More annual reports from LEG Immobilien:
2023 ReportAnnual Report 2017 C O N T E N T S Company Directory Chairman’s Report Directors’ Review of Activities Corporate Governance Statement Directors’ Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Notes to the Financial Statements Directors’ Declaration Declaration of Auditor’s Independence Independent Auditor’s Report Shareholder Information Tenement Listing Page 1 2 3 12 13 20 21 22 23 24 47 48 49 54 55 Web www.legendmining.com.au Email legend@legendmining.com.au ASX Code LEG – ordinary shares ACN 060 966 145 Cover photo courtesy of Orlando Drilling C OM PA N Y D I R E C T O R Y Directors Auditors Michael William Atkins (Chairman) Mark William Wilson (Managing Director) Derek William Waterfield (Executive Director-Technical) Ernst & Young 11 Mounts Bay Road PERTH WA 6000 Secretary Tony Walsh Registered Office Level 1 8 Kings Park Road WEST PERTH WA 6005 Telephone: Facsimile: (08) 9212 0600 (08) 9212 0611 Bankers Australian and New Zealand Banking Group Ltd 1275 Hay Street WEST PERTH WA 6005 Home Exchange Australian Securities Exchange 2 The Esplanade PERTH WA 6000 Share Registry Advanced Share Registry Services 150 Stirling Highway NEDLANDS WA 6009 Telephone: (08) 9389 8033 (08) 9389 7871 Facsimile: L E G E N D M I N I N G L IM I T E D 1 C H A I RM A N ’ S R E P O R T F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 2017 was another year of innovation and exploration which has firmed up your Board’s belief that Legend’s ground in the Fraser Range is highly prospective for another orebody like Independence Group’s Nova-Bollinger Project. As I write this letter, Legend has commenced an extensive 100 hole, ~8,000m aircore drilling program at Area D of our exciting Rockford Project, located in the Fraser Range in Western Australia. Legend continues to carry out exploration of its Rockford Project. The Fraser Range hosts Independence Group’s Nova-Bollinger Project which has now commenced production having been discovered only five and a half years ago. Legend has circa 2,792 km2 wholly within the Fraser Zone, which Legend regards as the most prospective area of the Fraser Range for a repeat of a Nova-Bollinger style deposit. This current aircore drilling program is designed to follow up the highly anomalous nickel-copper results in two aircore holes drilled in November 2017. We have received very positive commentary on these two holes, described by experienced Fraser Range followers as being some of the most significant results in the Fraser Range since the Nova discovery and development. In the words of Managing Director Mark Wilson- “we feel we have found the haystack and are now working our way to the needle”. We continue to be very pleased with the progress to date and remain optimistic that we are working in an area capable of hosting an economic nickel-copper deposit, but of course realise that there is still a lot of work to be done to complete the task. Legend has a strong managerial and technical team, led by Mark Wilson and Derek Waterfield, and I also acknowledge the support and encouragement of our major shareholder Mark Creasy and his technical team. I also would like to thank all our contractors for the work they have done in challenging conditions. Your Board thanks you the shareholders for your continuing support and we look forward to an exciting year ahead. Yours sincerely Michael Atkins Chairman 21 March 2018 2 2 2 0 1 7 A N N U A L R E P O R T ROCKFORD PROJECT – FRASER RANGE DISTRICT (NICKEL-COPPER, GOLD) The Rockford Project is located in the highly prospective Fraser Range district of Western Australia and covers a total area of 2,792km2, see Figure 1. The majority of the project (2,530km2), comprising seven contiguous granted exploration licences, is the subject of a joint venture between Legend (70%) and Creasy Group (30%), with Legend operator and manager of the joint venture. The remaining 262km2 is 100% owned by Legend and includes five granted exploration licences. Exploration is targeting Nova-Bollinger style nickel-copper and Tropicana style structurally controlled gold mineralisation. The Rockford Project covers a strike length of 100km over a regional gravity high “ridge” associated with dense mafic/ultramafic intrusive rocks of the Fraser Zone, within the larger Albany-Fraser Orogen. The Nova- Bollinger deposit, which lies within the Fraser Zone, is situated on a similar tenor gravity ridge to that of the Rockford Project, see Figure 1. During 2017 Legend undertook an extensive exploration programme involving: • Further interpretation of aeromagnetic/gravity datasets • Aircore drilling (116 holes for 6,682m at Areas D, L, M, N, O) • RC drilling (5 holes for 1,106m at Areas E, F, N, O) • Diamond drilling (2 holes for 1,350.4m at Area N) • Downhole electromagnetic surveys - DHTEM (three holes at Area N) • Petrology (25 drill core and aircore samples) • Innovative moving loop electromagnetic surveys – MLTEM (Areas L, M, O, P, Q, R, S, T, U, V) • Fixed loop electromagnetic surveys – FLTEM (Areas E, M, N) • Gravity survey (5,668 stations) Exploration activities initially focussed on RC/diamond drill testing of two strong EM conductors at Area N and RC testing of three conductors at Areas E, F and O. On a Project scale, the systematic evaluation of ten aeromagnetic/gravity features with innovative MLTEM surveys was undertaken, along with a 75 hole aircore drilling programme. Activities culminated with a 41 hole aircore drilling programme at Area D, which returned highly significant geochemical and petrological results. The prospect locations are set out in Figure 2 and exploration activities discussed in further detail below. Figure 1: Rockford Project Location Figure 2: Area D Location L E G E N D M I N I N G L IM I T E D 3 DIRECTORS’ REVIEW OF ACTIVITIESFor the year ended 31 December 2017 AREA D Exploration activities completed during 2017 at Area D comprised a broad spaced aircore drill programme aimed at testing a range of aeromagnetic and gravity features interpreted as possible mafic/ultramafic intrusions. The programme comprised 41 holes (RKAC140-180) for 3,494m with drilling undertaken at 400m intervals along a 7.6km long E-W baseline and three N-S traverses, see Figure 3. The drilling intersected a range of bedrock lithologies including mafic intrusives and mafic to felsic granulites, all overlain by a thick profile of transported cover and saprock/saprolite. Figure 3: Area D Aircore Drillholes on Aeromagnetics Drillholes RKAC151 and RKAC167 returned highly anomalous nickel, copper and cobalt results as shown in Table 1 below. Table 1: Area D - Aircore Drillhole RKAC151 & RKAC167 1m Assays Drillhole RKAC151 Incl. Incl. Incl. RKAC167 Incl. From To Int. Ni % Cu % Co % Lithology 64 64 96 106 56 59 111 EOH 74 102 111 EOH 66 EOH 63 47 10 6 5 10 4 0.30 0.23 0.38 0.43 0.09 0.14 0.11 0.25 0.15 0.06 0.09 0.16 0.03 0.03 0.03 0.02 0.01 0.02 Clay/Saprock/Gabbronorite Saprock/Weathered Mafic Saprock/Weathered Mafic Saprock/Gabbronorite Saprolite/Saprock/Mafic Saprock/Mafic • RKAC151 638602E / 6598395N & RKAC167 638999E / 6596799N; GDA94 MGA Zone 51, Dip -900. 4 2017 ANNUAL REPORTDIRECTORS’ REVIEW OF ACTIVITIESFor the year ended 31 December 2017 Maximum nickel and copper values from individual 1m samples included: RKAC151: 1m @ 0.47% Ni, 0.18% Cu, 0.04% Co from 99m 1m @ 0.43% Cu, 0.25% Ni, 0.03% Co from 71m RKAC167: 1m @ 0.17% Ni, 0.17% Cu, 0.02% Co from 60m 1m @ 0.18% Cu, 0.14% Ni, 0.02% Co from 62m Petrological examination of the bottom of hole (BOH) sample from drillhole RKAC151 identified the host rock as a weathered olivine-rich gabbronorite orthocumulate (Photos 1 & 2), which is the host rock for nickel-copper mineralisation at the Nova deposit. The peak nickel value of 0.47% Ni cannot be fully explained by nickel-in- olivine, when related to the amount of olivine originally present in the gabbronorite, however the value can be explained by the weathering of primary nickel sulphides. The significance of this host rock is highlighted by the anomalous copper values associated with the nickel assay results. The prospectivity of RKAC151 is further enhanced given its location some 400m SE of diamond drillhole RKDD002, which was drilled in July 2016, see Figure 3. RKDD002 intersected minor disseminated pyrrhotite/ chalcopyrite/pentlandite at 626.8m downhole with petrological analysis indicating a magmatic origin for these sulphides in a cumulate textured olivine bearing ultramafic. Whilst a possible link between the anomalous Ni-Cu geochemistry in RKAC151 and Ni-Cu sulphides in a favourable host rock in RKDD002 is still interpretative, the prospectivity of Area D has been significantly increased by this recent aircore programme. Infill aircore drilling is planned adjacent to drillholes RKAC151 and RKAC167 to determine the extent of the anomalous Ni-Cu-Co footprint. Further aircore traverses are also planned over the wider Area D region focussing on aeromagnetic and gravity features. The results from this aircore drilling will be used to assist in the design of follow-up MLTEM surveying. Photo 1: Aircore Drillhole RKAC151 showing strong Fe-rich clay and goethite development between 73-111m EOH Photo 2: Olivine Gabbronorite BOH petrology sample from RKAC151. (Photo taken prior to final thin section preparation, width 3cm). 5 LEGEND MINING LIMITEDDIRECTORS’ REVIEW OF ACTIVITIESFor the year ended 31 December 2017 REGIONAL MLTEM SURVEYS Ten areas (Areas L, M, O-V) were selected for MLTEM surveying during 2017 (see Figure 4), based on the interpretation of detailed aeromagnetic/gravity data and from recently gained knowledge from previous surveys and recent drilling programmes. The MLTEM surveys utilised an enhanced/reconfigured high power EM system and is proving to be an effective tool in “seeing” through the conductive cover sequence. The combination of high power (~200 amp) and slingram (out loop) reading configuration allows for relatively broad spaced surveying, enabling greater area coverage of targets without compromising the quality of the survey and the ability to detect bedrock conductors to 600m below surface. Figure 4: Rockford Project Target Areas on Regional Gravity 6 2017 ANNUAL REPORTDIRECTORS’ REVIEW OF ACTIVITIESFor the year ended 31 December 2017 Five significant bedrock conductors were identified at Areas M, O, Q, S and U and are summarised in Table 2 below. RC drill testing of the O1 conductor, along with the previously identified E2 and F1 conductors was completed during 2017 and is discussed below. Further evaluation of the MLTEM features at Areas M, Q, S, and U is required before drill testing. AREA N Area N is characterised by a large folded and/or intrusive feature with generally low magnetic response closely associated with a 2.5 x 0.5km NE-SW trending gravity feature. FLTEM surveying was completed during April 2017 to better define the previously identified strong to moderate MLTEM conductors (N1 and N2) and allow accurate geophysical modelling, see Table 3. Table 2: Conductor Description (Modelled Parameters) Conductor Conductance Dimensions Depth to Top Plate Orientation M1 O1 Q1 S1 U1 200-400S 1,000 x 500m 2,500-5,000S >300m x 300m 250-350S 300-500S 300-450S 1,000m x 500m 1,000m X 1,000m 1,500m x 350m 150-200m 125-150m 450-550m 150-200m 400-450m 60-750 SE dip 70-800 WNW dip 50-700 WNW dip 45-550 ESE dip 50-600 E Table 3: Area N Conductor Description Conductor Conductance Dimensions Depth to Top Plate Orientation N1 N2 6,000-12,000S 850m x 300m 400-500S 700m x 600m 500-550m 300-400m 75-850 NW dip 50-650 E dip 7 LEGEND MINING LIMITEDDIRECTORS’ REVIEW OF ACTIVITIESFor the year ended 31 December 2017 Two aircore drill traverses were then completed over the top of the N1 and N2 conductors identifying a +300m wide zone containing elevated nickel and copper values associated with a hornblende-rich metamorphosed mafic; RKAC119 (37m @ 0.1% Ni and 0.01% Cu from 24m to end of hole) and RKAC119 (31m @ 0.09% Ni and 0.03% Cu from 20m to end of hole), see Figure 5. Petrological analysis of a bottom of hole sample in RKAC119 indicated an original igneous composition rich in orthopyroxene/clinopyroxene, with subordinate olivine and a cumulate texture. The petrology also revealed the presence of supergene nickel minerals along with chalcopyrite further confirming it as a highly favourable host rock. A drilling programme comprising two diamond drillholes (RKDD003-004 for 1,350.4m) and two RC holes (RKAC006-007 for 338m) was completed in July 2017 directly testing the N1 and N2 conductors and the anomalous nickel-copper geochemistry returned in aircore drillholes RKAC068 and RKAC119, see Figure 6. Figure 5: Area N - Aircore Drilling and FLTEM Conductors Over Gravity Figure 6: Area N Drillholes and Conductor Plates on Gravity 8 2017 ANNUAL REPORTDIRECTORS’ REVIEW OF ACTIVITIESFor the year ended 31 December 2017 Both diamond drillholes intersected a thick package of felsic to mafic metasediments/granulites containing broad sulphidic-graphitic intervals, along with several thin mafic intrusives. RKDD003 intersected two prominent pyrrhotite/minor chalcopyrite sulphide zones (1m and 2.8m respectively) with massive and matrix to net textures associated with pyroxene-rich lithologies at 693.8m (Photo 3) and 738.7m respectively. DHTEM surveys confirmed that the N1 and N2 conductors were both successfully tested by the drilling and explained by the presence of broad sulphidic-graphitic intervals close to the geophysically modelled depths. Assay results from drillcore and RC samples returned elevated nickel and copper values, consistent with geological observations and logging. Petrology results from drillcore samples confirmed the presence of multiple mafic/ultramafic sill-like intrusions intruding the thick metasedimentary package (+sulphidic-graphitic intervals), with significant mixing and assimilation of the sulphidic-graphitic metasediment noted. However, the intrusions at Area N are considered fractionated, high-level and low-Ni intrusions with any significant mineralisation potentially occurring lower in the system. Whilst the final results were not positive, several indicators for possible economic mineralisation were highlighted including; two significant bedrock conductors, a large gravity high and elevated Ni-Cu in aircore drilling. This validates Legend’s initial target selection criteria. Photo 3: Massive pyrrhotite, minor chalcopyrite in pyroxenite 694.5m (NQ2 core) 9 LEGEND MINING LIMITEDDIRECTORS’ REVIEW OF ACTIVITIESFor the year ended 31 December 2017 REGIONAL RC DRILLING Three RC drillholes (RKRC008-010) for 768m testing conductors at Area E (E2), Area F (F1) and Area O (O1) were completed in July 2017, see Figure 7. Drillholes RKRC008 (E2) and RKRC010 (O1) both intersected an intercalated package comprising metasediments/granulites containing broad graphite/ sulphide intervals which adequately explain the targeted conductors. Similar lithologies were intersected in RKRC009 at F1, and while the amount of graphite-sulphide was less, it is felt that the conductor has been tested. Figure 7: MLTEM Conductors E2, F1 & O1 with RC Drillholes on Aeromagnetics NORTH ROCKFORD AIRCORE DRILLING PROGRAMME An aircore drilling programme comprising 57 holes for 2,443m was completed during April-May 2017 over the northern part of the Rockford Project. The drilling was undertaken over several targets (Areas L, M, O and Doggers Tanks, see Figure 8) selected from aeromagnetic/gravity data and EM surveys, with the aim of providing information on the regolith profile, basement lithologies and the lithogeochemical signature of the basement rocks. No significant nickel- copper results were returned from this drill programme. 1 0 Figure 8: Aircore Drill Traverses on Regional Aeromagnetic Image 2017 ANNUAL REPORTDIRECTORS’ REVIEW OF ACTIVITIESFor the year ended 31 December 2017 CORPORATE Treasury – Sale of Artemis Resources Limited Shares In July and August 2017 Legend sold 3,000,000 shares in Artemis Resources Limited for a net aggregate consideration of $466,644. The 3,000,000 Artemis Resources Limited shares had a fair value as at 31 December 2016 of $120,000. Cameroon Project Sale Legend announced on 4 January 2017 that it had received a request from Jindal to consider a further deferral of the payment of the final amount of $3 million owing to Legend from the sale of the Cameroon Iron Ore project. Legend agreed to this request in principle, and will report to the ASX as soon as an agreement of new payment terms is reached. Since this time, Legend has remained actively in contact with Jindal on its debt restructuring, which once completed, will enable Jindal to focus on matters such as the payment of the amount owing to Legend. In the meantime, the amount owing from Jindal continues to attract interest at the rate of 4% per annum paid quarterly and Jindal has paid each interest payment of $30,000 per quarter since January 2017. Annual Tax Return – R & D Claim In December 2017 Legend submitted its 2017 annual tax return, which included a research and development (“R&D”) claim for reimbursement of $1.3M. The cornerstone of Legend’s exploration activities at the Rockford Project is using innovative geo-sensing moving loop electromagnetic surveys (MLTEM). These surveys qualify Legend for R&D cash reimbursement for these surveys and other associated research and development activities via the annual tax return. In January 2018, Legend received the R&D refund of $1.3M. Acquisition of Exploration Licences On 27 February 2017 Legend announced that it had purchased two exploration licences contiguous with the existing Rockford Project tenements from Musgrave Minerals Limited. The tenements cover an area of 238.5km2 and increase the Rockford Project’s exposure to the western stratigraphy of the Fraser Zone. The consideration was 10,000,000 Legend shares and 10,000,000 Legend options exercisable at 4 cents per option by 30 March 2021. The transaction settled on 28 February 2017 following the satisfaction of sale agreement conditions. The information in this report that relates to Exploration Results is based on information compiled by Mr Derek Waterfield, a Member of the Australian Institute of Geoscientists and a full time employee of Legend Mining Limited. Mr Waterfield has sufficient experience that is relevant to the styles of mineralisation and types of deposit under consideration, and to the activity being undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr Waterfield consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to Legend’s Exploration Results is a compilation of previously released to ASX by Legend Mining (9 May 2017, 6 June 2017, 13 June 2017, 18 July 2017, 3 August 2017, 12 September 2017, 3 October 2017, 6 November 2017, 27 November 2017, 11 December 2017, 18 December 2017, 22 January 2108) and Mr Derek Waterfield consents to the inclusion of these Results in this report. Mr Waterfield has advised that this consent remains in place for subsequent releases by Legend of the same information in the same form and context, until the consent is withdrawn or replaced by a subsequent report and accompanying consent. Legend confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and that all material assumptions and technical parameters in the market announcements continue to apply and have not materially changed. Legend confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcements. 1 1 LEGEND MINING LIMITEDDIRECTORS’ REVIEW OF ACTIVITIESFor the year ended 31 December 2017 CORPORATE GOVERNANCE STATEMENT Legend Mining Limited and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Legend Mining Limited has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council. The 2017 Corporate Governance Statement was approved by the Board on 21 March 2018 and is current as at 21 March 2018. A description of the Group’s current corporate governance practices is set out in the Group’s Corporate Governance Statement which can be viewed at www.legendmining.com.au 12 DIRECTORS’ REPORT F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 The Directors submit their report for the year ended 31 December 2017. 1. DIRECTORS The names and details of the Company’s directors in office during the financial year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated. Michael Atkins (Chairman, Non-Executive Director) Mark Wilson (Managing Director) Derek Waterfield (Executive Director - Technical) 2. INFORMATION ON DIRECTORS AND COMPANY SECRETARY Michael Atkins is a Fellow of the Australian Institute of Company Directors. Mr Atkins was a founding partner of a national Chartered Accounting practice from 1979 to 1987 and was a Fellow of the Institute of Chartered Accountants in Australia between 1984 and 2012. Between 1987 and 1998 he was involved in the executive management of several publicly listed resource companies with operations in Australia, USA, South East Asia and Africa. From 1990 to 1995 he was managing director and later a non-executive director of Claremont Petroleum NL and Beach Petroleum NL during their reconstruction, and then remained as a non- executive director until 1995. He was also founding executive chairman of Gallery Gold Ltd until 1998, and remained a non- executive director until 2000. Since February 2009 Mr Atkins has been a Director – Corporate Finance at Patersons Securities Limited where he advises on the formation of, and capital raising for, emerging companies in the Australian resources sector. He is currently non-executive chairman of Australian listed companies Azumah Resources Ltd and Castle Minerals Ltd, and non- executive director of SRG Limited. Mr Atkins has not held any former public company directorships in the last three years. Mark Wilson is a Member of the Institution of Engineers, Australia and a Chartered Professional Engineer with an Associateship in Civil Engineering from Curtin University in Western Australia. He has an extensive business background, mainly in corporate management and project engineering. This has included site management of remote construction projects, ten years of commercial construction as a founding proprietor of a Perth based company and the past twenty years in executive, non- executive, consulting and owner roles in resource focused companies. During the past three years, Mr Wilson has also served as non-executive director of Australian listed company Tanga Resources Limited (resigned July 2017). Derek Waterfield is a Member of the Australian Institute of Geoscientists and a graduate of the University of Queensland (B.Sc. Hons). He has over 25 years’ experience in gold, base metals, iron ore, nickel and uranium exploration throughout Australia and Cameroon. He started his career with CRA Exploration Pty Ltd and has held senior exploration leadership positions with Normandy Mining and Newmont Australia, and led the team that discovered the Moolart Well gold deposit in the Duketon Belt 350km north of Kalgoorlie. He was Exploration Manager at Legend Mining for five years managing Legend’s WA and Cameroon projects. More recently he has been Exploration Manager for Enterprise Metals Ltd, responsible for gold, iron ore, uranium and base metal exploration in WA. Mr Waterfield has not held any former public company directorships in the last three years. Tony Walsh (Company Secretary) was appointed Company Secretary effective on 12 December 2016. Mr Walsh has over 30 years’ experience in dealing with listed companies, ASX, ASIC and corporate transactions including 14 years with the ASX in Perth where he acted as ASX liaison with the JORC committee, four years as Chairman of an ASX listed mining explorer and as a director of a London AIM listed explorer. Tony is also currently Company Secretary of Battery Minerals Mining Ltd and is a Director of Entek Energy Limited. Mr Walsh is a member of the Australian Institute of Company Directors, a Fellow of the Governance Institute of Australia, the Institute of Chartered Secretaries and the Institute of Chartered Accountants in Australia. He is currently a non-executive director of the Women’s and Infants Research Foundation. 3. EARNINGS PER SHARE Basic loss per share: Diluted loss per share: 0.028 cents 0.028 cents 13 DIRECTORS’ REPORT F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 4. DIVIDENDS No dividend has been paid or recommended during the financial year. 5. CORPORATE INFORMATION Corporate Structure Legend Mining Limited is a company limited by shares that is incorporated and domiciled in Australia. Legend Mining Limited has prepared a consolidated financial report incorporating the entities that it controlled during the financial year, which are outlined in the following illustration of the group’s corporate structure. Legend Mining Limited 100% 100% Gibson Metals Pty Ltd Legend Cameroon Pty Ltd Nature of Operations and Principal Activities The principal activities during the year of the entities within the consolidated entity were: exploration for nickel and copper deposits in Australia. Employees The consolidated entity had a staff of four employees at 31 December 2017 (2016: four employees). 6. OPERATING AND FINANCIAL REVIEW Results of Operations The net loss after income tax of the consolidated entity for the year was $567,068 (2016: loss of $2,599,591). Review of Operations The Directors’ Review of Activities for the year ended 31 December 2017 is contained on pages 3 to 11 of the Annual Report. Summarised Operating Results Impairment of Deferred Exploration Costs: There was nil impairment of deferred expenditure expensed to the income statement during the year (2016: $492,882). Deferred Exploration Costs: Total acquisition costs and deferred expenditure on tenements capitalised during the year, net of amounts reimbursed through the research and development incentive grant amounted to $1,964,401 (2016: $2,719,559). 7. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There have been no significant changes during the year. 8. ENVIRONMENTAL REGULATION AND PERFORMANCE The consolidated entity’s operations are subject to various environmental regulations under both Commonwealth and State legislation in Australia. The Directors have complied with these regulations and are not aware of any breaches of the legislation during the financial year which are material in nature. 9. LIKELY DEVELOPMENTS AND EXPECTED RESULTS Likely developments in the operations of the consolidated entity, and expected results of those operations in subsequent financial years have been discussed, where appropriate, in the Chairman’s Report and Review of Activities. 14 DIRECTORS’ REPORT F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 10. SHARE OPTIONS Unissued shares As at the date of this report, there were 238,000,000 unissued ordinary shares under options. Refer to note 17 for further details of the options outstanding at 31 December 2017. Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate. Shares issued as a result of the exercise of options There were no shares issued as a result of the exercise of options during the financial year. 11. SIGNIFICANT EVENTS AFTER THE BALANCE DATE In January 2018, the Company receipted its R&D claim submission from the Australian Taxation Office of $1,303,462. No other matters or circumstance has arisen since the end of the financial year which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years. 12. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has not, during or since the financial year, in respect of any person who is or has been an officer of the Company or a related body corporate: (i) (ii) indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings; or paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer for the costs or expenses to defend legal proceedings. 13. INDEMNIFICATION OF AUDITORS To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year. 14. REMUNERATION REPORT (AUDITED) The compensation arrangements in place for key management personnel of Legend are set out below: Details of key management personnel Directors M Atkins M Wilson D Waterfield Chairman (non-executive) Managing Director Executive Director - Technical Compensation Philosophy The performance of the Company depends upon the quality of its directors and executives. To prosper, the Company must attract, motivate and retain highly skilled directors and executives. The Company embodies the following principle in its compensation framework: Provide competitive rewards to attract high-calibre executives. 15 DIRECTORS’ REPORT F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 14. REMUNERATION REPORT (CONTD) Group Performance The Group’s financial performance for the last five years has been as follows: Revenue Net loss after tax Basic loss per share (cents per share) Diluted loss per share (cents per share) Net assets Share price (at balance date) December 2017 $267,989 (567,068) (0.028) December 2016 $407,180 ($2,599,591) (0.128) December 2015 $575,162 ($1,311,284) (0.066) December 2014 $371,332 ($2,618,326) (0.128) December 2013 $280,734 ($38,412,494) (1.769) (0.028) (0.128) (0.066) (0.128) (1.769) $14,349,754 $0.03 $14,734,111 $0.01 $17,127,502 $0.008 $17,067,286 $0.007 $22,354,576 $0.008 As the Group is currently in exploration and evaluation phases, historical earnings are not yet an accurate reflection of Group performance and cannot be used as a long term incentive measure. Consideration of the Group’s earnings will be more relevant as the Group matures. Remuneration Committee Due to the size of Legend, remuneration is considered by the full Board. The Board reviews remuneration packages and policies applicable to the directors and senior executives. Remuneration levels are competitively set to attract the most qualified and experienced directors and senior executives. Compensation Structure In accordance with best practice corporate governance, the structure of non-executive director and senior manager remuneration is separate and distinct. Objective of Non-Executive Director Compensation The Board seeks to set aggregate compensation at a level that provides the company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. Structure of Non-Executive Director Compensation The Constitution and the ASX Listing Rules specify that the aggregate compensation of non-executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The latest determination was at the Annual General Meeting held on 16 May 2012 when shareholders approved the aggregate remuneration of $300,000 per year. The amount of aggregate compensation sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The Board considers the fees paid to non-executive directors of comparable companies when undertaking the annual review process. Objective of Senior Management and Executive Director Compensation The company aims to reward executives with a level and mix of compensation commensurate with their position and responsibilities within the company and so as to: reward executives for company and individual performance against targets set by reference to appropriate benchmarks; align the interests of executives with those of shareholders; and ensure total compensation is competitive by market standards. Structure of Senior Management and Executive Director Compensation In determining the level and make-up of executive compensation, the Board may engage external consultants to provide independent advice. No external advice was obtained during the 2017 year. It is the Board’s policy that an employment contract is entered into with key executives. Compensation consists of a fixed compensation element and the issue of options from time to time at the directors’ discretion under the Employee Share Option Plan. Any issue of options to directors under the Employee Share Option Plan requires prior shareholder approval. 16 DIRECTORS’ REPORT F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 14. REMUNERATION REPORT (CONTD) Fixed Compensation Fixed compensation is reviewed annually by the Board. The process consists of a review of company and individual performance, relevant comparative compensation in the market and internally and, where appropriate, external advice on policies and practices. No external advice was obtained during the 2017 year. Structure Senior managers are given the opportunity to receive their fixed (primary) compensation in a variety of forms including cash and fringe benefits. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Company. Employment Contracts The Managing Director, Mr Mark Wilson, is employed under contract. The current contract commenced on 1 July 2011 and is effective until terminated in accordance with the contract. The significant terms of the contract are: Mr Wilson receives remuneration of $320,000 per annum exclusive of superannuation; Mr Wilson may resign from his position and thus terminate his contract by giving one month written notice; The company may terminate Mr Wilson’s employment contract by providing six months’ written notice if the position has become redundant, or three months’ written notice in all other circumstances; and The Company may terminate Mr Wilson’s contract at any time without notice if serious misconduct has occurred. Mr Michael Atkins, is employed under contract. The current contract commenced on 1 July 2012 and is effective until terminated in accordance with the contract. The significant terms of the contract are: Mr Atkins receives remuneration of $80,000 per annum exclusive of superannuation; Mr Atkins’ agreement provides for engagement of consultancy services outside of the scope of the ordinary duties of a non-executive chairman. In addition to the director’s fees above, Mr Atkins is paid $2,000 per day (inclusive of superannuation) for the provision of these consultancy services. Mr Atkins’ appointment is contingent upon satisfactory performance and successful re-election by shareholders of the Company; Mr Atkins may resign from his position and thus terminate his contract by giving written notice; and The Company may terminate Mr Atkins’ contract by way of resolution of the Board. Mr Derek Waterfield, is employed under contract. The current contract commenced on 1 November 2012 and is effective until terminated in accordance with the contract. The significant terms of the contract are: Mr Waterfield receives remuneration of $220,000 per annum exclusive of superannuation; Mr Waterfield may resign from his position and thus terminate his contract by giving one month written notice; The company may terminate Mr Waterfield’s employment contract by providing three months’ written notice if the position has become redundant, or one months’ written notice in all other circumstances; and The Company may terminate Mr Waterfield’s contract at any time without notice if serious misconduct has occurred. Employee Share Option Plan The Board has in place an Employee Share Option Plan allowing share options to be issued to eligible employees in order to provide them with an incentive to provide growth and value to all shareholders. At a General Meeting on 4 December 2009 shareholders approved the implementation of Employee Share Option Plan No 3. The new plan differs from the previous plans in that there is no 12 month vesting period on any new options received under plan No 3. There is a significant change in the context of recent proposals by the Federal Government to change the tax treatment of options issued under incentive schemes. Removal of the vesting period requirement allows the Board maximum flexibility to make offers of options on the terms of the plans appropriate at the time, having regard for the tax environment which the proposed participants find themselves in when an offer of options is received from the company. 17 DIRECTORS’ REPORT F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 14. REMUNERATION REPORT (CONTD) Share-based Payments During the year the Company did not grant any incentive options to directors (2016 - $196,000). In 2016, 70,000,000 options with an exercise price of 4 cents and expiring on 30 March 2021 were issued to Directors following approval at the Annual General Meeting of the Company held on 28 April 2016. The fair value of the options granted during 2016 was 0.28 cents, for a total value of $196,000 included within share-based payments expense. The 70,000,000 options granted in 2016 were issued to provide a mid to long term incentive for performance and promote opportunities for share ownership in the company. The Directors considered that the incentives represented by the grant of these options is a cost effective and efficient means for the company to provide reward and incentive. Compensation of Key Management Personnel for Years Ended 31 December 2017(1) and 31 December 2016 Name Year Short term Salary and Fees(1) $ Post- Employment Super- annuation $ Long-term benefits Long Service Leave $ Director M Atkins M Wilson 80,000 80,000 332,308 327,385 243,692 226,769 656,000 634,154 (1) Short term salary and fees includes net movements in leave provisions. 7,600 7,600 30,400 35,077 20,900 20,900 58,900 63,577 2017 2016 2017 2016 2017 2016 2017 2016 - - 5,333 5,333 18,944 - 24,277 5,333 D Waterfield Total Share based payments options Total $ % of compen- sation granted as options % of performance related remuneration $ - 28,000 - 112,000 - 56,000 - 196,000 87,600 115,600 368,041 479,795 283,536 303,669 739,177 899,064 - 24 - 23 - 18 - 22 - - - - - - - - Option holdings of Key Management Personnel Options held in Legend Mining Limited (number) during the year ended 31 December 2017 Name Balance at beginning of year 1 Jan 2017 Granted as Remuneration Exercised during the year Net Change Other Balance at end of year 31 Dec 2017 Not Vested & Not Exercisable Vested & Exercisable Directors M Atkins M Wilson D Waterfield Total 10,000,000 40,000,000 20,000,000 70,000,000 - - - - - - - - - - - - 10,000,000 40,000,000 20,000,000 70,000,000 - - - - 10,000,000 40,000,000 20,000,000 70,000,000 Shareholdings of Key Management Personnel(1)(2) Shares held in Legend Mining Limited (number) during the year ended 31 December 2017 Name Balance 1 Jan 17 Granted as remuneration On exercise of options Net change other Balance 31 Dec 17 Directors M Atkins (Windamurah P/L), (Alkali Exploration P/L) M Wilson (Chester Nominees WA P/L) D Waterfield Total 4,558,334 110,000,000 1,000,000 115,558,334 Includes shares held directly, indirectly and beneficially by KMP. (1) (2) On-market purchases made during the year. END OF REMUNERATION REPORT 18 - - - - - - - - 2,550,000 7,108,334 (2)16,000,000 126,000,000 - 18,550,000 1,000,000 134,108,334 DIRECTORS’ REPORT F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 15. DIRECTORS’ MEETINGS The number of Meetings of Directors held during the year and the number of Meetings attended by each Director was as follows: Name Attended by: Michael Atkins Mark Wilson Derek Waterfield 16. DIRECTORS’ INTERESTS No. of Board Meetings Attended No. of Meetings Held Whilst A Director No of Audit Committee Meetings Attended No of Audit Committee Meetings Held 7 7 7 7 7 7 2 2 2 2 2 2 The relevant interest of each director in the shares and options issued by the company in accordance with the Corporations Act 2001, at the date of signing this report is as follows: Name M Atkins (Windamurah P/L), (Alkali Exploration P/L) M Wilson (Chester Nominees WA P/L) D Waterfield Ordinary shares 7,108,334 Options over ordinary shares 10,000,000 126,000,000 40,000,000 1,000,000 20,000,000 17. AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES Non-audit services There were no non-audit services provided by the Company’s auditor, Ernst & Young during the 2017 financial year. We have received the Declaration of Auditor Independence from Ernst & Young, the Company’s Auditor. This is available for review on page 48 and forms part of this report. SIGNED in accordance with a Resolution of the Directors on behalf of the Board _______________________________ Mark Wilson Managing Director Dated this 23rd day of March 2018 19 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 Note 4(a) 4(b) 4(c) 4(d) 4(e) 4(f) 4(g) 18(a) 6 Finance revenue Other income Net gain on revaluation of financial assets held for Trading Employee benefit expenses Impairment of deferred exploration costs Other expenses Corporate and administration expenses Impairment of Jindal receivable Share-based payments expense Net loss before income tax Income tax benefit Net loss for the year attributable to Members of Legend Mining Limited Other comprehensive income for the year, net of tax Total comprehensive loss for the year attributable to Members of Legend Mining Limited 2017 $ 267,989 - 353,632 (569,415) - (39,199) (561,575) - (18,500) (567,068) - 2016 $ 407,180 123,007 1,624,178 (527,796) (492,882) (14,136) (507,942) (3,005,000) (206,200) (2,599,591) - (567,068) (2,599,591) - - (567,068) (2,599,591) EARNINGS PER SHARE (cents per share) Basic loss per share Diluted loss per share 5 5 (0.028) (0.028) (0.128) (0.128) The accompanying notes form part of these financial statements 20 CONSOLIDATED STATEMENT OF FINANCIAL POSITION A s a t 3 1 D e c e m b e r 2 0 1 7 ASSETS Current Assets Cash and cash equivalents Trade and other receivables Other financial assets Total Current Assets Non-current Assets Other financial assets Property, plant & equipment Deferred exploration costs Total Non-current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Provisions Total Current Liabilities Non-current Liabilities Provisions Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to equity holders of the parent Contributed equity Reserves Accumulated losses TOTAL EQUITY Notes 2017 $ 2016 $ 8 9 10 10 11 12 13 14 14 15 16 4,469,964 39,630 289,868 4,799,462 5,775 149,039 9,676,532 9,831,346 14,630,808 6,673,674 31,243 402,308 7,107,225 5,775 156,479 7,712,131 7,874,385 14,981,610 62,580 131,882 194,462 89,021 94,190 183,211 86,592 86,592 281,054 14,349,754 64,288 64,288 247,499 14,734,111 60,711,242 23,268,278 (69,629,766) 14,349,754 60,588,031 23,208,778 (69,062,698) 14,734,111 The accompanying notes form part of these financial statements 21 CONSOLIDATED STATEMENT OF CASH FLOWS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 CASH FLOWS FROM OPERATING ACTIVITIES Note Payments to suppliers and employees Interest received 2017 $ (1,161,546) 254,552 2016 $ (949,947) 302,165 Net cash flows used in operating activities 20(ii) (906,994) (647,782) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment 11 Payment for the purchase of investments Proceeds from the sale of investments Payments for deferred exploration costs Receipt of research and development tax incentive grant (43,282) - 466,072 (2,756,591) 1,037,085 (141,907) (2,378) 4,034,848 (2,820,292) - Net cash flows (used in)/from investing activities (1,296,716) 1,070,271 Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at end of year 20(i) (2,203,710) 6,673,674 4,469,964 422,489 6,251,185 6,673,674 The accompanying notes form part of these financial statement 22 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 Contributed Equity Share Option Premium Reserve Accumulated Losses Total Equity At 1 January 2017 60,588,031 23,208,778 (69,062,698) 14,734,111 Loss for the year Total comprehensive loss for the year Issue of share capital and options for tenement acquisition Share-based payments At 31 December 2017 - - - - (567,068) (567,068) (567,068) (567,068) 123,211 - 41,000 18,500 - - 164,211 18,500 60,711,242 23,268,278 (69,629,766) 14,349,754 At 1 January 2016 60,588,031 23,002,578 (66,463,107) 17,127,502 Loss for the year Total comprehensive loss for the year Share-based payments At 31 December 2016 - - - - - (2,599,591) (2,599,591) (2,599,591) (2,599,591) 206,200 - 206,200 60,588,031 23,208,778 (69,062,698) 14,734,111 The accompanying notes form part of these financial statements 23 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 1: CORPORATE INFORMATION The consolidated financial statements of Legend Mining Limited and its subsidiaries (collectively, the Group) for the year ended 31 December 2017 were authorised for issue in accordance with a resolution of the Directors on 21 March 2018. Legend Mining Limited (the Company or the parent) is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Group are described in note 3. NOTE 2: SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for certain financial assets carried at fair value. The financial report is presented in Australian dollars and all values are expressed as whole dollars. The consolidated financial statements have been prepared on a going concern basis which assumes the continuity of normal business activity and the realisation of assets and settlement of liabilities in the ordinary course of business. Compliance with AASB The financial report also complies with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board. Changes in accounting policy, disclosures, standards and interpretations The accounting policies adopted are consistent with those of the previous financial year except as follows: (i) New and amended standards and interpretations The Group has adopted all new and amended Australian Accounting Standards and AASB Interpretations effective as of 1 January 2017, including: AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107 AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle The adoption of these amendments has resulted in minor changes to disclosures in the Group’s financial statements. Other than that, the adoption of these amendments did not have any impact on the current period or any prior period and is not likely to affect future periods. (ii) Accounting Standards and Interpretations issued but not yet effective Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Group for the annual reporting period ending 31 December 2017 are outlined below: AASB 9 Financial Instruments In December 2014, the AASB issued the final version of AASB 9 Financial Instruments that replaces AASB 139 Financial Instruments: Recognition and Measurement and all previous versions of AASB 9. AASB 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. AASB 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Group plans to adopt the new standard on the required effective date and will not restate comparative information. During 2017, the Group has performed an impact assessment of all three aspects of AASB 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018 when the Group will adopt AASB 9. Overall, the Group expects no significant impact on its statement of financial position and equity. The Group does not expect a significant impact on its balance sheet or equity on applying the classification and measurement requirements of AASB 9. It expects to continue measuring at fair value all financial assets currently held at fair value. 24 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTD) AASB 15 Revenue from Contracts with Customers AASB 15 was issued in December 2014, and amended in May 2016, and establishes a five-step model to account for revenue arising from contracts with customers. Under AASB 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under Australian Accounting Standards. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. Early adoption is permitted. The Group plans to adopt the new standard on the required effective date using the full retrospective method. The adoption of this new standard will not impact the consolidated financial statements. AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based Payment Transactions The AASB issued amendments to AASB 2 Share-based Payment that address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. The amendments are effective for annual periods beginning on or after 1 January 2018, with early application permitted. The Group is assessing the potential effect of the amendments on its consolidated financial statements. AASB 16 Leases AASB 16 was issued in February 2016 and it replaces AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases-Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. Lessor accounting under AASB 16 is substantially unchanged from today’s accounting under AASB 117. Lessors will continue to classify all leases using the same classification principle as in AASB 117 and distinguish between two types of leases: operating and finance leases. AASB 16 also requires lessees and lessors to make more extensive disclosures than under AASB 117. AASB 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies AASB 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. In 2018, the Group will continue to assess the potential effect of AASB 16 on its consolidated financial statements. AASB Interpretation 23 Uncertainty over Income Tax Treatment The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of AASB 112 and does not apply to taxes or levies outside the scope of AASB 112, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following: Whether an entity considers uncertain tax treatments separately The assumptions an entity makes about the examination of tax treatments by taxation authorities How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates How an entity considers changes in facts and circumstances An entity must determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. The interpretation is effective for annual reporting periods beginning on or after 1 January 2019, but certain transition reliefs are available. The Group will apply interpretation from its effective date. The Group has not yet assessed the impact of the adoption of this interpretation. 25 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTD) Summary of significant accounting policies (i) Basis of consolidation The consolidated financial statements comprise the financial statements of Legend Mining Limited and its subsidiaries (‘the Group’) as at 31 December 2017. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: Power over the investee (ie existing rights that give it the current ability to direct the relevant activities of the investee); Exposure, or rights, to variable returns from its involvement with the investee; and The ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: The contractual arrangement with the other vote holders of the investee; Rights arising from other contractual arrangements; and The Group’s voting rights and potential voting rights. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. (ii) Significant accounting judgements, estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimate and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: Held for trading investments The Group has classified equity investments as held for trading. This classification requires significant judgements on the intentions of the Group in relation to the investments held. Share-based payment transactions The Group measures the cost of equity-settled share-based payments at fair value at the grant date using a Black-Scholes formula taking into account the terms and conditions upon which the instruments were granted. Impairment of capitalised exploration and evaluation expenditure The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors which could impact the future recoverability include the level of proved, probable and inferred mineral resources, future technological changes which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, this will reduce profits and net assets in the period in which the determination is made. 26 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTD) In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent that it is determined in the future that this capitalised expenditure should be written off, this will reduce profits and net assets in the period in which this determination is made. (iii) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight line basis over the useful life of the asset from the time the asset is held ready for use. The depreciation rates used for each class are: Buildings 10% Plant and equipment 7.5% - 50% Impairment The carrying values of property, plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash- generating unit to which the asset belongs. If any indication of impairment exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amounts. The recoverable amount of property, plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised. (iv) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. (v) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above. (vi) Trade and other receivables Trade receivables, which generally have 30-90 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for any uncollectible amounts. Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when identified. An allowance for doubtful debts is raised when there is objective evidence that the Group will not be able to collect the debt. (vii) Other financial assets Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transactions costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year- end. 27 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTD) All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace. Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. (viii) Government grants Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset. When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and released to profit or loss over the expected useful life of the asset, based on the pattern of consumption of the benefits of the underlying asset by equal annual instalments. (ix) Deferred exploration costs Deferred exploration and evaluation costs Exploration and evaluation expenditure is stated at cost and is accumulated in respect of each identifiable area of interest. Such costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area of interest (or alternatively by its sale), or where activities in the area have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active operations are continuing. Accumulated costs in relation to an abandoned area are written off to the income statement in the period in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Impairment The carrying values of exploration and evaluation costs are reviewed for impairment when facts and circumstances indicate the carrying value may not be recoverable. The recoverable amount of exploration and evaluation costs is the greater of fair value less costs to sell and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the fair value of money and the risks specific to the asset. Accumulated costs in relation to an abandoned area are written off in full against the income statement in the year in which the decision to abandon the area is made. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Each area of interest is limited to the size related to known or probable mineral resources capable of supporting a mining operation. 28 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTD) (x) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. (xi) Revenue Revenue is recognised and measured at the fair value of consideration received or receivable to the extent that it is probable that economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Sale of goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer. Interest income Interest revenue is recognised as it accrues, using the effective interest rate method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Rental Income Rental income is accounted for on a straight line basis over the lease term. All revenue is stated net of the amount of goods and services tax (GST). (xii) Taxes Current income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax law used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred tax Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences: Except where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised: Except where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. 29 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTD) The carrying amounts of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax assets to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Goods and services tax (GST) Revenue, expenses and assets are recognised net of the amount of GST except: Where the amount of the 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 the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the ATO are classed as operating cash flows. (xiii) Business Combinations Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of AASB 139 Financial Instruments: Recognition and Measurement is measured at fair value with changes in fair value recognised either in profit or loss or as a change to OCI. If the contingent consideration is not within the scope of AASB 139, it is measured in accordance with the appropriate AASB. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the identifiable net assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash- generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. 30 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTD) Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained. (xiv) Trade and or other payables Liabilities for trade creditors and other amounts are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of these goods and services. The amounts are unsecured and are usually paid within 30 days. (xv) Interest bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement. (xvi) Share based payment transactions The Group provides benefits to employees (including directors) of the Group and to the providers of services to the Group in the form of share based payment transactions, whereby employees or service providers render services in exchange for shares or rights over shares (‘equity-settled transactions’). There are currently three scenarios in place to provide these services: (a) ‘Employees Share Option Plan’, which provides benefits to eligible persons; (b) Capital raising costs, which provide payment to stockbrokers and finance institutions for capital raising services and commissions; and (c) Other grants of options to directors on an ad hoc basis. The cost of the equity-settled transactions with stockbrokers and finance institutions is measured by reference to the fair value of the service received at the date they are granted. For transactions with employees (including directors), the cost of these equity-settled transactions is measured by reference to the fair value of the options provided. The fair value is determined by an external valuer using a Black-Scholes model. The cost of these equity-settled transactions with employees is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employee becomes fully entitled to the award (‘vesting date’). In valuing these equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Legend Mining Limited (market conditions) if applicable. The cumulative expense recognised for these equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period represents the movement in cumulative expenses recognised as at the beginning and end of the period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However , if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. For transactions with other service providers, the cost of these equity-settled transactions is measured by reference to the value of the services provided. The cost of these equity-settled transactions is recognised, together with a corresponding increase in equity, at the time the services are provided unless they are transaction costs arising on the issue of ordinary shares, in which case the transaction costs are recognised directly in equity as a reduction of the proceeds received on the issue of shares. 31 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTD) (xvii) Contributed Equity Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs net of tax arising on the issue of ordinary shares are recognised directly in equity as a reduction of the proceeds received. (xviii) Employee Benefits Provision is made for employee benefits accumulated as a result of employee services up to the reporting date. These employee benefits include wages, salaries, annual leave and include related on-costs such as superannuation and payroll tax. The Group does not expect its long service leave or annual leave benefits to be settled wholly within 12 months of each reporting date. The Group recognises a liability for long service leave and annual leave measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. No provision is made for non-vesting sick leave, as the anticipated pattern of future sick leave taken indicates that accumulated non-vesting sick leave will never be paid. The liability for long service leave is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflow. Contributions to employee superannuation funds of choice are expensed as incurred. (xix) Earnings per share Basic earnings per share (EPS) is calculated as net profit or loss attributable to members, adjusted to exclude costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted EPS is calculated as net profit or loss attributable to members, adjusted for: (a) Costs of servicing equity (other than dividends). (b) The after tax effect of dividends and interest associated with the dilutive potential ordinary shares that have been recognised as expenses; and (c) Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (xx) Foreign currency translation (a) Functional and presentation currency The Group’s consolidated financial statements are presented in Australian dollars, which is also the Company’s functional currency. For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. (b) Transactions and balances Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rates of exchange at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchanges rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (ie translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss respectively). 32 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 3: NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES The principal activities during the year of the entities within the consolidated entity were exploration for nickel and copper deposits in Australia. NOTE 4: REVENUE AND EXPENSES a) Finance Revenue Bank interest received and receivable Interest on receivables b) Other Income Other c) Employee Benefits Expense Salaries, on-costs and other employee benefits Note 9 2017 $ 147,989 120,000 267,989 - - 569,415 569,415 2016 $ 183,520 223,660 407,180 123,007 123,007 527,796 527,796 d) Impairment of Deferred Exploration Costs Impairment of deferred exploration costs 12 - 492,882 e) Other Expenses Depreciation Exploration expenditure not capitalised f) Corporate and administration expenses Fees – Audit/Tax Fees – ASX Fees – Share Registry Consultancy Fees Office Rent Legal expenses Travel expenses Other expenses 35,184 4,015 39,199 215,407 36,734 13,617 74,748 88,944 5,493 38,005 88,627 561,575 14,136 - 14,136 66,953 36,121 13,440 55,890 58,750 1,800 45,445 229,543 507,942 g) Impairment of Jindal receivable Impairment of Jindal receivable 9 - 3,005,000 NOTE 5: EARNINGS PER SHARE (a) Reconciliation of earnings to net loss: Net Loss Loss used in the calculation of basic earnings per share 2017 $ 2016 $ (567,068) (2,599,591) (567,068) (2,599,591) (b) Weighted average number of shares on issue during the financial year used in the calculation of basic loss per share 2,042,487,787 2,034,350,801 Weighted average number of ordinary shares on issue used in the calculation of diluted loss per share 2,042,487,787 2,034,350,801 33 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 5: EARNINGS PER SHARE (CONTD) (c) Information on classification of options For the year ended 31 December 2017, all options on issue were antidilutive as the various exercise prices were all greater than the average market price of the Company’s shares during the year. This has resulted in the diluted earnings per share being the same as the basic earnings per share. These options could potentially dilute basic earnings per share in the future. The number of anti-dilutive potentially issuable ordinary shares at 31 December 2017 is 238,000,000. (31 December 2016: 223,000,000) NOTE 6: INCOME TAX The major components of income tax expense are: Income Statement Current income tax Current year income tax charge (benefit) Under/Over provision of prior tax year Deferred income tax Relating to origination and reversal of temporary differences Under/Over provision of prior tax year Income tax benefit reported in the income statement A reconciliation between tax expense and the product of accounting profit/(loss) before income tax multiplied by the Group’s applicable income tax rate is as follows: Accounting loss before tax from ordinary activities Accounting loss before income tax At the Group’s statutory income tax rate of 30% Expenditure not allowed for income tax purposes Non-assessable income Utilisation of previous unrecognised tax losses Deferred tax assets not brought to account Deductible equity raising costs Income tax expense attributable to entity reported in the consolidated income statement Income tax expensed directly to equity Relating to equity costs Deferred tax expense/(income) recognised in equity Current Income Tax Asset/(Liability) 2017 $ 2016 $ - - - - - - - - - - (567,068) (567,068) (170,120) 56,141 (106,090) (85,822) 305,891 - - - - - (2,599,591) (2,599,591) (779,877) 754,917 (28,046) (1,021,227) 1,077,633 (3,400) - - - - 34 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 6: INCOME TAX (CONTD) Deferred Income Tax Deferred income tax at 31 December related to the following: Consolidated Recognised deferred tax liabilities Capitalised exploration and evaluation expenditure Investments Other Amounts disclosed as deferred tax liability Set-off of deferred tax assets Net deferred tax liabilities disclosed Recognised deferred tax assets Tax losses available to offset against future taxable income Other provisions Plant and Equipment Other future blackhole deductions Gross deferred tax assets Set-off of deferred tax assets Net deferred tax assets recognised Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following as the statutory requirements for recognising those deferred tax assets have not been met Deductible temporary differences Tax revenue losses Tax capital losses Net deferred tax assets not recognised Tax Consolidation 2017 $ 2016 $ (1,825,825) - (2,889) (1,828,714) 1,828,714 - 1,664,086 74,542 86 90,000 1,828,714 (1,828,714) - (1,203,910) - (13,945) (1,217,855) 1,217,855 - 1,012,061 55,794 - 150,000 1,217,855 (1,217,855) - 1,088,464 426,114 2,223,755 3,738,333 1,108,731 547,952 2,309,577 3,966,260 Legend Mining Limited and its 100% owned Australian resident subsidiaries formed a tax consolidated group with effect from 1 July 2004. Legend Mining Limited is the head entity of the tax consolidated group. Members of the group have entered into a tax sharing agreement in order to allocate the income tax liabilities between the entities within the Group should the head entity default on its tax payment obligations. At the balance date, the possibility of default is remote. Tax effect accounting by members of the tax consolidated group Tax expense / income, deferred tax liabilities and deferred tax assets arising from temporary differences are recognised in the separate financial statements of the members of the tax consolidated group using the separate taxpayer within a group method. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax consolidated group are recognised by the Company (as head entity in the tax consolidated group). Members of the tax consolidated group have not entered into a tax funding agreement. As a result, the aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and tax credits in respect of that period, assumed by the Company, are recognised as a contribution from (or distribution to) equity participants. There were no contributions (or distributions) made during the year ended 31 December 2017. 2017 Tax Return On 22 December 2017, the Company lodged its tax return for the tax year ended 30 June 2017 and claimed a refundable Research and Development (R&D) tax offset of $1,303,462. In January 2018, the Company received this refund. 35 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 7: SEGMENT INFORMATION Operating Segments The group has one reportable operating segment, being exploration and evaluation activities in Australia. NOTE 8: CASH AND CASH EQUIVALENTS Cash at bank and in hand Deposits Cash at bank earns interest at floating rates based on daily bank deposit rates. Deposits at call earn interest on a 30, 60 and 90 day term basis at bank deposit rates. NOTE 9: TRADE AND OTHER RECEIVABLES Current Receivable from Jindal Mining & Exploration Limited (a) Provision for Jindal receivable Other receivables (b) Non-currentCurrent Receivable from Jindal Mining & Exploration Limited (a) Provision for Jindal receivable 2017 $ 969,964 3,500,000 4,469,964 2016 $ 673,674 6,000,000 6,673,674 2017 $ - - 39,630 39,630 3,005,000 (3,005,000) - 2016 $ 3,005,000 (3,005,000) 31,243 31,243 - - - Terms and conditions relating to the above financial instruments: (a) On 4 January 2017, the Company announced that it has received a request from Jindal Steel and Power (Mauritius) Limited (“Jindal”) to consider a further deferral of the payment of the final amount of $3 million owing to Legend from the sale of the Cameroon Iron Ore project. At that time, Legend agreed to this request in principle, and expected to report to the ASX as soon as an agreement of new payment terms was reached. Legend has since been advised by Jindal that it is undergoing a major debt rescheduling with its creditors and is unable to make any payments to creditors, including Legend, nor finalise any rescheduling of the Legend debt until its own debt rescheduling is complete. At the date of this report, Legend has yet to complete an agreement on new payment terms with Jindal. Since January 2017, Jindal has continued to pay the 4% interest due on the $3 million owing to Legend each quarter. (b) Other receivables are non-interest bearing and have repayment terms of between 30 and 60 days. NOTE 10: OTHER FINANCIAL ASSETS Current Shares in S2 Resources Ltd – at fair value (a) Shares and options in Nemex Resources Ltd – at fair value (b) Shares in Artemis Resources Ltd – at fair value (c) Security bond (d) Non-current Rental property bond (e) 36 2017 $ 173,868 66,000 - 50,000 289,868 2016 $ 166,308 66,000 120,000 50,000 402,308 5,775 5,775 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 10: OTHER FINANCIAL ASSETS (CONTD) Terms and conditions relating to the above financial instruments: (a) Shares in S2 Resources Ltd – 755,946 shares were on hand at 31 December 2017. The shares had a market value of $0.23 each (2016: $0.22) (b) Shares and options in Nemex Resources Ltd – 3,300,000 shares were on hand at 31 December 2017. The shares had a market value of $0.02 each (2016: 3,300,000 shares at $0.02). (c) Shares in Artemis Resources Ltd: In August 2017, Legend completed the sale of its interest in Artemis Resources Limited for a net consideration of $466,644. (d) Security bond – bank deposit held as security for credit cards. At 31 December 2017, this deposit is held on a 6 month term deposit with an interest rate of 2.47% per annum (31 December 2016, 6 months at 2.66%pa). (e) Rental Property Bond – this bond relates to a rental property in Boulder WA. No interest is received on this bond. The equity investments are all classified as held for trading. The market value of all equity investments represent the fair value based on quoted prices on active markets (ASX) as at the reporting date without any deduction for transaction costs. These investments are classified as Level 1 financial instruments. There have been no transfers between levels of the fair value hierarchy used in measuring the fair value of these financial instruments, or changes in its classification as a result of a change in the purpose or use of these assets. NOTE 11: PROPERTY, PLANT AND EQUIPMENT Plant and equipment At 31 December Cost Accumulated depreciation Net carrying amount At 1 January Net of accumulated depreciation Additions Disposals Depreciation expense - Admin Depreciation expense - Exploration At 31 December Net of accumulated depreciation 2017 $ 2016 $ 324,726 (175,687) 149,039 281,444 (124,965) 156,479 156,479 43,282 - (35,184) (15,538) 44,486 141,907 - (14,136) (15,778) 149,039 156,479 NOTE 12: DEFERRED EXPLORATION COSTS Deferred exploration costs (a) Deferred exploration and evaluation costs At 1 January, at cost Acquired during the year Reimbursement of exploration expenditure – R&D Rebate Impaired during the year Expenditure incurred during the year At 31 December, at cost Note (i) (ii) 2017 $ 9,676,532 7,712,131 164,211 (1,037,085) - 2,837,275 9,676,532 2016 $ 7,712,131 5,485,454 - - (492,882) 2,719,559 7,712,131 Note: (i) During the year Legend purchased two exploration licences from Musgrave Minerals Limited in the Fraser Range district of Western Australia. Legend acquired 100% interest in the tenements E28/2404 and E28/2405 for the following consideration: 10,000,000 Legend Shares 10,000,000 unlisted options to subscribe for a fully paid ordinary Legend share at an exercise price of $0.04 each, exercisable by 30 March 2021. 37 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 12: DEFERRED EXPLORATION COSTS (CONTD) (ii) The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. NOTE 13: TRADE AND OTHER PAYABLES Current – unsecured Trade payables Other payables and accruals Terms and conditions relating to the above financial instruments (i) Trade payables are non-interest bearing and normally settled on 30 day terms. (ii) Other payables are non-interest bearing and normally settled as they fall due. (iii) There are no trade payables past due for payment. 2017 $ 32,580 30,000 62,580 2016 $ 61,521 27,500 89,021 NOTE 14: PROVISIONS Current Employee benefits Non-Current Employee benefits Number of employees at year end NOTE 15: CONTRIBUTED EQUITY Ordinary shares Issued and fully paid Movement in ordinary shares on issue 2017 At 1 January 2017 Shares issued for tenement acquisition (refer note 12(i)) At 31 December 2017 Movement in ordinary shares on issue 2016 At 1 January 2016 At 31 December 2016 2017 $ 2016 $ 131,882 94,190 86,592 4 2017 $ 64,288 4 2016 $ 60,711,242 60,588,031 60,711,242 60,588,031 No. 2,034,350,801 10,000,000 2,044,350,801 No. 2,034,350,801 2,034,350,801 $ 60,588,031 123,211 60,711,242 $ 60,588,031 60,588,031 Effective 1 July 1998, the Corporations’ legislation in place abolished the concept of authorised share capital and par value shares. Accordingly the Company does not have authorised capital nor par value in respect of its issued shares. Fully paid ordinary shares carry one vote per share and carry the right to dividends. 38 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 16: RESERVES Movement in reserves At 1 January 2017 Options issued to employees(refer note 18) Options issued for tenement acquisition (refer note 12 (i)) At 31 December 2017 At 1 January 2016 Options issued to employees(refer note 18) At 31 December 2016 Share option premium reserve Share option premium reserve $ 23,208,778 18,500 41,000 23,268,278 23,002,578 206,200 23,208,778 The share option premium reserve is used to record the value of share based payments provided to employees, directors and contractors, as part of their remuneration. NOTE 17: SHARE OPTIONS Unlisted options – Expiry date 23 September 2020 At 1 January 2017 At 31 December 2017 Unlisted options – Expiry date 30 March 2021 At 1 January 2017 Issued during the year At 31 December 2017 Unlisted options – Expiry date 23 September 2020 At 1 January 2016 At 31 December 2016 Unlisted options – Expiry date 30 March 2021 At 1 January 2016 Issued during the year At 31 December 2016 NOTE 18: SHARE BASED PAYMENT PLANS (a) Recognised share-based payment expenses Number Exercise price cents per share 150,000,000 150,000,000 73,000,000 15,000,000 88,000,000 150,000,000 150,000,000 - 73,000,000 73,000,000 4 cents 4 cents 4 cents 4 cents 4 cents During the 2017 Year the following share-based payment transactions occurred: 5,000,000 incentive options with an exercise price of 4 cents and expiring on 30 March 2021 were issued to employees. Under the Company’s Employee Share Option Plan. The fair value of the options granted during the half-year was 0.37 cents, for a total value of $18,500 included within share based payments expense (2016: $206,200). The fair values were calculated by using the Black-Scholes European Option Pricing Model applying the following inputs: Exercise price (cents) Life of the option (years) Underlying share price (cents) Expected share price volatility Risk free interest rate 39 Incentive Options 4.0 5.0 1.2 75.0% 2.06% NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 18. SHARE BASED PAYMENT PLAN (CONTD) (b) Types of share-based payment plans Employee Share Option Plan, ‘ESOP’ Share options are granted to Eligible Persons with more than 6 months service. Eligible Persons are determined by the Board after taking into account the following considerations: (i) the seniority of the Eligible Person and the position the Eligible Person occupies within the Group; (ii) the length of service of the Eligible Person with the Group; (iii) the record of employment of the Eligible Person with the Group; (iv) the contractual history of the Eligible Person with the Group; (v) the potential contribution of the Eligible Person to the growth of the Group; (vi) the extent (if any) of the existing participation of the Eligible Person in the Plan; and (vii) any other matters which the Board considers relevant. At a General Meeting on the 4 December 2009 shareholders approved the implementation of Employee Share Option Plan No 3. The new plan differs from the previous plans in that there is no 12 month vesting period on any new options received under plan No 3. There is a significant change in the context of recent proposals by the Federal Government to change the tax treatment of options issued under incentive schemes. Removal of the vesting period requirement allows the Board maximum flexibility to make offers of options on the terms of the plans appropriate at the time, having regard for the tax environment which the proposed participants find themselves in when an offer of options is received from the company. Vendor Options In 2017 share options were granted, as opposed to cash payments, for the following expenses: (i) Tenement acquisition – 10,000,000 options were granted as part consideration for the tenement acquisition from Musgrave Minerals Limited in the Fraser Range district of Western Australia. Legend acquired 100% interest in the tenements E28/2404 and E28/2405. (c) Summaries of options granted ESOP: The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options issued during the year: Outstanding balance at the beginning of the year Granted during the year Expired/lapsed during the year Outstanding at the end of the year Exercisable at the end of the year 2017 No. 73,000,000 5,000,000 - 78,000,000 78,000,000 2017 WAEP ($) 0.040 0.040 - 0.040 0.040 2016 No. 2016 WAEP ($) - - 73,000,000 0.040 - 73,000,000 73,000,000 - 0.040 0.040 Expense Share Option Plan ‘ExSOP: The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options issued during the year: Outstanding balance at the beginning of the year Granted during the year Expired/lapsed during the year Outstanding at the end of the year Exercisable at the end of the year 2017 No. 150,000,000 10,000,000 - 160,000,000 160,000,000 2017 WAEP 0.040 0.040 - 0.040 0.040 2016 No. 150,000,000 2016 WAEP 0.040 - - 150,000,000 150,000,000 - - 0.040 0.040 The outstanding balance as at 31 December 2017 is represented by: (i) 150,000,000 options over ordinary shares with an exercise price of $0.04 each, exercisable immediately and expiring on 23 September 2020. (ii) 88,000,000 options over ordinary shares with an exercise price of $0.04 each, exercisable immediately and expiring on 30 March 2021. 40 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 19: RELATED PARTIES (i) Wholly-owned group transactions Loans made by Legend Mining Limited to wholly-owned subsidiaries are repayable on demand and are not interest bearing. (ii) Other related party transactions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. (iii) Ultimate parent Legend Mining Limited is the ultimate parent company. (iv) Compensation of key management personnel of the Group Short-term employee benefits Post-employment benefits Other long-term benefits Termination benefits Share-based payment Total compensation paid to Key Management Personnel 2017 $ 656,000 58,900 24,277 - - 739,177 2016 $ 634,154 63,577 5,333 - 196,000 899,064 The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel. NOTE 20: CASH FLOW INFORMATION (i) Reconciliation of Cash For the purposes of the Cash Flow Statement, cash and cash equivalents includes cash on hand and at bank and short term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the Cash Flow Statement is reconciled to the related items in the Statement of Financial Position as follows: Cash on hand Cash at bank Deposits at call Note 8 (ii) Reconciliation of net loss after income tax to net cash used in operating activities Net loss after tax Depreciation Impairment of Jindal receivable Share-based payments expense Unwinding of discount on receivables Fair value (gain)/loss on investments Deferred exploration costs impaired Movement in provisions and other Change in operating assets and liabilities: (Increase)/decrease in receivables Increase/(decrease) in payables Net cash used in operating activities 2017 $ 500 969,464 3,500,000 4,469,964 (567,068) 35,184 - 18,500 - (353,632) - (5,150) (872,166) (8,387) (26,441) (906,994) 2016 $ 500 673,174 6,000,000 6,673,674 (2,599,591) 29,913 3,005,000 206,200 (103,659) (1,624,178) 492,882 (6,257) (599,690) (29,966) (17,626) (647,282) 41 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 20. CASH FLOW INFORMATION (CONTD) Non-cash financing and investing activities During the year Legend purchased two exploration licences from Musgrave Minerals Limited in the Fraser Range district of Western Australia. Legend acquired 100% interest in the tenements E28/2404 and E28/2405 for the following non-cash consideration: 10,000,000 Legend Shares; 10,000,000 unlisted options to subscribe for a fully paid ordinary Legend share at an exercise price of $0.04 each, exercisable by 30 March 2021. Other than listed above there were no other non-cash financing or investing activities during the 2017 or 2016 years. NOTE 21: COMMITMENTS (a) Exploration expenditure commitments In order to maintain current rights of tenure to exploration tenements, the Group will be required to outlay approximately $2,110,500 (2016: $1,645,500) in the following twelve months in respect of tenement lease rentals and to meet minimum expenditure requirements of the Department of Industry & Resources. These obligations are expected to be fulfilled in the normal course of operations and have not been provided for in the financial report. (b) Operating Lease commitments The company has a month by month lease commitment over its office premises located at 8 Kings Park Road, West Perth. NOTE 22: INVESTMENTS IN CONTROLLED ENTITIES Details of subsidiaries Set out below are the Group’s subsidiaries at 31 December 2017. All the subsidiaries as listed below have share capital consisting solely of ordinary shares, which are held directly by the Group, and the proportion of ownership interests held equals to the voting rights held by the Group. The country of incorporation or registration is also their principal place of business. Name Place of Business / Country of Incorporation Ownership Interest Held by the Group Ownership Interest Held by Non-Controlling Interests Gibson Metals Pty Ltd Legend Cameroon Pty Ltd Australia Australia 2017 % 100 100 2016 % 100 100 2017 % - - 2016 % - - NOTE 23: FINANCIAL INSTRUMENTS DISCLOSURE The Group’s principal financial instruments comprise cash and short-term deposits and investments held for trading. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken. The main risks arise from the Group’s financial instruments are fair value interest rate risks, liquidity risk, credit risk and equity price risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements. Fair value interest risk The Group’s exposure to fair value interest risk is minimal. 42 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 23: FINANCIAL INSTRUMENTS DISCLOSURE (CONTD) Commodity price risk The Group’s exposure to price risk is minimal as the group is still in an exploration phase and has no revenues from mining. Credit risk The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis. The only significant concentration of credit risk within the Group is the loan receivable from Jindal. Exposure to credit risk is managed through regular analysis of Jindal’s ability and willingness to meet payment obligations. The carrying amount of financial assets represents the maximum credit exposure. The Company has provided in full for the $3 million receivable from Jindal (see Note 9 for full details on this impairment). No collateral is held as security. Jindal’s obligations are supported by a guarantee from its parent entity. Jindal’s parent is a large industrial conglomerate listed on both the Bombay Stock Exchange and National Stock Exchange of India. The credit rating and financial health of Jindal and its parent entity are monitored regularly as is Jindal’s exploration activities in-country Cameroon. With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Since the Group only trades with recognised third parties, there is no requirement for collateral. Liquidity risk The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of a mixture of long and short term debt. Equity price risk Equity price risk is the risk that changes in equity prices will affect the fair value of the Group’s holdings of financial instruments. The objective of equity price risk management is to manage and control the risk within acceptable parameters, while optimising the return. To minimise the risk the Group’s investments are of high quality and are publicly traded on the ASX. The investments are managed on a day to day basis so as to pick up any significant adjustments to market prices. (a) Interest Rate Risk The consolidated entity’s exposure to cashflow interest rate risk is as follows: 2017 Financial assets: Cash and cash equivalents Other financial assets 2016 Financial assets: Cash and cash equivalents Other financial assets Weighted Average Interest Rate Floating Interest $ Fixed Interest $ Non-Interest Bearing $ 2.55% 2.84% 969,464 - 969,464 3,500,000 50,000 3,550,000 673,174 - 673,174 6,000,000 50,000 6,050,000 500 - 500 500 - 500 Total $ 4,469,964 50,000 4,519,964 6,673,674 50,000 6,723,674 The maturity date for all financial instruments included in the above tables is 1 year or less from balance date. A change of 100 basis points in interest rates would result in a net gain/loss before taxation of $55,716 (2016: $64,872). This is based on the interest bearing financial assets as detailed above. 43 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 23: FINANCIAL INSTRUMENTS DISCLOSURE (CONTD) (b) Credit Risk The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Cash and cash equivalents Trade and other receivables Rental Bond/Security bond Note 8 9 10 Carrying Amount 2017 $ 4,469,964 39,630 55,775 4,565,369 2016 $ 6,673,674 31,243 55,775 6,760,692 The Company’s maximum exposure to credit risk at the reporting date was $4,565,369 (2016: $6,760,692). Except for the amount receivable from Jindal, all other trade and other receivables are current and have not been impaired. (c) Liquidity Risk The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements: 31 December 2017 Non-derivative financial liabilities Trade and other payables 31 December 2016 Non-derivative financial liabilities Trade and other payables Carrying Amount 62,580 62,580 Carrying Amount 89,021 89,021 Contractual cash 6 mths or less flows 62,580 62,580 62,580 62,580 Contractual cash 6 mths or less flows 89,021 89,021 89,021 89,021 (d) Net Fair Value of Financial Assets and Liabilities The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows: Held for trading financial assets Cash and cash equivalents Security bond Trade and other receivables Trade and other payables (e) Equity price risk 31 December 2017 31 December 2016 Carrying Amount $ 239,968 4,469,964 50,000 39,630 (62,580) 4,736,982 Fair Value $ 239,968 4,469,964 50,000 39,630 (62,580) 4,736,982 Carrying Amount $ 352,308 6,673,674 50,000 31,243 (89,021) 7,018,204 Fair Value $ 352,308 6,673,674 50,000 31,243 (89,021) 7,018,204 The Group’s exposure to equity securities is considered high as the company has significant investments in other listed investments totalling $239,968 at 31 December 2017. Such risk is managed through diversification of investments and daily monitoring of price movements. A change of 10% in the market price of the shares would result in a gain/loss before taxation of $23,997 (2016: $35,231). (f) Foreign Exchange risk At balance date, the group had no material foreign currency denominated liabilities and receivables. 44 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 24: FAIR VALUES The carrying amounts of the Group’s financial assets and financial liabilities at 31 December 2017 and 31 December 2016 are reasonable approximations of its fair value. Management assessed that cash and cash equivalents, trade and other receivables, and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments. The following table provides the fair value measurement hierarchy of the Group’s assets measured at fair value: Asset measured at fair value Date of valuation Total Quoted prices in active market (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Quoted equity investments (Note 10) Recurring 31-Dec-2017 239,968 239,968 - - The fair value of the financial assets is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value of the quoted equity instruments is based on price quotations at the reporting date. NOTE 25: INFORMATION RELATING TO LEGEND MINING LIMITED (“THE PARENT ENTITY”) Current assets Total assets Current liabilities Total liabilities Net assets Contributed equity Accumulated losses Share option premium reserve 2017 $ 4,799,462 14,630,808 194,462 281,054 14,349,754 60,711,242 (69,629,766) 23,268,278 14,349,754 2016 $ 7,107,225 14,981,610 183,211 247,499 14,734,111 60,588,031 (69,062,698) 23,208,778 14,734,111 Loss of the parent entity after tax Total comprehensive loss of the parent entity (567,068) (567,068) (2,818,251) (2,818,251) NOTE 26: AUDITOR’S REMUNERATION The auditor of Legend Mining Limited is Ernst & Young Australia. Amounts received or due and receivable by Ernst & Young Australia for: - An audit or review of the financial report of the entity and any other entity in the consolidated group Consolidated 2017 $ 2016 $ 30,900 30,900 30,900 30,900 45 NOTES TO THE F INANCIAL STATEMENTS F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 NOTE 27: CONTINGENT LIABILITIES There are no contingent liabilities at the date of this report. The consolidated entity’s activities in Australia are subject to the Native Titles Act and the Department of Environment. Uncertainty associated with Native Title issues may impact on the Group’s future plans. There are no unresolved Native Title issues and the consolidated entity is not aware of any other matters that may impact upon its access to the land that comprises its project areas. NOTE 28: EVENTS AFTER THE BALANCE SHEET DATE In January 2018, the Company receipted its R&D claim submission from the ATO of $1,303,462. No other matter or circumstance has arisen since the end of the financial year which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years. NOTE 29: DIVIDENDS PAID AND PROPOSED No dividends were paid or proposed this financial year. There are no franking credits available for future reporting periods. 46 DIRECTORS’ DECLARATION In accordance with a resolution of the Directors of Legend Mining Limited, I state that: In the opinion of the Directors: (a) the financial statements and notes on pages 20-46, and the remuneration disclosures that are contained in the Remuneration report in the Directors report pages 15-18, of the consolidated entity, are in accordance with the Corporations Act 2001, including; i Giving a true and fair view of the consolidated entity’s financial position as at 31 December 2017 and of its performance for the year ended on that date; and ii Complying with Australian Accounting Standards’ and the Corporations Regulations 2001; and iii The financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 31 December 2017. On behalf of the Board. Mark Wilson Managing Director Dated this 23rd day of March 2018 47 DECLARATION OF AUDITOR’S INDEPENDENCE 48 INDEPENDENT AUDITOR’S REPORT 49 INDEPENDENT AUDITOR’S REPORT 50 INDEPENDENT AUDITOR’S REPORT 51 INDEPENDENT AUDITOR’S REPORT 52 INDEPENDENT AUDITOR’S REPORT 53 SHAREHOLDER INFORMATION F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 The issued capital of the company as at 16 March 2018 is 2,044,350,801 ordinary fully paid shares. Distribution of Share Holders as at 16 March 2018 Fully Paid Shares 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Shares 27,344 444,951 2,444,111 80,530,165 1,960,904,230 2,044,350,801 Holders 95 119 289 1,675 1,258 3,436 Number of holdings less than a marketable parcel 10,100,929 936 Top 20 Shareholders as at 16 March 2018 Name YANDAL INVESTMENTS PTY LTD AUSTRALIAN GOLD RESOURCES PTY LTD CHESTER NOMINEES WA PTY LTD BAILEY GROUP ZERO NOMINEES PTY LTD PONTON MINERALS PTY LTD BELLARINE GOLD PTY LTD LISTOGA PTY LTD ROCKFORD METALS PTY LTD TOPAZ PTY LTD MR MATTHEW MCLEISH PHH PTY LIMITED MR PETER HAWKES WHITCOMBE NINO CONSTRUCTIONS PTY LTD MICHAELMAS ISLAND PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED MR ANDREW NICHOLAS VUKOSAV MR PHILIP ROY TRAFFORD THE DAVIES SUPER FUND A/C CONTINENTAL GLOBAL INVESTMENT LIMITED MUSGRAVE MINERALS LIMITED Substantial shareholders as at 16 March 2018 Name Creasy Group Chester Nominees WA Pty Ltd Unlisted Option holders as at 16 March 2018 Class of options 23 September 2020 exercisable at 4.0 cents per share 30 March 2021 exercisable at 4.0 cents per share 54 Shares 344,750,000 164,985,000 126,000,000 99,815,736 48,572,819 48,000,000 47,000,000 35,000,000 23,500,000 22,703,072 22,000,000 17,800,000 14,464,488 13,161,547 11,216,945 11,160,681 10,377,777 10,000,000 10,000,000 10,000,000 10,000,000 % 16.86 8.07 6.16 4.88 2.38 2.35 2.3 1.71 1.15 1.11 1.08 0.87 0.71 0.64 0.55 0.55 0.51 0.49 0.49 0.49 0.49 1,100,508,065 53.84 Shares 581,235,000 126,000,000 Options 150,000,000 88,000,000 % 28.43 6.16 Holders 2 7 TENEMENT LISTING F o r t h e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 7 AUSTRALIA – FRASER RANGE – ROCKFORD PROJECT Tenements held at 21 March 2018 Tenement E28/1718 E28/1727 E28/2188 E28/2189 E28/2190 E28/2191 E28/2192 E28/2404 E28/2405 E28/2675 E28/2676 E28/2677 Status Granted Granted Granted Granted Granted Granted Granted Granted Granted Application Application Application Percentage Interest 70% 70% 70% 70% 70% 70% 70% 100% 100% 100% 100% 100% 55
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