Annual 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