ENABLING LOW CARBON TECHNOLOGIES
Annual Report 2017
Contents
2017 Highlights
Chairman's Letter
CEO's Letter
Review Of Operations
Directors' Report
Auditor's Independence Declaration
Independent Auditor's Report
Consolidated Statement Of Comprehensive Income
Consolidated Statement Of Financial Position
Consolidated Statement Of Cash Flows
Consolidated Statement Of Changes In Equity
Notes To Financial Statements
Directors' Declaration
Corporate Governance Statement
Tenement Schedule
Additional Shareholder Information
03
04
06
08
20
32
33
38
39
40
41
42
67
67
68
68
Corporate Directory
Directors
Non-Executive Chairman:
Peter Harold
Managing Director:
Darren Townsend
Technical Director:
David Hammond
Non-Executive Directors:
Jonathan Murray
John Jetter
Chief Executive Officer:
Rocky Smith
Company Secretary/Chief Financial Officer:
Graeme Scott
Registered office
Ground Floor, 5 Ord Street
West Perth, WA 6005
Contact details
Phone: +61 8 9200 5360
Fax: +61 8 9226 3831
Email: info@peakresources.com.au
Web: www.peakresources.com.au
ACN: 112 546 700
Home stock exhange
ASX: Australian Securities Exchange, Perth
Code: PEK
Auditors
Ernst and Young
11 Mounts Bay Road
Perth, WA 6000
Share registry
Link Market Services
Level 12, 680 George Street
Sydney, NSW 2000
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
PAGE 2
ENABLING LOW CARBON TECHNOLOGIES 2017 Highlights
The sustained rise in prices for neodymium-praseodymium oxide (“NdPr”) experienced in 2017 is perfect timing for Peak’s Ngualla
Project. Prices continue to climb amid predictions of a strong increase in demand for this critical raw material due to the increasing shift
towards hybrid and electric vehicles by manufacturers.
The completion of the Bankable Feasibility Study and the progress made in project permitting are some of the highlights for 2017 that
are great strides accomplished towards the Company’s strategy to position Ngualla as one of the lowest cost rare earth operations ready
to help meet the surge in demand for NdPr.
Bankable Feasibility and
Process Optimisation Studies
The detailed study by Tier One engineers defines a technically
robust, long life and uniquely low cost project with products
strongly aligned to the permanent magnet, electric vehicle and
green energy markets.
NdPr Prices
Have increased sharply, improving by 111% since their lows in
November 2016 and reversing 6 years of decline.
Electric Vehicles to drive
demand
Over 90% of EV models in the design pipeline use NdPr electric
motors, each of which require about 1.7kg of NdPr.
Ngualla Ore Reserve Estimate
Pilot Plants completed
Rare Earth refinery selected
A revised Ore Reserve estimate confirms Ngualla as one of the
largest, highest quality and highest grade NdPr deposits in the
world.
The final of three pilot plants was successfully concluded,
completing the comprehensive verification of the process
developed for Ngualla’s unique ore.
Tees Valley in the UK is an existing industrial park close to ports
and bulk low cost reagent supplies that also offers established
utilities.
Environmental Certificate
recieved
The environmental permitting of the Ngualla Project was
successfully completed with the issue of the Environmental
Impact Assessment Certificate in March 2017.
Mining Licence lodged
The application for a Special Mining Licence for the Ngualla
Project in Tanzania was made post year end in August 2017.
New fluorspar and rare earth
discoveries
Extensive zones of high grade fluorspar were identified during
2017 and are being evaluated as a potential value add second
commodity to rare earths. Additional new zones of rare earths
have also been discovered and remain at an early stage of
evaluation.
PAGE 3
Chairman's Letter
Peter Harold, B.AppSc (Chem)
23 October 2017
Dear Shareholder
The past year has seen your Company achieve the major milestone of delivering the Bankable Feasibility Study (BFS) on the
Ngualla Rare Earth Project in Tanzanian which confirms that the project can be one of the world’s lowest cost rare earth
producers of any comparable rare earth developer.
The BFS and subsequent optimisation improvements delivered in August 2017 demonstrates the outstanding quality of
Ngualla Project with some of the key metrics being:
Project life
Annual production
Unit operating cost
26 years
2,810tpa NdPr mixed oxide
4,230tpa La oxide equivalent
1,920tpa Ce oxide equivalent
US $32.24/kg NdPr
Capital cost
Operating margin
NPV8
IRR
Payback period
US $365 million
66%
US $776 million
24%
4 years
The Ngualla Project development now looks to be well timed with the permanent
magnet rare earths, neodymium and praseodymium, having experienced sustained
price rises in China throughout 2017. The mixed neodymium praseodymium oxide
(NdPr) price was around US $41/kg when Peak announced the results of the BFS for
Ngualla in April 2017, while the BFS assumed a long-term price of US $85/kg. The
NdPr price has increased over 100% since November 2016 and in mid-October 2017
was around US $71/kg. The strong rise in the NdPr price is particularly important for
Peak given that NdPr is Ngualla’s main value driver, representing 90% of the project’s
estimated future revenue.
NdPr is used in the manufacture of super strong permanent magnets as is essential
in the preferred motors of electric vehicles (EVs). The strong price increases for
NdPr have occurred earlier than analysts predicted, driven by industry consolidation
and the enforcement of production quotas and environmental guidelines in China.
While the uptake of EV technology is gathering momentum, the forecast significant
increase in physical demand for NdPr from EVs is still some years away indicating we
could be in for a sustained period of higher prices. This is indeed excellent news for
our Ngualla Project, which is one of the few NdPr projects that could be brought into
production in time to help meet this forecast increase in demand.
While the delivery of the BFS and the rally in the NdPr price have been very positive
news for Peak there were some changes made to Tanzanian mining legislation in
July 2017 which created some uncertainty and had a negative impact on our share
price. The Company sought advice from an in-country international legal firm and
concluded that, while the new legislation will result in some significant changes
to the regulatory framework in Tanzania governing natural resources, it appeared
to be focused on precious and base metal producers with Mining Development
Agreements containing historic concessions. Importantly, Peak does not hold any
such agreements and therefore is not affected by those particular changes.
PAGE 4
ENABLING LOW CARBON TECHNOLOGIES
Chairman's Letter
(continued)
The legislative changes that appear to apply to Ngualla are a 16% minimum Free Carried Interest in the Project and
a 1% clearing fee. While these changes will impact the returns to existing shareholders in the Project, the Company
believes the impacts will be manageable.
Importantly, the Government of Tanzania has always been supportive of Peak and its development plan for Ngualla.
The local community and regional authorities are also strongly supportive. The Company will continue to monitor the
implementation of these legislative changes and will engage with the Tanzanian government during the mining licence
application process to ensure a mutually beneficial outcome can be achieved for the successful development of the
Ngualla Project.
The priority now is to progress Ngualla through the next stages of development being project permitting, product
marketing and project financing, so we can move to the construction phase and then into production to take
advantage of the expected growth in demand for NdPr. In order to fund the next phase of development we recently
raised new equity via a $2.8 million placement and a pro rata renounceable entitlement issue to raise a further
$2.74 million. The entitlement offer was well supported by existing shareholders and we thank them and the new
shareholders, who have come aboard through the placement, for their support of the Company.
There have been some changes to the executive team recently with both Darren Townsend and Dave Hammond
resigning from the Company to continue their respective careers with different resource companies. Darren and Dave
have been instrumental in progressing the Ngualla Project through to the delivery of the Bankable Feasibility Study
and on behalf of the board and shareholders I thank them for their efforts and wish them well in their new roles.
Darren will transition to a non-executive director of the Company during November which will ensure continuity and
retention of his knowledge base within the Company.
We are fortunate to have a talented and experienced executive team at Peak which has allowed us to replace Darren
and Dave with internal candidates. Rocky Smith, who was Peak’s Chief Operating Officer and has over 35 years’
experience in the minerals processing and chemical engineering sectors, has become Interim CEO. Rocky has been
with the Company since early 2016 and is an experienced resources executive who ran the Mountain Pass rare earth
operation in the USA prior to joining Peak. Lucas Stanfield, Peak’s General Manager of Development will take over
Dave’s responsibilities in Tanzania. Lucas has extensive experience in rare earths and during his time with Peak has
spent a considerable amount of time in Tanzania representing the Company.
On behalf of the Board and shareholders I acknowledge the hard work and dedication of my fellow board members,
the executive team and all the staff of Peak. The Company is moving into the development phase of Ngualla at a time
of improved rare earth prices and expected strong demand growth for our primary rare earth product which bodes
well for the future of the Company.
Yours sincerely,
Peter Harold
Non-Executive Chairman
PAGE 5
CEO's Letter
Rocky Smith, B.SC (Chem)
23 October 2017
It goes without saying we have had a few changes this year, starting with me recently stepping up into the CEO’s role. In
every business there is likely to be a transition, in our case it is taking a development project into a startup.
I want to give a big thank you to all the team members that helped get Peak and the Ngualla Project to such a favorable
spot. Peak is the unique proposition where world class rare earth experience meets with a world class deposit and a
perfect alignment to the market for its planned products.
The past year saw many significant advances in the development of the Ngualla Rare Earth Project. Most importantly the
Bankable Feasibility Study ("BFS") that was completed during the year showed a major improvement in the estimated
operating costs. Operating costs improved from US $126 million a year in the PFS to US $81 million for the BFS. Cost per
kilogram of produced NdPr was projected at US $34/kg, one of the lowest cost projections for either current or projected
rare earth facilities. Capital costs were relatively similar in the two studies, however there was significant improvement
technically in the BFS, resulting in a much more saleable product mix, resulting in a much higher degree of confidence in the
estimated costs, improved plant operability and a corresponding improvement in product quality projections.
Technical Process Optimization work that followed the BFS by six months further reduced the cost per kilogram of NdPr
produced to US $32/kg. The Company will continue to investigate opportunities for further improvement over coming
months.
Commercial demand for NdPr is just now starting to build momentum, mostly we are
seeing significant increase in capital spending for battery facilities, lithium and cobalt
production for the approaching increased Electric Vehicle (EV) demand. Automotive
Industry are spending US$ billions in capital for the manufacturing facilities for the
120 plus EV models that are projected to be introduced between now and 2020, and
by 2025 the EV production will effectively double NdPr demand and consumption
worldwide. Tesla recently made the decision to move from the induction motor to rare
earth permanent magnet motors for its Model 3 production. This now means that over
95% of drive motors in electrical cars will use NdPr magnets. Soon the world will wake
up to the fact that it takes an NdPr drive motor to move battery energy in the EV to the
ground.
Coinciding with these positive indicators, there was however some uncertainty in
Tanzania, with a change to the mining laws. The precise effect on Ngualla of some of
these changes is not completely understood yet, because not all the regulations have
been written and the new Mining Commission has not yet been appointed. Regardless
of the changes occurring we continue to maintain good relations with the Tanzanian
government. Our goal has always been to find the middle ground that allows maximum
value for our shareholders and our partners in Tanzania, because the most sustainable
business is the one that is profitable for the next 30 years and beyond and which
benefits all stakeholders.
PAGE 6
ENABLING LOW CARBON TECHNOLOGIES
CEO's Letter
(continued)
The Honourable Angellah Kairuki as the new Minister of Minerals in Tanzania stated that her top priority was to improve
relations with investors with a view to ensuring that the mining sector as a whole contributes to its full capacity to
Tanzania’s economic growth. The Minister also took the opportunity to reassure that the prevailing investment climate in
Tanzania is truly investor-friendly and that the Tanzania government remains ready to receive prospective investors with an
open mind. We already have a team in Tanzania ready to start our negotiations by making sure all groups are well briefed
about the complexity and cost, of starting and operating this rare earth business. We also expect to meet with the Minister
in the very near future to discuss our pending Special Mining License application.
As always, we wish to thank the community in and around the Ngwala village and the wider Songwe region for their
ongoing support of the Company, and the project. We would also like to thank the Government of Tanzania for their
support of the project and we look forward to working with the Government in completing our permitting process in 2018.
We also wish to thank our shareholders for their continued support as we focus on completing the acquisition of the Special
mining License, concluding our discussions on offtake and strategic investment for construction.
Rocky Smith
Chief Executive Officer
THE ASSET - THE MARKET - THE TEAM
PEAK RESOURCES - MORE THAN THE SUM OF ITS PARTS AND THE FIRST CHOICE
FOR INVESTMENT IN THE RARE EARTH SPACE.
PAGE 7
Review of Operations
Summary
The year saw the successful completion of a number of technical programs that have positioned the Company’s 75% owned
Ngualla Rare Earth Project in Tanzania as one of the leading magnet rare earth development projects.
With 90% of Ngualla’s future revenue (Figure 1) to be derived from NdPr, the project is one of very few capable of helping
to meet the predicted surge in demand for this vital raw material for the high performance permanent magnets used in the
preferred motors of electric vehicles ("EV"s).
NdPr prices increased significantly during the year, providing the impetus for the Company to progress the permitting of
the project with authorities in Tanzania after the completion of the engineering studies and the receipt of an Environmental
Certificate for the project in early 2017.
Bankable Feasibility Study and Process Optimisation Studies
Chief amongst the milestones achieved during the reporting year is the BFS, announced simultaneously with an updated
Ore Reserve estimate on 12 April 2017. The Study was completed under the auspices of Lead Engineers AMEC Foster
Wheeler with the input of real world rare earth production and marketing expertise from Peak’s in-house team. The Study
components consist of a mine and multi-stage processing plant on-site at Ngualla in Tanzania and a proposed refinery in
Tees Valley in the UK.
After year end on 28 August 2017, the company was pleased to release a Project Update to the BFS which provided a
further boost to Ngualla’s compelling project economics through the optimisation of process throughputs.
Together, the BFS and subsequent process optimisation define Ngualla as the leading technically robust and long life NdPr
development project that has the potential to become one of the lowest cost worldwide. Ngualla’s planned products are
well aligned to market demand and support the strong financial metrics summarised in Table 1 which include:
• Annual operating margin of US $174m per annum over 26 year life
Low unit costs of US $32.24/kg NdPr
•
• Post Tax and Royalties NPV10 of US $579 million
• Post Tax and Royalties IRR 24%
Final products from the project planned to be
produced annually are:
2,810 tonnes of neodymium and praseodymium oxide
(2N min 75% Nd2O3)
8,040 tonnes lanthanum carbonate
(equivalent to 4,230tpa oxide)
3,475 tonnes cerium carbonate
(equivalent to 1,920tpa oxide)
625 tonnes of mixed SEG and Heavy rare earth carbonate
(equivalent to 330tpa oxide)
Relative value contributors
2% Ce Carbonate
7% La Carbonate
1% Mid-Heavy
Carbonate
90%
NdPr Mixed Oxide
Relative value* contributors by product type and constituent REO’s.
* Relative value of contained REO equivalent product mix based on prices assumed in the BFS for individual rare earth oxide
Figure 1: Ngualla's final products are strongly aligned to the permanent magnet and electric vehicle markets
PAGE 8
ENABLING LOW CARBON TECHNOLOGIES Review of Operations
(continued)
Table 1: Post BFS Process Optimisation Assumptions and Financial Analysis
PRODUCTION ASSUMPTIONS
Life of Operation
AVERAGE ANNUAL PRODUCTION (TONNES)
Ore Mill Feed
Processed Mineral Concentrate
NdPr mixed oxide 2N
La oxide equivalent (final product: La carbonate)
Ce oxide equivalent (final prduct Ce carbonate)
SEG and Mixed Heavy oxide equivalent (final product mixed carbonate)
CAPITAL COSTS
Total Capital cost*
Average Annual Consolidated Sustaining Capital
OPERATING COSTS
Average Annual Operating Cost#
Unit operating cost> (/kg NdPr)
FINANCIAL METRICS
Consolidated Average Annual Revenue
Average Annual Operating margin (EBITDA)
Annual Average Consolidated (Post Tax) Cashflow
NPV8 - Post Tax and Royalties
NPV10 - Post Tax and Royalties
IRR - Post Tax and Royalties
Operating Margin
Payback Period (from Start of Operations)
COMMODITY PRICE ASSUMPTIONS AVERAGE LOM
NdPr Mixed Oxide 2N Min 75% Nd2O3
Lanthanum Oxide Equivalent
Cerium Oxide Equivalent
SEG Mixed Heavy Oxide Equivalent
26 Years
711,000
32,700
2,810
4,230
1,920
330
US$ 365m
US$ 5m
US$ 91m p.a
US$ 32.24
US$ 265m p.a
US$ 174m
US$ 126m p.a
US$ 776m
US$ 579m
24%
66%
4 Years
US$ 85.00/kg
US$ 4.41/kg
US$ 2.25/kg
US$ 8.00/kg
Project details above are the latest process optimisation project update to BFS. Production assumptions are post ramp-up. Total pre-production Capex
and post ramp up Opex are for Ngualla mine and Multi-stage Processing Facility and Tees Valley refinery combined. Material assumptions are as per
BFS and Ore Reserve ASX Announcements of 12 April 2017 except where indicated in the process optimisation announcement of 28 August 2017 and
summarised in the above Table 1.
PEAK RESOURCES:
NUMBER 1 AMONG ITS PEERS
PAGE 9
Review of Operations
(continued)
Ngualla’s low operating costs and favourable project economics are driven by a unique combination of qualities including
the high NdPr grade and advantageous mineralogy of the rare earth deposit itself, together with the development of an
extraction and purification process that targets the higher value rare earths whilst rejecting impurities and the majority of
lower value cerium. The location of the refinery in proximity to sources of lower cost bulk reagents and existing utilities is
also a key driver of lower Opex (Figure 2).
Ngualla Ore Body
Ngualla Mine and Process Plant
Tees Valley Refinery
Large deposit
• High grade- 4.80% REO
•
• Bastnaesite mineralogy
• Mineralisation from surface
• Very low U and Th (14 and 55 ppm)
•
•
Thick blanket morpology
Low in reagent consuming minerals
+
Soft, free dig Ore
Simple, small open mine pit
Low waste: Ore Strip ratio (1.77)
Zero offsite discharge + water recycle
•
•
•
•
• High grade (45% REO), low mass
concentrate
Proven piloted process
•
+
Selective leach process
Low strength acids- no acid roast
•
•
• Modular plastic tanks
•
Small SX separation plant
• Bulk, low-cost reagents available
•
•
Pre-existing utilities
Existing waste management facilities
Right sized project
Low production cost
Long life- 26 years
Ethically sustainable
High value, separated products
NdPr drives 90% of revenue
Aligned to permanent magnet and EV markets
Figure 2: A unique combination of project physicals drive the favourable economics of Ngualla's BFS and subsequent Project Update
Compliance Information
See ASX Announcement “BFS positions Ngualla one of world’s lowest cost RE Projects” of 12 April 2017 for the mining,
processing, economic and price assumptions, which remain unchanged except for as summarised in the Project Update
ASX announcement “Process optimisation study boosts Ngualla’s operating margin” of 28 August 2017, and for the
application of a new 1% clearing fee for product export from Tanzania as per the Finance Act, 2017. BFS price assumptions
include US $85/kg for NdPr, which is estimated to contribute 90% of Ngualla’s future product value.
The increased production rate is based on the Ngualla Ore Reserve (ASX Announcement “Ngualla Rare Earth Project –
Updated Ore Reserve” of 12 April 2017), which together with the BFS summarises the Material Assumptions underpinning
this Project Update, which continue to apply and have not materially changed except for the compressed BFS mine
schedule. A revised mine plan was not generated for the Project Update. The increased production rate is based on a
compressed BFS mine schedule, which would reduce the operational life to 26 years, from 31 years at BFS.
Peak will require new funding for its 75% share in the Ngualla Rare Earth Project in order to achieve the stated financial
outcomes, which will result in some dilution of existing shares, the quantum of which will depend on the final debt to
equity ratio of the financing package that is yet to be arranged.
PAGE 10
ENABLING LOW CARBON TECHNOLOGIES Review of Operations
(continued)
NdPr Prices Improve
The reporting year saw a significant turnaround in NdPr prices after 5 years of declines ended in November 2016 (US
$35.99/kg NdPr*), steadily climbing 37% from their lows to US $49.18/kg by year end on 30 June 2017 (Figure 3).
Figure 3: NdPr prices during the financial year. Prices recovered from 5 year lows in November 2016 and have since continued to strengthen
further.
*Asian Metal China domestic NdPr prices
Post year end, by the end of August 2017, prices continued to rise sharply to
US $75.80/kg NdPr, or an increase of 111% from the lows of November 2016.
PAGE 11
Review of Operations
(continued)
Electric Vehicles to Drive NdPr Demand
The Company’s business strategy is to position Ngualla Rare Earth Project as one of the very few that is ready for
implementation in time to meet the widely predicted surge in demand for the magnet materials NdPr from electric and
hybrid vehicles (“EVs”).
NdPr is used in the powerful magnets in the electric motor that is preferred by the majority of EV manufacturers. Over 90%
of EV models in the development pipeline use NdPr electric motors, each of which require about a kilogram of NdPr.
The BFS estimates that 90% of Ngualla’s future revenue will be from NdPr,
strongly aligning the Ngualla Project to this sector.
A Bloomberg report (The Electric-Car Boom, April 2017) indicates that all the major car manufacturers are developing EV
product lines and that there will be 120 models in development by 2020. The wave of EV releases is already in progress,
with the Automotive Industry alone investing over US $25 billion to develop dozens of EV lines over the next five years
(UBS report, Tearing down the most disruptive car category since the Model T). Even Tesla with its Model 3 has decided to
use for its first high volume model (annual sales forecast 500,000 units) a NdPr Permanent Magnet Motor technology.
The UBS report also suggests that total cost of ownership parity (and therefore widespread market acceptance of EV’s)
between EV and petrol cars will be achieved 2 to 3 years earlier than previously thought, by 2023 in Europe.
The earlier prediction is due to the predicted
reduction in battery costs which UBS say
will raise EV sales penetration into the
mainstream. UBS concludes that NdPr in
particular could face demand shocks in case of
a rapidly evolving EV market
Ngualla Ore Reserve
The Ore Reserve announced simultaneously with the BFS in April 2017 confirms Ngualla as not only one of the world’s
largest but also highest quality at an average grade of 4.80% REO and over 91% in the highest JORC Proved category (Table
2).
Table 2: Ngualla Project Ore Reserve estimate
CATEGORY
ORE TONNES (MT)
REO %
CONTAINED REO (TONNES)
Proved
Provable
Total
17.0
1.5
18.5
4.78
5.10
4.80
813,000
74,000
887,000
A multi element cut off is applied. See Table 3 for breakdown of individual REO’s. See ASX Announcement “Ngualla Rare Earth Project – Updated Ore
Reserve” of 12 April 2017 for further details.
PAGE 12
ENABLING LOW CARBON TECHNOLOGIES
Review of Operations
(continued)
Pilot Plants Completed
The final of three Pilot Plants, the leach recovery pilot plant, was successfully operated in October 2016 at ANSTO’s
dedicated piloting facility near Sydney, completing the comprehensive verification of the three stage metallurgical process
(Figure 4) developed by Peak for Ngualla’s unique ore.
The pilot plant demonstrated the selective leach recovery stage flowsheet to be robust, delivering high recoveries (>90%)
of the target rare earths neodymium and praseodymium along with low dissolution of cerium and gangue elements. The
selective leach process is a key factor in Ngualla’s low operating and capital costs and aligns the final products to the high
demand NdPr market.
Run of
mine ore
Piloted
Piloted
Piloted
Beneficiation
Leach recovery
Separation
Rare earth
Oxide and
Carbonate
Products
Figure 4: The successful demonstration of the leach recovery and purification pilot plant in October 2016 completed the piloting of the three stage
process developed by Peak for Ngualla's rare earth mineralisation.
Rare Earth Refinery Site Selected
Following an extensive global search, Peak selected the Tees Valley in the UK as the location for its rare earth refinery. Tees
Valley is an existing industrial park close to ports and bulk low cost reagent supplies that also offers established utilities
including power, steam, water, natural gas and environmentally sustainable options for effluent disposal.
UK:
Rare Earth Refinery
Tanzania:
Mine and Multi-Stage
Processing Plant
Australia:
Peak Headquarters
Environmental Certificate Recieved and SML Application Lodged
The Environmental and Social Impact Assessment (“ESIA”) process, a two year study under the auspices of Tanzanian
regulators National Environment Management Council, was successfully completed during the year. An Environmental
Certificate was granted by the Minister of State for the Ngualla mine, multistage processing plant and access road in March
2017.
Strong support for the development of the Ngualla Rare Earth Project was received at local village, District, Regional and
National levels during the stakeholder meetings held as part of the ESIA process. The grant of the Environmental Certificate,
together with the completion of the BFS, were the major requisites that paved the way for an application for a Special
Mining Licence (“SML”) after the year end in late August 2017.
PAGE 13
Review of Operations
(continued)
Tanzania Legislative Changes
Subsequent to the end of the annual reporting period, on 3 and 4 July 2017, new legislation governing the natural resources
sector was passed by the Tanzanian parliament (ASX Announcement “Tanzanian Legislative Changes” of 24 July 2017).
As well as several administrative changes, the new legislation includes a defined minimum of 16% government free carried
interest for mining projects and an additional 1% clearing fee for exported product. At this stage the Company believes that
other impacts, although significantly negative for some mining companies in Tanzania with pre-existing mining agreements,
are manageable in respect of Ngualla if rare earth prices continue to rise. Regulations to accompany these new Acts have
not yet been released and the practical application of the new laws is presently unknown.
The Government of Tanzania has always been supportive of Peak and its development plan for the Ngualla Project,
a development that would position the country as an important supplier of these strategic commodities. The
local community and Regional authorities are also strongly supportive. The Company will continue to monitor the
implementation of these legislative changes and looks forward to engaging with the Tanzanian government during the
Special Mining Licence process to ensure a mutually beneficial outcome can be achieved for the successful development of
the Ngualla Project.
High Grade Fluorspar and New Rare Earth Zone Discovered at Ngualla
In February 2017 the Company was pleased to announce the discovery of continuous and wide zones of high grade
fluorspar mineralisation from trenches within the alteration zone that surrounds the Ngualla Carbonatite. Assay results
returned up to 78m at 37% CaF2 and subsequent sampling has demonstrated a strike length of 570 metres, which remains
open along strike in both directions, in one of two areas evaluated to date. The results reinforce the multi-commodity
endowment of Ngualla and the potential for additional value adding products once a rare earth operation is established.
The trenching programs along a 3.8km long zone of brecciation within the hills forming the outer rim of the carbonatite
complex also identified a new area of rare earth mineralisation with widths of up to 53 metres grading an average of 2.37%
rare earth oxide returned.
Follow-up trenching programs are in progress.
Above: Trench works continue in the alteration zone that
surrounds the Ngualla Carbonatite
Above: PR Ng Geologist, Erasto Kafyulilo holding a
sample od fluorspar mineralisation discovered at
Ngualla
PAGE 14
ENABLING LOW CARBON TECHNOLOGIES
Review of Operations
(continued)
Social and Environmental Responsibility
Peak places great importance on social and environmental responsibility and is committed to assisting the communities in
which it operates whilst maintaining best practise environmental and health and safety standards. The Company maintains
standards in these areas in line with investor partner IFC’s guidelines and sees a market advantage in being the ethically
sustainable supplier of choice to the global rare earth market.
Above: Women's tug of war event won by the PR Ng Minerals team during Nane Nane Day community celebrations
The Company values the excellent relationship maintained with the local village, District and Regional authorities and
individuals and recognises that the development of the Ngualla Project must provide benefits for the Company and
Community
The Ngwala community identified the priorities for new
social programs during the year as teacher’s houses
at Magareza and Ngwala villages, assistance with the
community water supply and clinic infrastructure and
construction of new school classrooms at Itiziro village.
The former projects were handed over in November
2016 and work on the classrooms is in progress.
Above: Peak Technical Director, Dave Hammond and staff meet with the
Hon. Chiku Galawa Regional Commissioner of Songwe Region
Above: A completed teachers' house in Itziro built by Peak
Above: Members of the PR Ng Minerals project team standing in front
of a teachers' house in Ngwala village built by Peak during 2016
PAGE 15
Review of Operations
(continued)
Appendices
Table 3: Relative components of individual rare earth oxides (including yttrium) as a percentage of total REO for the Ngualla Project Ore Reserve estimate
(refer to Table 2)
RARE EARTH OXIDES
REO GRADE (%)
% OF TOTAL REO
Proved
Probable
All
Proved
Probable
All
Lanthanum
Cerium
Praseodymium
Neodymium
Samarium
Europium
Gadolinium
Terbium
Dysprosium
Holmium
Erbium
Thulium
Ytterbium
Lutetium
Yttrium
Total REO
1.318
2.305
0.228
0.788
0.077
0.014
0.029
0.002
0.004
0.000
0.001
0.000
0.001
0.000
0.010
4.78
1.418
2.456
0.243
0.838
0.082
0.015
0.031
0.002
0.004
0.000
0.002
0.000
0.001
0.000
0.010
5.10
1.326
2.317
0.229
0.792
0.077
0.014
0.030
0.002
0.004
0.000
0.002
0.000
0.001
0.000
0.010
4.80
27.59
48.25
4.77
16.49
1.61
0.30
0.62
0.05
0.07
0.01
0.03
0.00
0.01
0.00
0.20
100.00
27.80
48.15
4.77
16.43
1.61
0.28
0.60
0.05
0.07
0.01
0.03
0.00
0.01
0.00
0.19
100.00
27.61
48.24
4.77
16.49
1.61
0.30
0.62
0.05
0.07
0.01
0.03
0.00
0.01
0.00
0.20
100.00
Values may not balance due to rounding to 0.01%
Ore Reserves
The information in the announcement that relates to Ore Reserve estimates and estimated mine operating costs is 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 mineralisation 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.
Mineral Resource estimates
The information in this statement that relates to the Mineral Resource estimates is based on work conducted by Rod Brown of SRK Consulting (Australasia) Pty Ltd, and the
work conducted by Peak Resources, which SRK has reviewed. Rod Brown takes responsibility for the Mineral Resource estimate. Rod Brown is a Member of The Australian
Institute of Mining and Metallurgy and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the activities
undertaken, to qualify as Competent Person in terms of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code,
2012 edition).Rod Brown consents to the inclusion of such information in this report in the form and context in which it appears.
Exploration and Geology
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.
Metallurgy
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 was the General Manager Metallurgy of the Company and has 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.
Project Engineering and Cost Estimation
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 Australasian Institute of Mining and Metallurgy. Lucas Stanfield is the General Manager – Development 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. Lucas consents to the inclusion in
the report of the matters based on his information in the form and context in which it appears.
PAGE 16
ENABLING LOW CARBON TECHNOLOGIES
Review of Operations
(continued)
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 annual review
date is 30 June.
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
Ore Reserve estimates
The tables below compare the Ore Reserve and Mineral Resource statements for 2016 and 2017. A revised Ore Reserve
estimate was completed during the reporting period by Orelogy Consulting Pty Ltd and released simultaneously with the
Bankable Feasibility Study on 12 April 2017.
Table 4: Classification of Ore Reserve estimates for the Weathered Bastnaesite Zone at Ngualla.
ORE RESERVE AS AT 30 JUNE 2017
ORE RESERVE AS AT 30 JUNE 2016
JORC CATEGORY
Ore Tonnes
(millions)
REO %
Contained REO
Tonnes
Ore Tonnes
(millions)
REO %
Contained REO Tonnes
Proved
Probable
Total
17.0
1.5
18.5
4.78
5.10
4.80
813,000
74,000
887,000
18.0
2.7
20.7
4.53
4.62
4.54
817,000
124,000
941,000
See Table 7 for the breakdown of individual REO’s. Reported according to the JORC 2012 Code and Guidelines.
The Ngualla Ore Reserve 2017 is detailed in the ASX announcement titled ‘Ngualla Rare Earth Project – Updated Ore
Reserve’ of 12 April 2017, which also includes a detailed summary of the supporting project assumptions and data. The
Ore Reserve and the accompanying Ngualla Project Bankable Feasibility Study, detailed in the ASX announcement titled
‘BFS positions Ngualla as one of the world’s lowest cost rare earth projects’ of 12 April 2017 were based on the 2016 +1%
REO Ngualla Weathered Bastnaesite Zone Mineral Resource, which is detailed in the ASX announcement titled ‘Higher
grade Resource for Ngualla nearly 1M tonnes REO’ of 22 February 2016.
The Ngualla Ore Reserve 2016 was detailed in the ASX announcement titled ‘Ngualla Rare Earth Project Maiden Ore
Reserve’ of 19 March 2014, released simultaneously with the Preliminary Feasibility Study.
PAGE 17
Review of Operations
(continued)
Mineral Resource estimates
The Mineral Resource as at 30 June 2017 is detailed in the ASX announcement titled ‘Mineral Resource estimate re-stated
to include barite’ of 2 March 2017 to include a further commodity – barite. The REO component of the Mineral Resource
remains unchanged from the 22 February 2016 estimate. The Ngualla Mineral Resource as at 30 June 2016 is detailed in
the ASX announcement titled ‘Higher grade Ngualla Mineral Resource contains nearly 1 million tonnes rare earth oxide’ of
22 February 2016. Both estimates were reported according to the JORC 2012 Code and Guidelines and were completed by
Rod Brown of SRK Consulting (Australasia) Pty Ltd.
Table 5: Classification of All Mineral Resources for the Ngualla Rare Earth Project at a 1.0% REO cut-off grade.
MINERAL RESOURCE AS AT 30 JUNE 2017
MINERAL RESOURCE AS AT 30
JUNE 2016
Lower Cut-
off Grade
JORC Category
Ore Tonnes
(millions)
REO %
Contained
REO Tonnes
BaSO4
%
Ore Tonnes
(millions)
REO %
Contained REO
Tonnes
Ngualla All
Mineral
Resources
1.0% REO
Measured
Indicated
Inferred
86.1
112.6
15.7
2.61
1.81
2.15
2,250,000
2,040,000
340,000
20.2
13.8
17.6
86.1
112.6
15.7
2.61
1.81
2.15
2,250,000
2,040,000
340,000
4,620,000
* REO (%) includes all the lanthanide elements plus yttrium oxide. See Tables 8 for breakdown of individual REO’s. Figures above may not sum due to
rounding. The number of significant figures does not impy an added level of precision. Barite (BaSO4) was not reported in the 2016 Mineral Resource
estimates.
4,620,000
214.4
214.4
Total
2.15
2.15
16.6
The Weathered Bastnaesite Zone Mineral Resource estimate summarised below is a subset and contained within the All
Mineral Resources reported in Table 5 above and is detailed in the same ASX announcements as stated above.
Table 6: Classification of Mineral Resources for the Weathered Bastnaesite Zone mineralisation at a 1.0% and 3.0% REO cut-off grades.
MINERAL RESOURCE AS AT 30 JUNE
2017
MINERAL RESOURCE AS AT 30
JUNE 2016
Lower Cut-off
Grade
JORC Category
Ore
Tonnes
(millions)
REO %
Ngualla
Weathered
Bastnaesite
Zone
1.0% REO
3.0% REO
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
18.9
1.9
0.5
21.3
17.9
1.7
0.4
19.9
4.75
4.85
4.43
4.75
4.88
5.14
4.84
4.90
Contained
REO
Tonnes
900,000
90,000
20,000
1,010,000
870,000
90,000
20,000
980,000
BaSO4
%
Ore
Tonnes
(millions)
REO %
Contained REO
Tonnes
37.8
38.3
31.5
37.7
38.6
39.3
35.4
38.6
18.9
1.9
0.5
21.3
17.9
1.7
0.4
19.9
4.75
4.85
4.43
4.75
4.88
5.14
4.84
4.90
900,000
90,000
20,000
1,010,000
870,000
90,000
20,000
980,000
* REO (%) includes all the lanthanide elements plus yttrium oxide. See Table 8 for breakdown of individual REO’s. The Weathered Bastnaesite Zone
Mineral Resource is contained within an is a subset of the Total All Ngualla Project Mineral Resource at a 1% REO cut-off grade in Table 5 above. Fig-
ures above may not sum due to rounding. The number of significant figures does not impy an added level of precision. Barite (BaSO4) was not reported
in the 2016 Mineral Resource estimates.
PAGE 18
ENABLING LOW CARBON TECHNOLOGIES Review of Operations
(continued)
Table 7: Relative components of individual rare earth oxides (including yttrium) as a percentage of total REO for the Ngualla Project Ore Reserves
summarised in Table 4.
OXIDE
ORE RESERVE AS AT 30 JUNE 2017 ORE RESERVE AS AT 30 JUNE 2016
REO Grade %
% of Total REO
REO Grade %
% of Total REO
Lanthanum
Cerium
Praseodymium
Neodymium
Samarium
Europium
Gadolinium
Terbium
Dysprosium
Holmium
Erbium
Thulium
Ytterbium
Lutetium
Yttrium
Total
La2O3
CeO2
Pr6O11
Nd2O3
Sm2O3
Eu2O3
Gd2O3
Tb4O7
Dy2O3
Ho2O3
Er2O3
Tm2O3
Yb2O3
Lu2O3
Y2O3
1.326
2.317
0.229
0.792
0.077
0.014
0.030
0.002
0.004
0.000
0.002
0.000
0.001
0.000
0.010
4.80
27.61
48.24
4.77
16.49
1.61
0.30
0.62
0.05
0.07
0.01
0.03
0.00
0.01
0.00
0.20
100
1.254
2.188
0.215
0.752
0.073
0.013
0.028
0.002
0.003
0.000
0.001
0.000
0.001
0.000
0.009
4.54
27.62
48.19
4.73
16.56
1.60
0.30
0.62
0.05
0.08
0.01
0.03
0.00
0.01
0.00
0.20
100
* Figures may not sum due to rounding
Table 8: Relative components of individual rare earth element oxides (including yttrium) as a percentage of total REO for the 2017 and 2016Total Ngualla
+1% REO, Weathered Bastnaesite Zone +1% REO and Weathered Bastnaesite Zone +3% REO and Mineral Resources summarised in Tables 5 and 6.
NGUALLA 2017 TOTAL
MINERAL RESOURCE
NGUALLA 2017
WEATHERED BASTNAESITE
ZONE RESOURCE
NGUALLA 2017
WEATHERED BASTNAESITE
ZONE RESOURCE
1% REO
1% REO
3% REO
OXIDE
REO grade (%)
Lanthanum
Cerium
Praseodymium
Neodymium
Samarium
Europium
Gadolinium
Terbium
Dysprosium
Holmium
Erbium
Thulium
Ytterbium
Lutetium
Yttrium
Total
La2O3
CeO2
Pr6O11
Nd2O3
Sm2O3
Eu2O3
Gd2O3
Tb4O7
Dy2O3
Ho2O3
Er2O3
Tm2O3
Yb2O3
Lu2O3
Y2O3
0.587
1.039
0.104
0.348
0.036
0.007
0.016
0.001
0.003
0.000
0.001
0.000
0.001
0.000
0.010
2.15
% of total
REO
27.25
48.23
4.81
16.2
1.66
0.34
0.75
0.07
0.16
0.02
0.06
0.00
0.04
0.00
0.47
100
REO grade (%)
% of total REO
REO grade (%)
% of total REO
1.310
2.293
0.227
0.784
0.076
0.014
0.029
0.002
0.004
0.000
0.002
0.000
0.001
0.000
0.010
4.75
27.58
48.27
4.77
16.5
1.60
0.29
0.61
0.05
0.07
0.01
0.03
0.00
0.01
0.00
0.20
100
1.353
2.364
0.234
0.806
0.078
0.014
0.030
0.002
0.004
0.000
0.002
0.000
0.001
0.000
0.010
4.90
27.63
48.27
4.77
16.5
1.60
0.29
0.61
0.05
0.08
0.01
0.03
0.00
0.01
0.00
0.20
100
* Figures may not sum due to rounding. Rare earth distributions and grades remain constant between 2016 and 2017 Mineral Resource estimates since
the 2017 estimate added barite as an additional commodity and rare earths estimates were unchanged.
PAGE 19
Directors' Report
DIRECTORS’ REPORT
The directors of Peak Resources Limited submit herewith the financial statements of the Company for the financial year ended 30 June
2017. 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 Peter Harold
Mr Darren Townsend
Mr Dave Hammond
Mr Jonathan Murray
Mr John Jetter
Mr Robin Mills
Non-Executive Chairman
Managing Director
Technical Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (resigned 3 October 2016)
INFORMATION ON DIRECTORS
Low average total mining rate of 1.9Mt per year
Mr Peter Harold– Non-Executive Chairman (Appointed Chairman 1 December 2015)
B.AppSc (Chem), AFAICD
Mr. Harold trained as an industrial chemist and has almost 30 years' operational and corporate experience in the minerals industry
specialising in financing, marketing, operating and business development with a focus on building cash flow generative businesses.
Peter was a founding director of Panoramic Resources Limited (formerly Sally Malay Mining) and has been responsible for managing
the company through the development phase of the $65 million Savannah (formerly the Sally Malay) Nickel Project in the Kimberley
region of WA and the acquisition of five other resource projects.
Peter is currently the Managing Director of Panoramic Resources. He is also the Chairman of Youth Focus, an independent not for profit
charity that focusses on the prevention of youth suicide and depression. He has held previous senior roles with Spectrum Rare Earths,
Alloy Resources, Shell Australia, Australian Consolidated Minerals, MPI Mines Limited and Normandy Mining Limited.). Peter has also
served as a director of the following other listed companies:
Panoramic Resources Limited – from 16 March 2001
•
Pacifico MInerals Limited - from 19 August 2013
•
Spectrum Rare Earths Limited - from 1 March 2007 to June 2014
•
• Alloy Resources Limited - from 15 September 2005 to June 2014
• Horizon Gold Limited – from 10 August 2016
Mr Darren Townsend – Managing Director (Appointed 3 February 2014)
B.Eng (Mining-Hons) EMBA Managing Director
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 Tailson) 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 operations. 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 – Technical Director (Appointed 25 October 2010)
MSc in Mineral Exploration, DIC, BSc (Hons), MAusIMM
David has over 25 years' technical and management experience in Africa, Australia and South America. He has been Technical Director
with Peak and the Ngualla Project for almost seven years, since the second drill hole into the main Bastnaesite Zone. He was previously
PAGE 20
ENABLING LOW CARBON TECHNOLOGIES
Directors' Report
(continued)
the Exploration Manager with De Grey Mining Limited working on projects in the Pilbara and new project acquisitions globally. Previous
positions include 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.
Mr Jonathan Murray – Non-Executive Director (Appointed 22 February 2011, Chairman from 1 April 2015 to 30 November 2015)
Bachelor Laws and Commerce
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 Limited Ltd – from 22 January 2010
• Vietnam Industrial Investments Limited - from 19 January 2016
Mr John Jetter – Non-Executive Director (Appointed 1 April 2015)
BLaw, BEcon, INSEAD
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 JPMorgan, 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 Robin Mills – Non-Executive Director (Appointed 1 April 2015, Resigned 3 October 2016)
BSc.Eng.Rand.(Mining), FSAIMM., FIMMM.(UK), CEng.(UK)
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 operating 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
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)
FCCA
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 12 years working in the resources sector in CFO and Company
Secretarial roles for both ASX and TSX listed companies.
PRINCIPAL ACTIVITIES
During the year, the principal activities of the Company consisted of:
a) Mineral processing technological evaluations;
PAGE 21
Directors' Report
(continued)
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 $4,886,187 (2016: loss $15,892,428).
The basic and diluted loss per share for the Group for the year was 1.04 cents (2016: 3.95 cents).
FINANCIAL POSITION
The net assets of the Group have decreased from $26,891,541 at 30 June 2016 to $22,675,197 at 30 June 2017.
The Group’s working capital, being current assets less current liabilities, was $2,653,847 at 30 June 2017 (2016: $6,960,223).
The Company announced on 19 September 2017 a two tranche placement. Tranche 1 for the issue of 30,625,000 fully paid ordinary
shares at $0.04 per share settled on 15 September 2017 for gross funds raised of A$1,225,000 and tranche 2 for the issue of a further
39,375,000 fully paid ordinary shares at $0.04 per share is scheduled to settle on or around the 20 September 2017 to raise further
gross proceeds of A$1,575,000.
In addition and as announced at the time of the placement the Company intends to undertake a 1 for 8 Rights issue (1 for 8 Entitlements
Issue) on the same terms as the tranche 1 and 2 placement which will see up to a further 68,431,891 fully paid ordinary shares issued
to raise up to a further A$2,737,276 before costs.
Any shares issued pursuant to the placement and rights issue will also be accompanied, subject to the Company obtaining shareholder
approval where required, by a 1 for 2 share option exercisable at $0.06 per share. The options, once issued, will be exercisable for 12
months from the date shareholder approval is obtained.
Appian has provided a waiver from the mandatory repayment provisions of the term loan facility for the first A$1.5m raised pursuant
to the placement referred to above. For amounts raised over and above the A$1.5m, funds are to be applied as follows to the Appian
loan facility debt repayment:
a) 25% of any funds raised pursuant to a capital raising of up to $3 million towards repayment of the Appian loan; and
b) 50% of any funds raised pursuant to a capital raising of over $3 million towards repayment of the Appian loan.
DIVIDENDS PAID OR RECOMMENDED
The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the
date of this report.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Other than detailed below and in the Review of Operations section of this Annual Report there were no significant changes in the state
of affairs of the Company, during the financial year:
On the 15 August 2016 the closing of Stage 2 of the Bankable Feasibility (BFS) financing with Appian occurred and subsequent to
that on 22 September 2016 the closing of Stage 2 with IFC. The Stage 2 closure involved a subscription of US$ 2,374,955 into Peak’s
majority owned associate PAM giving Appian and IFC an additional 10% and 2.5% interest respectively. Peak retains a 75% interest in
PAM (Appian 20%, IFC 5%).
On the 20 September 2016 the Company received ~A$4.1m under a term loan facility provided by Appian.
Capital raising equity issues were made during the year as follows:
•
•
14 October 2016 issue of 16,306,957 shares to Appian and IFC at $0.05 per share to raise A$815,348
11 November 2016 issue of 6,674,140 shares to IFC on conversion of loan note at $0.103 per share to raise A$687,436
AFTER BALANCE DATE EVENTS
The Company announced on 19 September 2017 a two tranche placement. Tranche 1 for the issue of 30,625,000 fully paid ordinary
PAGE 22
ENABLING LOW CARBON TECHNOLOGIES Diretors' Report
(continued)
shares at $0.04 per share settled on 15 September 2017 for gross funds raised of A$1,225,000 and tranche 2 for the issue of a further
39,375,000 fully paid ordinary shares at $0.04 per share is scheduled to settle on or around the 20 September 2017 to raise further
gross proceeds of A$1,575,000.
In addition and as announced at the time of the placement the Company intends to undertake a 1 for 8 Rights issue (1 for 8 Entitlements
Issue) on the same terms as the tranche 1 and 2 placement which will see up to a further 68,431,891 fully paid ordinary shares issued
to raise up to a further A$2,737,276 before costs.
Any shares issued pursuant to the placement and rights issue will also be accompanied, subject to the Company obtaining shareholder
approval where required, by a 1 for 2 share option exercisable at $0.06 per share. The options, once issued, will be exercisable for 12
months from the date shareholder approval is obtained.
Appian has provided a waiver from the mandatory repayment provisions of the term loan facility for the first A$1.5m raised pursuant
to the placement referred to above. For amounts raised over and above the A$1.5m, funds are to be applied as follows to the Appian
loan facility debt repayment:
a. 25% of any funds raised pursuant to a capital raising of up to $3 million towards repayment of the Appian loan; and
b. 50% of any funds raised pursuant to a capital raising of over $3 million towards repayment of the Appian loan.
MEETINGS OF DIRECTORS
The number of meetings attended by each Director of the Company during the financial year was:
Peter Harold
Darren Townsend
David Hammond
Jonathan Murray
John Jetter
Robin Mills
Board Meetings
Number held and
entitled to attend
Number attended
11
11
11
11
11
2
11
11
10
11
9
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 HOLIDINGS OF DIRECTORS
As at the date of this report, the Directors’ interest in the Company were:
Peter Harold*
Darren Townsend
David Hammond
Jonathan Murray
John Jetter
Equity shares
Equity options
Performance Rights
-
600,000
1,590,198
1,456,669
-
1,000,000
4,000,000
2,666,666
666,666
666,666
-
5,000,000
2,500,000
-
-
*During the year an allocation of options was made to Mr Harold following approval by shareholders at the AGM held on 16 November 2016. Details of
these issues are provided in the Remuneration Report.
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.
PAGE 23
Directors' Report
(continued)
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.
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 $300,000 as approved by shareholders at the 26 November
2015 annual general meeting.
Performance based remuneration
The Company continues to review and consider the inclusion of performance based remuneration component built into director and
executive remuneration packages.
The Company has previously, during the 30 June 2015 financial year, 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
PAGE 24
ENABLING LOW CARBON TECHNOLOGIES Directors' Report
(continued)
ii.
processing plant for its Ngualla Rare Earth Project and approval of the Board of the Company being received to proceed with
construction; or
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 performance rights expire on 5 January 2018 if the performance milestones
are not met.
The Board consider that the achievement of these milestones will deliver increased shareholder wealth.
The employment agreements for the two additional executive appointed during the prior year of Chief Operating Officer – Development
and Executive General Manager Sales, Marketing and Business development provide for provision of discretionary performance
bonuses.
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:
Total income
Net loss before tax
Net loss after tax
2017
$
1,861,274
2016
$
9,253
2015
$
38,426
2014
$
54,134
2013
$
2,503,930
(4,886,187)
(15,892,428)
(4,195,877)
(3,148,903)
(2,867,384)
(4,886,187)
(15,892,428)
(4,195,877)
(3,148,903)
(2,867,384)
Closing share price at end of year
$0.067
$0.048
$0.085
Basic loss per share (cents)
Dividends per share
1.04
-
3.95
-
1.13
-
$0.06
1.05
-
$0.13
1.15
-
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 2017 financial year were:
Peter Harold – Non-Executive Chairman (Appointed 1 December 2015)
•
• Darren Townsend – Managing Director
• David Hammond – Technical Director
•
•
•
•
• Michael Prassas – Executive General Manager Sales, Market & Business Development (Appointed 18 February 2016)
• Graeme Scott– Chief financial Officer & Company Secretary
Jonathan Murray – Non-Executive Director
John Jetter- Non-Executive Director
Robin Mills- Non-Executive Director (Resigned 3 October 2016)
Rocky Smith – Chief Operations Officer (Appointed 6 February 2016)
Total remuneration for the year was:
Salary and fees
Non-monetary benefits
Superannuation
Share based payments
Total
2017
$
2016
$
1,571,607
1,257,002
59,011
78,850
11,835
80,416
215,130
298,421
1,924,598
1,647,674
PAGE 25
Directors' Report
(continued)
Remuneration of individual KMP’s were:
Short term benefits
Post-employ-
ment benefits
Salary &
fees
Non-
monetary
Super-
annuation
Performance
Rights*
Options
Total
Equity
Performance
Share based payments
Proportion related to:
30-Jun-17
$
$
$
$
$
$
%
%
Directors
Peter Harold
Darren Townsend
David Hammond
Jonathan Murray
John Jetter
Robin Mills
Executives
Rocky Smith
Michael Prassas
Graeme Scott
60,000
300,000
250,000
35,011
35,004
8,751
688,766
389,091
273,750
220,000
882,841
Total remuneration
1,571,607
-
-
-
-
-
-
-
5,700
28,500
23,750
-
-
-
-
119,022
59,511
-
-
-
5,449
9,596
6,398
1,599
1,271
-
71,149
457,118
339,659
36,610
36,275
8,751
57,950
178,533
24,313
949,562
30,204
28,807
-
59,011
59,011
-
-
20,900
20,900
78,850
-
-
-
-
6,590
3,295
2,399
12,284
425,885
305,852
243,299
975,036
178,533
36,597
1,924,598
8%
2%
2%
4%
4%
0%
2%
2%
1%
1%
1%
3%
0%
26%
18%
0%
0%
0%
19%
0%
0%
0%
0%
9%
Salary &
fees
Non-
monetary
Super-
annuation
Performance
Rights*
Options#
Total
Equity
Performance
30-Jun-16
$
$
$
$
$
$
%
%
Directors
Peter Harold
Darren Townsend
David Hammond
Jonathan Murray
John Jetter
Robin Mills
Executives
Rocky Smith
Michael Prassas
Graeme Scott
40,000
351,354
281,667
39,584
39,584
39,584
-
-
-
-
-
-
3,800
29,750
26,758
-
-
-
-
119,348
59,674
-
-
-
-
42,757
28,505
7,126
6,011
6,011
43,800
543,209
396,604
46,710
45,595
45,595
791,773
-
60,308
179,022
90,410
1,121,513
153,889
99,673
211,667
6,913
4,922
-
-
-
20,108
-
-
-
465,229
11,835
20,108
-
12,200
173,002
6,100
10,689
28,989
110,695
242,464
526,161
Total remuneration
1,257,002
11,835
80,416
179,022
119,399
1,647,674
* The performance rights are subject to achievement of performance milestone vesting criteria.
# Options will vest subject to length of service criteria.
0%
8%
7%
15%
13%
13%
8%
7%
6%
4%
6%
7%
0%
22%
15%
0%
0%
0%
16%
0%
0%
0%
0%
11%
PAGE 26
ENABLING LOW CARBON TECHNOLOGIES
Directors' Report
(continued)
Options and performance rights granted during the year ended 30 June 2017
Options granted during the year
30-Jun-17
Directors
Peter Harold
Executives
Total
Date of
issue
Number
of options
issued
Value per
Option¹
Total value
of issue $
Vesting
Date
Exercise
Price
Expiry
Date
Number vested
during the year
16-Nov-16
500,000
$ 0.007
16-Nov-16
500,000
$ 0.004
1,000,000
-
1,000,000
3,500
2,000
5,500
-
5,500
16-Nov-16
$ 0.15
5-Jan-18
5-Jan-17
$ 0.20
5-Jan-18
500,000
500,000
1,000,000
-
1,000,000
1. Options are valued using the Black-Scholes method on date of grant
Options granted during the year ended 30 June 2016
30-Jun-16
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
John Jetter
Robin Mills
Executives
Rocky Smith
Michael Prassas
Total
27-Oct-15
333,333
$ 0.013
27-Oct-15
333,333
$ 0.009
27-Oct-15
333,333
$ 0.013
27-Oct-15
333,333
$ 0.009
1,333,332
4,249
3,074
4,249
3,074
14,646
5-Jan-16
$ 0.15
5-Jan-18
333,333
5-Jan-17
$ 0.20
5-Jan-18
-
27-Oct-15
$ 0.15
5-Jan-18
333,333
5-Jan-16
$ 0.20
5-Jan-18
-
666,666
17-June-16
2,000,000
$ 0.006
11,734
17-June-16
$ 0.15
5-Jan-18
2,000,000
17-June-16
2,000,000
$ 0.004
7,270
5-Jan-17
$ 0.20
5-Jan-18
-
17-June-16
1,000,000
$ 0.006
5,867
17-June-16
$ 0.15
5-Jan-18
1,000,000
17-June-16
1,000,000
$ 0.004
3,635
5-Jan-17
$ 0.20
5-Jan-18
-
6,000,000
7,333,332
28,506
43,152
3,000,000
3,666,666
No Performance Rights were granted during the year ended 30 June 2017 or 30 June 2016.
PAGE 27
Directors' Report
(continued)
Shareholdings of KMP’s
30-Jun-17
Directors
Peter Harold
Darren Townsend
David Hammond
Jonathan Murray
Robin Mills
John Jetter
Executives
Rocky Smith
Michael Prassas
Graeme Scott
Opening
Balance
Granted as
Remuneration
Exercise of
Options/PRs
Cancelled
Market
Transactions
Closing
Balance
- .
600,000
1,590,198
1,456,669
- .
- .
3,646,867
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
600,000
1,590,198
1,456,669
- .
- .
3,646,867
- .
- .
- .
- .
3,646,867
Total
3,646,867
Option Holdings of KMP’s including performance rights
30-Jun-17
Opening
Balance
Granted as
Remuneration
Exercise of
Options &
PRs
Expired#/
Cancelled
Market
Transactions
Closing
Balance
Vested at 30
June
Directors
Peter Harold
Darren Townsend
David Hammond
Jonathan Murray
Robin Mills*
John Jetter
Executives
Rocky Smith
Michael Prassas
Graeme Scott
- .
1,000,000
11,000,000
6,500,000
1,000,000
666,666
666,666
- .
- .
- .
- .
- .
19,833,332
1,000,000
4,000,000
2,000,000
1,000,000
7,000,000
- .
- .
- .
- .
Total
26,833,332
1,000,000
*Mr Mills ceased to be a KMP on cessation as a director on 3 October 2016.
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
(2,000,000)
(1,333,334)
(333,334)
(333,333)
- .
(4,000,001)
- .
- .
- .
- .
(4,000,001)
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
- .
1,000,000
1,000,000
9,000,000
5,166,666
666,666
333,333
666,666
4,000,000
2,666,666
666,666
333,333
666,666
16,833,331
9,333,331
4,000,000
2,000,000
4,000,000
2,000,000
1,000,000
1,000,000
7,000,000
7,000,000
23,833,331
16,333,331
# Other than the options on issue to Mr Mills cancelled on his resignation the remaining 3,666,668 options expired unexercised. These options were
granted in the year ended 30 June 2015 and had an exercise price of $0.10 per share and expired on 5 January 2017.
PAGE 28
ENABLING LOW CARBON TECHNOLOGIES Directors' Report
(continued)
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 $328,500 (previously
$400,000) inclusive of superannuation effective 1 May 2016, 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 the Company or three months from the executive.
Dave Hammond – Technical Director
Dave is employed under an ESA. The agreement provides for an annual salary of $250,000 (previously $300,000) effective 1 May 2016,
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.
Peter Harold – Non-Executive Chairman (appointed 1 December 2015)
Under Peter’s agreement annual directors fees of $60,000 (previously $70,000) effective 1 June 2016, plus superannuation are payable.
No retirement benefits are provided for.
Jonathan Murray / John Jetter - 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 $35,000 (previously $40,000) per annum effective 1 June 2016. No
retirement benefits are provided for.
Rocky Smith – Chief Operating Officer - Development (appointed 6 February 2016)
Rocky is employed under an ESA. The agreement provides for an annual salary of $377,775 inclusive of superannuation, plus private
health and life cover, annual airfares, expenses, discretionary performance bonuses and options. The Executive is entitled to leave in
accordance with the relevant legislation. Rocky’s engagement has no fixed term but is subject to a three month notice period from
either party.
Michael Prassas – Executive General Manager Sales, Marketing and Business Development (appointed 18 February 2016)
Michael is employed under an ESA. The agreement provides for an annual salary of $250,000, plus superannuation, plus private
health, annual airfares, expenses, discretionary performance bonuses and options. The Executive is entitled to leave in accordance
with the relevant legislation. Michael’s engagement has no fixed term but is subject to a six 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 $220,000 (previously $200,000) effective 1
December 2015, 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 $79,990
(2016: $202,883) as fees for the provision of legal advice. Balance outstanding at 30 June 2017 and included in trade creditors $24,468
(30 June 2016: $26,470).
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)
PAGE 29
Directors' Report
(continued)
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
3 March 2018
Exercise Price
$0.55
Number under option
150,000
Unissued ordinary shares of the Company under option to directors, former directors and employees are:
Expiry Date
5 January 2018
5 January 2018
*Vesting subject to length of service criteria
Exercise Price
Number under option
$0.15
$0.20
10,549,999
9,916,667
Unissued ordinary shares of the Company under Performance Right to directors and former directors are:
Expiry Date
5 January 2018
Exercise Price
$0.00
Number under option
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.
Details of options and performance rights issued during the year are detailed in the Remuneration Report.
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.
PAGE 30
ENABLING LOW CARBON TECHNOLOGIES Directors' Report
(continued)
AUDITOR'S INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2017 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 5 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,
Peter Harold
Non-executive Chairman
Perth, 27 September 2017
PAGE 31
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
As lead auditor for the audit of Peak Resources Limited for the financial year ended 30 June 2017, I
declare to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Peak Resources Limited and the entities it controlled during the financial
period.
Ernst & Young
D A Hall
Partner
Perth
27 September 2017
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DH:JH:PEK:025
PAGE 32
ENABLING LOW CARBON TECHNOLOGIES
Auditor's Independence
Declaration
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 audit of the financial report
Opinion
We have audited the financial report of Peak Resources Limited (the ‘Company’) and its subsidiaries
(collectively the ‘Group’), which comprises the consolidated statement of financial position as at 30 June
2017, 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 to the financial
statements, including a summary of significant accounting policies, and the director’s declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017
and of its consolidated financial performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
We draw attention to Note 2(a) in the financial report, which indicates that the Group incurred a net loss
of $4.8m during the year ended 30 June 2017 and, as of that date, the Group has net current assets of
$2.6m and incurred an operating cash outflow after income tax of $3.3m. The Group’s ability to continue
as a going concern and meet its debts as and when they fall due is dependent on the ability to raise
additional capital. These events or conditions indicate that a material uncertainty exists that may cast
significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DH:JH:PEK:026
PAGE 33
Independent Auditor's Report
(continued)
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a
separate opinion on these matters. For the matter below, our description of how our audit addressed the
matter is provided in that context. In addition to the matter described in the Material Uncertainty Related
to Going Concern section, we have determined the matter described below to be the key audit matters to
be communicated in our report.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial statements. The results of our audit procedures, including the procedures
performed to address the matter below, provide the basis for our audit opinion on the accompanying
financial report.
1. Accounting for the investment in associate
Why significant
How our audit addressed the key audit matter
Peak African Minerals (“PAM”) is a Mauritian company that
currently owns 100% of the shares in PR NG Minerals
Limited (“PRNG”), the 100% owner of the Ngualla Project. As
stated in note 3 to the financial report, upon completion of
Stage 1 of the financing arrangement between the
shareholders of PAM, PAM was re-classified from being an
entity under control of the Group, to an associate accounted
for using the equity method.
During the financial year ended 30 June 2017, Stage 2 of the
Ngualla project financing was finalised which gave rise to the
Group’s interest diluting to 75%, with the other shareholders in
PAM increasing their collective interest by 12.5% in PAM.
This dilution gave rise to a prima facie loss of $500k on a
deemed disposal of a partial interest in PAM in the Group’s
consolidated statement of comprehensive income.
Upon conclusion of a bankable feasibility study of the Ngualla
project, the Group also incorporated this study into an overall
assessment for the recoverability of investment value in the
associate.
We assessed the equity accounting treatment of the Group’s
interest in PAM to evaluate whether the interest has been
accounted for in accordance with Australian Accounting
Standards.
We obtained the Group’s calculations with regard to the
deemed disposal of the interest in PAM through the dilution of
ownership interest in the company and performed the
following procedures:
•
Examined the subscription agreement documenting the
nature and terms of the finance transaction;
•
•
Tested conformity with Australian Accounting Standard -
AASB 128 Investments in Associates and Joint Ventures;
Tested capital contributions by the Group to the
investee;
Tested the Group’s equity accounting calculations; and
•
• Assessed the assumptions including the foreign
exchange rates.
We assessed the recoverability of the investment in the
associate with reference to implied project values, as well as
project economic models and assumptions included in the Fair
Value Less Costs to Dispose valuation such as commodity
prices, capital and operating costs, foreign exchange rates
and discount rates.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DH:JH:PEK:026
PAGE 34
ENABLING LOW CARBON TECHNOLOGIES
Independent Auditor's Report
(continued)
Information other than the financial report and auditor’s report
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2017 Annual Report, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 control as the Directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DH:JH:PEK:026
PAGE 35
Independent Auditor's Report
(continued)
►
►
►
►
►
Obtain an understanding of internal control relevant to the audit 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 control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting in
the preparation of the financial report. We also conclude, based on the audit evidence obtained,
whether a material uncertainty exists related to events and conditions that may cast significant
doubt on the entity’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in the auditor’s report to the disclosures in the
financial report about the material uncertainty or, if such disclosures are inadequate, to modify the
opinion on the financial report. However, future events or conditions may cause an entity to cease
to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in the Directors' Report for the year ended 30 June
2017.
In our opinion, the Remuneration Report of Peak Resources Limited for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DH:JH:PEK:026
PAGE 36
ENABLING LOW CARBON TECHNOLOGIES
Independent Auditor's Report
(continued)
Responsibilities
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.
Ernst & Young
D A Hall
Partner
Perth
27 September 2017
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DH:JH:PEK:026
PAGE 37
Consolidated Statement of
Comprehensive Income
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended 30 June 2017
Interest income
R&D rebate received
Other income
Total income
Employee benefits expenses
Share based payments expenses
Depreciation expenses
Borrowing costs
Administrative and other costs
Technical feasibility costs
Share of loss of associate
Gain/(loss) recognised on disposal of former subsidiary
Loss before income tax
Income tax expense
Loss after income tax
Other comprehensive income/(loss), net of tax
Items that could be transferred to profit or loss in future:
Exchange differences on translation of foreign operations
Recycled to the profit and loss on disposal of former subsidiary
Group’s share of associate’s other comprehensive income
Total comprehensive loss for the year
Loss per share (in cents)
Basic and Diluted loss per share
The statement should be read in conjunction with the accompanying notes
Note
2017
$
2016
$
5
5
5
5
4
3
8
7
21,746
1,813,602
25,926
1,861,274
(905,730)
(230,173)
(15,871)
(983,721)
(692,504)
(1,985,476)
(1,433,955)
(500,031)
(4,886,187)
-
9,253
-
-
9,253
(1,088,331)
(416,680)
(14,987)
(76,917)
(823,953)
(4,420,592)
(15,908,627)
6,848,406
(15,892,428)
-
(4,886,187)
(15,892,428)
41,064
(172,425)
(851,914)
(25,138)
(1,273,526)
1,533,916
(5,869,462)
(15,657,176)
(1.04)
(3.95)
PAGE 38
ENABLING LOW CARBON TECHNOLOGIES
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
Note
2017
$
2016
$
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other assets – due from associate
Prepayments
Assets held for sale – investment in associate
Total current assets
Non-current assets
Property plant and equipment
Investment in associate
Investments
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Other payables
Loans and borrowings – due to associate and other parties
Total non-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
9
10
11
4
12
4
13
14
15
14
16
18
17
2,125,680
1,723,830
29,437
55,000
1,227,526
4,709
-
3,442,352
125,002
55,000
2,890,821
32,336
3,692,430
8,519,419
16,500
27,594
29,482,222
22,154,579
8,000
29,506,722
32,949,074
8,000
22,190,173
30,709,592
588,264
200,241
788,505
303,454
9,181,918
9,485,372
10,273,877
1,372,578
186,618
1,559,196
45,256
2,213,599
2,258,855
3,818,051
22,675,197
26,891,541
65,251,219
2,562,819
63,828,274
3,315,921
(45,138,841)
(40,252,654)
22,675,197
26,891,541
PAGE 39
Consolidated Statement of
Cash Flows
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended 30 June 2017
OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
R&D rebate received
Borrowing costs paid
Cash used in operating activities
INVESTING ACTIVITIES
Acquisition of property, plant and equipment
Proceeds from disposal of former subsidiary
Contributions to associates
Cash used in investing activities
FINANCING ACTIVITIES
Proceeds from issue of equity shares
Reduction in performance bonds – restricted cash
Costs of issuing equity shares
(Repayment of) / Proceeds from borrowings
Borrowings from associate and other parties
Loans to associate
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
Note
2017
$
2016
$
(4,407,854)
(5,518,853)
21,585
1,813,602
(725,523)
(3,298,190)
(4,778)
-
(6,593,537)
(6,598,315)
1,502,784
-
(79,840)
1,663,294
6,968,319
-
10,054,557
158,053
1,723,830
243,797
2,125,680
7,988
-
(153,175)
(5,664,040)
(27,194)
5,184,950
-
5,157,756
9,266,663
44,500
(593,802)
(8,917,700)
1,134,166
(1,769,119)
(835,292)
(1,341,576)
2,943,861
121,545
1,723,830
9
4
9
PAGE 40
ENABLING LOW CARBON TECHNOLOGIES
Consolidated Statement of
Changes in Equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Year Ended 30 June 2017
At 1 July 2015
Loss for the year 2016
Other comprehensive income
Group’s share of associate’s other compre-
hensive income
Total comprehensive loss for the year
Equity issued
Performance rights exercised
Equity based payments
Transaction costs
At 30 June 2016
Loss for the year 2017
Other comprehensive income
Group’s share of associate’s other compre-
hensive income
Total comprehensive loss for the year
Equity issued
Performance rights exercised
Equity based payments
Transaction costs
At 30 June 2017
Contributed
Equity
Share based
payment reserve
Foreign currency
translation reserve
Accumulated
losses
Total equity
$
$
$
$
$
54,943,414
1,602,463
1,273,526
(24,360,226)
33,459,177
-
-
-
-
9,298,662
180,000
-
(593,802)
63,828,274
-
-
-
-
1,502,784
-
-
(79,839)
-
-
-
-
(32,000)
(180,000)
416,680
-
-
(15,892,428)
(15,892,428)
(1,298,664)
1,533,916
235,252
-
-
(1,298,664)
1,533,916
(15,892,428)
(15,657,176)
-
-
-
-
-
-
-
-
9,266,662
-
416,680
(593,802)
1,807,143
1,508,778
(40,252,654)
26,891,541
-
-
-
-
-
-
230,173
-
-
(4,886,187)
(131,361)
(851,914)
(983,275)
-
-
(4,886,187)
-
-
-
-
-
-
-
-
(4,886,187)
(131,361)
(851,914)
(5,869,462)
1,502,784
-
230,173
(79,839)
65,251,219
2,037,316
525,503
(45,138,841)
22,675,197
The statement should be read in conjunction with the accompanying notes
PAGE 41
Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The financial report of Peak Resources Limited for the year ended 30 June 2017 was authorised for issue in accordance with a resolution
of the directors on 26 September 2017.
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 assets of $2,653,847 (2016: net current assets $6,960,223) and incurred an operating cash outflow after
income tax of $3,298,190 (30 June 2016: $5,664,040) for the year ended 30 June 2017. The Group’s ability to continue as a going
concern and meet its debts as and when they fall due is dependent on the ability to raise additional capital.
The Company announced on 19 September 2017 a two tranche placement. Tranche 1 for the issue of 30,625,000 fully paid ordinary
shares at $0.04 per share settled on 15 September 2017 for gross funds raised of A$1,225,000 and tranche 2 for the issue of a further
39,375,000 fully paid ordinary shares at $0.04 per share is scheduled to settle on or around the 20 September 2017 to raise further
gross proceeds of A$1,575,000.
In addition and as announced at the time of the placement the Company intends to undertake a 1 for 8 Rights issue (1 for 8 Entitlements
Issue) on the same terms as the tranche 1 and 2 placement which will see up to a further 68,431,891 fully paid ordinary shares issued
to raise up to a further A$2,737,276 before costs.
Any shares issued pursuant to the placement and rights issue will also be accompanied, subject to the Company obtaining shareholder
approval where required, by a 1 for 2 share option exercisable at $0.06 per share. The options, once issued, will be exercisable for 12
months from the date shareholder approval is obtained.
Appian has provided a waiver from the mandatory repayment provisions of the term loan facility for the first A$1.5m raised pursuant
to the placement referred to above. For amounts raised over and above the A$1.5m, funds are to be applied as follows to the Appian
loan facility debt repayment:
a. 25% of any funds raised pursuant to a capital raising of up to $3 million towards repayment of the Appian loan; and
b. 50% of any funds raised pursuant to a capital raising of over $3 million towards repayment of the Appian loan.
In the directors’ opinion, there are reasonable grounds to believe that the Company has the ability to raise further funding as and when
required. However, in the event additional funding is not forthcoming the Group 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.
PAGE 42
ENABLING LOW CARBON TECHNOLOGIES Notes to Financial Statements
(continued)
B) ADOPTION OF NEW OR REVISED ACCOUNTING STANDARDS
Standards and Interpretations affecting amounts reported in the current period (and/or prior periods)
The mandatory adoption of Australian Accounting Standards and Interpretations that have come into effect in the current financial
reporting period, as noted below have not had a material impact on the amounts reported in the Group.
Title
Summary
AASB 2014-3 - Accounting for
Acquisitions of Interests in Joint
Operations (AASB1 & AASB11)
AASB 11 Joint Arrangements now provides guidance on the accounting for acquisitions of interests in
joint operations in which the activity constitutes a business. The impact of this change to the Group is
that such acquisitions will be accounted for as business combinations and not asset acquisitions.
Application date for
Group
1 July 2018
Standards and Interpretations in issue not yet adopted
A number of new Standards, amendment of Standards and interpretations have been issued but are not yet effective and have not
been adopted by the Group as at the financial reporting date. The potential effect of these Standards is yet to be fully determined.
However, it is not expected that the new or amended Standards will significantly affect the Group’s accounting policies, financial
position or performance, except for the following:
Title
Summary
AASB 9 – Financial Instruments
AASB 15 - Revenue from Contracts with Customers
AASB16 – Leases
AASB 2016 – 2: Amendments to Australian accounting
Standards – Disclosure Initiative: Amendments to AASB
107
AASB 2014-10: Amendments to Australian Accounting
Standards – Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
AASB Interpretation 22 – Foreign Currency Transactions
and Advance Consideration
AASB Interpretation 23 – Uncertainty over Income Tax
Treatments
A finalised version of AASB 9 which contains accounting requirements for financial instruments, replacing
AASB 139 Financial Instruments: Recognition and Measurement. The standard contains requirements in
the areas of classification and measurement, impairment, hedge accounting and de-recognition.
AASB 15 provides a single, principles-based five-step model to be applied to all contracts with cus-
tomers. Guidance is provided on topics such as the point in which revenue is recognised, accounting
for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New
disclosures about revenue are also introduced.
IFRS 16 provides a new lessee accounting model which requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A
lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly
to other financial liabilities. Assets and liabilities arising from a lease are initially measured on a present
value basis. The measurement includes non-cancellable lease payments (including inflation-linked pay-
ments), and also includes payments to be made in optional periods if the lessee is reasonably certain
to exercise an option to extend the lease, or not to exercise an option to terminate the lease. IFRS 16
contains disclosure requirements for lessees.
The amendments to AASB 107 Statement of Cash Flows are part of the IASB’s Disclosure Initiative and
help users of financial statements better understand changes in entity’s debt. The amendments require
entities to provide disclosures about changes in the liabilities arising from financing activities, including
both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses)
The amendments clarify that a full gain or loss is recognised when a transfer to an associate or joint
venture involves a business as defined in AASB 3 Business Combinations. Any gain or loss resulting from
the sale or contribution of assets that does not constitute a business, however, is recognised only to the
extent of unrelated investors’ interest in the associate or joint venture.
AASB 2015-10 defers the mandatory effective date (application date) of AASB 2014-10 so that the
amendments are required to be applied for annual periods beginning on or after 1 January 2018 instead
of 1 January 2016.
The interpretation clarifies that in determining the spot exchange rate to use on initial recognition of the
related asset, expense or income (or part of it) on the derecognition of non-monetary asset or non-mon-
etary liability relating to advance consideration, the date of the transaction is the date on which an entity
initially recognises the non-monetary asset or non-monetary liability arising from the advance consider-
ation. If there are multiple payments or receipts in advance, then the entity must determine a date of the
transactions for each payment or receipt of advance consideration.
The Interpretation clarifies the application of the recognition and measurement criteria in IAS 12 Income
Taxes when there is uncertainty over income tax treatments. The Interpretation specifically addresses
the following:
Whether an entity considers uncertain tax treatments separately
The assumptions and entity makes about the examination of tax treatments by taxation
authorities
How an entity determine taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates
How an entity considers changes in facts and circumstances
Application date for
Group
1 July 2018
1 July 2018
1 July 2019
1 January 2017
1 January 2018
1 January 2018
PAGE 43
Notes to Financial Statements
(continued)
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 2017. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if
and only if the Group has:
-
-
-
power over the investee (i.e. existing rights that give it the current ability to direct the relevent 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 consistency with
those policies applied by the parent entity. All controlled entities have a June financial year-end.
If the Group loses control over a subsidiary, it derecognises the related assets, liabilities, non-controlling interest and other components
of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. 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.
D) INVESTMENT IN ASSOCIATES
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial
and operating policy decisions of the investee, but is not control or joint control over those policies. The Group’s investments in its
associates are accounted for using the equity method. Under the equity method, the investment in an associate is initially measured
at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate
since the entity became an associate.
The statement of profit or loss reflects the Group’s share of the results of operations of the associate. Any change in other comprehensive
income (OCI) of those investees is presented as part of the Group’s OCI. In Addition when there has been a change recognised directly
in the equity of an associate, the Group recognises its share of any changes, when applicable, in the statement of changes in equity.
Unrealised gains or losses resulting from transactions between the Group and associate are eliminated to the extent of the interest in
the associate.
The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement of profit or loss outside
operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate. The financial
statement of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring
the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment
in its associate. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate
is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable
amount of the associate and its carrying value, and then recognises the loss as ‘Share of profit of an associate’ in the statement of
profit or loss.
Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value.
PAGE 44
ENABLING LOW CARBON TECHNOLOGIES Notes to Financial Statements
(continued)
Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained
investment and proceeds from disposal is recognized in profit and loss.
E) 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.
F) 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.
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.
G) 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.
PAGE 45
Notes to Financial Statements
(continued)
Superannuation entitlements
Contributions are made by the company to employee superannuation funds and are charged as expenses when incurred.
H) 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.
I) 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.
J) 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.
K) EARNINGS PER SHARE
Basic earnings per share
a.
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.
PAGE 46
ENABLING LOW CARBON TECHNOLOGIES Notes to Financial Statements
(continued)
Diluted earnings per share
b.
Diluted EPS is calculated as the net profit attributable to members, adjusted for:
•
•
costs of servicing equity (other than dividends) and;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as
expenses; and,
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary
shares
•
Divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
L) 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; (vi) long term loans and borrowings; and (vii) other financial assets, including
bank deposits.
M) 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.
N) 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.
O) 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:
•
•
• Other assets: 2 to 5 years
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.
Leasehold improvements: 2 years
Plant and equipment: 2 to 5 years
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.
P) 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:
PAGE 47
Notes to Financial Statements
(continued)
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.
•
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.
Q) TRADE AND OTHER PAYABLES
Trade payables and other payables are initially recognised at fair value, then carried at amortised cost. 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.
R) 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.
S) 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.
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.
PAGE 48
ENABLING LOW CARBON TECHNOLOGIES Notes to Financial Statements
(continued)
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.
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.
T) 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.
U) 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.
PAGE 49
Notes to Financial Statements
(continued)
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(p).
3. LOSS ON PARTIAL DISPOSAL OF ASSOCIATE
Pursuant to the closing of stage 1 of the financing transaction with Appian and IFC on 24 July 2015, in which Appian and IFC acquired
a direct 12.5% interest in Peak African Minerals (PAM), the company that held the interests in the Group’s Ngualla project, it was
determined that Peak Resources no longer solely controlled nor did it have joint control of PAM despite maintaining its majority
ownership and beneficial interests in PAM. The company determined that based on its involvement in the PAM Board (albeit it does
not control the Board decisions) along with its ownership interest in the company, Peak Resources is deemed to have significant
influence over PAM and accordingly is considered to be an associate under Australian Accounting Standards. In accordance with the
requirements of Australian Accounting Standards, the PAM Group was deconsolidated from the Peak Group effective July 2015 and the
retained interest in PAM re-measured at its fair value at that time, being the deemed cost on initial recognition of Peak’s investment in
the associate. Fair value was determined with reference to the implied market value of the Appian and IFC payment which is an arms-
length transaction therefore the Directors believed represented fair value in an orderly transaction. The fair value is level 3 per the fair
value hierarchy. The Company recorded a $6,848,406 gain (including the re-cycle of associated foreign currency translation reserve on
reclassification from a subsidiary to an associate) related to this disposal in the half-year 31 December 2015 period.
At the end of the prior period, a portion of the investment in associate was classified as held for sale at 30 June 2016 in accordance with
the dilution of a further 12.5% interest related to stage 2 of the financing transaction with Appian and IFC. On completion of stage 2 of
the financing transaction by Appian and IFC in August 2016 and September 2016 respectively, they invested a combined US$2,874,955
into PAM for respectively an additional 10% and 2.5% interest with the Group’s remaining interest in the PAM Group diluted to 75%.
Pursuant to the additional contributions of capital, by Appian and IFC for the stage 2 referred to above, in the associate between 30
June 2016 and the dates of deemed disposal, the Company has recorded a loss of $500,031 on the disposal of this 12.5% interest in
the PAM Group during the period.
PAGE 50
ENABLING LOW CARBON TECHNOLOGIES Notes to Financial Statements
(continued)
4. INVESTMENTS IN ASSOCIATES
As set out in Note 3, the Group has an 75% interest in Pan African Minerals (PAM), a company domiciled in Mauritius, that owns 100%
of the shares in PR NG Minerals Limited (“PRNG”), the 100% owner of the Ngualla Project in Tanzania. The Group’s interest in PAM
is accounted for using the equity method in the consolidated financial statements. The following table illustrates the summarised
financial information of the Group’s investment in PAM:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Income
Administrative costs
Employee benefits
Depreciation and amortisation expenses
Other expenses(1)
Finance costs
Loss before income tax expense
Income tax expense
Loss for the period
Other comprehensive income/(loss)
Total comprehensive loss for the period
Group’s share of loss for the period
Group’s share of movement of other comprehensive income for the period
Peak Resources investment in associate:
Opening balance
Less Group’s share of loss in the associate for the period
Loss on partial disposal
Recycle of FCTR on partial disposal
Add Group’s share of movement in other comprehensive income in the associate for the period
Peaks additional equity investment in PAM during the period(3)
Investment in associate
Classified in the statement of financial position as:
Asset held for sale – investment in associate(2)
Investment in associate
Investment in associate
$AUD
$AUD
30 June 2017
30 June 2016
194,277
47,059,107
564,292
7,980,879
38,708,212
264,788
(316,425)
(45,628)
(35,032)
(1,628,373)
(11,465)
(1,772,135)
-
(1,772,135)
(1,073,609)
(2,845,744)
(1,433,955)
(851,914)
25,847,009
(1,433,955)
(500,031)
(172,424)
(851,914)
6,593,537
305,457
41,246,479
4,429,558
7,582,939
29,539,439
46,839
(468,689)
(101,977)
(33,084)
(16,325,659)
(1,298,718)
(18,181,288)
-
(18,181,288)
1,753,047
(16,428,241)
(15,908,627)
1,533,916
40,221,720
(15,908,627)
-
-
1,533,916
-
29,482,222
25,847,009
-
29,482,222
29,482,222
3,692,430
22,154,579
25,847,009
(1) Included in the 2016 period is an impairment expense of AUD$15,472,510, as sufficient data exists to indicate that, although a development in the
specific area is likely to proceed, the carrying amount of the exploration and evaluation asset may not be recovered in full from successful development
PAGE 51
Notes to Financial Statements
(continued)
or by sale. The impairment charge is made with reference to the fair value of the project implied by the negotiated transaction between the
shareholders of PAM, being Peak Resources Limited, Appian and IFC, which is an arms-length transaction therefore the Directors believe this represents
fair value in an orderly transaction relating to Stage 2 of the financing arrangement. The fair value is level 3 per the fair value hierarchy.
(2) Based on the transaction in (1) the portion of the associate subject to disposal has been re-classified as a current asset held for sale.
(3) Additional equity subscription contributions were made to the associate in February 2017 for A$4,587,750 and in February 2017 for a further
A$2,005,787.
5. INCOME AND EXPENDITURE ITEMS
2017
$
2016
$
21,746
9,253
1,813,602
25,926
1,839,528
-
-
-
(209,069)
(219,990)
(55,489)
(72,043)
(106,007)
(166,072)
(1,985,476)
(4,420,592)
Auditors’ remuneration
82,814
33,670
-
82,814
5,886
-
5,886
-
33,670
8,378
-
8,378
Included in loss for the year are:
Interest received
Australian R&D rebate receivable
Other income
Total other income
Occupancy costs
Listing compliance costs
Travel & accommodation
Technical feasibility costs
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
PAGE 52
ENABLING LOW CARBON TECHNOLOGIES
Notes to Financial Statements
(continued)
6. 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:
•
• Unallocated - to manage the corporate affairs of the group.
Exploration & Development (E&D) – Group’s exploration and development activities for the Ngualla project in Tanzania; and
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 2017
E&D
$
Unallocated
$
Total
$
E&D
$
30 June 2016
Unallocated
$
Total
$
Finance income
Other income
Total income
-
-
-
21,746
21,746
1,839,528
1,839,528
1,861,274
1,861,274
-
-
-
9,253
-
9,253
9,253
-
9,253
Depreciation and amortisation
(195)
(15,676)
(15,871)
(2,418)
(12,569)
(14,987)
Impairment of exploration and evaluation
costs
Impairment of Investments
Share based payment expenses
Borrowing costs
Gain on disposal of former subsidiary
Share of loss of associate
Technical feasibility costs
Other expenses
Income Tax
Segment results
Segment assets
Segment liabilities
Additions to non-current assets:
Plant and equipment
Investment in associate
7. LOSS PER SHARE
-
-
-
-
-
-
-
(230,173)
(983,721)
(500,031)
(230,173)
(983,721)
(500,031)
-
-
-
-
-
-
-
-
-
(416,680)
(416,680)
(76,917)
(76,917)
6,848,406
6,848,406
(1,433,955)
(1,985,476)
-
-
(1,433,955)
(15,908,627)
(1,985,476)
(4,420,592)
-
-
(15,908,627)
(4,420,592)
-
-
(1,598,235)
(1,598,235)
-
-
-
-
(1,912,284)
(1,912,284)
-
-
(3,419,626)
(1,466,562)
(4,886,188)
(20,331,637)
4,439,209
(15,892,428)
29,482,222
3,466,853
32,949,075
25,847,009
4,862,583
30,709,592
-
(10,273,877)
(10,273,877)
4,778
4,778
-
-
(3,818,051)
(3,818,051)
27,194
27,194
6,593,537
6,593,537
6,593,537
22,154,579
-
22,154,579
4,778
6,598,315
22,154,579
27,194
22,181,773
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 based on reported losses after tax as set out
in the Statement of Comprehensive Income
Weighted average number of ordinary shares used in calculating
Basic & Diluted loss per share
2017
Cents
(1.04)
Nos.
2016
Cents
(3.95)
Nos.
470,332,142
402,377,186
Anti-dilutive options over ordinary shares and performance rights excluded
from the weighted average number of shares
28,616,666
43,383,332
PAGE 53
Notes to Financial Statements
(continued)
8. INCOME TAX
a.
The components of tax expense comprise:
Current tax
Deferred tax
Income tax expense reported in statement of comprehensive income
2017
$
2016
$
-
-
-
-
-
-
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 27.5% (2016: 30%)
(1,343,702)
(4,697,153)
Add tax effect of:
- Assessable items
- Revenue losses not recognised
- Other non-allowable items
Less tax effect of:
- Other deferred tax balances not recognised
- Australian R&D rebate
Income tax expense reported in statement of comprehensive income
c.
Deferred tax recognised at 27.5% (2016:30%) (Note 1):
Deferred tax liabilities:
Investment in associate
Accrued interest
Other
Deferred tax assets:
Carry forward revenue losses
Provisions and accruals
Net deferred tax
d.
Unrecognised deferred tax assets at 27.5% (2016:30%) (Note 1):
Carry forward revenue losses
Carry forward capital losses
Unrealised FX
Capital raising costs
Provisions and accruals
Other
-
706,555
12,114
672,306
7,497,098
6,248,951
6,859,951
2,236,218
6,361,210
111,121
498,741
2,125,097
-
-
(4,791,325)
(7,754,102)
(369)
(2,185)
(353)
(986)
4,793,879
5,067,533
-
-
403,882
270,879
144,513
197,674
128,626
15,311
2,687,908
-
-
295,504
-
291,678
4,133,969
-
1,160,885
4,721,151
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;
PAGE 54
ENABLING LOW CARBON TECHNOLOGIES Notes to Financial Statements
(continued)
the company continues to comply with the conditions for deductibility imposed by law; and
b)
c) no changes in income tax legislation adversely affect the company in utilising the benefits.
Note 1 - the corporate tax rate for eligible companies will reduce from 30% to 25% by 30 June 2027 providing certain turnover thresh
olds and other criteria are met. Deferred tax assets and liabilities are required to be measured at the tax rate that is expected to apply
in the future income year when the asset is realised or the liability is settled. The Directors have determined that the deferred tax
balances be measured at the tax rates stated.
Note 2 - Tax Consolidation
For the purpose of income taxation, the Company and its 100% Australian controlled entities have formed a tax consolidated group
effective from 1 July 2012.
9. 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:
Loss / (Gain) on disposal of former subsidiary
Share of loss of associate
Share based payments expenses
Depreciation expenses
Foreign exchange gain/loss
Movement in working capital items:
Decrease in trade and other receivables
Decrease in prepayments
(Decrease) in trade and other payables
Increase in provisions
Material non-cash transactions:
In 2017 and 2016 no material non-cash transactions occurred during the year.
2017
$
2016
$
1,581,180
544,500
2,125,680
1,679,330
44,500
1,723,830
(4,886,187)
(15,892,428)
500,031
(6,848,406)
1,433,955
15,908,627
230,173
15,871
416,680
14,987
(202,731)
(121,545)
95,564
27,627
868,817
421,086
(526,116)
(524,250)
13,623
92,392
(3,298,190)
(5,664,040)
PAGE 55
Notes to Financial Statements
(continued)
10. TRADE AND OTHER RECEIVABLES
Current
GST receivable
Other receivable
Ageing of receivables
Recoverable within 3 months
Beyond 3 months
Receivables are non-interest bearing and unsecured
11. OTHER FINANCIAL ASSETS
Bank Term Deposit
2017
$
2016
$
25,510
3,927
29,437
121,478
3,524
125,002
29,437
125,002
-
-
29,437
125,002
2017
$
55,000
55,000
2016
$
55,000
55,000
A deposit of $55,000 (2016: $55,000) 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.
12. PROPERTY, PLANT AND EQUIPMENT
2017
$
2016
$
103,002
(86,502)
110,079
(82,485)
16,500
27,594
27,593
4,778
-
(15,871)
85,143
27,194
(69,756)
(14,987)
16,500
27,594
Plant and equipment
At cost
Accumulated depreciation
Movement in net carrying amount
Balance at the beginning of the year
Additions
Disposals / de-recognised on disposal of former subsidiary
Depreciation for the year
Balance at the end of the year
PAGE 56
ENABLING LOW CARBON TECHNOLOGIES
Notes to Financial Statements
(continued)
13. AVAILABLE FOR SALE FINANCIAL ASSETS
Investment in listed shares – at fair value (Level 1)
14. TRADE AND OTHER PAYABLES
Current
Trade and other payables
Non-current
Other payables
Ageing of payables
Payable within 3 months
Beyond 12 months
Payables are non-interest bearing, unsecured and are generally payable in 30-90 days
15. PROVISIONS
Employee benefits - leave entitlements
16. LOANS AND BORROWINGS
Non-current:
Working capital loan facility – Peak African Minerals
Bridging Loan – Appian Pinnacle Holdings
Balance at the end of the year
2017
$
2016
$
8,000
8,000
8,000
8,000
2017
$
2016
$
588,264
1,372,578
303,454
45,256
588,264
1,372,578
303,454
45,256
891,718
1,417,834
2017
$
2016
$
200,241
186,618
2017
$
2016
$
4,586,972
2,213,599
4,594,946
-
9,181,918
2,213,599
Non-current – majority owned associate company Peak African Minerals has provided a working capital loan facility of up to
US$4,209,317 of which the facility is deemed fully drawndown at the end of the financial year. The facility is repayable the earlier of
29 March 2021 or on the commencement of commercial production from the Ngualla project. Interest accrues at 8% per annum until
repayment.
Non-current – Appian loan facility – On 20 September 2016 Appian advanced A$4,179,828 (US$3,145,739) under a full draw down of a
3 year loan facility. The loan is denominated in US$ with interest of 15% per annum calculated daily and capitalised at the end of each
calendar quarter, payable at the time of the loan repayment. Provisions of the facility provide for partial mandatory repayment from
subsequent capital raisings undertaken by the Company.
PAGE 57
Notes to Financial Statements
(continued)
17. RESERVES
At 30 June 2015
Share based payment made in 2016
Equity issued
Performance Rights exercised
Recycled to profit and loss on disposal of former subsidiary
Group’s share of associates FCTR
Exchange difference on translation of foreign operations
At 30 June 2016
Share based payment made in 2017
Equity issued
Performance Rights exercised
Recycled to profit and loss on disposal of former subsidiary
Group’s share of associates FCTR
Exchange difference on translation of foreign operations
At 30 June 2017
Share based
payment reserve
Foreign currency
translation reserve
$
$
Total
$
1,602,463
416,680
(32,000)
(180,000)
-
-
-
1,807,143
230,173
-
-
-
-
-
1,273,526
2,875,989
-
-
-
416,680
(32,000)
(180,000)
(1,273,526)
(1,273,526)
1,533,916
1,533,916
(25,138)
(25,138)
1,508,778
3,315,921
-
-
-
230,173
-
-
(172,425)
(172,425)
(851,914)
(851,914)
41,064
41,064
2,037,316
525,503
2,562,819
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.
18. CONTRIBUTED EQUITY
Balance at 30 June 2015
Issue of shares to Appian and IFC at $0.09 per share
Issue of shares on exercise of performance rights
Issue of shares to Kibuta Ongwamahuna
Issue of shares on conversion of loan notes at $0.103 per
share
Issue of shares pursuant to a placement at $0.05 per share
Issue of shares pursuant to 10 for 36 entitlement issue at
$0.05 per share
Equity issue costs
Balance at 30 June 2016
Issue of Placement Shares to IFC and Appian
Issue of Shares on conversion of loan note at $0.103
per share
Equity issue costs
Balance at 30 June 2017
PAGE 58
24-Jul-15
28-Aug-15
27-Oct-15
30-Dec-15
4-May-2016 &
5-May-2016
17-Jun-16
14-Oct-16
11-Nov-16
Nos.
$
334,546,631
54,943,414
50,134,369
4,512,094
2,500,000
500,000
180,000
32,000
26,696,558
2,749,744
20,000,000
1,000,000
20,096,476
1,004,824
(593,802)
454,474,034
63,828,274
16,306,957
815,348
6,674,140
687,436
(79,839)
477,455,131
65,251,219
ENABLING LOW CARBON TECHNOLOGIES
Notes to Financial Statements
(continued)
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 28,616,666 options over unissued shares as follows:
Options over Ordinary Shares
Date of expiry/
exercise or issue
Nos
Status
Exercise
Price
Expiry Date
Balance at 30 June 2016
Exercised:
Expired:
43,383,332
-
Expiry of unlisted $0.10 options
5 January 2017
(6,383,334)
Cancellation of unlisted $0.20 op-
tions
5 January 2017
(633,332)
Expiry of unlisted $0.15 options
2 June 2017
Expiry of unlisted $0.55 options
20 February 2017
(2,500,000)
(6,250,000)
15,766,666
Vested and
unvested
$0.00
-$0.55
5/01/2018 -
3/03/2018
Issued:
Unlisted options
Unlisted options
16 Nov 2016
16 Nov 2016
500,000
500,000
Vested
Vested
$0.15
$0.20
5/01/2018
5/01/2018
Balance at 30 June 2017
28,616,666
Pursuant to shareholder approval obtained at the Annual General Meeting held on 16 November 2016, 500,000 $0.15 options and
500,000 $0.20 options were issued to the Chairman otherwise on the same terms as those already on issue to other directors. At the
end of the reporting period, there were 28,616,666 unlisted Options and Performance Rights over unissued shares on issue.
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.
PAGE 59
Notes to Financial Statements
(continued)
19. 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 2017 a total of 1,000,000 (2016:
7,333,332) options were issued under the EOP to directors, executives, employees and contractors.
Options granted during and as at the year ended 30 June 2017:
Number
WA Exercise Price
Value per option
Outstanding at 1 July 2016
Granted during the year:
28,983,332
16-Nov-16 - issue of $0.15 vested options expiring 5-Jun-2018
500,000
16-Nov-16 - issue of $0.20 options vested on 5-Jan-2017 expiring
5-Jan-2018
Exercised during the year
Expired during the year
Outstanding at 30 June 2017
Exercisable at 30 June 2017
WA (weighted average)
500,000
-
(9,516,666)
20,466,666
20,466,666
$0.16
$0.15
$0.20
-
-
$0.18
$0.18
$0.007
$0.004
Options granted during and as at the year ended 30 June 2016:
Outstanding at 1 July 2015
Granted during the year:
27-Oct-2015 - issue of $0.15 vested options expiring 5-Jun-2017
27-Oct-2015 - issue of $0.15 vested options expiring 5-Jan-2018
27-Oct-2015 - issue of $0.20 unvested options expiring 5-Jan-2018
17-Jun-2016 - issue of $0.15 vested options expiring 5-Jan-2018
17-Jun-2016 - issue of $0.20 unvested options expiring 5-Jan-2018
Exercised during the year
Expired during the year
Outstanding at 30 June 2016
Exercisable at 30 June 2016
Number
WA Exercise Price
Value per option
19,150,000
2,500,000
666,666
666,666
3,000,000
3,000,000
-
-
28,983,332
18,983,333
$0.15
$0.15
$0.15
$0.20
$0.15
$0.20
-
-
$0.16
$0.13
$0.011
$0.013
$0.009
$0.006
$0.004
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.
The volume weighted exercise price of options issued during the year was $0.175 (2016: $0.169).
The weighted average remaining contractual life for share options outstanding at 30 June 2017 was 0.52 years (2016: 1.25 years).
The weighted average fair value of options issued during the year was $0.006 per option (2016: $0.007).
PAGE 60
ENABLING LOW CARBON TECHNOLOGIES Notes to Financial Statements
(continued)
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.
No performance rights were granted during the year ended 30 June 2017.
Performance rights granted during and as at the year ended 30 June 2017:
Outstanding at 1 July 2016
Granted during the year:
Exercised during the year
Expired during the year
Outstanding at 30 June 2017
Exercisable at 30 June 2017
Performance rights granted during and as at the year ended 30 June 2016:
Outstanding at 1 July 2015
Granted during the year:
Exercised during the year
Expired during the year
Outstanding at 30 June 2016
Exercisable at 30 June 2016
Number
Exercise Price
Value per
performance right
8,000,000
$0.00
-
-
-
-
-
-
8,000,000
-
$0.00
-
Number
Exercise Price
Value per
performance right
10,500,000
$0.00
-
-
(2,500,000)
$0.00
-
-
8,000,000
-
$0.00
-
The unvested performance rights vest on achievement of performance milestones:
i.
ii.
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
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 volume weighted exercise price of rights issued during the year was $0.00 (2016: $0.00)
The weighted average remaining contractual life for rights options outstanding at 30 June 2017 was 0.52 years (2016: 1.52 years)
The weighted average fair value of rights issued during the year was $0.00 per right (2016: $0.00)
The options and performance rights have been valued using the Black-Scholes methodology with the following inputs:
WA Share price on date of grant
WA Risk-free interest rate
Dividend yield
Expected volatility
2017
$0.067
1.50%
0%
77%
2016
$0.057
1.85%
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 $230,173 (2016: $416,680) is $Nil (2016: $32,000) relating to the shares issued during the year, $39,738 (2016: $193,723) related to
PAGE 61
Notes to Financial Statements
(continued)
options granted during the year and prior year, and $190,435 (2016: $190,957) relating to performance rights granted in the prior year.
20. CONTINGENCIES AND COMMITMENTS
Lease commitments
The company has committed to a non-cancellable office lease of $97,200 per annum to 31 July 2017.
Up to 1 year
2017
$
8,100
8,100
2016
$
56,700
56,700
Tenement Commitments
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 2017 minimum annual expenditure commitments in respect of exploration assets amounted to US$145,558 (2016
$127,430). 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 2017, the Group has no capital commitments. (2016: Nil).
Contingencies
At 30 June 2017, the Group had no contingencies (2016: Nil).
Other Contingencies
Peak has provided a performance guarantee to a service provider for services to the Company’s majority owned associate Peak African
Minerals.
21. KEY MANAGEMENT PERSONNEL DISCLOSURE
Salary and fees – short term benefits
Non-monetary benefits
Superannuation
Share based payments
2017
$
2016
$
1,571,607
1,257,002
59,011
78,850
11,835
80,416
215,130
298,421
1,924,598
1,647,674
Loans to KMP’s
No loans were made to KMP’s during the financial year (2016: 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 $79,990
(2016: $202,883) as fees for the provision of legal advice. Balance outstanding at 30 June 2017 and included in trade creditors $24,468
(30 June 2016: $26,470).
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.
PAGE 62
ENABLING LOW CARBON TECHNOLOGIES
Notes to Financial Statements
(continued)
22. 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:
Parent
Peak Resources Limited
Controlled Entities
PRL Pty Ltd
Peak Hill Gold Mines Pty Ltd
Redpalm Pty Ltd
Pan African Exploration Limited
Peak Resources Tanzania Limited
Associated entities
Peak African Minerals Limited
PR Ng Minerals Limited
23. FINANCIAL INSTRUMENTS
Ownership interest
Incorporation
Australia
2017
100%
2016
100%
Australia
Australia
Australia
Australia
Tanzania
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Mauritius
Tanzania
75%
75%
87.5%
87.5%
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; (vi) long term loans and borrowings; and (vii) 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
Due from associate
AFS Investment
Trade and other payables
Current – Loans and borrowings
Non-current – Loans and borrowings
2017
$
2016
$
2,125,680
1,723,830
29,437
55,000
125,002
55,000
1,227,526
2,890,821
8,000
8,000
(891,718)
(1,417,834)
-
-
(9,181,918)
(2,213,599)
The carrying amount of financial instruments closely approximate their fair value on account of the short maturity cycle.
PAGE 63
Notes to Financial Statements
(continued)
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 $29,437 (2016: $125,002) at
reporting dates.
As at 30 June 2017, the receivable balances consist primarily of GST credits. Management does not consider the GST receivable to be
at risk of default as these are receivable from the Government agencies.
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:
Up to 3
months
$
2017
> 3 months
$
2016
Total
$
Up to 3
months
$
> 3 months
Total
$
$
Financial liabilities
-
Trade and other payables
(588,264)
(1,678,792)
(2,267,056)
(1,372,578)
(45,256)
(1,417,834)
Short term loans
Long term loans(1)(2)
Total financial liabilities
Financial assets
-
-
-
-
(10,810,908)
(10,810,908)
-
-
-
-
(3,099,039)
(3,099,039)
(588,264)
(12,489,700)
(13,077,964)
(1,372,578)
(3,144,295)
(4,516,873)
Cash and cash equivalents
2,125,680
-
2,125,680
1,723,830
-
1,723,830
Other financial assets
Due from associate
Investments
Trade and other receivables
Total financial assets
-
55,000
55,000
-
55,000
55,000
1,227,526
-
29,437
3,382,643
-
1,227,526
2,890,821
-
2,890,821
8,000
-
63,000
8,000
29,437
-
125,002
8,000
-
8,000
125,002
3,445,643
4,739,653
63,000
4,802,653
1) PAM working capital facility is repayable the earlier of 29 March 2021 or on the commencement of commercial production from the Ngualla
project.
2) Appian Bridging loan advanced on 20 September 2016 with a 3 year loan facility. Provisions of the facility provide for partial mandatory
repayment from subsequent capital raisings undertaken by the Company
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
PAGE 64
ENABLING LOW CARBON TECHNOLOGIES
Notes to Financial Statements
(continued)
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
2017
$
2016
$
2,125,680
1,723,830
21,257
17,238
(21,257)
(17,238)
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.
24. SUBSEQUENT EVENTS
There were no subsequent events to 30 June 2016 that have a material impact on the financial statements at present other than as
follows:
The Company announced on 19 September 2017 a two tranche placement. Tranche 1 for the issue of 30,625,000 fully paid ordinary
shares at $0.04 per share settled on 15 September 2017 for gross funds raised of A$1,225,000 and tranche 2 for the issue of a further
39,375,000 fully paid ordinary shares at $0.04 per share is scheduled to settle on or around the 20 September 2017 to raise further
gross proceeds of A$1,575,000.
In addition and as announced at the time of the placement the Company intends to undertake a 1 for 8 Rights issue (1 for 8 Entitlements
Issue) on the same terms as the tranche 1 and 2 placement which will see up to a further 68,431,891 fully paid ordinary shares issued
to raise up to a further A$2,737,276 before costs.
Any shares issued pursuant to the placement and rights issue will also be accompanied, subject to the Company obtaining shareholder
approval where required, by a 1 for 2 share option exercisable at $0.06 per share. The options, once issued, will be exercisable for 12
months from the date shareholder approval is obtained.
Appian has provided a waiver from the mandatory repayment provisions of the term loan facility for the first A$1.5m raised pursuant
to the placement referred to above. For amounts raised over and above the A$1.5m, funds are to be applied as follows to the Appian
loan facility debt repayment:
a) 25% of any funds raised pursuant to a capital raising of up to $3 million towards repayment of the Appian loan; and
b) 50% of any funds raised pursuant to a capital raising of over $3 million towards repayment of the Appian loan.
PAGE 65
Notes to Financial Statements
(continued)
25. PARENT ENTITY DISCLOSURE
The following details information related to the parent entity, Peak Resources Limited, at 30 June 2017. 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
2017
$
2016
$
2,205,611
1,925,387
28,292,944
23,291,888
30,498,555
25,217,275
777,851
9,485,371
10,263,222
1,541,547
2,258,855
3,800,402
20,235,333
21,416,873
65,566,970
64,144,025
2,100,800
1,870,627
(47,432,437)
(44,597,779)
20,235,333
21,416,873
(2,834,658)
(28,730,096)
-
-
(2,834,658)
(28,730,096)
Peak Resources Limited had no commitments to purchase property, plant and equipment or contingent liabilities, other than the
performance guarantee as referred to in Note 20, at year end.
PAGE 66
ENABLING LOW CARBON TECHNOLOGIES
Directors' Declaration
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Peak Resources Limited, I state that:
In the opinion of the Directors:
a) Subject to the matters set out in Note 2 to the Financial Statements there are reasonable grounds to believe that the company
b)
will be able to pay its debts as and when they become due and payable;
the attached financial statements are in compliance with International Financial Reporting Standards, as stated in note 2 to
the financial statements;
the attached financial statements and notes thereto for the financial year ended 30 June 2017 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 2017 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
c)
Signed in accordance with a resolution of the Directors made pursuant to s295(5) of the Corporations Act 2001.
On behalf of the Directors
Peter Harold
Non-Executive Chairman
Perth, 27 September 2017
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/corporate-governance
PAGE 67
Tenement Schedule and
Additional Shareholder Information
TENEMENT SCHEDULE
Project
Tenement
%
Status
Arrangement/Comment
Tanzanian Projects
Ngualla
Ngualla
Ngualla
PL 6079/2009
PL 9157/2013
PL 10897/2016
75*
75*
75*
Granted
Granted
Granted
Held by 100% Tanzanian associate company PR NG Minerals Ltd
Held by 100% Tanzanian associate company PR NG Minerals Ltd
Held by 100% Tanzanian associate company PR NG Minerals Ltd
*Peak holds a 75% beneficial interest in the above two licences with Appian and IFC holding a 20% and 5% interest respectively through
their equity interest in Peak African Minerals.
ADDITIONAL SHAREHOLDER INFORMATION
QUOTED SECURITY DISTRIBUTION
The distribution of members and their holdings of quoted equity securities in the company as at 20 October 2017 were as
follows:
Number Held as at 20 October 2017
Class of Equity Securities
Fully Paid Ordinary Shares
1-1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
Total
There were 815 holders with less than a marketable parcel of fully paid shares.
SUBSTANTIAL SECURITY HOLDERS
152
328
308
1,097
539
2,424
Substantial shareholders listed in the Company’s register as at 20 October 2017 were:
Holder
APPIAN PINNACLE HOLDCO LIMITED
INTERNATIONAL FINANCE CORPORATION
Number of shares
Percentage of issued capital
76,965,767
31,846,257
14.06%
5.82%
UNQUOTED SECURITIES
Class of Equity Security
$0.55 options expiring 3 March 2018
$0.15 options expiring 5 January 2018
$0.20 options expiring 5 January 2018
Unvested performance rights expiring 5 January 2018
PAGE 68
Number
150,000
10,549,999
9,916,667
8,000,000
Number of Security Holders
1
18
15
3
ENABLING LOW CARBON TECHNOLOGIES
Additional Shareholder Information
(continued)
Names of persons holding greater than 20% of a class of unquoted securities:
Class of Equity Security
$0.55 options expiring 3 March 2018
$0.20 options expiring 5 January 2018
Unvested performance rights expiring 5 January 2018
Unvested performance rights expiring 5 January 2018
VOTING RIGHTS
Number
150,000
2,000,000
5,000,000
2,500,000
Holder
Mzhci LLC
Darren Townsend
Darren Townsend
David Hammond
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 2017, there were no restricted securities.
Twenty largest security holders
The names of the twenty largest ordinary fully paid shareholders as at 20 October 2017 are as follows:
Name
CITICORP NOMINEES PTY LIMITED
INTERNATIONAL FINANCE CORPORATION
J P MORGAN NOMINEES AUSTRALIA LIMITED
SAMBOLD PTY LTD
ERP STRATEGIC MINERALS, LLC
CRX INVESTMENTS PTY LIMITED
BUSHELL NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
WISEVEST PTY LTD
ASHABIA PTY LTD
ONE MANAGED INVESTMENT FUNDS LIMITED
HOTLAKE PTY LTD
BNP PARIBAS NOMINEES PTY LTD
PINNACLE SUPERANNUATION PTY LIMITED
MR JAMES SUTTON HARRISON
RASK PTY LTD
WAPIMALA PTY LIMITED
JBBM PTY LTD
MRS JENNY LEE BUSHELL
RENOM PTY LTD
TOTAL TOP 20
TOTAL
Number Held of
Ordinary Fully
Paid Shares
% Held of Issued Ordinary Capital
83,148,172
31,846,257
24,472,888
13,199,144
12,500,000
12,475,000
11,072,401
10,878,692
9,500,000
9,000,000
7,000,000
6,352,325
5,326,826
5,000,000
5,000,000
4,664,000
4,600,000
4,550,000
4,044,889
4,000,000
15.19
5.82
4.47
2.41
2.28
2.28
2.02
1.99
1.74
1.64
1.28
1.16
0.97
0.91
0.91
0.84
0.73
0.83
0.74
0.73
268,630,594
547,455,131
49.07%
100.00%
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.
PAGE 69
www.peakresources.com.au
Ground Floor, 5 Ord Street,
West Perth, WA 6005
Ph: +61 8 9200 5360