PolarX Limited
ABN 76 161 615 783
Annual Report
30 June 2018
PolarX Limited
Corporate Directory
Review of Operations
Directors’ Report
CONTENTS
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Audit Report
Additional ASX Information
Page No
2
3
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27
61
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PolarX Limited
2018 Annual Report
Directors’ Report
CORPORATE DIRECTORY
Directors
Mr. Mark Bojanjac
Dr. Frazer Tabeart
Dr. Jason Berton
Mr. Robert Boaz
Company Secretary
Mr. Ian Cunningham
Executive Chairman
Managing Director
Executive Director
Non-Executive Director
Registered Office
Suite 9, 5 Centro Avenue
Subiaco WA 6008
Australia
Telephone:
Facsimile:
(+61 8) 9226 5566
(+61 8) 9226 2027
Principal Place of Business
Suite 1, 245 Churchill Avenue
Subiaco WA 6008
Australia
Telephone:
Facsimile:
(+61 8) 6465 5500
(+61 8) 6465 5599
Share Register
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
Perth WA 6000 Australia
Telephone: 1300 787 272
International: (61 8) 9323 2000
(61 8) 9323 2033
Facsimile:
Stock Exchange Listing
Australian Securities Exchange
ASX Code: PXX
Auditors
Stantons International Audit and Consulting Pty Ltd
Level 2, 1 Walker Avenue
West Perth WA 6005
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Directors’ Report
REVIEW OF OPERATIONS
Alaska Range Project, Alaska USA
During the financial year ended 30 June 2018 (FY2018), the Company significantly expanded its highly prospective footprint
in Alaska by acquiring 100% of the issued capital of Vista Minerals Pty Ltd (Vista Acquisition), which holds a 100% interest
in the Stellar Copper Gold Project (Stellar Property).
Subsequent to the Vista Acquisition, PolarX’s focus has been on the exploration and development of its newly named
Alaska Range Project which contains both the Caribou Dome Copper Project (Caribou Dome Property) and the new
Stellar Property (refer Figure 1). The combined Alaska Range Project now comprises 417 State mineral claims covering a
total area of ~241km2, which follows the staking of an additional 104 State Mining Claims during the reporting period.
Collectively these claims form a contiguous package with ~35km strike length containing extensive copper and gold-in-soil
anomalism, with significant upside potential for resource extensions and larger porphyry copper-gold discoveries.
The project is located approximately 250km northeast of Anchorage. It is easily accessible by road with the Denali Highway
passing within 20km of the project. The project is also located ~125km from the Anchorage-Fairbanks railway line. Any
potential concentrate or metal produced from the project could be transported by road or rail to the ports of Anchorage,
Seward (all year) or Port Mackenzie. There are also nearby lodges along the Denali Highway which provide accommodation
facilities, communications, logistics support and supplies.
Figure 1: Location map showing main deposits and prospects at the Stellar and Caribou Dome properties in central Alaska, which
collectively form the Alaska Range Project, regional copper geochemistry in soil sampling draped on digital elevation.
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Geological setting of the Alaska Range Project
The Alaska Range Project occurs along a major ENE trending structural break marking the local boundary between the
Tintina Gold Belt to the north, and a major porphyry Cu-Au belt to the south (Figure 2). This porphyry belt has had a long
geological history which commenced as a volcanic island arc over 300 million years ago. The island arc was accreted to the
north American Craton causing associated collisional to post-collisional magmatic events between 110 and 90 million years
ago. This magmatism created world class deposits such as the Pebble Cu-Au-Mo porphyry and the Tintina-style gold
deposits at Donlin, Pogo and Fort Knox.
Multiple styles of mineralisation occur in the Alaska Range Project, including early massive sulphide lenses at Caribou
Dome (2.8Mt @ 3.1% Cu, Table 1) which pre-date the intense folding events caused by the collision 110 million years ago,
and the Zackly Cu-Au skarn (3.4Mt @ 1.2% Cu, 2.0g/t Au, 14.0 g/t Ag) which overprints the folding and thus occurred in a
post-collisional setting. Such settings are highly prospective for large porphyry Cu-Au deposits, and the presence of Zackly
is direct confirmation that the right processes have operated in the Alaska Range Project.
A major NW trending fault corridor intersects the terrane boundary in the eastern part of the Alaska Range Project and hosts
several interpreted intrusive centres such as Mars, Gemini and Jupiter, all of which the Company considers highly
prospective for large mineralised porphyry systems.
Figure 2: Regional geological setting of the Alaska Range Project
TABLE 1; Alaska Range Project Resource Estimates (JORC 2012), 0.5% Cu cut-off grade
ZACKLY
CARIBOU
DOME
Category
Inferred
Inferred
Indicated
Measured
Million
Tonnes
Cu %
Au g/t
Ag g/t
Contained Cu
(t)
Contained
Cu (M lb)
Contained Au
(oz)
Contained
Ag (oz)
3.4
1.6
0.6
0.6
1.2
2.0
14.0
41,200
91
213,000
1,500,000
3.2
2.2
3.6
-
-
-
52,300
13,000
20,500
TOTAL
127,000
115
29
45
280
-
-
-
-
-
-
213,000
1,500,000
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Stellar Property (100% interest)
The Stellar Property contains six main prospects: the Zackly Cu-Au skarn; the Zackly SE, Jupiter, Mars and Gemini porphyry
Cu-Au targets, and the Au-only Moonwalk Prospect (Figure 2). Prior to the Vista Acquisition, Zackly was the only prospect
to have been tested by drilling, undertaken between 1981 and 1994. This drilling identified a mineralized Cu-Au skarn along
a strike-length of approximately 800m. PolarX identified the opportunity to significantly increase the strike length and depth
of the mineralisation through further drilling.
The skarn mineralisation as Zackly was caused by mineralising fluids escaping from an intrusion and reacting with silty
limestones. The Zackly skarn mineralisation comprises predominantly sub-vertical zones of intense garnet alteration which
completely replaces the original limestone, and which contains variable amounts of magnetite, copper sulphides and coarse
gold. The copper sulphides are predominantly the high-tenor minerals bornite and chalcocite, with lesser amounts of
chalcopyrite. Late supergene remobilisation and oxidation has locally produced copper oxides and native copper.
2017 Stellar Field Program and Maiden Mineral Resource Estimate
During the 2017 field season, a program of 13 drill holes, for a total of 2,054m, were drilled at Zackly. This drilling helped
validate the historical drilling results, and a maiden JORC Inferred Resource estimate for the Zackly Deposit was announced
in March 2018 (Zackly Resource, Table 2). The Zackly Resource extends from surface and remains open for extension
along strike and at depth.
Table 2: Zackly Mineral Resource Estimate (JORC 2012) at various cut-off grades*
Cut-off grade Category
Cu % Au g/t
0.5% Cu
0.8% Cu
1.0% Cu
2.0
2.3
2.5
*Refer to the ASX announcement of 20 March 2018 for full details, including applicable technical information and reporting criteria
Inferred
Inferred
Inferred
1.2
1.5
1.6
Contained Cu
(t)
41,200
34,750
30,250
Contained
Cu (M lb)
90.8
76.6
66.7
Contained
Au (oz)
213,000
177,000
152,000
Million
Tonnes
3.4
2.4
1.9
2018 Stellar Field Program
The 2018 drilling program comprised 17 holes for a total of 3,754m of core drilling designed to extend the Zackly Resource
both along-strike and down-dip (Figure 3).
Figure 3: Drill hole plan for Zackly showing the 2017 surface trace of PolarX’s inferred resource outline (red) and the 2018 drill
holes (yellow) on detailed drone imagery.
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Highlights from the 2018 drilling program are summarised below:
Hole ZX-18020 intersected 55m @ 2.8g/t Au and 0.6% Cu from near-surface. This hole is 850m east of the Zackly
Resource (Figure 3 and Figure 4). The intersection included a 0.3m down-hole thickness from 56.7m which assayed
27.3% Cu, 2.5g/t Au and 82.5g/t Ag. Hole ZX-18024, drilled 40m down-dip from ZX-18020 intersected 46.7m @ 3.1g/t
Au and 0.6% Cu from 37m, confirming the presence of thick, near-surface high-grade mineralisation.
The gold and copper mineralisation in ZX-18020 occurs from near-surface under 2.5m of transported cover in garnet-
bearing skarn alteration located above a fault. Visible copper mineralisation in both holes occurs in veins, fractures,
interstitial to grains, as native copper flecks and silicified chalcocite. High grade gold is also present throughout the
mineralised zone. The gold and copper oxide mineralisation appear to be associated with quartz and sericite veining
and alteration, which is consistent with hydrothermal alteration proximal to a porphyry system.
Significantly, the relict bedding in both holes clearly shows that the mineralisation is at a much lower angle than the
usual steeply dipping mineralisation seen elsewhere at Zackly such as seen in nearby hole ZX-18021 (Figure 4). This
lower angle mineralisation, if extended down-dip and along-strike, may be amenable to open-pit extraction.
Figure 4: Shallow, sub-horizontal mineralisation is hole ZX-18020 and ZX-18024
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Hole ZX-18018 intersected multiple zones of copper-gold mineralisation below the nearest hole in the current Zackly
Resource (Figure 5). The mineralisation in hole ZX-18018 occurs approximately 100m vertically below historic drill
hole Z31-82 and it is expected that this will result in the resource block model extending down-dip by a similar distance,
increasing the size of the Zackly inferred resource. The cumulative width of the intersections is thicker than previous
intercepts and included 1.4m @ 3.2% Cu, 9.3g/t Au and 38.2g/t Ag from 285.8m and 2.5m @ 2.3% Cu, 3.5g/t Au and
18.5g/t Ag from 326.1m.
Figure 5: Multiple, thicker zones of mineralisation in hole ZX-18018, 100m below Z31-82
Hole ZX-18023 intersected shallow, strong copper sulphide (bornite and chalcopyrite) mineralisation in a magnetite-
skarn at 20.5m down-hole depths, 350m to the east of the Zackly Resource (refer Figures 3 and 7). The copper
mineralisation is hosted within magnetite-rich skarn alteration and assayed 3.3% Cu, 2.3g/t Au and 19.7g/t Au over
9.3m. Copper mineralisation occurs as the high-tenor sulphide bornite, with lesser amounts of chalcopyrite, covellite,
native copper and copper oxides. These minerals appear to replace original bedding layers in the pre-cursor silty
limestone (Figure 6). Mineralisation occurs between an altered limestone and an altered basalt, and is consistent with
that previously reported by the Company.
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Figure 6: Chalcopyrite replacing folded, crenulated bedding planes in magnetite rich skarn, hole ZX-18023
Hole ZX-18025 intersected a 15.0m wide down-hole interval of magnetite skarn containing 2.3% copper, 2.2 g/t gold
and 11.9 g/t silver, from 84.9m to 99.8m down-hole depth. This zone of mineralisation is approximately 40m below the
similar mineralisation in hole ZX-18023 (refer Figures 7 and 8) and adds substantially to the growing discovery outside
the existing Zackly Resource. The copper mineralisation occurs as disseminated, blebby and vein-hosted chalcopyrite
between an altered limestone and an altered basalt.
Figure 7: Cross-section showing relationship between holes ZX-18023, ZX-18025 and ZX-18027 and historic percussion hole
Z86.
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Assay results for deeper hole ZX-18027 which intersected less intense magnetite skarn, but with more prominent quartz and
carbonate veining are expected in October 2018.
Figure 8: Visible copper sulphides and magnetite in half-core, hole ZX-18025, 93.9m down-hole depth. Copper sulphides
comprise mainly chalcopyrite (yellow colour). Assays returned mineralisation grades of 5.4% Cu, 3.7g/t Au and 16.3g/t Ag
for the interval including the above core-photograph. Scale bar is in cm
Hole ZX-18020 was drilled 850m east of the Zackly Resource. Given this result and the fact that several other holes drilled
as part of this program intersected visible mineralisation outside the current Zackly Resource, PolarX expects the existing
resource estimate to increase, with a mineral resource estimate update targeted for later in the year.
Importantly, PolarX also believes that the geological nature, width and the grade of the mineralisation in hole ZX-18020
supports its view of the potential for a porphyry copper-gold target at Zackly SE (refer Figure 9).
Figure 9: Aeromagnetic imagery showing a prominent magnetic anomaly to the SE of the Zackly inferred resource. Note the
recently completed drill hole ZX-18020 in which thick zones of gold and copper mineralisation were intersected in association with
quartz-sericite veining, possible indicative of the presence of porphyry style mineralisation.
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Regional Activity
The Company’s exploration program also aims to test the strong potential at Zackly for a deeper and much larger buried
porphyry source. PolarX believes a porphyry intrusion may be the source of the prominent, buried magnetic anomaly at
Zackly SE and the magnetic anomaly and associated Cu-Au soil geochemical anomalism at Mars (Figures 9 and 10).
Following the observed association of magnetite with mineralisation and the presence of geological structures at the Zackly
Skarn, and given the magnetic signatures of the porphyry targets, a detailed helicopter-borne magnetic and radiometric
survey at 50m line-spacing has been completed over the entire northern part of the Alaska Range Project. Processing of the
raw data will commence in October and is expected to be complete in November. Given the close association of magnetite
with mineralisation, the presence of geological structures at the Zackly Skarn, and the magnetic signatures of the porphyry
targets, this data will provide an excellent context for all future exploration in this part of the Alaska Range.
Mars Cu-Au Target
The Mars prospect lies 6km to the WNW of the Zackly Skarn. Geological evidence indicates a WNW structural corridor
extending between Mars and Zackly (Figure 10). This potentially hosts multiple buried porphyry Cu-Au systems.
The Mars prospect is characterised by co-incident copper, gold, molybdenum and silver anomalism in broadly spaced soil
samples over a large area of approximately 2,000m x 1,500m. Up to 7.4% Cu and 1.8g/t Au is evident in rock-chip samples.
PolarX conducted an initial IP survey over the Mars prospect in late August 2017. Three lines of data and one short tie line
were collected using a pole-dipole array with 100m spaced electrodes. The IP results (Figure 11) show a buried
chargeability anomaly located 100-150m below the surface geochemical anomalism. This is consistent with a buried,
mineralised porphyry Cu-Au system.
Figure 10: Regional copper in soil anomalism plotted over aeromagnetic data showing the prominent geochemical
anomalism at Mars, Gemini and immediately north of Zackly. Note that Zackly SE is covered by glacial till and is therefore
blind to surface geochemical sampling.
.
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Figure 11: Mars Prospect showing IP chargeability anomaly directly below soil geochemistry results and rock-
chip sampling copper assays.
The full extent of the chargeability anomaly is not yet known as the anomalism extends to the edge of the 800m wide survey
area which lies within the 2km long soil anomaly – further IP surveying will be undertaken to map out the full extent of the IP
anomaly. In addition, a program of detailed soil sampling and geological mapping on a 200m x 150m grid has been recently
completed over the entire 4km x 2km Mars target. The results from these programs, together with the newly acquired
aeromagnetic data, will lead to a drill campaign on this prospect.
Moonwalk Prospect
A program of detailed mapping and rock-chip sampling was undertaken at the Moonwalk Tintina-style gold prospect in the
far north of the project. Results are pending.
Caribou Dome Property
Caribou Dome Deposit (earning an 80% interest)
The Caribou Dome deposit is located approximately 20km south-west of the Zackly Deposit. A maiden mineral resource
estimate for the Caribou Dome Deposit was announced in April 2017 (Table 3).
Table 3: Caribou Dome Mineral Resource Estimate
Category
Contained Cu (t)
Tonnes Grade Cu
%
3.6
2.2
3.2
3.1
569,000
593,000
1,634,000
2,796,000
Measured
Indicated
Inferred
Total
Notes:
1. Numbers are presented at a 0.5% Cu cut-off grade and are rounded; and
2. Refer to the ASX announcement of 5 April 2017 for full details, including applicable technical information and reporting criteria
21,000
13,000
52,000
86,000
During FY2018 there was no change to the Mineral Resources Estimate reported at 30 June 2017 for comparison.
The FY2018 program at Caribou Dome comprised detailed geological mapping and structural interpretation of outcrop and
drill core. This work will aid understanding the structural influences and geometry of the known mineralisation and will be
used to assist in planning extensional drilling at the Caribou Dome Deposit.
Senator Cu Target (earning a 90% interest)
The Senator copper prospect, which forms part of the Caribou Dome Property, was discovered through a soil sampling
program undertaken by the Company in 2016. This highlighted an area covering approximately 5km x 2.5km with elevated
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copper in soils (>100ppm Cu) and sporadic outcrop. Site visits undertaken during 2017 highlighted the potential of this area
having identified intense iron alteration (jarosite and hematite) and the presence of copper oxides on fracture surfaces.
Environmental Baseline Surveys
Environmental baseline studies to monitor surface and ground water at the Caribou Dome and Zackly deposits for future
mine permitting purposes commenced during FY2018 and included a reconnaissance level wetlands survey over Zackly and
collection of initial water samples from a number of baseline monitoring stations at Zackly and Caribou Dome. These
studies are ongoing.
Uncle Sam Gold Project, Alaska USA
The Uncle Sam Project is located 75 kilometres southeast of the City of Fairbanks in Alaska. Intrusion-related gold has
been targeted in previous exploration programs.
The Company acquired the Uncle Sam Project in April 2013 from Millrock. Subsequently in July 2015, the Company entered
into a mineral lease and purchase agreement with Great American Minerals Exploration Inc. (GAME), pursuant to which
GAME agreed to lease the Uncle Sam Project for 10 years with an option to purchase the property at any time during the
lease period (refer Note 29 to the 2017 Annual Financial Report for key terms).
During the reporting period the Company received noticed from the Department of Natural Resources (State of Alaska) that
the mineral claims which comprise the Uncle Sam Gold Project had been declared abandoned (DNR Notice). The basis for
the decision was an error on the affidavit of labor filed by the previous tenement owner in 2011. As a result, GAME has
sought to terminate the Option Agreement.
The Company is currently reviewing its options in relation to this matter, including whether GAME has complied with its
obligations under the Option Agreement, but notes that the Uncle Sam Gold Project:
‐
‐
is considered a non-core asset and had a $nil carrying value in the Company’s financial statements at the time of
receipt of the DNR Notice; and
is independent of the Company’s Alaska Range Project.
Corporate
A summary of significant corporate activities that have taken place during the reporting period is as follows:
‐
‐
‐
‐
‐
‐
on 26 July 2017 the Company announced that it had (i) completed the Vista Acquisition; and (ii) raised
approximately $5.5 million via the issue of 54,950,000 ordinary shares at an issue price of $0.10 per Share. The
July 2017 placement was a condition precedent to completion of the Vista Acquisition;
following the Vista Acquisition, Dr Frazer Tabeart and Dr Jason Berton were appointed as directors of the
Company, with Dr Tabeart appointed as Managing Director/CEO and Dr Berton as Technical Director;
on 3 August 2017, the Company completed a 1 for 5 security consolidation (Consolidation) Accordingly,
references to shares and options throughout this financial report, including the accompanying financial statements
and notes thereto, are on a post-Consolidation basis;
on 15 September 2017 the Company changed its name to PolarX Limited;
on 26 May 2018, the Company completed a placement consisting of 23,974,407 Shares at an issue price of $0.105
per Share for gross proceeds of $2.517 million to institutional and sophisticated investors; and
on 2 August 2018, the Company completed a placement consisting of 35,299,128 Shares at an issue price of $0.11
per Share for gross proceeds of $3.883 million to institutional and sophisticated investors (refer further Note 19 to
the financial statements). Net funds raised pursuant to the August 2018 placement will be used for exploration and
development activities on the Alaska Range Project and for general working capital purposes.
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Additional Disclosure
The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the ‘JORC Code’) sets out
minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources
and Ore Reserves. The information contained in this report has been presented in accordance with the JORC Code.
Information in this report relating to Exploration results is based on information compiled by Dr Frazer Tabeart (an employee and
shareholder of PolarX Limited), who is a member of The Australian Institute of Geoscientists. Dr Tabeart 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 under the 2012 Edition of the Australasian Code for reporting of Exploration Results, Mineral
Resources and Ore Reserves. Dr Tabeart consents to the inclusion of the data in the form and context in which it appears.
There is information in this report relating to:
(i)
(ii)
the Mineral Resource Estimate for the Caribou Dome Deposit (Alaska Range Project), which was previously announced on
5 April 2017;
the Mineral Resource Estimate for the Zackly Deposit (Alaska Range Project), which was previously announced on 20
March 2018; and
(iii) exploration results which were previously announced on 13 July 2018, 17 July 2018, 24 July 2018, 7 August 2018, 15
August 2018, 21 August 2018, 27 August 2018, 20 September 2018 and 25 September 2018.
Other than as disclosed in those announcements, 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 have not materially changed. The Company also confirms that the form and context in which the Competent Person’s
findings are presented have not been materially modified from the original market announcements.
Forward Looking Statements:
Any forward-looking information contained in this report is made as of the date of this news release. Except as required under
applicable securities legislation, PolarX does not intend, and does not assume any obligation, to update this forward-looking
information. Any forward-looking information contained in this report is based on numerous assumptions and is subject to all of the
risks and uncertainties inherent in the Company’s business, including risks inherent in resource exploration and development. As a
result, actual results may vary materially from those described in the forward-looking information. Readers are cautioned not to
place undue reliance on forward-looking information due to the inherent uncertainty thereof.
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2018 Annual Report
Directors’ Report
The Directors present the annual report of PolarX Limited (PolarX or the Company) and its subsidiaries (the Group) for the
financial year ended 30 June 2018.
DIRECTORS
The names, qualifications and experience of the Directors in office during or since the end of the financial year are as follows
(Directors were in office for the entire period unless otherwise stated).
Mark Bojanjac
Executive Chairman
Qualifications
BCom, ICAA
Experience
Interest in shares
and options
Other Directorships
Mr Bojanjac is a Chartered Accountant with over 25 years’ experience in developing resource
companies. Mr Bojanjac was a founding director of Gilt-Edged Mining Limited which discovered
one of Australia’s highest grade gold mines and was managing director of a public company
which successfully developed and financed a 2.4m oz gold resource in Mongolia. He also co-
founded a 3 million oz gold project in China.
Mr Bojanjac was most recently Chief Executive Officer of Adamus Resources Limited and
oversaw its advancement from an early stage exploration project through its definitive feasibility
studies and managed the debt and equity financing of its successful Ghanaian gold mine.
2,000,000 unlisted options exercisable at $0.0715 on or before 19 February 2020
Director of Geopacific Resources Limited (since 28 March 2013) and Kula Gold Limited (since 21
August 2017)
Frazer Tabeart
Managing Director (appointed 25 July 2017)
Qualifications
Ph.D, B.Sc (Hons), ARSM, MAIG
Experience
Dr. Tabeart is a geologist with over 30-years’ international experience in exploration and project
development, with strong technical background in porphyry copper-gold systems in SE Asia, SW
Pacific, the American Cordillera and central and northern Asia. After spending 16 years with WMC
Resources and managing exploration portfolios in the Philippines, Mongolia and Africa, he left to
join the Mitchell River Group.
Interest in shares
and options
Other Directorships
Dr. Tabeart has served on ASX-listed Company Boards at Executive level over last 10 years.
4,103,273 ordinary shares
Dr. Tabeart is a Director and Principal at Mitchell River Group, and current Managing Director at
African Energy Resources Limited (since 1 November 2007) and Non-Executive Director at
Arrow Minerals Limited (since 1 September 2014).
Jason Berton
Executive Director (appointed 25 July 2017)
Qualifications
Ph.D, B.Sc (Hons), MAusIMM
Experience
Dr. Berton is a geologist with over 17 years’ mining and exploration experience including working
for Homestake, Barrick and BHP Billiton and SRK Consulting. Dr Berton has also previously
spent two years in private equity investment and four years as Managing Director of ASX- listed
Estrella Resources.
Dr Berton holds two Degrees, a Bachelor of Economics and a Bachelor of Science (Hons) plus a
PhD in Structural Geology, all from Macquarie University.
Interest in shares
and options
13,664,938 ordinary shares
Other Directorships
None
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Robert Boaz
Independent Non-Executive Director
Qualifications
Honors B.A., M.A. Economics
Experience
Interest in shares
and options
Other Directorships
Mr Boaz graduated with honours from McMaster University of Hamilton, Ontario with a Bachelor
of Arts in Economics and has a Masters Degree in Economics from York University in Toronto.
He is a highly respected financial and economic strategist in Canadian bond and equity markets
with experience related to equity research, portfolio management, institutional sales and
investment banking.
Mr Boaz has over 20 years’ experience in the finance industry, most recently as Managing
Director, Investment Banking with Raymond James Ltd and Vice-President, Head of Research
and in-house portfolio strategist for Dundee Securities Corporation.
Mr Boaz is the former President & CEO of Aura Silver Resources Inc.
1,000,000 unlisted options exercisable at $0.0715 on or before 19 February 2020
Aura Silver Resources Inc. (2008 - 2018)
Renaissance Gold Inc. (since 2010)
Caracara Silver Inc. (since 2011)
Michael Fowler
Independent Non-Executive Director (resigned 1 December 2017)
Qualifications
BSc, MSc, MAusIMM
Experience
Interest in shares
and options
Mr Fowler is a geologist with over 25 years’ experience in the resources industry. He graduated
from Curtin University in 1988 with a Bachelor of Applied Science degree majoring in geology
and in 1999 received a Master of Science majoring in Ore Deposit Geology from the University of
Western Australia. On graduating he explored for gold and base metals for Dominion Mining in
the Murchison, Gascoyne and Eastern Goldfields regions of Western Australia. In 1996, Mr
Fowler joined Croesus Mining NL and was made Exploration Manager in 1997. He oversaw all
exploration for Croesus until June 2004 and was then appointed Business Development Manager
and subsequently Managing Director in October 2005.
Mr Fowler has overseen the discovery and development of several significant gold deposits. He
has intimately involved in a number of significant acquisitions and project reviews.
1,000,000 unlisted options exercisable at $0.0715 on or before 19 February 2020
Other Directorships
Director of Genesis Minerals Limited (since 16 April 2007)
RESULTS OF OPERATIONS
The Group’s total comprehensive loss after taxation attributable to the members for the year was $869,476 (2017:
$1,056,489).
DIVIDENDS
No dividend was paid or declared by the Group in the year and up to the date of this report.
CORPORATE STRUCTURE
PolarX Limited is an Australian registered public company limited by shares.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
During the financial year, the Group’s principal activity was mineral exploration. The Group currently holds interests in
copper and gold exploration projects in Alaska USA. During the 2018 financial year there were no changes in the principal
activities from the prior financial year.
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EMPLOYEES
The Group had one employee at 30 June 2018 (2017: one employee).
REVIEW OF OPERATIONS
A detailed summary of the Group’s operations during the year, including significant changes in the state of affairs, are
detailed in the Review of Operations.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
On 2 August 2018, the Company completed a placement consisting of 35,299,128 Shares at an issue price of $0.11 per
Share for gross proceeds of $3.883 million to institutional and sophisticated investors. Net funds raised pursuant to the
August placement were used for exploration and development activities on the Alaska Range Project and for general
working capital purposes.
No other significant events have occurred subsequent to the balance sheet date but prior to the date of this report that would
have a material impact on the consolidated financial statements.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Group will continue to carry out its business plan, by:
continuing to explore the Alaska Range Project and advance these projects towards development;
continuing to meet its commitments relating to exploration tenements and carrying out further exploration, permitting
and development activities; and
prudently managing the Group’s cash to be able to take advantage of any future opportunities that may arise to add
value to the business.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group carries out operations that are subject to environmental regulations under Federal and State legislation in the
USA. The Group has procedures in place to ensure regulations are adhered to. The Group is not aware of any breaches in
relation to environmental matters.
SHARE OPTIONS
There were 5,200,000 options over unissued ordinary shares at 30 June 2018. During the 2018 financial year:
the Company issued 400,000 options, exercisable at $0.12 on or before 18 September 2020, in lieu of cash
consideration for consulting services; and
372,370 options expired; and
no options were exercised.
Since the end of the financial year, no options have been issued, exercised or have expired. The details of the options on
issue at the date of this report are as follows:
Number
Exercise Price
Expiry Date
4,000,000
$0.0715
19 February 2020
400,000
400,000
400,000
$0.175
$0.195
$0.12
17 June 2020
30 August 2019
18 September 2020
PolarX Limited
16
2018 Annual Report
Directors’ Report
No option holder has any right under the options to participate in any other share issue of the Company or any other entity.
There were 298,170,638 Shares on issue at the reporting date.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has made agreements indemnifying all the Directors and Officers of the Company against all losses or
liabilities incurred by each Director or Officer in their capacity as Directors or Officers of the Company to the extent permitted
by the Corporations Act 2001. The indemnification specifically excludes wilful acts of negligence. The Company paid
insurance premiums in respect of Directors’ and Officers’ Liability Insurance contracts for current Officers of the Company,
including Officers of the Company’s controlled entities. The liabilities insured are damages and legal costs that may be
incurred in defending civil or criminal proceedings that may be brought against the Officers in their capacity as officers of
entities in the Group. The total amount of insurance premiums paid has not been disclosed due to confidentiality reasons.
DIRECTORS’ MEETINGS
During the financial year, in addition to regular informal Board discussions and decisions made via circulating resolutions,
the number of Directors’ meetings (including meetings of Committees) held during the year, and the number of meetings
attended by each Director were as follows:
Directors Meetings
Audit Committee Meetings
Name
Number Eligible to
Attend
Number Attended
Number Eligible
to Attend
Number Attended
Mark Bojanjac
Frazer Tabeart
Jason Berton
Robert Boaz
Michael Fowler
1
1
1
1
1
1
1
1
1
1
2
-
-
2
1
2
-
-
2
1
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings. The Company was not a party to any such proceedings during the year.
CORPORATE GOVERNANCE
The Board of Directors is responsible for the overall strategy, governance and performance of the Company. The Board has
adopted a corporate governance framework which it considers to be suitable given the size, nature of operations and
strategy of the Company. To the extent that they are applicable, and given its circumstances, the Company adopts the eight
essential Corporate Governance Principles and Best Practice Recommendations ('Recommendations') published by the
Corporate Governance Council of the ASX. The Company’s Corporate Governance Statement and Appendix 4G, both of
which have been lodged with ASX, are available on the Company’s website: www.polarx.com.au.
AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES
Section 307C of the Corporations Act 2001 requires the Group’s auditors to provide the Directors of PolarX with an
Independence Declaration in relation to the audit of the full-year financial report. A copy of that declaration is included at
page 62 of this report. There were no non-audit services provided by the Company’s auditor.
PolarX Limited
17
2018 Annual Report
Directors’ Report
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Directors and other key management personnel of the
Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purpose of this report,
Key Management Personnel (KMP) are defined as those persons having authority and responsibility for planning, directing
and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether
executive or otherwise) of the Parent entity.
Details of Directors and Key Management Personnel
The directors and other KMP of the Group during or since the end of the financial year were:
Non-Executive Directors
Mr. Michael Fowler
Mr. Robert Boaz
Non-Executive Director (resigned 1 December 2017)
Non-Executive Director
Executive Officers (KMP)
Mr. Mark Bojanjac
Dr. Frazer Tabeart
Dr. Jason Berton
Mr. Ian Cunningham
Executive Chairman
Managing Director (appointed 25 July 2017)
Executive Director (appointed 25 July 2017)
Chief Financial Officer and Company Secretary
Remuneration Policy
The Board is responsible for determining and reviewing compensation arrangements for the Directors and management.
The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by
reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from
the retention of a high quality board and executive team. The Company does not link the nature and amount of the
emoluments of such officers to the Group’s financial or operational performance. The lack of a performance link at this time
is not considered to have a negative impact on retaining and motivating Directors.
The rewards for Directors’ have no set or pre-determined performance conditions or key performance indicators as part of
their remuneration due to the current nature of the business operations. The Board will determine appropriate levels of
performance rewards as and when they consider rewards are warranted.
The table below shows the performance of the Group as measured by earnings / (loss) per share for the previous five years:
As at 30 June 2018
2018
2017*
2016*
2015*
2014*
Loss per share (cents)
Share price at reporting date (cents)
*adjusted on a post-Consolidation basis
$0.65
8.0
$1.05
8.0
$1.95
31.0
$2.4
17.5
$153.45
2.5
PolarX Limited
18
2018 Annual Report
Directors’ Report
Details of the nature and amount of each element of the emolument of Directors and KMP of the Company for the financial
year are as follows:
Short Term Benefits
Base Salary
$
Director Fees
$
Consulting
Fees
$
Super-
annuation
$
Share
Based
Payments –
Options
$
Director
2018
Non-Executive Directors
Michael Fowler5
Robert Boaz
Executive Officers (KMP)
Mark Bojanjac
Frazer Tabeart4
Jason Berton4
Ian Cunningham
2017
Non-Executive Directors
Michael Fowler
Robert Boaz
Executive Officers (KMP)
Mark Bojanjac1
Michael Haynes2
Ian Cunningham3
Notes:
-
-
-
-
-
-
-
-
-
-
-
-
-
7,610
20,000
-
-
-
-
-
-
27,610
18,265
20,000
10,464
-
-
48,729
180,000
128,333
136,250
140,000
584,583
-
-
97,500
79,030
140,000
316,530
723
-
-
-
-
-
723
1,735
-
995
-
-
2,730
Total
$
8,333
20,000
180,000
128,333
136,250
140,000
612,916
-
-
-
-
-
-
-
7,171
7,171
27,171
27,171
14,341
-
-
28,683
123,300
79,030
140,000
396,672
1. Mark Bojanjac was appointed as Executive Chairman on 13 December 2016;
2. Michael Haynes resigned as Managing Director on 13 December 2016;
3.
Ian Cunningham resigned as Executive Director on 13 December 2016, but continued in the roles of Chief Financial Officer and
Company Secretary;
4. Frazer Tabeart and Jason Berton were appointed as directors on 25 July 2017; and
5. Michael Fowler resigned as Non-Executive Director on 1 December 2017.
There were no other key management personnel of the Company during the financial years ended 30 June 2018 and 30
June 2017.
The share options issued as part of the remuneration to Non-Executive Directors were subject to vesting conditions,
designed to secure their ongoing commitment to the Company.
The terms and conditions of each grant of options affecting remuneration in the previous, this or future reporting periods are
as follows:
Name
Grant
Date
Grant
Number
Second
Vesting
Date)
Expiry
Date /
Last
Exercise
Date
Mark Bojanjac*
20/02/15
2,000,000
20/02/17
19/02/20
Average
Fair
Value per
Option at
Grant
Date
$0.0460
Exercise
Price per
Option
Total
Value
Granted
$
Vested
%
Vested
$0.0715
$92,393
2,000,000
Michael Fowler* **
20/02/15
1,000,000
20/02/17
19/02/20
$0.0460
$0.0715
$46,197
1,000,000
Robert Boaz*
20/02/15
1,000,000
20/02/17
19/02/20
$0.0460
$0.0715
$46,197
1,000,000
100
100
100
*Options were granted for no consideration with 50% vesting on 20 February 2016 (fair value per option $0.0455) and the remaining 50% vested on 20 February
2017 (fair value per option $0.0465).
**Michael Fowler resigned as non-executive director on 1 December 2017.
There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There were
no forfeitures during the year. No remuneration options were exercised during the year ended 30 June 2018 (2017: Nil).
PolarX Limited
19
2018 Annual Report
Directors’ Report
Options were granted as part of the recipient’s remuneration package. On resignation, any unvested options will be
forfeited.
Shareholdings of Directors and Key Management Personnel
The number of shares in the Company held during the financial year by Directors and Key Management Personnel of the
Group, including their personally related parties, is set out below.
Balance at
the start of
the year
Granted as
compensation
Received on
exercise of
options
Acquired on
Market
Balance on
resignation
date / Other
Balance at
the end of the
year
30 June 2018
Non-Executive Directors
Robert Boaz
Michael Fowler5
Executive Officers (KMP)
Mark Bojanjac
Frazer Tabeart 4
Jason Berton4
Ian Cunningham
30 June 2017
Non-Executive Directors
Michael Fowler
Robert Boaz
Executive Officers (KMP)
Mark Bojanjac1
Michael Haynes2
Ian Cunningham3
Notes:
-
-
-
4,103,273
13,631,832
3,720,930
-
-
-
4,700,786
3,720,931
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,106
-
-
-
-
-
-
-
-
-
-
-
-
4,103,273
13,664,938
3,720,930
-
-
-
(4,700,786)
-
-
3,720,931
1. Mark Bojanjac was appointed as Executive Chairman on 13 December 2016;
2. Michael Haynes resigned as Managing Director on 13 December 2016;
3.
Ian Cunningham resigned as Executive Director on 13 December 2016, but continued in the roles of Chief Financial Officer and
Company Secretary;
4. Frazer Tabeart and Jason Berton were appointed as directors on 25 July 2017 and hence their opening balances represent
shares held on the appointment date; and
5. Michael Fowler resigned as Non-Executive Director on 1 December 2017.
PolarX Limited
20
2018 Annual Report
Directors’ Report
Option holdings of Directors and Key Management Personnel
The numbers of options over ordinary shares in the Company held during the financial year by Directors and Key
Management Personnel of the Group, including their personally related parties, are set out below:
Balance at the
start of the year
Granted as
compensation
Exercised
during the year
Balance on
resignation
date / Other
Balance at
the end of the
year
30 June 2018
Non-Executive Directors
Robert Boaz
Michael Fowler5
Executive Officers (KMP)
Mark Bojanjac
Frazer Tabeart4
Jason Berton4
Ian Cunningham
30 June 2017
Non-Executive Directors
Robert Boaz
Michael Fowler
Executive Officers (KMP)
Mark Bojanjac1
Michael Haynes2
Ian Cunningham3
Notes:
1,000,000
1,000,000
2,000,000
-
-
-
1,070,000
1,000,000
2,000,000
195,650
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
(1,000,000)
-
-
-
-
-
2,000,000
-
-
-
(70,000)
1,000,000
-
-
(195,650)
-
1,000,000
2,000,000
-
-
1. Mark Bojanjac was appointed as Executive Chairman on 13 December 2016;
2. Michael Haynes resigned as Managing Director on 13 December 2016. Prior to his resignation, 70,000 options expired on 28
3.
November 2016 and the balance of 125,650 expired on 1 December 2016;
Ian Cunningham resigned as Executive Director on 13 December 2016, but continued in the roles of Chief Financial Officer and
Company Secretary;
4. Frazer Tabeart and Jason Berton were appointed as directors on 25 July 2017; and
5. Michael Fowler resigned as Non-Executive Director on 1 December 2017.
Service Agreements
Executive Officers
The Executive Chairman, Mr. Mark Bojanjac consults to the Company is remunerated on a monthly basis at a rate of
$15,000 per month (excluding GST). Mr. Bojanjac is not entitled to any termination benefits.
The Managing Director, Mr. Frazer Tabeart consults to the Company and is remunerated on a monthly basis at a rate of
$11,666 per month (excluding GST). Mr. Tabeart is not entitled to any termination benefits.
The Executive Director, Mr. Jason Berton consults to the Company and is remunerated on a monthly basis at a rate of
$10,000 per month (excluding GST). Mr. Berton is not entitled to any termination benefits.
The Company Secretary / Chief Financial Officer, Mr. Ian Cunningham consults to the Company and is remunerated on a
monthly basis at a rate of $11,666 per month (excluding GST). Mr. Cunningham is not entitled to any termination benefits.
Non-Executive Directors
Mr. Michael Fowler and Mr. Robert Boaz are paid Director’s fees on a monthly basis. No notice period is required should a
non-executive director elect to resign.
END OF REMUNERATION REPORT
PolarX Limited
21
2018 Annual Report
Directors’ Report
Signed on behalf of the board in accordance with a resolution of the Directors.
Mark Bojanjac
Executive Chairman
28 September 2018
PolarX Limited
22
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2018
Notes
Consolidated
June 30
2018
$
2017
$
Interest Revenue & Other Income
$ 4,247 $ 27,471
Public company costs
Consulting and directors fees
Share-based compensation
Legal fees
Staff costs
Serviced office and outgoings
Interest and penalties
Foreign exchange loss
Write off of exploration Assets
Other expenses
Loss from operations
Income tax expense
Loss after Income Tax
43,558 50,825
402,630 390,214
16, 25
29,738 28,683
40,373 62,419
50,471 50,390
28,000 72,000
570 1,763
(40,931)
31,187
12
7
3,094 -
938,526 264,466
1,496,029 951,947
$ (1,491,782) $ (924,476)
8
- -
$ (1,491,782) $ (924,476)
Other comprehensive (loss)/income
Items that may be reclassified to profit and loss in subsequent
periods
Foreign currency translation
Other comprehensive (loss)/income for the year
16
622,306 (132,013)
622,306 (132,013)
Total comprehensive loss for the year
$ (869,476) $ (1,056,489)
Loss per share:
Basic and diluted loss per share (cents per share)
20
$ (0.64) $ (1.03)
Weighted Average Number of Shares:
Basic and diluted number of shares
231,387,714
90,033,168
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
PolarX Limited
23
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Statement of Financial Position as at 30 June 2018
Current Assets
Cash and cash equivalents
Other receivables and prepayments
Total current assets
Non-Current Assets
Property, plant and equipment
Exploration and evaluation assets
Total Non-Current Assets
Total Assets
Current liabilities
Trade and other payables
Convertible note
Total Current Liabilities
Total Liabilities
NET ASSETS
Equity
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Commitments
Contingent Liability
Notes
Consolidated
As at
June 30
June 30
2018
$
2017
$
9
10
12
$ 528,997
$ 54,856
1,096,095 35,612
1,625,092 90,468
$ 8,834
$ 12,165
20,308,946 6,031,415
20,317,780 6,043,580
$ 21,942,872 $ 6,134,048
13
6, 13
$ 199,309
123,934
-
108,863
199,309
232,797
$ 199,309 $ 232,797
$ 21,743,563 $ 5,901,251
$ 77,805,986
$ 61,123,936
5,805,924 5,153,880
(61,868,347) (60,376,565)
$ 21,743,563 $ 5,901,251
14
16
15
18
26
The above statement of financial position should be read in conjunction with the accompanying notes.
PolarX Limited
24
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Statement of Cash Flows for the year ended 30 June 2018
Cash flows from Operating activities
Payments to suppliers and employees
Interest received and other income
Net cash flows used in operating activities
Cash flows from investing activities
Cash acquired on acquisition
Payments for expenditure on exploration
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue costs
Convertible note
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Foreign exchange variances on cash
Cash and cash equivalents at end of year
Notes
Consolidated
2018
$
2017
$
17
5
14
6
$ (1,627,717) $ (988,502)
41,260
4,247
(1,623,470) (947,242)
35,142
(5,404,515) (2,889,506)
-
(5,369,373) (2,889,506)
8,012,313 1,807,160
(521,941) (146,068)
- 100,000
7,490,372 1,761,092
497,529 (2,075,656)
54,856 2,137,481
(23,388) (6,969)
$ 528,997 $ 54,856
The above statement of cash flows should be read in conjunction with the accompanying notes.
PolarX Limited
25
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Statement of Changes in Equity for the year ended 30 June 2018
Consolidated
Notes
Number of
Shares
Issued Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserves
Warrant
Reserves
Share Based
Payment
Reserves
Option Premium
Reserve
Total
At 1 July 2017
Loss for the year
91,982,673
$ 61,123,936 $ (60,376,565) $ (215,978) $ 1,190,098 $ 4,176,760 $ 3,000 $ 5,901,251
- - (1,491,782)
- - - - (1,491,782)
Other comprehensive loss
- - - 622,306
- - - 622,306
Total comprehensive loss for the year
Transactions with owners in their
capacity as owners
Shares issued
Share issue costs
Shares issued for acquisition of Vista
Minerals
- $ - $ (1,491,782)
$ 622,306
$ - $ - $ - $ (869,476)
14
14
78,924,407 8,012,313
- - - - - 8,012,313
- (526,689)
- - - - - (526,689)
5, 14
91,964,430 9,196,426
- - - - - 9,196,426
Options issued to consultants
Share-based compensation
14
25
- - - - - 29,738
- 29,738
- - - - - - -
-
Balance at 30 June 2018
262,871,510 $ 77,805,986 $ (61,868,347) $ 406,328
$ 1,190,098 $ 4,206,498 $ 3,000 $ 21,743,563
Consolidated
Notes
Number of
Shares
Issued Capital
Accumulated
Losses
Foreign
Currency
Translation
Reserves
Warrant
Reserves
Share Based
Payment
Reserves
Option Premium
Reserve
Total
At 1 July 2016
Loss for the year
80,687,923 59,462,844 (59,452,089) (83,965)
1,190,098 4,098,880 3,000
5,218,768
- - (924,476)
- - - - (924,476)
Other comprehensive loss
- - - (132,013)
- - - (132,013)
Total comprehensive loss for the year
- - (924,476) (132,013)
- - - (1,056,489)
capacity as owners
Shares issued
Share issue costs
Options issued to consultants
Share-based compensation
14
14
14
25
11,294,750 1,807,160 - - - - -
1,807,160
- (146,068) - - - - - (146,068)
- - - - - 49,197 - 49,197
- - - - - 28,683 - 28,683
Balance at 30 June 2017
91,982,673 61,123,936 (60,376,565) (215,978)
1,190,098 4,176,760 3,000
5,901,251
The above statement of changes in equity should be read in conjunction with the accompanying notes.
PolarX Limited
26
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
1. Corporate Information
The financial report of PolarX Limited (formerly Coventry Resources Limited) (PolarX or the Company) and its
subsidiaries (the Group) for the year ended 30 June 2018 was authorised for issue in accordance with a resolution of
the Directors on 28 September 2018.
PolarX Limited is a public company limited by shares incorporated and domiciled in Australia whose shares are
publicly traded on the Australian Securities Exchange. It is a “for profit” entity. The Company changed its name to
PolarX Limited (formerly Coventry Resources Limited) on 15 September 2017.
On 7 August 2017, the Company completed a 1 for 5 security consolidation (the Consolidation). Accordingly, all
amounts have been presented on a post-Consolidation basis in this report. References throughout the financial
statements and the notes to the financial statements to shares and options, are on a post-Consolidation basis.
The nature of the operations and principal activities of the Group are described in the Directors’ report.
2. Going Concern
The financial report has been prepared on the going concern basis, which contemplates continuity of normal
business activities and realisation of assets and settlement of liabilities in the ordinary course of business.
For the year ended 30 June 2018, the Group incurred a loss from operations of $1,491,782 (2017: $924,476) and
recorded net cash inflows of $497,529 (2017: outflows of $2,075,656). At 30 June 2018, the Group had net current
assets of $1,425,783 (2017: net current liabilities of $142,329).
The Group’s ability to continue as a going concern is dependent upon it maintaining sufficient funds for its operations
and commitments. The Directors continue to be focused on meeting the Group’s business objectives and is mindful of
the funding requirements to meet these objectives. The Directors consider the basis of going concern to be
appropriate for the following reasons:
the current cash balance of the Group relative to its fixed and discretionary commitments;
given the Company’s market capitalisation and the underlying prospects for the Group to raise further
funds from the capital markets; and
the fact that future exploration and evaluation expenditure are generally discretionary in nature (i.e. at the
discretion of the Directors having regard to an assessment of the Group’s eligible expenditure to date
and the timing and quantum of its remaining earn-in expenditure requirements). Subject to meeting
certain minimum expenditure commitments, further exploration activities may be slowed or suspended as
part of the management of the Group’s working capital.
The Directors are confident that the Group can continue as a going concern and as such are of the opinion that the
financial report has been appropriately prepared on a going concern basis. However, should the Group be unable to
raise further required financing, there is uncertainty which may cast doubt as to whether or not the Group will be able
to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course
of business and at the amounts stated in the financial statements.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts nor to the amounts and classification of liabilities that might be necessary should the Group not
continue as a going concern.
PolarX Limited
27
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
3. Summary of Significant Accounting Policies
Basis of Preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements
of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis.
The financial report is presented in Australian dollars.
(a) Compliance Statement
The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards
Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board.
(b) New accounting standards and interpretations
New and revised accounting requirement applicable to the current reporting period
The Group has adopted the following new standards and amendments to standards, including any consequential
amendments to other standards, with a date of initial application of 1 July 2017 and that are applicable to the Group.
(i) AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for
Unrealised Losses
This Standard makes amendments to AASB 112 Income Taxes to clarify the accounting for deferred tax
assets for unrealised losses on debt instruments measured at fair value.
AASB 2016-1 is applicable to annual reporting periods beginning on or after 1 January 2017.
The adoption of these amendments has not had a material impact on the Group as they are largely of the
nature of clarification of existing requirements.
(ii)
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to
AASB 107
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 an entity’s debt. The amendments require
entities to provide disclosures about changes in their liabilities arising from financing activities, including both
changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses).
AASB 2016-2 is applicable to annual reporting periods beginning on or after 1 January 2017.
The adoption of these amendments has not had a material impact on the Group.
(iii) AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016
Cycle
This Standard clarifies the scope of AASB 12 Disclosure of Interests in Other Entities by specifying that the
disclosure requirements apply to an entity’s interests in other entities that are classified as held for sale or
discontinued operations in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued
Operations.
AASB 2017-2 is applicable to annual reporting periods beginning on or after 1 January 2017.
The adoption of these amendments has not had a material impact on the Group as they are largely of the
nature of clarification of existing requirements.
PolarX Limited
28
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
New accounting standards and interpretations issued but not yet effective
The following applicable accounting standards and interpretations have been issued or amended but are not yet
effective. The Company has not elected to early adopt any new Standards or Interpretations. The adoption of the
Standards or Interpretations are not expected to have material impact on the financial statements of the Group.
Reference
Title
Summary
9:
AASB
Financial
Instrument
s
and
associated
Amending
Standards
AASB 139
Financial
Instruments:
Recognition
and
Measurement
below)
for
The Standard will be applicable retrospectively
(subject to the provisions on hedge accounting
revised
and
outlined
requirements
and
the
measurement of financial instruments, revised
recognition and derecognition requirements for
financial instruments and simplified requirements
for hedge accounting.
includes
classification
Application
Application
date
of
date
for
Standard
Group
1 January 2018
1 July 2018
the classification of
The key changes that may affect the Group on
initial application include certain simplifications
to
financial assets,
simplifications to the accounting of embedded
derivatives, upfront accounting
for expected
credit loss, and the irrevocable election to
recognise gains and losses on investments in
equity instruments that are not held for trading in
other comprehensive income. AASB 9 also
introduces a new model for hedge accounting
that will allow greater flexibility in the ability to
hedge risk, particularly with respect to hedges of
non-financial items. Should the entity elect to
change its hedge policies in line with the new
hedge accounting requirements of the Standard,
the application of such accounting would be
largely prospective.
The directors anticipate that the adoption of
AASB 9 will not have a material impact on the
Group’s financial instruments.
PolarX Limited
29
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
AASB 15
Revenue
from
Contracts
with
Customers
AASB 118:
Revenue,
AASB 111
Construction
Contracts
When effective, this Standard will replace the
current accounting requirements applicable to
revenue with a single, principles-based model.
Apart from a limited number of exceptions,
including leases, the new revenue model in
AASB 15 will apply
to all contracts with
customers as well as non-monetary exchanges
between entities in the same line of business to
facilitate sales
to customers and potential
customers.
1 January 2018
1 July 2018
The core principle of the Standard is that an
the
entity will recognise revenue
to
transfer of promised goods or services
the
customers
consideration to which the entity expects to be
entitled in exchange for the goods or services.
in an amount
that reflects
to depict
transitional provisions of
The
this standard
permit an entity to either: restate the contracts
that existed in each prior period presented per
AASB 108, Accounting Policies, Changes in
Accounting Estimates and Errors (subject to
certain practical expedients in AASB 15), or
recognise the cumulative effect of retrospective
application to incomplete contracts on the date
of initial application. There are also enhanced
disclosure requirements.
The directors anticipate that the adoption of
AASB 15 will not have a material impact on the
Group’s revenue recognition and disclosures.
PolarX Limited
30
2018 Annual Report
1 January 2019
1 July 2020
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
AASB 16
Leases
AASB 117
Leases
Int. 4
Determining
whether an
Arrangement
contains a
Lease
Int. 115
Operating
Leases—
Lease
Incentives
Int. 127
Evaluating the
Substance of
Transactions
Involving the
Legal Form of
a Lease
When effective, this Standard will replace the
current accounting requirements applicable to
leases
in AASB 117: Leases and related
interpretations. AASB 16 introduces a single
lessee accounting model that eliminates the
requirement for leases to be classified as either
operating
leases. Lessor
accounting remains similar to current practice.
leases or
finance
The main changes
Standard are as follows:
introduced by
the new
recognition of the right-to-use asset and
liability for all leases (excluding short term
leases with less than 12 months of tenure
and leases relating to low value assets);
depreciating the right-to-use assets in line
with AASB 116: Property, Plant and
Equipment in profit or loss and unwinding of
the liability in principal and interest
components;
inclusion of variable lease payments that
depend on an index or a rate in the initial
measurement of the lease liability using the
index or rate at the commencement date;
application of a practical expedient to permit
a lessee to elect not to separate non-lease
components and instead account for all
components as a lease; and
additional disclosure requirements.
to either
retrospectively apply
The transitional provisions of AASB 16 allow a
lease
the
Standard to comparatives in line with AASB 108
or
of
retrospective application as an adjustment to
opening equity at the date of initial application.
cumulative
recognise
effect
the
The directors anticipate that the adoption of
AASB 16 will not have a material impact on the
Group’s recognition of leases and disclosures.
PolarX Limited
31
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
to
AASB
2016-5
Amendme
nts
Australian
Accounting
Standards
-
Classificati
on
Measurem
ent
Share-
based
Payment
Transactio
ns
and
of
None
The AASB issued amendments to AASB 2
Share-based Payment that address three
main areas:
1 January 2018
1 July 2018
the effects of vesting conditions on the
measurement of a cash-settled share-based
payment transaction;
the classification of a share-based payment
transaction with net settlement features for
withholding tax obligations; and
accounting where a modification to the terms
and conditions of a share-based payment
transaction changes its classification from
cash settled to equity settled.
On adoption, entities are required to apply the
amendments without restating prior periods, but
retrospective application is permitted if elected
for all three amendments and other criteria are
met. Early application of this amendment is
permitted.
The directors anticipate that the adoption of
AASB 2016-5 will not have a material impact on
the Group's financial statements.
1 January 2018
1 July 2018
AASB 9
Financial
Instruments
with AASB 4
Insurance
Contracts
AASB
2016-6
Amendme
nts
Australian
Accounting
Standards
– Applying
to
financial
the new
The amendments address concerns arising from
implementing
instruments
standard, AASB 9, before implementing AASB
17 Insurance Contracts, which replaces AASB 4.
The amendments introduce two options for
entities issuing insurance contracts: a temporary
exemption from applying AASB 9 and an overlay
approach. The temporary exemption is first
applied for reporting periods beginning on or
after 1 January 2018. An entity may elect the
overlay approach when it first applies AASB 9
to
and apply
financial assets designated on
to
restates comparative
AASB 9. The entity
information reflecting the overlay approach if,
and only if, the entity restates comparative
information when applying AASB 9. These
amendments are not applicable to the Group.
that approach retrospectively
transition
(c) Basis of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the Company and all of its
subsidiaries. Subsidiaries are entities the Company controls. The Company controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. A list of the subsidiaries is provided in Note 11.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group
from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the
date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions
between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed
and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
PolarX Limited
32
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling
interests". The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries
and are entitled to a proportionate share of the subsidiary's net assets on liquidation at either fair value or at the non-
controlling interests' proportionate share of the subsidiary's net assets. Subsequent to initial recognition, non-
controlling interests are attributed their share of profit or loss and each component of other comprehensive income.
Non-controlling interests are shown separately within the equity section of the statement of financial position and
statement of comprehensive income.
(d)
Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the balance date.
Deferred income tax is provided for on all temporary differences at balance date between the tax base of assets and
liabilities and their carrying amounts for financial reporting purposes.
No deferred income tax will be recognised from the initial recognition of goodwill or of an asset or liability, excluding a
business combination, where there is no effect on accounting or taxable profit or loss.
No deferred income tax will be recognised in respect of temporary differences associated with investments in
subsidiaries if the timing of the reversal of the temporary difference can be controlled and it is probable that the
temporary differences will not reverse in the near future.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled. Deferred tax is credited to Profit or Loss except where it relates to items that may be credited
directly to equity, in which case the deferred tax is adjusted directly against equity.
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 future tax profits will be available against which
deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on tax rates (and tax laws)
that have been enacted or substantially enacted at the balance date and the anticipation that the Group will derive
sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility
imposed by the law. The carrying amount of deferred tax assets is reviewed at each balance date and only
recognised to the extent that sufficient future assessable income is expected to be obtained.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the Statement of profit
or loss.
(e) Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position include cash on hand, deposits held at call with
banks and other short term highly liquid investments with original maturities of three months or less. Bank overdrafts
are shown as current liabilities in the Statement of Financial Position. For the purpose of the Statement of Cash
Flows, cash and cash equivalents consist of cash and cash equivalents as described above, net of outstanding bank
overdrafts.
(f) Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less
an allowance for any uncollectible amounts.
Collectability of trade receivables is reviewed on an ongoing basis. 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. Financial difficulties of the debtor, default payments or debts more than 60
days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable
PolarX Limited
33
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
carrying amount compared to the present value of estimated future cash flows, discounted at the original effective
interest rate.
(g) Property, plant and equipment
Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation
and impairment losses.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the group and the cost of the
item can be measured reliably. Repairs and maintenance expenditure is charged to Profit or Loss during the financial
period in which it is incurred.
Depreciation
The depreciable amount of most of the fixed assets are depreciated on a diminishing balance method and some of
the fixed assets are depreciated on a straight line basis over their useful lives to the Group commencing from the time
the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Plant and equipment 10 % to 30%
Computer Equipment
Furniture and Fittings
33%
20%
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
Derecognition
Additions of property, plant and equipment is derecognised upon disposal or when no further future economic
benefits are expected from its use or disposal.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and
losses are recognised in the Profit or Loss.
Impairment
Carrying values of plant and equipment are reviewed at each balance date to determine whether there are any
objective indicators of impairment that may indicate the carrying values may be impaired.
Where an asset does not generate cash flows that are largely independent it is assigned to a cash generating unit
and the recoverable amount test applied to the cash generating unit as a whole.
Recoverable amount is determined as the greater of fair value less costs to sell and value in use. The assessment of
value in use considers the present value of future cash flows discounted using an appropriate pre-tax discount rate
reflecting the current market assessments of the time value of money and risks specific to the asset. If the carrying
value of the asset is determined to be in excess of its recoverable amount, the asset or cash generating unit is written
down to its recoverable amount.
(h) Exploration expenditure
Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area
of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure,
but does not include general overheads or administrative expenditure not having a specific nexus with a particular
area of interest.
PolarX Limited
34
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
Each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a
mining operation.
Exploration and evaluation expenditure for each area of interest is carried forward as an asset provided that one of
the following conditions is met:
such costs are expected to be recouped through successful development and exploitation of the area of
interest or, alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and
significant operations in relation to the area are continuing.
Expenditure which fails to meet the conditions outlined above is written off, furthermore, the directors regularly review
the carrying value of exploration and evaluation expenditure and make write downs if the values are not expected to
be recoverable.
Identifiable exploration assets acquired are recognised as assets at their cost of acquisition, as determined by the
requirements of AASB 6 Exploration for and Evaluation of Mineral Resources. Exploration assets acquired are
reassessed on a regular basis and these costs are carried forward provided that at least one of the conditions
referred to in AASB 6 is met.
Exploration and evaluation expenditure incurred subsequent to acquisition in respect of an exploration asset
acquired, is accounted for in accordance with the policy outlined above for exploration expenditure incurred by or on
behalf of the entity.
Acquired exploration assets are not written down below acquisition cost until such time as the acquisition cost is not
expected to be recovered.
When an area of interest is abandoned, any expenditure carried forward in respect of that area is written off.
Expenditure is not carried forward in respect of any area of interest/mineral resource unless the Group’s rights of
tenure to that area of interest are current.
(i)
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the
asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its
value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or categories of assets and the asset's value in use cannot be
estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash generating
unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
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.
Impairment losses relating to continuing operations are recognised in those expense categories consistent with the
function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is
treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used
to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for
the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in
which case the reversal is treated as a revaluation increase.
PolarX Limited
35
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
(j) Trade and other payables
Liabilities for trade creditors and other amounts are measured at amortised cost, which is the fair value of the
consideration to be paid in the future for goods and services received that are unpaid, whether or not billed to the
Group.
(k) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue
of new shares or options, or for the acquisition of a business, are included in the cost of the acquisition as part of the
purchase consideration.
(l) Revenue
Revenue is recognised and measured by the fair value of the consideration received or receivable to the extent that it
is probable that the economic benefits will flow to the Group and the revenue is capable of being reliably measured.
The following specific recognition criteria must also be met before revenue is recognised:
Interest income
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying
amount of the financial asset.
(m) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group, excluding any
costs of servicing equity other than dividends, by the weighted average number of ordinary shares, adjusted for any
bonus elements.
Diluted earnings per share
Diluted earnings per share is calculated as net profit attributable to members of the Group, adjusted for:
costs of servicing equity (other than dividends);
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 elements.
(n) Share based payment transactions
The Group provides benefits to individuals acting as, and providing services similar to employees (including
Directors) of the Group in the form of share based payment transactions, whereby individuals render services in
exchange for shares or rights over shares (‘equity settled transactions’).
There is currently an Employee Share Option Plan (ESOP) in place, which provides benefits to Directors and
individuals providing services similar to those provided by an employee. The Company may also issue options
outside of the ESOP to consultants and other service providers.
PolarX Limited
36
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
The cost of these equity settled transactions is measured by reference to the fair value at the date at which they are
granted. The fair value is determined by using the Black Scholes formula taking into account the terms and conditions
upon which the instruments were granted, as discussed in Note 25.
In valuing equity settled transactions, no account is taken of any performance conditions, other than conditions linked
to the price of the Company’s shares (‘market conditions’).
The cost of the equity settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become
fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date reflects (i)
the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of
the group, will ultimately vest. This opinion is formed based on the best available information at balance date. No
adjustment is made for the likelihood of the 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 at the beginning and end of the period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon
a market condition.
Where 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 increase in the value of the transaction as a result of
the modification, as measured at the date of the modification.
Where an equity settled award is cancelled, it is treated as if it had vested on the date of the 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 in the computation of loss per share (see note 20).
(o) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of
the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement
of Financial Position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the Australian Tax Office is included as part of receivables
or payables in the Statement of Financial Position.
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of
investing and financing activities, which is receivable from or payable to the ATO, are disclosed as operating cash
flows.
(p) Investments in controlled entities
All investments are initially recognised at cost, being the fair value of the consideration given and including
acquisition charges associated with the investment. Subsequent to the initial measurement, investments in controlled
entities are carried at cost less accumulated impairment losses.
(q) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each entity within the Group are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The functional and
presentation currency of PolarX Limited is Australian dollars.
PolarX Limited
37
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the profit or loss.
Group entities
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
assets and liabilities are translated at the closing rate at the date of that Statement of Financial Position;
income and expenses are translated at average exchange rates (unless this is not a reasonable
approximation of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the dates of the transactions);
retained earnings are translated at the exchange rates prevailing at date of transaction; and
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are taken to shareholders’
equity. When a foreign operation is sold the exchange differences relating to that entity are recognised in the profit or
loss, as part of the gain or loss on sale where applicable.
(r) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not
the legal ownership, that are transferred to entities in the economic entity are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value
of the leased property or the present value of the minimum lease payments, including any guaranteed residual
values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for
the period.
Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the
Group will obtain ownership of the asset or over the term of the lease. Leases are classified as operating leases
where substantially all the risks and benefits remain with the lessor.
Payments in relation to operating leases are charged as expenses in the periods in which they are incurred. Lease
incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of
the lease term.
(s) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors of PolarX Limited.
(t) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
PolarX Limited
38
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the profit or loss net of any reimbursement.
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.
4. Critical accounting estimates and judgments
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
Capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors,
including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the
related exploration and evaluation asset through sale.
Factors which could impact the future recoverability include the size and composition of any future mineral resource
and ore reserve estimates, future technological changes which could impact the cost of mining, future legal changes
(including changes to environmental restoration obligations) and changes to commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the
future, this will reduce profits and net assets in the period in which this determination is made.
In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet
reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves. To the extent that it is determined in the future that this capitalised expenditure should be written off, this
will reduce profits and net assets in the period in which this determination is made.
Share based payment transactions
The Group measures the cost of equity settled transactions with employees 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 Black Scholes
formula taking into account the terms and conditions upon which the instruments were granted, as discussed in Note
25.
Functional currency translation reserve
Under the Accounting Standards, each entity within the Group is required to determine its functional currency, which
is the currency of the primary economic environment in which the entity operates. Management considers the United
States subsidiary to be a foreign operation with United States dollars as the functional currency. In arriving at this
determination, management has given priority to the currency that influences the labour, materials and other costs of
exploration activities as they consider this to be a primary indicator of the functional currency.
PolarX Limited
39
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
5. Acquisition
On 23 May 2017, the Company announced it had entered into agreements that provided it the right to acquire an
100% interest in the Stellar Copper Gold Project (Stellar Property) via the acquisition of Vista Minerals Pty Ltd
(Vista) (the Vista Transaction), subject to shareholder approval and certain closing conditions. On 30 June 2017,
the Company’s shareholders approved the Vista Transaction and it was completed on 26 July 2017.
Pursuant to the Vista Transaction, PolarX issued 91,964,430 fully paid ordinary shares (Shares), on a post-
Consolidation basis, to Vista’s shareholders, being the consideration for the acquisition of 100% of the issued capital
of Vista. Concurrently, the Company completed a private placement (Placement) pursuant to which 54,950,000
Shares, on a post-Consolidation basis, were issued at $0.10 per Share for gross proceeds of $5.495 million.
The Company has accounted for the Vista Transaction as a business combination and has identified and recognized
the individual identifiable assets acquired and liabilities assumed. The purchase price was allocated to the individual
identifiable assets and liabilities on the basis of their fair values at the date of purchase. Consideration consisted
entirely of Shares, which were measured at the fair value of the PolarX Shares issued using quoted price per Share.
The fair value of the 91,964,430 Shares issued to Vista’s shareholders to complete the Vista Transaction was
$9,196,426.
The fair value of net assets at the Vista Transaction date is as follows:
ASSETS
Cash
Convertible note (refer to Note 6)
Other receivables
Exploration and evaluation assets
Total Assets
LIABILITIES
Accounts payables
Accrued liabilities
Total Liabilities
Net assets
July 26,
2017
$ 35,142
100,921
44,191
9,240,287
9,420,541
140,787
83,328
224,115
$ 9,196,426
The acquired subsidiary contributed no revenue and a loss of $15,332 for the period 26 July 2017 to 30 June 2018.
6. Convertible Note
On 29 April 2017, the Company entered into a convertible note deed (the Note) with Vista Minerals Pty Ltd
(Noteholder) to borrow up to $200,000. Under the terms of the Note, the funds could be withdrawn on the “liquidity
date”, which was the date the Company’s consolidated cash position was at or below $50,000. On 14 June 2014, the
Company borrowed $100,000 pursuant to the Note, which was repayable within twelve months. Interest accrued on
the balance at 8% per annum. During the year, there was a gain on the change in the fair value of the convertible
note of $8,512 (2017: loss of $8,512).
The Noteholder had the option to convert the outstanding balance and accrued interest into shares of the Company.
Upon issue of a conversion notice, the Noteholder is entitled to receive that number of shares equal to the amount
withdrawn plus accrued interest divided by a 10% discount to the volume weighted average price of the closing price
of the Company’s Shares trading on the ASX for 30 trading days immediately prior to the date of the conversion
notice. The Company repaid the outstanding balance plus accrued interest on 2 August 2017.
PolarX Limited
40
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
Consolidated
7. Other expenses
Accounting and audit fees
Analysts
Bank fees
Business expenses
Computer expenses
Conferences
Corporate Finance
Insurance
Investor relations
Media coverage
Printing and stationery
Postage
Rent & accommodation
Subscriptions
Telephone
Travel expenses
Depreciation
Others
2018
$
67,397
46,845
3,981
107,545
4,282
57,446
183,643
35,933
42,117
60,357
3,206
5,247
99,747
-
1,905
155,400
246
63,229
938,526
2017
$
52,195
-
7,834
36,596
5,236
-
46,128
34,657
970
-
5,139
2,852
-
400
3,688
39,357
216
29,198
264,466
PolarX Limited
41
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
8.
Income Tax
(a) Income tax expense
Current tax
Deferred tax
Consolidated
2018
$
-
-
-
2017
$
-
-
-
(b) Numerical reconciliation between aggregate tax expense
recognised in the statement of profit or loss and other
comprehensive income and tax expense calculated per the
statutory income tax rate
A reconciliation between tax expense and the product of accounting
loss before income tax multiplied by the Company’s applicable tax
rate is as follows:
(Loss)/Profit from operations before income tax
expense
Tax at the company rate of 27.5% (2017: 30%)
Expense of remuneration options
Other non-deductible expenses
Income tax benefit not brought to account
Income tax expense
(c) Deferred tax
Statement of financial position
The following deferred tax balances have not been brought to
account:
Deferred Tax Liabilities
Unrealised forex gain
Exploration (foreign @ 30%)
Deferred tax liability not recognised
Deferred Tax Assets
Foreign carry forward revenue losses (@ 30%)
Australian carry forward revenue losses (@ 27.5%)
Accrued expenses
The benefit for tax losses will only be obtained if:
(1,491,782)
(410,240)
8,178
(149,558)
551,620
-
11,747
733,132
744,879
1,244,918
932,453
8,250
2,185,621
(924,476)
(277,342)
8,605
1,681
267,056
-
-
240,760
240,760
488,741
369,655
7,630
866,026
(i) the Company derives future assessable income in Australia or the US (as applicable) of a nature and of an
amount sufficient to enable the benefit from the deductions for the losses to be realised, and
(ii) the Company continues to comply with the conditions for deductibility imposed by tax legislation in Australia or the
US (as applicable); and
(iii) no changes in tax legislation in Australia or the US, adversely affect the Company in realising the benefit from the
deductions for the losses.
(d) Tax consolidation
PolarX has not formed a tax consolidation group and there is no tax sharing agreement.
PolarX Limited
42
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
9. Other Receivables and Prepayments
Current
GST / VAT receivable
Prepayments
Consolidated
2018
$
2017
$
22,927
1,073,168
1,096,095
18,101
17,511
35,612
Prepayments include $1,012,567 paid to Millrock Exploration Corp. as an advance for exploration work for the Stellar
Project.
Trade debtors, other debtors and goods and services tax are non-interest bearing and generally receivable on 30 day
terms. They are neither past due nor impaired. The amount is fully collectible. Due to the short term nature of these
receivables, their carrying value is assumed to approximate their fair value.
10. Property, Plant and Equipment
Plant and Equipment
Cost
Accumulated depreciation
Net carrying amount
Office Furniture and Fixtures
Cost
Accumulated depreciation
Net carrying amount
Computer Equipment
Cost
Accumulated depreciation
Net carrying amount
Total property, plant and equipment
Cost
Accumulated depreciation
Net carrying amount
Consolidated
2018
$
2017
$
17,628
(9,206)
8,422
519
(317)
202
1,946
(1,736)
210
20,093
(11,259)
8,834
17,557
(5,958)
11,599
519
(266)
253
1,946
(1,633)
313
20,022
(7,857)
12,165
PolarX Limited
43
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current
financial year:
Consolidated
Plant and Equipment
Carrying amount at beginning of year
Additions
Depreciation expense
Net exchange differences on translation
Carrying amount at end of year
Office Furniture and Fixtures
Carrying amount at beginning of year
Additions
Depreciation expense
Net exchange differences on translation
Carrying amount at end of year
Computer Equipment
Carrying amount at beginning of year
Additions
Depreciation expense
Net exchange differences on translation
Carrying amount at end of year
2018
$
11,599
-
(3,451)
274
8,422
253
-
(51)
-
202
313
-
(103)
-
210
2017
$
17,118
-
(5,068)
(451)
11,599
316
-
(63)
-
253
468
-
(154)
(1)
313
Total property, plant and equipment
8,834
12,165
11.
Investments in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in Note 3. Details of subsidiaries are as follows:
Name
Country of
incorporation
% Equity Interest
2018
2017
Coventry Minerals Pty Ltd
Crescent Resources (USA) Inc.
Vista Minerals Pty Ltd
Vista Minerals (Alaska) Inc.
Aldevco Pty Ltd
Aldevco Inc.
Australia
USA
Australia
USA
Australia
USA
100%
100%
100%
100%
100%
100%
100%
100%
-
-
100%
100%
PolarX Limited
44
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
Consolidated
2018
$
2017
$
12. Deferred Exploration and Evaluation Expenditure
Exploration and evaluation
expenditure
At cost
Accumulated provision for
impairment
Total exploration and evaluation
21,602,490
(1,293,544)
7,321,865
(1,290,450)
20,308,946
6,031,415
Consolidated
Carrying amount at beginning of the year
Acquisition cost
Exploration and evaluation expenditure during the year
Payment related to mineral lease agreement
Net exchange differences on translation
Carrying amount at end of year
Impairment of exploration and evaluation expenditures
2018
$
6,031,415
9,240,287
4,466,504
-
573,834
20,312,040
(3,094)
2017
$
3,794,242
-
2,410,010
(42,781)
(130,056)
6,031,415
-
Carrying amount at end of year
20,308,946
6,031,415
The Directors’ assessment of the carrying amount for the Group’s exploration and development expenditure was after
consideration of prevailing market conditions; previous expenditure for exploration work carried out; and the potential
for mineralisation based on the Group’s independent geological reports. The recoverability of the carrying amount of
the deferred exploration and evaluation expenditure is dependent on successful development and commercial
exploitation, or alternatively the sale, of the respective areas of interest. It was determined the carrying amount of the
Uncle Sam Project was not recoverable and therefor was written down to nil.
13. Current Liabilities
Trade and other payables
Trade payables
Accruals
Convertible note
Consolidated
2018
$
2017
$
111,507
87,802
199,309
-
199,309
67,742
56,192
123,934
108,863
232,797
PolarX Limited
45
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
14. Contributed Equity
(a) Issued and paid up capital
2018
2017
No. of shares
No. of shares
Ordinary shares fully paid
262,871,510
459,913,365
2018
No. of
shares
$
2017
No. of
shares
$
(b) Movements in ordinary shares on
issue
Balance at beginning of year
459,913,365
61,123,936
403,439,615
59,462,844
1:5 Share Consolidation
(367,930,692)
-
-
-
Number of shares post- Consolidation
91,982,673
61,123,936
403,439,615
59,462,844
Shares issued for acquisition of Vista
Minerals
Share issues (net of costs)
Balance at end of year
(c) Ordinary shares
91,964,430
78,924,407
9,196,426
7,485,624
-
-
56,473,750
1,661,092
262,871,510
77,805,986
459,913,365
61,123,936
The Group does not have authorised capital nor par value in respect of its issued capital. Shares have the right to
receive dividends as declared and, in the event of a winding up of the Company, to participate in the proceeds from
sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Shares entitle their
holder to one vote, either in person or proxy, at a meeting of the Company.
On 26 July 2017, concurrent with the Vista Acquisition, the Company completed a private placement of 54,950,000
Shares at an issue price of $0.10 per share for gross proceeds of $5.495 million to institutional and sophisticated
investors.
On 26 May 2018, the Company completed a placement consisting of 23,974,407 Shares at an issue price of $0.105
per Share for gross proceeds of $2.337 million to institutional and sophisticated investors.
In the prior year, on 1 September 2016, the Company completed a placement consisting of 56,473,750 Shares at an
issue price of $0.032 per Share for gross proceeds of $1,807,160 to institutional and sophisticated investors.
(d) Capital Risk Management
The Group’s capital comprises share capital, reserves less accumulated losses amounting to $21,743,563 at 30 June
2018 (2017: $5,901,251). The Group manages its capital to ensure its ability to continue as a going concern and to
optimise returns to its shareholders. The Group was ungeared at year end and not subject to any externally imposed
capital requirements. Refer to Note 24 for further information on the Group’s financial risk management policies.
(e) Share options
At 30 June 2018, there were 5,200,000 options (post-Consolidation basis) over unissued Shares (2017: 5,172,370
options). During the financial year 372,370 options expired. No options were exercised during the financial year.
Since the end of the financial year, no options have been exercised and no options have expired.
On 19 September 2017, the Company issued 400,000 options, each exercisable at $0.12 on or before 18 September
2020, in lieu of cash consideration for consulting services.
In the prior year, on 31 August 2016, the Company issued 400,000 options (post-Consolidation basis), each
exercisable at $0.195 on or before 30 August 2019, in lieu of cash consideration for consulting services provided
during the 2016 financial year. These expenses were accrued for at 30 June 2017.
PolarX Limited
46
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
No option holder has any right under the options to participate in any other share issue of the Company or any other
entity.
Information relating to the Options granted by the Company, including details of options issued under the Plan, is set
out in Note 25.
15. Accumulated losses
Movements in accumulated losses were as follows:
At 1 July
Loss for the year
At 30 June
16. Reserves
Foreign currency translation reserve
Warrant reserves
Share based payments reserves
Option premium reserve
Movement in reserves:
Share based payments and option premium reserve
Balance at beginning of year
Options issued to agents
Options exercised
Equity benefits expense
Balance at end of year
Consolidated
2018
$
2017
$
60,376,565
59,452,089
1,491,782
924,476
61,868,347
60,376,565
2018
$
2017
$
406,328
1,190,098
4,206,498
3,000
(215,978)
1,190,098
4,176,760
3,000
5,805,924
5,153,880
Consolidated
2018
$
2017
$
4,179,760
29,738
-
-
4,101,880
49,197*
-
28,683
4,209,498
4,179,760
The Share based payments and option premium reserve is used to record the value of equity benefits provided to
individuals acting as employees, directors as part of their remuneration, and consultants and for their services. Refer
to Note 25 for details of share based payments during the financial year and prior year.
*Expense of $49,197 was recorded in the financial year ending 30 June 2016, being the fair value of consultant stock
options issued as consideration for services provided during the 2016 financial year. which were subsequently issued
in August 2016.
PolarX Limited
47
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
Foreign currency translation reserve
At 1 July
Foreign currency translation
Balance at end of year
2017
$
(215,978)
622,306
406,328
2016
$
(83,965)
(132,013)
(215,978)
The foreign currency translation reserve is used to record the value of warrants provided to shareholders as part of
capital raising activities.
Warrant reserve
At 1 July
Warrants exercised
Balance at end of year
2018
$
2017
$
1,190,098
1,190,098
-
-
1,190,098
1,190,098
The warrant reserve is used to record the currency difference arising from the translation of the financial statements
of the foreign operation.
17. Cash and Cash Equivalents
(a) Reconciliation of cash
Cash balance comprises:
Cash and cash equivalents
(b) Reconciliation of the net loss after tax to the
net cash flows from operations
Net loss after tax
Adjustments for:
Depreciation
(Gain)/Loss on convertible note
Share-based compensation
GAME lease payment
Changes in operating assets and liabilities:
Decrease in other receivables/prepayments
Increase in trade and other payables
Net cash flow used in operating activities
Consolidated
2017
$
2017
$
528,997
54,856
(1,491,782)
(924,476)
246
(8,512)
29,738
-
61,974
(215,134)
(1,623,470)
216
8,512
28,683
13,792
23,009
(96,978)
(947,242)
PolarX Limited
48
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
18. Expenditure commitments
(a) Tenement expenditure commitments – Caribou Dome Property
Remaining commitments related to the Caribou Dome Project at reporting date but not recognized as liabilities,
include the following (refer further Note 29):
(i)
(ii)
(iii)
maintaining the claims (licenses) at the Project in good standing, including making annual claim rental
payments and ensuring minimum expenditure commitments are met;
expending a minimum of US$2,000,000 in each of the periods (i) 2 September 2017 to 1 September
2020; and (ii) 2 September 2020 to 6 June 2023 (unless the Earn-in deadline of 6 June 2023 is
extended);
expending a total of US$9,000,000 on the Project (inclusive of the expenditure in (i) and (ii) above and
expenditure prior to 2 September 2017) or completing a feasibility study on the Project by 6 June 2023
(unless the Earn-in deadline of 6 June 2023 is extended); and
(iv) making annual payments to the underlying vendors of the Project in the amounts of:
Due Date
6 June 2019
6 June 2020
6 June 2021
6 June 2022
Earn-in deadline
(currently 6 June 2023)
Payment
US$100,000
US$100,000
US$100,000
US$100,000
US$1,360,000
(b) Tenement expenditure commitments – Stellar Property
Remaining commitments related to the Stellar Property at reporting date but not recognized as liabilities below
include the following:
(i)
(ii)
payment of US$1,000,000 cash to Millrock Resources Inc (Millrock) if a JORC Indicated Resource of
1Moz contained Au or more is delineated;
payment of US$2,000,000 cash to Millrock if a JORC Indicated Resource of 1Moz contained copper (or
copper equivalent) metal is delineated;
(iii)
45 claim blocks covering the Zackly, Moonwalk, Mars and Gemini prospects, are subject to a royalty
payable to Altius Minerals, being:
a. 2% gross value royalty on all uranium produced
b. 2% net smelter return royalty on gold, silver, platinum, palladium and rhodium
c. 1% net smelter return royalty on all other metals;
(iv)
All Stellar claim blocks are subject to a royalty payable to Millrock, being:
a. 1% gross value royalty on all uranium produced; and
b. 1% net smelter royalty on all other metals;
and
PolarX Limited
49
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
(v) making advance royalty payments (payments are deductible from future royalty payments) to Millrock in the
amounts of:
Due Date
31 March 2019
31 March 2020
31 March 2021
31 March 2022
31 March 2023*
31 March 2024*
31 March 2025*
31 March 2026*
31 March 2027,* and 31 March of
each year thereafter occurring
prior to the fifth anniversary of the
commencement of Commercial
Production
Payment
US$20,000
US$25,000
US$30,000
US$35,000
US$40,000
US$45,000
US$50,000
US$55,000
US$60,000
* Such payments will not be payable if the fifth anniversary of the commencement of Commercial Production has
occurred before such date.
(c) Services agreement
Within one year
19. Subsequent events
Consolidated
2018
2017
$
-
-
$
-
-
On 2 August 2018, the Company completed a placement consisting of 35,299,128 Shares at an issue price of $0.11
per Share for gross proceeds of $3.883 million to institutional and sophisticated investors. Net funds raised pursuant
to the August placement were used for exploration and development activities on the Alaska Range Project and for
general working capital purposes.
No other significant events have occurred subsequent to the balance sheet date but prior to the date of this report
that would have a material impact on the consolidated financial statements.
PolarX Limited
50
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
20. Loss per share
Loss used in calculating basic and dilutive EPS
(1,491,782)
(924,476)
Consolidated
2018
$
2017
$
Weighted average number of ordinary shares
used in calculating basic earnings / (loss) per
share:
Effect of dilution:
Share options
Adjusted weighted average number of
ordinary shares used in calculating diluted
loss per share:
Basic and Diluted loss per share (cents
per share)
Number of Shares
2018
2017
231,387,714*
90,033,168*
-
-
231,387,714*
90,033,168*
(0.64)
(1.03)
*All share numbers are shown on a post-Consolidation basis
There is no impact from the 5,200,000 options outstanding at 30 June 2018 (2017: 5,172,370 options) on the loss per
share calculation because they are anti-dilutive. These options could potentially dilute basic EPS in the future.
21. Auditor’s remuneration
During the financial year, the following audit fees were paid or payable:
BDO Canada LLP
Stantons International Audit and Consulting Pty Ltd.
Consolidated
2018
$
-
46,765
46,765
2017
$
3,035
40,947
43,982
PolarX Limited
51
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
22. Key Management Personnel Disclosures
(a) Details of Key Management Personnel
Mr. Mark Bojanjac
Executive Chairman (Chairman prior to 13 December 2016)
Mr. Frazer Tabeart
Managing Director (appointed 26 July 2017)
Mr. Jason Berton
Executive Director (appointed 26 July 2017
Mr. Michael Haynes
Managing Director (resigned 13 December 2016)
Mr. Ian Cunningham
Executive Director/Company Secretary/Chief Financial Officer
(resigned as Executive Director on 13 December 2016)
Mr. Robert Boaz
Non-Executive Director
Mr. Michael Fowler
Non-Executive Director (resigned on 1 December 2017)
(b) Remuneration of Key Management Personnel
Details of the nature and amount of each element of the emolument of each Director and Executive of the Group for
the financial year are as follows:
Consolidated
2018
$
2017
$
Consulting and director fees
Share-based compensation
Total remuneration
612,916
367,989
-
28,683
612,916
396,672
23. Related Party Disclosures
The ultimate parent entity is PolarX Limited. Refer to Note 11 - Investments in subsidiaries, for a list of all
subsidiaries.
Mitchell River Group Pty Ltd., a Company of which Mr. Frazer Tabeart is a Director, provided the Company with
consulting services related to exploration activities for a fee totalling $33,579 (2017: Nil).
In the prior year, MQB Ventures Pty Ltd, a Company of which Mr. Michael Haynes is a Director, provided the
Company with a fully serviced office including administration support for a fee totalling $33,000 up to the date of his
resignation on 13 December 2016.
There were no other related party disclosures for the year ended 30 June 2018 (2017: Nil).
24. Financial Instruments and Financial Risk Management
Exposure to interest rate, liquidity and credit risk arises in the normal course of the Group’s business. The Group
does not hold or issue derivative financial instruments.
The Company uses different methods as discussed below to manage risks that arise from financial instruments. The
objective is to support the delivery of the financial targets while protecting future financial security.
PolarX Limited
52
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
(a) Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial
liabilities.
The Group manages liquidity risk by maintaining sufficient cash facilities to meet the operating requirements of the
business and investing excess funds in highly liquid short term investments. The responsibility for liquidity risk
management rests with the Board of Directors.
Alternatives for sourcing our future capital needs include our cash position and the issue of equity instruments. These
alternatives are evaluated to determine the optimal mix of capital resources for our capital needs. We expect that,
absent a material adverse change in a combination of our sources of liquidity, present levels of liquidity will be
adequate to meet our expected capital needs.
Maturity analysis for financial liabilities
Financial liabilities of the Group comprise trade and other payables. As at 30 June 2018 and 30 June 2017, all
financial liabilities are contractually matured within 60 days.
(b)
Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value
of financial instruments.
The Group’s exposure to market risk for changes to interest rate risk relates primarily to its earnings on cash and
term deposits. The Group manages the risk by investing in short term deposits.
Cash and cash equivalents
Interest rate sensitivity
Consolidated
2018
$
528,997
2017
$
54,856
The following table demonstrates the sensitivity of the Group’s statement of profit or loss and other comprehensive
income to a reasonably possible change in interest rates, with all other variables constant.
Consolidated
Change in Basis Points
Judgements of reasonably possible
movements
Increase 100 basis points
Decrease 100 basis points
Effect on Post Tax Loss
Effect on Equity
Increase/(Decrease)
including accumulated
losses
Increase/(Decrease)
2018
$
5,290
(5,290)
2017
$
549
(549)
2018
$
5,290
(5,290)
2017
$
549
(549)
A sensitivity of 100 basis points has been used as this is considered reasonable given the current level of both short
term and long term interest rates. The change in basis points is derived from a review of historical movements and
management’s judgement of future trends. The analysis was performed on the same basis in 2017.
PolarX Limited
53
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
(c) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and
cause the Group to incur a financial loss. The Group’s maximum credit exposure is the carrying amounts on the
statement of financial position. The Group holds financial instruments with credit worthy third parties.
At 30 June 2018, the Group held cash deposits. Cash deposits were held with financial institutions with a rating from
Standard & Poors of A or above (long term). The Group has no past due or impaired debtors as at 30 June 2018
(2017: Nil).
(d) Foreign Currency Risk Exposure
As a result of operations in the USA and expenditure in US dollars, the Group’s statement of financial position can be
affected by movements in the USD$/AUD$ exchange rates. The Group seeks to mitigate the effect of its foreign
currency exposure by holding cash in US dollars to match expenditure commitments.
Sensitivity analysis:
The table below summarises the fx exposure on the net monetary position of parent and the subsidiary against its
respective functional currency, expressed in group’s presentation currency. If the AUD/ USD rates moved by +10%,
the effect on comprehensive loss would be as follows:
Loan to subsidiary – Aldevco Pty Ltd and Aldevco Inc. (in AUD)
Loan to subsidiary – Vista Minerals Pty Ltd and Vista Minerals (Alaska)
Inc. (in AUD)
Total effect on comprehensive loss of positive movements
Total effect on comprehensive loss of negative movements
Consolidated
2018
$
6,130,967
7,881,418
2017
$
5,404,011
-
10%
A$
1,401,239
(1,401,239)
10%
A$
540,401
(540,401)
The table below summarises the fx exposure on the net monetary position of parent and the subsidiary against its
respective functional currency, expressed in group’s presentation currency. If the AUD/ CAD rates moved by +10%,
the effect on comprehensive loss would be as follows:
Loan from subsidiary – Coventry Minerals. (in AUD)
Percentage shift of the AUD / CAD exchange rate
Total effect on comprehensive loss of positive movements
Total effect on comprehensive loss of negative movements
Consolidated
2018
$
709,298
10%
A$
70,930
(70,930)
2017
$
690,900
10%
A$
69,090
(69,090)
PolarX Limited
54
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
(e) Fair Value
The aggregate net fair values of the Group’s financial assets and financial liabilities both recognised and
unrecognised are as follows:
Carrying
Carrying
Amount in
Aggregate
Amount in
Aggregate
the Financial
Net Fair
the Financial
Net Fair
Statements
Value
Statements
2018
$
2018
$
2017
$
Value
2017
$
528,997
528,997
22,927
22,927
54,856
18,101
54,856
18,101
199,309
199,309
123,934
-
-
108,863
123,934
108,863
Financial Assets
Cash Assets
Receivables
Financial Liabilities
Payables
Borrowings
The following methods and assumptions are used to determine the net fair value of financial assets and liabilities.
Cash assets and financial assets are carried at amounts approximating fair value because of their short term
nature to maturity. Receivables and payables are carried at amounts approximating fair value.
25. Share Based Payment Plans
(a) Recognised share based payment expenses
Total expenses arising from share based payment transactions recognised during the year as part of share based
payment expense were as follows:
Operating expenditure
Options issued to employees and directors
(b) Share based payment to employees
Consolidated
2018
$
-
2017
$
28,683
The Group has established an Employee Share Option Plan (ESOP) and also issues options to executive officers,
directors, consultants and employees outside the Plan (collectively the Options). The objective of the Options is to
assist in the recruitment, reward, retention and motivation of the recipients and/or reduce the level of cash
remuneration that would otherwise be paid to the recipient. An eligible person may receive the options or nominate a
relative or associate to receive the options. Details of Options granted are as follows:
PolarX Limited
55
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
2018
Grant date
Expiry date Exercise
Balance at
Granted
Exercised
Expired
Balance at
Exercisable
price
start of the
during the
during the
during the
end of the
at end of the
year
year
year
year
year
year
Number
Number
Number
Number
Number
Number
Jan 8, 2013 Aug 17, 2017
C$0.25
226,170
Feb 20, 2015 Feb 19, 2020 A$0.0715
4,000,000
Jun 18, 2015
Jun 17, 2020 A$0.175
400,000
Jun 18, 2015
Jun 30, 2018
A$0.13
146,200
Aug 31, 2016 Aug 30, 2019 A$0.195
400,000
-
-
-
-
-
Sep 19, 2017 Sep 18, 2020
A$0.12
-
400,000
5,172,370
400,000
-
-
-
-
-
-
-
(226,170)
-
-
-
-
4,000,000
4,000,000
400,000
400,000
(146,200)
-
-
-
-
400,000
400,000
400,000
400,000
(372,370)
5,200,000
5,200,000
Weighted remaining contractual
2.47
1.67
1.67
life (years)
Weighted average exercise price
$ 0.10
$ 0.09
$ 0.09
On 19 September 2017, the Company issued 400,000 options exercisable at $0.12 on or before 18 September 2020,
in lieu of cash consideration for consulting services. The fair value at grant date of options was determined using the
Black Scholes option pricing model that takes into account the exercise price ($0.12), the term of the option (3 years),
the share price at grant date ($0.10) and expected price volatility (135%) of the underlying share and the risk free
interest rate (2.1%) for the term of the Option. The fair value of the stock options was $29,738.
2017
Grant date
Expiry date Exercise
Balance at
Granted
Exercised
Expired
Balance at
Exercisable
price
start of the
during the
during the
during the
end of the
at end of the
year
year
year
year
year
year
Number
Number
Number
Number
Number
Number
Jan 8, 2013 Dec 1, 2016
C$0.25
301,560
Jan 8, 2013 Aug 17, 2017
C$0.25
226,170
Jan 8, 2013 Mar 8, 2017
C$0.25
25,130
Nov 28, 2013 Nov 28, 2016
C$0.25
670,000
Feb 20, 2015 Feb 19, 2020 A$0.0715
4,000,000
Jun 18, 2015
Jun 17, 2020 A$0.175
400,000
Jun 18, 2015
Jun 30, 2018
A$0.13
146,200
-
-
-
-
-
-
-
Aug 31, 2016 Aug 30, 2019 A$0.195
-
400,000
5,769,060
400,000
-
-
-
-
-
-
-
-
-
(301,560)
-
-
-
226,170
226,170
(25,130)
(670,000)
-
-
-
-
-
-
-
-
4,000,000
4,000,000
400,000
400,000
146,200
146,200
400,000
400,000
(996,690)
5,172,370
5,172,370
Weighted remaining contractual
2.97
2.47
2.47
life (years)
Weighted average exercise price
$ 0.10
$ 0.10
$ 0.10
During the 2017 financial year, 400,000 Options were issued. The fair value at grant date of options was determined
using the Black Scholes option pricing model that takes into account the exercise price ($0.195), the term of the
option (3 years), the share price at grant date ($0.15) and expected price volatility (162%) of the underlying share and
the risk free interest rate (1.4%) for the term of the Option. The expense of $49,197 had been accrued for at 30 June
2016 on the basis that the underlying services had been provided during the 2016 financial year.
PolarX Limited
56
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
26. Contingent Liabilities
The Company has a contingent liability arising from the termination of a drilling contract in Paraguay in 2008,
subsequent to which Arbitration proceedings were commenced by the drilling contractor.
In August 2016, the Company received notice of the Arbitration Tribunal’s determination. Based on its review of the
Tribunal’s judgement and advice from its Paraguayan legal counsel, the Company assessed the quantum of
damages that may be payable by it to be approximately US$40,000 plus interest. Subsequently on 7 March 2018,
the Company received notice that the plaintiff was seeking a Paraguayan judicial order for the enforcement of an
arbitration award against the Company in the amount of US$123,853.
The Company does not anticipate making any damages payment until it has received further advice in relation to the
matter, including the accuracy of the claimed amount and the Company’s right to challenge any attempt to enforce
the judgement in Australia.
Refer also to Notes 18, 29 and 30 for the contingent payments and royalties applicable to the Caribou Dome, Stellar
and Uncle Sam properties.
27. Operating Segment
For management purposes, the Group is organised into one main operating segment, which involves mineral
exploration, predominantly for copper. All of the Group’s activities are interrelated, and discrete financial information
is reported to the Board (Chief Operating Decision Makers) as a single segment. Accordingly, all significant operating
decisions are based upon analysis of the Group as one segment. The financial results from this segment are
equivalent to the financial statements of the Group as a whole. The Group currently operates in Australia and the
USA. The following table shows the assets and liabilities of the Group by geographic region:
Assets
Australia
United States
Total Assets
Liabilities
Australia
United States
Total Liabilities
Operating Result
Australia
United States
Total loss from operations
Consolidated
30 June
30 June
2018
$
1,054,140
20,888,732
21,942,872
154,840
44,469
199,309
30 June
2018
$
(1,463,701)
(28,081)
(1,491,782)
2017
$
122,164
6,011,884
6,134,048
223,407
9,390
232,797
30 June
2017
$
(921,368)
(3,108)
(924,476)
PolarX Limited
57
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
28. Dividends
No dividend was paid or declared by the Company in the period since the end of the financial year and up to the date
of this report. The Directors do not recommend that any amount be paid by way of dividend for the financial year
ended 30 June 2018 (2017: Nil). The balance of the franking account as at 30 June 2018 is Nil (2017: Nil).
29. Agreements over the Caribou Dome Copper Project
On 5 November 2014, the Company announced it had entered into agreements that provided it the right to acquire
80% of the Caribou Dome Project via the acquisition of Aldevco Pty Ltd (Aldevco) (the Aldevco Transaction). On
February 20, 2015, shareholders approved the Aldevco Transaction, with completion taking place on 25 February
2015 following the issue of 12,000,000 Shares to Aldevco’s shareholders in consideration for the acquisition of
100% of the issued capital of Aldevco.
Aldevco holds the right to acquire an 80% interest in the Caribou Dome Project from Hatcher Resources Inc
(Hatcher) by:
(i) maintaining the claims (licenses) at the Caribou Dome Project in good standing, including making annual
claim rental payments and ensuring minimum expenditure commitments are met;
(ii) expending a minimum of US$100,000 on the Caribou Dome Project for each of the 12 month periods ending 1
September 2015, 2016 and 2017;
(iii) expending a minimum of US$2,000,000 (inclusive of payments in (ii) above) in each of the three year periods
(i) 2 September 2014 to 1 September 2017; (ii) 2 September 2017 to 1 September 2020; and (iii) 2 September
2020 to 6 June 2023 (unless the Earn-in deadline of 6 June 2023 is extended);
(iv) expending a total of US$9,000,000 on the Caribou Dome Project (inclusive of the payments in (ii) and (iii)
above) or completing a feasibility study on the Project by 6 June 2023 (unless the Earn-in deadline of 6 June
2023 is extended); and
(v) making annual payments to the underlying vendors of the Caribou Dome Project, who are not related parties
of Hatcher or Aldevco, in the amounts of (remaining payments only):
Due Date
6 June 2017
6 June 2018
6 June 2019
6 June 2020
6 June 2021
6 June 2022
Payment
US$50,000
US$100,000
US$100,000
US$100,000
US$100,000
US$100,000
Earn-in deadline (currently 6 June 2023)
US$1,360,000
Subject to Aldevco exercising its right to acquire an 80% interest in the Caribou Dome Project, Hatcher will retain a
10% interest in the Project with the remaining 10% held by SV Metals LP. The current owner of the Caribou Dome
Project, C-D Development Corporation, would retain a 5.0% Net Smelter Returns royalty, with PolarX retaining the
right to purchase this royalty for US$1million for each 1.0%.
Related parties of former directors, Michael Haynes and Ian Cunningham retain a majority shareholding in Hatcher
post the Aldevco Transaction.
PolarX Limited
58
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
30. Agreements over the Uncle Sam Gold Project
On December 15, 2010, Millrock Resources Inc. and Millrock Alaska LLC (collectively Millrock) entered into an
option agreement with PolarX Limited (the Millrock Option), whereby PolarX Limited was granted (and subsequently
exercised in April 2013) an option to purchase an undivided 100% interest the Uncle Sam Gold Project. Pursuant to
the Millrock Option, during such time as PolarX Limited retains an interest in the Uncle Sam Project it has the
following obligations (the Resource Share Payments) in relation to any future mineral resource estimate for the
Uncle Sam Gold Project:
(i)
(ii)
the issue of 60,000 Shares to Millrock in the event that a gold mineral resource of 1,000,000 ounces or more is
defined, in accordance with NI 43-101 on the Uncle Sam Project; and
the issue of a further 40,000 Shares to Millrock in the event that a gold mineral resource of 2,000,000 ounces or
more is defined, in accordance with NI 43-101 on the Uncle Sam Project, plus an additional 40,000 shares for
every additional 1,000,000 ounces of resources in excess of 2,000,000 ounces.
Pursuant to the Millrock Option, PolarX also remains obligated to pay a 2% net smelter return royalty to a third party
in relation to any future production from the Uncle Sam Project.
In July 2015, the Company entered into a mineral lease and purchase agreement (Option Agreement) with Great
American Minerals Exploration Inc. (GAME), pursuant to which GAME agreed to lease the Uncle Sam Project for 10
years with an option to purchase the property outright at any time during the lease period.
During the 2018 financial year, the Company received noticed from the Department of Natural Resources (State of
Alaska) that the mineral claims which comprise the Uncle Sam Gold Project had been declared abandoned (DNR
Notice). The basis for the decision was an error on the affidavit of labor filed by the previous tenement owner in
2011. As a result, GAME has sought to terminate the Option Agreement.
The Company is currently reviewing its options in relation to this matter, including whether GAME has complied with
its obligations under the Option Agreement, but notes that the Uncle Sam Gold Project:
is considered a non-core asset and had a $nil carrying value in the Company’s financial statements at the time
of receipt of the DNR Notice; and
is independent of the Company’s Alaska Range Project.
Refer further to the Review of Operations.
‐
‐
PolarX Limited
59
2018 Annual Report
PolarX Limited (formerly Coventry Resources Limited)
Notes to the financial statements for the financial year ended 30 June 2018
31.
Information relating to PolarX Limited (“the parent entity”)
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Retained losses
(Loss) of the parent entity
Total comprehensive (loss) of the parent entity
Guarantees entered into by the parent entity in
relation to the debts of its subsidiaries
Guarantees provided
Contingent liabilities of the parent entity
Commitment for the acquisition of property, plant
and equipment by the parent entity
Not longer than one year
Longer than one year and not longer than five years
Longer than five years
2018
$
564,370
20,499,838
21,064,208
152,200
-
152,200
20,912,008
73,013,238
3,238,719
2017
$
76,997
5,414,129
5,491,126
223,406
-
223,406
5,267,720
56,331,189
3,208,981
(55,339,949)
(54,272,450)
20,912,008
(1,067,499)
(1,067,499)
5,267,720
(955,919)
(955,919)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
PolarX Limited
60
2018 Annual Report
PolarX Limited
DIRECTORS' DECLARATION
In accordance with a resolution of the directors of PolarX Limited, I state that:
In the opinion of the directors:
(a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
note 3(a);
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and
(d) this declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2018.
On behalf of the Board
Mark Bojanjac
Executive Chairman
28 September 2018
PolarX Limited
61
2018 Annual Report
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
28 September 2018
Board of Directors
PolarX Limited
Suite 9,
5 Centro Avenue,
SUBIACO WA 6008
Dear Directors
RE:
POLARX LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of PolarX Limited.
As Audit Director for the audit of the financial statements of PolarX Limited for the year ended 30 June
2018, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours sincerely
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
Liability limited by a scheme approved
under Professional Standards Legislation
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
POLARX LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of PolarX Limited (formerly Coventry Resources Limited) the Company and its
subsidiaries (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2018, 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, and notes to the financial statements, including a
summary of significant accounting policies, and the directors' 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 Group’s financial position as at 30 June 2018 and of its financial
performance for the year then ended; 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 Company 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.
Emphasis of Matter Relating to Going Concern
Without modifying our audit opinion expressed above, attention is drawn to the following matter.
As referred to in Note 2 to the financial statements, the consolidated financial statements have been prepared on
the going concern basis. At 30 June 2018, the Group had cash and cash equivalents of $528,997, and incurred a
loss after income tax of $1,491,782.
The ability of the Group to continue as a going concern and meet its planned exploration, administration and other
commitments is dependent upon the Group raising further working capital and/or successfully exploiting its mineral
assets. In the event that the Group is not successful in raising further equity or successfully exploiting its mineral
assets, the Group may not be able to meet its liabilities as and when they fall due and the realisable value of the
Group’s current and non-current assets may be significantly less than book values.
Liability limited by a scheme approved
under Professional Standards Legislation
Key Audit Matters
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have
determined the matter described below to be Key Audit Matter to be communicated in our report.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters
How the matter was addressed in the audit
Carrying Value of Exploration and Evaluation
Assets
As at 30 June 2018, Exploration and Evaluation
Assets totalled $20,308,946 (refer to Note 12 of the
financial report).
The carrying value of exploration and evaluation
assets is a key audit matter due to:
The significance of the expenditure capitalised
representing 93% of total assets;
to assess management’s
The necessity
the
requirements of
the
application of
accounting standard Exploration
for and
Evaluation of Mineral Resources (“AASB 6”), in
light of any indicators of impairment that may
be present; and
The assessment of significant judgements
made by management in relation to the
capitalised
evaluation
expenditure.
exploration
and
Inter alia, our audit procedures
following:
included
the
i. Assessing the Group’s right to tenure over
the
exploration assets by corroborating
ownership of the relevant licences for mineral
resources to government registries and relevant
third-party documentation;
ii. Reviewing the directors’ assessment of the
carrying value of the capitalised exploration and
evaluation costs, ensuring the veracity of the
data presented and assessing management’s
consideration of potential impairment indicators,
commodity prices and the stage of the Group’s
projects also against AASB 6;
iii. Evaluation of Group documents for consistency
with the intentions for continuing exploration and
evaluation activities in areas of interest and
corroborated in discussions with management.
The documents we evaluated included:
Minutes of the board and management; and
Announcements made by the Group to the
Australian Securities Exchange; and
iv. Consideration of the requirements of accounting
standard AASB 6 and reviewed the financial
statements to ensure appropriate disclosures
are made.
Key Audit Matters
How the matter was addressed in the audit
Business Combination – Acquisition of Vista
Minerals Pty Ltd.
During the year, the Company acquired 100%
issued capital Vista Minerals Pty Ltd which holds a
100% interest in the Stellar Copper Gold Project.
The acquisition has been disclosed in Note 5 to the
financial report and was considered a key audit
matter due to:
The significance of the transaction ($9.2
million net asset acquisition); and
The judgement required in the application
of AASB 3 Business Combinations (“AASB
3”).
AASB 3 required the Group to determine, if the
transaction is an asset acquisition or a business
combination and the fair value of considerations
transferred and the identifiable assets and liabilities
acquired as part of the acquisition.
Inter alia, our audit procedures
following:
included
the
i. Examining the contract for the acquisition of
Vista Minerals Pty Ltd;
ii. Reviewing and assessing the determination
made by the Group whether the transaction is
an asset acquisition or a business combination;
iii. Assessing the fair value of consideration paid
for the acquisition of Vista Minerals Pty Ltd;
iv. Examining the net assets of Vista Minerals Pty
Ltd as at the date of acquisition; and
v. Considering the adequacy of the financial
report disclosures contained in Note 5 in
relation to AASB 3.
Other Information
The directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 30 June 2018, 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 opinion thereon.
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 ability of the Group 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 to cease operations, or has 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 the
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 judgement and
maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view 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.
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.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We 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.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements.
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 with the Directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore 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 pages 18 to 21 of the directors’ report for the year ended 30
June 2018.
In our opinion, the Remuneration Report of PolarX Limited for the year ended 30 June 2018 complies with section
300A of the Corporations Act 2001.
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.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Martin Michalik
Director
West Perth, Western Australia
28 September 2018
PolarX Limited
ASX Additional Information
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this
report. The additional information was applicable as at 5 September 2018.
Information in relation to the Company’s securities is provided on a post-Consolidation basis.
Distribution of Security Holders
There are 298,170,638 fully paid ordinary shares on issue. Analysis of numbers of listed equity security holders by size of
holding:
Holding
Number of shareholders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
73
165
100
380
229
947
There are 266 shareholders holding less than a marketable parcel of ordinary shares.
Statement of Restricted Securities
There are no restricted securities on issue.
Substantial Shareholders
The substantial shareholders of the Company are as follows:
Shareholder
Number of shares
JP Morgan Chase & Co and its affiliates
Ruffer LLP
Millrock Resources Inc.
25,791,864
21,567,333
19,203,968
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary Shares
Each ordinary share is entitled to one vote when a poll is called otherwise each member present at a meeting or by proxy
has one vote on a show of hands.
Options
These securities have no voting rights.
PolarX Limited
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2018 Annual Report
PolarX Limited
Quoted Equity Security Holders
The names of the twenty largest ordinary shareholders of the Company as at 5 September 2018 are as follows:
Shareholder
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
Orogen Investments Pty Ltd
Aetas Global Markets Limited
Mr Adam Leslie Hajek + Mrs Lisa Gaye Hajek
Equity Trustees Limited
Mr William Willoughby
Mr Frank Violi
Terra Metallica Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
CS Fourth Nominees Pty Limited
Dr Charles Frazer Tabeart
BNP Paribas Nominees Pty Ltd Hub 24 Custodial Serv Ltd DRP
Mr Anthony Violi
MICJUD Pty Ltd
Mr Andrew John Pearson
Mr Richard Offer
Mr Kevin Banks Smith
Anita Cunningham
Number of
Shares
46,559,604
31,840,520
24,517,874
13,631,832
12,018,099
9,765,312
7,687,976
5,169,427
4,800,000
4,378,841
4,355,132
3,980,823
3,447,368
2,916,114
2,850,000
2,754,840
2,743,446
2,615,916
2,519,500
2,460,931
% of Issued
Capital
15.62
10.68
8.22
4.57
4.03
3.28
2.58
1.73
1.61
1.47
1.46
1.34
1.16
0.98
0.96
0.92
0.92
0.88
0.84
0.83
191,013,555
64.06
Unquoted Equity Security Holders
Class
Number of
options
Number of
holders
Holders with more than 20%
Unlisted stock options each
exercisable at $0.0715 on or
before 19/2/2020
Unlisted stock options each
exercisable at $0.175 on or
before 17/6/2020
Unlisted stock options each
exercisable at $0.195 on or
before 30/8/2019
Unlisted stock options each
exercisable at $0.12 on or
before 18/9/2020
4,000,000
400,000
400,000
400,000
3
1
1
2
Denise Worthington (2,000,000)
Robert Boaz (1,000,000)
Michael Fowler (1,000,000)
Julie Lai (400,000)
Anthony Violi (400,000)
Jayart Funds Management Pty
Ltd (200,000)
Borsa Enterprises Pty Ltd
(200,000)
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2018 Annual Report
PolarX Limited
Tenement Schedule
The tenement interest held by the Group as at the date of this report are listed below:
Project
Location
Licence(s)
Ownership Interest
Caribou Dome
Copper Property
Alaska, USA
Claim
ADL #
Caribou 1 – Caribou 20
563243 - 563262
Option to earn 80%
Copper 1 – Copper 6
588461 – 588466
Option to earn 80%
Copper 7 – Copper 11
645375 – 645379
Option to earn 80%
CD 1 – CD66
664859 – 664924
Option to earn 80%
CD 001 – 040
719909 – 719948
Option to earn 90%
CDS 001 – 038
719949 – 7199861
Option to earn 80%
Senator Property
Alaska, USA
CDE-01 – 27
722216 - 722242
Option to earn 90%
Stellar Copper Gold
Project
Alaska, USA
SB 154 – 155
704562 – 704563
100%
SB 167 – 168
704575 – 704576
ZK 3 – 5
ZK 14
704621 – 704623
704632
ZK 19 – 21
704637 – 704639
Z 1 – 5
Z 6 - 10
SB 281 - 283
SB 297 - 299
709427 - 709431
711728 - 711732
714079 - 714081
714095 - 714097
SB 317 – 319
714115 – 714117
SB 346 – 348
714144 - 714146
SB 364 - 368
SB 376 - 379
SB 389 - 390
SB 417
714162 – 714166
714174 - 714177
714187 - 714188
715392
SBA 001 – 066
721446 - 721511
SBX 001 – 070
724789 - 724858
LYKN 1 – 2
CD 41 – 51
SBX 71 - 91
725111 – 725112
725113 – 725123
726910 - 726930
Uncle Sam Gold
Project
Notes:
Alaska, USA
-2
-2
-2
1. Caribou Dome Claims numbered CDS 007 (ADL# 719955), CDS 008 (ADL# 719956), CDS 009 (ADL# 719957), CDS 015 (ADL#
719963), CDS 016 (ADL# 719964) and CDS 017 (ADL# 719965), overlap prior existing active claims. Hence no exploration activity
has been undertaken on these claims to date and no work will be undertaken on these claims unless they are abandoned by the
original locator. The claims are not considered material to the overall Caribou Dome Project.
2. Refer Note 29 to the financial statements for the status of the Uncle Sam Gold Project. For a detailed listing of the Uncle Sam Gold
Project mineral claims, held prior to receipt of the DNR Notice referred to in Note 29, please refer to Appendix 1 to the quarterly
activities report dated 31 October 2017.
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2018 Annual Report