Maximus Resources Limited
Annual Report 2017

Plain-text annual report

ABN 74 111 977 354 ANNUAL REPORT 2017 Maximus Resources Limited ABN 74 111 977 354 Corporate Directory Directors Robert Kennedy (Non-executive Chairman) Kevin Malaxos (Managing Director) Leigh McClusky (Non-executive Director) Ewan Vickery (Non-executive Director) Nicholas Smart (Alternate for Mr Vickery) 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 Postal Address GPO Box 1167 Adelaide SA 5001 Share Registry Computershare Investor Services Level 5, 115 Grenfell Street Adelaide, South Australia 5000 Telephone +61 8 8236 2300 Facsimile +61 8 8236 2305 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 Auditor Grant Thornton Level 3, 170 Frome Street Adelaide, South Australia 5000 Banker National Australia Bank 48 Greenhill Road Wayville, South Australia 5034 Stock Exchange Listing Australian Securities Exchange 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. Maximus Resources Limited ABN 74 111 977 354 Financial report - 30 June 2017 Contents Chairman’s Letter Managing Director’s Report Tenement Report Schedule Directors' report Auditor's Independence Declaration Financial statements Consolidated statements of profit or loss and other comprehensive income Consolidated statements of financial position Consolidated statements of changes in equity Consolidated statements of cash flows Notes to the consolidated financial statements Directors' declaration Independent auditor's report to the members ASX Additional Information Page 1 2 12 13 14 15 16 17 41 42 46 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 2 to 8. The financial statements were authorised for issue by the directors on 29/09/2017. 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. Maximus Resources Limited ABN 74 111 977 354 Chairman's Letter Dear Fellow Shareholders It is with a degree of satisfaction that I present the significant advances made by the Company during the financial year. These advances have not been without their challenges, but I can confidently state that your company is now is a significantly more robust position than it was in mid-2016. As a small exploration focused Company, we have held our nerve and remained predominantly focused on our gold assets, whilst our peers have chased the latest commodity of the day. We investigated various mineral commodities located on our tenements early in the year, including lithium with limited success. Therefore, with limited funds and our continued commitment to prudent exploration expenditure, we remained focused on our gold assets in what has been a year of growth for the gold industry and the gold price. We continued to undertake targeted exploration on our Spargoville tenements, and we have proven a modest resource base of 1.45 million tonnes for 112,000 ounces. Where assets did not present a reasonable return or potential return to the Company, the decision was made to either offer these assets for joint venture or sale. This allowed the Company to focus on what we considered our better opportunities for growth. The exploration team has continued to work diligently throughout the year assessing the significant database of information acquired with our purchase of the Spargoville tenement package in 2015. This database included in excess of 65 gold targets, with some 50 targets still to be investigated. With success from our exploration drilling programs undertaken during the year, we now have 5 Joint Ore Reserve Committee, or JORC compliant resources, representing 5 potential future mining operations. These resources may be extracted from either open pit or underground mining methods, and evaluations will be undertaken in the near future. As I have mentioned previously, the total of these 5 resources represent 1.45 million tonnes of ore for 112,000 ounces. We continue to build on this resource base with the intention of process our own gold ore through the recently acquired Burbanks treatment plant. The acquisition of the Burbanks gold treatment plant was agreed in August 2016, and represented a cornerstone asset acquisition for your Company’s transition from an explorer to a producer. The transaction was finalised in October 2016 and work commenced on refurbishing the plant. This work has recently been completed with Toll milling commenced generating revenue for the Company. We have secured ore feed to the Burbanks mill from two sources which should provide continuous feed through to June 30, 2018. We have also fielded numerous enquiries from developers and producers to secure throughput capacity in the mill to process gold ore on a Toll basis. We will continue to progress these discussions with a view to ensuring the supply of continuous mill feed to the plant through 2018, until such time as Maximus has secured approval to mine ore from its Spargoville resources. The Company continues to review mining projects for acquisition as they become available, with a view to progressing from explorer and toll mill operator to an owner miner in our own right. These opportunities are becoming scarcer as the gold industry continues to improve, but small projects do occasionally present and we will assess each opportunity as and when they arise. We continue to operate on minimal budget overheads in order to conserve our capital for the Burbanks plant refurbishment, whilst meeting an acceptable standard for a listed company. Our Managing Director has successfully achieved significant growth in our resources portfolio whilst acquiring and refurbishing the Burbanks gold treatment plant. I commend his report to you which will expand on our projects. It remains for me to thank shareholders, my fellow Directors, staff and contractors for their assistance and support during the past year. I look forward to further exploration success, growth from our toll milling operation and your continued support for Maximus in the coming year. Bob Kennedy CHAIRMAN Maximus Resources Limited ABN 74 111 977 354 Managing Director’s Report Burbanks Mill The Burbanks gold treatment facility was acquired in August 2016 from Ramelius Resources Limited for $2.5 million. The Processing plant was purchased as it presented a significant opportunity for the Company to generate early cashflows via the treatment of 3rd party ore feed on a Toll treatment basis, whilst enabling the Company to focus on project generation and mining approvals of its Spargoville gold projects. Acquisition of the Burbanks facility also eliminates the significant restraint on timing and costs of processing ore produced through other 3rd part treatment plants in the area. Several parties have shown interest in securing milling capacity to Toll treat ore through the Burbank facility in 2017 with Toll Treatment agreements signed with Empire Resources Ltd and Lloyd George Mining Pty Ltd. Discussions have commenced with several other parties regarding Toll treatment services throughout 2018. Refurbishment plans and works commenced in November 2016. The major mechanical refurbishments were finalised in June 2017 with electrical upgrades and refurbishment of the crushing and screening circuit completed in August 2017. Commissioning of the processing plant commenced in September with crushing of gold ore from Empire Resources. Processing of gold ore through Burbanks commenced in September 2017 and nameplate capacity achieved in early October. Recruitment of operational personnel also commenced during June to ensure sufficient trained personnel were available during the final refurbishment program and commissioning phase. During the refurbishment process many additional improvements were identified and incorporated into the works schedule to prevent future downtime whilst significantly improving the safety systems throughout the plant. One such improvement is the move to a liquid cyanide storage and distribution system, eliminating the manual mixing of dry cyanide. Spargoville Following the initial acquisition of 25% interest in the Spargoville tenement package near Coolgardie in the Eastern Goldfields of Western Australia on 5 August 2015, Maximus quickly moved to 90% equity under the terms of the Sale Agreement with Tychean Resources Limited (TYK). The acquisition provided an interest in, and access to 36 tenements totalling approximately 11,485 hectares. The Company subsequently negotiated a second Sale Agreement with TYK securing the final remaining 10% equity in the Spargoville project for 25 million MXR shares. This final share issue was completed in October 2016 extinguishing all remaining TYK equity in the Spargoville tenement package and cancels the gold royalty applicable under the first Sale Agreement. The Company continued to progress exploration drilling and analysis on two main gold targets, Eagles Nest and West Larkinville during the year, resulting in preliminary ore resource estimates being generated. Efforts continued with the review of the extensive package of exploration data, acquired as part of the Spargoville tenement acquisition. Infill drilling completed at Eagles Nest confirmed that the orebody appears to plunge to the south and off the Maximus tenement, prompting the Company to acquire the adjoining southern tenement. A further extensional drill program was undertaken in November to test for strike extensions to the south, across the recently acquired adjoining tenement, and depth extensions. The results were very positive allowing a reinterpretation of the ore block model resulting in an extension to the overall strike length of Eagles nest, and thickening of the middle section of the ore zone. A revised mineral resource estimate compliant with the JORC 2012 guidelines was completed resulting in a significant increase in the contained ore tonnes to 679,600 tonnes at 1.95 g/t for 42,600 ounces, representing a 59% increase in contained ounces. Initial drilling on the West Larkinville gold project identified a small shallow deposit. Infill drilling undertaken in November, concurrent with the Eagles Nest drill program, resulted in a thickening of the central ore zone, with a significant lift in the overall model grade to above 3.0 g/t. The JORC 2012 revised mineral resource estimate now totals 119,700T at 3.02 g/t for 11,600 ounces of contained gold. The orebody remains open to the north and at depth to the south, indicating potential future increases to the resource model tonnes. Work continued on evaluating the historic production data from the Wattle Dam High Grade underground mine to determine the potential volume of remaining gold ore and the economics of extracting this ore. During this evaluation work, an area east of the main Wattle Dam open pit outline was identified as an exploration target, as it appeared to be under-explored. A preliminary aircore (AC) and reverse circulation (RC) drill program totaling 3,334 metres was undertaken at the east Wattle Dam site to identify potential parallel structures to the main Wattle dam mineralized lode and test for continuation of the structure hosting the Redback prospect to the south of Wattle dam. Several encouraging results were return from the drill program, Maximus Resources Limited ABN 74 111 977 354 Managing Director’s Report Further drilling is planned to be undertaken in 2017/18 between the Redback project and Wattle dam east project to confirm the intrusive contact is continuous between the two sites, which may indicate the potential for additional mineralisation along this contact trend. With success from our exploration drilling programs undertaken during the year, we now have 5 Joint Ore Reserve Committee, or JORC compliant resources, representing 5 potential future mining operations. These resources may be extracted from either open pit or underground mining methods, and evaluations will be undertaken in the near future. The 5 resources contain a total of 1.45 million tonnes of ore for 112,000 ounces. We continue to build on this resource base with the intention of process our own gold ore through the recently acquired Burbanks treatment plant. Minimal field exploration was undertaken during the second half of the year, due to capital being invested in the Burbanks refurbishment. However, exploration would shall re-commence in early 2018 as the mill becomes cash positive. With limited exploration success from our lithium exploration activities, a binding term sheet was signed with Lepidico Ltd (a pure lithium explorer) in August 2017 under which Lepidico can earn a 75% interest in the Company’s lithium rights located on the Spargoville Project through staged payments totaling $350,000. The initial payment of $80,000 in Lepidico shares at a 5 day VWAP issue price was received in August 2017. At any time within the three years, and after the third payment detailed above, Lepidico can secure 100% of the Lithium Rights by making a payment of $400,000 as either cash, or 50% cash and Lepidco shares at a 5 day VWAP issue price. Narndee A total of 6 tenements were held in the Narndee package at the beginning of the financial year containing 2 Electro- magnetic (EM) targets showing a potentially similar structure to the Nova Nickel deposit in the Fraser Range south of Perth. A ground EM survey commenced in July 2016 to investigate and test MG 03 and MG 24. The survey of MG03 was completed in July, with rain delaying completion of MG24 until August 2016. No significant target identified. The remaining six tenements were relinquished by the end of the year. Millers Creek No on-ground activities were conducted during the year. No interest was shown by third parties in acquiring an interest in the tenement package and all tenements were relinquished during the financial year. 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. Corporate During August 2017, Maximus acquired Ramelius Milling Services Pty Ltd, the holding company for the Burbanks Treatment facility owned by ASX listed Ramelius Resources Ltd. Upon signing of a Sale Agreement, the Company prepared a detailed refurbishment plan and commenced a mid-level refurbishment in November 2016. The treatment plant has an annual capacity of 180,000 tonnes per annum, and is particularly suited to high grade, course gold style mineralisation. The Burbanks plant provides MXR with a cash generating asset to fund future operational and exploration capital costs. The plant was recommissioned in September 2017 with first commercial gold poured expected during late October 2017. Summary 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 commercial agreements. Kevin Malaxos MANAGING DIRECTOR MAXIMUS RESOURCES LIMITED - TENEMENT SCHEDULE Tenement Number Tenement Name Registered Holder/Applicant Maximus Resources Limited Tenement Schedule 30 June 2017 Maximus Resources interest 30/06/2017 WESTERN AUSTRALIA SPARGOVILLE PROJECT Eagles Nest Eagles Nest Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Kambalda West Hilditch Larkinville Larkinville 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 BURBANKS PROJECT Burbanks Burbanks Burbanks Burbanks Burbanks Burbanks Burbanks Burbanks Burbanks Burbanks Burbanks Burbanks Burbanks M15/1475 P15/5545 E15/967 E15/968 L15/128 L15/255 M15/395 M15/703 P15/5860 P15/5953 M15/1448 M15/1449 P15/5912 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 G15/10 G15/11 G15/12 G15/13 G15/25 L15/109 L15/110 L15/189 L15/234 L15/284 M15/1273 M15/1369 M15/1370 Maximus Resources Ltd & Tychean 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 Maximus Resources Ltd, Tychean Resources Ltd & Bullabulling Pty Ltd Maximus Resources Ltd, Tychean Resources Ltd & Pioneer Resources Ltd Maximus Resources Ltd, Tychean Resources Ltd & Pioneer Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Maximus Resources Ltd & Tychean Resources Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd Eastern Goldfields Milling Services Pty Ltd 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 90.00% 75.00% 75.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Page | 1 Maximus Resources Limited Directors' Report 30 June 2017 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 2017 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 the refurbishment of the Burbanks Mill, natural resources exploration and development. Dividends There were no dividends declared or paid during the year (2016: 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 $3,893,139 (2016: $681,865). The loss includes exploration impairment of $2,919,675 which is mainly derived from impairing exploration and evaluation costs relation to the Narndee project. The net assets of the Company have decreased by $1,848,165 during the financial year from $5,427,587 at 30 June 2016 to $3,579,422 at 30 June 2017. While the tangible assets of the Company have increased as a result of the acquisition of Eastern Goldfields Milling Services Pty Ltd, the overall net assets have decreased due to the impairment of exploration and evaluation assets in relation to the Narndee project during the year. 2. Review of Operations Burbanks Mill The Burbanks gold treatment facility was acquired in August 2016 from Ramelius Resources Limited for $2.5 million. The Processing plant was purchased as it presented a significant opportunity for the Company to generate early cashflows via the treatment of 3rd party ore feed on a Toll treatment basis, whilst enabling the Company to focus on project generation and mining approvals of its Spargoville gold projects. Acquisition of the Burbanks facility also eliminates the significant restraint on timing and costs of processing ore produced through other 3rd part treatment plants in the area. Refurbishment plans and works commenced in December 2016. The mechanical refurbishment was finalized in June 2017 with electrical upgrades and refurbishment of the crushing and screening circuit completed in July 2017. Several parties have shown interest to secure capacity to Toll treat ore through the Burbank facility in 2017 with Toll Treatment agreements signed with Empire Resources Ltd and Lloyd George mining. Discussions have commenced with several other parties regarding Toll treatment agreements. Recruitment of operational personnel also commenced during June to ensure sufficient trained personnel were available during the final refurbishment program and commissioning phase. Processing ore through Burbanks commenced during late September 2017. Page | 2 Maximus Resources Limited Directors' Report 30 June 2017 Spargoville The Company continued to progress exploration drilling and analysis on two main gold targets, Eagles Nest and West Larkinville during the period, resulting in preliminary ore resource estimates being generated. Efforts continued with the review of exploration data, acquired as part of the Spargoville tenement acquisition in August 2015, with additional targets identified for further interrogation. Infill drilling completed at Eagles Nest confirmed that the orebody appears to plunge to the south and off the Maximus tenement, which resulted in MXR acquiring the adjoining southern tenement. A further extensional drill program was undertaken in November to test for strike extensions to the south, across the recently acquired adjoining tenement, and depth extensions. The results were very positive allowing a reinterpretation of the ore block model resulting in an extension to the overall strike length of Eagles nest, and thickening of the middle section of the ore zone. A revised mineral resource estimate compliant with the JORC 2012 guidelines was being prepared and should see a significant increase in the contained ore tonnes and resultant ounces. Initial drilling on the West Larkinville gold project identified a small shallow deposit. Infill drilling undertaken in November, concurrent with the Eagles Nest drill program, resulted in a thickening of the central ore zone, with a significant lift in the overall model grade to above 3.0 g/t. The JORC 2012 revised mineral resource estimate now totals 119,700T at 3.02 g/t for 11,600 ounces of contained gold. The orebody remains open to the north and at depth to the south, indicating potential future increases to the resource model tonnes. Work continued on evaluating the historic production data from the Wattle Dam High Grade underground mine to determine the potential volume of remaining gold ore and the economics of extracting this ore. During this evaluation work, an area east of the main Wattle Dam open pit outline was identified as an exploration target, as it appeared to be under-explored. A preliminary aircore (AC) and reverse circulation (RC) drill program was undertaken at the east Wattle Dam site to identify potential parallel structures to the main Wattle dam mineralized lode and test for continuation of the structure hosting the Redback prospect to the south of Wattle dam. A total of 4 RC and 60 AC holes were completed for a total of 3,334 metres. Several encouraging results were return from the drill program, The ultramafic/felsic intrusive contact identified in several drill holes is a similar setting to the mineralisation at the Redback deposit, some 500m to the south, and directly along strike. Further drilling is planned tol be undertaken in 2017/18 between the Redback and Wattle dam east projects to confirm the intrusive contact is continuous between the two sites. Narndee A total of 6 tenements were held in the Narndee package at the beginning of the financial year. Within these tenements were 2 high priority EM targets (MG 03 and MG24) showing a potentially similar structure to the Nova Nickel deposit in the Fraser Range south of Perth. A ground EM survey commenced in July 2016 to investigate and test MG 03 and MG 24. The survey was rained out after completing the review of MG03, with no significant anomaly identified. The EM survey of EM 24 was completed in August 2016 with no significant target identified. The remaining six tenements were relinquished by the end of the year. Adelaide Hills The remaining 2 tenements in the Adelaide Hills tenement package were surrendered during the financial year. Following the Sale Agreement with Terramin Exploration Pty Ltd in November 2013, two contingent $1 million payments (totalling $2 million) remain outstanding and are dependent on Environmental approval to mine (PEPR) from the Department for State Development (DSD) and the commencement of bullion production from the site. A 0.5% gold royalty is also applicable to all ounces produced from the Bird in Hand project in excess of 50,000 ounces. Page | 3 Maximus Resources Limited Directors' Report 30 June 2017 Millers Creek No on-ground activities were conducted during the year. The tenement package was posted on a web-based minerals industry notice board seeking a Joint Venture party of buyer to progress exploration on the targets. No interest was shown and all tenements were relinquished during the financial year. Northern Gawler Craton Maximus held one tenement, the Welbourn Hill tenement, in the Northern Gawler Craton region at the beginning of the financial year. The Company continued to search for a Joint Venture party to conduct further exploration on this tenement, however due to no interest shown the tenement was relinquished during the financial year. Corporate During the 2017 financial year the following securities were issued: • 533,000,000 ordinary shares and 533,000,000 unlisted options were issued to sophisticated and professional investors following a General Meeting of shareholders on 16 September 2016. The shares were offered at an issue price of $0.003 per share raising $1.6 million before costs. 500,000,000 ordinary shares and unlisted options were issued on 27 September 2016. The remaining 33,000,000 ordinary shares and unlisted options were issued on 4 October 2016. • On 18 October 2016 the Company issued 25,000,000 fully paid ordinary shares to Tychean Resources Limited (ASX: TYK). These shares were issued under the terms of the Second Sale Agreement with TYK for consideration of full ownership of TYK’s interest in the Spargoville gold project. The Agreement also removed all earn-in obligations required by the Company and cancelled any gold royalty to TYK. • 113,250,000 ordinary shares were issued to shareholders on 31 May 2017 who participated in the Share Purchase Plan. The shares were offered at an issue price of $0.002 per share raising $226,500 before costs. • 300,000,000 ordinary shares were issued to sophisticated and professional on 26 June 2017. The shares were offered at an issue price of $0.001 per share raising $300,000 before costs. 3. Significant changes in the state of affairs During the year the Company acquired Eastern Goldfields Milling Services Pty Ltd (formerly Ramelius Milling Services Pty Ltd) from Ramelius Resources Limited (ASX:RMS). The transaction with RMS resulted in the Company acquiring the Burbanks Processing Facility located in Coolgardie, Western Australia. While the Company has been effecting exploration activities on its key project areas, it has also undertaken the refurbishment of the Burbanks Mill and plans to commence operations during September 2017 on a toll treatment basis There have been no other significant changes in the state of affairs from the 2016 financial year to 2017. 4. Events arising since the end of the reporting period On 3 July 2017 the Company signed a Toll Treatment Agreement with Empire Resources Limited for the supply of up to 150,000 tonne of ore from the Penny’s Find gold project to the Burbanks Treatment Facility which commenced during mid-September 2017. The Agreement also allows Empire Resources to extend the agreement for up to an additional 150,000 tonnes of ore from the Penny’s Find underground resource should this project proceed. During August 2017 the Company signed a Binding Term Sheet with Lepidico Ltd (Lepidico) under which Lepidico can earn a 75% interest in the Company’s lithium rights located on the Spargoville Project. Lepidico must meet the following terms to earn the 75% interest in the lithium rights: On execution of the term sheet, payment to the Company of $80,000 Lepidico shares, at a 5 day VWAP issue price (issued 21 August 2017); Six months after execution, payment to the Company of $120,000 in cash or Lepidico shares at a 5 day VWAP issue price; and 12 months after execution, payment to the Company of $150,000 in cash or Lepdico shares at a 5 day VWAP issue price. At anytime within the three years, and after the third payment detailed above, Lepidico can secure 100% of the Lithium Rights by making a payment of $400,000 as either cash, or a combination of 50% cash and 50% Lepidco shares at a Page | 4 Maximus Resources Limited Directors' Report 30 June 2017 5 day VWAP issue price. On 6 September 2017 the Company completed a placement by issuing 173,032,308 ordinary shares to sophisticated and professional investors to raise $200,000 before costs. 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 near future, should continued exploration success be achieved. The acquisition of the Spargoville tenements has presented several advanced gold exploration targets. The Company plans to pursue the gold potential of the Spargoville tenements. 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 acquired 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. The Company completed refurbishment of the mill during August 2017 enabling the facility to Toll treat gold ore from 3rd parties located within an economic trucking distance to the facility. This process will enable the Company to continue 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. Agreement has been secured with third parties to toll treat gold ore and discussions are ongoing with several additional parties to ensure Toll treatment ore is available to treat through the plant until mining commences at the company owned resources. 6. Environmental regulation The Company’s operations are subject to significant environmental regulation under both Commonwealth and 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, CTA, AGIA, Life Member AIM, FAICD. 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. Independence Whilst Mr Kennedy has been appointed to a number of Resource Industry Boards, due to his knowledge of the industry and the companies all operating domestically, the time required across these companies in no way impedes on his dedication to his role as Chairman of the Board. In taking all of these issues into account, the Board (excluding Mr Kennedy), were unanimous in declaring Mr Kennedy as independent. 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). Page | 5 Former directorships in the last 3 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 February 2015) and Marmota Energy Limited (from April 2006 to April 2015). Maximus Resources Limited Directors' Report 30 June 2017 Special responsibilities Chairman of the Board. Member of the Audit, Risk & Corporate Governance Committee. Interests in shares and options 91,500,000 ordinary shares 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 was a non-executive director of ASX-listed company Flinders Mines Limited (from December 2010 to October 2016). Special responsibilities Managing Director. Interests in shares, options and rights 46,000,000 ordinary shares in Maximus Resources Limited. Leigh Carol McClusky Non-executive Director 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 7,939,338 ordinary shares in Maximus Resources Limited. 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 Page | 6 a past national president of Australian Mining and Petroleum Law Association (AMPLA Limited). Other current directorships Mr Vickery is also a non-executive director of Tychean Resources Limited (Appointed May 2013). Mr Vickery was a non-executive director of Flinders Mines Limited (from 2000 to October 2016). Maximus Resources Limited Directors' Report 30 June 2017 Special responsibilities Chairman of the Audit, Risk & Corporate Governance Committee. Interests in shares and options 42,500,003 ordinary shares in Maximus Resources Limited. Nicholas John Smart Alternate director for E J Vickery. 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 to 2016). Mr Smart currently consults to various public and private companies. Interests in shares and options 37,500 ordinary shares in Maximus Resources Limited. Company Secretary Rajita Shamani Alwis LLB BCom, CA. 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. 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 2017, and the number of meetings attended by each director were: Robert Michael Kennedy Kevin John Malaxos Leigh Carol McClusky Ewan John Vickery Nicholas John Smart Full meetings of directors B A Audit & Risk Committee meetings B A 10 10 9 10 - 10 10 10 10 - 3 3 2 3 - 3 3 3 3 - 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 Page | 7 Maximus Resources Limited Directors' Report 30 June 2017 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 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. Fees for non-audit services paid or payable to the external auditors or its related practices during the year ended 30 June 2017 was $3,500 (2016: $2,000). Remuneration report – audited The remuneration report is set out under the following main headings: Principles used to determine the nature and amount of remuneration Voting and comments made at the Company’s 2016 Annual General Meeting Details of remuneration Service agreements Share-based compensation A B C D E 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. Page | 8 Maximus Resources Limited Directors' Report 30 June 2017 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. 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 2017 or 2016. B. Voting and comments made at the Company’s 2016 Annual General Meeting Maximus Resources Limited received more than 90% of ‘yes’ votes on its remuneration report for the 2016 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 2017 Name Robert M Kennedy Kevin J Malaxos Leigh C McClusky Ewan J Vickery Nicholas J Smart Rajita S Alwis Short-term employee benefits Post-employment benefits Share-based payments Fees $ 61,712 - 40,875 37,329 - 68,175 Salary $ - 188,356 - - - - Bonus Superannuation Options $ $ $ - - - - - - - 5,863 17,894 - 3,546 - - 27,303 - - - - - - - Total key management personnel compensation 208,091 188,356 * Note. The Directors suspended directors’ fees from 1 April 2017 to preserve cash for operational purposes Rights $ Total $ - - - - - - - 67,575 206,250 40,875 40,875 - 68,175 423,750 Page | 9 Key management personnel and other executives of the Company Maximus Resources Limited Directors' Report 30 June 2017 2016 Name Robert M Kennedy Kevin J Malaxos Leigh C McClusky Ewan J Vickery Nicholas J Smart Rajita S Alwis Short-term employee benefits Post-employment benefits Share-based payments Salary $ Bonus $ Fees $ 82,283 - 54,500 49,772 - 69,225 - 251,143 - - - - Superannuation Options $ 7,817 23,857 - 4,728 - - 36,402 $ - - - - - - - Rights $ Total $ - - - - - - - 90,100 275,000 54,500 54,500 - 69,225 543,325 - - - - - - - Total key management personnel compensation 255,780 251,143 The relative proportions of remuneration that are fixed and those that are at risk are as follows: Name Kevin John Malaxos Fixed remuneration 2016 % 100 2017 % 100 2017 At risk - STI* 2017 % - 2016 % - At risk - LTI** 2017 % - 2016 % 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 long-term incentives for executives to deliver long-term 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. 2017 Name 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 R M Kennedy K J Malaxos L C McClusky E J Vickery N J Smart 24,000,000 11,000,000 1,982,670 10,000,003 - - - - - - (24,000,000) (11,000,000) (1,982,670) (10,000,003) - - - - - - - - - - - - - - - - - - - - - Page | 10 Maximus Resources Limited Directors' Report 30 June 2017 2016 Name 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 R M Kennedy K J Malaxos L C McClusky E J Vickery N J Smart - - - - - - - - - - - - - - - 24,000,000 11,000,000 1,982,670 10,000,003 - 24,000,000 11,000,000 1,982,670 10,000,003 - 24,000,000 11,000,000 1,983,670 10,000,003 - - - - - - *The options were acquired as a result of participating in the pro-rata Entitlement Issue. (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. 2017 Name R M Kennedy KJ Malaxos L C McClusky E J Vickery N J Smart Balance at the start of the year 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 - - - - - - - - - - 7,500,000 7,500,000 1,000,000 7,500,000 - 91,500,000 46,000,000 7,939,338 42,500,003 37,500 *The shares were acquired as a result of participating in the Share Purchase Plan. 2016 Name R M Kennedy KJ Malaxos L C McClusky E J Vickery N J Smart Balance at the start of the year Received as compensation Exercise of options/rights Acquired/ (disposed) Balance at the end of the year 50,000,000 20,000,000 2,456,668 16,070,001 37,500 - - - - - - - - - - 34,000,000 18,500,000 4,482,670 18,930,002 - 84,000,000 38,500,000 6,939,338 35,000,003 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 27 September 2016 4 October 2016 29 September 2017 29 September 2017 $0.006 $0.006 Number under option 500,000,000 33,333,333 533,333,333 Auditors 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 12. This report is signed and dated in Adelaide on this 29th day of September 2017 and made in accordance with a resolution of the directors. Kevin J Malaxos Director Page | 11 Page | 12 Maximus Resources Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2017 Consolidated 30 June 2017 $ 30 June 2016 $ Notes Revenue Gold Sales - Spargoville Other Sales – Burbanks Other income Burbanks mill expenses Administrative expenses Compliance expenses Depreciation expense Employment benefits expense Marketing expenses Finance expense Exploration expenditure written off Other expenses Gain/(loss) on sale of available for sale financial assets Impairment of financial assets (Loss) before income tax Income tax expense Loss for the year Other comprehensive income (Items that maybe reclassified subsequently to profit or loss) Changes in the fair value of available-for-sale financial assets Other comprehensive income for the year (net of tax) 4 5 5 5 5 16 5 10 17 6 45,653 5,000 35,073 (458,253) (105,941) (131,559) (1,824) (253,166) (6,409) (22,613) (2,919,675) (79,425) - - 16,845 - 11,232 - (103,325) (94,485) (1,295) (341,306) (5,025) - (70,904) - (7,281) (52,527) (3,893,139) - (648,071) (33,794) (3,893,139) (681,865) - - - - Total comprehensive loss for the year (3,893,139) (681,865) (Loss) is attributable to: Maximus Resources Limited Total comprehensive loss for the year is attributable to: Maximus Resources Limited 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 (3,893,139) (681,865) (3,893,139) (681,865) Cents Cents 28 28 (0.168) (0.168) (0.07) (0.07) This statement should be read in conjunction with the notes to the financial statements. Page | 13 Maximus Resources Limited Consolidated statement of financial position As at 30 June 2017 Notes Consolidated 30 June 2017 $ 30 June 2016 $ 7 8 9 11 12 13 16 14 17 15 18 19 229,813 35,199 18,368 9,719 1,443,300 455 - 9,546 293,099 1,453,301 3,834,306 2,467,297 2,811 4,220,642 6,301,603 4,223,453 6,594,702 5,676,754 407,505 415,402 43,008 183,162 - 37,023 875,191 220,185 1,342,433 797,656 - 28,982 2,140,089 28,982 3,015,280 249,167 3,579,422 5,427,587 39,988,897 (36,409,475) 37,943,923 (32,516,336) 3,579,422 5,427,587 ASSETS Current assets Cash and cash equivalents Trade and other receivables Inventories 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 Financial liability Provisions Total current liabilities Non-current liabilities Financial liability Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Accumulated losses Total equity This statement should be read in conjunction with the notes to the financial statements. Page | 14 Maximus Resources Limited Consolidated statement of changes in equity For the year ended 30 June 2017 Consolidated Notes Contributed equity $ Accumulated losses $ Total equity $ Balance at 1 July 2016 Total comprehensive loss for the year: (Loss) for the year Other comprehensive income Transactions with owners in their capacity as owners: Contributions of equity 18 19 37,943,923 (32,516,336) 5,427,587 - - (3,893,139) - (3,893,139) (3,893,139) - (3,893,139) 2,044,974 - 2,044,974 Balance at 30 June 2017 39,988,897 (36,409,475) 3,579,422 Balance at 1 July 2015 35,398,391 (31,834,471) 3,563,920 Total comprehensive loss for the year: (Loss) for the year Other comprehensive income Transactions with owners in their capacity as owners: Contributions of equity Balance at 30 June 2016 18 19 - - (681,865) - (681,865) (681,865) (681,865) 2,545,532 37,943,923 - (32,516,336) 2,545,532 5,427,587 This statement should be read in conjunction with the notes to the financial statements. Page | 15 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Net cash used in operating activities Cash flows from investing activities Payment for purchase of Eastern Goldfields Milling Services Pty Ltd Payment for property, plant & equipment Payments for available for sale financial assets Proceeds from sale of available for sale financial assets Payments for exploration and evaluation Net cash provided by investing activities 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 Notes 27 10 Maximus Resources Limited Consolidated statement of cash flows For the year ended 30 June 2017 Consolidated 30 June 2017 $ 30 June 2016 $ 51,153 (669,859) 20,295 16,845 (450,172) 11,232 (598,411) (422,095) (829,424) (625,271) - - (1,205,355) - - (1,279) 30,406 (1,380,925) (2,660,050) (1,351,798) 2,126,500 (81,526) 2,424,384 (112,646) 2,044,974 2,311,738 (1,213,487) 1,443,300 537,845 905,455 Cash and cash equivalents at the end of the financial year 7 229,813 1,443,300 This statement should be read in conjunction with the notes to the financial statements. Page | 16 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 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. 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 $3,893,139 (2016 $681,865) with negative operating and investing cashflows of $3,258,464. 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. b) Basis of consolidation The Group financial statements consolidate those of the Parent Company and all of its subsidiaries as of 30 June 2017. 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. Page | 17 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 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 (2016: 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 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. The Company and its subsidiaries are not part of a consolidated tax group. 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. Page | 18 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 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. Provision for restoration and rehabilitation The Company assesses its mill restoration and rehabilitation provision in accordance with accounting policies. Significant judgement is required in determining the provision for restoration and rehabilitation as there are many transactions and other factors that will affect the ultimate liability payable to rehabilitate the mill site. The estimate of future costs therefore requires management to make assessment of the future restoration and rehabilitation date, future environmental legislation, changes in regulations, price increases, changes in discount rates, the extent of restoration and rehabilitation activities and future removal technologies. When these factors change and become known in the future, such differences will impact the restoration and rehabilitation provision in the period in which they change or become known. At each reporting date, the rehabilitation and restoration provision is remeasured to reflect any of these changes. 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 Page | 19 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 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 straight-line 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(f). 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. 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. Page | 20 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 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 2016. 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 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. 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 Page | 21 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 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. 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. 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 2017, 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 Page | 22 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) • 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. 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. 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. The Company holds the following financial instruments: Financial assets Cash and cash equivalents Trade and other receivables Financial liabilities Trade and other payables Financial liabilities – current Financial liabilities – non-current (a) Market risk Consolidated 30 June 2017 $ 30 June 2016 $ 229,813 35,199 1,443,300 455 265,012 1,443,755 416,781 415,402 1,342,433 183,162 - - 2,174,616 183,162 (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. (i) 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: Page | 23 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 30 June 2017 Weighted average interest rate % 1.95% 30 June 2017 Balance $ 229,813 229,813 30 June 2016 Weighted average interest rate % 1.95% 30 June 2016 Balance $ 1,443,300 1,443,300 Cash and cash equivalents Net exposure to cashflow interest rate Interest rate sensitivity analysis At 30 June 2017, 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: 30 June 2017 Financial assets Cash and cash equivalents Total increase/ (decrease) 30 June 2016 Financial assets Cash and cash equivalents Total increase/ (decrease) (b) Credit risk Carrying amount $ Increase 2% Decrease 2% Interest rate risk Profit $ Equity $ Profit $ Equity $ 229,813 397 397 397 397 (397) (397) (397) (397 Carrying amount $ Increase 2% Decrease 2% Profit $ Equity $ Profit $ Equity $ 1,443,300 225 225 225 225 (225) (225) (225) (225) 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. Page | 24 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 3 Segment information (a) Description of segments 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. Following acquisition of the Burbanks Mill the operating segments have now changed. Previously the segments were separated for each exploration area. In 2017 other than Spargoville these have been consolidated into “Other”. 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. 2017 Spargoville Burbanks Mill Other Total Segment revenue Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) Impairment Segment assets $ 45,653 $ 5,000 $ $ - 50,653 45,653 (475,866) (2,919,675) (3,349,888) 2,467,297 3,885,028 - 6,352,325 (2,919,675) (2,919,675) Capital expenditure 1,099,285 625,271 79,686 1,804,242 Total movement for the year 1,099,285 625,271 (2,839,989) (1,115,433) Total segment assets Unallocated assets Total assets Total segment liabilities Unallocated liabilities Total liabilities - 2,744,564 6,352,325 242,377 6,594,702 - 2,744,564 270,716 3,015,280 Page | 25 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 3. Segment Information (cont) 2016 Millers Creek $ Spargoville $ Narndee $ Other $ Total $ Segment revenue - 16,845 Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) Impairment Segment assets (30,443) (30,443) 16,845 - - - - - 16,845 (40,461) (54,059) (40,461) (70,904) - 1,368,011 2,839,836 12,795 4,220,642 Segment asset movements for the year: Capital expenditure 30,443 1,368,011 179,215 53,256 1,630,925 Total movement for the year - 1,368,011 179,215 12,795 1,560,021 Total segment assets Unallocated assets Total assets Total segment liabilities Unallocated liabilities Total liabilities (ii) Adjusted EBITDA A reconciliation of adjusted EBITDA to operating loss 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 Administrative expenses Marketing expenses 4,220,642 1,456,112 5,676,754 - 249,167 249,167 Consolidated 30 June 2017 $ 30 June 2016 $ (3,349,888) (54,059) 35,073 - - (571,915) (6,409) 11,232 (52,527) (7,281) (540,411) (5,025) Profit before income tax from continuing operations (3,893,139) (648,071) Allocated: Segment assets Unallocated: Cash and cash equivalents Trade and other receivables Other assets Plant and equipment Consolidated 30 June 2017 $ 30 June 2016 $ 6,352,325 4,220,642 217,688 12,228 9,719 2,742 1,443,300 455 9,546 2,811 Total assets as per the consolidated statements of financial position 6,594,702 5,676,754 Page | 26 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 3. Segment Information (cont) (iii) Segment liabilities Reportable segments' liabilities are reconciled to total liabilities as follows: Allocated: Allocated segment liabilities Unallocated: Trade and other payables Provisions Consolidated 30 June 2017 30 June 2016 2,744,564 - 188,259 82,457 183,162 66,005 Total liabilities as per the consolidated statements of financial position 3,015,280 249,167 4. Other income Interest received Other 5. Expenses Burbanks mill expenses Milling expenses – consumables etc Personnel expenses Insurance Depreciation Licences Travel Other mill expenses Administration Administration costs Legal fees Compliance expenses Share registry fees ASX fees Audit Fees Insurance Other compliance expenses Marketing Marketing and promotion Exploration expenses General exploration expenditure written off Capitalised exploration expenditure impaired Consolidated 30 June 2017 20,295 14,778 30 June 2016 11,232 - 35,073 11,232 Consolidated 30 June 2017 30 June 2016 91,271 248,355 40,347 37,008 6,323 11,351 23,598 458,253 99,591 6,350 - - - - - - - - 103,325 - 105,941 103,325 48,288 23,100 34,745 22,978 2,448 24,040 17,951 25,928 25,158 1,408 131,559 94,485 6,409 5,025 6,409 5,025 5,650 2,914,025 12,125 58,779 2,919,675 70,904 Page | 27 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 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% (2016: 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 2017 $ 30 June 2016 $ - - 33,794 33,794 (3,893,139) (681,865) (1,167,942) (204,560) 1,167,942 (238,354) - 33,794 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 $7,308,420 (2016: $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 2017 $ 30 June 2016 $ 229,813 - 313,300 1,130,000 229,813 1,443,300 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 1.95% (2016: 2.05%). Page | 28 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 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 Consolidated 30 June 2017 $ 30 June 2016 $ 28,833 6,366 35,199 - 455 455 Consolidated 30 June 2017 $ 30 June 2016 $ 9,719 9,546 Page | 29 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 10. Business Combination On 2 August 2016 the Company signed a Share Sale Agreement with Ramelius Resources Limited (ASX:RMS) for the purchase of the company, Eastern Goldfields Milling Services Pty Ltd (formerly Ramelius Milling Services Pty Ltd) that owns the Burbanks Processing Facility located 10km south of Coolgardie, Western Australia. The Company changed the name of the wholly-owned subsidiary shortly after acquisition from RMS. The consideration to acquire Eastern Goldfields Milling Services Pty Ltd was $2.5 million that was to 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 Share Sale Agreement. (Refer Note 17) During March 2017 the Company signed a Deed of Variation with RMS in relation to the Share Sale Agreement. The Deed of Variation changed the payment terms relating to the $1,000,000 stage payment due either 12 months from the date of signing the Sale Agreement (2 August 2017) or commencement of commercial production, whichever occurs first. The new terms for this staged payment are four instalments of $250,000 due on 1 April 2017, 1 July 2017, 1 October 2017 and 1 January 2018 with interest. A payment of $250,000 was made to RMS on 1 April 2017. During June 2017 the Company signed a Second Deed of Variation to amend the terms of the remaining $750k owing to RMS. The Second Deed of Variation introduced a royalty payable to RMS for $772,613 ($750k plus interest) that would be repaid at a rate of $3.00 per tonne of ore processed through the Burbanks Processing Facility. (Refer Note 16) Total purchase consideration was therefore $2,500,000. The interest on the Second Deed of Variation (royalty payable) includes interest of $22,613. The acquisition of Eastern Goldfields Milling Services Pty Ltd will be accounted for under AASB 3 – Business Combinations. This requires the acquired assets and liabilities to be recorded at fair value. The fair values of the identifiable assets and liabilities are as follows: ASSETS Inventory: - Consumables - Fuel Property Plant & Equipment: - Mill Plant & Equipment - Motor Vehicles - Burbanks – Office equipment - Burbanks – Office furniture TOTAL ASSETS LIABILITIES Rehabilitation provision TOTAL LIABILITIES $ 12,604 8,138 3,225,119 7,012 1,505 3,828 3,258,206 758,206 758,206 The Company also entered into a Mortgage Agreement with RMS over the assets held in Eastern Goldfields 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 Eastern Goldfields Milling Services Pty Ltd. The total cash payments made to RMS during the year was $750,000. The Company incurred costs of $79,424 which are acquisition costs in relation to the purchase of Eastern Goldfields Milling Services Pty Ltd. The total cash outflow therefore was $829,424. Mr Kennedy is a director of Ramelius Resources Limited and abstained from any voting and discussions in relation to the acquisition (refer note 24). Page | 30 11. Plant and equipment Consolidated At 30 June 2016 Cost or fair value Accumulated depreciation Net book amount Year ended 30 June 2017 Opening net book amount Asset purchases Assets transferred (fair value) Depreciation charge Closing net book amount At 30 June 2017 Cost or fair value Accumulated depreciation Net book amount Consolidated Year ended 30 June 2016 Opening net book amount Depreciation charge Closing net book amount At 30 June 2016 Cost or fair value Accumulated depreciation Net book amount Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) Other plant and equipment $ Burbanks plant & equipment $ Burbanks Office equipment and furniture $ Total $ 20,467 (17,656) 2,811 - - - - - - 20,467 (17,656) 2,811 4,107 1,755 - (3,120) - 626,016 3,225,121 (35,804) - 5,091 12,345 (1,205) 4,107 632,862 3,237,466 (40,129) 2,742 3,815,333 16,231 3,834,306 22,222 (19,480) 3,851,137 (35,804) 17,436 (1,205) 3,890,795 (56,489) 2,742 3,815,333 16,231 3,834,306 Other plant and equipment $ Burbanks plant & equipment $ Burbanks Office equipment and furniture $ 4,107 (1,296) 2,811 20,467 (17,656) 2,811 - - - - - - - - - - - - Total $ 4,107 (1,296) 2,811 20,467 (17,656) 2,811 Page | 31 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 12. Non-current assets - Exploration and evaluation 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 Provision – Employee benefits 15. Non-current liabilities – Provisions Provision – Employee benefits Restoration provision Consolidated 30 June 2017 30 June 2016 4,220,642 1,166,330 (2,919,675) 2,660,621 1,630,925 (70,904) 2,467,297 4,220,642 - 2,467,297 2,839,836 1,380,806 2,467,297 4,220,642 Consolidated 30 June 2017 $ 30 June 2016 $ 407,505 183,162 407,505 183,162 Consolidated 30 June 2017 $ 30 June 2016 $ 43,008 37,023 43,008 37,023 Consolidated 30 June 2017 $ 30 June 2016 $ 39,449 758,207 28,982 - 797,656 28,982 Page | 32 16. Current liabilities – Financial liabilities Financial Liability – Ramelius Resources Ltd (Royalty) Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) Consolidated 30 June 2017 $ 30 June 2016 $ 415,402 415,402 - - During June 2017 the Company signed a Second Deed of Variation to amend the terms of the remaining $750k owing to Ramelius Resources Limited (ASX:RMS). The Second Deed of Variation introduced a royalty payable to RMS for $772,613 ($750k plus interest of $22,613) that would be repaid at a rate of $3.00 per tonne of ore processed through the Burbanks Processing Facility. The $415,402 Financial Liability above represents the current portion of the royalty payable to RMS based on current projections for the toll treatment operations at the Burbanks Mill. 17. Non-current liabilities – Financial liabilities Financial Liability – Ramelius Resources Ltd (Royalty) – refer note 16 Financial Liability – Ramelius Resources Ltd Consolidated 30 June 2017 $ 357,211 985,222 1,342,433 30 June 2016 $ - - The consideration to purchase Eastern Goldfields Milling Services Pty Ltd includes a final staged payment of $1,000,000 due on 3 August 2018 to RMS. The future payment is not subject to any interest and therefore $985,222 represents the discounted value of the future payment. (Refer Note 10) Page | 33 18. Contributed equity (a) Share capital Ordinary shares Fully paid (b) Movements in ordinary share capital: Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) Consolidated Consolidated 30 June 2017 30 June 2016 30 June 2017 30 June 2016 39,988,897 1,882,686,299 37,943,923 870,407,498 Date Details Number of shares Issue price $ 1 July 2015 Opening balance 870,407,498 35,398,391 27 October 2015 11 December 2015 17 February 2016 25 February 2016 13 April 2016 16 May 2016 17 May 2016 30 June 2016 Issue of Shares - placement Issue of Shares – Share Purchase Plan Issue of Shares – Tychean Resources Limited Issue of Shares - placement Issue of Shares - placement Issue of Shares – Entitlement Issue (Rights Issue) Issue of Shares – Entitlement Issue Shortfall Exercise of Options 100,000,000 138,000,000 100,000,000 66,000,000 70,000,000 530,182,388 7,580,611 515,802 Less: Transaction costs arising on share issues Deferred tax credit recognised directly in equity $0.002 $0.002 $0.002 $0.001 $0.0038 200,000 276,000 200,000 66,000 266,000 $0.003 1,590,547 22,742 $0.003 3,095 $0.006 2,624,384 (112,646) 33,794 (78,852) 30 June 2016 Balance 1,882,686,299 37,943,923 27 September 2016 4 October 2016 18 October 2016 31 May 2017 26 June 2017 Issue of Shares - placement Issue of Shares – placement Issue of Shares – Tychean Resources Limited Issue of Shares – Share Purchase Plan Issue of Shares – placement 500,000,000 33,333,333 25,000,000 113,250,000 300,000,000 $0.003 1,500,000 100,000 $0.003 50,000 $0.002 226,500 $0.002 300,000 $0.001 Less: Transaction costs arising on share issues Deferred tax credit recognised directly in equity 30 June 2017 Balance (c) Ordinary shares 2,176,500 (131,526) - 39,988,897 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. Page | 34 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 18. Contributed equity (cont) (d) Options and rights There were no options and rights issued during the 2016 and 2017 year in relation to the Maximus Resources Limited Employee Share Option and Incentive Rights Plans. (e) Capital risk management The Company debt capital which commenced during the 2017 financial year and as such there are externally imposed capital requirements. The Company's debt and capital includes ordinary share capital, supported by property, plant and equipment. 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. During the year there was a change in the strategy adopted by management to control the capital from the acquisition of the Burbanks Mill Processing Facility. 19. Retained losses Retained Earnings Balance 1 July Net loss for the year Balance 30 June 20. Key management personnel disclosures Key management personnel compensation Short-term employee benefits Post-employment benefits Share-based payments Consolidated 30 June 2017 30 June 2016 (32,516,336) (3,893,139) (31,834,471) (681,865) (36,409,475) (32,516,336) Consolidated 30 June 2017 $ 396,477 27,303 - 30 June 2016 $ 506,923 36,402 - 423,750 543,325 Detailed remuneration disclosures and interests held by key management personnel are provided in sections A to D of the remuneration report on pages 8 to 11. Page | 35 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 21. 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 22. Contingencies (a) Contingent liabilities Consolidated 30 June 2017 30 June 2016 34,745 3,500 27,357 2,000 38,245 29,357 The Group had no known contingent liabilities as at 30 June 2017 (2016: $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. 23. 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 2017 amounts of approximately $290,590 (2016: $1,018,400) 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 2017, the Group had no bank guarantees in place for this purpose (2016: $35,000). Page | 36 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 24. Key management personnel (a) Key management personnel Disclosures relating to key management personnel are set out in note 20. (b) Transactions with key management personnel The following transactions occurred with related parties: • • • • On 2 August 2016 the Company signed a Share Sale Agreement with Ramelius Resources Limited (ASX:RMS) for the purchase of the company, Eastern Goldfields Milling Services Pty Ltd (formerly Ramelius Milling Services Pty Ltd) that owns the Burbanks Processing Facility located 10km south of Coolgardie, Western Australia. The consideration to acquire Eastern Goldfields Milling Services Pty Ltd was $2.5 million that was to be paid in staged payments over a 24 month period. Mr Kennedy as a director of Ramelius Resources Limited abstained from any discussions and voting relating to this transaction. During March 2017 the Company signed a Deed of Variation with RMS in relation to the Share Sale Agreement to acquire Eastern Goldfields Milling Services Pty Ltd. The Deed of Variation changed the payment terms relating to the $1,000,000 stage payment due either 12 months from the date of signing the Sale Agreement (2 August 2017) or commencement of commercial production, whichever occurs first. The new terms for this staged payment amended to four instalments of $250,000 due on 1 April 2017, 1 July 2017, 1 October 2017 and 1 January 2018 with interest. A payment of $250,000 was made to RMS on 1 April 2017. Mr Kennedy as a director of Ramelius Resources Limited abstained from any discussions and voting relating to this transaction. During June 2017 the Company signed a Second Deed of Variation to amend the terms of the remaining $750k owing to RMS. The Second Deed of Variation introduced a royalty payable to RMS for $772,613 ($750k plus interest) that would be repaid at a rate of $3.00 per tonne of ore processed through the Burbanks Processing Facility. Mr Kennedy as a director of Ramelius Resources Limited abstained from any discussions and voting relating to this transaction. 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 that were issued to Tychean on 18 October 2016. Messrs Kennedy and Vickery are directors of Tychean Resources Limited and abstained from any voting and discussions relating to this transaction. Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. 25. 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 Equity holding 2016 % 2017 % MXR Minerals Pty Ltd Eastern Goldfields Milling Services Pty Ltd Australia Australia Ordinary Ordinary 100 100 100 0 Page | 37 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 26. Events occurring after the reporting period On 5 July 2017 the Company signed a Toll Treatment Agreement with Empire Resources Limited for the supply of up to 150,000 tonne of ore from the Penny’s Find gold project to the Burbanks Treatment Facility which commenced during mid-September 2017. During August 2017 the Company signed a Binding Term Sheet with Lepidico Ltd (Lepidico) under which Lepidico can earn a 75% interest in the Company’s lithium rights located on the Spargoville Project. To earn the 75% interest Lepidico must meet all of the following terms: On execution of the term sheet, payment to the Company of $80,000 Lepidico shares, at a 5 day VWAP issue price (issued 21 August 2017); Six months after execution, payment to the Company of $120,000 in cash or Lepidico shares at a 5 day VWAP issue price; and 12 months after execution, payment to the Company of $150,000 in cash or Lepdico shares at a 5 day VWAP issue price. At anytime within the three years, and after the third payment detailed above, Lepidico can secure 100% of the Lithium Rights by making a payment of $400,000 as either cash, or a combination of 50% cash and 50% Lepidco shares at a 5 day VWAP issue price. On 6 September 2017 the Company completed a placement by issuing 173,032,308 ordinary shares to sophisticated and professional investors to raise $200,000 before costs. 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. 27. 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 Consolidated 30 June 2017 $ (3,893,141) 38,832 - 2,919,675 - - (23,083) (558,024) 900,878 16,452 30 June 2016 $ (681,865) 1,295 33,794 70,904 52,527 7,281 4,210 2,248 68,510 19,001 Net cash (outflow)/inflow from operating activities (598,411) (422,095) Page | 38 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) 28. Earnings per share (a) Basic earnings per share Loss from continuing operations attributable to the ordinary equity holders Weighted average number of ordinary shares outstanding during the year used to calculate basic earnings per share Basic earnings per share (cents) (b) Diluted earnings per share Loss from continuing operations attributable to the ordinary equity holders Weighted average number of options outstanding during the year used to calculate diluted earnings per share Weighted average number of ordinary shares outstanding during the year used to calculate diluted earnings per share Diluted earnings per share (cents) 30 June 2017 30 June 2016 (3,893,139) (681,865) 2,316,585,108 (0.168) 1,014,057,771 (0.07) (3,893,139) (681,865) 2,316,585,108 (0.168) 1,014,057,771 (0.07) 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 $3,893,139 this financial year (2016: $681,865), the options have not been included in the determination of diluted earnings per share. 29. Share-based payments (a) Employee Option Plan No option arrangements existed at 30 June 2017: Fair value of options granted No employee options were granted during the year ended 30 June 2017 (2016: 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 2017 and 2016. Page | 39 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 Maximus Resources Limited 30 June 2017 Notes to the Consolidated Financial Statements (continued) Parent 2017 $ 240,145 4,970,039 2016 $ 1,453,827 4,223,454 5,210,184 5,677,281 1,003,880 1,039,449 220,183 28,982 2,043,329 249,165 3,166,855 5,428,116 39,988,897 (36,822,042) 37,943,923 (32,515,807) Capital and reserves attributable to owners 3,166,855 5,428,116 Statement of profit or loss and other comprehensive income Profit for the year Other comprehensive income Total comprehensive income (4,306,235) - (681,865) - (4,306,235) (681,865) Parent Entity Contingencies Contingent liabilities The parent entity had no known contingent liabilities as at 30 June 2017 (2016: $35,000). 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. Parent Entity 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 2017 amounts of approximately $290,590 (2016: $1,018,400) 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 2017, the Group had no bank guarantees in place for this purpose (2016: $35,000). Page | 40 In the directors' opinion: Maximus Resources Limited Directors' declaration 30 June 2017 (a) the consolidated financial statements and notes set out on pages 13 to 40 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 giving a true and fair view of the consolidated entity's financial position as at 30 June 2017 and of their performance for the financial year ended on that date, and (ii) (b) (c) 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 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. Kevin J Malaxos Director Adelaide 29th September 2017 Page | 41 Page | 42 Page | 43 Page | 44 Page | 45 Maximus Resources Limited ASX Additional Information The shareholder information set out below was applicable as at 30 September 2017. A Distribution of equity securities Analysis of numbers of equity security holders by size of holding: ORDINARY SHARES Holding 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Shares 130 203 220 711 1,461 2,725 There were 1,882 holders of less than a marketable parcel of ordinary shares. At a share price of $0.001, an unmarketable parcel is 500,000 shares. B Equity Security Holders Twenty largest quoted equity security holders The names of the twenty largest equity holders of quoted securities are listed below: Rank Name Units % of Units 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. MR NICHOLAS BARADAKIS BRISTOL CONTRACTING PTY LTD MRS GWENDOLINE MALAXOS UBS NOMINEES PTY LTD MR STEPHEN RONALD O'KEEFFE TRIPLE EIGHT GOLD PTY LTD CORPORATE PROPERTY SERVICES PTY LTD RMK SUPER PTY LTD KENNY INVESTMENTS PTY LTD MR ALISTAIR MARK CAMERON MR ARCHIBALD GEOFFREY LOUDON DINWOODIE INVESTMENTS PTY LTD MR DARRYN ANTHONY TLG TRADING PTY LTD LAKE PACIFIC PTY LTD OCTIFIL PTY LTD TYCHEAN RESOURCES LIMITED J P MORGAN NOMINEES AUSTRALIA LIMITED MR MARK ANDREW TKOCZ + MS SUSAN ELIZABETH EVANS MR SANG WOON LEE Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL) Total Remaining Holders Balance C Substantial holders As at 30 September 2017 there were not substantial shareholders. 130,000,000 86,516,154 86,516,154 56,837,527 48,757,319 48,223,482 45,000,000 43,276,518 41,800,000 36,900,000 33,333,333 30,000,000 29,000,000 27,000,000 25,000,000 25,000,000 25,000,000 24,096,922 23,000,000 21,900,000 887,157,409 2,140,144,531 4.29 2.86 2.86 1.88 1.61 1.59 1.49 1.43 1.38 1.22 1.10 0.99 0.96 0.89 0.83 0.83 0.83 0.80 0.76 0.72 29.31 70.69 Page | 46 Maximus Resources Limited ASX Additional Information 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. 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