ANNUAL REPORT 2016 Maximus Resources Limited ABN 74 111 977 354 CORPORATE DIRECTORY CONTENTS Non-executive Chairman Managing Director Non-executive Director Non-executive Director Alternate for Mr Vickery Chairman’s Letter Managing Director’s Report Tenement Schedule Financial Report Directors’ Report Auditor’s Independence Declaration Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income 3 4 6 8 9 17 18 Directors Robert Kennedy Kevin Malaxos Leigh McClusky Ewan Vickery Nicholas Smart Company Secretary Rajita Alwis Registered Office Level 3, 100 Pirie Street Adelaide, South Australia 5000 Principal Office Level 3, 100 Pirie Street Adelaide, South Australia 5000 Telephone +61 8 7324 3172 Facsimile +61 8 8312 5501 Solicitors DMAW Lawyers Level 3, 80 King William Street Adelaide, South Australia 5000 Telephone +61 8 8210 2222 Facsimile +61 8 8210 2233 Minter Ellison Lawyers Level 10, 25 Grenfell Street Adelaide, South Australia 5000 Telephone +61 8 8233 5555 Facsimile +61 8 8233 5556 Share Registry Computershare Investor Services Level 5, 115 Grenfell Street Adelaide, South Australia 5000 Telephone +61 8 8236 2300 Facsimile +61 8 8236 2305 Auditor Grant Thornton 67 Greenhill Road Wayville, South Australia 5034 Banker National Australia Bank 48 Greenhill Road Wayville, South Australia 5034 Stock Exchange Listing Australia Securities Exchange (Adelaide) Maximus Resources Limited shares are listed on the Australian Securities Exchange ASX code: MXR Website www.maximusresources.com The website includes information about the Company, its strategies, projects, reports and ASX announcements. Consolidated Statement of Financial Position 19 Consolidated Statement of Changes In Equity 20 Consolidated Statement of Cash Flows 21 Notes To The Consolidated Financial Statements 22 Directors’ Declaration Independent Auditor’s Report To The Members ASX Additional Information 40 41 44 COMPLIANCE STATEMENTS Disclaimer This Annual Report contains forward looking statements that are subject to risk factors associated with the exploration and mining industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a variety of variables which could cause actual results or trends to differ materially. Exploration Targets Exploration Targets are reported according to Clause 18 of the JORC Code, 2012. This means that the potential quantity and grade is conceptual in nature and that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource. Competent Person The information in this report relating to Exploration Results, Mineral Resources and Ore Reserves is based on information compiled by Mr Stephen Hogan who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Hogan is a consultant to Maximus Resources Limited. He has sufficient experience that is relevant to the styles of mineralisation and types of deposit under consideration and consents to the inclusion of the information in this report in the form and context in which it appears. Mr Hogan qualifies 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). 2 Maximus Resources Limited ANNUAL REPORT 2016 Front cover image: Burbanks Processing Plant, located approx 8km SW of Coolgardie, Western Australia CHAIRMAN’S LETTER Dear Fellow Shareholders My addresses at the past two AGMs commenced by describing market conditions as the perfect storm for the resources sector. Thankfully, over the past 12 months we have seen a minor resurgence in the market’s appetite for mineral exploration, primarily due to rising gold and lithium commodity pricing. Conducive market conditions and prospective opportunities identified by management have enabled Maximus to successfully raise sufficient capital to fund gold and lithium exploration activities along with the acquisitions of the Spargoville tenement package and the nearby Burbanks Processing Plant. The survival of any junior exploration company is centered upon its shareholders and I thank all those who have participated in the recent capital raisings. During the 2016 financial year, Maximus’ exploration activities primarily focused on the Spargoville tenement package located in the Eastern Goldfields of Western Australia. During this period, Maximus moved to full ownership of the Spargoville project which illustrates the high regard in which these tenements are held and the strong belief that significant gold mining potential exists. Additionally, a significant review of the lithium prospectivity of the Spargoville tenements was undertaken. This resulted in the discovery of substantial lithium bearing pegmatites at the Lefroy prospect. X-Ray diffraction analysis was also undertaken on selected samples of pegmatite sourced during previous exploration programs and confirmed the presence of lithium bearing minerals including spodumene. During the June quarter of 2016, Maximus undertook due diligence on the Burbanks Processing Plant. Maximus was selected as the preferred bidder, and subsequently announced the landmark signing of a binding Share Sale Agreement with ASX-listed Ramelius Resources Limited. Maximus acquired the facility for a total of $2.5 million which includes staged payments over a 24 month period. The facility previously treated ore from Ramelius’ Wattle Dam gold mine located within Maximus’ current Spargoville portfolio and consequently provides Maximus with the ability to easily monetise future exploration success. Maximus has identified numerous parties potentially requiring gold treatment options and will be able to provide toll milling services later in 2016 following refurbishment and recommissioning of the facility. The acquisition provides Maximus with a near-term revenue opportunity and a platform for further growth. Maximus is currently reviewing additional project opportunities and continues to operate on minimal budget overheads in order to preserve capital for exploration whilst meeting an acceptable standard for a listed company. Finally, I thank my fellow Directors and all of our shareholders for your continued support and commitment to Maximus during this past period. The Maximus board and management team will continue to work hard to capitalise on our existing portfolio and other value-accretive opportunities in a bid to create shareholder value in the 2017 financial year. Bob Kennedy CHAIRMAN Maximus Resources Limited ANNUAL REPORT 2016 3 MANAGING DIRECTOR’S REPORT Review of operations Spargoville Maximus acquired an initial 25% interest in the Spargoville tenement package located 70km south of Coolgardie in the Eastern Goldfields of Western Australia on 5 August 2015, with 3 years to complete exploration expenditure totalling a further $800,000 to results reported high grade intersections at significant widths including 24m @ 3.05g/t from 19m (including 8m @ 4.0 g/t from 35m) in hole MXENRC04, 7m @ 4.0 g/t from 33m (including 1m @ 14.7g/t from 34m) in hole MXENRC05 and 6m @ 1.98g/t from 81m (including 1m @ 5.3g/t from 81m) in hole MXENRC07 (refer to ASX announcement dated 28 January 2016). Further reverse circulation (RC) drilling was completed on the Eagles Nest tenement in March, testing strike and depth extensions of the orebody. Activities have progressed to generating cross-section and ore modelling and producing a JORC 2012 compliant ore resource. It is anticipated that a resource model will be completed secure 90% equity. The initial 25% stake of Tychean Resources in the December quarter 2016. Ltd’s (TYK) interest in the 36 tenements totalling approximately 11,485 hectares was secured for $200,000. In November 2015, Maximus achieved the stage 1 earn-in commitment following exploration expenditure of $200,000 and increased its equity share in the Spargoville tenements to 51%. A significant review of the Lithium prospectivity of the Spargoville tenements was undertaken in the March quarter. This resulted in the discovery of significant lithium bearing pegmatites on the Lefroy prospect in the north eastern region of the tenement package, which lies on the northern portion of the Southern In February 2016, following exploration expenditure totalling a Yilgarn Tantalum-Tin-Lithium Province, in the vicinity of two further $600,000 MXR achieved the Stage 2 earn-in commitment and securing 90% equity in the Spargoville project. In addition, major Lithium Projects; Mt Marion (Neometals) and Lepidolite Hill (Lithium Australia). The Lefroy prospect is located approximately MXR negotiated a second Sale Agreement with TYK securing 20km south of, and along strike of the Mt Marion Lithium project. the remaining 10% equity in the Spargoville project for 25 million The discovery was made during the Company’s first dedicated MXR shares. This final payment extinguishing all remaining TYK Lithium field exploration program designed to test a series of equity in the Spargoville tenement package and cancels the gold targets generated from auger drill results by previous explorers, royalty applicable under the first Sale Agreement. The pace at detailed aerial photography interpretations and geophysical which MXR moved to full ownership of the Spargoville project confirms the high regard in which these tenements are held and the strong belief that significant gold potential still exists at imaging. The discovery identified lithium bearing mica (lepidolite) over a strike length of 200m with results averaging 3.55% Li20, with a peak value of 4.97% Li20. several sites across the tenement package. In May, X-Ray diffraction (XRD) analysis was undertaken on Following the commencement of the extensive soil sampling selected samples of pegmatite sourced during previous gold program across multiple targets on the Wattle Dam tenements, and nickel exploration programs and confirmed the presence of several high quality targets were identified. Maximus commenced lithium bearing minerals including spodumene. its maiden drilling campaign on Eagles Nest during December 2015 with a total of 8 holes completed for 809 metres. Final assay Narndee The Narndee tenements in Western Australia remain an important asset for the company, but minimal progress was made during 2015/16 due to the exploration priority given to the Spargoville acquisition. Analysis of previous RC drilling assay results confirmed elevated Copper grades in addition to substantial intervals of Copper and Zinc mineralisation and contributes to our confidence that the area has the potential to host a significant Volcanic Massive Sulphide (VMS) style Copper-Gold orebody, similar to other projects in the region. These RC drill results continued to encourage, but we were not able to plot consistent intervals of WA NARNDEE NT QLD Eromanga Basin NORTH GAWLER CRATON mineralisation across adjacent intersections. Yilgarn Craton SPARGOVILLE SA Gawler Craton MILLERS CREEK This analysis of previous RC drilling results confirmed the NSW ADELAIDE HILLS VIC presence of several electromagnetic (EM) conductors on the Narndee homestead tenement. A survey was undertaken in May 2016, with one target evaluated. Unfortunately the survey was terminated due to inclement weather, with plans to complete at a later date when access was re-established. Applications were submitted for 3 additional tenements Figure 1 Location of projects. TAS surrounding the company’s E59/908 tenement to protect the EM anomalies and potential future prospects. 4 Maximus Resources Limited ANNUAL REPORT 2016 MANAGING DIRECTOR’S REPORT (cont) Millers Creek (formerly Billa Kalina) Summary The Millers Creek project is located north-west of Lake Torrens Following the acquisition of the Spargoville tenement package in in the Eromanga Basin within the Woomera Prohibited Area 2015, Maximus was able to maintain an aggressive exploration (WPA) in central South Australia. The company retains 2 granted program on these tenements, despite continued difficult market tenements and 1 application for a total of 1,619 sq km. conditions throughout 2015/16 due to the high calibre of these Maximus continues to search for suitable Joint Venture parties to cooperate on drill testing the remaining targets on the Millers Creek tenements. The project is listed on a web hosted assets. Shareholders and the capital markets agreed with this opinion that these are high quality assets enabling MXR to raise funds to continue our exploration activities. Resources Notice board for Joint Venture or Sale. Significant progress has been made on both gold and lithium potential on the Spargoville tenements and these will remain our focus throughout 2016/17. Work continues on preparing resource models on several smaller gold projects with the view to seeking regulatory approval to commence mining within 18 months. Completing negotiations with TYK to secure 100% of the Spargoville project ensures that Maximus can explore and develop projects as rapidly as possible and be rewarded for our efforts. Success with the Burbanks treatment plant sale process ensures that the company is able to plan and schedule treatment of 100% owned ore through the company owned treatment plant and not be reliant on other third parties to process ore to generate a revenue. Kevin Malaxos MANAGING DIRECTOR Adelaide Hills Maximus retains entitlement to two contingent $1 million payments (totalling $2 million) in accordance with the Bird in Hand Sale Agreement which are dependent on Environmental approval to mine (PEPR) from the Department for State Development (DSD, formerly DMITRE) and the commencement of bullion production from the site. Maximus retains a 0.5% gross royalty on gold produced in excess of 50,000 Oz mined and continues to liaise with Terramin and monitor progress of the project feasibility study and approval process. Maximus retains 2 tenements in the Adelaide Hills region and has completed minimal exploration activities on these tenements during 2015/16. Northern Gawler Craton Maximus retains 1 tenement, the Welbourn Hill tenement located in the Northern Gawler Craton region of SA to follow-up on anomalous copper assay results by the previous tenement holder. MXR completed a review of the dataset followed by an airborne magnetic survey in March 2015 but failed to identify a suitable host for large tonnage copper deposits. Maximus continues to search for a Joint Venture party to conduct further exploration on the remaining tenement. Corporate During the June quarter of 2016, Maximus undertook Due Diligence on the Burbanks Treatment facility owned by ASX listed Ramelius Resources Ltd. The plant was on care & maintenance following processing of the Wattle Dam ore and various smaller parcels from the Spargoville area. The treatment plant has an annual capacity of 180,000 tonnes per annum, and is particularly suited to high grade, coarse gold style mineralisation. Maximus was selected as the preferred bidder for the project, and subsequently agreed on terms and signed a Sale Agreement in August 2016. The total cost of the facility was $2.5 million, with staged payments due over a 2 year period from the date of signing the Sale Agreement. MXR is currently preparing plans and obtaining quotes to refurbish the Burbanks plant and recommence milling operations. The plan is to complete processing on a Toll basis for third parties throughout 2017/18, when it is envisaged that MXR will have projects approved and ready for mining late 2017 or early 2018. Maximus Resources Limited ANNUAL REPORT 2016 5 TENEMENT SCHEDULE For the year ended 30 June 2016 Tenement Number WESTERN AUSTRALIA Narndee Project E59/908 E59/1829 E59/1830 E59/1831 E59/1834 E59/1854 E59/1917 E59/2160 E59/2161 Spargoville Project M15/1475 E15/967 E15/968 L15/128 L15/255 M15/395 M15/703 P15/4884 P15/4885 P15/4963 P15/5860 P15/5953 M15/1448 M15/1449 P15/5912 M15/97 M15/99 M15/100 M15/101 M15/102 M15/653 M15/1271 M15/1101 M15/1263 M15/1264 M15/1323 M15/1338 M15/1474 M15/1769 M15/1770 M15/1771 M15/1772 M15/1773 M15/1774 M15/1775 M15/1776 Tenement Name Registered Holder/Applicant Maximus Resources Interest Narndee Milgoo Peak 1 Milgoo Peak 2 Narndee Homestead Boondanoo Bricky Bore Eagles Nest Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Hilditch Larkinville Larkinville North Widgie North Widgie North Widgie North Widgie North Widgie North Widgie North Widgie Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Wattle Dam Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd & Bullabulling Pty Ltd Tychean Resources Ltd & Pioneer Resources Ltd Tychean Resources Ltd & Pioneer Resources Ltd Salt Lake Mining Pty Ltd Salt Lake Mining Pty Ltd Salt Lake Mining Pty Ltd Salt Lake Mining Pty Ltd Salt Lake Mining Pty Ltd Salt Lake Mining Pty Ltd Salt Lake Mining Pty Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd Tychean Resources Ltd 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 38.25% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 51% 6 Maximus Resources Limited ANNUAL REPORT 2016 TENEMENT SCHEDULE (cont) Tenement Name Registered Holder/Applicant Maximus Resources Interest Tenement Number SOUTH AUSTRALIA Adelaide Hills Project EL 5351 EL5135 Millers Creek Project EL 4463 EL 4899 EL 4854 EL 4898 Mount Monster Mount Rufus Billa Kalina Bamboo Lagoon Millers Creek Paisley Creek Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd Maximus Resources Ltd 100% 100% 100% 100% 100% 100% 100% Northern Gawler Craton Project EL 5248 Welbourn Hill Maximus Resources Ltd Maximus Resources Limited ANNUAL REPORT 2016 7 Contents Directors' Report Auditor's Independence Declaration Financial statements Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes In Equity Consolidated Statement of Cash Flows Notes To The Consolidated Financial Statements Directors' Declaration Independent Auditor's Report To The Members 9 17 18 19 20 21 22 40 41 FINANCIAL REPORT For the year ended 30 June 2016 Maximus Resources Limited ABN 74 111 977 354 These financial statements are the consolidated financial statements of the consolidated entity consisting of Maximus Resources Limited and its subsidiaries. The financial statements are presented in the Australian currency. Maximus Resources Limited is a company limited by shares, is listed on the Australian Securities Exchange (ASX) under the code “MXR” and is incorporated and domiciled in Australia. The registered office and principal place of business is: Maximus Resources Limited Level 3, 100 Pirie Street Adelaide SA 5000 Registered postal address is: Maximus Resources Limited GPO Box 1167 Adelaide SA 5001 A description of the nature of the Company’s operations and its principal activities is included in the Directors’ Report on pages 9 to 16, which is not part of these financial statements. The financial statements were authorised for issue by the directors on 7 September 2016. The directors have the power to amend and reissue the financial statements. Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available on our website: www.maximusresources.com 8 Maximus Resources Limited ANNUAL REPORT 2016 DIRECTORS’ REPORT Your directors present their report on Maximus Resources Limited (referred to hereafter as the Company) at the end of, or during, the year ended 30 June 2016 Directors The following persons were directors of the Company during the whole of the financial year and up to the date of this report: Robert Michael Kennedy (Non-executive chairman) Kevin John Malaxos (Managing Director) Leigh Carol McClusky (Non-executive director) Ewan John Vickery (Non-executive director) Nicholas John Smart (Alternate director for E J Vickery) Principal activities During the year the principal activities of the Company consisted of natural resources exploration and development. Dividends There were no dividends declared or paid during the year (2015: Nil). OPERATIONAL AND FINANCIAL REVIEW 1. Operating results and financial position The net result of operations of the Company for the financial year was a loss of $681,865 (2015: $97,389). The net assets of the Company have increased by $1,863,667 during the financial year from $3,563,920 at 30 June 2015 to $5,427,587 at 30 June 2016. 2. Review of Operations Spargoville The Spargoville tenements in Western Australia were secured in August 2015 through a Sale and Farm-in Agreement with Tychean Resources Limited (ASX: TYK). Maximus initially purchased a 25% interest in Tychean’s equity of the Spargoville tenements for $200,000 in cash and $200,000 worth of Maximus fully paid ordinary shares which were issued in February 2016 once Maximus’ equity was registered on the Department of Mines and Petroleum records. Maximus immediately commenced on-ground reconnaissance and an orientation soil sampling program to validate sampling techniques undertaken by previous explorers and test targets identified by an independent geophysicist. In excess of 60 targets were identified and infill soil sampling programs were conducted on these targets. In November 2015, Maximus achieved the stage 1 earn-in milestone, securing a further 26% equity in the Spargoville tenement package for a total equity of 50%. During December 2015 the first MXR drill program was undertaken on the Eagles Nest project. A total of 8 holes were drilled for 809 metres along the mapped lode system hosting several shallow shafts. During February 2016 the Company entered into an agreement to secure full ownership of Tychean’s interest in the Spargoville gold project. Consideration for the full ownership was ordinary shares in Maximus Resources Limited to the value of $50,000 that will be satisfied with the issue of 25,000,000 fully paid ordinary shares. The new agreement with Tychean removed all earn-in obligations required under the original farm-in agreement and cancelled the gold royalty to Tychean. An infill drilling program commenced in mid-March to obtain further data to assist in the preparation of a resource calculation for the Eagles Nest project. Drilling was undertaken on the northern tenement boundary to test the strike extension to the mineralisation identified in the maiden drill program in December. Final assay results were received in April which did not repeat the higher grades recorded in the initial drilling program. The results do not diminish the area’s potential for hosting a HG ore source which is demonstrated by the number and size of nuggets found on this tenement over the past 100 years as nuggets continue to be found by prospectors in this area to this day. During the year Tribute Mining activities returned 18.67ozs of gold to the Company, which was subsequently sold to refinery at a realized price of $1,699/oz. During March rock chip samples were collected from the Landor Lithium prospect (M15/1323) to test areas identified by Geological Survey of Western Australia historic mapping as pegmatites. Elevated Lithium oxide assay results were returned from the Landor samples prompting the decision to undertake further mapping and sample analysis on both the Landor prospect and the Lefroy lithium prospect during May 2016. XRD analysis was conducted on a series of samples of pegmatite to determine which lithium mineral was responsible for elevated assay results. The XRD analysis results confirm that spodumene is present in these drillholes, varying in amount from trace, to major. The results indicate that the lithium bearing pegmatites are shallow dipping, and ranging in thickness from 4m to 15m. The Company continues to locate and test pegmatites at the Lefroy Prospect for lithium mineralisation. Narndee The review of past and recent exploration programs on Narndee highlighted Electromagnetic (EM) conductors that warrant on- ground follow-up. Further analysis by an independent geophysicist confirmed a priority target located adjacent to an area previously evaluated by Maximus. The renewed focus on the area and the early identification of a significant anomaly justifies the Company’s persistence on the tenement package. Applications were submitted to the Department of Mines and Petroleum (DMP) for 3 tenements contiguous with the current MXR tenements in the area to secure all possibilities for the EM target. One tenement was granted however the remaining 2 applications are currently with a Native Title group for determination. Maximus Resources Limited ANNUAL REPORT 2016 9 DIRECTORS’ REPORT (cont) Maximus is continuing to evaluate surrounding tenements to further secure our position, and thus secure future potential in the southern portion of the tenement package (Milgoo project area). The Company also reviewed the northern tenement package located east of Mt Magnet held for its gold potential, where little success has resulted from early exploration efforts. Expenditure commitments on these tenements are increasing, and with the focus moving to the southern portion of the Narndee block, maintaining these northern tenements is difficult to justify. As a result, 4 northern tenements were relinquished during the quarter. The Company completed a Ground Electro-magnetic (GEM) Survey over part of the highly prospective Narndee poly-metallic project located approximately 400 km north east of Perth in the Murchison region of Western Australia. This GEM survey was targeting two high priority targets; MG03 & MG24. MG24 presents as a long slender feature considered similar to the Nova Bolinger anomaly in the Fraser Range area in the south-west of Western Australia. The GEM survey will provide more detailed information regarding the two anomalies and provide valuable data to pinpoint drill collar positions in the planned drill program. The survey was conducted over Target MG03 and consisted of three east-west orientated survey lines, with station spacing’s of 100m. The second Target, MG24 could not be surveyed due to excessive rain preventing access to the site. This survey will be completed when access is restored during late August 2016, weather permitting. The Company pre-empted the GEM survey results and has submitted a Program of Works (PoW) to the Department for Mines and Petroleum in WA to facilitate drilling of both MG03 and MG24, once the GEM survey on MG24 is completed and the resultant data interpreted. Adelaide Hills A review of the available data on the 4 remaining Adelaide Hills tenements was completed during the year with little scope identified for a significant discovery. The Company attempted to secure JV or sale opportunities for the 4 Adelaide Hills tenements. With little interest shown in the current environment, 2 tenements were relinquished, and 2 tenements remain in the portfolio. Millers Creek The Company completed a review of the geophysical data to determine the presence of any IOCG targets and maintains that the tenement holding remains highly prospective for IOCG mineralisation. However, with the current focus of the Company towards gold projects and base metal projects in Western Australia, the Company listed the tenement package on an online platform to solicit offers for a Joint Venture on the expanded Millers Creek project. Northern Gawler Craton The Northern Gawler Craton Project consists of a single granted tenement, Welbourn Hill (EL 5248) located along the northern margins of the Gawler Craton in the Marla region of South Australia covering an area totalling 439 km². Following the airborne magnetic survey completed during March 2015, the Geophysicist completed some preliminary imagery. This data shows a detailed picture of the magnetics, which suggests that basement rocks are the source of the magnetic anomaly, and the mineralisation is associated with magnetite depletion. The Company continues to promote this project to prospective Joint Venture parties as one with potential to host a significant copper target within the basement structure. Corporate During the 2016 financial year the following securities were issued: • 100,000,000 ordinary shares were issued to sophisticated investors on 27 October 2015 at an issue price of $0.002 per share raising $200,000 before costs. • 138,000,000 ordinary shares were issued to shareholders who participated in the Company’s Share Purchase Plan on 11 December 2015. The shares were offered at an issue price of $0.002 per share raising $276,000 before costs. • 100,000,000 fully paid ordinary shares were issued to Tychean Resources Limited (Tychean) on 17 February 2016. The issue of shares was part consideration to secure 25% interest in Tychean’s interest in the Spargoville tenements located in Kalgoorlie, Western Australia. • 66,000,000 ordinary shares were issued to sophisticated investors on 25 February 2016 for an issue price of $0.001 per share raising $66,000 before costs. • 70,000,000 ordinary shares were issued to sophisticated investors on 13 April 2016 for an issue price of $0.0038 per share raising $266,000 before costs. • 530,182,688 ordinary shares and 530,182,688 unlisted options were issued to shareholders who participated in the pro-rata Entitlement Issue. The shares were offered at an issue price of $0.003 per share with a free attaching option. The shares and unlisted options were issued on 16 May 2016 raising $1,590,548 before costs. The unlisted options are exercisable at $0.006 and expire on 31 May 2017. • 7,580,611 ordinary shares and 7,580,611 unlisted options were issued to an investor as part of the shortfall remaining after closure of the pro-rata Entitlement Issue. The shortfall raised an additional $22,742 before costs. The unlisted options are exercisable at $0.006 per option and expire on 31 May 2017. • 515,802 ordinary shares were issued to investors who exercised their unlisted options at $0.006 per options. The ordinary shares were issued on 30 June 2016 raising $3,095 before costs. 3. Significant changes in the state of affairs There have been no significant changes in the state of affairs from the 2015 financial year to 2016 apart from items as disclosed in this report. 4. Events arising since the end of the reporting period On 2 August 2016 the Company signed a binding Share Sale Agreement with Ramelius Resources Limited (ASX: RMS) for the purchase of the company, Ramelius Milling Services Pty Ltd that owns the Burbanks Processing Facility located 10km south of Coolgardie, Western Australia. The consideration to acquire Ramelius Milling Services Pty Ltd is $2.5 million that will be paid in staged payments over a 24 month period as outlined below: • $50,000 deposit to secure an exclusivity period to finalise Due Diligence and negotiate Share Sale Agreement. (paid July 2016); • $200,000 upon signing of the binding Sale Agreement. (paid August 2016); • $250,000 upon transfer of all licenses and shares in Ramelius Milling Services Pty Ltd (paid 30 August 2016); • $1,000,000 to be paid to RMS 12 months from the date of signing the Sale Agreement or commencement of commercial production, whichever occurs first; and • $1,000,000 upon the 24 month anniversary of signing the Share Sale Agreement. The Company also entered into a Mortgage Agreement with RMS over the assets held in Ramelius Milling Services Pty Ltd. This 10 Maximus Resources Limited ANNUAL REPORT 2016 Mortgage Agreement provides security to RMS against any default by the Company on the payment terms detailed above. Should the Company default on any future payments, RMS has the option to take possession of Ramelius Milling Services Pty Ltd. A placement to institutional investors for 533,333,333 fully paid ordinary shares raising $1.6 million will be completed in mid- September 2016 following the announcement to the market on 4 August 2016. The placement will also include a free attaching unlisted option resulting in 533,333,333 unlisted options with an exercise price of $0.006 per option being issued. The placement will fund part of the acquisition and refurbishment of the Burbanks Processing Facility and provide working capital. There has been no other transaction or event of a material or unusual nature that has arisen in the interval between the end of the financial year and the date of this report that is likely, in the opinion of the directors, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. 5. Future business developments, prospects and business strategies The Company is poised to progress from a pure explorer to a producer in the very near future, should continued exploration success be achieved. The acquisition of the Spargoville tenements has presented several advanced gold exploration targets in addition to several lithium targets. The Company plans to pursue both the gold and lithium potential of the Spargoville tenements with the aim of identifying economic gold resources and/or a marketable lithium project. In addition to exploration on the Spargoville tenements, the Company shall continue to review potential gold projects and advance exploration targets held by other companies or individuals, within an economic trucking distance to Coolgardie, to build upon the exploration asset base at Spargoville and grow future gold resources. These additional 3rd party targets may be acquired or accessed through joint ventures or other agreements. The Company was fortunate to acquire the Burbanks gold ore processing facility in August 2016. The ultimate plan is to refurbish the treatment facility and process Maximus owned or controlled ore sources. To achieve this outcome, the Company plans to refurbish the facility and Toll treat gold ore from 3rd parties, located within trucking distance to the facility. This process will enable the Company to continue our exploration activities at Spargoville with the aim of generating MXR owned mineable gold ore resources. Once regulatory approval is received for each project, the Company aims to process the ore through the Burbanks processing plant. Refurbishment of the Treatment facility shall only occur once a 3rd party agreement to Toll treat ore is secured, or exploration success leads to a proven reserve being generated on a Maximus owned target. Discussions are ongoing with several parties to achieve a Toll treatment agreement. Exploration will continue on the remaining Narndee project targets with the aim of identifying a gold or large base metal resource. A review of airborne electromagnetic (EM) data and a recent ground EM survey identified several targets warranting follow-up exploration evaluation and testing. We aim to test these targets in the medium term future. 6. Environmental regulation The Company’s operations are subject to significant environmental regulation under both Commonwealth and relevant State legislation in relation to discharge of hazardous waste and materials arising from any exploration or mining activities and development conducted by the Company on any of its tenements. The Company believes it is not in breach of any environmental obligation. INFORMATION ON DIRECTORS Robert Michael Kennedy KSJ, ASAIT, Grad Dip (Systems Analysis), Dip Financial Planning, Dip Financial Services, FCA, AGIA, Life Member AIM, FAICD, FTI. NON-EXECUTIVE CHAIRMAN Experience and expertise Mr Kennedy, a Chartered Accountant, has been non-executive chairman of Maximus Resources Limited since 2004. Mr Kennedy brings to the Board his expertise and extensive experience as Chairman and non-executive director of a range of listed public companies in the resources sector. He conducts the review of the Board including the Managing Director in his executive role. Apart from his attendance at Board and Committee meetings, Mr Kennedy leads the development of strategies for the development and future growth of the Company. Other current directorships Mr Kennedy is a director of ASX listed companies Ramelius Resources Limited (since listing in March 2003), Flinders Mines Limited (since December 2001), Monax Mining Limited (since 2004), and Tychean Resources Limited (since 2006). Former directorships in the last three years He was appointed the Chairman of the University of Adelaide’s Institute of Minerals and Energy Resources in 2008 and his term ended early in 2014. Formerly he was a director of Crestal Petroleum Limited (formerly Tellus Resources Limited from 2013 to 2015) and Marmota Energy Limited (from April 2006 to April 2015). Special responsibilities Chairman of the Board. Member of the Audit, Risk & Corporate Governance Committee. Interests in shares and options 84,000,000 ordinary shares in Maximus Resources Limited. 24,000,000 unlisted options in Maximus Resources Limited. Kevin John Malaxos BSc Mining Engineering MANAGING DIRECTOR Experience and expertise A director since 13 December 2010, Mr Malaxos has 30 years’ experience in the resources sector in senior management and executive roles across a suite of commodities including gold, nickel, iron ore, silver, lead, zinc and chromium. He has managed surface and underground mining operations and brings a wealth of experience in project evaluation and development, project approval and Government liaison. Mr Malaxos’ previous roles include CEO for Mt Gibson Mining (MGX) and COO of listed iron ore developer Centrex Metals Limited (CXM), where he was responsible for project development, project approvals and community and government consultation. Other current directorships Mr Malaxos is a non-executive director of ASX listed company Flinders Mines Limited (since December 2010). Special responsibilities Managing Director. Interests in shares, options and rights 38,500,000 ordinary shares in Maximus Resources Limited. 11,000,000 unlisted options in Maximus Resources Limited. Maximus Resources Limited ANNUAL REPORT 2016 11 DIRECTORS’ REPORT (cont) Leigh Carol McClusky Nicholas John Smart NON-EXECUTIVE DIRECTOR ALTERNATE DIRECTOR FOR E J VICKERY Experience and expertise Appointed as a director on 1 September 2010, Ms McClusky is the Managing Director of the McCo GROUP, a strategic communications company with offices in Adelaide, Melbourne and Geelong. After more than 30 years in key media roles across Melbourne, Sydney and Adelaide, Ms McClusky now works closely with a range of organisations and industries to develop proactive communication campaigns and to deflect potentially damaging impacts on corporate reputations. Her role also includes stakeholder engagement and management, client advocacy and crisis communications. Special responsibilities Member of the Audit, Risk & Corporate Governance Committee. Interests in shares, options and rights 6,939,338 ordinary shares in Maximus Resources Limited. 1,982,670 unlisted options in Maximus Resources Limited. Experience and expertise An alternate director since 9 May 2005, Mr Smart has held positions as a general manager in Australia and internationally. Previously a full Associate Member of the Sydney Futures Exchange and adviser with a national share broking firm, with over 25 years’ experience in the corporate arena including capital raising for private and listed companies. Other experience includes startup companies in technology development including commercialisation of the Synroc process for safe storage of high level nuclear waste, controlled temperature and atmosphere transport systems and the beneficiation of low rank coals. He is an alternate director for Maximus Resources Limited (since May 2005) and an alternate director for Flinders Mines Ltd (since 2009). Mr Smart currently consults to various public and private companies. Interests in shares and options 37,500 ordinary shares in Maximus Resources Limited. Rajita Shamani Alwis LLB BCom, CA COMPANY SECRETARY Experience and expertise Ms Alwis has been the Company Secretary since 30 June 2011 to the date of this report. Ms Alwis has over 15 years’ experience in public practice and commerce and has been a Chief Financial Officer and Company Secretary of numerous listed and proprietary companies. Ewan John Vickery LLB NON-EXECUTIVE DIRECTOR Experience and expertise A director since incorporation 17 December 2004, Mr Vickery is a corporate and business lawyer with over 30 years’ experience in private practice in Adelaide. He has acted as an advisor to companies on a variety of corporate and business issues including capital and corporate restructuring, native title and land access issues, and as lead native title advisor and negotiator for numerous mining and petroleum companies. He is a member of the Exploration Committee of the South Australian Chamber of Mines and Energy Inc, the International Bar Association Energy and Resources Law Section, the Australian Institute of Company Directors and is a past national president of Australian Mining and Petroleum Law Association (AMPLA Limited). Other current directorships Mr Vickery is a non-executive director of Flinders Mines Limited (since 2000). Mr Vickery is also a non-executive director of Tychean Resources Limited (Appointed May 2013). Special responsibilities Chairman of the Audit, Risk & Corporate Governance Committee. Interests in shares and options 35,000,003 ordinary shares in Maximus Resources Limited. 10,000,003 unlisted options in Maximus Resources Limited. 12 Maximus Resources Limited ANNUAL REPORT 2016 Meetings of directors The numbers of meetings of the Company’s board of directors and of each board committee held during the year ended 30 June 2016, and the number of meetings attended by each director were: • the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. Full meetings of directors Audit and risk committee meetings A 11 11 10 11 B 11 11 11 11 A 3 3 3 3 B 3 3 3 3 Fees for non-audit services paid or payable to the external auditors or its related practices during the year ended 30 June 2016 was $2,000 (2015: $2,200). REMUNERATION REPORT – AUDITED The remuneration report is set out under the following main headings: A Principles used to determine the nature and amount of remuneration B Voting and comments made at the Company’s 2015 Annual Robert Michael Kennedy Kevin John Malaxos Leigh Carol McClusky Ewan John Vickery Nicholas John Smart A = Number of meetings attended B = Number of meetings held during the time the director held office or was a member of the committee during the year Indemnification and insurance of officers The Company has entered into deeds of indemnity with each director whereby, to the extent permitted by the Corporations Act 2001, the Company agreed to indemnify each director against all loss and liability incurred as an officer of the Company, including all liability in defending any relevant proceedings. The Company is required to indemnify the directors and other officers of the Company against any liabilities incurred by the directors and officers that may arise from their position as directors and officers of the Company. No costs were incurred during the year pursuant to this indemnity. Insurance premiums Since the end of the previous year the Company has paid insurance premiums of $14,648 to insure the directors and officers in respect of directors’ and officers’ liability and legal expenses insurance contracts. Proceedings on behalf of company No person has applied to the Court under section 237 of the Corporations Act 2001 to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Non-audit services The Board of Directors, in accordance with advice from the Audit Committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons: • all non-audit services are reviewed and approved by the Audit Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and General Meeting C Details of remuneration D Service agreements E Share-based compensation The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001. A Principles used to determine the nature and amount of remuneration The Company’s policy for determining the nature and amounts of emoluments of board members and other key management personnel of the Company is as follows: The Company’s Constitution specifies that the total amount of remuneration of non-executive directors shall be fixed from time to time by a general meeting. The current maximum aggregate remuneration of non-executive directors has been set at $300,000 per annum. Directors may apportion any amount up to this maximum amount amongst the non- executive directors as they determine. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as directors. The remuneration of the Managing Director is determined by the non-executive directors on the Board as part of the terms and conditions of his employment which are subject to review from time to time. The remuneration of other executive officers and employees is determined by the Managing Director subject to the approval of the Board. Non-executive director remuneration is by way of fees and statutory superannuation contributions. Non-executive directors do not participate in schemes designed for remuneration of executives nor do they receive options or bonus payments and are not provided with retirement benefits other than salary sacrifice and statutory superannuation. The Company’s remuneration structure is based on a number of factors including the particular experience and performance of the individual in meeting key objectives of the Company. The Board is responsible for assessing relevant employment market conditions and achieving the overall, long term objective of maximising shareholder benefits, through the retention of high quality personnel. The Company does not presently emphasise payment for results through the provision of cash bonus schemes or other incentive payments based on key performance indicators of the Company given the nature of the Company’s business as a junior listed mineral exploration entity and the current status of its activities. However, the Board may approve the payment of cash bonuses from time to time in order to reward individual executive performance in achieving key objectives as considered appropriate by the Board. Maximus Resources Limited ANNUAL REPORT 2016 13 DIRECTORS’ REPORT (cont) Remuneration Report - Audited (cont) The Company also has an Employee Incentive Rights Plan approved by shareholders that enables the Board to offer eligible employees rights to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, rights to acquire ordinary fully paid shares at no cost may be offered to the Company’s eligible employees as determined by the Board in accordance with the terms and conditions of the Plan. The objective of the Plan is to align the interests of employees and shareholders by providing employees of the Company with the opportunity to participate in the equity of the Company as a long term incentive to achieve greater success and profitability for the Company and to maximise the long term performance of the Company. The employment conditions of the Managing Director were formalised in a contract of employment. The base salary as set out in the employment contract is reviewed annually. The Managing Director’s contract may be terminated at any time by mutual agreement and in instances of serious misconduct the Company may terminate his agreement without notice. No remuneration consultants were engaged for the year ending 30 June 2016 or 2015. B Voting and comments made at the Company’s 2015 Annual General Meeting Maximus Resources Limited received more than 80% of ‘yes’ votes on its remuneration report for the 2015 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. C Details of remuneration This report details the nature and amount of remuneration for each key management person of the Company. The names and positions held by directors and key management personnel of the Company during the financial year are: Mr R M Kennedy Chairman, non-executive Mr K J Malaxos Managing Director Ms L C McClusky Director, non-executive Mr E J Vickery Director, non-executive Mr N J Smart Alternate director for E J Vickery, non-executive Ms R S Alwis Company Secretary Key management personnel and other executives of the Company: Short-term employee benefits Short-term employee benefits Short-term employee benefits Post- employment benefits Share-based payments Share-based payments Salary Bonus Superannuation Options Rights 2016 Name Robert M Kennedy Kevin J Malaxos Leigh C McClusky Ewan J Vickery Nicholas J Smart Rajita S Alwis 2015 Name Robert M Kennedy Kevin J Malaxos Leigh C McClusky Ewan J Vickery Nicholas J Smart Rajita S Alwis Total key management personnel compensation 255,780 251,143 Key management personnel and other executives of the Company: $ - $ - Fees $ 82,283 - 251,143 54,500 49,772 - 69,225 - - - - Fees $ 82,454 - 251,143 54,500 49,772 - 64,200 - - - - $ - - - - - - $ 7,817 23,857 - 4,728 - - 36,402 $ - - - - - - - $ - - - - - - - $ - - - - - - $ 7,817 23,857 - 4,728 - - 36,402 $ - - - - - - - $ - - - - - - - Total $ 90,100 275,000 54,500 54,500 - 69,225 543,325 Total $ 90,100 275,000 54,500 54,500 - 64,200 538,300 Short-term employee benefits Short-term employee benefits Short-term employee benefits Post- employment benefits Share-based payments Share-based payments Salary Bonus Superannuation Options Rights Total key management personnel compensation 250,755 251,143 14 Maximus Resources Limited ANNUAL REPORT 2016 The relative proportions of remuneration that are fixed and those that are at risk are as follows: Name Fixed remuneration Fixed remuneration At risk – STI* At risk – STI* At risk – LTI** At risk – LTI** Kevin John Malaxos 2016 % 100 2015 % 100 2016 % - 2015 % - 2016 % - 2015 % 15 * Short-term incentives (STI) include cash incentive payments (bonuses) linked to company and/or individual performance. ** Long-term incentives (LTI) include equity grants issued via the Company’s Employee Share Option and Incentive Rights Plans. This plan is designed to provide longterm incentives for executives to deliver longterm shareholder returns. D Service agreements The Board has negotiated a contract with Mr Malaxos with no fixed term at a salary of $275,000 per annum inclusive of superannuation guarantee contributions to be reviewed annually and with termination on three months’ notice. Messrs Kennedy and Vickery and Ms McClusky are engaged as directors with formal agreements per the ASX Corporate Governance Principles and Recommendations Third Edition. E Share-based compensation Incentive rights The Company has an Employee Incentive Rights Plan approved by shareholders that enables the Board to offer eligible employees rights to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, rights to acquire ordinary fully paid shares at no cost may be offered to the Company’s eligible employees as determined by the Board in accordance with the terms and conditions of the Plan. No rights were issued during the year. Options granted as remuneration No options were granted during the year. Shares issued on exercise of remuneration options No shares were issued to directors as a result of the exercise of remuneration options during the financial year. Directors’ interests in shares and options i) Option holdings The numbers of options over ordinary shares in the Company held during the financial year by each director of Maximus Resources Limited and other key management personnel of the Company, including their personally related parties, are set out below: 2016 Name R M Kennedy K J Malaxos L C McClusky E J Vickery N J Smart Balance at start of the year Issued as remuneration Exercised (expired/ purchased) Acquired during the year* Balance at end of the year Vested and exercisable Unvested - - - - - - - - - - - - - - - 24,000,000 24,000,000 24,000,000 11,000,000 11,000,000 11,000,000 1,982,670 1,982,670 1,983,670 10,000,003 10,000,003 10,000,003 - - - - - - - - *The options were acquired as a result of participating in the pro-rata Entitlement Issue. 2015 Name Balance at start of the year Issued as remuneration R M Kennedy 18,000,000 K J Malaxos 7,000,000 L C McClusky 1,223,334 E J Vickery N J Smart 6,072,001 - - - - - - Exercised (expired/ purchased) (18,000,000) (7,000,000) (1,223,334) (6,072,001) - Acquired during the year Balance at end of the year Vested and exercisable Unvested - - - - - - - - - - - - - - - - - - - - Maximus Resources Limited ANNUAL REPORT 2016 15 DIRECTORS’ REPORT (cont) ii) Share holdings The numbers of shares in the Company held during the financial year by each director of Maximus Resources Limited and other key management personnel of the Company, including their personally related parties, are set out below: 2016 Name R M Kennedy KJ Malaxos L C McClusky E J Vickery N J Smart Balance at start of the year 50,000,000 20,000,000 2,456,668 16,070,001 37,500 Received as compensation Exercise of options/rights Acquired/ (disposed)* - - - - - - - - - - 34,000,000 18,500,000 4,482,670 18,930,002 - *The shares were acquired as a result of participating in the Share Purchase Plan and pro-rata Entitlement Issue. 2015 Name R M Kennedy KJ Malaxos L C McClusky E J Vickery N J Smart Balance at start of the year 50,000,000 20,000,000 2,456,668 16,070,001 37,500 Received as compensation Exercise of options/rights Acquired/ (disposed) - - - - - - - - - - - - - - - Balance at the end of the year 84,000,000 38,500,000 6,939,338 35,000,003 37,500 Balance at the end of the year 50,000,000 20,000,000 2,456,668 16,070,001 37,500 END OF AUDITED REMUNERATION REPORT Shares under option Unissued ordinary shares of Maximus Resources Limited under option at the date of this report are as follows: Date options granted Expiry date Exercise price Number under option 16 May 2016 17 May 2016 31 May 2017 31 May 2017 $0.006 $0.006 529,666,586 7,580,611 537,247,197 AUDITOR’S INDEPENDENCE DECLARATION A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 17. This report is signed and dated in Adelaide on this 7th day of September 2016 and made in accordance with a resolution of the directors. Robert M Kennedy Director 16 Maximus Resources Limited ANNUAL REPORT 2016 AUDITOR’S INDEPENDENCE DECLARATION Maximus Resources Limited ANNUAL REPORT 2016 17 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 June 2016 REVENUE Gold Sales - Spargoville Other income Administrative expenses Compliance expenses Depreciation expense Employment benefits expense Marketing expenses Exploration expenditure written off Loss on sale of assets Gain/(loss) on sale of available for sale financial assets Impairment of financial assets (Loss) before income tax Income tax expense Notes Consolidated 30 June 2016 $ 16,845 11,232 (103,325) (94,485) (1,295) (341,306) (5,025) (70,904) - (7,281) (52,527) (648,071) (33,794) 4 5 5 5 17 6 Consolidated 30 June 2015 $ - 29,121 (190,023) (103,988) (1,800) (302,535) (4,755) (536,271) (424) 1,102,500 (89,214) (97,389) - Loss for the year (681,865) (97,389) Other comprehensive income (Items that maybe reclassified subsequently to profit or loss) Changes in the fair value of available-for-sale financial assets 17 Other comprehensive income for the year (net of tax) Total comprehensive loss for the year (Loss) is attributable to: Maximus Resources Limited - - (681,865) (405,393) (405,393) (502,782) (681,865) (97,389) Total comprehensive loss for the year is attributable to: Maximus Resources Limited (681,865) (502,782) Earnings per share for (loss) from continuing operations attributable to the ordinary equity holders of the Company: Basic earnings per share Diluted earnings per share 27 27 Cents (0.07) (0.07) Cents (0.01) (0.01) This statement should be read in conjunction with the notes to the financial statements. 18 Maximus Resources Limited ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2016 ASSETS Current assets Cash and cash equivalents Trade and other receivables Available-for-sale assets Other current assets Total current assets Non-current assets Plant and equipment Exploration and evaluation 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 Contributed equity Retained losses Total equity Notes Consolidated 30 June 2016 $ Consolidated 30 June 2015 $ 7 8 10 9 11 12 13 14 15 16 17 1,443,300 455 - 9,546 905,455 4,665 90,214 11,794 1,453,301 1,012,128 2,811 4,220,642 4,223,453 2,827 2,660,621 2,663,448 5,676,754 3,675,576 183,162 37,023 220,185 28,982 28,982 64,652 29,664 94,316 17,340 17,340 249,167 111,656 5,427,587 3,563,920 37,943,923 (32,516,336) 5,427,587 35,398,391 (31,834,471) 3,563,920 This statement should be read in conjunction with the notes to the financial statements. Maximus Resources Limited ANNUAL REPORT 2016 19 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2016 Consolidated Notes Balance at 1 July 2015 Total comprehensive loss for the year: (Loss) for the year Other comprehensive income 17 Contributed equity $ 35,398,391 - - Transactions with owners in their capacity as owners: Contributions of equity 16 2,545,532 Balance at 30 June 2016 37,943,923 Reserves $ - - - - - - Retained losses $ Total equity $ (31,834,471) 3,563,920 (681,865) (681,865) - (681,865) (681,865) - 2,545,532 (32,516,336) 5,427,587 Balance at 1 July 2014 35,394,766 405,393 (31,737,082) 4,063,077 Total comprehensive loss for the year: (Loss) for the year Other comprehensive income 17 Transactions with owners in their capacity as owners: Contributions of equity 16 - - 3,625 3,625 Balance at 30 June 2015 35,398,391 - (405,393) (405,393) - - (97,389) - (97,389) - (97,389) (405,393) (502,782) 3,625 3,625 (31,834,471) 3,563,920 This statement should be read in conjunction with the notes to the financial statements. 20 Maximus Resources Limited ANNUAL REPORT 2016 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2016 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Notes Consolidated 30 June 2016 $ 16,845 (450,172) 11,232 Consolidated 30 June 2015 $ - (593,738) 28,112 Net cash used in operating activities 26 (422,095) (565,626) Cash flows from investing activities Payments for available for sale financial assets Proceeds from sale of available for sale financial assets Payments for exploration and evaluation (1,279) 30,406 (1,380,925) (1,000) 1,602,500 (756,081) Net cash provided by investing activities (1,351,798) 845,419 Cash flows from financing activities Proceeds from issues of shares and other equity securities Transactions costs associated with equity issues Net cash provided by financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 2,424,384 (112,646) 2,311,738 537,845 905,455 626 - 626 280,419 625,036 Cash and cash equivalents at the end of the financial year 7 1,443,300 905,455 This statement should be read in conjunction with the notes to the financial statements. Maximus Resources Limited ANNUAL REPORT 2016 21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016 1 Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Maximus Resources Limited and its subsidiaries. a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Maximus Resources Limited is a for-profit entity for the purpose of preparing the financial statements. i) Compliance with IFRS The consolidated financial statements of the Maximus Resources Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRSs ensures that the financial statements and notes comply with International Financial Reporting Standards (IFRS). ii) Historical cost convention These financial statements have been prepared on an accrual basis, under the historical cost convention, as modified by the revaluation of available for sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss and certain classes of property, plant and equipment. iii) Critical accounting estimates The directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. b) Basis of consolidation The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2016. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. c) Employee benefits Short-term employee benefits Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. Examples of such benefits include wages and salaries, non-monetary benefits and accumulating sick leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the liabilities are settled. Other long-term employee benefits The Group’s liabilities for annual leave and long service leave are included in other long term benefits as they are not expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. They are measured at the present value of the expected future payments to be made to employees. The expected future payments incorporate anticipated future wage and salary levels, experience of employee departures and periods of service, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds (2015: government bonds) that have maturity dates that approximate the timing of the estimated future cash outflows. Any re-measurements arising from experience adjustments and changes in assumptions are recognised in profit or loss in the periods in which the changes occur. The Group presents employee benefit obligations as current liabilities in the statement of financial position if the Group does not have an unconditional right to defer settlement for at least twelve (12) months after the reporting period, irrespective of when the actual settlement is expected to take place. d) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors. e) Income tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities 22 Maximus Resources Limited ANNUAL REPORT 2016 and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. f) Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non- financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. g) Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of 12 months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. h) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. i) Investments and other financial assets Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date the date on which the Company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. When securities classified as available for sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss as gains and losses from investment securities. Measurement At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Loans and receivables and held to maturity investments are subsequently carried at amortised cost using the effective interest method. Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue from continuing operations when the Company’s right to receive payments is established. Interest income from these financial assets is included in the net gains/(losses). Impairment The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired. If there is evidence of impairment for any of the Company’s financial assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in the statement of profit or loss and other comprehensive income. j) Plant and equipment Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets’ employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the assets’ carrying amount or recognised as separate assets as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a straightline basis over their useful lives to the Company commencing from the time the asset is held ready for use. The depreciation rates used for plant & equipment are from 12.5 to 40%. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount note 1(g). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit or loss and other comprehensive income. When revalued assets are sold, it is Company policy to transfer any amounts included in other reserves in respect of those assets to retained earnings. Maximus Resources Limited ANNUAL REPORT 2016 23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2016 k) Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. l) Earnings per share (EPS) i) Basic earnings per share Basic earnings per share is calculated by dividing: ¬ the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares ¬ by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares. ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: ¬ the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and ¬ the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. m) Exploration and evaluation expenditure Exploration and evaluation costs related to an area of interest are written off as incurred except they may be carried forward as an item in the statement of financial position where the rights of tenure of an area are current and one of the following conditions is met: • the costs are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and • exploration and/or evaluation activities in the area of interest have not at the end of each reporting period reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Capitalised costs include costs directly related to exploration and evaluation activities in the relevant area of interest. General and administrative costs are allocated to an exploration or evaluation asset only to the extent that those costs can be related directly to operational activities in the area of interest to which the asset relates. Capitalised exploration and evaluation expenditure is written off where the above conditions are no longer satisfied. All capitalised exploration and evaluation expenditure is assessed for impairment if facts and circumstances indicate that an impairment may exist. Exploration and evaluation assets are also tested for impairment once commercial reserves are found, before the assets are transferred to development properties. n) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. o) Comparative figures Comparative figures are adjusted to conform to Accounting Standards when required. p) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. q) Key estimates The preparation of the financial statements requires management to make estimates and judgments. These estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: Impairment The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value in use calculations performed in assessing recoverable amounts incorporate a number of key estimates. Exploration and evaluation The Company’s policy for exploration and evaluation is discussed in Note 1(m). The application of this policy requires management to make certain assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised exploration and evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by future sale or exploration, then the relevant capitalised amount will be written off through the statement of profit or loss and other comprehensive income. r) New and revised standards that are effective for these financial statements A number of new and revised standards and an interpretation became effective for the first time to annual periods beginning on or after 1 July 2015. Information on these new standards is presented below. AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement. AASB 2012-3 is applicable to annual reporting periods beginning on or after 1 January 2015. The adoption of these amendments has not had a material impact on the Group as the amendments merely clarify the existing requirements in AASB 132. AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets 24 Maximus Resources Limited ANNUAL REPORT 2016 These narrow-scope amendments address disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements. When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 Impairment of Assets to require disclosures about the recoverable amount of impaired assets. The IASB noticed however that some of the amendments made in introducing those requirements resulted in the requirement being more broadly applicable than the IASB had intended. These amendments to IAS 36 therefore clarify the IASB’s original intention that the scope of those disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of disposal. AASB 2013-3 makes the equivalent amendments to AASB 136 Impairment of Assets and is applicable to annual reporting periods beginning on or after 1 January 2015. The adoption of these amendments has not had a material impact on the Group as they are largely of the nature of clarification of existing requirements. AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities The amendments in AASB 2013-5 provide an exception to consolidation to investment entities and require them to measure unconsolidated subsidiaries at fair value through profit or loss in accordance with AASB 9 Financial Instruments (or AASB 139 Financial Instruments: Recognition and Measurement where AASB 9 has not yet been adopted). The amendments also introduce new disclosure requirements for investment entities that have subsidiaries. These amendments apply to investment entities, whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both. Examples of entities which might qualify as investment entities would include Australian superannuation entities, listed investment companies, pooled investment trusts and Federal, State and Territory fund management authorities. AASB 2013-5 is applicable to annual reporting periods beginning on or after 1 January 2015. This Standard has not had any impact on the Group as it does not meet the definition of an ‘investment entity’ in order to apply this consolidation exception. AASB 2015-1 Amendments to Australian Accounting Standards (Part A: Annual Improvements 2010-2012 and 2011-2013 Cycles) Part A of AASB 2015-1 makes amendments to various Australian Accounting Standards arising from the issuance by the IASB of International Financial Reporting Standards Annual Improvements to IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle. Among other improvements, the amendments arising from Annual Improvements to IFRSs 2010-2012 Cycle: • clarify that the definition of a ‘related party’ includes a management entity that provides key management personnel services to the reporting entity (either directly or through a group entity) • amend AASB 8 Operating Segments to explicitly require the disclosure of judgements made by management in applying the aggregation criteria Among other improvements, the amendments arising from Annual Improvements to IFRSs 2011-2013 Cycle clarify that an entity should assess whether an acquired property is an investment property under AASB 140 Investment Property and perform a separate assessment under AASB 3 Business Combinations to determine whether the acquisition of the investment property constitutes a business combination. Part A of AASB 2015-1 is applicable to annual reporting periods beginning on or after 1 July 2015. s) Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the group: The accounting standards that have not been early adopted for the year ended 30 June 2016, but will be applicable to the group in future reporting periods, are detailed below. Apart from these standards, other accounting standards that will be applicable in future periods have been reviewed, however they have been considered to be insignificant to the group. At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the group. Management anticipates that all of the relevant pronouncements will be adopted in the group’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the group’s financial statements is provided below Year ended 30 June 2018: IFRS 15: Revenue from Contracts with Customers This standard will change the timing and in some cases the quantum of revenue received from customers. IFRS 15 requires an entity to recognise revenue by identifying for each customer contract, the performance obligations in the contract and the transaction price. The transaction price is then allocated against the performance obligations in the contract with revenue recognised when (or as) the entity satisfies each performance obligation. Management are currently assessing the impact of the new standard but it is not expected to have a material impact on the financial performance or financial position of the consolidated entity. Year ended 30 June 2019: AASB 9: Financial Instruments This standard introduces new requirements for the classification and measurement of financial assets and liabilities. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are • Financial assets that are debt instruments will be classified based on (1) the objective of the entity’s business model for managing the financial assets; and (2) the characteristics of the contractual cash flows. • Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). • Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. • Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. • Where the fair value option is used for financial liabilities the change in fair value is to be accounted by presenting changes in credit risk in other comprehensive income (OCI) and the remaining change in the statement of profit or loss. This standard is not expected to result in a material change to the manner in which the Group’s financial result is determined or upon the extent of disclosures included in future financial reports although the Group will quantify the effect of the application of AASB 9 when the final standard, including all phases, is issued. Maximus Resources Limited ANNUAL REPORT 2016 25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2016 There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. 2 Financial risk management The Company’s activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Risk management is carried out by management under policies approved by the Board of Directors. Management identifies and evaluates financial risks in close cooperation with the Company’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas, such as interest rate risk, credit risk, the use of financial instruments and investment of excess liquidity. The Company’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, and loans to associated companies. The Company holds the following financial instruments: Financial assets Cash and cash equivalents Trade and other receivables Available-for-sale financial assets Financial liabilities Trade and other payables The Company holds the following financial instruments: Financial assets Cash and cash equivalents Trade and other receivables Available-for-sale financial assets Financial liabilities Trade and other payables 26 Maximus Resources Limited ANNUAL REPORT 2016 Consolidated 30 June 2016 $ Consolidated 30 June 2015 $ 1,443,300 455 - 905,455 4,665 90,214 1,443,755 1,000,334 183,162 183,162 64,652 64,652 Consolidated 30 June 2016 $ Consolidated 30 June 2015 $ 1,443,300 455 - 905,455 4,665 90,214 1,443,755 1,000,334 183,162 183,162 64,652 64,652 a) Market risk i) Price risk Price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate as a result of changes in market prices (other than those arising from foreign exchange or interest rate risk). The Company is not exposed to any material price risk. ii) Cash flow and fair value interest rate risk Interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted interest rates on classes of financial assets and financial liabilities. Interest rate risk is managed by the Company with the use of rolling short-term deposits. The Company has no long term financial liabilities upon which it pays interest. As at the end of the reporting period, Maximus Resources Limited had the following variable rate cash and cash equivalent holdings: Cash and cash equivalents Net exposure to cashflow interest rate 30 June 2016 30 June 2016 30 June 2015 30 June 2015 Weighted average interest rate % 1.95% Balance $ 1,443,300 1,443,300 Weighted average interest rate % 2.05% Balance $ 905,455 905,455 Interest rate sensitivity analysis At 30 June 2016, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows: Interest rate risk Increase 2% Decrease 2% 30 June 2016 Financial assets Carrying amount $ Cash and cash equivalents 1,443,300 Total increase/ (decrease) Profit $ 225 225 Equity $ 225 225 Profit $ (225) (225) Increase 2% Decrease 2% Interest rate risk 30 June 2015 Financial assets Carrying amount $ Cash and cash equivalents 905,455 Total increase/ (decrease) Profit $ 582 582 Equity $ 582 582 Profit $ (582) (582) Equity $ (225) (225) Equity $ (582) (582) Maximus Resources Limited ANNUAL REPORT 2016 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2016 b) Credit risk Credit risk is the risk of default by borrowers and transactional counterparties as well as the loss of value of assets due to deterioration in credit quality. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk. c) Liquidity risk Liquidity risk is the risk that the Company may encounter difficulty in settling its debts or otherwise meeting its obligations. The Company manages liquidity risk by monitoring cash flows and ensuring that adequate funds are available to meet cash demands. d) Fair value measurements The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. AASB 7: Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2),and c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3) The following table presents the Company’s assets and liabilities measured and recognised at fair value at 30 June 2016 and 30 June 2015. 30 June 2016 Level 1 Level 2 Level 3 Total Assets Available-for-sale financial assets $ - - $ - - $ - - The Company did not hold any available-for-sale financial assets at 30 June 2016. 30 June 2015 Assets Available-for-sale financial assets Tychean Resources Limited 3 Segment information a) Description of segments Level 1 $ 90,214 90,214 Level 2 Level 3 $ - - $ - - $ - - Total $ 90,214 90,214 Identification of reportable segments Management has determined the operating segments based on the reports reviewed and used by Managing Director (the chief operating decision maker) are used to make strategic decisions. The Company is managed primarily on the basis of geographical area of interest, since the diversification of the Company operations inherently has notably different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis. Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics and are also similar with respect to the following: • external regulatory requirements • geographical and geological styles Accounting policies developed Unless stated otherwise, all amounts reported to the Managing Director as chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Company. 28 Maximus Resources Limited ANNUAL REPORT 2016 b) Business segments 2016 Millers Creek Spargoville Narndee Other Segment revenue Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) Impairment Segment assets Segment asset movements for the year: Capital expenditure Capital expenditure impaired Total movement for the year Total segment assets Unallocated assets Total assets Total segment liabilities Unallocated liabilities Total liabilities 2015 Segment revenue Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) Impairment Segment assets Segment asset movements for the year: Capital expenditure Capital expenditure impaired Total movement for the year Total segment assets Unallocated assets Total assets Total segment liabilities Unallocated liabilities Total liabilities $ - (30,443) $ 16,845 16,845 (30,443) - $ - - - - 1,368,011 2,839,836 1,368,011 179,215 - - 1,368,011 179,215 30,443 (30,443) - - $ - (40,461) (40,461) 12,795 53,256 (40,461) 12,795 - - - Total $ 16,845 (54,059) (70,904) 4,220,642 1,630,925 (70,904) 1,560,021 4,220,642 1,456,112 5,676,754 - 249,167 249,167 Millers Creek Adelaide Hills Province $ - $ - (326,926) (61,803) (326,926) (61,803) Narndee Other Total $ - - - $ - $ - (148,172) (536,271) (148,172) - (536,271) 2,660,621 - - 2,660,621 165,964 (326,296) (165,964) 10,976 (61,803) (50,827) 440,340 - 440,340 141,800 (148,172) 6,372 - - - - 759,080 (536,270) 222,810 2,660,621 1,014,955 3,675,576 - 111,656 111,656 Maximus Resources Limited ANNUAL REPORT 2016 29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2016 ii) Adjusted EBITDA A reconciliation of adjusted EBITDA to operating profit before income tax is provided as follows: Allocated: Adjusted EBITDA Unallocated: Interest revenue Impairment of financial assets Gain/(loss) on sale of available for sale financial assets Loss on sale of assets Administrative expenses Marketing expenses Profit before income tax from continuing operations Allocated: Segment assets Unallocated: Cash and cash equivalents Trade and other receivables Other assets Available for sale financial assets Plant and equipment Consolidated 30 June 2016 Consolidated 30 June 2015 (54,059) (536,271) 11,232 (52,527) (7,281) - (540,411) (5,025) (648,071) 29,121 (89,214) 1,102,500 (424) (598,346) (4,755) (97,389) Consolidated 30 June 2016 Consolidated 30 June 2015 4,220,642 2,660,621 1,443,300 455 9,546 - 2,811 905,455 4,665 11,794 90,214 2,827 Total assets as per the consolidated statements of financial position 5,676,754 3,675,576 (iii) Segment liabilities Reportable segments’ liabilities are reconciled to total liabilities as follows: Allocated: Allocated segment liabilities Unallocated: Trade and other payables Provisions Total liabilities as per the consolidated statements of financial position 4 Other income Interest received Consolidated 30 June 2016 Consolidated 30 June 2015 - - 183,162 66,005 249,167 64,652 47,004 111,656 Consolidated 30 June 2016 Consolidated 30 June 2015 11,232 11,232 29,121 29,121 30 Maximus Resources Limited ANNUAL REPORT 2016 5 Expenses Administration Administration costs Legal fees Marketing Marketing and promotion Exploration expenses General exploration expenditure written off Capitalised exploration expenditure impaired 6 Income Tax Expense a) Income tax expense: Current tax b) Numerical reconciliation of income tax expense to prima facie tax payable Loss from continuing operations before income tax expense Tax at the Australian tax rate of 30% (2015: 30%) Tax effect of amounts which are not deductible (assessable) in calculating taxable income: Temporary differences not brought to account Income tax expense Consolidated 30 June 2016 Consolidated 30 June 2015 103,325 - 103,325 5,025 5,025 12,125 58,779 70,904 188,449 1,574 190,023 4,755 4,755 33,764 502,507 536,271 Consolidated 30 June 2016 Consolidated 30 June 2015 33,794 33,794 (681,865) (204,560) (238,354) 33,794 - - (97,380) (29,217) (29,217) - A deferred tax asset (DTA) has not been recognised in respect of temporary differences as they do not meet the recognition criteria as outlined in Note 1(e) of the financial statements. A DTA has not been recognised in respect of tax losses either as realisation of the benefit is not regarded as probable. The Company has unrecognised DTAs of $6,140,478 (2015: $6,140,478) that are available indefinitely for offset against future taxable profits. The tax rates applicable to each potential tax benefit are as follows: • • timing differences - 30% tax losses - 30% 7 Current assets – Cash and cash equivalents Cash at bank and in hand Term deposits a) Risk exposure Consolidated 30 June 2016 Consolidated 30 June 2015 313,300 1,130,000 1,443,300 120,455 785,000 905,455 The Company’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the end of each reporting period is the carrying amount of each class of cash and cash equivalents mentioned above. b) Deposits at call The deposits are bearing a weighted average interest rate of 2.00% (2015: 2.05%). Maximus Resources Limited ANNUAL REPORT 2016 31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2016 8 Current assets – Trade and other receivables Net trade receivables Trade and other receivables GST paid on purchases 9 Current assets – Other current assets Prepayments 10 Available-for-sale financial assets a) Fair values Available-for-sale financial assets include the following classes of financial assets: Current Shares in listed companies Total available-for-sale financial assets Consolidated 30 June 2016 Consolidated 30 June 2015 - 455 455 4,120 545 4,665 Consolidated 30 June 2016 Consolidated 30 June 2015 9,546 9,546 11,794 11,794 Consolidated 30 June 2016 Consolidated 30 June 2015 - - - 90,214 90,214 90,214 b) Listed securities Maximus Resources Limited held 45,107,143 (2015: 45,107,143) shares in Tychean Resources Limited. The Company disposed of these shares in the 2016 year. Tychean Resources Limited is a related party of Messrs Kennedy and Vickery. 11 Plant and equipment Consolidated Year ended 30 June 2016 Opening net book amount Asset purchases Depreciation charge Closing net book amount At 30 June 2016 Cost or fair value Accumulated depreciation Net book amount Plant and equipment Furniture, fittings and equipment Computer equipment and software $ 104 - (98) 6 11,984 (11,978) 6 $ 258 - (258) - 2,216 (2,216) - $ 2,465 1,280 (940) 2,805 6,267 (3,462) 2,805 Total $ 2,827 1,280 (1,296) 2,811 20,467 (17,656) 2,811 32 Maximus Resources Limited ANNUAL REPORT 2016 Consolidated Plant and equipment Furniture, fittings and equipment Computer equipment and software Year ended 30 June 2015 Opening net book amount Depreciation charge Closing net book amount At 30 June 2015 Cost or fair value Accumulated depreciation Net book amount $ 1,460 (1,503) 104 11,984 (11,880) 104 $ 516 (258) 258 2,216 (1,958) 258 $ 3,329 (864) 2,465 4,987 (2,522) 2,465 Total $ 5,305 (2,478) 2,827 19,187 (16,360) 2,827 12 Non-current assets – Exploration and evaluation, development and mine properties Exploration and evaluation Movement: Opening balance Expenditure incurred Impairment of capitalised expenditure Closing balance Closing balance comprises: Exploration and evaluation – 100% owned Exploration and evaluation phases – joint ventures 13 Current liabilities – Trade and other payables Trade payables 14 Current liabilities – Provisions Annual leave 15 Non-current liabilities – Provisions Long service leave Consolidated 30 June 2016 Consolidated 30 June 2015 2,660,621 1,630,925 (70,904) 4,220,642 2,839,836 1,380,806 4,220,642 2,437,811 759,080 (536,270) 2,660,621 2,660,621 - 2,660,621 Consolidated 30 June 2016 Consolidated 30 June 2015 183,162 183,162 64,652 64,652 Consolidated 30 June 2016 Consolidated 30 June 2015 37,023 37,023 29,664 29,664 Consolidated 30 June 2016 Consolidated 30 June 2015 28,982 28,982 17,340 17,340 Maximus Resources Limited ANNUAL REPORT 2016 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2016 16 Contributed equity a) Share capital Ordinary shares Fully paid b) Movements in ordinary share capital: Consolidated 30 June 2016 Shares Consolidated 30 June 2015 Shares Consolidated 30 June 2016 $ Consolidated 30 June 2015 $ 1,882,686,299 870,407,498 870,407,498 35,398,391 Date Details Number of shares Issue price $ 1 July 2014 Opening balance 11 August 2014 Issue of Shares - consultant 30 April 2015 Exercise of Options Less: Transaction costs arising on share issues Deferred tax credit recognised directly in equity 30 June 2015 Balance 27 October 2015 Issue of Shares - placement 11 December 2015 Issue of Shares – share purchase plan 17 February 2016 Issue of Shares – Tychean Resources Limited 25 February 2016 Issue of Shares - placement 13 April 2016 Issue of Shares - placement 869,376,390 1,000,000 31,108 870,407,498 100,000,000 138,000,000 100,000,000 66,000,000 70,000,000 16 May 2016 Issue of Shares – Entitlement Issue (Rights Issue) 530,182,388 17 May 2016 Issue of Shares – Entitlement Issue Shortfall 30 June 2016 Exercise of Options 7,580,611 515,802 Less: Transaction costs arising on share issues Deferred tax credit recognised directly in equity 30 June 2016 Balance 1,882,686,299 $0.003 $0.02 $0.002 $0.002 $0.002 $0.001 $0.0038 $0.003 $0.003 $0.006 35,394,766 3,000 625 3,625 - - 35,398,391 200,000 276,000 200,000 66,000 266,000 1,590,547 22,742 3,095 2,624,384 (112,646) 33,794 (78,852) 37,943,923 c) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. At shareholders’ meetings, on a show of hands every holder of ordinary shares present in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. d) Options and rights There were no options and rights issued during the 2014 and 2015 year in relation to the Maximus Resources Limited Employee Share Option and Incentive Rights Plans. e) Capital risk management The Company has no debt capital. There are no externally imposed capital requirements. The Company’s debt and capital includes ordinary share capital, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the Company’s capital by assessing its financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. There have been no changes in the strategy adopted by management to control the capital of the Company since the prior year. This strategy is to ensure that the Company has no debt. 34 Maximus Resources Limited ANNUAL REPORT 2016 17 Reserves and retained losses a) Reserves Available-for-sale investments revaluation reserve (i) Movements: Available-for-sale investments revaluation reserve Balance 1 July Impairment Disposal of financial assets Balance 30 June Retained Earnings Balance 1 July Net loss for the year Balance 30 June b) Nature and purpose of reserves i) Available-for-sale reserve Consolidated 30 June 2016 Consolidated 30 June 2015 $ - - - (52,527) 52,527 - $ - - 405,393 (89,214) (317,179) - (31,834,471) (31,737,082) (681,865) (97,389) (32,516,336) (31,834,471) Changes in the fair value of instruments, such as equities, classified as available for sale financial assets, are recognised in other comprehensive income, as described in note 1(k) and accumulated in a separate reserve within equity. Amounts are reclassified to profit or loss when the associated assets are sold or impaired. 18 Key management personnel disclosures Key management personnel compensation Short-term employee benefits Post-employment benefits Share-based payments Consolidated 30 June 2016 Consolidated 30 June 2015 506,923 36,402 - 543,325 501,898 36,402 - 538,300 Detailed remuneration disclosures and interests held by key management personnel are provided in sections A to E of the remuneration report on pages 13 to 15. 19 Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the Company and its related practices: Grant Thornton Audit and review of financial reports Taxation Services Total auditors’ remuneration Consolidated 30 June 2016 Consolidated 30 June 2015 27,357 2,000 29,357 28,000 2,200 30,200 Maximus Resources Limited ANNUAL REPORT 2016 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2016 20 Contingencies a) Contingent liabilities The Group had no known contingent liabilities as at 30 June 2016 (2015: $35,000). b) Contingent assets The Adelaide Hills tenement package was reduced to 4 tenements following the sale of 5 tenements, including the Bird in Hand project to Terramin Australia Limited (“Terramin”). The consideration included the following contingent payment from Terramin: • $1,000,000 payable upon approval of a Program for Environmental Protection and Rehabilitation; and • $1,000,000 payable upon commencement of bullion production. Maximus is also entitled to a 0.5% royalty payable upon bullion production in excess of 50,000 ozs. 21 Commitments a) Commitments for exploration and joint venture expenditure In order to maintain current rights of tenure to exploration tenements the Company will be required to outlay in the year ending 30 June 2016 amounts of approximately $1,018,400 (2015: $260,129) in respect of tenement lease rentals and to meet minimum expenditure requirements pursuant to various joint venture requirements. b) Lease commitments: Company as lessee The State Government departments responsible for mineral resources require performance bonds for the purposes of rehabilitation of areas disturbed by exploration activities. At 30 June 2016, the Group had no bank guarantees in place for this purpose (2015: $35,000). 22 Key management personnel a) Key management personnel Disclosures relating to key management personnel are set out in note 18. b) Transactions with key management personnel The following transactions occurred with related parties: • The Company signed a Farm-in Agreement with Tychean Resources Limited (Tychean) during August 2015 to secure up to 90% of the Tychean equity in the Spargoville Gold Project. Under the terms for the Farm-in Agreement for the Company to acquire 25% equity, consideration was a payment of $200,000 (paid in August 2015) and an additional 100,000,000 fully paid ordinary shares in Maximus Resources Limited to the value of $200,000 (issued 17 February 2016). Messrs Kennedy and Vickery are directors of Tychean Resources Limited. • During February 2016 the Company signed a Second Sale Farm-in Agreement with Tychean to secure 100% of the Tychean equity in the Spargoville Gold Project. The consideration to acquire the 100% was fully paid ordinary shares in Maximus Resources Limited to the value of $50,000. The issue price was $0.002 per ordinary share resulting in 25,000,000 fully paid ordinary shares to be issued to Tychean. Messrs Kennedy and Vickery are directors of Tychean Resources Limited. Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. 23 Subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(b): Name of entity Country of incorporation Class of shares MXR Minerals Pty Ltd Australia Ordinary Equity holding Equity holding 2016 % 100 2015 % 100 24 Interests in joint ventures Maximus Resources Limited has the following interests in unincorporated joint ventures: State Agreement name Parties Summary WA Corporate Group Agreement MXR and Corporate Resource Consultants Pty Ltd, B Legendre and TE Johnston and Associates Pty Ltd Corporate Group retains a 10% free carried interest in all or specified blocks within several exploration licences in the Narndee Project. 36 Maximus Resources Limited ANNUAL REPORT 2016 25 Events occurring after the reporting period On 2 August 2016 the Company signed a binding Share Sale Agreement with Ramelius Resources Limited (ASX: RMS) for the purchase of the company, Ramelius Milling Services Pty Ltd that owns the Burbanks Processing Facility located 10km south of Coolgardie, Western Australia. The consideration to acquire Ramelius Milling Service Pty Ltd is $2.5 million that will be paid in staged payments over a 24 month period as outlined below: • $50,000 deposit to secure an exclusivity period to finalise Due Diligence and negotiate Share Sale Agreement. (paid July 2016); • $200,000 upon signing of the binding Sale Agreement. (paid August 2016); • $250,000 upon transfer of all licenses and shares in Ramelius Milling Service Pty Ltd (paid 30 August 2016); • $1,000,000 to be paid to RMS 12 months from the date of signing the Sale Agreement or commencement of commercial production, whichever occurs first; and • $1,000,000 upon the 24 month anniversary of signing the Sale Agreement. The Company also entered into a Mortgage Agreement with RMS over the assets held in Ramelius Milling Services Pty Ltd. This Mortgage Agreement provides security to RMS against any default by the Company on the payment terms detailed above. Should the Company default on any future payments, RMS has the option to take possession of Ramelius Milling Services Pty Ltd. A placement to institutional investors for 533,333,333 fully paid ordinary shares raising $1.6 million will be completed in mid-September 2016 following the announcement to the market on 4 August 2016. The placement will also include a free attaching unlisted option resulting in 533,333,333 unlisted options with an exercise price of $0.006 per option being issued. The placement will fund part of the acquisition and refurbishment of the Burbanks Processing Facility and provide working capital. No matter or circumstance has occurred subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years. 26 Reconciliation of profit after income tax to net cash inflow from operating activities (Loss) for the year Depreciation Tax effect on transaction costs Impairment of capitalised exploration expenditure Impairment of financial assets (Gain)/loss on sale of financial assets Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables Decrease/(increase) in other operating assets (Decrease)/increase in trade and other payables (Decrease)/increase in provisions Net cash (outflow)/inflow from operating activities Consolidated 30 June 2016 (681,865) 1,295 33,794 70,904 52,527 7,281 4,210 2,248 68,510 19,001 Consolidated 30 June 2015 (97,389) 1,800 - 536,271 89,214 (1,102,500) (340) (2,762) 964 9,116 (422,095) 565,626 Maximus Resources Limited ANNUAL REPORT 2016 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont) 30 June 2016 27 Earnings per share a) Basic earnings per share Consolidated 30 June 2016 Consolidated 30 June 2015 Loss from continuing operations attributable to the ordinary equity holders (681,865) (97,389) Weighted average number of ordinary shares outstanding during the year used to calculate basic earnings per share 1,014,057,771 869,770,630 Basic earnings per share (cents) b) Diluted earnings per share (0.07) (0.01) Loss from continuing operations attributable to the ordinary equity holders (681,865) Weighted average number of options outstanding during the year used to calculate diluted earnings per share (97,389) - Weighted average number of ordinary shares outstanding during the year used to calculate diluted earnings per share 1,014,057,771 869,770,630 Diluted earnings per share (cents) (0.07) (0.01) Options Options granted to employees under the Maximus Resources Limited Employee Share Option Plan are typically considered to be potential ordinary shares. These may have a dilutive effect on the weighted average number of ordinary shares. As the Company has reported a loss of $681,865 this financial year (2015: $97,389), the options have not been included in the determination of diluted earnings per share. 28 Share-based payments a) Employee option plan No option arrangements existed at 30 June 2016: Fair value of options granted No employee options were granted during the year ended 30 June 2016 (2015: Nil). Therefore no calculation of the fair value of options granted during the year was required to be made using the Black Scholes option pricing model. b) Employee incentive rights plan No incentive rights arrangements existed at 30 June 2016 and 2015. 29 Going concern The financial report has been prepared on the basis of going concern. The cash flow projections of the Company and consolidated entity evidence that there is a material uncertainty that the Company is a going concern and Maximus will require positive cash flows from additional capital for continued operations. The Company incurred a loss of $681,865 (2015 $97,389) with negative operating cashflows of $1,773,893. The operations were funded by the raising of funds through the various equity issues during the year. The Company and consolidated entity’s ability to operate as a going concern is contingent upon obtaining additional capital and generating positive cashflows from operations, in particular operations at the Burbanks Processing Facility. If additional capital is not obtained, the going concern basis of accounting may not be appropriate, as a result that the Company may have to realise its assets and extinguish its liabilities, other than in the ordinary course of business in amounts which could be different from those stated in the financial report. No allowance for such circumstances has been made in the financial report. 38 Maximus Resources Limited ANNUAL REPORT 2016 30 Parent entity Statement of financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Shareholder’s Equity Contributed Equity Retained Losses Capital and reserves attributable to owners Statement of profit or loss and other comprehensive income Profit for the year Other comprehensive income Total comprehensive income Parent 2016 $ 1,453,827 4,223,454 5,677,281 220,183 28,982 249,165 Parent 2015 $ 1,012,655 2,663,448 3,676,103 94,315 17,340 111,655 5,428,116 3,654,448 37,943,923 (32,515,807) 5,428,116 35,398,391 (31,833,943) 3,564,448 (681,865) - (681,865) (97,389) (405,393) (502,782) Maximus Resources Limited ANNUAL REPORT 2016 39 DIRECTORS’ DECLARATION 30 June 2016 In the directors’ opinion: a) the consolidated financial statements and notes set out on pages 18 to 39 are in accordance with the Corporations Act 2001, including: i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of their performance for the financial year ended on that date, 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, and c) the financial statements comply with International Financial Reporting Standards as confirmed in note 1(a). The directors have been given the declarations by the Managing Director and Company Secretary required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the directors. Robert M Kennedy Director Adelaide 7th September 2016 40 Maximus Resources Limited ANNUAL REPORT 2016 INDEPENDENT AUDITOR’S REPORT 30 June 2016 Maximus Resources Limited ANNUAL REPORT 2016 41 42 Maximus Resources Limited ANNUAL REPORT 2016 INDEPENDENT AUDITOR’S REPORT (cont) 30 June 2016 Maximus Resources Limited ANNUAL REPORT 2016 43 ASX ADDITIONAL INFORMATION The shareholder information set out below was applicable as at 30 September 2016. The shareholder information set out below was applicable as at 30 September 2016. A Distribution Of Equity Securities B Equity Security Holders Analysis of numbers of equity security holders by size of holding: Twenty largest quoted equity security holders Ordinary Shares Holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Shares 133 207 224 755 1,214 2,533 There were 1,369 holders of less than a marketable parcel of ordinary shares. At a share price of $0.004, an unmarketable parcel is 125,000 shares. Unlisted Options Holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over TOTAL Holders 10 18 19 136 251 Shares 3,102 51,371 136,316 6,639,943 1,030,416,465 1,037,247,197 The names of the twenty largest equity holders of quotes securities are listed below: Rank Name Units % of Units 1. J P MORGAN NOMINEES AUSTRALIA LIMITED 100,000,000 4.20 2. MR NICHOLAS BARADAKIS 80,000,000 3.36 3. MR EDWARD VAN HEEMST & 60,000,000 2.52 MRS MARILYN ELAINE VAN HEEMST 4. MRS GWENDOLINE MALAXOS 53,300,000 2.24 5. RMK SUPER PTY LTD 43,276,518 1.82 6. TRIPLE EIGHT GOLD PTY LTD 40,723,482 1.71 7. PEPLON NOMINEES PTY LTD 39,486,105 1.66 8. KENNY INVESTMENTS PTY LTD 34,300,000 1.44 9. THE STEPHENS GROUP PTY LTD 30,000,000 1.26 10. MR ALISTAIR MARK CAMERON 29,400,000 1.23 11. UBS NOMINEES PTY LTD 28,462,471 1.19 12. CALAMA HOLDINGS PTY LTD 26,666,666 1.12 13. TAYCOL NOMINEES PTY LTD 23,000,000 0.97 14. R & S RUSSELL INVESTMENTS PTY LTD 22,400,000 0.94 15. GFA SERVICES PTY LTD 22,000,000 0.92 16. PUNTERO PTY LTD 21,666,667 0.91 17. MR KEVIN MICHAEL KELLY 21,310,416 0.89 18. MR DARRYN ANTHONY 20,000,000 0.84 19. CORPORATE PROPERTY SERVICES 20,000,000 0.84 PTY LTD 20. MR BERNARD OWEN STEPHENS & 20,000,000 0.84 MRS ERIN JOSEPHINE STEPHENS Totals: Top 20 holders of ORDINARY FULLY PAID SHARES 735,992,325 30.89 Total Remaining Holders Balance 1,646,693,974 69.11 44 Maximus Resources Limited ANNUAL REPORT 2016 ASX ADDITIONAL INFORMATION (cont) Twenty largest unquoted equity security holders The names of the twenty largest equity holders of unquoted securities are listed below: Rank Name Units % of Units 1. MR NICHOLAS BARADAKIS 60,000,000 11.17 2. MRS GWENDOLINE MALAXOS 28,300,000 5.27 3. MR MARK ANDREW TKOCZ & MS SUSAN ELIZABETH EVANS 17,000,000 3.16 4. SPICEME CAPITAL PTY LTD 16,000,000 2.98 5. 1215 CAPITAL PTY LTD 15,000,000 2.79 6. MR EDWARD VAN HEEMST & 14,000,000 2.61 MRS MARILYN ELAINE VAN HEEMST 7. RMK SUPER PTY LTD 12,364,720 2.30 8. TRIPLE EIGHT GOLD PTY 11,635,280 2.17 9. BEIRNE TRADING PTY LTD 10,032,000 1.87 10. MR DARRYN ANTHONY 10,000,000 1.86 11. MR MATTHEW BURFORD 10,000,000 1.86 12. CLODENE PTY LTD 10,000,000 1.86 13. EUTHENIA TYCHE PTY LTD 10,000,000 1.86 14. MRS LILY YAN HONG LI 10,000,000 1.86 15. MR DAVID JOHN REED 10,000,000 1.86 16. J P MORGAN NOMINEES AUSTRALIA 9,856,480 1.83 17. KENNY INVESTMENTS PTY LTD 9,800,000 1.82 18. MR MARK ANDREW TKOCZ 9,000,000 1.68 19. MR ALISTAIR MARK CAMERON 8,400,000 1.56 20. GFA SERVICES PTY LTD 8,000,000 1.49 Totals: Top 20 holders of UNLISTED OPTIONS 289,388,480 53.87 Total Remaining Holders Balance 247,858,717 46.13 C Substantial Holders As at 30 September 2016 there were no substantial shareholders. D Voting Rights The voting rights attaching to each class of equity securities are set out below: Ordinary Shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have once vote. Options No voting rights. 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