2015
ANNUAL
REPORT
Developing
the ngualla
RaRe eaRth
pRoJeCt
PEAK0316 Annual Report-Cover.indd 1
23/10/2015 12:01 pm
Peak is developing the
Ngualla Project as a
‘Next Generation’ rare earth
producer aligned to the
realities of the new rare
earth market.
CONTENTS
4 Chairman’s Letter
5 Managing Director’s Letter
6 Ngualla Rare Earth Project
8 Review of Operations
18 Directors’ Report
29 Auditor’s Independence Declaration
30 Independent Auditor’s Report
32 Consolidated Statement of Comprehensive Income
33 Consolidated Statement of Financial Position
34 Consolidated Statement of Cash Flows
35 Consolidated Statement of Changes in Equity
36 Notes to Financial Statements
62 Directors’ Declaration
62 Tenement Schedule
63 Additional Shareholder Information
65 Corporate Directory
65 Corporate Governance Statement
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PEAK RESOURCES LTD ANNUAL REPORT 2015
The Next Generation rare earth producer
Ngualla is differentiated from current rare earth producers and other developers
by a distinctly different development approach backed by the advantages of a
large high quality deposit and demonstrated process.
Products strongly aligned with the high
value, high growth Magnet Metal rare
earth market
MAGNET
METALS
FOCUS
Production profile suitably sized for entry
to the market at only 5% of global supply
Quality deposit and demonstrated process
supports Capex that is substantially less
than the western producers
Small modular plant construction with
expansion ability
Simpler and lower cost processing
No radioactivity issues
Potential for a low debt structure
very large, high grade deposit will support
a long project life
well placed to become the key strategic,
long term, low cost producer of the
Magnet Metal rare earths
PROvEN
METALLURGICAL
PROCESS
LOw CAPEx
ANd OPEx
~A$31.8M
FUNdING
STRONG
FINANCIAL
PARTNERS
CLEAR PATh
TO
PROdUCTION
The discovery, definition of a large Mineral Resource, completion of a favourable
PFS and high quality Ore Reserve, demonstration of a uniquely tailored process
flow sheet and production profile in five years since discovery is without
comparison in the rare earth industry. Peak has achieved this at a fraction
of the cost of other western development projects.
PEAK0316 Annual Report-Spreads.indd 1
1
1
22/10/2015 3:53 pm
The Magnet Metals
75% of the world rare earth market value
The rare earths used in the manufacture of high strength permanent
magnets comprise neodymium, praseodymium and to a lesser extent
terbium, dysprosium, gadolinium and samarium (the Magnet Metals).
Market value and increase
The contribution of the Magnet Metals
to the global rare earth market value has
increased markedly - from 47% in 2011,
to 74% in 2014 (Figure 1). The increase
in demand for these rare earths is driven
largely by growth in permanent magnet
end use sectors including personal
electronic mobile devices such as mobile
phones, computer hard drives, audio
equipment, hybrid and electric cars and
wind energy turbines.
The most important of these six rare
earths in terms of both value and volume
are neodymium and praseodymium,
which together comprised 85% of the
Magnet Metals market value in 2014
(Figure 2).
Significance for Ngualla
The growing importance of neodymium
and praseodymium in terms of relative
rare earth market share and absolute
value is positive for Ngualla, as the
project is particularly well endowed
with these rare earths and is one
of the highest grade neodymium-
praseodymium development projects.
100%
9
3%
6%
4%
11%
7%
6%
15%
2%
4%
4%
7%
6%
7%
15%
2%
3%
3%
5%
5%
5%
10%
1%
3%
3%
3%
4%
4%
8%
75%
68%
54%
47%
0
2011
2012
2013
2014
Pr6O11
25%
Magnet
sector
value
share
Nd2O3
60%
Figure 1: The increasing
importance of the rare
earth permanent magnet
industry to the global rare
earth market value, 2011
to 2014.
Source data - Curtin-IMCOA.
Glass Additives
Polishing Powders
Other
Catalysts
Metal Alloys
Ceramics
Phosphors
Permanent Magnets
Figure 2: Magnet sector
breakdown of individual
rare earths by relative
value contribution (2014).
Source data - Curtin-IMCOA.
Neodymium 60%
Praseodymium 25%
Dysprosium 11%
Terbium 3%
Gadolinium 1%
Samarium <1%
The Company’s focus on these magnet metals results in an estimated
81% of projected revenue will be derived from neodymium
and praseodymium.
2
The Magnet Metals
PEAK RESOURCES LTD ANNUAL REPORT 2015
75% of the world rare earth market value
high Growth applications
Increasing demand from end use applications in the green energy and consumer electronics sectors
is predicted to drive Magnet Metal rare earth growth of 8- 12% pa from 2015-20 and beyond. Demand
may be even greater if the rare earths used in permanent magnets were to become available in larger
quantities on a long term sustainable basis at reasonable prices.
Rare earth magnets are the engine room of growth for the industry. Rare earth magnets are found in electric
vehicles, hybrid vehicles, wind turbines, mag-lev trains and in the more-efficient standard automobiles:
hybrid & electric vehicles
Hybrid and electric vehicles: 30% of the
permanent magnet market, growth opportunities
of 15-20% pa are predicted with 2 to 10kg of rare
earth magnets typically used in each vehicle
Electronics
Hard disk drives, voice coils. 10-20g in each DVD.
HDD production to increase 6-8% pa by 2019.
Low substitution risk as key to weight reduction
Personal electronics make use of smaller, lighter
rare earth permanent magnets
wind turbines
550kg of rare earth magnets per MW, expanding
green energy generation driving growth 10 to 15% pa
Direct drive technologies for new offshore wind
turbines rely on NdFeB magnets
Air-conditioning and MRI
Widely used applications
Improved power efficiency by incorporating
rare earth magnets
~5% pa growth predicted
1) Roskill Market Outlook to 2020. 15th Edition 2015 and, 2) Prof. Dudley Kingsnorth, Curtin-IMCOA
30%
OF PERMANENT
MAGNET MARkET
20%
OF wORLd
MARkET
10%
MARkET
ShARE
20%
MARkET
ShARE
3
3
Chairman’s Letter
Dear Shareholder
The 2015 financial year has seen our Company continue on its stated course
of transition from exploration to development of the Ngualla Rare Earth
Project (‘Project’).
Over the course of the year a number of key milestones were achieved.
These key milestones include:
•
completion of Stage 1 of the Company’s financing transaction with Appian Natural Resources Fund
(‘Appian’) and International Finance Corporation (‘IFC’);
• commencement of the Bankable Feasible Study (‘BFS’);
•
several key executive and consultant appointments and advancement of various technical processes
necessary for BFS completion;
• continued improvements to metallurgical test work and Project flowsheet design; and
•
the appointment of new directors having complimentary skills and expertise.
In formally welcoming John Jetter and Robin Mills as our new non-executive directors, I would also like
to thank Alastair Hunter, our previous Chairman, for his unwavering commitment to the Company and
its promotion over many years. Not only did he oversee the original discovery of the Project, Alastair
played a vital role in raising capital at various points and in so doing, attracted other key investors to our
register. Many of these parties remain valued stakeholders to this day. The continued support of all our
shareholders is noted by the Board and very much appreciated.
I would like to thank our executive and management team, all employees and my fellow board members
for their tireless effort, contribution and support over the past year.
The year ahead will present continued challenges particularly in the context of a difficult market
landscape. However in my view, the Peak team remains steadfast, prepared and well resourced to meet
these challenges front on.
The Company is currently well funded, enjoys the support of its investment partners Appian and IFC
and possesses a committed executive and management team that will engine the implementation of
objectives in the coming term.
I look forward to our shared success in the future.
Jonathan Murray Chairman
4
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Managing Director’s Letter
Dear Shareholder,
On behalf of the Peak team I am very pleased to present the 2015 Annual Report.
Against a backdrop of uncertain global markets and a drop in rare earth prices this
year we are one of the few rare earth companies to raise funding for the meaningful
advancement of their project. With the recent closing of Stage 1 (circa A$20m) of a three stage funding
transaction with Appian and IFC the Company is well funded to undertake the BFS for the Ngualla Rare
Earth project.
The financing transaction involved extensive due diligence and this should give all investors comfort of the
strong technical merits of the Ngualla Project and the quality of the management team that is in place to
advance the project.
Appian and IFC have a long term investment horizon and in addition to strong financial capability bring
a large number of other benefits ranging from extensive mine construction and operations experience
through to relationships with international banks. They, like Peak, are dedicated to seeing the Ngualla
Project advanced through construction and into production. Peak welcomes both Appian and IFC as
significant shareholders in the Company and also as partners for the development of Ngualla.
This year we have had strong progress on the technical front, as continued metallurgical test work
identified significant improvements over the preliminary feasibility study flowsheet. The breakthrough in
achieving high beneficiation concentrate grades have allowed for opportunities to improve the leach
recovery stage of the process. These process developments are expected to reduce both capital and
operating costs in these areas.
Peak’s focus on the magnet metals rare earths together with the following factors bode well for the
Company and the Ngualla Project, despite current softness in the rare earth markets:
1)
71% of the rare earth market by value are the permanent magnet metals Neodymium and
Praseodymium (Nd/Pr),
2) Demand for permanent magnets is expected to grow at 10% per annum over the next decade,
3) Ngualla has the highest Nd/Pr grade of any of the development projects and as a result 81% of our
revenues are expected to come from Nd/Pr.
4) Ngualla’s capital and operating costs are very competitive and this is driven by our ability to get a high
grade mineral concentrate and to reject the bulk of the loss making cerium early in our process.
If you, like me, are a believer in the growing demand for green and technology applications such as wind
turbines, electric and hybrid vehicles and personal electronics then the future does indeed look very bright
for Peak.
I would like to thank the community in and around the Ngwala village area for their strong support of the
project as well as the Tanzanian government and the various agencies we interact with for their interest in
and support for the project.
The coming year will be a busy one as we progress the BFS, project permitting and offtake discussions.
In the near term we look forward to completing our pilot plant work which will lead to commencement
of the detailed process engineering.
As these milestones are achieved and the project continues to be derisked we should see an improved
market recognition of the Company.
Darren Townsend Managing Director
PEAK0316 Annual Report-Spreads.indd 2
5
22/10/2015 3:41 pm
Ngualla Rare Earth Project
The Ngualla Rare Earth Project in Tanzania was discovered by Peak in 2010. The weathered
Bastnaesite Zone portion of the deposit that is identified for development is favourably
differentiated from other deposits by a unique combination of fundamental factors including:
High REO grades
High neodymium-praseodymium ratio to other rare earths
Thick blanket of mineralisation at surface – supporting low cost,
predominantly ‘free dig’, open cut mining
A unique combination of bastnaesite rare earth mineralogy and favourable
gangue minerals – enabling low cost processing
The lowest uranium – thorium contents of any major rare earth deposit
– no radioactivity or transport issues
Large, high grade Ore Reserve supporting a long life project
Classification
Ore Tonnes (million)
REO %
Contained REO tonnes
Proved
Probable
TOTAL
18.0
2.7
20.7
4.53
4.62
4.54
817,000
124,000
941,000
See Appendix Table 4 for breakdown of individual REO’s. A 3.0% cut-off grade is applied.
These factors have enabled Peak to rapidly progress Ngualla’s development at a markedly lower
cost in comparison to other rare earth projects and also now attract investor partners of the quality
and depth of Appian and IFC.
Ngualla has the potential to have the lowest capital and operating cost of any
comparable development rare earth project or operating western producer and
provide a strong cash flow over an initial mine life of over 30 years.
Ngualla Hill
REO %:
A >4%
A 3 to 4%
A 2 to 3%
A 1 to 2%
Pit outline
150m
t e Z o n e
i
B a s t n a e s
550m
A thick blanket of high grade mineralisation at surface allows for simple, low cost open pit mining.
6
PEAK RESOURCES LTD ANNUAL REPORT 2015
Mineralogy is the key to low risks and costs
Main components of typical Ore
Barite
40%
Iron Oxides (Haematite and Goethite)
35%
Quartz
Bastnaesite
Mineral Associations
Quartz:
Barite:
Fe Ox & Bast:
15%
6.5%
liberated
liberated
more intimately
associated
Acid-consuming carbonate minerals have
been completely leached from the weathered
Bastnaesite Zone mineralisation by natural
weathering processes, which also upgrade
the rare earths threefold to an average grade
of 5% REO.
Unlike many rare earth deposits,
the weathered Bastnaesite Zone
mineralisation is non-radioactive,
containing just 14ppm uranium and
51ppm thorium.
The mineral association allows for an
effective benefication process to produce a
high grade mineral concentrate that leads to
lower production costs.
Ngualla’s favourable mineralogy is a key
advantage of the project and underpins low
capital and operating costs.
Diamond core NDD006:
SEM images of weathered Bastnaesite
Weathered iron
oxide- barite carbonatite
containing high grade
mineralisation,
3 to 8 % REO.
Amenable to selective
acid leach as majority
of carbonate minerals
removed through
weathering.
Sharp karstic surface
contact between
weathered and fresh
carbonatite.
Fresh carbonatite rock
containing primary
mineralisation
1 to 2.5% REO.
7
Review of Operations
Summary
The Company, in collaboration with strategic partners Appian and IFC, is advancing the development
of the Ngualla Project into a long term, low cost supplier of Magnet Metal rare earths for the expanding
green technology sector.
A large number of technical programs were completed during the year that were successful in demonstrating
significant improvements to each of the three main stages of the process design flowsheet, and show
potential to further reduce the already low operating and / or capital costs compared to the March 2014
Preliminary Feasibility Study (PFS) (‘’ASX Announcement “Peak Resources Delivers Robust PFS for Ngualla” of
19 March 2014).
Engineering studies for the Bankable Feasibility Study (BFS) also commenced with the appointment of AMEC
Foster Wheeler as Lead Engineer.
Continuing work programs include pilot plant operations and preliminary engineering design to support the
completion of the BFS by the end of 2016.
The detailed PFS completed in March 2014 last year evaluated the potential to develop a mine and process
plants to produce 10,000 tonnes of >99% purity separated rare earth oxide products.
The 2014 PFS indicated robust project economics that result from the combination of favourable
characteristics that together contribute to lowering costs at every stage of the operation. The 2014 PFS
demonstrated robust project economics including:
Low capex: US$367m (30% contingency)
Low cost: US$11.74/kg REO
Long mine life
Large high quality Ore Reserve just 22% of Mineral Resource contained REO
The net effect of work programs completed during the reporting year, together with some still in progress,
is expected to improve the fundamentals of the Project in several areas and lead to a ‘Next Generation’
Rare Earth Project well aligned to the current realities of the world rare earth market.
Increased Production focus on Magnet Metals
During the year Peak revised the planned production profile of the proposed Ngualla operation by increasing the
focus on Magnet Metal rare earths through a cerium rejection strategy demonstrated in laboratory scale testwork.
The rejection of cerium is expected to lead to reduced costs and improved
margins for the future operation. The focus on the Magnet Metals, particularly
neodymium and praseodymium, aligns the production profile with the most
important rare earths in terms of expected demand growth and market value.
Neodymium and praseodymium are of increasing importance to the global
rare earth market.
At March 2015 prices and Ngualla’ s revised rare earth production profile,
81% of Ngualla’ s projected revenue will be derived from neodymium and
praseodymium. The focus on Magnet Metals is expected to improve the
marketing potential of Ngualla’ s product as cerium is currently (and expected
to continue) in oversupply. As a low value product, where the cost of
production exceeds the achievable sale price, operating margins should also
be increased.
8
Cerium 2%
Lanthanum 6%
Mid-Heavy
11%
Ngualla
Magnet
Metals
Nd/Pr
81%
Ngualla’s Projected Revenue
Process Development – Beneficiation Breakthrough
Breakthrough improvements in the beneficiation process were achieved during the year, with testwork
delivering concentrate grades of between 30 and 50% rare earth oxide (REO) from two alternative new
flowsheets developed specifically for Ngualla’s unique mineralisation. The grades achieved range from
double to triple the 16.3% REO attained at PFS. The ability to produce a high grade mineral concentrate has
a profound positive impact on the downstream leach recovery process and provides the potential to reduce
both operating and capital costs for the project compared to the Preliminary Feasibility Study (PFS).
The three major steps in processing Ngualla’s weathered bastnaesite mineralisation from mine feed to high purity
rare earth products.
1. Beneficiation
2. Recovery
3. Separation
Mine
Feed
Flotation
Mineral
Concentrate
Acid Leach
and Purification
RE
Solution
SX
Separation
high Purity
Rare Earth
Products
In addition to reducing the mass of concentrate to be transported and treated in the subsequent leach
recovery stage, by reducing transport costs and decreasing the size of the recovery plant, a significant benefit
of a higher grade concentrate is the improved rejection of acid consuming iron from the concentrate,
thereby reducing downstream reagent requirements.
After extensive evaluation of the two alternative
beneficiation flowsheets, a two stage float process has
been selected on the basis of operational advantages
and lower operating costs.
The selected two stage float process will be
demonstrated at pilot plant scale to provide the
operating data to assist in the engineering of the
developed process into the commercial scale
operation.
BENEFITS OF A hIGhER
GRAdE CONCENTRATE
REdUCTIONS IN:
3 Concentrate transport costs
3 Leach recovery plant size
3 Leach plant capital costs
3 Acid consumption
3 Leach plant operating costs
Two Stage Float flowsheet developed and selected by Peak.
Ore
~5% REO
Crushing
and Milling
Barite
Pre-flotation
Regrind
Rare Earth
Flotation
Rare Earth
Concentrate
~40% REO
Barite
Waste
Iron and
Quartz Waste
9
Peak Resources Ltd Annual Report 2015 One of several excavated trenches for 66 tonne bulk sample
66 tonne sample of weathered typical mineralisation in Perth
collection, March 2015.
being prepared as feed for the pilot plants.
A bulk sample of 66 tonnes of typical Ngualla weathered bastnaesite mineralisation was collected from the
area of proposed first mining and shipped to Perth to be prepared for the operation of the beneficiation pilot
plant during the latter half of 2015 as part of the BFS.
Process Development –Advances in Leach Recovery
The breakthrough in increased concentrate grades through beneficiation achieved during the year has
provided the opportunity to improve the next stage leach recovery process. Additional testwork is now
nearing completion to define an improved leach recovery process that is expected to realise further savings
in Opex and Capex compared to PFS.
The reduced feed mass of the higher grade mineral concentrate into the leach circuit is expected to
significantly reduce the leach plant size. The higher grade concentrate also contains less than half the levels
of acid consuming iron compared to PFS, thereby leading to reductions in reagent consumption.
A multiple stage and selective leach process using dilute reagents has been developed. This allows for the
specific targeting of the rare earth bearing bastnaesite minerals whilst rejecting the majority of the gangue
minerals and cerium. As a result, reagent requirements are further reduced during both leaching and
purification stages.
The ability to reject a significant proportion
of low value cerium during the leach process
also has the potential to significantly reduce
both the size and reagent requirements of
the downstream separation plant.
The extensive testwork program on a
range of mineral concentrates, which was
commenced during 2015, is now nearing
completion and will quantify the optimum
leach parameters applicable to the higher
grade concentrate prior to the design and
operation of a leach recovery pilot plant.
Operation of a leach recovery pilot plant
will commence in early 2016 following the
completion of the beneficiation pilot plant.
IMPROvEMENTS IN LEACh
RECOvERy PROCESS
COMPAREd TO PFS:
3 At least double the concentrate grade
into less mass
3 Reduces leach plant size and reagent
consumption
3 Acid consuming iron content halved
3 Selective leaching has potential to:
– Require less acid
– Reduce gangue dissolution
– Reject cerium
3 Potential for Capex and Opex reductions
10
Review of Operations Process Development – Separation
A simplified and lower cost solvent extraction (SX) process compared to PFS has been chosen as a result of
the focus on Ngualla’s major value drivers, the Magnet Metals neodymium and praseodymium.
Peak has also changed the form of and reduced the number of final products from the four at PFS to three at
BFS to align with market requirements.
The amount of high purity neodymium – praseodymium oxide to be produced, the main value driver
estimated at approximately 81% of Ngualla’s revenue, will be maintained. Marketing discussions indicate a
preference for the remaining rare earths to be produced in carbonate form, and without the separation of
lanthanum and cerium.
The size of the separation plant and the amount of hydrochloric acid (the major reagent) required to produce
the same amount of neodymium – praseodymium as at PFS are expected to be reduced as the result of the
cerium rejection strategy.
The reduced product suite reduces the
complexity of the solvent extraction circuit
compared to the PFS. The effect of this is
expected to reduce the size of the solvent
extraction separation plant as well as significantly
reduce reagent requirements – most notably
hydrochloric acid and caustic soda .
Peak completed the operation of a solvent
extraction pilot plant at ANSTO Minerals research
facility at Lucas Heights near Sydney in 2013.
The data obtained will feed into the BFS and
engineering design together with additional test
work to be completed as part of the BFS.
AdvANCES IN SEPARATION
PROCESS
COMPAREd TO PFS:
3 Prior cerium rejection reduces plant
size and reagent requirements
3 New product suite allows for
a simplified SX plant
3 Lower separation costs achieved
for low value products
3 Overall potential for significant
Capex and Opex reductions
Neodymium – Praseodymium
Lanthanum
Mid+Heavy RE
Cerium
ANSTO SX pilot plant.
Some of the final products produced from a bulk sample of
Ngualla’s mineralisation.
11
Peak Resources Ltd Annual Report 2015 N
0
400
800m
Accommodation Village
Fresh Water Tank
Explosives Magazines
Fence
Process
Plant
ROM
Pad
Open Pit
Mine
Waste Dump
Road
Long Term
Stockpile
Tailings Storage
Facility
Topsoil
Stockpile
Above: Ngualla rare earth mine,
infrastructure and processing plant
preliminary design concept.
Right: Peak Technical Director Dave
Hammond and appointed Feasibility
Study Lead Engineers AMECFW personnel
reviewing proposed mining and plant sites,
Ngualla, March 2015.
12
Review of Operations BFS progress and Engineering Studies
The build out of the Peak team continued successively during the year as feasibility study activity ramped up,
with the appointment of a tier one team of internationally recognised engineering specialists for the BFS.
Peak appointed international engineering group AMEC Foster Wheeler (AMEC FW) as Lead Study Engineers
for the Feasibility Studies early in 2015. Gavin Beer was appointed as General Manager of Metallurgy in
February, after consulting to the Company since April 2012. Additional tier one consultants for the BFS were
appointed in specialised areas including Mineral Resource Estimation (SRK), open pit geotechnical and
hydrological (Golder Associates) and mine waste, process tailings, plant site geotechnical and water supply
(Knight Piesold).
Engineering design commenced with preliminary layout plan of the Ngualla site and evaluation of waste
storage and treatment options.
Preparation was completed for drilling programs at Ngualla to support the BFS. Drilling commenced just
after year end in July 2015. Individual programs include infill and trial grade control drilling in the area of the
proposed pit, diamond drilling to provide additional metallurgical samples, geotechnical and hydrological
investigation of the pit area, geotechnical diamond drilling in the plant site and tailings storage facility and
exploration drilling for water supply.
The selection of the final optimised process flowsheets and pilot plant operation will allow the engineering
design of the processing plants and associated infrastructure to commence in the coming year.
The Company is on target to commence the execution phase of detailed design and construction in 2017
and commissioning towards the end of 2018.
Ngualla Project Summary Development Schedule.
TASk
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015
2016
2017
2018
2019
Met Testwork
Drilling
ESIA
Beneficiation Pilot Plant
Hydromet Pilot Plant
Feasibility Study
Mining Approvals
Project Funding
Engineering, Design & Long Lead Procurement
Construction
Commisioning
Production
13
Peak Resources Ltd Annual Report 2015 Environmental Permitting
Early in 2015 Peak announced the appointment of environmental consultants to complete studies and
reports required to support a mining licence application for the Ngualla Rare Earth Project.
In country consultants Align Environment and Risk (“Align”) and Paulsam Geo-engineering Company Ltd are
well respected with extensive experience in the field and have operational centres in Tanzania.
An additional part of Align’s role is to assist Peak to continue to meet IFC’s best practise standards of
operation and to complete the reporting required by IFC and international banks in environmental and social
responsibility.
Wet season baseline surveys were completed to support the Environmental and Social Impact Assessment
required for the issue of an Environmental Certificate (“EC”). The EC is required prior to the grant of a mining
licence. The project development area at Ngualla is free of any habitation, farming or grazing and there are
no Reserves of any kind over the area. Dry season surveys were completed in 2014 with no endangered
species identified.
Social and Environmental Responsibility
Peak is committed to assisting the communities in
which it operates whilst maintaining best practise
environmental management and health and safety
standards.
The Company values the excellent relationship
maintained with local village, district authorities and
individuals and recognises that the development of
the Ngualla Project must provide for benefits for both
Community and Company. Through provisions of
employment opportunities, training, purchase of local
products and funding for local building projects, win-
win relationships have been established with the local
community.
Ngwala village chairman, Michael Nazia receiving the
donated furniture from Peak Project Manager Patrick
The Ngwala community identified that a lack of
housing was continuing to lead to a shortage of
teachers for the primary school. In the 2014 – 2015 reporting year Peak completed a second pair of teacher’s
houses and is now constructing two more at the outlying village of Itiziro.
Ochieng, June 2015.
Peak’s community projects have included:
•
•
•
•
•
Construction and refurbishment of classrooms for the Ngwala Primary School
Donation and construction of new school desks for schools in the Ngwala Ward
Donation of a range of items for community needs including beds, mattresses, textbooks, cement,
office furniture, stationary and sports equipment
Construction of six teacher’s houses
Assistance with water supply, road and airstrip maintenance
The Community projects further benefit the community through the involvement of many local contractors,
labourer and suppliers.
14
Review of Operations Peak Resources Ltd Annual Report 2015
Construction nearing completion on a pair of teachers houses at the Itiziro village, September 2015.
Preparations for the handover of the second pair of teachers
Peak Geologist Erasto Kafyulilo handing over a donation
houses constructed by Peak for the Ngwala Primary School,
of cement for the Kapalala secondary school to the Chunya
November 2014.
District Commissioner, Hon. Deodatus Kinawiro watched
by District Executive Director , Mrs Sofia Kumbule,
November 2014.
15
APPENdIx
Corporate Governance and Internal Controls
Peak ensures that the Ore Reserve and Mineral Resources estimates are subject to appropriate governance and internal controls
which are reviewed periodically in line with the expansion and development of the Company.
The Mineral Resource estimate and Ore Reserve were derived by independent consulting organisations whose staff are highly
competent and professional. Competent Persons named by the company are Members or Fellows of the Australian Institute of
Mining and Metallurgy and/or the Australian Institute of Geoscientists and qualify as Competent Persons as defined in the JORC
Code. The Mineral Resource consultant carried out rigorous reviews of the quality of the database and geological models prior to
estimation. Internal technical reviews are carried out systematically by both of the independent consulting organisations.
The Company confirms that it is not aware of any new information or data that materially affects the information included in the
original market announcements and that all material assumptions and technical parameters underpinning the estimates in the
relevant market announcement continue to apply and have not materially changed.
Comparison of Mineral Resources and Ore Reserves with previous year
The tables below compare the Ore Reserve and Mineral Resource statements for 2014 and 2015. There have been no material
changes in the Mineral Resource or Ore Reserve holdings from the previous year.
Table 1: Classification of Ore Reserves for the weathered Bastnaesite Zone at Ngualla.
Ore Reserve as at 30 June 2015
Ore Reserve as at 30 June 2014
JORC
Category
Proved
Probable
Total
Ore Tonnes
(million)
18.0
2.7
20.7
REO%
4.53
4.62
4.54
Contained
Ore Tonnes
REO tonnes
(million)
817,000
124,000
941,000
18.0
2.7
20.7
REO%
4.53
4.62
4.54
Contained
REO tonnes
817,000
124,000
941,000
Ngualla
weathered
Bastnaesite
Zone
* A 3.0% REO cut-off grade is applied. See Table 4 for the breakdown of individual REO’s. Reported according to the JORC 2012 Code and Guidelines.
The maiden Ngualla Ore Reserve is detailed in the ASX announcement titled ‘Ngualla Rare Earth Project – Maiden Ore Reserve’ of
19 March 2014, which also includes a detailed summary of the supporting project assumptions and data.
Table 2: Classification of Mineral Resources for the Ngualla Rare Earth Project at a 1.0% cut-off grade.
Mineral Resource
as at 30 June 2015
Mineral Resource
as at 30 June 2014
Lower cut-
off grade
JORC Resource
Category
Tonnage
(Mt)
REO
(%)*
Contained
REO tonnes
(‘000)
JORC Resource
Category
Tonnage
(Mt)
REO
(%)*
Contained
REO tonnes
(‘000)
Ngualla
Rare
Earth
Project
1.0% REO
Measured
Indicated
Inferred
Total
81
94
20
195
2.66
2.02
1.83
2.26
2,100
1,900
380
4,400
Measured
Indicated
Inferred
Total
81
94
20
195
2.66
2.02
1.83
2.26
2,100
1,900
380
4,400
* REO (%) includes all the lanthanide elements plus yttrium oxides. See Table 5 for breakdown of individual REO’s. Figures above may not sum precisely due to rounding.
The number of significant figures does not imply an added level of precision. Reported according to the JORC 2004 Code and Guidelines.
The Ngualla Mineral Resource is detailed in the ASX announcement titled ‘Increased Resource Estimate to improve Ngualla Project
economics’ of 4 April 2013.
Table 3: Classification of Mineral Resources for the Bastnaesite Zone weathered mineralisation at a 3.0% cut off grade.
Mineral Resource
as at 30 June 2015
Mineral Resource
as at 30 June 2014
Lower cut-
off grade
JORC Resource
Category
Tonnage
(Mt)
REO
(%)*
Contained
REO tonnes
(‘000)
JORC Resource
Category
Tonnage
(Mt)
REO
(%)*
Contained
REO tonnes
(‘000)
Ngualla
weathered
Bastnaesite
Zone
3.0% REO
Measured
Indicated
Inferred
Total
19
2.9
0.11
21.6
4.53
4.62
4.10
4.54
840
140
4
982
Measured
Indicated
Inferred
Total
19
2.9
0.11
21.6
4.53
4.62
4.10
4.54
840
140
4
982
* REO (%) includes all the lanthanide elements plus yttrium oxides. See Table 5 for breakdown of individual REO’s. The weathered Bastnaesite Zone mineral resource is
contained within and is a subset of the Total Ngualla Project Mineral Resource at a 1% REO cut-off grade in Table 2 above’. Reported according to the JORC 2004 Code and
Guidelines. Figures above may not sum precisely due to rounding.
16
Review of Operations Table 4: Relative components of individual rare earth element oxides (including yttrium) as a percentage of total REO for the
Ngualla Project Ore Reserve summarised in Table 1.
Oxide
% of Total REO
Individual REO Grade %
Lanthanum
Cerium
Praseodymium
Neodymium
Samarium
Europium
Gadolinium
Terbium
Dysprosium
Holmium
Erbium
Thulium
Ytterbium
Lutetium
Yttrium
La2O3
CeO2
Pr6O11
Nd2O3
Sm2O3
Eu2O3
Gd2O3
Tb4O7
Dy2O3
Ho2O3
Er2O3
Tm2O3
Yb2O3
Lu2O3
Y2O3
Total %:
27.6
48.2
4.74
16.6
1.60
0.30
0.62
0.05
0.08
0.01
0.03
0.00
0.01
0.00
0.20
100
1.25
2.19
0.21
0.75
0.07
0.01
0.03
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
4.54
Table 5: Relative components of individual rare earth element oxides (including yttrium) as a percentage of total REO for the
weathered Bastnaesite Zone +3% REO and Total Ngualla +1% REO Mineral Resources.
Oxide
Bastnaesite ZoneMineral Resource
at 3.0% cut %
Ngualla total Mineral Resource
at 1.0% cut%
Lanthanum
Cerium
Praseodymium
Neodymium
Samarium
Europium
Gadolinium
Terbium
Dysprosium
Holmium
Erbium
Thulium
Ytterbium
Lutetium
Yttrium
La2O3
CeO2
Pr6O11
Nd2O3
Sm2O3
Eu2O3
Gd2O3
Tb4O7
Dy2O3
Ho2O3
Er2O3
Tm2O3
Yb2O3
Lu2O3
Y2O3
Total %
27.6
48.2
4.73
16.6
1.60
0.30
0.61
0.05
0.08
0.01
0.03
0.00
0.01
0.00
0.20
100
27.1
48.2
4.81
16.3
1.67
0.35
0.76
0.07
0.16
0.02
0.06
0.00
0.02
0.00
0.48
100
Figures may not sum due to rounding to 0.01%
The information in this report that relates to Exploration Results is based on information compiled and/or reviewed by Dave Hammond who is a Member of The Australasian
Institute of Mining and Metallurgy. Dave Hammond is the Technical Director of the Company. He has sufficient experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dave Hammond consents to the inclusion in the report of the matters based on his information in the
form and context in which it appears.
The information in this report that relates to Mineral Resources is based on information compiled by Robert Spiers, who is a member of The Australasian Institute of Geoscientists.
Robert Spiers is an employee of geological consultants H&S Consultants Pty Ltd. Robert Spiers has sufficient experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Robert Spiers consents to the inclusion in the report of the matters based on his information in the form
and context in which it appears.
The information in the announcement that related to Ore Reserves and estimated mine operating costs was based on information compiled by Mr Ryan Locke, a Competent
Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Locke is a Principal Planner and is employed by Orelogy Pty Ltd, an independent consultant
to Peak Resources. Mr Locke has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity being undertaken
to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Ryan Locke
consents to the inclusion in the report of the maters based on his information in the form and context in which it appears.
The information in this report that relates to Metallurgical Test Work Results based on information compiled and / or reviewed by Gavin Beer who is a Member of The
Australasian Institute of Mining and Metallurgy and a Chartered Professional. Gavin Beer is a Consulting Metallurgist with sufficient experience relevant to the activity which he is
undertaking to be recognized as competent to compile and report such information. Gavin Beer consents to the inclusion in the report of the matters based on his information
in the form and context in which it appears.
The information in this report that relates to infrastructure, project execution and cost estimating is based on information compiled and / or reviewed by Lucas Stanfield who
is a Member of the Australian Institute of Mining and Metallurgy. Lucas Stanfield is the Chief Development Officer for Peak Resources Limited and is a Mining Engineer with
sufficient experience relevant to the activity which he is undertaking to be recognized as competent to compile and report.
17
Peak Resources Ltd Annual Report 2015
Directors’ Report
The directors of Peak Resources Limited submit herewith the financial statements of the Company for the financial year ended
30 June 2015. In order to comply with the provisions of the Corporations Act 2001, the Directors Report as follows:
DIRECTORS
The names and details of the Company’s directors in office during and since the financial year end until the date of the report
are as follows. Directors were in office for the entire period unless otherwise stated.
Mr Jonathan Murray
Non-Executive Chairman (appointed 1 April 2015, previously Non-Executive Director)
Mr Darren Townsend
Managing Director
Mr Dave Hammond
Technical Director
Mr Robin Mills
Non-Executive Director (appointed 1 April 2015)
Mr John Jetter
Non-Executive Director (appointed 1 April 2015)
Mr Alastair Hunter
Non-Executive Chairman (resigned 1 April 2015)
INFORMATION ON DIRECTORS
Mr Jonathan Murray Bachelor Laws and Commerce
Non-Executive Chairman (Appointed Chairman 1 April 2015, previously Non-Executive Director appointed 22 February 2011)
Jonathan is a partner at independent corporate law firm Steinepreis Paganin, based in Perth, Western Australia. He specialises in
equity capital raisings, all forms of acquisitions and divestments, governance and corporate compliance.
Mr Murray graduated from Murdoch University in 1996 with a Bachelor of Laws and Commerce (majoring in Accounting). He is
also a member of FINSIA (formerly the Securities Institute of Australia). Jonathan has also served as a director of the following
other listed companies:
• Hannans Reward Ltd – from 22 January 2010
• Lemur Resources Limited (appointed 6 November 2013; resigned 29 May 2014)
• Highfield Resources Ltd (appointed 25 October 2011; resigned 14 August 2013)
• Kalgoorlie Mining Company Ltd (appointed 4 June 2010; resigned 5 October 2012) previously US Nickel Ltd
Mr Darren Townsend B.Eng (Mining-Hons), EMBA, MAusIMM
Managing Director (Appointed 3 February 2014)
Darren is a mining engineer with extensive mining and corporate experience. Prior to joining Peak over a period of 6 years
Darren was President & CEO of TSXV listed Pacific Wildcat Resources Corp where he was responsible for building a tantalum
mine in Mozambique and completing the acquisition and resource drill out of a large rare earth and niobium project in Kenya.
Previously Darren has also worked at De Grey Mining Ltd where he held the position of Managing Director from May 2006
to December 2007. Prior to that he was General Manager of Operations at Sons of Gwalia’s (now Talison) Wodgina Tantalum
operations and over a period of 7 years, led and managed the development of the mine to become the world’s largest hard rock
Tantalum operation. Darren has also served as a director of the following other listed companies:
• De Grey Mining Ltd – from 23 May 2006 until 20 November 2014
• Pacific Wildcat Resources Corp – from 25 July 2008 until 14 January 2015
Mr David Hammond MSc in Mineral Exploration, BSc (Hons), MAusIMM
Technical Director (Appointed 25 October 2010)
David has 26 years technical and management experience in Africa, Australia and South America. He has been Technical
Director with Peak and the Ngualla Project for almost five years, since the second drill hole into the main Bastnaesite Zone.
He was previously the Exploration Manager with De Grey Mining Limited working on projects in the Pilbara and new project
acquisitions globally. His previous experience also includes Exploration Manager for Sons of Gwalia in NE Goldfields of Western
Australia and Project Geologist with Billiton/Gencor in South Africa and Zambia in a range of commodities and geological
deposit styles.
18
Peak Resources Ltd Annual Report 2015
Mr Robin Mills BSc.Eng.Rand.(Mining), FSAIMM., FIMMM.(UK), CEng.
Non-Executive Director (Appointed 1 April 2015)
Robin is a South African who has had a long global mining career as an engineer, operating manager and director.
For 40 + years this included operational, consulting and board level assignments with the Anglo American and De Beers
Groups, primarily in gold, nickel, copper, platinum and diamond mine projects and operations in Africa, North and South
America.
He operated in positions ranging from Mine and General Manager, Consulting Engineer, COO and CEO responsibilities over
that period and concluded his career with the majors as the Group Technical Director for De Beers. Robin is currently a senior
partner in the London based Appian Capital Advisory LLP. Robin also serves as a director of the following other listed companies:
• Royal Bafokeng Platinum Ltd (JSE) – from 20 September 2010
• RoXgold Incorporated (TSX) – from 11 June 2015
Mr John Jetter BLaw, BEcon, INSEAD
Non-Executive Director (Appointed 1 April 2015)
John has Bachelor of Law and Bachelor of Economics degrees and has extensive international finance and M&A experience
having been the former Managing Director, CEO and head of investment banking of JP Morgan in Germany and Austria, and a
member of the European Advisory Council of JP Morgan in London. He has held various senior positions with JP Morgan during
which time he focused his attention on major corporate clients and advised on some of Europe’s largest transactions. Before
joining JP Morgan, he spent 12 years with CRA Limited (now Rio Tinto) in a variety of senior management roles gaining extensive
experience in the mining and mineral processing industries. In addition, John has an extensive understanding of the rare earths
industry and has been actively involved in negotiating and executing rare earth offtake agreements. John has also served as a
director of the following other listed companies:
• Otto Energy – from 10 December 2007
• Venture Minerals Ltd – from 8 June 2010
Mr Alastair Hunter
Non- executive Chairman (Resigned 1 April 2015)
Alastair has in excess of forty years’ experience in exploration and management of resource companies. During this period, he
has played a significant role in a number of base metal, gold and uranium discoveries. He was formerly a director of Peninsula
Minerals NL, Matlock Mining NL and Anglo Australian Resources NL. His experience extends to working throughout Australia,
Africa as well as North America. Alastair was appointed as a Director on 23 May 2008.
COMPANY SECRETARY
The following person(s) have held the position of company secretary during or at the end of the financial year:
Graeme Scott
Company Secretary (Appointed 3 November 2014)
Graeme is a fellow of the Association of Chartered Certified Accountants (UK) with more than 20 years’ experience in
professional and corporate roles in both Australia and the UK. He has spent the last 10 years working in the resources sector in
CFO and Company Secretarial roles for both ASX and TSX listed companies.
Jeffrey Dawkins
Company Secretary (Resigned 3 November 2014)
Jeff is an Australian Chartered Accountant with more than 20 years’ experience in professional and corporate roles in Perth,
London and Singapore. He holds a Bachelor of Business Degree from Curtin University and a Graduate Diploma in Applied
Finance and Investment. He has a strong background in mining and has worked with various mining Companies involved with
gold, copper, rare earth and iron ore.
19
Peak Resources Ltd Annual Report 2015 PRINCIPAL ACTIVITIES
During the year, the principal activities of the Company consisted of:
(a) Mineral processing technological evaluations;
(b) Mining and associated infrastructure, feasibility evaluations; and
(c) Mineral definition and development.
OPERATING RESULTS
The loss of the Group after providing for income tax amounted to $4,195,877 (2014: loss $3,148,903).
The basic and diluted loss per share for the Group for the year was 1.26 cents (2014: 1.05 cents)
FINANCIAL POSITION
The net assets of the Group have decreased from $36,145,291 at 30 June 2014 to $33,459,177 at 30 June 2015.
The Group’s working capital deficiency, being current assets less current liabilities, was ($6,418,152) at 30 June 2015 (2014: net
working capital $2,113,434). On 26 July 2015 the Company announced the closing of Stage 1 of the financing transaction with
Appian Natural Resource Fund (Appian), a UK Based private equity investor, and International Finance Corporation (IFC) which
has addressed the Company’s working capital deficiency. Further details are provided in the After Balance Date Events section of
this report, please also refer ASX release dated 26 July 2015 – Closing of BFS Financing with Appian and IFC.
DIVIDENDS PAID OR RECOMMENDED
The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to
the date of this report.
REVIEW OF OPERATIONS
The group is advancing the development of the Ngualla Rare Earth Project towards becoming a long term, low cost supplier of
magnet metal raw materials.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Other than detailed in the Review of Operations above there were no significant changes in the state of affairs of the Company,
during the financial year.
AFTER BALANCE DATE EVENTS
On the 26 July 2015 the Company announced the closing of Stage 1 of the Bankable Feasibility (BFS) financing with Appian and
IFC. The Stage 1 closure involved the following:
1.
Issue of 40,107,495 and 10,026,874 fully paid ordinary shares for A$0.09 per share to Appian and IFC respectively for a total
of A$4,512,094.
2.
Appian have the right to nominate two directors to the Peak Board (Mr Mills and Mr Jetter appointed 1 April 2015) and IFC
have the right to nominate one director.
3.
A subscription of US$4,385,219 into Peak’s 100% owned subsidiary Peak African Minerals giving Appian and IFC a 10% and
2.5% interest respectively. Peak retains an 87.5% interest.
4.
A subscription of A$2,599,004 for a convertible loan note, convertible into either 33,370,698 fully paid ordinary shares in
Peak at A$0.103 per share or an additional combined interest of 4.99% in Peak African Minerals.
5.
Appian have been granted rights to an equal number of directors as Peak on the Peak African Minerals board, including the
right to nominate the chairman with a casting vote.
6.
The granting of a 2% Gross Sales Royalty over the production from the Ngualla Rare Earth Project for a payment of
US$5,191,200.
7.
Repayment in full of interim loan funding facilities provided by Appian of US$3,000,000 and A$5,000,000 together with all
applicable interest.
20
Peak Resources Ltd Annual Report 2015
Directors’ Report
MEETINGS OF DIRECTORS
The number of meetings attended by each Director of the Company during the financial year was:
Jonathan Murray
Darren Townsend
David Hammond
Alastair Hunter
John Jetter
Robin Mills
Board Meetings
Number held and
entitled to attend
Number attended
9
9
9
7
2
2
8
9
9
7
2
2
Note – no Audit Committee Meetings or Remuneration Committee Meetings were held during the year as the function of these committees was dealt with
by the full Board.
EQUITY HOLDING OF DIRECTORS
As at the date of this report, the Directors’ interest in the Company were:
Mr Jonathan Murray
Mr Darren Townsend
Mr David Hammond
Mr John Jetter*
Mr Robin Mills*
Equity shares
Equity options
Performance Rights
1,140,001
-
1,570,589
-
-
1,000,000
6,000,000
4,000,000
-
-
-
5,000,000
2,500,000
-
-
During the year an allocation of options and performance rights was made to the Director’s following approval by shareholders
on 1 July 2014. Details of these issues are provided in the Remuneration Report.
*An allocation of options to Messrs Jetter and Mills was approved at a General Meeting of Shareholders held on 11 September
2015.
FUTURE DEVELOPMENTS
Likely future developments in the operations of the Group are referred to elsewhere in the Annual Report. Other than as referred
to in this report, further information as to likely developments in the operations of the Group and expected results of those
operations would, in the opinion of the Directors, be speculative.
ENVIRONMENTAL ISSUES
The Company is aware of its environmental obligations with regards to its exploration activities and ensures that it complies
with all regulations when carrying out any exploration work. The Directors of the Company are not aware of any breach of
environmental regulations for the year under review.
The Directors have considered the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which introduced a
single national reporting framework for the reporting and dissemination of information about the greenhouse gas emissions,
greenhouse gas projects, and energy use and production of corporations which exceed specified thresholds. At the current
stage of development, the Directors have determined that the NGER Act has no effect on the Company for the current or
subsequent financial year. The Directors will reassess this position as and when the need arises.
21
Peak Resources Ltd Annual Report 2015 REMUNERATION REPORT (AUDITED)
The remuneration report outlines the director and executive remuneration arrangements for the Group in accordance with the
requirements of the Corporations Act 2001 and its Regulations.
Remuneration Policy
The remuneration policy of the Company has been designed to align director and executive objectives with shareholder and
business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with market rates
and offering specific long-term incentives based on key performance areas affecting the Company’s financial results.
The Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best directors
and executives to run and manage the Company.
The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives of the
Company is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was
developed by the Board. All executives receive a base salary (which is based on factors such as length of service and experience)
and superannuation. The Board reviews executive packages annually by reference to the Company’s performance, executive
performance and comparable information from industry sectors and other listed companies in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is to attract the highest
calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. Executives and
employees are also entitled to participate in the employee share and option arrangements.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment
and responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration annually,
based on market practice, duties and accountability. Independent external advice is sought when required. Fees for non-
executive directors are not linked to the performance of the Company. However, to align directors’ interests with shareholder
interests, the directors are encouraged to hold shares in the Company and are able to participate in the employee option plan..
Non-executive directors are not provided with any specified retirement benefits.
All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Shares given to directors
and executives are valued as the difference between the market price of those shares and the amount paid by the director
or executive. Options and performance rights are valued using the Black-Scholes methodology. Details of options and
performance rights provided to directors are detailed in the Remuneration Report.
Non-executive director remuneration
The remuneration of non-executive directors has been set at a maximum of $150,000 as approved by shareholders at the 2006
annual general meeting.
Performance based remuneration
The Company is in the process of including a performance based remuneration component built into director and executive
remuneration packages.
During the year the Company issued 2,500,000 vested performance rights and 8,000,000 unvested performance rights. The
unvested performance rights vest on achievement of performance milestones:
(i) the Company (or any of its subsidiaries) receiving an offer of unconditional finance for the construction of a rare earth
processing plant for its Ngualla Rare Earth Project and approval of the Board of the Company being received to proceed
with construction; or
ii) the Company (or any of its subsidiaries) receiving an offer of unconditional finance for an amount in excess of AUD $50
million and approval by the Board of such financing.
The Board consider that the achievement of these milestones will deliver increased shareholder wealth.
22
Peak Resources Ltd Annual Report 2015
Directors’ Report Company performance, shareholder wealth and director’s and executive’s remuneration
Summary of group’s performance and movements in Peak Resources Limited’s share price over the last five years:
Other income
Net loss before tax
Net loss after tax
2015
$
38,426
2014
$
2013
$
2012
$
2011
$
54,134
2,503,930
582,143
558,722
(4,195,877)
(3,148,903)
(2,867,384)
(5,297,738)
(2,241,059)
(4,195,877)
(3,148,903)
(2,867,384)
(5,297,738)
(2,241,059)
Closing share price at end of year
$0.085
Basic loss per share (cents)
Dividends per share
1.13
-
$0.06
1.05
-
$0.13
1.15
-
$0.22
3.01
-
$0.51
1.71
-
The remuneration policy has been tailored to increase goal congruence between shareholders and directors and executives.
Currently, this is facilitated through a policy to issue options and in some instances performance rights to the majority of
directors and executives to encourage the alignment of personal and shareholder interests. The Company believes the policy
will be effective in increasing shareholder wealth. Details of directors and executives interests in shares and options at year end
are detailed below.
Details of remuneration
The relevant Key Management Personnel (KMP) of the group for the 2015 financial year were:
Mr. Jonathan Murray – Non-Executive Chairman (Appointed 1 April 2015, previously Non-Executive Director)
Mr. Darren Townsend – Managing Director
Mr. David Hammond – Technical Director
Mr John Jetter
– Non-Executive Director (Appointed 1 April 2015)
Mr Robin Mills
– Non-Executive Director (Appointed 1 April 2015)
Mr. Alastair Hunter – Non-Executive Chairman (Resigned 1 April 2015)
Mr. Graeme Scott
– Chief Financial Officer & Company Secretary (Appointed 3 November 2014)
Mr. Jeffrey Dawkins – Chief Financial Officer & Company Secretary (Resigned 3 November 2014)
Total remuneration for the year was:
Salary and fees
Superannuation
Share based payments
2015
$
951,530
63,838
472,726
2014
$
863,592
66,469
-
1,488,094
930,061
23
Peak Resources Ltd Annual Report 2015 Remuneration of individual kMP’s were:
Short-Term
Benefits
Post
Employ-
ment
Share-Based
Payment*
Total
Proportion related to:
Salary &
Fees
Non-
Monetary
Super-
annuation
Performance
Rights
Options
Equity
$
$
$
$
$
$
%
30 June 2015
DIRECTORS
Mr. Alastair Hunter
56,534
Mr. Darren Townsend
319,445
Mr. David Hammond
300,000
Mr. Jonathan Murray
36,676
Mr. John Jetter
Mr. Robin Mills
10,000
10,000
-
-
-
-
-
-
5,371
10,103
28,500
-
-
-
77,967
27,167
167,039
59,964
81,500
471,012
137,837
54,333
520,670
-
-
-
13,583
-
-
50,259
10,000
10,000
63%
30%
37%
27%
0%
0%
Perfor-
mance
%
47%
13%
26%
0%
0%
0%
732,655
-
43,974
275,768
176,583
1,228,980
37%
22%
EXECUTIVES
Mr. Jeffrey Dawkins
65,041
- 5,250
-
12,104
82,395
15%
Mr. Graeme Scott
153,834
- 14,614
-
8,271
176,719
218,875
-
19,864
-
20,375
259,114
5%
8%
Total remuneration
951,530
- 63,838
275,768
196,958
1,488,094
52%
30 June 2014
DIRECTORS
$
$
$
$
$
$
%
Mr. Alastair Hunter
133,333
-
12,333
Mr. Darren Townsend
123,590
-
1,411
Mr. David Hammond
300,000
- 27,750
Mr. Jonathan Murray
36,668
-
-
-
-
-
-
-
145,667
-
125,002
-
327,750
- 36,668
593,592
-
41,494
-
-
635,086
EXECUTIVES
Mr. Jeffrey Dawkins
270,000
-
24,975
270,000
-
24,975
-
-
-
294,975
-
294,975
Total remuneration
863,592
- 66,469
-
-
930,061
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18%
%
0%
0%
0%
0%
0%
0%
0%
0%
*Some options and performance rights are subject to length of service vesting criteria and achievement of performance milestone vesting criteria.
24
Peak Resources Ltd Annual Report 2015
Directors’ Report
Options and performance rights granted during the year ended 30 June 2015
Options granted during the year
30 June 2015
Date of
issue
Number
of options
issued
Value per
Option¹
Total value
of issue
Vesting
Date²
Exercise
Price
Expiry
Date
Number
vested
during the
year
DIRECTORS
Mr Jonathan Murray
5-Jan-15
333,334
0.024
8,069
5-Jan-15
$ 0.10 5-Jan-17
333,334
5-Jan-15
333,333
0.024
7,997
5-Jan-16
$ 0.15 5-Jan-18
-
5-Jan-15
333,333
0.019
6,424
5-Jan-17
$ 0.20 5-Jan-18
-
Mr Alastair Hunter
5-Jan-15
666,667
0.024
16,139
5-Jan-15
$ 0.10 5-Jan-17
666,667
5-Jan-15
666,667
0.024
15,993
5-Jan-16
$ 0.15 5-Jan-18
-
5-Jan-15
666,666
0.019
12,847
5-Jan-17
$ 0.20 5-Jan-18
-
Mr Darren Townsend
5-Jan-15
2,000,000
0.024
48,416
5-Jan-15
$ 0.10 5-Jan-17
2,000,000
5-Jan-15
2,000,000
0.024
47,980
5-Jan-16
$ 0.15 5-Jan-18
-
5-Jan-15
2,000,000
0.019
38,542
5-Jan-17
$ 0.20 5-Jan-18
-
Mr David Hammond
5-Jan-15
1,333,334
0.024
32,277
5-Jan-15
$ 0.10 5-Jan-17
1,333,334
5-Jan-15
1,333,333
0.024
31,987
5-Jan-16
$ 0.15 5-Jan-18
-
5-Jan-15
1,333,333
0.019
25,695
5-Jan-17
$ 0.20 5-Jan-18
-
13,000,000
292,366
4,333,335
EXECUTIVES
Mr Jeff Dawkins
5-Jan-15
500,000
Mr Graeme Scott
5-Jan-15
500,000
Total
5-Jan-15
500,000
1,500,000
14,500,000
0.024
0.024
0.019
12,104
5-Jan-15
$ 0.10 5-Jan-17
500,000
11,995
5-Jan-16
$ 0.15 5-Jan-18
-
9,636
5-Jan-17
$ 0.20 5-Jan-18
-
33,735
326,101
500,000
4,833,335
1. Options are valued using the Black-Scholes method on date of grant
2.
The unvested $0.15 and $0.20 options vest after 1 years continuous service on 5 January 2016 and 2 years continuous service on 5 January 2017
respectively.
No options were granted during the year ended 30 June 2014.
Performance Rights granted during the year
30 June 2015
Date of
issue
Number of
Performance
Rights issued
Value per
Performance
Right
Total value
of issue
Vesting
Date
Exercise
Price
Expiry
Date
Number
vested
during the
year
DIRECTORS
Mr Alastair Hunter
5-Jan-15
1,000,000
$ 0.072
72,000
5-Jan-15
$ - 5-Jan-18 1,000,000
Mr Darren Townsend
5-Jan-15
5,000,000
$ 0.072
360,000
5-Jan-15
500,000
$ 0.072
36,000
**
**
$ - 5-Jan-18
-
$ - 5-Jan-18
-
Mr David Hammond
5-Jan-15
1,500,000
$ 0.072
108,000
5-Jan-15
$ - 5-Jan-18
1,500,000
5-Jan-15
2,500,000
$ 0.072
180,000
**
$ - 5-Jan-18
-
10,500,000
756,000
2,500,000
**Vest on achievement of performance milestones.
No Performance Rights were granted during the year ended 30 June 2014.
25
Peak Resources Ltd Annual Report 2015
Shareholdings of kMP’s
30 June 2015
DIRECTORS
Mr Jonathan Murray
Mr Alastair Hunter*
Mr Darren Townsend
Mr David Hammond
Mr Robin Mills
Mr John Jetter
EXECUTIVES
Mr Jeffrey Dawkins*
Mr Graeme Scott
Total
Opening
balance
Granted as
remuneration
Exercise /
expiry of
options
Cancelled
Market
transactions
Closing
balance
1,140,001
9,048,991
-
70,589
-
-
10,259,581
25,000
-
25,000
10,284,581
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,140,001
(9,048,991)
-
-
-
-
70,589
-
-
-
-
-
-
(9,048,991)
1,210,590
-
-
-
-
-
-
-
-
(25,000)
-
(25,000)
-
-
-
(9,073,991)
1,210,590
*Ceased engagement during the year, their holdings are not reported at the year end.
Option Holdings of kMP’s including performance rights
30 June 2015
DIRECTORS
Opening
balance
Granted as
remuneration
Exercise of
Options
Expired/
Cancelled
Market
transactions
Closing
balance
Vested at
30 June
Mr Jonathan Murray
326,298 1,000,000
-
(326,298)
- 1,000,000
333,334
Mr Alastair Hunter*
2,082,396
4,500,000
-
(2,082,396)
(4,500,000)
-
-
Mr Darren Townsend
-
11,000,000
-
-
-
11,000,000
2,000,000
Mr David Hammond
70,590 8,000,000
-
(70,590)
-
8,000,000
2,833,334
Mr Robin Mills
Mr John Jetter
EXECUTIVES
Mr Jeff Dawkins*
Mr Graeme Scott
- -
-
-
- -
-
-
-
-
-
- -
-
2,479,284
24,500,000
-
(2,479,284)
(4,500,000)
20,000,000 5,166,668
83,334
500,000
-
(83,334)
(500,000)
-
-
-
1,000,000
-
- -
1,000,000
-
83,334
1,500,000
-
(83,334)
(500,000)
1,000,000
-
Total
2,562,618 26,000,000
-
(2,562,618)
(5,000,000)
21,000,000 5,166,668
*Ceased engagement during the year, their holdings are not reported at the year end.
Performance income as a proportion of total income
No performance based bonuses have been paid to directors or executives during the financial year.
Service agreements:
The key terms of the service agreements with the KMP’s are:
Darren Townsend – Managing Director
Darren is employed under an Executive Service Agreement (ESA). The agreement provides for an annual salary of $400,000
inclusive of superannuation, plus a fully expensed vehicle (not currently taken), expenses, discretionary bonuses, options and
performance rights. The Executive is entitled to leave in accordance with the relevant legislation. Darren’s engagement has no
fixed term but is subject to a six month notice period from either party.
26
Peak Resources Ltd Annual Report 2015
Directors’ Report
Dave Hammond – Technical Director
Dave is employed under an ESA. The agreement provides for an annual salary of $300,000 plus superannuation, expenses, and
eligibility for options. The Executive is entitled to leave in accordance with the relevant legislation. Dave’s engagement has no
fixed term but is subject to a three month notice period from either party.
Alastair Hunter – Non-Executive Chairman (resigned 1 April 2015)
Under Alastair’s agreement annual directors fees of $75,000 plus superannuation were payable. No retirement benefits are
provided for.
Jonathan Murray / John Jetter / Robin Mills - Non-Executive Directors
Non-Executive Directors are appointed by letter agreement with no fixed term ceasing on resignation or removal as a director in
accordance with the Corporations Act. Fees are currently set at $40,000 per annum. No retirement benefits are provided for.
Jeffrey Dawkins – CFO & Company Secretary (resigned 3 November 2014)
Jeff was employed under an ESA. The agreement provides for an annual salary of $270,000, plus superannuation, expenses, and
eligibility for options. The Executive is entitled to leave in accordance with the relevant legislation. Jeff’s engagement has no
fixed term but is subject to a three month notice period from either party.
Graeme Scott – CFO & Company Secretary (appointed 3 November 2014)
Graeme is employed under an ESA. The agreement provides for an annual salary of $200,000, plus superannuation, expenses,
and eligibility for options. The Executive is entitled to leave in accordance with the relevant legislation. Graeme’s engagement
has no fixed term but is subject to a three month notice period from either party.
Other transactions
During the year Steinepreis Paganin Lawyers and Consultants a legal practice associated with Mr Jonathan Murray received
$365,711 (2014: $98,075.29) as fees for the provision of legal advice. Balance outstanding at 30 June 2015 and included in trade
creditors $4,276 (30 June 2014: $27,658).
These costs have not been included in directors’ remuneration as these fees were not paid to individual directors in relation to
the management of the affairs of the Company. All transactions were entered into on normal commercial terms.
(End of Remuneration Report)
OPTIONS AND PERFORMANCE RIGHTS
At the date of this report unissued ordinary shares of the Company under option to service providers only are:
Expiry Date
20 February 2017
3 March 2018
Exercise Price
Number under option
$0.55
$0.55
6,250,000
150,000
Unissued ordinary shares of the Company under option to directors, former directors and employees are:
Expiry Date
5 January 2017
5 January 2018
5 January 2018
*Vesting subject to length of service criteria
Exercise Price
Number under option
$0.10
$0.15
$0.20
6,383,334
6,383,333*
6,383,333*
Unissued ordinary shares of the Company under Performance Right to directors and former directors are:
Expiry Date
5 January 2017
5 January 2018
Exercise Price
Number under option
$0.00
$0.00
2,500,000
8,000,000#
#Vest on achievement of performance milestones
Option or rights holders do not have any right, by virtue of the option or right to participate in any share issue of the Company
or any related body corporate. 317,498 ordinary shares were issued as a result of the exercise of A$0.10 listed options during the
financial year ended 30 June 2015. 51,659,251 A$0.25 listed options and 58,354,749 A$0.10 listed options expired unexercised
during the year ended 30 June 2015. Details of options and performance rights issued during the year are detailed in the
Remuneration Report.
27
Peak Resources Ltd Annual Report 2015 INDEMNIFYING OFFICERS OR AUDITOR
During the financial year, the company paid a premium in respect of a contract insuring the directors and officers of the
Company and related body corporates against a liability incurred as such a director, secretary or executive officer to the extent
permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the
amount of the premium.
The company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of the company or of any related body corporate against a liability
incurred as such an officer or auditor.
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its
audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has
been made to indemnify Ernst & Young during or since the financial year.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied to the court under legislation such as section 237 of the Corporations Act of Australia for leave to bring
proceedings on behalf of the company, or to 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 part of those proceedings. No proceedings have been brought or
intervened in on behalf of the consolidated entity with leave of the court under such legislation.
AUDITOR’S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2015 has been received and can be found immediately
following this Directors’ report.
Details of amounts paid or payable to the auditor for non-audit services are set out in Note 3 to the Financial Statements.
The Board of Directors is satisfied that the provision of non-audit services performed during the year by the Company’s auditors
is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are
satisfied that the services did not compromise the external auditor’s independence for the following reason:
•
All non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of
the auditor; and
•
The nature of the services provided does not compromise the general principles relating to auditors independence as set
out in the APES 110 (Code of Ethics for Professional Accountants).
The Directors’ report is signed in accordance with a resolution of Directors made pursuant to s.298(2) of the
Corporations Act 2001.
On behalf of the Directors,
Jonathan Murray Non-executive Chairman
Perth, 30 September 2015
28
Peak Resources Ltd Annual Report 2015
Directors’ Report
Auditor’s Independence Declaration
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Peak Resources
Limited
In relation to our audit of the financial report of Peak Resources Limited for the financial year ended 30
June 2015, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
D A Hall
Partner
30 September 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DH:ET:PEAK:002
13
29
Independent Auditor’s Report
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Peak Resources Limited
Report on the financial report
We have audited the accompanying financial report of Peak Resources Limited, which comprises the
consolidated statement of financial position as at 30 June 2015, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended, notes comprising a summary of significant accounting policies and
other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the year's end or from time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and
fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DH:ET:PEAK:001
14
30
Peak Resources Ltd Annual Report 2015
Opinion
In our opinion:
a.
the financial report of Peak Resources Limited is in accordance with the Corporations Act 2001,
including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June 2015
and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.
Emphasis of matter
Without qualifying our opinion, we draw attention to Note 2(a) in the financial report which describe the
principal conditions that raise doubt about the consolidated entity’s ability to continue as a going concern.
These conditions indicate the existence of an uncertainty that may cast significant doubt about the
consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be
unable to realise its assets and discharge its liabilities in the normal course of business.
Report on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2015. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is
to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Peak Resources Limited for the year ended 30 June 2015,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
D A Hall
Partner
Perth
30 September 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DH:ET:PEAK:001
15
3131
Consolidated Statement
of Comprehensive Income
For the Year Ended 30 June 2015
Finance income
Other income
Total income
Employee benefits expenses
Share based payments expenses
Impairment of capitalised exploration costs
Depreciation expenses
Borrowing costs
Administrative and other costs
Loss before income tax
Income tax benefit
Loss after income tax
Other comprehensive (loss)/income, net of tax
Items that could be transferred to profit or loss in future:
Exchange difference on translation of foreign operations
Total comprehensive loss for the year
Note
2015
$
2014
$
3
3
38,426
48,959
-
5,175
38,426
54,134
(964,718)
(1,455,033)
(535,597)
-
(1,915)
(122,671)
(37,757)
(45,423)
(504,130)
(19,875)
(2,190,186)
(1,560,035)
(4,195,877)
(3,148,903)
6
-
-
(4,195,877)
(3,148,903)
942,416
(182,191)
(3,253,461)
(3,331,094)
Loss per share (in cents)
Basic and Diluted loss per share
5
(1.26)
(1.05)
The statement should be read in conjunction with the accompanying notes
32
Peak Resources Ltd Annual Report 2015
Consolidated Statement
of Financial Position
As at 30 June 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other Financial Assets
Prepayments
Total current assets
Non-current assets
Property plant and equipment
Capitalised exploration and evaluation costs
Investments
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Short term loans
Total current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
The statement should be read in conjunction with the accompanying notes
Note
2015
$
2014
$
7
8
9
10
11
12
13
14
15
17
16
2,943,861
1,889,470
993,819
99,500
453,423
729,149
104,000
145,004
4,490,603
2,867,623
85,143
91,624
39,784,186
33,936,233
8,000
4,000
39,877,329
34,031,857
44,367,932
36,899,480
1,896,829
94,226
8,917,700
10,908,755
10,908,755
666,127
88,062
-
754,189
754,189
33,459,177
36,145,291
54,943,414
54,911,664
2,875,989
1,397,976
(24,360,226)
(20,164,349)
33,459,177
36,145,291
33
Consolidated Statement
of Cash Flows
For the Year Ended 30 June 2015
OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Finance costs paid
Borrowing costs paid
R&D Tax Refund received
Cash used in operating activities
INVESTING ACTIVITIES
Acquisition of property, plant and equipment
Proceeds from sale of non-current assets
Payment for exploration and evaluation costs
Cash used in investing activities
FINANCING ACTIVITIES
Proceeds from issue of equity shares
Payment for term deposit
Costs of issuing equity shares
(Repayment of) / Proceeds from borrowings
Cash generated from financing activities
Net decrease in cash and cash equivalents
Balance at the beginning of the year
Effect of foreign currency translation
Balance at the end of the year
The statement should be read in conjunction with the accompanying notes
34
Peak Resources Ltd Annual Report 2015
Note
2015
$
2014
$
(3,167,620)
(2,782,218)
39,996
(18,012)
(37,692)
48,959
-
(19,875)
-
1,690,381
7
(3,183,328)
(1,062,753)
(31,276)
(31,460)
-
2,381
(4,672,130)
(2,434,328)
(4,703,406)
(2,463,407)
31,749
4,500
-
8,917,700
8,953,949
1,067,215
1,889,474
(12,828)
3,520,335
(104,000)
(146,559)
(315,000)
2,954,776
(571,384)
2,463,309
(2,455)
7
2,943,861
1,889,470
Consolidated Statement
of Changes In Equity
For the Year Ended 30 June 2015
Contributed
Equity
Share based
payment
reserve
Foreign
currency
translation
reserve
Accumulated
losses
Total equity
$
$
$
$
$
At 30 June 2013
51,537,888
1,066,866
513,301
(17,015,446)
36,102,609
Loss for the year 2014
Other comprehensive income
Total comprehensive income for the year
Equity issued
Equity based payments
Transaction costs
-
-
-
3,520,335
-
(146,559)
-
-
-
-
-
-
-
(3,148,903)
(3,148,903)
(182,191)
-
(182,191)
(182,191)
(3,148,902)
(3,331,094)
-
-
-
-
-
-
3,520,335
-
(146,559)
At 30 June 2014
54,911,664
1,066,866
331,110
(20,164,349)
36,145,291
Loss for the year 2015
Other comprehensive income
Total comprehensive income for the year
-
-
-
Equity issued
31,750
-
-
-
-
Equity based payments
-
535,597
-
(4,195,877)
(4,195,877)
942,416
-
942,416
942,416
(4,195,877)
(3,253,461)
-
-
-
-
31,750
535,597
At 30 June 2015
54,943,414
1,602,463
1,273,526
(24,360,226)
33,459,177
The statement should be read in conjunction with the accompanying notes
35
Notes to Financial Statements
1. CORPORATE INFORMATION
The financial report of Peak Resources Limited for the year ended 30 June 2015 was authorised for issue in accordance with a
resolution of the directors on 30 September 2015.
Peak Resources Limited is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on
the Australian Securities Exchange (ASX). The address of its registered office and principal place of business is disclosed in the
introduction to the Annual Report.
The principal activity of the Group during the year was exploration and evaluation of mineral licences.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for Available for sale (AFS)
Investments which are measured at fair value. All amounts are presented in Australian Dollars unless otherwise noted.
The functional and presentation currency is Australian Dollars.
Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act
2001, Accounting Standards and Interpretations, and complies with other requirements of the law.
Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Group comply with
International Financial Reporting Standards (IFRS).
Going concern
The Group has net current liabilities of $6,418,152 (2014: net current assets $2,113,434) and incurred an operating cash outflow
after income tax of $3,183,328 (30 June 2014: $1,062,753) for the year ended 30 June 2015. The Group’s ability to continue as a
going concern and meet its debts as and when they fall due is dependent on the satisfaction of project milestones in relation to
Stage 2 and Stage 3 of the BFS financing transaction with Appian Natural Resource Fund (Appian) and the International Finance
Corporation (IFC).
On 26 July 2015, the Group announced the closing of Stage 1 of the financing transaction with Appian and IFC which on closing
resulted in the receipt of net $10.776m which addressed the Group’s working capital deficiency at the date of the transaction.
Completion of Stage 2 and Stage 3 of this financing is subject to the satisfaction of the following milestones:
Stage 2: On or before 31 December 2015, if Appian and IFC deem a high-grade mineral concentrate can be produced from
a steady state pilot plant which is of sufficient scale to support scalability to a production sized plant, Appian and IFC will
invest a further US$4.4m to purchase a further 12.5% interest in PAM.
Stage 3: On or before 31 July 2016, if Appian and IFC deem production of full separated rare earths of saleable quality is
economically viable, Appian and IFC will invest a further US$4.4m to purchase a further 12.5% interest in PAM.
In the directors’ opinion, there are reasonable grounds to believe that these milestones will be satisfied and the funding
(under Stage 2 and 3) will be made available. However, in the event the milestones are not satisfied, the Group will need to
seek alternative funding or may be unable to continue as a going concern. No adjustments have been made relating to the
recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the
Group not continue as a going concern.
b) Adoption of new or revised accounting standards
Standards and Interpretations affecting amounts reported in the current period (and/or prior periods)
The following new and revised Standards and Interpretations have been adopted in the current year. The adoption of these
Standards and Interpretations have not had a material impact on the amounts report.
36
Peak Resources Ltd Annual Report 2015
Reference
Title
AASB 2012-3
Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities
AASB 2012-3 adds application guidance to AASB 132 Financial Instruments: Presentation 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 2013-3
Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets
AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment of Assets. The
amendments include the requirement to disclose additional information about the fair value
measurement when the recoverable amount of impaired assets is based on fair value less costs of
disposal.
AASB 2013-7
Amendments to AASB 1038 arising from AASB 10 in relation to consolidation and interests of
policyholders [AASB 1038]
AASB 2013-7 removes the specific requirements in relation to consolidation from AASB 1038, which
leaves AASB 10 as the sole source of consolidation requirements applicable to life insurance entities.
AASB 1031
Materiality
The revised AASB 1031 is an interim standard that cross-references to other Standards and the
Framework (issued December 2013) that contain guidance on materiality.
AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and Interpretations have
been removed.
AASB 2014-1 Part C issued in June 2014 makes amendments to eight Australian Accounting Standards
to delete their references to AASB 1031. The amendments are effective from 1 July 2014*.
AASB 2013-9
Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial
Instruments
The Standard contains three main parts and makes amendments to a number of Standards and
Interpretations.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete references to AASB
1031 and also makes minor editorial amendments to various other standards.
Part C makes amendments to a number of Australian Accounting Standards, including incorporating
Chapter 6 Hedge Accounting into AASB 9 Financial Instruments.
AASB 2014-1
Part A -Annual
Improvements
2010–2012 Cycle
AASB 2014-1 Part A: This standard sets out amendments to Australian Accounting Standards
arising from the issuance by the International Accounting Standards Board (IASB) of International
Financial Reporting Standards (IFRSs) Annual Improvements to IFRSs 2010–2012 Cycle and Annual
Improvements to IFRSs 2011–2013 Cycle.
Annual Improvements to IFRSs 2010–2012 Cycle addresses the following items:
• AASB 2 - Clarifies the definition of ‘vesting conditions’ and ‘market condition’ and introduces the
definition of ‘performance condition’ and ‘service condition’.
• AASB 3 - Clarifies the classification requirements for contingent consideration in a business
combination by removing all references to AASB 137.
• AASB 8 - Requires entities to disclose factors used to identify the entity’s reportable segments
when operating segments have been aggregated. An entity is also required to provide a
reconciliation of total reportable segment assets to the entity’s total assets.
• AASB 116 & AASB 138 - Clarifies that the determination of accumulated depreciation does not
depend on the selection of the valuation technique and that it is calculated as the difference
between the gross and net carrying amounts.
• AASB 124 - Defines a management entity providing KMP services as a related party of the reporting
entity. The amendments added an exemption from the detailed disclosure requirements in
paragraph 17 of AASB 124 Related Party Disclosures for KMP services provided by a management
entity. Payments made to a management entity in respect of KMP services should be separately
disclosed.
37
Peak Resources Ltd Annual Report 2015 Reference
Title
AASB 2014-1
Part A -Annual
Improvements
2011–2013 Cycle
Amendments
to AASB 1053 –
Transition to and
between Tiers,
and related Tier
2 Disclosure
Requirements
[AASB 1053]
Annual Improvements to IFRSs 2011–2013 Cycle addresses the following items:
• AASB 13 - Clarifies that the portfolio exception in paragraph 52 of AASB 13 applies to all contracts
within the scope of AASB 139 or AASB 9, regardless of whether they meet the definitions of
financial assets or financial liabilities as defined in AASB 132.
• AASB 140 - Clarifies that judgment is needed to determine whether an acquisition of investment
property is solely the acquisition of an investment property or whether it is the acquisition of a
group of assets or a business combination in the scope of AASB 3 that includes an investment
property. That judgment is based on guidance in AASB 3.
The Standard makes amendments to AASB 1053 Application of Tiers of Australian Accounting
Standards to:
• clarify that AASB 1053 relates only to general purpose financial statements;
•
•
make AASB 1053 consistent with the availability of the AASB 108 Accounting Policies, Changes in
Accounting Estimates and Errors option in AASB 1 First-time Adoption of Australian Accounting
Standards;
clarify certain circumstances in which an entity applying Tier 2 reporting requirements can apply
the AASB 108 option in AASB 1; permit an entity applying Tier 2 reporting requirements for the
first time to do so directly using the requirements in AASB 108 (rather that applying AASB 1) when,
and only when, the entity had not applied, or only selectively applied, applicable recognition
and measurement requirements in its most recent previous annual special purpose financial
statements; and
•
specify certain disclosure requirements when an entity resumes the application of Tier 2 reporting
requirements.
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet
effective. Those Standards and Interpretations which have an application date of 1 July 2015 are not expected to have a material
impact on the financial report. The impacts of those amendments for future years have not yet been assessed by management.
Application
date of
standard*
Application
date for
Group*
1 January
2018
1 July
2018
Reference
Title
Summary
AASB 9
Financial
Instruments
AASB 9 (December 2014) is a new standard which replaces
AASB 139. This new version supersedes AASB 9 issued
in December 2009 (as amended) and AASB 9 (issued in
December 2010) and includes a model for classification
and measurement, a single, forward-looking ‘expected loss’
impairment model and a substantially-reformed approach to
hedge accounting.
AASB 9 is effective for annual periods beginning on or after
1 January 2018. However, the Standard is available for early
adoption. The own credit changes can be early adopted in
isolation without otherwise changing the accounting for
financial instruments.
38
Notes to Financial Statements Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
AASB 9
Financial
Instruments
(continued)
Classification and measurement
AASB 9 includes requirements for a simpler approach for
classification and measurement of financial assets compared
with the requirements of AASB 139. There are also some
changes made in relation to financial liabilities.
The main changes are described below.
Financial assets
a.
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; (2) the characteristics of the
contractual cash flows.
b.
c.
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. 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.
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities
are limited to the measurement of liabilities designated at fair
value through profit or loss (FVPL) using the fair value option.
Where the fair value option is used for financial liabilities, the
change in fair value is to be accounted for as follows:
•
The change attributable to changes in credit risk are
presented in other comprehensive income (OCI)
•
The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that was
caused by changes in the credit risk of liabilities elected to
be measured at fair value. This change in accounting means
that gains or losses attributable to changes in the entity’s
own credit risk would be recognised in OCI. These amounts
recognised in OCI are not recycled to profit or loss if the
liability is ever repurchased at a discount.
39
Peak Resources Ltd Annual Report 2015 Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
AASB 9
Financial
Instruments
(continued)
Impairment
The final version of AASB 9 introduces a new expected-loss
impairment model that will require more timely recognition of
expected credit losses. Specifically, the new Standard requires
entities to account for expected credit losses from when
financial instruments are first recognised and to recognise full
lifetime expected losses on a more timely basis.
Hedge accounting
Amendments to AASB 9 (December 2009 & 2010 editions
and AASB 2013-9) issued in December 2013 included the
new hedge accounting requirements, including changes to
hedge effectiveness testing, treatment of hedging costs, risk
components that can be hedged and disclosures.
Consequential amendments were also made to other standards
as a result of AASB 9, introduced by AASB 2009-11 and
superseded by AASB 2010-7, AASB 2010-10 and AASB 2014-1
– Part E.
AASB 2014-7 incorporates the consequential amendments
arising from the issuance of AASB 9 in Dec 2014.
AASB 2014-8 limits the application of the existing versions
of AASB 9 (AASB 9 (December 2009) and AASB 9 (December
2010)) from 1 February 2015 and applies to annual reporting
periods beginning on after 1 January 2015.
1 January
2016
1 July
2016
AASB
2014-3
Amendments
to Australian
Accounting
Standards –
Accounting for
Acquisitions
of Interests
in Joint
Operations
[AASB 1 & AASB
11]
AASB 2014-3 amends AASB 11 Joint Arrangements to provide
guidance on the accounting for acquisitions of interests in
joint operations in which the activity constitutes a business.
The amendments require:
(a) the acquirer of an interest in a joint operation in which
the activity constitutes a business, as defined in AASB
3 Business Combinations, to apply all of the principles
on business combinations accounting in AASB 3 and
other Australian Accounting Standards except for those
principles that conflict with the guidance in AASB 11; and
(b) the acquirer to disclose the information required by AASB
3 and other Australian Accounting Standards for business
combinations.
This Standard also makes an editorial correction to AASB 11
40
Notes to Financial Statements AASB 15
Revenue from
Contracts with
Customers
AASB
2014-10
Amendments
to Australian
Accounting
Standards
– Sale or
Contribution
of Assets
between an
Investor and
its Associate or
Joint Venture
AASB 15 Revenue from Contracts with Customers replaces the
existing revenue recognition standards AASB 111 Construction
Contracts, AASB 118 Revenue and related Interpretations
(Interpretation 13 Customer Loyalty Programmes,
Interpretation 15 Agreements for the Construction of Real
Estate, Interpretation 18 Transfers of Assets from Customers,
Interpretation 131 Revenue—Barter Transactions Involving
Advertising Services and Interpretation 1042 Subscriber
Acquisition Costs in the Telecommunications Industry).
AASB 15 incorporates the requirements of IFRS 15 Revenue
from Contracts with Customers issued by the International
Accounting Standards Board (IASB) and developed jointly with
the US Financial Accounting Standards Board (FASB).
AASB 15 specifies the accounting treatment for revenue arising
from contracts with customers (except for contracts within
the scope of other accounting standards such as leases or
financial instruments).The core principle of AASB 15 is that an
entity recognises revenue to depict the transfer of promised
goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled
in exchange for those goods or services. An entity recognises
revenue in accordance with that core principle by applying the
following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance
obligations in the contract
(e) Step 5: Recognise revenue when (or as) the entity satisfies
a performance obligation
Currently, AASB 15 is effective for annual reporting periods
commencing on or after 1 January 2017. Early application is
permitted. (Note A)
AASB 2014-5 incorporates the consequential amendments
to a number Australian Accounting Standards (including
Interpretations) arising from the issuance of AASB 15.
AASB 2014-10 amends AASB 10 Consolidated Financial
Statements and AASB 128 to address an inconsistency
between the requirements in AASB 10 and those in AASB 128
(August 2011), in dealing with the sale or contribution of assets
between an investor and its associate or joint venture. The
amendments require:
(a) a full gain or loss to be recognised when a transaction
involves a business (whether it is housed in a subsidiary or
not); and
(b) a partial gain or loss to be recognised when a transaction
involves assets that do not constitute a business, even if
these assets are housed in a subsidiary.
AASB 2014-10 also makes an editorial correction to AASB 10.
AASB 2014-10 applies to annual reporting periods beginning
on or after 1 January 2016. Early adoption permitted.
1 January
2017
1 July
2017
1 January
2016
1 July
2016
41
Peak Resources Ltd Annual Report 2015 1 January
2016
1 July
2016
The Standard makes amendments to AASB 101 Presentation
of Financial Statements arising from the IASB’s Disclosure
Initiative project. The amendments are designed to further
encourage companies to apply professional judgment in
determining what information to disclose in the financial
statements. For example, the amendments make clear that
materiality applies to the whole of financial statements and
that the inclusion of immaterial information can inhibit the
usefulness of financial disclosures. The amendments also
clarify that companies should use professional judgment in
determining where and in what order information is presented
in the financial disclosures.
The Standard completes the AASB’s project to remove
Australian guidance on materiality from Australian Accounting
Standards.
1 July
2015
1 July
2015
The amendment aligns the relief available in AASB 10
Consolidated Financial Statements and AASB 128 Investments
in Associates and Joint Ventures in respect of the financial
reporting requirements for Australian groups with a foreign
parent
1 July
2015
1 July
2015
AASB
2015-2
AASB
2015-3
AASB
2015-4
Amendments
to Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments
to AASB 101
Amendments
to Australian
Accounting
Standards
arising from
the Withdrawal
of AASB 1031
Materiality
Amendments
to Australian
Accounting
Standards
– Financial
Reporting
Requirements
for Australian
Groups with a
Foreign Parent
c) Basis of consolidation
The consolidated financial statements of Peak Resources Limited comprise the financial statements of the Group and its
subsidiaries as at 30 June 2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the
Group controls an investee if and only if the Group has:
-
-
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee, and
- The ability to use its power over the investee to affect its returns
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including
- The contractual arrangement with the other vote holders of the investee
- Rights arising from other contractual arrangements
- The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains
control until the date the Group ceases to control the subsidiary.
All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses,
have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure
consistencies with those policies applied by the parent entity. All controlled entities have a June financial year-end.
Where controlled entities have entered or left the economic entity during the year, their operating results have been included/
excluded from the date control was obtained or until the date control ceased through an equity transaction.
42
Notes to Financial Statements d) Foreign Currency Translation
The financial statements have been presented in Australian Dollars.
Translation of foreign operations
As at the reporting date the assets and liabilities of foreign operations are translated at the rate of exchange ruling at the
reporting date and the statement of comprehensive income, statement cash flows and statement of changes in equity are
translated at the weighted average exchange rates for the year. The exchange differences arising on translation are recognised
in other comprehensive income and accumulated balances are carried forward as a separate component of equity. Non-
monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at
the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items
measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also
recognised in other comprehensive income or profit or loss, respectively).
On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that particular foreign
operation is recognised in the profit or loss.
Foreign currency transactions
In preparing the financial statements of each individual group entity, transactions in foreign currencies are initially recorded in
the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies are retranslated at the rate of exchange ruling at the reporting date, and gain or loss in exchange rate
movements are recognised in profit or loss.
e) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Rendering of services
Revenue from a contract to provide services is recognised by reference to the stage of completion at rates agreed between the parties.
Interest
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial
asset on initial recognition).
Debt forgiveness
Debt forgiveness is being recognised as income in profit or loss in the year in which the debt is forgiven or when the
debtholders right of claim over the debt is fully exhausted.
R&D rebate grant
Government grants are recognised when there is reasonable assurance that the grant will be received and all conditions will be
complied with. When the grant relates to an expense item, it is recognised as income over the period necessary to match the
grant on a systematic basis to the costs that it is intended to compensate. When the grant relates to an asset, it is deducted from
the asset to which it relates, the net value of which is amortised over its expected useful life.
The Group is treating its receipt of the R&D rebate as government grant.
f) Employee benefits
Employee benefits such as salary and wages are measured at the rate at which the entity expects to settle the liability; and
recognised during the period over which the employee services are being rendered.
Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date.
Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid
when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the
present value of the estimated future cash outflows to be made for those benefits.
Superannuation entitlements
Contributions are made by the company to employee superannuation funds and are charged as expenses when incurred.
43
Peak Resources Ltd Annual Report 2015 g) Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as
expenses on a straight line basis over the lease term.
h) Income tax
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities
and their carrying amounts for the financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
•
Where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
•
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry-forward of unused tax assets and unused tax losses can be utilised except:
•
Where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
•
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the profit or loss.
i) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST/VAT except:
When the GST/VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which
case the GST/VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
Receivables and payables, which are stated with the amount of GST/VAT included.
The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the statement of financial position.
GST/VAT component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the
taxation authority, is classified as part of operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST/VAT recoverable from, or payable to, the taxation
authority.
j) Earnings per share
a. Basic earnings per share
Basic earnings per share is determined by dividing the group operating result after income tax attributable to members by
weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary
shares issued during the year.
b. Diluted earnings per share
Diluted earnings per share adjusts the figure used in the determination of basic earnings per share by taking into account
amounts paid on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options
outstanding during the financial year.
44
Notes to Financial Statements k) Financial Instruments
Financial instruments are recognised when the Group becomes party to the contractual provisions of the instrument. The
derecognition of a financial instrument takes place when the Group no longer controls the contractual rights that comprise the
financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument
are passed through to an independent third party.
The financial instruments of the Group are (i) cash and cash equivalents; (ii) trade and other receivables; (iii) trade and other
payables, (iv) available for sale investments; (v) short term loans; and (vi) other financial assets, including bank deposits.
l) Cash and Cash Equivalents
Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short term deposits
with an original maturity of three months or less.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts.
m) Trade and Other Receivables
Trade receivables, which generally have 30-90 day terms, are recognised initially at fair value and subsequently at amortised
cost, less an allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis at an operating unit
level. Individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised
when there is objective evidence that the Group will not be able to collect the receivable.
n) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
The useful life of the assets have been set at the following levels to determine the depreciation rates:
Leasehold improvements: 2 years
Plant and equipment: 2 to 5 years
Other assets: 2 to 5 years
The carrying amount of the property, plant and equipment are reviewed by the management to determine the adequacy of the
depreciation charged at the end of each reporting period. Any excess or shortfall in depreciation charged is being adjusted in the
statement of comprehensive income in the year in which such adjustments are being made as a reversal of the depreciation expense.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the item) is included in the profit or loss in the period the item is derecognised.
Impairment
The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being
estimated when events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses, if any,
are recognised in the profit or loss.
Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.
o) Deferred exploration and evaluation costs
Exploration and evaluation expenditure in relation to each separate area of interest is recognised as an exploration and
evaluation asset in the year in which they are incurred where the following conditions are satisfied:
the rights to tenure of the area of interest are current; and at least one of the following conditions is also met:
•
the exploration and evaluation expenditures are expected to be recouped through successful development and
exploration of the area of interest, or alternatively, by its sale; or
•
exploration and evaluation activities in the area of interest have not at the reporting date 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.
45
Peak Resources Ltd Annual Report 2015 Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory
drilling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation
activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where
they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount
of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and
evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest)
is estimated to determine the extent of the impairment loss (if any).
The recoverable amount of exploration and evaluation assets is the higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount.
The asset or cash-generating unit is then written down to its recoverable amount. Any impairment losses are recognised in
profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset in previous years.
Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant
exploration and evaluation asset is tested for impairment and the balance is then reclassified to production assets.
p) Trade and Other Payables
Trade payables and other payables are initially recognised at fair value, then carried at amortised. They represent liabilities for
goods and services provided to the Group prior to the end of the financial year that are unpaid and arising when the Group
becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured
and are usually paid within 30 days of recognition.
q) Provisions
Provisions are recognised when the entity has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to
the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
r) Share-based payment transactions
Equity settled transactions:
The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments,
whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).
The current plans in place to provide these benefits is the Employee Option Plan (EOP) and Performance Rights Plan (PRP),
which provides benefits to directors, senior executives and other eligible participants as determined by the Board; and
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the
price of the shares of Peak Resources Limited (market conditions) if applicable.
46
Notes to Financial Statements The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully
entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
•
•
the extent to which the vesting period has expired and
the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the
likelihood of market performance conditions being met as the effect of these conditions is included in the determination
of fair value at grant date. The profit or loss charge or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a
market condition.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and
designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.
s) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other
borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
t) Critical accounting judgements and estimates
In the application of Australian Accounting Standards, management is required to make judgments about applying accounting
policies and estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
Impairment of deferred exploration and evaluation costs
The future recoverability of deferred exploration and evaluation costs are dependent on a number of factors, including the level
of proved, probable and inferred mineral resources, future technological changes which could impact the cost of mining, future
legal changes (including changes to environment restoration obligations) and changes to commodity prices.
To the extent that deferred exploration and evaluation costs is determined not to be recoverable in the future, this will reduce
profits and net assets in the period in which this determination is made.
Share based payment transactions
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date
at which they are granted. The fair value is determined by using the most appropriate valuation model, which is dependent on
the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation
model including the expected life of the share option, volatility and dividend yield and making assumptions about them.
Capitalisation of Exploration and Evaluation
The Group assesses the criteria on which exploration and evaluation expenditure is capitalised based on the criteria in Note 2(o).
47
Peak Resources Ltd Annual Report 2015 3.
INCOME AND EXPENDITURE ITEMS
Included in loss for the year are:
Interest received
Gain on sale of non-current assets
Australian R&D rebate receivable
Total other income
Occupancy costs
Listing compliance costs
Travel & accommodation
Auditors’ remuneration
Amounts received or due and receivable by Ernst and Young for:
Audit and review of financial statements
Taxation services
Subsidiaries audit and review of financial statements
Subsidiaries taxation services
2015
$
2014
$
38,426
48,959
-
-
-
2,381
2,794
5,175
(234,608)
(209,859)
(63,644)
(350,598)
(98,725)
(198,331)
25,000
24,032
-
-
25,000
24,032
18,012
10,802
-
-
18,012
10,802
48
Notes to Financial Statements
4.
OPERATING SEGMENTS
Information reported to the chief operating decision makers for the purposes of resource allocation and assessment of segment
performance focuses on the exploration activities of the Group. The chief operating decision makers include the board of
directors. The Group’s reportable segments under AASB 8 are as follows:
Exploration – Group’s exploration activities carried on in Tanzania; and
Unallocated - to manage the corporate affairs of the group.
The segments have applied the same accounting policies as applied to the Group and disclosed in the notes 1 and 2 to these
financial statements.
30 June 2015
30 June 2014
Exploration
$
Unallocated
$
Total
$
Exploration
$
Unallocated
$
Total
$
Finance income
Other income
Total income
-
-
-
38,426
38,426
-
-
38,426
38,426
-
-
-
48,959
48,959
5,175
5,175
54,134
54,134
Depreciation and amortisation
(21,548)
(16,209)
(37,757)
(15,606)
(29,817)
(45,423)
Impairment of exploration and
evaluation costs
Impairment of Investments
Share based payment expenses
Borrowing costs
Other expenses
Income Tax
Segment results
Segment assets
(1,915)
(1,915)
(122,671)
-
(122,671)
-
-
-
4,000
4,000
(535,597)
(535,597)
-
-
(100,000)
(100,000)
-
-
(297,226)
(297,226)
(451,985)
(2,399,284)
(2,851,269)
1,255,951
(4,621,759)
(3,365,808)
-
-
-
-
-
(19,875)
(19,875)
-
-
1,232,488
(5,428,365)
(4,195,877)
(590,262)
(2,494,842)
(3,085,104)
40,949,243
3,418,689
44,367,932
34,738,063
2,161,417
36,899,480
Segment liabilities
(4,435,887)
(6,472,868)
(10,908,755)
(53,689)
(700,500)
(754,189)
Additions to non-current assets
Plant and equipment
22,779
8,497
31,276
26,941
4,519
31,460
Capitalised exploration &
evaluation costs
5.
LOSS PER SHARE
5,849,868
-
5,849,868
1,618,969
-
1,618,969
5,872,647
8,497
5,881,144
1,645,910
4,519
1,650,429
The following reflects the income and share data used in the total operations basic and dilutive earnings per share
computations:
Basic and diluted loss per share
2015
Cents
(1.26)
Nos.
2014
Cents
(1.05)
Nos.
Weighted average number of ordinary shares used in calculating
334,230,002
299,990,260
Basic & Diluted loss per share
Anti-dilutive options over ordinary shares and performance rights excluded
8,500,000
83,404,010
from the weighted average number of shares
49
Peak Resources Ltd Annual Report 2015
6.
INCOME TAX
a. The components of tax expense comprise:
Current tax
Deferred tax
Income tax expense reported in statement of comprehensive income
b. The prima facie tax benefit on loss from ordinary activities before income tax is
reconciled to the income tax as follows:
Prima facie tax benefit on loss from ordinary activities before income tax at 30%
(2014: 30%)
Add tax effect of:
– Revenue losses not recognised
– Other non-allowable items
Less tax effect of:
2015
$
2014
$
-
-
-
-
-
-
(1,258,763)
(939,692)
524,342
639,947
94,474
787,780
203,257
51,345
– Other deferred tax balances not recognised
94,474
50,507
– Australian R&D rebate
Income tax expense reported in statement of comprehensive income
c. Deferred tax recognised:
Deferred tax liabilities:
Accrued interest
Other
Deferred tax assets:
Carry forward revenue losses
Net deferred tax
d. Unrecognised deferred tax assets:
Carry forward revenue losses
Carry forward capital losses
Capital raising costs
Provisions and accruals
Other
-
-
(730)
(1,106)
1,836
-
838
-
(1,204)
(4,059)
5,263
-
4,777,845
4,342,360
73,303
405,880
115,073
3,922
73,303
572,763
95,329
-
5,376,023
5,083,755
The tax benefits of the above deferred tax assets will only be obtained if:
(a) the company derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised;
(b) the company continues to comply with the conditions for deductibility imposed by law; and
(c) no changes in income tax legislation adversely affect the company in utilising the benefits.
Tax Consolidation
For the purpose of income taxation, the Company and its 100% controlled entities have elected to form a tax consolidated
group effective from 1 July 2012.
At 30 June 2015, there was no recognised deferred tax liabilities for taxes that would be payable on the earning of certain of
the Group’s subsidiaries. The Group has determined that the undistributed profits of its subsidiaries will not be distributed in the
foreseeable future.
50
Notes to Financial Statements
7.
CASH AND CASH EQUIVALENTS
Reconciliation of cash and cash equivalent
For the purpose of the Cash Flow Statement, cash and cash equivalents
comprise the following:
Cash at bank and in hand
Short term deposits
Reconciliation of operating loss to operating cash flows
Loss for the year
Adjustments for non-cash items:
Gain on sale of non-current assets
Share based payments expenses
Impairment of capitalised exploration costs
Depreciation expenses
Foreign Exchange gain/loss
Other non-cash items
Movement in working capital items:
(Increase) / decrease in trade and other receivables
(Increase) / decrease in prepayments
Increase / (decrease) in trade and other payables
Increase in provisions
Material non-cash transactions:
2015: No material non-cash transactions occurred during the year.
2014: No material non-cash transactions occurred during the year.
8. TRADE AND OTHER RECEIVABLES
GST / VAT receivable
Other receivable
Ageing of receivables
Recoverable within 3 months
Beyond 3 months
Receivables are non-interest bearing and unsecured
2015
$
2014
$
1,443,861
1,500,000
889,470
1,000,000
2,943,861
1,889,470
(4,195,877)
(3,148,902)
-
535,597
1,915
37,757
(222,495)
2,381
-
122,671
45,423
-
(4,000)
100,000
(264,669)
(308,419)
1,230,699
6,164
1,747,543
(5,265)
60,143
13,253
(3,183,328)
(1,062,753)
2015
$
2014
$
987,846
5,973
993,819
83,988
909,831
993,819
724,198
4,951
729,149
52,023
677,126
729,149
51
Peak Resources Ltd Annual Report 2015
9. OTHER FINANCIAL ASSETS
Bank Term Deposit
2015
$
2014
$
99,500
99,500
104,000
104,000
A deposit of $99,500 (2014: $104,000) has been secured against two guarantees issued by the bank as rental deposits for office
leases. This cash balance is not available for withdrawal until the guarantee is withdrawn.
10.
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Movement in net carrying amount
Balance at the beginning of the year
Additions
Disposals
Depreciation for the year
Balance at the end of the year
11. CAPITALISED EXPLORATION AND EVALUATION COSTS
Movement in net carrying amount:
Balance at the beginning of the year
Expenditure capitalised during the year
Impairment recognised during the year (a)
Balance at the end of the year
Capitalised areas of interest:
Ngualla Rare Earths Project, Tanzania
2015
$
2014
$
247,530
(162,387)
85,143
91,624
31,276
-
(37,757)
85,143
216,253
(124,629)
91,624
121,315
31,460
(15,728)
(45,423)
91,624
2015
$
2014
$
33,936,233
32,439,935
5,849,868
(1,915)
1,618,969
(122,671)
39,784,186
33,936,233
39,784,186
33,936,233
39,784,186
33,936,233
During the financial year, the directors have reviewed the projects of the Group and have decided to continue with the
development of the Ngualla Rare Earths Project.
(a) The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on successful
development and commercial exploitation or sale of the respective exploration areas.
Deferred exploration and evaluation expenditure is assessed for impairment by the directors when facts and circumstances
suggest that the carrying amount exceeds the future economic benefits that may be recovered from the asset. This
assessment is performed when the above circumstances occur and at every reporting date.
52
Notes to Financial Statements
12.
AVAILABLE FOR SALE FINANCIAL ASSETS
Investment in listed shares – at fair value (Level 1)
13.
TRADE AND OTHER PAYABLES
Trade and other payables
Ageing of payables
Payable within 3 months
Beyond 3 months
Payables are non-interest bearing, unsecured and are generally payable in 30-90 days
14.
PROVISIONS
Employee benefits - leave entitlements
15.
SHORT TERM LOANS
Appian Loan – USD $3,000,000
Appian Loan – AUD $5,000,000
Balance at the end of the year
2015
$
2014
$
8,000
8,000
4,000
4,000
2015
$
1,896,829
1,896,829
2014
$
666,127
666,127
1,896,829
666,127
-
-
1,896,829
666,127
2015
$
2014
$
94,226
94,226
88,062
88,062
2015
$
3,917,700
5,000,000
8,917,700
2014
$
-
-
-
Appian provided interim loan funding of USD$3 million during the year (US$1m in October 2014 and US$2m in December 2014)
at an interest rate of 15% per annum. Appian provided further interim loan funding of AUD$5 million in March 2015 pending
closure of the BFS Financing with Appian and IFC at an interest rate of 8% per annum. As noted in After Balance Date Events, all
loan facilities together with applicable interest was repaid on 26 July 2015.
Forms of security customary for a transaction of this type have been agreed and have been or are to be registered including
share pledges over the shares in Peak African Minerals, PR NG Minerals Limited and asset level security given by PR NG Minerals
Limited.
53
Peak Resources Ltd Annual Report 2015
16.
RESERVES
Share based
payment reserve
Foreign currency
translation reserve
$
$
Total
$
At 30 June 2013
1,066,866
513,301
1,580,167
Exchange difference on translation of foreign operations
At 30 June 2014
Share based payment made in 2015
Exchange difference on translation of foreign operations
At 30 June 2015
-
1,066,866
535,597
-
1,602,463
(182,191)
331,110
-
942,416
1,273,526
(182,191)
1,397,976
535,937
942,416
2,875,989
Share based payment reserve – the reserve is used to recognise the value of equity benefits provided to employees and
directors as part of their remuneration, and other parties as part of their compensation for supply of goods and services.
Foreign currency translation reserve – the reserve is used to recognise exchange differences arising from translation of foreign
operations to the Australian dollar.
17. CONTRIBUTED EQUITY
Balance at 30 June 2013
Nos.
$
275,556,886
51,537,888
Placement at $0.06 per share
30-Jan-14
58,672,247
3,520,335
(146,559)
334,229,133
54,911,664
Equity issue costs
Balance at 30 June 2014
Exercise of Options at $0.10 per share
30-Jun-15
317,498
31,750
Balance at 30 June 2015
334,546,631
54,943,414
Ordinary shares have the right to receive dividends as declared, and in the event of winding up the Company, to participate in
the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid upon on shares held. Ordinary
shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Options over ordinary shares
At the end of the reporting period, there were 36,050,000 options over unissued shares as follows:
Options over Ordinary Shares
Balance at 30 June 2014
Exercised:
Date of expiry/
exercise or issue
Nos
Status
Exercise
Price
Expiry Date
116,731,498
$0.10 exercise of options
30 June 2015
(317,498)
Expired:
$0.25 Options lapsed unexercised
31 July 2014
(51,659,251)
$0.10 Listed options lapsed unexercised
30 June 2015
(58,354,749)
6,400,000
Vested
$0.55
20/2/2017 &
03/03/2018
54
Notes to Financial Statements
Options over Ordinary Shares
Issued:
Date of expiry/
exercise or issue
Nos
Status
Exercise
Price
Expiry Date
Issue of $0.10 unlisted options
5 January 2015
6,383,334
Vested
Issue of $0.15 unlisted options
5 January 2015
6,383,333
Unvested
Issue of $0.20 unlisted options
5 January 2015
6,383,333
Unvested
Issue of vested performance rights
5 January 2015
2,500,000
Vested
Issue of unvested performance rights
5 January 2015
8,000,000
Unvested
$0.10
$0.15
$0.20
$0.00
$0.00
05/01/2017
05/01/2018
05/01/2018
05/01/2018
05/01/2018
with performance milestones
Balance at 30 June 2015
36,050,000
The issues of the options and performance rights during the year were made under the Company’s Employee Option Plan and
Performance Rights Plan. Included in these issues are issues to Directors as disclosed in the Remuneration Report, these issues
were made subsequent to the receipt of shareholder approval at a General Meeting held on 1 July 2014.
317,498 shares were issued as a result of the exercise of options during the financial year ended 30 June 2015. During the
financial year, 110,014,000 listed options lapsed in accordance with their terms of options.
Capital Management Policy
The group’s policy is to effectively manage its capital structure so that it would continue to operate as a going concern. The
group manages its contributed equity and reserves as part of its capital. The group is not subject to any externally imposed
capital requirements.
As is similar with many other exploration companies, the operational requirements of the group are funded through equity and
debt raised in various tranches. The overall capital management policy of the group remains unchanged and is consistent with
prior years.
18.
SHARE BASED PAYMENTS
Employee share option plan
The group has an Employee Option Plan (EOP) for the granting of options to eligible participants which was approved by
Shareholders at a General Meeting of the Company on 1 July 2014. During the financial year ended 30 June 2015 a total of
19,150,000 options were issued under the EOP to directors, executives, employees and contractors.
Performance rights granted during the year ended 30 June 2015:
Number
Exercise Price
Value per option
Granted during the year:
5-Jan-2015 - issue of $0.10 vested options expiring 5-Jan-2017
6,383,334
5-Jan-2015 - issue of $0.15 unvested options expiring 5-Jan-2018
6,383,333
5-Jan-2015 - issue of $0.20 unvested options expiring 5-Jan-2018 6,383,333
Exercised during the year
Expired during the year
Outstanding at 30 June 2015
Exercisable at 30 June 2015
-
-
19,150,000
6,383,334
$0.024
$0.024
$0.019
$0.10
$0.15
$0.20
-
-
$0.15
$0.10
The unvested $0.15 and $0.20 options vest after 1 years continuous service on 5 January 2016 and 2 years continuous service
on 5 January 2017 respectively.
No options were granted during the year ended 30 June 2014.
The volume weighted exercise price of options issued during the year was $0.15.
The weighted average remaining contractual life for share options outstanding at 30 June 2015 was 2.19 years.
The weighted average fair value of options issued during the year was $0.022 per option.
55
Peak Resources Ltd Annual Report 2015
Performance Rights Plan
The group has a Performance Rights Plan (PRP) for the granting of performance rights to eligible participants which was
approved by Shareholders at a General Meeting of the Company on 1 July 2014. During the financial year ended 30 June 2015 a
total of 10,500,000 performance rights were issued to directors under the PRP.
Performance rights granted during the year ended 30 June 2015:
Number
Exercise Price
Value per
performance
right
Granted during the year:
5 January 2015 - issue of vested rights expiring 5 January 2018
2,500,000
5 January 2015 - issue of unvested rights expiring 5 January 2018
8,000,000
$0.00
$0.00
$0.072
$0.072
Exercised during the year
Expired during the year
Outstanding at 30 June 2015
Exercisable at 30 June 2015
-
-
-
-
10,500,000
2,500,000
$0.00
$0.00
The unvested performance rights vest on achievement of performance milestones:
(i)
the Company (or any of its subsidiaries) receiving an offer of unconditional finance for the construction of a rare earth
processing plant for its Ngualla Rare Earth Project and approval of the Board of the Company being received to proceed
with construction; or
ii)
the Company (or any of its subsidiaries) receiving an offer of unconditional finance for an amount in excess of
AUD $50 million and approval by the Board of such financing.
No Performance Rights were granted in the year ended 30 June 2014.
The volume weighted exercise price of rights issued during the year was $0.00
The weighted average remaining contractual life for rights options outstanding at 30 June 2015 was 2.52 years
The weighted average fair value of rights issued during the year was $0.072 per right
The options and performance rights have been valued using the Black-Scholes methodology with the following inputs:
Share price on date of grant
Risk-free interest rate
Dividend yield
Expected volatility
$0.072
2.50%
0%
77%
The expected volatility reflects the assumption that historical volatility over a period similar to the life of the options is indicative
of future trends, which may not necessarily be the case.
The value of options and performance rights granted are expensed over the vesting period. Included in share based
payments expense of $535,597 (2014: nil) is $260,121 relating to the options granted during the year and $275,476 relating
to performance rights.
56
Notes to Financial Statements
19.
CONTINGENCIES AND COMMITMENTS
Lease commitments
The company has committed to a non-cancellable office lease of $97,200 per annum to 31 January 2016.
Up to 1 year
Tenement Commitments
2015
$
56,700
56,700
2014
$
80,467
80,467
The Group has prospecting licences located in Tanzania which have a requirement for a certain level of expenditure each and
every year in addition to annual rental payments for the tenements. Additional detail on the tenements is available in Additional
Information in the Annual Report.
At 30 June 2015 minimum annual expenditure commitments in respect of exploration assets amounted to $118,967 (2014:
$96,511). These mineral commitments are subject to provisions of legislation governing the granting of mineral exploration
licences. Commitments may be varied in accordance with the provisions of governing regulations or obligations may be
farmed out under agreements with third parties.
Capital Commitments
At 30 June 2015, the Group has no capital commitments. (2014: Nil).
Contingencies
At 30 June 2015, the Group had no contingencies (2014: Nil).
20. kEY MANAGEMENT PERSONNEL DISCLOSURE
Salary and fees – short term benefits
Superannuation
Share based payments
2015
$
2014
$
951,530
863,592
63,838
66,469
472,726
1,488,094
-
930,061
Loans to kMP’s
No loans were made to KMP’s during the financial year (2014: Nil)
Other transaction and balances with kMP’s
During the year Steinepreis Paganin Lawyers and Consultants a legal practice associated with Mr Jonathan Murray received
$365,711 (2014: $98,075.29) as fees for the provision of legal advice. Balance outstanding at 30 June 2015 and included in trade
creditors $4,276 (30 June 2014: $27,658).
These costs have not been included in directors’ remuneration as these fees were not paid to individual directors in relation to
the management of the affairs of the Company. All transactions were entered into on normal commercial terms.
57
Peak Resources Ltd Annual Report 2015
21. GROUP STRUCTURE
Parent and subsidiaries
The parent and the ultimate parent entity of the Group is Peak Resources Limited, a company listed on the Australian Securities
Exchange.
The components of the Group are:
Accounting Parent
Peak Resources Limited
Controlled entities
PRL Pty Ltd
Peak Hill Gold Mines Pty Ltd
Redpalm Pty Ltd
Pan African Exploration Limited
PR Ng Minerals Limited (Formerly Zari Exploration Limited)
Peak Resources Tanzania Limited
Peak African Minerals Limited
Incorporation
2015
2014
Extent of control
Australia
100%
100%
Australia
Australia
Australia
Australia
Tanzania
Tanzania
Mauritius
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
There are no restrictions on the ability of the Group to transfer cash or other assets, guarantees or dividends between the parent
and subsidiaries.
22. FINANCIAL INSTRUMENTS
The financial instruments of the group comprise of (i) cash and cash equivalents; (ii) trade and other receivables; (iii) trade and
other payables; (iv) AFS investments; (v) short term loans and (vi) other financial assets, including bank deposits.
The Group’s principal financial instruments are cash and short term deposits. The main purpose of these financial instruments is
to finance the Group’s operations. It is, and has been throughout the period under review, the Group’s policy that no trading in
financial instruments shall be undertaken.
The financial instruments expose the group to certain risks. The nature and extent of such risks, and the management’s risk
management strategy are noted below.
Fair value of financial instruments
Cash and cash equivalents
Trade and other receivables
Other financial assets
AFS Investment
Trade and other payables
Short term loans
2015
$
2014
$
2,943,861
1,889,470
993,819
99,500
8,000
729,149
104,000
4,000
(1,896,829)
(666,127)
(8,917,700)
-
The carrying amount of financial instruments closely approximate their fair value on account of short maturity cycle.
Credit Risk
The group’s credit risks arise from potential default of trade and other receivables, cash and cash equivalents and other financial
assets. The maximum credit exposure is limited to the carrying amount of trade and other receivables $993,819 (2014: $729,149)
at reporting dates.
58
Notes to Financial Statements
As at 30 June 2015, the receivable balances consist primarily of GST/VAT credits. Management does not consider the GST/VAT
receivable to be at risk of default as these are receivable from the Government agencies. Management has received assurances
from its tax advisors that the amounts will be received in due course.
Credit risk from balances with banks and financial instruments is mitigated by holding balances with banks with a high credit
rating. The maximum exposure for cash and cash equivalents is shown below.
There were no significant concentrations of credit risks.
Liquidity risk
The group’s liquidity risks arise from potential inability of the group to meet its financial obligations as and when they fall due,
generally due to shortage of cleared funds. The group is exposed to liquidity risk on account of trade and other payables. The
group manages its liquidity risk through continuously monitoring the cleared funds position; and by utilising short term cash
budgets.
The contractual maturity analysis of the group’s financial instruments are noted below:
2015
2014
Up to 3 months
> 3 months
$
$
Total
$
Up to 3 months
> 3 months
Total
$
$
$
Financial liabilities
Trade and other payables
(1,896,829)
Short term loans
-
Total financial liabilities
(1,896,829)
Financial assets
Cash and cash equivalents
2,943,861
-
-
-
-
(1,896,829)
(666,127)
-
-
(1,896,829)
(666,127)
2,943,861
1,889,470
-
-
-
-
(666,127)
-
(666,127)
1,889,470
Other financial assets
Investments
-
-
99,500
99,500
8,000
8,000
-
-
104,000
104,000
4,000
-
Trade and other receivables
83,988
909,831
993,819
52,023
677,126
729,149
Total financial assets
3,027,849
1,017,331
4,045,180
2,045,493
785,126
2,830,619
Interest rate risk
Interest rate risk is the risk that fair values and cash flows of the Group’s financial instruments will be affected by changes in the
market interest rates.
The Group’s cash and cash equivalents are impacted by interest rate risks. Other receivables and payables have short maturities
and are non-interest bearing. Management believes that the risk of interest rate movement would not have a material impact of
the Group’s operations.
Management does not closely monitor the interest rates offered on cash and cash equivalents as the Group’s primary objective
is exploration of resources rather than earning interest income. The cash balances are invested at the prevailing short term
market interest rates with credit worthy financial institutions.
The sensitivity of the interest bearing financial instruments to a 1% change in market interest rate are noted below:
Cash and cash equivalents
Impact on profit and equity: +1% movement
Impact on profit and equity: -1% movement
2015
$
2014
$
2,943,861
1,889,470
29,439
(29,439)
18,895
(18,895)
59
Peak Resources Ltd Annual Report 2015
Foreign currency risk
The Group’s exposure to foreign currency price risk is minimal at this stage of the operations. The Group will transfer cash and
cash equivalents into foreign currency to meet short term expenditure obligations.
The Group’s expenditure obligations in Tanzania are primarily in US dollars as a result the Group is exposed to fluctuations in the
US dollar to Australian currency. These exposures are not subject to a hedging programme. The Board and management from
time to time having regard to likely forward commitments review this policy.
Commodity price risk
The Group’s exposure to commodity price risk is minimal at this stage of the operation.
23. SUBSEQUENT EVENTS
There were no subsequent events to 30 June 2015 that have a material impact on the financial statements at present other than
as follows:
On the 26 July 2015 the Company announced the closing of Stage 1 of the Bankable Feasibility (BFS) financing with Appian and
the IFC. The Stage 1 closure involved the following:
1.
Issue of 40,107,495 and 10,026,874 fully paid ordinary shares for A$0.09 per share to Appian and IFC respectively for a total
of A$4,512,094.
2.
Appian have the right to nominate two directors to the Peak Board (Mr Mills and Mr Jetter appointed 1 April 2015) and IFC
have the right to nominate one director.
3.
A subscription of US$4,385,219 into Peak’s 100% owned subsidiary Peak African Minerals giving Appian and IFC a 10% and
2.5% interest respectively. Peak retains an 87.5% interest.
4.
A subscription of A$2,599,004 for a convertible loan note, convertible into either 33,370,698 fully paid ordinary shares in
Peak at A$0.103 per share or an additional combined interest of 4.99% in Peak African Minerals.
5.
Appian have been granted rights to an equal number of directors as Peak on the Peak African Minerals board, including the
right to nominate the chairman with a casting vote.
6.
The granting of a 2% Gross Sales Royalty over the production from the Ngualla Rare Earth Project for a payment of
US$5,191,200.
7.
Repayment in full of interim loan funding facilities provided by Appian of US$3,000,000 and A$5,000,000 together with all
applicable interest.
60
Notes to Financial Statements 24. PARENT ENTITY DISCLOSURE
The following details information related to the parent entity, Peak Resources Limited, at 30 June 2015. The information
presented here has been prepared using consistent accounting policies as presented in Note 2.
Financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Share based payment reserve
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
2015
$
2014
$
3,310,634
2,089,862
44,132,461
37,769,705
47,443,095
39,859,567
6,385,665
653,510
-
-
6,385,665
653,510
41,057,430
39,206,057
55,259,165
55,227,417
1,665,948
1,130,351
(15,867,683)
(17,151,711)
41,057,430
39,206,057
(2,087,678)
(2,563,816)
-
-
(2,087,678)
(2,563,816)
Peak Resources Limited has provided a guarantee for the US$3 million loan advanced to PR NG Minerals Limited (refer Note 15).
Peak Resources Limited had no commitments to purchase property, plant and equipment or contingent liabilities at year end.
61
Peak Resources Ltd Annual Report 2015
Directors’ Declaration
In accordance with a resolution of the directors of Peak Resources Limited, I state that:
In the opinion of the Directors:
(a) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable;
(b) the attached financial statements are in compliance with International Financial Reporting Standards, as stated in note
2 to the financial statements;
(c) the attached financial statements and notes thereto for the financial year ended 30 June 2015 are in accordance with
the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the
financial position as at 30 June 2015 and performance of the consolidated entity for the year ended on that date;
(d) The Directors have been given the declarations required by section 295A of the Corporations Act 2001
Signed in accordance with a resolution of the Directors made pursuant to s295(5) of the Corporations Act 2001.
On behalf of the Directors,
Jonathan Murray Non-executive Chairman
Perth, 30 September 2015
Tenement Schedule
As at 28 September 2015
Project
Tenement
%
Status
Arrangement/Comment
Tanzanian Projects
Ngualla
Ngualla
PL 6079/2009
87.5*
Granted
Held by Tanzanian subsidiary PR NG Minerals Ltd
PL 9157/2013
87.5*
Granted
Held by Tanzanian subsidiary PR NG Minerals Ltd
* On 26th July 2015, the Company announced the closing of Stage 1 of the financing transaction with Appian and IFC. As a
result, Peak now holds a 87.5% beneficial interest in the above two licences with Appian and IFC holding the remaining 12.5%
interest at 80:20 split through their equity interest in Peak African Minerals.
62
Additional Shareholder Information
Quoted security distribution
The distribution of members and their holdings of quoted equity securities in the company as at 28 September 2015 were as
follows:
Number Held as at 28 September 2015
1-1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
Total
Class of Equity Securities
Fully Paid Ordinary Shares
152
366
372
1,212
427
2,529
There were 656 holders with less than a marketable parcel of fully paid shares.
Substantial Security holders
Substantial shareholders listed in the Company’s register as at 28 September 2015 were:
Holder
Number of shares
Percentage of issued capital
APPIAN PINNACLE HOLDCO LIMITED
40,107,495
10.36%
Unquoted Securities
Class of Equity Security
$0.55 options expiring 20 February 2017
$0.55 options expiring 3 March 2018
$0.10 options expiring 5 January 2017
$0.15 options expiring 5 January 2018
$0.20 options expiring 5 January 2018
Number
6,250,000
150,000
6,383,334
6,383,333
6,383,333
Unvested performance rights expiring 5 January 2018
8,000,000
Number of Security Holders
1
1
13
13
13
3
63
Peak Resources Ltd Annual Report 2015 Names of persons holding greater than 20% of a class of unquoted securities:
Class of Equity Security
Number
Holder
$0.55 options expiring 20 February 2017
$0.55 options expiring 3 March 2018
$0.10 options expiring 5 January 2018
$0.10 options expiring 5 January 2018
$0.15 options expiring 5 January 2018
$0.15 options expiring 5 January 2018
$0.20 options expiring 5 January 2018
$0.20 options expiring 5 January 2018
Unvested performance rights expiring 5 January 2018
Unvested performance rights expiring 5 January 2018
6,250,000
150,000
2,000,000
1,333,334
2,000,000
1,333,333
2,000,000
1,333,333
5,000,000
2,500,000
Citicorp Nominees Pty Ltd
Mzhci LLC
Darren Townsend
David Hammond
Darren Townsend
David Hammond
Darren Townsend
David Hammond
Darren Townsend
David Hammond
Voting Rights
Ordinary Shares
In accordance with the Company’s Constitution, on a show of hands every member present in person or by proxy or attorney
or duly authorised representative has one vote. On a poll every member present in person or by proxy or attorney or duly
authorised representative has one vote for every fully paid ordinary share held.
Restricted Securities
As at 30 June 2015, there were no restricted securities.
Twenty largest security holders
The names of the twenty largest ordinary fully paid shareholders as at 28 September 2015 are as follows:
Name
JP MORGAN NOMINEES AUSTRALIA LIMITED
UBS NOMINEES PTY LTD
WISEVEST PTY LTD
INTERNATIONAL FINANCE CORPORATION
CRX INVESTMENTS PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
HOTLAKE PTY LTD
ASHABIA PTY LTD
YARANDI INVESTMENTS PTY LTD
PASAGEAN PTY LIMITED
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BUELL PTY LTD
SCOTTISH CALEDONIAN PTY LTD
RASK PTY LTD
MICHAEL BUSHELL
RASK PTY LTD
WAPIMALA PTY LIMITED
FORTH-CLYDE INVESTMENTS PTY LTD
TOTAL
Number Held of Ordinary
Fully Paid Shares
% Held of Issued Ordinary
Capital
59,019,803
12,492,332
10,380,000
10,026,874
10,000,000
8,146,995
7,903,812
7,635,000
7,290,000
5,530,114
5,250,000
4,675,000
4,583,714
3,929,397
3,929,393
3,783,332
3,288,889
3,144,664
3,000,000
3,000,000
15.24
3.23
2.68
2.59
2.58
2.10
2.04
1.97
1.88
1.43
1.36
1.21
1.18
1.01
1.01
0.98
0.85
0.81
0.77
0.77
179,559,319
46.38%
Note: Information in the above schedule is based on data recorded in the Company’s Share Register on the date noted. A listed holder may hold
shareholdings or hold an associated shareholding in addition to those listed above. The data provided is solely attributable to a HIN or SRN particular to that
holding and as such may not necessarily represent the total of all holdings of the shareholder noted or their associates.
64
Additional Shareholder Information
Corporate Directory
DIRECTORS
Darren Townsend
Managing Director
Jonathan Murray Non-Executive Chairman
David Hammond
Technical Director
John Jetter
Non-Executive Director
Robin Mills
Non-Executive Director
COMPANY SECRETARY
Graeme Scott
REGISTERED OFFICE
Ground Floor
5 Ord Street
West Perth WA 6005
SOLICITORS
Steinepreis Paganin (Australia)
The Read Building
Level 4, 16 Milligan Street
Perth WA 6000
Clyde & Co/Ako Law (Tanzania)
11th Floor, Jubilee Towers
Ohio Street
Dar es Salaam
Tanzania
AUDITORS
Ernst and Young
11 Mounts Bay Road
Perth WA 6000
SHARE REGISTRY
Link Market Services Limited
Level 12,
680 George Street
Sydney NSW 2000
CONTACT DETAILS
Website:
Email:
Telephone:
Facsimile:
www.peakresources.com.au
info@peakresources.com.au
(08) 9200 5360
(08) 9226 3831
STOCk EXCHANGE LISTING
Australian Securities Exchange Limited
Home Exchange: Perth, Western Australia
Code: PEK
Corporate Governance Statement
The Company has adopted the recommendations of the ASX Corporate Governance Council’s Principles and
Recommendations (Third Edition) in regard to the Corporate Governance Disclosures and provides disclosure of the Company’s
Corporate Governance Statement on the Company’s website at:
http://www.peakresources.com.au/irm/content/corporate-governance
65
2015
ANNUAL
REPORT
Developing
the ngualla
RaRe eaRth
pRoJeCt
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