the
Group, and is an accurate representation of the available data and studies for the Project. Mr Major has sufficient experience
relevant to the style of mineralisation and type of deposit under consideration, and to the activity which he has undertaken, to
qualify as a Competent Person as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Major consents to the inclusion in this
announcement of the matters based on this information in the form and context in which it appears.
– 11 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
INFORMATION ON DIRECTORS
Colin Locke
Executive Chairman
From 1984 to 1993, Colin Locke worked in the mining industry
processing base and precious metals. During this time, he traded
resource stocks and international futures contracts.
In 1993, Mr. Locke joined an Australian commodity and futures
broking firm as an investment advisor and became a Director in
1994. In 1998 Mr. Locke founded a boutique Australian Financial
Services firm and held the position of Managing Director from
1999 until 2010.
In 2007 Mr. Locke held the role of Corporate Advisor during the
acquisition process for the Mayoko iron ore project in the
Republic of Congo that was subsequently taken over in 2010 for
circa AUD 50mi and later on sold for over 300mi.
through
From 2008, Mr. Locke focused on natural resources exploration
pursuits
founded
Western Mining Network Ltd, (now Aston Minerals Limited, ASO)
where he held the role of Executive Director from 2010 until
2012.
Indonesian archipelago and
the
Interest in Securities
Mr. Locke brings to the board and shareholders a mining related
background with business management and financial experience
spanning over 30 years. He currently serves on the board of
Albion Resources Limited (ASX: ALB).
1,129,000 Fully paid ordinary shares
4,000,000 options exercisable at $0.075 on or before 29
November 2023
2,500,000 share performance rights vesting at $0.20 on or before
29 November 2023
2,500,000 share performance rights vesting at $0.30 on or before
29 November 2023
2,500,000 share performance rights vesting at $0.40 on or before
29 November 2023
Directorships held
listed entities
in other
Albion Resources Limited
– 12 –
Krakatoa Resources Limited
& Controlled Entities
Timothy Hogan
Non-Executive Director
DIRECTORS’ REPORT (CONT.)
Mr. Hogan has approximately 25 years’ experience in the
stockbroking industry in Australia, initially as a founding private
client advisor at Hogan and Partners. Mr. Hogan has provided
corporate and execution services for a wide variety of corporate
and private clients.
Mr. Hogan is currently a Director of Barclay Wells Limited, a
boutique advisory firm that specialises in Australian resource
stocks, and has assisted many companies from their initial capital
raising and flotation on the ASX through to production. Mr. Hogan
brings extensive experience and a wide range of contacts that
will benefit the Company.
Interest in Securities
400,000 Fully paid ordinary shares
3,000,000 options exercisable at $0.075 on or before 29
November 2023
Directorships held in other
listed entities
None
David Palumbo
Non-Executive Director & Company Secretary
Mr Palumbo is a Chartered Accountant and graduate of the
Australian Institute of Company Directors with over fourteen
years’ experience across company secretarial, corporate
advisory and financial management and reporting of ASX listed
companies. Mr Palumbo is an employee of Mining Corporate Pty
Ltd, where he has been actively involved in numerous corporate
transactions. Mr Palumbo is currently a Non-Executive Director of
Albion Resources Limited (ASX: ALB).
3,601,500 Fully paid ordinary shares
2,100,000 options exercisable at $0.075 on or before 29
November 2023
Interest in Securities
Directorships held in other
listed entities
Albion Resources Limited
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each director of Krakatoa Resources
Limited and for the executives receiving the highest remuneration.
– 13 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
1. Employment Agreements
Mr Colin Locke has worked for the Group in an executive capacity as Executive Chairman since his
appointment on 6 August 2015. Under the terms of his executive agreement, Mr Locke is entitled to
receive $144,000 (plus superannuation) per annum, which is subject to annual review. Under the terms
of his agreement, Mr Locke received reimbursements for travel and other expenses related to his
employment during the financial year. The executive agreement may be terminated by either party with
3 months’ written notice.
Mark Major was appointed as Chief Executive Officer, effective from 14 October 2020. Under the terms
of the executive agreement, Mr Major is entitled to receive a base salary of $220,000 per annum
(inclusive of superannuation), which is subject to annual review. The executive agreement may be
terminated by either party with 3 months’ written notice.
Appointments of non-executive directors Timothy Hogan and David Palumbo are formalised in the form
of service agreements between themselves and the Group. Their engagements have no fixed term but
cease on their resignation or removal as a director in accordance with the Corporations Act 2001. Mr
Hogan is currently entitled to receive directors’ fees of $30,000 plus superannuation and Mr Palumbo is
currently entitled to receive directors’ fees of $60,000 per annum.
2. Remuneration policy
The Group’s remuneration policy has been designed to align director and executive objectives with
shareholder and business objectives by providing a fixed remuneration component and offering
specific long-term incentives based on key performance areas affecting the Group’s financial results.
The board believes the remuneration policy to be appropriate and effective in its ability to attract and
retain the best executives and directors to run and manage the Group, as well as create goal
congruence between directors, executives and shareholders.
The board’s policy for determining the nature and amount of remuneration for board members and
senior executives of the Group is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other
senior executives, was developed by the board.
All executives receive a base salary (which is based on factors such as length of service and
experience), superannuation and are entitled to the issue of share options.
Incentive paid in the form of share options are intended to align the interests of directors and
Group with those of the shareholders.
The performance of executives is measured against criteria agreed annually with each executive and is
based predominantly on the forecast growth of the Group’s shareholders’ value. The board may,
however, exercise its discretion in relation to approving incentives, bonuses and options, and can
recommend changes to the committee’s recommendations. Any changes must be justified by reference
to measurable performance criteria. The policy is designed to attract the highest calibre of executives
and reward them for performance that results in long-term growth in shareholder wealth.
Executives are also entitled to participate in the employee share and option arrangements. All
remuneration paid to directors and executives is valued at the cost to the Group and expensed, or
capitalised to exploration expenditure if appropriate. Options, if given to directors and executives in
lieu of remuneration, are valued using the Black-Scholes methodology. The board policy is to
remunerate non-executive directors at market rates for time, commitment and responsibilities. The
remuneration committee determines payments to the non-executive directors and reviews their
remuneration annually, based on market practice, duties and accountability. Independent external
advice is sought when required.
– 14 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
The maximum aggregate amount of fees that can be paid to directors is $300,000. Fees for non-
executive directors are not linked to the performance of the Group. However, to align directors’
interests with shareholder interests, the directors are encouraged to hold shares in the Group and are
able to participate in the employee share option plan.
3. Performance-based remuneration
During the financial year, non-executive director David Palumbo received 3,000,000 shares at $0.056
per share (equivalent to $168,000) in bonus consideration for his contribution in identifying the Rand,
Turon and Mt Clere Projects for direct application by the Group. Additionally, 15,000,000 options were
issued to Key Management Personnel (KMP’s) as performance based remuneration following approval
at the Group’s Annual General Meeting (AGM). Options were issued to KMP’s on the following basis:
Colin Locke 4,000,000, David Palumbo 3,000,000, Tim Hogan 3,000,000 and Mark Major 5,000,000.
Colin Locke and Mark Major also received 7,500,000 share performance rights each during the
reporting period.
4. Details of remuneration for the year ended 30 June 2021
The remuneration for each key management personnel of the Group during the financial year ended
30 June 2021 and 30 June 2020 was as follows:
2021
Short-term
Benefits
Post-
employment
Benefits
Other
Long-term
Benefits
Share based
Payment
Total
Perfor-
mance
Related
Value of
Options /
Rights
Re-
munerati
on
Key Management
Person
Directors
Cash, salary &
commissions
$
Super-
annuation
$
Other
Shares Options /
$
$
Rights
$
$
%
%
Colin Locke
Timothy Hogan
David Palumbo
144,000
30,000
60,000
5,700
2,850
-
Mark Major
143,664
13,648
377,664
22,198
-
-
-
-
-
-
-
407,577
557,277
93,440
126,290
168,000
93,440
321,440
-
356,540
513,852
168,000
950,997
1,518,859
-
-
52
-
11
73
74
29
69
63
2020
Short-term
Benefits
Post-
employment
Benefits
Other
Long-term
Benefits
Share based
Payment
Total
Perfor-
mance
Related
Value of
Options /
Rights Re-
muneration
Key Management
Person
Directors
Cash, salary &
commissions
$
Super-
annuation
$
Other
Shares Options
$
$
$
$
%
%
Colin Locke
Timothy Hogan
David Palumbo
152,000
47,500
60,000
-
4,513
-
259,500
4,513
-
-
-
-
-
-
-
-
-
-
-
-
152,000
52,013
60,000
264,013
-
-
-
-
-
-
-
-
– 15 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
5. Equity holdings of key management personnel
Shareholdings
Number of shares held by key management personnel during the financial year ended 30 June 2021
was as follows:
2021
Directors
Colin Locke
Timothy Hogan
David Palumbo*
Mark Major
Total
Balance
1.7.2020
No.
Received as
Compensation
No.
Options
Exercised
No.
Net Change
Other
No.
Balance
30.6.2021
No.
129,000
-
501,500
-
630,500
-
-
2,100,000
-
2,100,000
-
-
-
-
-
-
-
-
-
-
129,000
-
2,601,500
-
2,730,500
Option holdings
Number of options held by key management personnel during the financial year ended 30 June 2021
was as follows:
2021
Directors
Colin Locke
Timothy Hogan
David Palumbo*
Mark Major
Total
Balance
1.7.2020
No.
Received as
Compensation
No.
Options
Expired
No.
Net Change
Other
No.
Balance
30.6.2021
No.
11,000,000
10,000,000
4,539,389
-
25,539,389
4,000,000
3,000,000
2,100,000
5,000,000
(4,000,000)
(4,000,000)
(2,000,000)
-
14,100,000 (10,000,000)
-
-
-
-
-
11,000,000
9,000,000
4,639,389
5,000,000
29,639,389
Share performance rights
Number of performance rights held by key management personnel during the financial year ended 30
June 2021 was as follows:
2021
Directors
Colin Locke
Timothy Hogan
David Palumbo
Mark Major
Total
Balance
1.7.2020
No.
Received as
Compensation
No.
Rights
Expired
No.
Net Change
Other
No.
Balance
30.6.2021
No.
-
-
-
-
-
7,500,000
-
-
7,500,000
15,000,000
-
-
-
-
-
-
-
-
-
-
7,500,000
-
-
7,500,000
15,000,000
*900,000 shares and 900,000 options were issued to a nominee, which has been reflected in the
disclosure above.
6. Other transactions with key management personnel
During the year ended 30 June 2021, Barclay Wells Limited, an entity which Timothy Hogan is a
director, invoiced for brokerage of $14,220 plus GST on $237,000 (2020: $16,451 plus GST on
$267,500) raised in share placements completed in the 2021 financial year. The services were
provided on arm’s length terms.
There were no other transactions with key management personnel during the 2021 financial year.
– 16 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
7. Equity instruments granted as compensation
There were no other equity instruments granted as compensation during the year.
8. Group Performance
The earnings of the consolidated entity for the five years to 30 June 2021 are summarised below:
Sales revenue
EBITDA
EBIT
(Loss) after income tax
2021
$
-
(3,719,276)
(3,719,276)
(3,719,276)
2020
$
-
(2,650,603)
(2,650,603)
(2,650,603)
2019
$
-
(739,390)
(739,390)
(739,390)
2018 restated
$
-
(1,122,558)
(1,122,558)
(1,122,558)
2017 restated
$
-
(1,712,265)
(1,712,265)
(1,712,265)
The factors that are considered to affect total shareholder return ('TSR') are summarised below:
Share price at financial year
end ($)
Dividends declared
share)
Basic loss per share (cents per
share)
(cents per
** Figures have not been restated
2021
2020
2019
2018 restated
2017**
0.048
0.038
0.022
0.027
-
-
-
-
0.04
-
(1.38)
(1.47)
(0.63)
(1.08)
(2.61)
End of “Remuneration Report (Audited)”
MEETINGS OF DIRECTORS
The number of Directors' meetings held during the financial year and the number of meetings attended
by each Director are:
Director
Colin Locke
Timothy Hogan
David Palumbo
Directors’ Meetings
Number eligible to attend
2
2
2
Number attended
2
2
2
EVENTS AFTER THE REPORTING PERIOD
Between 1 July 2021 and 3 August 2021, the Company issued 15,759,917 fully paid ordinary shares
arising from the exercise of $0.05 options to raise $787,996. As a result, the remaining 67,040,083
options exercisable at $0.05 expired on 31 July 2021, along with 5,000,000 options exercisable at
$0.075.
No matters or circumstances have arisen since the end of the financial period which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the
state of affairs of the Group in future financial periods.
– 17 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
INDEMNITY AND INSURANCE OF AUDITOR
The Group has not, during or since the end of the financial year, indemnified or agreed to indemnify
the auditor of the Group or any related entity against a liability incurred by the auditor.
During the financial year, the Group has not paid a premium in respect of a contract to insure the
auditor of the Group or any related entity.
ENVIRONMENTAL ISSUES
The Group’s operations are subject to significant environmental regulation under the law of the
Commonwealth and State in relation to discharge of hazardous waste and materials arising from any
mining activities and development conducted by the Group on any of its tenements. To date there
have been no known breaches of any environmental obligations.
INDEMNIFYING AND INSURANCE OF OFFICERS
The Group has entered into deeds of indemnity with each director and the company secretary
whereby, to the extent permitted by the Corporations Act 2001, the Group agreed to indemnify each
director against all loss and liability incurred as an officer of the Group, including all liability in
defending any relevant proceedings.
The Group has paid premiums to insure each of the directors and the company secretary against
liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of
their conduct while acting in the capacity of director of the Group, other than conduct involving a wilful
breach of duty in relation to the Group. The disclosure of the amount of the premium is prohibited by
the insurance policy.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
Further information, other than as disclosed this report, about likely developments in the operations of
the Group and the expected results of those operations in future periods has not been included in this
report as disclosure of this information would be likely to result in unreasonable prejudice to the
Group.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of Court 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.
– 18 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ REPORT (CONT.)
NON-AUDIT SERVICES
The following fees were paid or payable to the auditor for non-audit services provided during the year
ended 30 June 2021:
—
taxation services
$
2,410
The directors are satisfied that the provision of non-audit services during the year by the auditor is
compatible with the general standard of independence for auditors imposed by the Corporations Act
2001.
The directors are of the opinion that the non-audit services provided by the auditor do not compromise
the auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed and approved to ensure that they do not impact the
integrity and objectivity of the auditor; and
none of the services provided undermine the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting
Professional and Ethical Standards Board.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF RSM AUSTRALIA
PARTNERS
There are no officers of the Group who are former partners of RSM Australia partners.
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2021 has been received and
can be found on the next page of the directors’ report.
Auditor
RSM Australia Partners continues in office in accordance with section 327C of the Corporations Act
2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001
Colin Locke
Executive Chairman
Dated: 30 September 2021
– 19 –
Level 32, Exchange Tower, 2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
RSM Australia Partners
T +61 8 9261 9100
F +61 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Krakatoa Resources Limited for the year ended 30 June
2021, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 September 2021
ALASDAIR WHYTE
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Krakatoa Resources Limited
& Controlled Entities
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Revenue
Administration expense
Compliance and regulatory expense
Employee benefits expense
Exploration expenditure and project evaluation costs
Share based payment expense
Loss before income tax expense
Income tax expense
Note
2
12
3
2021
$
2020
$
13,428
14,352
(131,335)
(280,152)
(282,945)
(1,901,839)
(1,136,433)
(201,095)
(311,450)
(264,013)
(1,888,397)
-
(3,719,276)
-
(2,650,603)
-
Loss from continuing operations after tax
(3,719,276)
(2,650,603)
Loss attributable to members of the parent entity
(3,719,276)
(2,650,603)
Other comprehensive income, net of tax
Reclassification adjustments
Reclassification to profit or loss on loss of control of
subsidiary
Other comprehensive income/(loss)
-
-
Total comprehensive (loss) attributable to members
of the parent entity
(3,719,276)
(2,650,603)
Basic and diluted loss per share (cents per share)
4
(1.38)
(1.47)
The accompanying notes form part of these financial statements.
– 21 –
Krakatoa Resources Limited
& Controlled Entities
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Note
2021
$
2020
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
5
6
8
9
10
11
2,341,691
122,561
686,170
43,811
2,464,252
729,981
2,464,252
729,981
244,827
16,704
250,995
-
261,531
250,995
261,531
250,995
2,202,721
478,986
16,525,965
2,794,069
(17,117,313)
12,057,138
1,819,885
(13,398,037)
2,202,721
478,986
The accompanying notes form part of these financial statements.
– 22 –
Krakatoa Resources Limited
& Controlled Entities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Note
Issued
Capital
$
Accumulated
Losses
$
Option Premium
Reserve
$
Total
$
Balance at 1 July 2019
9,453,316
(10,747,434)
1,544,885
250,767
Loss for the year
Other comprehensive income
Total comprehensive loss
Transactions with owner directly
recorded in equity
Shares issued during the year
Less: transaction costs arising from
issue of shares
Options issued during the year
Balance at 30 June 2020
10
10
-
-
(2,650,603)
(2,650,603)
(2,650,603)
(2,650,603)
2,792,500
-
-
2,792,500
(188,678)
-
12,057,138
-
-
(13,398,037)
-
275,000
1,819,885
(188,678)
275,000
478,986
Balance at 1 July 2020
12,057,138
(13,398,037)
1,819,885
478,986
Loss for the year
Other comprehensive income
Total comprehensive loss
Transactions with owner directly
recorded in equity
Shares issued during the year
Less: transaction costs arising from
issue of shares
Options issued during the year
Balance at 30 June 2021
10
10
-
-
(3,719,276)
(3,719,276)
-
-
(3,719,276)
(3,719,276)
4,803,000
-
-
4,803,000
(334,173)
-
16,525,965
-
-
(17,117,313)
-
974,184
2,794,069
(334,173)
974,184
2,202,721
The accompanying notes form part of these financial statements.
– 23 –
Krakatoa Resources Limited
& Controlled Entities
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Note
2021
$
2020
$
CASH FLOWS FROM OPERATING ACTIVITIES
Other income
Payments to suppliers and employees
Payment for exploration and evaluation expenditure and
project evaluation costs
13,428
(665,427)
14,352
(735,164)
(1,999,058)
(1,257,404)
Net cash used in operating activities
13
(2,651,057)
(1,978,216)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration assets
Net cash used in investing activities
-
-
-
-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options
Payment of transaction costs associated with capital
raising
4,640,750
2,467,500
(334,172)
(210,399)
Net cash provided by financing activities
4,306,578
2,257,101
Net increase / (decrease) in cash held
Cash at beginning of financial year
1,655,521
686,170
278,885
407,285
Cash at end of financial year
5
2,341,691
686,170
The accompanying notes form part of these financial statements.
– 24 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements and notes represent those of Krakatoa Resources Limited (the
“Company”) and its controlled entities (the “Group” or “consolidated entity”). Krakatoa Resources
Limited is a listed public Company, incorporated and domiciled in Australia.
The financial statements were authorised for issue on 30 September 2021 by the directors.
Basis of Preparation
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 (“AASB”) and the Corporations Act
2001. The Group is a for profit entity for financial reporting purposes under Australian Accounting
Standards.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where
applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial
assets at fair value through other comprehensive income, investment properties, certain classes of
property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the consolidated
entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial statements, are disclosed in note 1
(p).
Australian Accounting Standards set out accounting policies that the AASB has concluded would
result in a financial report containing relevant and reliable information about transactions, events and
conditions to which they apply. Compliance with Australian Accounting Standards ensures that the
financial statements and notes also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board. Material accounting policies adopted in the
preparation of this financial report are presented below. They have been consistently applied unless
otherwise stated.
The financial report has been prepared on an accruals basis and is based on historical costs modified
by the revaluation of selected financial assets for which the fair value basis of accounting has been
applied. All amounts are presented in Australian dollars unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued
by the Australia Accounting Standards Board (‘AASB’) that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or Interpretations that not yet mandatory have not been
early adopted.
The following Accounting Standards and Interpretations are most relevant to the Group.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The Group has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual
Framework contains new definition and recognition criteria as well as new guidance on measurement
that affects several Accounting Standards, but it has not had a material impact on the Group’s
financial statements.
– 25 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Accounting Policies
a) Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and
entities (including special purpose entities) controlled by the Company (its subsidiaries).
Income and expense of subsidiaries acquired or disposed of during the year are included in profit or
loss from the effective date of acquisition and up to the effective date of disposal, as appropriate.
Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the
non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with those used by other members of the Group. All intra-group
transactions, balances, income and expenses are eliminated in full on consolidation.
Changes in the Company’s ownership interests in subsidiaries that do not result in the Company
losing control are accounted for as equity transactions. The carrying amounts of the Company’s
interests and the non-controlling interests are adjusted to reflect the changes in their relative interests
in the subsidiaries. Any difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is recognised directly in equity and
attributed to owners of the Company.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including
goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative
translation differences recognised in equity. The consolidated entity recognises the fair value of the
consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the
Group only. Supplementary information about the parent entity is disclosed in note 20.
Income Tax
b)
The income tax expense (revenue) for the period comprises current income tax expense (income) and
deferred tax expense (income).
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.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the period as well unused tax losses. Current and deferred income tax expense
(income) is charged or credited directly to equity instead of the profit or loss when the tax relates to
items that are credited or charged directly to equity.
– 26 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
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 calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates enacted or substantively
enacted at reporting date. Their measurement also reflects the manner in which management expects
to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to
temporary differences and unused tax losses are recognised only to the extent that it is probable that
future taxable profit will be available against which the benefits of the deferred tax asset can be
utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the
reversal of the temporary difference can be controlled and it is not probable that the reversal will occur
in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where a 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.
c) Exploration and Evaluation Expenditure
Exploration and evaluation expenditure, including the costs of acquiring tenements, are expensed as
incurred. Expensing exploration and evaluation expenditure as incurred is irrespective of whether or
not the Board believe expenditure could be recouped from either a successful development and
commercial exploitation or sale of the respective assets.
Investments and other financial assets
d)
Investments and other financial assets are initially measured at fair value. Transaction costs are
included as part of the initial measurement, except for financial assets at fair value through profit or
loss. Such assets are subsequently measured at either amortised cost or fair value depending on
their classification. Classification is determined based on both the business model within which such
assets are held and the contractual cash flow characteristics of the financial asset unless, an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's
carrying value is written off.
– 27 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income
are classified as financial assets at fair value through profit or loss. Typically, such financial assets will
be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with
an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where
permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which
the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to
classify them as such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets
which are either measured at amortised cost or fair value through other comprehensive income. The
measurement of the loss allowance depends upon the consolidated entity's assessment at the end of
each reporting period as to whether the financial instrument's credit risk has increased significantly
since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a
12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The
amount of expected credit loss recognised is measured on the basis of the probability weighted
present value of anticipated cash shortfalls over the life of the instrument discounted at the original
effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance
is recognised within other comprehensive income. In all other cases, the loss allowance is recognised
in profit or loss.
e) Foreign Currencies
The individual financial statements of each group entity are presented in the currency of the primary
economic environment in which the entity operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial position of each group entity are
expressed in Australian dollars (‘$’), which is the functional currency of the Group and the
presentation currency for the consolidated financial statements.
In preparing the financial statements of each individual group entity, transactions in currencies other
than the entity’s functional currency are recognised at the rates of exchange prevailing at the dates of
the transactions. At the end of each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair
value that are denominated in foreign currencies are retranslated at the rates prevailing at the date
when the fair value was determined. Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated.
– 28 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Exchange differences on monetary items are recognised in profit or loss in the period in which they
arise except for:
exchange differences on foreign currency borrowings relating to assets under construction for
future productive use, which are included in the cost of those assets when they are regarded
as an adjustment to interest costs on those foreign currency borrowings;
exchange differences on transactions entered into in order to hedge certain foreign currency
risks; and
exchange differences on monetary items receivable from or payable to a foreign operation for
which settlement is neither planned nor likely to occur (therefore forming part of the net
investment in the foreign operation), which are recognised initially in other comprehensive
income and reclassified from equity to profit or loss on repayment of the monetary items.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the
Group’s foreign operations are translated into Australian dollars using exchange rates prevailing at
the end of the reporting period. Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuated significantly during that period, in which case
the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in equity (attributed to non-controlling
interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign
operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation,
loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of
significant influence over an associate that includes a foreign operation), all of the accumulated
exchange differences in respect of that operation attributable to the Company are reclassified to profit
or loss.
In addition, in relation to a partial disposal of a subsidiary that does not result in the Company losing
control over the subsidiary, the proportionate share of accumulated exchange differences are
reattributed to non-controlling interests and are not recognised in profit or loss. For all other partial
disposals (i.e. partial disposals of associates or jointly controlled entities that do not result in the
Company losing significant influence or joint control), the proportionate share of the accumulated
exchange differences is reclassified to profit or loss.
Impairment of Assets
f)
At the end of each reporting date, the Group assesses whether there is any indication that an asset
may be impaired. The assessment will include the consideration of external and internal sources of
information including dividends received from subsidiaries, associates or jointly controlled entities
deemed to be out of pre-acquisition profits. 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.
Impairment testing is performed annually for intangible assets with indefinite lives. Where it is not
possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
g) 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 3 months or less.
– 29 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
h) Revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable
to the financial assets.
All revenue is stated net of the amount of goods and services tax (GST”).
i) Goods and Services Tax
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.
j) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any allowance for expected credit losses Collectability of
trade and other receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectable are written off.
k) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group before the end of
the financial period and which are unpaid. The amounts are unsecured and usually paid within 30
days of recognition.
l) Employee Benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee
benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12
months after the end of the annual reporting period in which the employees render the related service,
including wages, salaries and sick leave. Short-term employee benefits are measured at the
(undiscounted) amounts expected to be paid when the obligation is settled.
The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are
recognised as a part of current trade and other payables in the statement of financial position. The
Group’s obligations for employees’ annual leave and long service leave entitlements are recognised
as provisions in the statement of financial position.
Defined contribution superannuation expense
Contributions to defined contributions superannuation plans are in the period in which they are
incurred.
m) Issued capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of shares or options
are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly
attributable to the issue of new shares or options, or for the acquisition of a business, are included in
the cost of the acquisition as part of the purchase consideration.
n) Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing the net profit after income tax attributable to
members of the Group, excluding any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year.
– 30 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential ordinary shares.
o) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
p) Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgments incorporated into the financial report based on
historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data, obtained both
externally and within the Group.
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
using a valuation model taking into account the terms and conditions upon which the instruments
were granted. 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 profit or loss and equity.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic
has had, or may have, on the Group based on known information. This consideration extends to the
nature of the products and services offered, customers, supply chain, staffing and geographic regions
in which the Group operates. Other than as addressed in specific notes, there does not currently
appear to be either any significant impact upon the financial statements or any significant uncertainties
with respect to events or conditions which may impact the Group unfavourably as at the reporting date
or subsequently as a result of the Coronavirus (COVID-19) pandemic.
q) Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-
current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is
expected to be realised within 12 months after the reporting period; or the asset is cash or cash
equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months
after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal
operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months
after the reporting period; or there is no unconditional right to defer the settlement of the liability for at
least 12 months after the reporting period. All other liabilities are classified as non-current.
– 31 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
r) Accounting Standards that are mandatorily effective for the current reporting year
The Group has adopted all of the new and revised Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board that are mandatory for the current reporting period.
The adoption of these new and revised Accounting Standards and Interpretations has not resulted in
a significant or material change to the Group’s accounting policies.
The adoption of the new Conceptual Framework for Financial Reporting from 1 July 2020 has not led
to any changes in accounting or disclosure for the Group, but the new Conceptual Framework may be
referred to if accounting matters arise that are not addressed by accounting standards.
The adoption of the new definition of Material included in AASB 2018-7 Amendments to Australian
Accounting Standards – Definition of Material from 1 July 2020 provides a new definition of material,
which now extends materiality consideration to obscuration and clarifies that materiality now depends
on the nature or magnitude of information.
Future effects of the implementation of these standards will depend on future details.
– 32 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 2:
REVENUE
Other Income
NOTE 3:
INCOME TAX EXPENSE
a. Reconciliation of income tax expense to
prima facie tax payable:
Loss from ordinary activities before income tax
expense
Prima facie tax benefit on loss from ordinary
activities before income tax at 30% (2020: 30%)
Increase/(decrease) in income tax due to:
- Capital raising costs
- Losses and
recognised
temporary differences not
Income tax attributable to the Group
b. Unused tax losses and temporary differences
for which no deferred tax asset has been
recognised at 30% (2020: 30%):
tax assets have not been
Deferred
recognised in respect of the following:
Tax revenue losses
2021
$
2020
$
13,428
13,428
14,352
14,352
2021
$
2020
$
(3,719,276)
(2,650,603)
(1,115,783)
(795,181)
(132,495)
1,248,278
(112,445)
907,626
-
-
14,398,759
11,396,646
Potential deferred tax assets attributable to tax losses and exploration expenditure carried
forward have not been brought to account at 30 June 2021 because the directors do not
believe it is appropriate to regard realisation of the deferred tax assets as probable at this point
in time. These benefits will only be obtained if:
-
the Group derives future assessable income of a nature and of an amount sufficient to
enable the benefit from the deductions for the loss and exploration expenditure to be
realised;
- no changes in tax legislation adversely affect the Group in realising the benefit from the
deductions for the loss and exploration expenditure.
– 33 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
2021
$
2020
$
NOTE 4:
EARNINGS PER SHARE
Loss used to calculate basic EPS
(3,719,276)
(2,650,603)
Weighted average number of ordinary shares outstanding
during the period used in calculating basic and diluted EPS
268,683,699
179,897,260
Basic and diluted loss per share
(1.38)
(1.47)
Cents
Cents
No.
No.
2021
$
2020
$
NOTE 5: CASH AND CASH EQUIVALENTS
Cash at bank
2,341,691
2,341,691
686,170
686,170
NOTE 6: TRADE AND OTHER RECEIVABLES
GST receivable
Other receivables
Other assets
57,957
61,600
3,004
122,561
40,894
-
2,917
43,811
Allowance for expected credit losses
The consolidated entity has not recognised a loss in respect of the expected credit losses for the year
ended 30 June 2021.
NOTE 7: REMUNERATION OF AUDITORS
Audit Services – RSM Australia Partners
NOTE 8: TRADE AND OTHER PAYABLES
Trade payables and accrued expenses
33,000
33,000
27,760
27,760
244,827
244,827
250,995
250,995
Trade creditors, excluding related party payables, are expected to be paid on 30-day terms.
– 34 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 9: PROVISIONS
CURRENT
Employee benefits
2021
$
16,704
16,704
2020
$
-
-
NOTE 10: ISSUED CAPITAL
2021
No.
2021
$
2020
No.
2020
$
Fully paid ordinary shares with no par value
218,750,000 16,525,965 218,750,000 12,057,138
a)
Ordinary shares
At the beginning of reporting period
Shares issued during the year:
- 27 September 2019
- 23 October 2019
- 5 December 2019
- 5 February 2020
- 14 July 2020 (i)
- 10 August 2020 (ii)
- 19 October 2020 (iii)
- 30 November 2020 (12c)
Less capital raising costs
218,750,000 12,057,138 135,000,000 9,453,316
-
-
-
-
-
-
-
-
30,000,000 2,400,000
110,000
25,000,000 2,125,000
168,000
(334,173)
3,000,000
-
2,200,000
330,000
15,000,000
750,000
15,000,000
10,000,000
400,000
43,750,000 1,312,500
-
-
-
-
(188,678)
-
-
-
-
-
Net share capital
278,950,000 16,525,965 218,750,000 12,057,138
(i)
(ii)
(iii)
30,000,000 shares were placed to investors on 14 July 2020 at an issue price of $0.08
per share raising $2,400,000 in cash before costs.
2,200,000 shares were issued on 10 August 2020 after options exercisable at $0.05 per
share were exercised raising $110,000.
25,000,000 shares were issued on 19 October 2020 at an issue price of $0.085 per
share raising $2,125,000 in cash before costs.
b)
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going
concern, so that it may continue to provide returns for shareholders and benefits for other
stakeholders. The Group’s capital includes ordinary share capital and financial liabilities, supported by
financial assets.
Due to the nature of the Group’s activities, being mineral exploration, it does not have ready access to
credit facilities, with the primary source of funding being equity raisings. Accordingly, the objective of
the Group’s capital risk management is to balance the current working capital position against the
requirements of the Group to meet exploration programmes and corporate overheads. This is
achieved by maintaining appropriate liquidity to meet anticipated operating requirements, with a view
to initiating appropriate capital raisings as required. The Group is not subject to any externally imposed
capital requirements.
– 35 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Provisions
Working capital position
NOTE 11: RESERVES
2021
$
2,341,691
122,561
(244,827)
(16,704)
2020
$
686,170
43,811
(250,995)
-
2,202,721
478,986
2021
$
2020
$
(a) Share based payment reserve
2,794,069
1,819,885
(b) Movement in share based payment reserve
Balance at 1 July 2020
KMP options (refer to note 12a)
Employee options (refer to note 12a)
Options exercised during period (i)
Options lapsed during period (ii)
Performance Rights Issue (refer to note 12b)
Options exercised not yet converted (iii)
Balance at 30 June 2021
No.
102,000,000
15,000,000
1,200,000
(2,200,000)
(12,000,000)
15,000,000
-
119,000,000
$
1,819,885
467,200
17,437
-
-
483,796
5,751
2,794,069
(i) On 10 August 2020, 2,200,000 listed options with an exercise price of $0.05 were exercised.
Refer to note 10(aii).
(ii) On 24 October 2020, 12,000,000 unlisted options with an exercise price of $0.10 expired
unexercised.
(iii) On 25 June 2021, $5,751 was received for options exercised for shares not yet converted at
the balance date.
NOTE 12: SHARE BASED PAYMENTS
a)
Options
Options were issued to Key Management Personnel (KMP), Colin Locke (4,000,000 options),
Timothy Hogan (3,000,000 options), David Palumbo (3,000,000 options) and Mark Major
(5,000,000 options) as performance based remuneration. The options were issued on 1
December 2020 following shareholder approval at the Group’s AGM. Additionally, the Group
issued employee incentive options (1,200,000) on 15 January 2021.
– 36 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Class
Number of
Instruments
Grant
Date
Expiry
Date
Exercise
Price
Fair value per
instrument $
Total
Value $
$0.075
$0.075
15,000,000 30/11/2020 29/11/2023
1,200,000 15/01/2021 29/11/2023
KMP Options1
Employee
Options2
1 KMP Options were fully vested at the balance date 30 June 2021. 10,000,000 Director Options vested
immediately and 5,000,000 options issued to CEO Mark Major vested on 14 April 2021 (6 months after
commencement).
2 Options were issued to employees in tranches of 500,000 (tranche 1) and 700,000 (tranche 2). Options
were recognised on a pro-rata basis at the balance date 30 June 2021, as service vesting conditions
associated with the employment agreement will not be completed until 15 January 2022 (tranche 1) and
15 January 2023 (tranche 2). At the balance date 30 June 2021 a total value of $17,437 has been
recognised on a pro-rata basis in the consolidated statement of profit and loss.
467,200
54,336
0.031
0.045
KMP options issued during the period were calculated using the Black-Scholes option pricing
model with the following inputs:
Expected volatility (%)
Risk free interest rate (%)
Weighted average expected life of options (years)
Expected dividends
Option exercise price ($)
Share price at grant date ($)
Fair value of option ($)
Options granted
Range
100%
0.14%
3.00
Nil
$0.075
$0.056
$0.031
Employee options issued during the period were calculated using the Black-Scholes option
pricing model with the following inputs:
Expected volatility (%)
Risk free interest rate (%)
Weighted average expected life of options (years)
Expected dividends
Option exercise price ($)
Share price at grant date ($)
Fair value of option ($)
Options granted
Range
100%
0.11%
2.87
Nil
$0.075
$0.075
$0.045
b)
Performance Rights
On 30 November 2020, the Group issued 7,500,000 Performance Rights to the Group’s CEO,
Mark Major and 7,500,000 to Executive Chairman Colin Locke following shareholder approval
at the Group’s AGM. The Performance Rights were issued in 3 tranches:
– 37 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Grant
Date/entitlement
Number of
Instruments
Grant Date
Vesting
Date
2,500,000 30/11/2020 30/11/2020
Fair value
per
instrument
$
0.049
Value $
121,875
Tranche 1 - SARs
issued to Colin Locke
at a strike price of
$0.20 expiring 29
November 2023
Tranche 2 - SARs
issued to Colin Locke
at a strike price of
$0.30 expiring 29
November 2023
Tranche 3 - SARs
issued to Colin Locke
at a strike price of
$0.40 expiring 29
November 2023
Total
Tranche 1 - SARs
issued to Mark Major
at a strike price of
$0.20 expiring 29
November 2023
Tranche 2 - SARs
issued to Mark Major
at a strike price of
$0.30 expiring 29
November 2023
Tranche 3 - SARs
issued to Mark Major
at a strike price of
$0.40 expiring 29
November 2023
Total
2,500,000 30/11/2020 30/11/2020
0.035
85,742
2,500,000 30/11/2020 30/11/2020
0.030
75,372
2,500,000 30/11/2020 14/10/2021
0.049
121,875
282,989
2,500,000 30/11/2020 14/10/2021
0.035
85,742
2,500,000 30/11/2020 14/10/2021
0.030
75,372
282,989
Performance Rights issued to Mark Major (7,500,000), vest 12 months after his employment
commenced which will be on 14 October 2021. These Performance Rights have been
recognised on pro-rata basis at the reporting date 30 June 2021 with a total value of $200,807
recognised in the consolidated statement of profit or loss.
c)
Shares
On 30 November 2020, the Group issued 3,000,000 at share price of $0.056 for $168,000 in
bonus consideration to director David Palumbo for his contribution in identifying the Rand,
Turon and Mt Clere Projects for direct application by the Group.
– 38 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 13: RECONCILIATION OF CASH FLOW FROM
OPERATIONS WITH LOSS AFTER INCOME TAX
Loss after income tax
Non cash-flows in loss:
Share based payments
Changes in assets and liabilities:
Trade and other receivables
Other assets
Trade payables and accruals
Provisions
2021
$
2020
$
(3,719,276)
(2,650,603)
1,136,433
600,000
(17,063)
(61,686)
(6,169)
16,704
(28,777)
7,191
93,973
-
Cash flow used in operations
(2,651,057)
(1,978,216)
Non Cash Investing & Financing Activities:
There were no non-cash investing entered into by the Group during the year (2020: Nil).
NOTE 14: KEY MANAGEMENT PERSONNEL COMPENSATION
Remuneration of Key Management Personnel
The totals of remuneration paid to the KMP of the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Share based payments
Total remuneration
2021
$
377,664
22,198
1,118,997
2020
$
259,500
4,513
-
1,518,859
264,013
NOTE 15: RELATED PARTY TRANSACTIONS
During the year ended 30 June 2021, Barclay Wells Limited, an entity which Timothy Hogan is a
director, invoiced for brokerage of $14,220 plus GST on $237,000 (2020: $16,451 plus GST on
$267,500) raised in share placements completed in the 2021 financial year.
All related party transactions are made on normal commercial terms and condition and at market
rates.
NOTE 16: CONTINGENT LIABILITIES
The Group has no contingent liabilities as at 30 June 2021 (2020: Nil).
– 39 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 17: EVENTS AFTER THE REPORTING PERIOD
Between 1 July 2021 and 3 August 2021, the Company issued 15,759,917 fully paid ordinary shares
arising from the exercise of $0.05 options to raise $787,996. As a result, the remaining 67,040,083
options exercisable at $0.05 expired on 31 July 2021, along with 5,000,000 options exercisable at
$0.075
No matters or circumstances have arisen since the end of the financial period which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the
state of affairs of the Group in future financial periods.
NOTE 18: COMMITMENTS
In order to maintain current rights of tenure to Western Australia exploration tenements, the Group is
required to perform minimum exploration requirements specified by the Department of Mines and
Petroleum of $402,440 (2020: $53,440).
In order to maintain current rights of tenure to the New South Wales exploration tenements, the Group
is required to perform minimum exploration requirements specified by the NSW Resources Regulator
of $390,000 (2020: $255,000).
The Group has no other commitments.
NOTE 19: CONTROLLED ENTITIES
Equity Holding Equity Holding
Country of Incorporation
Subsidiaries of Krakatoa Resources Ltd:
Krakatoa Australia Pty Ltd
Krakatoa Minerals Pty Ltd
Krakatoa Minerals – SMC Limited
2634501 Ontario Limited
Australia
Australia
Uganda
Canada
NOTE 20: PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Reserves
Total equity
– 40 –
2021
%
100
100
100
100
2021
$
2,365,005
-
2,365,005
2020
%
100
100
100
100
2020
$
729,981
-
729,981
163,893
163,893
250,995
250,995
16,525,965
(17,118,922)
2,794,069
2,201,112
12,057,138
(13,398,037)
1,819,885
478,986
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Financial performance
(Loss) for the year
Total comprehensive (loss) for the year
2021
$
(3,720,885)
(3,720,885)
2020
$
(2,650,603)
(2,650,603)
Guarantees:
Krakatoa Resources Limited has not entered into any guarantees in the current or previous financial
year, in relation to the debts of its subsidiaries.
Other Commitments and Contingencies:
Krakatoa Resources Limited has no commitment to acquire property, plant and equipment and has no
contingent liabilities (Note 18).
NOTE 21: OPERATING SEGMENTS
The Group has identified its operating segments based on the internal reports that are used by the
Board (the chief operating decision makers) in assessing performance and in determining the
allocation of resources.
The operating segments are identified by the Board based on the phase of operation within the mining
industry. For management purposes, the Group has organised its operations into two reportable
segments on the basis of stage of development as follows:
Development assets; and
Exploration and evaluation assets, which includes assets that are associated with the
determination and assessment of the existence of commercial economic reserves.
The Board as a whole will regularly review the identified segments in order to allocate resources to the
segment and to assess its performance.
During the year ended 30 June 2021, the Group had no development assets. The Board considers
that it has only operated in one segment, being mineral exploration.
The Group is domiciled in Australia. All revenue from external customers are only generated from
Australia. No revenues were derived from a single external customer.
NOTE 22: FINANCIAL RISK MANAGEMENT
The Group has exposure to the following risks from their use of financial instruments:
credit risk;
liquidity risk; and
-
-
- market risk.
This note presents information about the Group’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk
management framework. Management monitors and manages the financial risks relating to the
operations of the Group through regular reviews of the risks.
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at
reporting date to recognised financial assets, is the carrying amount, net of any provisions for
impairment of those assets, as disclosed in the statement of financial position and notes to the
financial statements.
– 41 –
Krakatoa Resources Limited
& Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining
sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults.
The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the
aggregate value of transactions is spread amongst approved counterparties.
Credit risk related to balances with banks and other financial institutions is managed by the board.
The board’s policy requires that surplus funds are only invested with counterparties with a Standard &
Poor’s rating of at least AA-. All of the Group’s surplus funds are invested with AA Rated financial
institutions.
The credit risk for counterparties included in cash and cash equivalents at 30 June 2021 is detailed
below:
Financial assets:
Cash and cash equivalents
- AA rated counterparties
2021
$
2020
$
2,341,691
686,170
The Group does not have any material credit risk exposure to any single receivable or Group of
receivables under financial instruments entered into by the Group.
Liquidity risk
The responsibility with liquidity risk management rests with the Board of Directors. The Group
manages liquidity risk by monitoring forecast cash flows and ensuring that adequate working capital is
maintained. The Group’s policy is to ensure that it has sufficient cash reserves to carry out its planned
exploration activities over the next 12 months.
Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates
and equity prices will affect the Group’s income or the value of its holdings of financial instruments.
Interest rate risk
The Group does not have any exposure to interest rate risk as there were no external borrowings at
30 June 2021 (2020: nil). Interest bearing assets are all short term liquid assets and the only interest
rate risk is the effect on interest income by movements in the interest rate. There is no other material
interest rate risk.
– 42 –
Krakatoa Resources Limited
& Controlled Entities
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of Krakatoa Resources Limited, I state that:
1. In the opinion of the directors:
(a)
the financial statements and notes of the Group are in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the financial position of the Group as at 30 June 2021
and of its performance for the year ended on that date; and
complying with Accounting Standards (including
Interpretations) and the Corporations Regulations 2001;
the Australian Accounting
(b)
(c)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when
they become due and payable; and
the financial statements and notes also comply with International Financial Reporting Standards
as disclosed in Note 1.
2. This declaration has been made after receiving the declarations required to be made by the
directors in accordance with sections of 295A of the Corporations Act 2001 for the financial year
ended 30 June 2021.
On behalf of the Board
Colin Locke
Executive Chairman
Dated: 30 September 2021
– 43 –
Level 32 Exchange Tower, 2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
RSM Australia Partners
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
KRAKATOA RESOURCES LIMITED
Opinion
We have audited the financial report of Krakatoa Resources Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated
statement of profit or loss and other 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 financial statements, including
a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
(ii)
Giving a true and fair view of the Group's financial position as at 30 June 2021 and of its financial
performance for the year then ended; and
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
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 of the current period. 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 this matter
Exploration expenditure and project evaluation costs
Refer to statement of profit or loss and other comprehensive income
The Group incurred exploration expenditure and
project evaluation costs of $1,901,839 during the
year ended 30 June 2021. In accordance with its
accounting policy, the Group expenses these costs
as incurred.
is
the Group’s most significant
We considered this to be a key audit matter because
it
transaction
category and a matter of significant audit attention in
performing the audit.
Share based payments
Refer to Note 12 in the financial statements
During the year, the Company issued 16,200,000
unlisted options, 15,000,000 performance rights and
3,000,000 ordinary shares.
Management has applied an option valuation model
to value the options and performance rights issued
during the year.
We determined this to be a key audit matter due to
the significant judgements involved in assessing the
fair value of the options and performance rights
issued during the year.
in relation
to exploration
Our audit procedures
expenditure and project evaluation costs included;
Assessing whether the Group’s accounting policy
for exploration and evaluation expenditure is in
compliance with Australia Accounting Standards;
Obtaining evidence that the right to tenure of the
exploration areas of interests are valid;
Performing substantive
testing on exploration
expenditure on a sample basis with additional
attention to any items identified as large or
unusual; and
Assessing the adequacy of the disclosures in the
financial report.
Our audit procedures in relation to share based
payments included:
Reviewing the key terms and conditions of the
options issued;
Obtaining
the valuation models prepared by
management and assessing whether the models
were appropriate for valuing the options granted
during the year;
Challenging
key
assumptions used by management to value the
options; and
reasonableness
the
of
Reviewing the relevant disclosures in the financial
statements to ensure compliance with Accounting
Standards.
Other Information
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 2021 but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2021.
In our opinion, the Remuneration Report of Krakatoa Resources Limited, for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 September 2021
ALASDAIR WHYTE
Partner
Krakatoa Resources Limited
& Controlled Entities
ASX INFORMATION
AS AT 28 SEPTEMBER 2021
The following additional information is required by the ASX Limited in respect of listed public
companies and was applicable at 28 September 2021.
1.
a.
Shareholder and Option holder information
Number of Shareholders and Option Holders
Shares
As at 28 September 2021, there were 1,777 shareholders holding a total of 294,709,917 fully
paid ordinary shares.
Options
As at 28 September 2021, there were 21,200,000 Unquoted Options exercisable at $0.075 on
or before 29 November 2023 held by 8 holders.
Share Performance Rights
As at 28 September 2021, there were 5,000,000 Unquoted Share Performance Rights
exercisable at $0.20, 5,000,000 Unquoted Share Performance Rights exercisable at $0.30,
and 5,000,000 Unquoted Share Performance Rights exercisable at $0.40 held by 2 holders.
All Performance Rights expire on 29 November 2023.
b.
Distribution of Equity Securities
Fully paid ordinary shares
Number (as at 28 September 2021)
Category (size of holding)
Shareholders
Ordinary Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
77
36
279
933
452
1,777
10,745
148,758
2,375,753
38,892,552
253,282,109
294,709,917
The number of shareholdings held in less than marketable parcels is 192 shareholders
amounting to 650,478 shares.
c.
The names of substantial shareholders listed in the company’s register as at 28 September
2021 are:
Shareholder
Ordinary Shares
Lafras Luitingh
Helmsdale Investments Pty Ltd
28,783,294
19,637,500
%Held of Total
Ordinary Shares
9.77%
6.66%
– 47 –
Krakatoa Resources Limited
& Controlled Entities
d. Voting Rights
The voting rights attached to the ordinary shares are as follows:
Each ordinary share is entitled to one vote when a poll is called, otherwise each member
present at a meeting or by proxy has one vote on a show of hands.
e.
20 Largest Shareholders as at 28 September 2021 — Ordinary Shares
Name
2.
3.
4.
5.
Number of
Ordinary
Fully Paid
Shares Held
% Held of
Issued
Ordinary
Capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
15
15
18
19
20
MR LAFRAS LUITINGH
HELMSDALE INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
MRS MEILY DAHLIA EVIANA
28,783,294
19,637,500
6,145,670
3,750,000
E C DAWSON SUPER PTY LTD
3,300,000
PROF YEW KWANG NG
2,937,560
MR GRAHAM GEOFFREY WALKER + MRS THELMA JEAN WALKER
2,700,000
MR GURUMURTHY NIDIGAL + MRS PURNIMA NIDIGAL
JSR PROMOTIONS PTY LTD
KEBIN NOMINEES PTY LTD
MR JACQUES HUGHES LUCAS + MR PHILLIP GEORGE LUCAS
MR DAVID PALUMBO
BNP PARIBAS NOMINEES PTY LTD
2,500,000
2,411,000
2,334,118
2,250,000
2,100,000
2,061,221
9.77
6.66
2.09
1.27
1.12
1.00
0.92
0.85
0.82
0.79
0.76
0.71
0.70
MR JOHN COLIN LOOSEMORE + MRS SUSAN MARJORY
LOOSEMORE
2,000,001
0.68
ARCHFIELD HOLDINGS PTY LTD
2,000,000
MR KENNETH ERNEST CONWAY + MRS BARBARA ANN CONWAY
2,000,000
MR DOMINIC VIRGARA
MRS TING TING XUE LUU
MR DAVID GEORGE CRAGGS
MR ANH DUONG NGUYEN
2,000,000
1,904,600
1,890,299
1,725,000
0.68
0.68
0.68
0.65
0.64
0.59
94,430,263
32.04
The name of the company secretary is David Palumbo.
The address of the principal registered office in Australia is:
Level 11, 216 St Georges Terrace Perth WA 6000
Registers of securities are held at the following address:
Computershare Investor Services Pty Ltd, Level 11, 172 St Georges Terrace, Perth WA 6000
Stock Exchange Listing
Quotation has been granted for all the ordinary shares of the company on all Member
Exchanges of the ASX Limited.
– 48 –
Krakatoa Resources Limited
& Controlled Entities
SCHEDULE OF MINERAL TENEMENTS
AS AT 28 SEPTEMBER 2021
Project
Tenement
Interest held by
Krakatoa Resources Limited
Belgravia
Turon
Rand
Rand
Rand
Mt Clere
Mt Clere
Mt Clere
Mt Clere
Mt Clere
Mt Clere
Mt Clere
Mt Clere
Mt Clere
Mt Clere
Mt Clere
Mac Well
Dalgaranga
Dalgaranga
Dalgaranga
Dalgaranga
Dalgaranga
Dalgaranga
EL8153
EL8942
EL9000
EL9276
EL9277
E09/2357
E51/1994
E52/3730
E52/3731
E52/3836
E52/3873
E52/3876
E52/3877
E52/3938
E52/3962
E52/3972
E59/2175
P59/2082
P59/2140
P59/2141
P59/2142
E59/2389
E59/2503
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
100%
100%
100%
100%
100%
100%
-
All tenements not indicated as 100% owned are under application.
– 49 –