Predictive Discovery Limited
Annual Report 2016

Plain-text annual report

ABN 11 127 171 877 2016 ANNUAL REPORT PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 CORPORATE DIRECTORY DIRECTORS AUDITOR Mr Phillip Jackson Mr Paul Roberts Mr David Kelly Non-executive Chairman Managing Director Non-executive Director Moore Stephens Level 18, 530 Collins Street MELBOURNE VIC 3000 Company Secretary Mr Eric Moore REGISTERED OFFICE Suite 2, Level 2 20 Kings Park Road WEST PERTH WA 6005 Telephone: +61 8 6143 1840 Fax: +61 8 9321 4692 Email: info@predictivediscovery.com Web Site: www.predictivediscovery.com POSTAL ADDRESS PO Box 1710 WEST PERTH WA 6872 CONTENTS CHAIRMAN’S REPORT REVIEW OF OPERATIONS DIRECTORS’ REPORT STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF FINANCIAL POSITION STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT AUDITOR’S INDEPENDENCE DECLARATION SHAREHOLDER INFORMATION MINERAL TENEMENT INFORMATION SHARE REGISTRY Link Market Services Limited Level 4, 152 St Georges Terrace PERTH WA 6000 Telephone: +61 8 9211 6670 Email: info@linkmarketservices.com.au ASX CODE PDI 3 4 21 30 31 32 33 34 58 59 61 62 64 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 CHAIRMAN’S REPORT Dear Shareholder Predictive Discovery Limited (‘PDI’) has continued to make progress in the past year despite ongoing difficult market conditions for junior gold explorers. Our Cote D’Ivoire joint venture with Toro Gold Limited has generated exciting drill results from both the Boundiali and Kokoumbo exploration permits. The Nyangboue Prospect at Boundiali appears to be particularly promising with the identification of a gold mineralised zone, containing some very high gold grades, which is now known to be at least 1.2km long. Elsewhere, we have received high grade gold values from drilling on the Kokoumbo permit and defined a large gold-in-soil geochemical anomaly on the Ferkessedougou South permit. Elsewhere in Cote D’Ivoire, we have farmed-in to the exciting Bobosso gold project where previous exploration had already identified a large gold mineralised system. We look forward to exploring this ground in the upcoming field season. In Burkina Faso, we have now calculated an Exploration Target on prospects close to our Bongou gold deposit. We have also been in discussions with potential investors about a project-level joint venture which can develop the Bongou district through to mine production via a multi-pit mining approach. Our strategy has changed over the past year. The Company is now operating with a West Africa-focused, “project generator” business model, whereby we will acquire the right to explore on high quality ground, undertake early stage exploration up to the drilling stage, and then seek joint venture partners with mine development credentials to help us advance gold discoveries through to development. The Toro Joint Venture provides a good example of the model we are seeking to follow and provides some vindication of the quality of exploration ground we have been able to acquire. We thank you for your strong support during the past year. We successfully raised $1.3 million via a fully subscribed Rights Issue in November-December 2015, at a particularly difficult time in the investment cycle, which reflects how strongly our shareholders have supported our activities and evolving business strategy. I am pleased to say that this support has been rewarded in recent months through a substantial rise in our share price, which has, in turn, enabled us to raise a further $3 million to support our exploration strategy. Two Directors, Phil Henty and Tim Markwell, retired from the Board in late 2015. I wish to record my thanks to them for their dedicated service to the Company over past years. Thank you also to our Managing Director, Paul Roberts, my fellow Director, David Kelly, and our staff in Australia and Burkina Faso. This has been another challenging year and the Company has again been obliged to cut costs wherever possible. Despite this, we have managed to continue to advance our projects with the assistance of our shareholders and joint venture partners. I thank everyone for their dedication to Predictive. Phillip Jackson Chairman PREDICTIVE DISCOVERY ANNUAL REPORT 3 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS REVIEW OF OPERATIONS HIGHLIGHTS In 2015-16, Predictive Discovery Limited (PDI) made substantial progress on its exploration projects, mainly through its joint ventures in West Africa and Victoria. Highlights of the year included:  Toro Joint Venture: o Excellent RC drill results from the Nyangboue Prospect in the Boundiali permit in Cote D’Ivoire (Quarterly Report to 30 June 2016), including:  28m at 4.0g/t Au from 3m, including 1m at 49.7g/t Au  14m at 5.5g/t Au from 32m, including 1m at 31.6g/t Au  9m at 7.9g/t Au from 99m, including 1m at 44.7g/t Au  20m at 2.0g/t Au from 0m, including 1m at 14.4g/t Au  7m at 3.8g/t Au from 33m, including 1m at 11.3g/t Au o Highly encouraging diamond drill results from the Kokoumbo permit in Cote D’Ivoire (Quarterly Report to 30 June 2016), including:  7.5m at 16.0g/t Au from 0m, including 1.5m at 74.2g/t Au  7.5m at 1.6g/t Au from 0m  1.5m at 14.9g/t Au from 87m o Large gold-in-soil geochemical anomalies recorded on Boundiali, Kokoumbo and Ferkessedougou permits in Cote D’Ivoire.  Cape Clear Joint Venture: o Encouraging diamond drill results from the British Banner prospect on the Cape Clear Exploration Licence in Victoria (Quarterly Report to 31 March 2016):  3.8m at 6.7g/t Au from 265.7m including 1.3m at 17.5g/t Au  4.5m at 2.5g/t Au from 326.5m including 0.7m at 10.4g/t Au  Calculation of an Exploration Target on prospects located within 10km of the Bongou Deposit.  Signature of a farm-in agreement with XMI SARL on the Bobosso project in Cote D’Ivoire and commencement of field work there. INTRODUCTION PDI is exploring for large, high value gold deposits in West Africa. In Cote D’Ivoire, the Company has interests in six granted exploration permits and two permit applications, totalling 3,133km2 (Figure 1), which are being actively explored under the terms of a joint venture with Toro Gold Limited. PDI is also conducting exploration under an agreement on the Bobosso Project, which covers a further 1,200km2 (Figure 1). In Burkina Faso, the Company has an effective Burkina-based team and a large regional tenement package in the north-east of the country covering 1,222km2 (Figure 9). PDI’s exploration focus is on the high-grade Bongou gold discovery and the surrounding area. A formal Mineral Resource Estimate on Bongou resulted in 184,000oz of gold in the Inferred and Indicated Mineral Resource categories with an average grade of 2.6g/t Au, including 136,000oz at 3.8g/t Au (ASX release dated 4 September, 2014). PDI also holds an Exploration Licence in Victoria (Figure 11) which was drilled in the December and March Quarters by joint venture partner, Cape Clear Minerals Pty Ltd. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 4 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Predictive’s strategy is to identify early stage exploration projects, explore them up to the initial drilling stage, and then maintain a high level of exploration activity on its more advanced projects through project- level funding – either via joint ventures or direct cash investments into private companies which hold the Company’s ground. The Toro and Cape Clear Joint Ventures are clear evidence that this model is working well and generating significant newsflow. Figure 1: Map of the Birimian Gold Belt showing major mines and important PDI project areas. COTE D’IVOIRE Background Predictive has been increasingly focused on Cote D’Ivoire in recent years. The country covers over a third of the highly prospective Birimian gold belt, more than any other country in West Africa. Cote D’Ivoire is highly underexplored for gold because the exploration investment boom in the last decade largely bypassed the country because of political instability. Since the accession of President Alassane Ouattara in 2011 and his comfortable re-election last year, and with investment certainty provided by an updated Mining Act and a forward-looking Mines Administration, Cote D’Ivoire has become a highly attractive exploration investment destination. Predictive is in joint venture with Toro Gold Limited (Toro), a UK-based company, on six granted permits and two permit applications in Cote D’Ivoire and with XMI SARL, an Ivoirian company, on two additional permits and one permit application covering the Bobosso Project (Figure 2). The Toro Joint Venture operates through Predictive Discovery Limited’s subsidiary, Predictive Cote D’Ivoire SARL (Predictive CI). Predictive now has interests in exploration ground in Cote D’Ivoire covering 4,333 km2. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 5 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Figure 2: Locality map showing the initial Toro Joint Venture permits (i.e. Boundiali, Kokoumbo, Ferkessedougou S and Kounahiri), location of the GIV Joint Venture permits and permit applications (which also fall within the Toro JV), and the permits covered by PDI’s agreement with XMI SARL over the Bobosso Project (ASX). Toro Gold Joint Venture Background The Toro Joint Venture operates through Predictive Discovery Limited’s subsidiary, Predictive Cote D’Ivoire SARL (Predictive CI) of which Predictive now holds 49%. Toro can earn a further 14% of Predictive CI by spending US$2.5 million, which would then lift its equity to 65%. Predictive plans to contribute 35% of the ongoing expenditure once Toro achieves its 65% equity. Boundiali Permit The Boundiali exploration permit is located within a very well mineralised greenstone belt which contains the large operating Tongon and Syama gold mines in Cote D’Ivoire and Mali respectively (Figure 2). The southern part of this belt has had little exploration to date and represents a first class opportunity to make new large gold discoveries. Predictive was granted the Boundiali permit in January 2014. The Company’s first exploration program on the permit was a BLEG stream sediment survey (ASX release dated 4/8/14) which discovered a series of strong stream sediment anomalies, the best of which, a 24ppb Au anomaly, lies downstream of the Nyangboue Prospect gold mineralised zone discovered in the recent drilling. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 6 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Figure 3: Toro Gold soil sampling grid covering the entire Boundiali exploration permit (results reported to the ASX on 20/10/15 and 23/3/16). Results in grade intervals are shown for all of Toro soil results to date. The large Nyangboue Prospect gold anomaly and two other coherent gold anomalies are highlighted on this map. Rock chip locations are shown as small black triangles. Toro carried out a soil sampling program covering the entire Boundiali permit initially on 800m spaced lines. Infill sampling highlighted three areas of coherent soil anomalies (Figure 3; December 2015 and March 2016 Quarterly Reports). A high quality 2km long plus 100ppb Au anomaly was selected for RC drilling (see below). Boundiali Drilling Program (Nyangboue Prospect) The RC drilling program on the Boundiali permit consisted of 92 RC holes totalling 5,496m. The RC holes were drilled:  on eight east-west oriented lines, of which six are spaced 320m apart. The northernmost and southernmost lines are 160m from their neighbours (Figure 4). Hole collars are approximately 40m apart,  mostly to depths of 50-60m, with the exceptions of a few holes which were extended or re-drilled to between 117m and 130m depth,  towards the west and angled at 50 degrees. Drill assay highlights (reported on 23/6/16, 25/7/16, 8/8/16, 12/9/16 and 13/10/16) were as follows:  BRC003 - 28m at 4.04g/t Au from 3m, including 1m at 49.7g/t Au  BRC004 - 20m at 1.97g/t Au from 0m  BRC004 - 14m at 5.51g/t Au from 32m, including 1m at 31.6g/t Au  BRC004BIS (twin hole) – 20m at 10.45g/t Au from 38m including 1m at 145.5g/t Au PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 7 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS  BRC006 – 9m at 7.9 g/t Au from 99m including 1m at 44.7g/t Au  BRC023 – 7m at 3.8g/t Au from 33m including 1m at 11.3g/t Au  BRC048 – 28m at 1.55g/t Au from 1m including 1m at 27.4g/t Au  BRC010 – 30m at 0.92g/t Au from 14m including 2m at 7.68g/t Au  BRC085 – 1m at 10.65g/t Au from 37m  BRC010 – 4m at 5.38g/t Au from 4m including 1m at 15.15g/t Au. Figure 4: RC drill hole collar locations on a gold-in-soil geochemical contour plan, highlighting locations of gold mineralised zones in the southern 2km portion of the Nyangboue Prospect. Gold geochemical contours are superimposed on satellite imagery. This drilling has revealed a substantial new body of gold mineralisation in multiple zones up to 1.2km long (Figure 4). Initial observations from logging these drill holes and mapping the limited rock exposures at surface are as follows:  The mineralised zone appears to lie within a large and complex ductile shear zone containing: o quartz-sericite schists which are interpreted to be derived from volcano-sedimentary rocks, o granitic intrusives, o sediments, PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 8 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS o felsic volcanics with quartz phenocrysts, o possible mylonites (extremely strongly sheared rocks) and o possible mafic volcanics.  Sparse rock outcrops indicate that shearing dips steeply to the east, which is why holes were drilled towards the west.  Gold values are generally associated with zones of quartz veining (1-2cm veinlets) - both smoky grey quartz and white quartz.  Visible gold has been panned from some of the RC drill chips and fines. Follow-up screen fire assays on intervals with high gold grades and/or visible gold are therefore planned.  The dip and dip direction of the mineralisation is not yet understood. Follow-up diamond drilling is required to address this question.  The sheared rock sequence contains minor sulphides, including pyrite, pyrrhotite and arsenopyrite. Kokoumbo Permit Predictive CI is earning a 90% interest in the Kokumbo exploration permit in southern Cote D’Ivoire from an Ivoirian company, Ivoir Negoce. The Kokumbo permit covers an area of historic artisanal and French colonial era mining located in a highly prospective belt of rocks which also includes the Bonikro gold mine, currently in production by Newcrest, and Agbaou gold mine, where Endeavour Mining commenced commercial production in January 2014 (Figure 2). Toro commenced work by carrying out geological mapping and rock and soil samples. The soil sampling defined two large areas of gold anomalism (September 2015 Quarterly Report):  A WNW orientated, 6km long gold geochemical anomaly with peak values of 3.4 and 3.3g/t Au.  An area of over 2 km2, covering the historic Kokumbo workings and surrounding area, and with peak soil values of 1.2 and 1.3g/t Au. Figure 5: Location of Kokoumbo diamond drilling, superimposed on a gridded image of gold in soil geochemistry (ASX release dated 15/9/15). The Kokoumbo Hill sites are in the centre of a large area of gold in soil anomalies and substantial historical and recent artisanal mine workings. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 9 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Kokoumbo Diamond Drilling Program 15 diamond drill holes totalling 1,610m were completed in April 2016. The diamond drilling program tested three prospects, with the main focus being Kokoumbo Hill (Figure 5). The majority of the holes drilled contained some gold mineralisation, including the following (June 2016 Quarterly Report): Kokoumbo Hill Prospect:  KOD001: 7.5m at 16.0g/t Au from 0m, including 1.5m at 74g/t Au from 6.0m.  KOD002: 7.5m at 1.6g/t Au from 0m  KOD003: 4.5m at 3.4g/t Au from 0m  KOD005: 7.5m at 1.5g/t Au from 12m, including 1.5m at 8.9g/t Au  KOD010: 1.5m at 14.9g/t Au from 87m Sereme Prospect:  KOD014: 3.0m at 1.9g/t Au from 39m  KOD015: 1.5m at 4.1/t Au from 1.5m  KOD015: 1.5m at 4.6/t Au from 18.7m Toro’s work on the Kokoumbo Hill Prospect has identified near surface gold mineralisation both in chip- channel sampling and RC drilling, some of which is high grade (e.g. the KOD001 intercept). While some gold values were obtained in colluvial material, most are from weathered or fresh bedrock including the highest grade values to date. A chip-channel sampling program (ASX release dated 10/11/15) indicated an association between encouraging gold values and a microdiorite containing rare quartz phenocrysts. Such rocks tend to contain lower titanium values than the surrounding basalts. A combination of core logging and titanium measurements (using a portable XRF machine) shows that such an association is also present in some of the drill intercepts, most definitively in the KOD001 and KOD005 intercepts. The principal gold mineralised zone identified from the drilling (holes KOD001-005) is open to the east and the south, the best results obtained to date being on the southernmost drill line. Ferkessedougou South Permit The Ferkessdougou exploration permit was selected by PDI on the basis of a country scale structural analysis using the Company’s Predictore methods. Toro Gold Soil Sampling Program Toro undertook reconnaissance soil sampling of the northern two thirds of the Ferkessedougou permit in the September and December Quarters of 2015 (ASX release 10/11/15). Infill soil sampling 200 x 50m grid of a 3km long gold anomalous zone identified in the initial survey was completed and reported in the March Quarter of 2016 (ASX release 28/4/16 – see Figure 6). PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 10 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Figure 6: Ferkessedougou geochemical map on satellite imagery background - showing location of the northern gold- in-soil anomaly including values above 0.5g/t Au (plus 500ppb Au). The infill sampling showed that there is a coherent gold anomalous zone in the northern part of the permit with values above 20ppb Au extending over 4km (Figure 6). Within that zone, there is a 2km long continuous anomaly above 50ppb along with other shorter strike length gold anomalous features. There are a number of encouraging high values (>500ppb Au or >0.5g/t Au), ranging from 509 to 895 ppb Au. Bobosso Project (XMI Joint Venture) Background The Bobosso Project consists of two granted exploration permits, Bassawa and Wendene, and one permit application, Dabakala, in northern Cote D’Ivoire (Figure 2), which are held by an Ivoirian company, XMI SARl (XMI). Bassawa and Wendene are located in the southern extension of the well mineralised Hounde Belt in Burkina Faso, which includes Semafo’s Mana Mine (5 Moz in ore resources and reserves). Predictive has entered into an agreement with XMI SARL whereby it can provide funding or arrange for third parties to invest in the Bobosso Project. Details of the agreement were released to the ASX on 28/10/15. At present, PDI’s equity in the project is approximately 35%. Historical Data Historical soil sampling by Equigold (ASX release 28/10/15) obtained many anomalous results over the Bassawa permit and Wendene permit applications. Of particular note is a 7km2 area in Wendene in which most of the values are above 100ppb Au (Figure 7). This area contains 729 soil samples with an average arithmetic value of 394ppb Au (0.39g/t Au) and peak values of 39.8g/t Au, 20.2g/t Au and 6.89g/t Au. There are numerous plus 100ppb Au anomalous values outside of this area, many of which are untested by drilling. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 11 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Figure 7: Bobosso gold in soil geochemical anomaly showing location of all historical RC holes, highlighting all holes with gold intercepts of at least 2 g x m and showing cross section location. 569 RC holes and 11 diamond drill holes were completed in the area of the 7km2 anomaly. Of these, 221 holes contained at least one 2gxm intercept at a cut-off grade of 0.5 g/t Au. Most of these intercepts were at shallow depths. The average (vertical) depth tested by drilling was approximately 80m. Historic RC and diamond drill intercepts (September 2015 Quarterly Report) include the following:  BRC047: 32m at 1.93g/t Au from 12m  BRC053: 2m at 29.70g/t Au from 0m  BRC083: 5m at 20.60g/t Au from 48m  BRC097: 7m at 5.36g/t Au from 17m  BRC262: 35m at 1.56g/t Au from 65m  BRC278: 7m at 9.52g/t Au from 26m  BRC311: 2m at 29.16g/t Au from 66m  BRC343: 25m at 1.45g/t Au from 11m  BRC552: 9m at 5.01g/t Au from 4m  BRC557: 31m at 1.18g/t Au from 59m  BRC561: 9m at 4.21g/t Au from 12m PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 12 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Figure 8: Cross section through Bobosso gold mineralised system, located as shown on Figure 7. Geological Analysis Predictive’s analysis of this data along with results of re-logging and surface geological mapping and review of historic aeromagnetic data recorded after the drilling was completed indicates that:  The historic drilling was directed at an oblique angle (25 to 30 degrees) to the structures which appear to control mineralisation. Thus structures mapped by the aeromagnetic data and distribution of drilled gold mineralisation appear to strike ENE (approximately 075-080°) and the holes are largely drilled to the east on an ESE azimuth (approximately 105°).  Several prospective structures mapped by aeromagnetics are undrilled.  The drilled area covers a major gold mineralised system with numerous separate zones of gold mineralisation, apparently with variable vein and/or mineralised shear orientations.  Gold mineralisation continuity is not completely understood. However, there is a strong correlation between gold values and primary silica-sericite-pyrite alteration, which can be traced on some sections from hole to hole.  In some areas, the mineralisation has an apparent flat dip (e.g. Figure 8), which may be a result of drilling near parallel to the strike of more steeply dipping mineralisation.  Elevated gold values near surface are quite common, and help explain the very large gold anomaly. These values may be explained by partly lateritised alluvium/colluvium formed by erosion of the underlying mineralisation.  The host rock consists of largely carbonatised mafic volcanics with lesser volcaniclastics and mafic to intermediate intrusives. Granites are known in the area but no felsic intrusives have yet been observed in core of RC drill chips.  According to the historical drill logs, the depth of weathering averages about 30m.  Most of the historical drilling was conducted on 200m spaced drill lines. It is unlikely that a formal resource estimation could be made using such widely spaced drill lines. Nevertheless, Predictive believes that, when supported by the results of new infill drilling, this data is sufficiently well documented for use in a future resource calculation because: o the digital database includes hole collar information, downhole survey data, assays, geological logs and drill core photography, o based on Predictive’s field visit, many hole collar markers appear to be intact, allowing validation of the drill locations by an independent expert, and PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 13 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS o most of the RC drill gold analysis certificates are now held by Predictive.  Few or no villagers live or farm directly on the Bobosso gold-in-soil geochemical anomaly. There are signs of recent artisanal mining activity. Predictive’s relationships with the local village communities are excellent.  Local infrastructure is generally quite good. The nearest town, Dabakala, is connected to Cote D’Ivoire’s sealed road network and is a 90 minute drive from the project area. There is also a substantial power line which runs within 10 kilometres of the Bobosso gold anomaly. There is a significant discovery opportunity for PDI at the Bobosso Project because of both the large gold mineralised system that is evidently present at Bobosso itself and the extensive regional potential along strike. Bobosso Work Program PDI has undertaken a series of relatively low cost work programs to date, including:  Pitting and metallurgical testwork of gold-bearing colluvial gold material within the 7km2 gold anomaly,  Clarifying the geological interpretation of some key sections through the Bobosso gold mineralisation by re-logging drill holes and surface mapping,  Undertaking a regional targeting exercise to identify gold mineralisation potential along strike from the Bobosso prospect both in the Wendene and Bassawa exploration permits. XMI has also applied for a third permit (Dabakala – northernmost area within Bobosso permit group, Figure 2). BURKINA FASO GOLD PROJECTS Background PDI’s Burkina Faso projects are all located within the Birimian gold belts in West Africa. These belts contain numerous gold ore deposits (Figure 1), many of which are in production. The Company’s tenement holding covers 1,222km2 including approximately 100km of strike length in the Samira Hill greenstone belt in eastern Burkina Faso (the Bonsiega permit group, Figure 9). This belt hosts the 2.5 million ounce Samira Hill gold deposit across the border in Niger and contains numerous active artisanal gold mine sites along its length. PDI owns 100%, or has the rights to earn 95% to 100% of all its permits in Burkina Faso. PDI has discovered gold mineralisation on multiple prospects in Eastern Burkina Faso during the past four years including the Bongou gold deposit. A formal Mineral Resource Estimate on Bongou resulted in 184,000oz of gold in the Inferred and Indicated Mineral Resource categories with an average grade of 2.6g/t Au, including 136,000oz at 3.8g/t Au (ASX release dated 4 September, 2014). PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 14 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Figure 9: Location of PDI’s Burkina Faso permits, highlighting the Bongou Prospect. Each dot within the permit outlines is a drilled prospect with ore grade and width gold intercepts. Note that the nearby operating Samira Hill gold mine in Niger contains resources, reserves and past production of 2.5 million ounces (source: www.semafo.com). Figure 10: Geology of the SE Bonsiega Permit Group, including the Bongou Prospect and nearby exploration targets Exploration Target near Bongou In August 2015, the Company calculated an Exploration Target on drilled prospects within 10km of the Bongou gold deposit (ASX release dated 3rd September 2015). The Exploration Target detailed in the following table is estimated to be in a range of 9.4 to 10.4 million tonnes averaging between approximately 1.5 to 1.7g/t Au and containing approximately 460,000 to 563,000 ounces of gold, as follows: PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 15 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS for 3 Figure Prospect Names (see locations) Dave Laterite Hill Near Bongou (W2/W8) Prospect 71 Target 92 Totals Million Tonnes Grade Ounces Gold Lower estimate 6.71 1.48 0.27 0.68 0.23 9.37 Higher estimate 7.41 1.63 0.30 0.75 0.26 10.35 Lower estimate 1.49 1.62 1.57 1.21 2.88 1.53 Higher estimate 1.65 1.79 1.74 1.33 3.18 1.69 Lower estimate Higher estimate 322,000 77,000 14,000 26,000 21,000 460,000 394,000 94,000 17,000 32,000 26,000 563,000 Cautionary Statement: The potential quantity (tonnage) and grade of the Exploration Target is conceptual in nature. There has been insufficient exploration to estimate Mineral Resources and it is uncertain if further exploration will result in the estimation of Mineral Resources. The calculation was restricted to prospects for which there is good evidence of mineralisation orientation and continuity. Most of these prospects are open along strike and at depth. A number of other isolated gold intercepts within 10km of Bongou were excluded, so there is significant potential to expand the Exploration Target further within range of PDI’s own drilling. Additionally, PDI’s extensive ground holdings in Eastern Burkina Faso hold other significant prospects for which Exploration Targets could be calculated (e.g. Tambiri, Solna, Bira and Fouli) Data and parameters used in calculating this Exploration Target were as follows:  Data: o Gold intercepts from 291 reverse circulation holes, 4 air core holes and 5 diamond drill holes1 were used in the calculation. o The holes were mostly drilled on lines spaced from 50m to 100m apart, with a spacing along the lines ranging from 10m to 50m.  Parameters: o 0.5 g/t gold cut-off grade; o Minimum downhole intercept width of 2m and a minimum grade times width intercept of 2g*m; o Minimum internal waste of 3m except for a few holes where it was clear that the holes had drilled almost down-dip and where the inclusion of larger down-hole intervals of internal waste made geological sense; o Maximum of 100m strike extent from drill holes (where the continuity of the mineralisation is supported by mapping and/or the location of artisanal workings and/or anomalous auger results); o Maximum of 70m vertical extent below surface; o Dry bulk density estimates as follows:  Laterite: 2.2  Saprolite: 1.8  Weathered rock between base of saprock and base of complete oxidation (BOCO): 2.3 1 These drilling results were reported to the ASX in the following Quarterly Reports: June Quarter 2011, March Quarter 2012, June Quarter 2012, March Quarter 2014 and June Quarter 2015. The drill results reported in these Quarterly Reports up to the June Quarterly of 2012 were prepared and first disclosed under the JORC Code 2004; they have not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 16 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS  Fresh mafic volcanics: 2.8  Fresh felsic to intermediate rocks including granite and granodiorite: 2.7 o The calculation was carried out using a cross sectional method with volumes projected half way to the next hole (on the section) or half way to the next section to a maximum distance of 100m (along strike). Additional Potential Most of the zones of gold mineralisation included in the Exploration Target are open at depth and along- strike. In addition, there are a series of other mineralised intercepts which have potential for resource discovery either along strike or at depth. Follow-up Drilling Subject to funding availability, Predictive plans to follow up the Exploration Target calculation with drilling programs on all the listed prospects in order to make Mineral Resource Estimates. A total drilling budget of 20,000m, consisting of both RC and diamond drilling, has been calculated to complete this task, and is planned for completion over the next one to two years. VICTORIAN GOLD PROJECT Cape Clear EL5434 Background PDI has one project remaining in Australia, the Cape Clear Project west of Ballarat in Victoria (Figure 11). Exploration there is targeted at discovery of Stawell-style and/or Ballarat-style gold mineralisation on the margins of a concealed Cambrian basalt ridge located on the west side of the major north-south striking Avoca Fault. The 5 million ounce Stawell gold deposit is located in a comparable geological position on the western side of a basalt ridge, which is also west of a major fault (the Coongee Fault). PDI announced the signing of a joint venture agreement with Cape Clear Minerals Pty Ltd (CCM) in regards to the project on 22nd September 2014. CCM has now earned a 75% interest in the joint venture. Past exploration by Leviathan Resources Limited revealed a gold mineralised zone on the eastern side of the basalt ridge at the British Banner prospect (Figure 12). This included drill hole PFD036 (Figures 12 and 13) which reportedly contained visible gold in several places and intersected:  0.4m at 6.98g/t Au from 313.1m  0.6m at 22.80g/t Au from 334.0m  1.8m at 2.39g/t Au from 347.8.0m  3.0m at 3.15g/t Au from 392.2m including 0.4m at 19.5g/t Au.  0.4m at 4.99g/t Au from 397.2m PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 17 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Figure 11: Cape Clear Project, Victoria - locality plan Drilling program CCM completed a diamond drilling program on Cape Clear, totalling 7 holes and 2,147m, in the December 2015 and March 2016 Quarters (see Figure 12 for drill hole locations). Encouraging results, including some high gold grades over narrow widths, were obtained from the British Banner Prospect (Figures 12 and 13). Highlights of that drilling included the following:  CCD001: o 0.7m at 2.07g/t Au from 232.2m o 3.8m at 6.74g/t Au from 265.7m including 1.3m at 17.50g/t Au o 4.5m at 2.45g/t Au from 326.5m including 0.7m at 10.35g/t Au  CCD004: o 2.1m at 3.18g/t Au from 206.8m including 0.6m at 5.22g/t Au o 1.1m at 4.08g/t Au from 266.5m  CCD005: o 1.2m at 2.45g/t Au from 160.5m o 0.8m at 3.72g/t Au from 167.4m PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 18 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Figure 12: Drill hole locality plan on map of interpreted basement geology below younger (Tertiary) basalt cover (see Figure 13 for cross sectional view). Figure 13: Cross section through the British Banner Prospect and diamond drill holes CCD001 and CCD005 The drilling to date indicates that there is a broad zone of gold-anomalous quartz veining, with traces of visible gold, in the vicinity of the contact position between sandstones and shales east of the basalt contact and west of the major Avoca Fault. CCM’s drilling has demonstrated that this zone extends for at least 400m along strike and is open to the north and south. CORPORATE Capital raisings during the year totalled $1.3 million via a rights issue in the December 2015 Quarter. The Company’s overhead costs were again reduced in 2015-16, reflecting the ongoing difficult capital raising environment during the year. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 19 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 REVIEW OF OPERATIONS Two of PDI’s Non-Executive Directors, Mr Phil Henty and Mr Tim Markwell, retired from the Board during the December 2015 Quarter. The Company thanks both of them for their many valuable contributions. Mr David Kelly was appointed as a Non-Executive Director of PDI’s Board early in the March 2016 Quarter. Subsequent to 30th June, 2016, the Company raised $3 million in funds in three components:  $1m from clients and affiliates of the Sprott Group;  A placement of $1.2m to large shareholders and several other sophisticated investors; and  A Share Purchase Plan which raised $0.8m. OUTLOOK Predictive’s current strategy is to operate through a project generator business model, i.e.:  generate high quality exploration ground in West Africa with the Company’s highly effective project  generation methods, conduct early stage exploration up to initial the drilling stage in order to generate substantial value for shareholders,  maintain a high level of exploration activity on its drilling stage and more advanced projects through project-level funding – either via joint ventures or direct cash investments into private companies which hold the Company’s ground. The Toro and Cape Clear Joint Ventures are operating well and already generating significant newsflow. The Company’s focus in the second half of 2016 is to obtain project-level funding on the Bonsiega Project in Burkina Faso and the Bobosso Project in Cote D’Ivoire. Assuming that the Company is successful in obtaining well qualified joint venture partners on Bonsiega and Bobosso, Predictive shareholders can expect substantial progress on all of the Company’s projects in West Africa with drilling results expected from three or four projects in Cote D’Ivoire and from the Bonsiega district in Burkina Faso. Predictive’s geologists are also actively investigating new opportunities in West Africa with a high expectation of identifying more early stage projects for the Company to explore. Competent Person’s Statement The exploration results and Exploration Target reported herein, insofar as they relate to mineralisation, are based on information compiled by Mr Paul Roberts (Fellow of the Australian Institute of Geoscientists). Mr Roberts is a full-time employee of the company and has sufficient experience relevant to the style of mineralisation and type of deposits being considered to qualify as a Competent Person as defined by the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Roberts consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The input data, including the drill hole dataset, topography and geology interpretation used in the Mineral Resource estimate for the Bongou deposit is based on information and supporting documentation compiled by Mr Paul Roberts. Mr Roberts is a full-time employee of Predictive Discovery Ltd and a Fellow of the Australasian Institute of Geoscientists. Mr Roberts has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 Edition). Mr Roberts consents to the inclusion of the drill hole data, topography and geological interpretation and the supporting information in the form and context in which it appears in this report. The Mineral Resource estimation and classification of Mineral Resources and Exploration Targets for the Bongou deposit is based on, and fairly represents, information and supporting documentation compiled by Mr Richard Gaze. Mr Gaze is a full-time employee of Golder Associates Pty Ltd and a Member and Chartered Professional of the Australasian Institute of Mining and Metallurgy. Mr Gaze has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 Edition). Mr Gaze consents to the inclusion of the estimates, classification and the supporting information in the form and context in which it appears in this report. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 20 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT Predictive Discovery Limited (“the Company” or “Predictive”) is a public company incorporated and domiciled in Australia and listed on the Australian Securities Exchange. The directors of the Company present their report on the group, which comprises Predictive Discovery Limited and its controlled entities, for the year ended 30 June 2016. The names of the directors in office at any time during, or since the end of the year are: NAMES Mr Phillip Jackson Mr Paul Roberts Mr Philip Henty Mr Timothy Markwell Mr David Kelly POSITION Non-Executive Chairman Managing Director Non-Executive Director (resigned 30 November 2015) Non-Executive Director (resigned 17 December 2015) Non-Executive Director (appointed 22 January 2016) The Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. COMPANY SECRETARY Eric Moore Eric (Ric) Moore was appointed as Company Secretary on 7 April 2015. He has held senior managerial positions in a number of resource companies during the past 20 years and was Company Secretary of a publicly listed company between 1996 and 2005. Ric is also Company Secretary of Aurora Minerals Limited and Peninsula Mines Limited. PRINCIPAL ACTIVITIES During the financial year, the principal activity of the group was mineral exploration with the objective of identifying and developing economic reserves in West Africa and Australia. OPERATING RESULTS FOR THE PERIOD The consolidated loss of the group for the financial year after providing for income tax amounted to $7,864,047 (2015: $7,060,889). This was largely from the costs of administering the group to 30 June 2016, impairment of exploration and exploration costs. REVIEW OF OPERATIONS In the year to June 2016, substantial exploration operations including three drilling programs were undertaken by joint venture partners in Cote D’Ivoire and Victoria. In addition, the Company farmed in on the Bobosso Project in NE Cote D’Ivoire and was engaged in discussions with possible joint venture partners in Burkina Faso. $1.3 million was raised in a fully subscribed Rights issue in November-December 2015. Predictive’s joint venture with Toro Gold Limited (Toro JV) in Cote D’Ivoire carried out a large exploration program involving diamond and RC drilling, extensive geochemical sampling programs and geological mapping. This work obtained highly encouraging results on the Boundiali, Kokoumbo and Ferkessedougou exploration permits including: (1) Boundiali - a 6km long gold geochemical anomaly under which first pass RC drilling has obtained excellent drill intersections including 20m at 10.5g/t Au and 28m at 4.0g/t Au with abundant visible gold panned from drill chips, (2) Kokoumbo – two large gold-in-soil anomalies beneath one of which diamond drilling intersected a new style of quartz diorite-hosted gold mineralisation with a best intercept of 7.5m at 16g/t Au, and (3) Ferkessedougou (South) – a 4km long gold-in-soil geochemical anomaly which requires follow-up drilling. The Toro JV also farmed into a ground package held by GIV Minerals SARL, an Ivoirian company, and thereby approximately doubled the area covered by the JV to 3,133km2. Toro earned a 51% interest in Predictive’s Cote D’Ivoire subsidiary, Predictive Discovery Cote D’Ivoire SARL, during the financial year by exploration expenditure of US$1 million and is in the process of earning 14% more equity by spending an additional US$2.5 million. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 21 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT Also in Cote D’Ivoire, the Company entered into a JV with XMI SARL, an Ivoirian company, over two permits and one permit application in NE Cote D’Ivoire, covering 1,200km2. This project covers a large known gold mineralised system drilled previously by Equigold and Lihir Gold. An initial program of data assessment, historic drill core and RC chip re- logging, regional target generation and collection of near-surface metallurgical samples was carried out in the first six months to June 2016. In Burkina Faso, Predictive published an Exploration Target estimate covering drilled prospects within a 10km radius of the Company’s Bongou gold discovery. In addition, the Company undertook field visits and discussions with possible joint venture partners, in accordance with the Company’s announced joint venture strategy. In Victoria, the Company’s joint venture partner, Cape Clear Minerals Pty Ltd (CCM), undertook a diamond drilling program which encountered narrow high grade gold mineralisation including 1.3m at 17.5g/t Au. As in previous years, administration costs were reduced in Burkina Faso and Australia, reflecting the ongoing difficult capital raising environment during the year. DIVIDENDS PAID OR RECOMMENDED No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made. FINANCIAL POSITION The net assets of the group have decreased by $6,581,400 from 30 June 2015 to 30 June 2016. This net movement is largely due to the following factors:    $1.2m net capital raising; Expenditure on exploring and evaluating the assets in Burkina Faso and Cote D’Ivoire; and Impairment of exploration costs carried forward. SIGNIFICANT CHANGES IN STATE OF AFFAIRS No significant changes in the group’s state of affairs occurred during the financial year. EVENTS SUBSEQUENT TO BALANCE DATE On 22 August 2016 Predictive Discovery Limited announced plans to raise up to $4million in three components, being: 1. A minimum of $1m and up to $2m being raised from clients and affiliates of the Sprott Group; 2. A placement of $1.2m to large shareholders and several other sophisticated investors; and 3. A Share Purchase Plan to raise up to $0.8m. Portions of the first two components are subject to shareholder approval at a meeting to be held on 5 October 2016, while the Share Purchase Plan is expected to close on 27 September 2016. Subsequent to balance date, 45,000,000 shares were issued prior to the date of this report for consideration of $450,000 before costs as part of this capital raising. Other than the above, no matters or circumstances have arisen for the year which significantly affected or could significantly affect the operations of the group, the results of those operations, or the state of affairs of the group in future financial years. FUTURE DEVELOPMENTS Likely developments in the operations of the group and the expected results of those operations in future financial years have not been included in this report, as the inclusion of such information is likely to result in unreasonable prejudice to the group. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 22 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT ENVIRONMENTAL ISSUES The group’s operations are subject to significant environmental regulations under both Commonwealth and State legislation. The Board believes that the group has adequate systems in place for the management of its environmental regulations and is not aware of a breach of those environmental requirements as they apply to the group. INFORMATION ON DIRECTORS Mr Phillip Jackson Non-Executive Chairman Qualification Experience BJuris, LLB, MBA, FAICD Phillip Jackson, the Chairman and a Director of the Company, is a barrister and solicitor with over 25 years legal and international corporate experience, especially in the areas of commercial and contract law, mining law and corporate structuring. He has worked extensively in the Middle East, Asia and the United States of America. In Australia, he was formerly a managing legal counsel for a major international mining company, and in private practice specialised in small to medium resource companies. Phillip was managing region legal counsel: Asia-Pacific for a leading oil services company for 13 years. He is now General Counsel for a major international oil and gas company. Phillip has been Chairman of Aurora since it listed in June 2004 and of listed subsidiary Peninsula Mines Limited (“Peninsula”), and is a non-executive Chairman of Predictive Discovery Limited. Phillip is also a non-executive director of listed company Scotgold Resources Limited. Interest in Shares and Options Nil Directorships held in other listed entities during the three years prior to the current year Aurora Minerals Limited Peninsula Mines Limited Scotgold Resources Limited Mr Paul Roberts Qualifications Experience Managing Director BSc, MSc, FAIG, MGSA Mr Roberts has a long and successful history in mineral exploration management and mine geology both in Australia and overseas. He was responsible for discovery of the Henty gold deposit and major extensions to the St Dizier tin deposit both in Tasmania, as well as resource evaluations of the Kuridala copper gold deposit in North Queensland, the Bongara zinc deposit in Peru and a number of gold deposits in the Cue and Meekatharra districts in Western Australia. Interest in Shares and Options Shareholding: 14,331,790 Optionholding: 3,000,000 Directorships held in other listed entities during the three years prior to the current year None Mr Philip Henty Qualifications Experience Non-Executive Director (resigned 30 November 2015) BA Acc, Dip SIA, F Fin Mr Henty has extensive experience in the Australian securities markets. He has worked for nearly 30 years in stockbroking and investments markets. His experience covers the equities, derivatives and fixed interest markets and most aspects of the securities industry from dealing and advice through to management, capital raising, investment management and private investment. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 23 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT Interest in Shares and Options Shareholding: 20,712,583 Optionholding: 1,000,000 Directorships held in other listed entities during the three years prior to the current year None Mr Timothy Markwell Non-Executive Director (resigned 17 December 2015) Qualifications Experience BSc (Hons), GradDipAppFin, MAusIMM Mr Markwell is a geologist and has worked for 20 years in the resources and finance industries. He is currently African Lion 3 Limited’s manager based in Melbourne. Previously Mr Markwell worked for LinQ Resources Fund as an investment manager and as a resource analyst for Perth broker DJ Carmichael. He has also worked as a geologist for BHP-Billiton, Golder Associates, Anaconda Nickel, Great Central Mines and Reynolds. Interest in Shares and Options Shareholding: Nil Optionholding: Nil Directorships held in other listed entities during the three years prior to the current year Aurora Minerals Ltd Celamin Holdings NL Mr David Kelly Qualifications Experience Non-Executive Director (appointed 22 January 2016) (B.Sc. (Hons.) - Major in Geology Mr Kelly is a highly experienced executive and director with almost 30 year’s involvement in the resources sector. Mr Kelly brings a wealth of experience to the Company in the areas of geology and also in the areas of strategic analysis, project evaluation and corporate advice. Interest in Shares and Options Nil Directorships held in other listed entities during the three years prior to the current year Renaissance Minerals Limited MEETINGS OF DIRECTORS During the financial year, 16 meetings / circular resolutions of directors (including committees of directors) were held. Attendances by each director at meetings during the year were as follows: Directors' Meetings Circular Resolutions Director Number eligible to attend Mr Phillip Jackson Mr Paul Roberts Mr Philip Henty Mr Timothy Markwell Mr David Kelly 4 4 1 2 2 Number attended Number eligible to Number attended 4 4 1 2 2 attend 12 12 5 6 4 12 12 5 6 4 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 24 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT INDEMNIFYING OFFICERS OR AUDITORS The group has paid premiums to insure directors against liabilities for costs and expenses incurred by them in defending legal proceedings arising from their conduct while acting in the capacity of director of the group, other than conduct involving a wilful breach of duty in relation to the group. The terms and conditions of the insurance are confidential and cannot be disclosed. OPTIONS At the date of this report, the unissued ordinary shares of Predictive Discovery Limited under option, including those options issued during the year and since 30 June 2016 to the date of this report are as follows: Grant Date 27 March 2013 Date of Expiry 31 March 2017 Exercise Price $0.022 TOTAL Number under Option 8,000,000 8,000,000 During the year ended 30 June 2016 no ordinary shares of Predictive Discovery Limited were issued on the exercise of options granted. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of Court to bring proceeding on behalf of the group or intervene in any proceedings to which the group is a party for the purpose of taking responsibility on behalf of the group for all or any part of those proceedings. The group was not a party to any such proceeding during the year. NON AUDIT SERVICES The Board of Directors in accordance with the advice from the audit committee is satisfied that no provision of non- audit services was provided by the auditors during the year. AUDITOR’S INDEPENDENCE DECLARATION The auditors’ independence declaration for the year ended 30 June 2016 has been received and can be found on page 61 of the financial report. REMUNERATION REPORT (AUDITED) REMUNERATION POLICY It is the policy of the Company that, except in special circumstances, non-executive directors normally be remunerated by way of fixed fees, should not receive a bonus or options and should not be provided with retirement benefits other than statutory superannuation. The Board, within the limit pre-approved by shareholders, determines fees payable to individual non-executive directors. The remuneration level of any executive director or other senior executive is determined by the Board after taking into consideration levels that apply to similar positions in comparable companies in Australia and taking account of the individual’s possible participation in any equity based remuneration scheme. The Board may use industry wide data gathered by independent remuneration experts annually as its point of reference. Options or shares issued to any director pursuant to any equity based remuneration scheme require approval by shareholders prior to their issue. Options or shares granted to senior executives who are not directors are issued by resolution of the Board. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 25 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued) It is the policy of the Company that persons to whom options have been issued should not enter into any transaction in any associated product which is designed to limit the economic risk of participating in unvested entitlements under an equity based remuneration scheme. There are no schemes for retirement benefits, other than the payment of the statutory superannuation contribution for non-executive and executive directors. All executives receive a base salary (which is based on factors such as qualifications, expertise, experience etc.), superannuation and fringe benefits and are eligible for the grant of options under the Employee Option Plan. The Board policy is to remunerate non-executive directors at market rates for comparable companies for the time, commitment and responsibilities. The fees payable to individual non-executive directors must be determined by the Board within the aggregate sum of $500,000 per annum provided for under clause 21.1 of the constitution. That aggregate sum can only be increased with the prior approval of the shareholders of the Company at a general meeting. A non-executive director is entitled to a refund of approved expenditure and may also receive payments for consultancy work contracted for and performed separately on the Company’s behalf. The Company’s policy for determining the nature and amount of emoluments of Board members and senior executives of the Company is as follows: The remuneration structure for executive officers, including executive directors, is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the Company. The contracts for service between the Company, Directors and executives are on a continuing basis the terms of which are not expected to change in the immediate future. PERFORMANCE-BASED REMUNERATION Performance based remuneration for key management personnel is limited to granting of options. RELATIONSHIP BETWEEN REMUNERATION POLICY AND COMPANY PERFORMANCE The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. The issue of options in past years to the majority of directors and executives is to encourage the alignment of personal and shareholder interests. The company believes this policy will be effective in increasing shareholder wealth. PERFORMANCE CONDITIONS LINKED TO REMUNERATION The group’s remuneration of key management personnel does not include any performance conditions. EMPLOYMENT DETAILS OF MEMBERS OF KEY MANAGEMENT PERSONNEL AND OTHER EXECUTIVES The following table provides employment details of persons who were, during the financial year, members of key management personnel of the Group, and to the extent different, among the five Group executives or company executives receiving the highest remuneration. The table also illustrates the proportion of remuneration that was performance and non-performance-based and the proportion of remuneration received in the form of options. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 26 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued) Key Management Personnel Position held during the year ended 30 June 2016 Mr Phillip Jackson Mr Paul Roberts Mr David Kelly Mr Philip Henty Mr Tim Markwell Mr Eric Moore Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director Non-Executive Director Company Secretary Non-salary cash-based incentives % - - - - - - Options/ Rights % - - - - - - Fixed Salary/Fees % 100 100 100 100 100 - Total % 100 100 100 100 100 - The employment terms and conditions of key management personnel and group executives are formalised upon each Director's appointment. All non-executive directors are remunerated on a monthly basis with no fixed term or termination benefits. Paul Roberts, Managing Director, has entered into a contract of employment that requires 3 months’ notice of voluntary termination of employment that entitles Mr Roberts to $31,200 as a termination benefit. REMUNERATION DETAILS FOR THE PERIOD ENDED 30 JUNE 2016 The following table of benefits and payment details, in respect to the financial year, the components of remuneration for each member of the key management personnel of the group and, to the extent different, the five group executives and five company executives receiving the highest remuneration: Table of Benefits and Payments for the Period Ended 30 June 2016 Key Management Personnel Mr Philip Jackson(1) Mr Paul Roberts Mr David Kelly(2) Mr Philip Harman (3) Mr Philip Henty(4) Mr Tim Markwell(5) Mr Ian Hobson(6) Mr Eric Moore(7) Total Key Management Personnel Salary, fees and leave $ 27,500 26,041 126,739 164,384 10,127 - - 12,500 5,327 30,725 6,436 32,812 - 72,550 - - 176,129 339,012 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Pension and super- annuation $ Other $ Shares/ Units $ Options/ Rights $ - - - - - - - - - - - - - - - - - - - - 12,040 15,616 962 - - - 506 2,087 - - - - - - 13,508 17,703 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Total $ 27,500 26,041 138,779 180,000 11,089 - - 12,500 5,833 32,812 6,436 32,812 - 72,550 - - 189,637 356,715 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 27 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued) (1) Appointed 4 December 2014 (2) Appointed 22 January 2016 (3) Resigned 25 November 2014 (4) Resigned 30 November 2015 (5) Resigned 17 December 2015 (6) Resigned 7 April 2015 (7) Appointed 7 April 2015. Mr Moore received no remuneration from the Company. Parent Aurora Minerals Limited provides company secretarial, accounting and bookkeeping services to the Company under an Administration Services Agreement at the rate of $79,200 per annum. KEY MANAGEMENT PERSONNEL OPTIONS AND RIGHTS HOLDINGS The number of options over ordinary shares held by each key management person of the group during the financial year is as follows: Balance at beginning of period Granted as remunerat- ion during the period Expired during the period Other changes during the period Balance at end of period Vested during the period Vested and exercisable Vested and unexercis- able 30 June 2016 Mr Philip Jackson Mr Paul Roberts Mr David Kelly(1) Mr Philip Henty Mr Tim Markwell(3) Mr Eric Moore - 4,700,000 - 1,600,000 - - 6,300,000 - - - (1,700,000) - - (600,000) - - - - - - (2,300,000) (1,000,000) - - - 3,000,000 - - (1,000,000)(2) - - - - - 3,000,000 - - - 3,000,000 - - - - - - - - - 3,000,000 - - - - - - - (1) Mr Kelly was appointed a director of the Company on 22 January 2016 (2) Mr Henty resigned as a director of the Company on 30 November 2015 (3) Mr Markwell resigned as a director of the Company on 17 December 2015 30 June 2015 Mr Phillip Jackson Mr Phillip Harman Mr Paul Roberts Mr Philip Henty Mr Tim Markwell Mr Eric Moore3 Mr Ian Hobson Balance at beginning of period - 2,095,469 4,825,000 2,826,563 - - 1,000,000 10,747,032 Granted as remunerat- ion during the period Exercised during the period Other changes during the period Balance at end of period Vested during the period Vested and exercisable Vested and unexercis- able - - (125,000) - (1,226,563) - - - - - - - 1,351,563 - (2,095,469)1 - - - - (1,000,000)2 (3,095,469) - 4,700,000 1,600,000 - - - 6,300,000 - - - 4,700,000 - 1,600,000 - - - - - - - 6,300,000 - - - - - - - (1) Mr Harman resigned as a director of the Company on 25 November 2014 (2) Mr Hobson resigned as secretary of the Company on 7 April 2015 (3) Mr Moore was appointed as secretary of the Company on 7 April 2015 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 28 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued) KEY MANAGEMENT PERSONNEL SHAREHOLDINGS The number of ordinary shares in Predictive Discovery Limited held by each key management person of the group during the financial year is as follows: Balance at beginning of period Granted as remuneration during the period Issued on exercise of options during the period Purchased during the period Other changes during the period Balance at end of period 30 June 2016 Mr Phillip Jackson Mr Paul Roberts Mr David Kelly Mr Philip Henty Mr Tim Markwell Mr Eric Moore - 7,165,895 - 20,712,583 - - 27,878,478 - - - - - - - - - - - - - - - 7,165,895 - - - - 7,165,895 - - - (20,712,583) - - (20,712,583) - 14,331,790 - - - - 14,331,790 Balance at beginning of period Granted as remuneration during the period Issued on exercise of options during the period Purchased during the period Other changes during the period Balance at end of period 30 June 2015 Mr Phillip Harman Mr Phillip Jackson Mr Paul Roberts Mr Philip Henty Mr Tim Markwell Mr Eric Moore Mr Ian Hobson 5,969,311 - 5,165,895 17,212,583 - - 60,000 28,407,789 - - - - - - - - - - - - - - - - 3,581,587 - 2,000,000 3,500,000 - - - 9,081,587 (9,550,898) - - - - - (60,000) (9,610,898) - - 7,165,895 20,712,583 - - - 27,878,478 SECURITIES RECEIVED THAT ARE NOT PERFORMANCE-BASED No members of key management personnel received securities during the period which were not dependent upon the performance of the group’s share price as part of their remuneration package. CASH BONUSES, PERFORMANCE-RELATED BONUSES AND SHARE-BASED PAYMENTS Options were granted as remuneration during the year to key management personnel and other executives as set out in notes 16 and 22. END OF THE REMUNERATION REPORT Signed in accordance with a resolution of the Board of Directors: Paul Roberts Managing Director 22 September 2016 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 29 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 Finance income Other income Share based payments Administrative payments Foreign exchange gain/(expenses) Impairment of exploration Exploration expenditure pre-right to tenure Loss before income tax Income tax expense Consolidated Note 2016 $ 2015 $ 9,030 119,486 - (725,970) (20,325) (7,197,867) (48,401) 9,267 257,036 - (1,055,013) 48,217 (6,320,272) (124) (7,864,047) (7,060,889) 2 - - Loss from continuing operations (7,864,047) (7,060,889) Other comprehensive income Other comprehensive income 62,270 3,170 Total comprehensive loss for the year (7,801,777) (7,057,719) Profit attributable to: Members of the parent entity (7,801,777) (7,057,719) (7,801,777) (7,057,719) Basic loss per share (cents per share) Diluted loss per share (cents per share) 12 12 (0.773) (0.773) (1.281) (1.281) The accompanying notes form part of these financial statements PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 30 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016 Current Assets Cash and cash equivalents Trade and other receivables Other current assets Total current assets Non-Current Assets Property, plant and equipment Exploration expenditure Total non-current assets Total assets Current Liabilities Trade and other payables Provisions Total current liabilities Total liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity The accompanying notes form part of these financial statements Consolidated Note 2016 $ 2015 $ 3 4 5 6 7 9 625,917 181,266 - 807,183 717,648 188,141 - 905,789 113,759 3,675,061 3,788,820 180,703 10,338,343 10,519,046 4,596,003 11,424,835 79,280 16,095 95,375 95,375 322,522 20,285 342,807 342,807 4,500,628 11,082,028 10 11 25,401,246 2,023,686 (22,924,304) 24,180,869 1,961,416 (15,060,257) 4,500,628 11,082,028 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 31 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016 CONSOLIDATED At 1 July 2014 Loss for the year Other comprehensive income Total comprehensive loss for the year Transactions with owners in their capacity as owners: Share based payments Issue of share capital Transaction costs At 30 June 2015 At 1 July 2015 Loss for the year Other comprehensive income Total comprehensive loss for the year Transactions with owners in their capacity as owners: Share based payments Issue of share capital Transaction costs At 30 June 2016 Issued Capital Accumulated Losses Foreign Currency Translation Reserve Share Based Payments Reserve Total $ $ $ $ $ 22,539,830 - - - - 1,857,784 (216,745) 24,180,869 24,180,869 - - - - 1,351,169 (130,792) 25,401,246 (7,999,368) (7,060,889) - (7,060,889) - - - (15,060,257) (15,060,257) (7,864,047) - (7,864,047) - - - (22,924,304) 1,449,315 - 3,170 3,170 - - - 1,452,485 1,452,485 - 62,270 62,270 - - - 1,514,755 508,931 - - - - - - 508,931 508,931 - - - - - - 508,931 16,498,708 (7,060,889) 3,170 (7,057,719) - 1,857,784 (216,745) 11,082,028 11,082,028 (7,864,047) 62,270 (7,801,777) - 1,351,169 (130,792) 4,500,628 The accompanying notes form part of these financial statements PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 32 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016 Cash flows from operating activities Receipts from customers GST receipts/(payments) Payments to suppliers and employees Note Consolidated 2016 $ 119,486 93 (737,536) 2015 $ 257,036 (2,572) (1,187,668) Net cash provided by (used in) operating activities 21 (617,957) (933,204) Cash flows from investing activities Interest received Proceeds from refunds of tenement acquisitions Proceeds from sales of property, plant and equipment Purchase of property, plant and equipment Payments for exploration expenditure 9,030 - 4,642 - (702,469) 9,267 18,985 - (5,606) (1,005,780) Net cash provided by (used in) investing activities (688,797) (983,134) Cash flows from financing activities Proceeds from issue of shares Payment for share issue costs 1,301,169 (85,791) 1,857,784 (216,747) Net cash inflow from financing activities 1,215,378 1,641,037 Foreign exchange differences Net cash provided by (used in) other activities (355) (355) 42,124 42,124 Net increase (decrease) in cash held (91,376) (275,301) Cash and cash equivalents at beginning of financial period 717,648 Cash and cash equivalents at end of the financial period 3 625,917 950,825 717,648 The accompanying notes form part of these financial statements PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 33 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTES TO THE FINANCIAL STATEMENTS This financial report includes the consolidated financial statements and notes of Predictive Discovery Limited and controlled entities (the “group”). NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Predictive Discovery Limited is a for-profit company limited by shares, incorporated and domiciled in Australia. The financial report is a general purpose financial statement that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated. The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected financial assets and financial liabilities. These financial statements are presented in Australian dollars, rounded to the nearest dollar. (a) Principles of consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Predictive Discovery Limited at the end of the reporting period. A controlled entity is any entity over which Predictive Discovery Limited has the power to govern the financial and operating policies so as to obtain benefits from the entity's activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered. Where controlled entities have entered or left the group during the year, the financial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 18 to the financial statements. As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. Where controlled entities have entered (left) the group during the year, their operating results have been included (excluded) from the date control was obtained (ceased). In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are shown separately within the Equity section of the consolidated statement of financial position and consolidated statement of comprehensive income. The non-controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date. Subsidiaries are accounted for in the parent entity at cost. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 34 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Principles of consolidation (continued) Business Combinations Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination one of the combining entities must be identified as the acquirer (i.e. parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured. The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree where less than 100% ownership interest is held in the acquiree. The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer. Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss. Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is remeasured each reporting period to fair value through the statement of comprehensive income unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive income. (b) Revenue and Other Income Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue. Interest revenue is recognised using the effective interest rate method. The effective interest rate method uses the effective interest rate which is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial assets. All revenue is stated net of the amount of goods and services tax (GST). PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 35 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in income in the period in which they are incurred. (d) Income Tax The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the reporting period. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. Current and deferred tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at the end of the reporting period. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 36 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (e) Employee Benefits Provision is made for the company's liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Those cashflows are discounted using market yields on corporate bonds with terms to maturity that match the expected timing of cashflows. Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured at the present value of the estimated future cash outflows to be made by The Group in respect of services provided by employees up to reporting date. (f) Provisions Provisions are recognised when The Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. (g) Foreign Currency Transactions and Balances The functional currency of each of the group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency. All other companies within The Group have Australian dollars as their functional currency. Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the consolidated statement of comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the consolidated statement of comprehensive income. The financial results and position of foreign operations whose functional currency is different from the group's presentation currency are translated as follows: • • • assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; income and expenses are translated at average exchange rates for the period; and retained earnings are translated at the exchange rates prevailing at the date of the transaction. Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation reserve in the consolidated statement of financial position. These differences are recognised in the consolidated statement of comprehensive income in the period in which the operation is disposed. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 37 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (h) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short term borrowings in current liabilities in the statement of financial position. (i) Financial Instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is the equivalent to the date that the group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified 'at fair value through profit or loss', in which case transaction costs are expensed to profit or loss immediately. Classification and subsequent measurement Financial instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted. Amortised cost is calculated as: (a) (b) (c) the amount at which the financial asset or financial liability is measured at initial recognition; less principal repayments; plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and less any reduction for impairment. (d) The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss. The group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments. Financial assets at fair value through profit or loss (i) Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the purpose of short term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss. Loans and receivables (ii) Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 38 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (i) Financial Instruments (continued) Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period. (All other loans and receivables are classified as non-current assets). (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the group's intention to hold these investments to maturity. They are subsequently measured at amortised cost. Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months are the end of the reporting period. (All other investments are classified as current assets). If during the period the group sold or reclassified more than an insignificant amount of the held to maturity investments before maturity, the entire held-to-maturity investments category would be tainted and reclassified as available for sale. Available for sale financial assets (iv) Available for sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments. Available for sale financial assets are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. (All other financial assets are classified as current assets). Financial liabilities (v) Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed is recognised in profit or loss. (j) Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value as indicated, less, where applicable, any accumulated depreciation and impairment losses. Plant and Equipment Plant and equipment are measured on the cost basis. Depreciation The depreciable amount of all fixed assets is depreciated on a straight line basis over the asset's useful life to the group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 39 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (j) Property, Plant and Equipment (continued) The estimated useful lives used for each class of depreciable assets are: Class of Fixed Asset Plant and Equipment Useful Life 2 - 20 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the consolidated statement of comprehensive income. Property, plant and equipment is derecognised and removed from the consolidated statement of financial position on disposal or when no future economic benefits are expected. Gains and losses from derecognition are measured as the difference between the net disposal proceeds, if any, and the carrying amount and are recognised in profit or loss. Subsequent costs are included in the property, plant and equipment's carrying value or recognised as a separate asset when it is probable that future economic benefits associated with the item will be realised and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in profit or loss. Where required by accounting standards comparative figures have been adjusted to conform with changes in presentation for the current financial year. (k) Exploration and Development Expenditure Costs Carried Forward Costs arising from exploration and evaluation activities are carried forward where the rights to tenure for the area of interest are current and such costs are expected to be recouped through successful development, or by sale, or where exploration and evaluation activities have not, at reporting date, reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves. Costs carried forward in respect of an area of interest that is abandoned are written off in the period in which the decision to abandon is made. Contributions received from third parties in exchange for participating interests in exploration and evaluation tenements (e.g. as part of farm out arrangements) are netted off against the costs carried forward in respect of those tenements in which the third party acquires a participating interest. (l) Impairment of Assets At each reporting date, the group assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information including, dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the consolidated statement of comprehensive income. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 40 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Impairment of Assets (continued) Where an impairment loss on a revalued asset is identified, this is debited against the revaluation surplus in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same class of asset. Non-financial assets, other than inventories, deferred tax assets, assets from employee benefits, investment properties and deferred acquisition costs, are assessed for any indication of impairment at the end of each reporting period. Any indication of impairment requires formal testing of impairment by comparing the carrying amount of the asset to an estimate of the recoverable amount of the asset. An impairment loss is calculated as the amount by which the carrying amount of the asset exceeds the recoverable amount of the asset. Intangible assets with an indefinite useful life and intangible assets not yet available for use are tested for impairment annually regardless of whether there is any indication of impairment. The recoverable amount is the greater of the asset's fair value less costs to sell and its value in use. The asset's value in use is calculated as the estimated future cash flows discounted to their present value using a pre-tax rate that reflects current market assessments of the time value of money and the risks associated with the asset. Assets that cannot be tested individually for impairment are grouped together into the smallest group of assets that generates cash inflows (the asset's cash generating unit). Impairment losses are recognised in profit or loss. Impairment losses are allocated first, to reduce the carrying amount of any goodwill allocated to cash generating units, and then to other assets of the group on a pro rata basis. Assets other than goodwill are assessed at the end of each reporting period to determine whether previously recognised impairment losses may no longer exist or may have decreased. Impairment losses recognised in prior periods for assets other than goodwill are reversed up to the carrying amounts that would have been determined had no impairment loss been recognised in prior periods. (m) Trade and Other Payables Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the group during the reporting period which remain unpaid. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability. (n) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the 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 consolidated statement of financial position are shown inclusive of GST. (o) 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 group 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. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 41 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (p) Earnings Per Share Basic loss per share is calculated as net loss attributable to members of the group divided by the weighted average number of ordinary shares. Diluted loss per share is calculated by adjusting the net loss attributable to members of the group and the number of shares outstanding for the effects of all dilutive potential ordinary shares, which include shares options. (q) Contributed Equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown as a deduction, net of tax, from the proceeds. (r) Share-based Payment Transactions Employees of the group receive remuneration in the form of share based payment transactions, whereby employees render services in exchange for equity instruments ("equity settled transactions"). When the goods or services acquired in a share based payment transaction do not qualify for recognition as assets, they are recognised as expenses. The cost of equity settled transactions and the corresponding increase in equity is measured at the fair value of the goods or services acquired. Where the fair value of the goods or services received cannot be reliably estimated, the fair value is determined indirectly by the fair value of the equity instruments using the Black Scholes option valuation technique. Equity-settled transactions that vest after employees complete a specified period of service are recognised as services are received during the vesting period with a corresponding increase in equity. (s) Critical Accounting Estimates and Judgements The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within The Group. Key estimates – Impairment The group assesses impairment at the end of each reporting period by evaluating conditions specific to the group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using fair value less cost to sell or value-in-use calculations which incorporate various key assumptions. Key judgements – Exploration and Evaluation Expenditure The group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. $3,675,601 has been capitalised as at 30 June 2016 (see note 6). While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded and there are no facts of circumstances that suggest the carrying amounts of the exploration and evaluation assets recognised exceed their recoverable amount. In assessing the recoverability of the carrying amounts, the Directors have determined that as with similar companies, future capital raisings will be required in order to continue the exploration and development of the company's mining tenements (some subject to an option payment) to achieve a position where they can prove exploration reserves. Should there be no funding available, exploration of the areas of interest may be put on hold. The recoverability of the exploration asset is dependent upon the continued exploration of each area of interest. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 42 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (s) Critical Accounting Estimates and Judgements (continued) Key Judgements – 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 using the Black Scholes method. The related assumptions are detailed in note 22. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity. Key Judgements - Going Concern For the year ended 30 June 2016 the Group made a loss of $7,801,777 (2015: loss $7,057,719). Notwithstanding this the financial report has been prepared using the going concern basis. The Directors have determined that as with similar companies, future capital raisings will be required in order to continue the exploration and development of the company's mining tenements (some subject to an option payment) and meet operational expenditure at current levels to achieve a position where they can prove exploration reserves. The ability of the company to continue as a going concern is dependent upon the company raising additional capital sufficient to meet the company's exploration commitments and operational commitments. Should there be no funding available, exploration of the areas of interest may be put on hold. The recoverability of the exploration asset is dependent upon the continued exploration of each area of interest. The Directors have prepared a cash flow forecast for the foreseeable future reflecting this expectation and their effect upon the company. The achievement of the forecast is dependent upon the future capital raising, the outcome of which is uncertain. Key Judgements - Recoverability of Intercompany Loan Within Non-current assets of the parent entity (see note 20) there is a loan due from the 100% subsidiaries of $18,214,918 which is considered fully recoverable. The recoverability of this loan is dependent upon the successful development or sale of exploration assets in Burkina Faso. Adoption of New and Revised Accounting Standards (t) In the current year, the group has adopted all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current annual reporting period. The adoption of these new and revised Standards and Interpretations has not resulted in a significant or material change to the group’s accounting policies. New accounting standards issued but not yet effective Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed below: Financial Instruments (effective from 1 January 2018) AASB 9 AASB 9 will replace AASB 139: Financial Instruments: Recognition and Measurement. The key changes that may affect the Group on initial application of AASB 9 and associated amending Standards include:  simplifying the general classifications of financial assets into those carried at amortised cost and those carried at fair value;  permitting entities to irrevocably elect on initial recognition to present gains and losses on an equity   instrument that is not held for trading in other comprehensive income (OCI); simplifying the requirements for embedded derivatives, including removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost; requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to changes in the entity’s own credit risk in OCI, except when it would create an ‘accounting mismatch’; PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 43 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (t) Adoption of New and Revised Accounting Standards (continued)   introducing a new model for hedge accounting that permits greater flexibility in the ability to hedge risk, particularly with respect to non-financial items; and requiring impairment of financial assets carried at amortised cost based on an expected loss approach. Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial instruments, including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB 15 Revenue from Contracts with Customers (effective from 1 January 2018) AASB 15 will provide (except in relation to some specific exceptions, such as lease contracts and insurance contracts) a single source of accounting requirements for all contracts with customers, thereby replacing all current accounting pronouncements on revenue. These Standards provide a revised principle for recognising and measuring revenue. Under AASB 15, revenue is recognised in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the provider of the goods or services expects to be entitled. The give effect to this principle, AASB 15 requires the adoption of the following 5-step model:      identify the contract(s) with a customer; identify the performance obligations under the contract(s); determine the transaction price; allocate the transaction price to the performance obligations under the contract(s); and recognise revenue when (or as) the entity satisfies the performance obligations. AASB 15 also provides additional guidance to assist entities in applying the revised principle to licences of intellectual property, warranties, rights of return, principal/agent considerations and options for additional goods and services. This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue. Although the directors anticipate that the adoption of AASB 15 may have an impact on the group’s financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB 16 Leases (effective from 1 January 2019) Under IFRS 16 there is no longer a distinction between finance and operating leases. Lessees will now bring to account a right-to-use asset and lease liability onto their balance sheets for all leases. Effectively this means the vast majority of operating leases as defined by the current AASB 117 Leases which currently do not impact the balance sheet will be required to be capitalised on the balance sheet once IFRS 16 is adopted. Although the directors anticipate that the adoption of AASB 16 may have an impact on the group’s financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment Transactions (effective from 1 January 2018) This Standard amends AASB 2 Share-based Payment to address: (a) the accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled share based payments; (b) the classification of share-based payment transactions with a net settlement feature for withholding tax obligations; and (c) the accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. Although the directors anticipate that the adoption of AASB 2016-5 may have an impact on the group’s financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 44 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 Consolidated 2016 $ 2015 $ NOTE 2: INCOME TAX (a) Income tax recognised in profit or loss Tax expense/(revenue) comprises: Current tax expense/(revenue) Under/(over) provision in prior year Deferred tax expense/(revenue) relating to the origination and reversal of temporary difference Tax losses not recognised Income tax expense/(revenue) (255,447) - (1,721,068) 1,976,515 - The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax in the financial statements as follows: Profit/(loss) from operations Income tax expense/(revenue) calculated at 30% (2015: 30%) Under / (over) provision in prior year Tax effect of employee options Tax effect of FX loss Tax effect of capital raising costs not recognised Tax effect on other items Tax losses not recognised (7,864,047) (2,359,214) - - (9,118) (64,259) 456,076 1,976,515 - (723,094) 17,736 (1,510,484) 2,215,842 - (7,057,715) (2,117,315) 17,736 - (15,417) (101,037) 191 2,215,842 - Income tax rate The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by the Australian corporate entities on taxable profits under the Australian tax law. There has been no change in the corporate tax rate when compared with the previous year. NOTE 3: CASH AND CASH EQUIVALENTS Cash at bank NOTE 4: TRADE AND OTHER RECEIVABLES Other receivables 2016 $ 2015 $ 625,917 625,917 717,648 717,648 181,266 181,266 188,141 188,141 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 45 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 5: PLANT AND EQUIPMENT Plant and Equipment Accumulated depreciation Consolidated 2016 $ 2015 $ 478,337 (364,578) 113,759 545,222 (364,519) 180,703 A reconciliation of the carrying amounts of each class of plant and equipment between the beginning of the current financial year is set out below: Balance at 30 June 2016 Balance at the beginning of year Disposals (carrying value) Depreciation expense Movement in exchange rate Balance at 30 June 2016 Balance at 30 June 2015 Balance at the beginning of year Reclassification of assets to exploration Additions Depreciation expense Movement in exchange rate Balance at 30 June 2015 NOTE 6: EXPLORATION, EVALUATION AND DEVELOPMENT ASSETS Exploration and evaluation expenditure 2016 Balance at beginning of the year Expenditure incurred Impairment Balance at the end of the year 2015 Balance at beginning of the year Expenditure incurred Impairment Balance at end of the year Plant and Equipment $ 180,703 - (74,225) 7,281 113,759 303,885 (27,297) 5,598 (79,077) (22,406) 180,703 Total $ 180,703 - (74,225) 7,281 113,759 303,885 (27,297) 5,598 (79,077) (22,406) 180,703 Consolidated 2016 $ 2015 $ 3,675,061 3,675,061 10,338,343 10,338,343 Exploration and Evaluation $ 10,338,343 534,585 (7,197,867) 3,675,061 15,639,370 1,019,370 (6,320,397) 10,338,343 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 46 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 6: EXPLORATION, EVALUATION AND DEVELOPMENT ASSETS (continued) The recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest. The board has assessed the exploration and evaluation assets for impairment, using AASB 6 paragraph 20 as a guide. As a result of this process 13 tenements were impaired during the period. The budget for future exploration and evaluation expenditure is split by geographical area and not by area of interest as the allocation of resources will depend upon findings. However, it is acknowledged that the budget allows for spending on all areas of interest without exclusion. It is anticipated that all expenditure required by agreement or permit will be met. In assessing the recoverability of the carrying amounts, reference is made to Note 1 (S) - Key Judgements - Exploration and Evaluation Expenditure and Going Concern. The Directors have determined that as with similar companies, future capital raisings will be required in order to continue the exploration and development of the company's mining tenements (some subject to an option payment) to achieve a position where they can prove exploration reserves. Should there be no funding available, exploration of the areas of interest may be put on hold. The recoverability of the exploration asset is dependent upon the continued exploration of each area of interest. NOTE 7: CURRENT TRADE AND OTHER PAYABLES Accruals and other creditors NOTE 8: TAX ASSETS AND LIABILITIES (a) Assets Current Income tax refundable Non-current Deferred tax asset comprises: Employee entitlements Accruals and payables Cancellation of licence Tax losses Amount not recognised (b) Liabilities Current Income tax liabilities Less: PAYG instalments paid Income tax payable Non-current Deferred tax liability comprises: Exploration expenditure Amount not recognised Net DTA/DTL Consolidated 2016 $ 2015 $ 79,280 79,280 322,522 322,522 - - - - 4,829 6,450 36,000 5,904,876 (5,952,155) - - - - - - - 6,086 7,500 54,000 5,825,356 (5,892,942) - - - - (1,080,770) 1,080,770 - PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 47 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 8: TAX ASSETS AND LIABILITES (continued) (c) Reconciliation (i) Gross Movements The overall movement in the deferred tax balance is as follows: Opening balance Under/(over) provision in prior year Credited/(charged) to the income statement Amount not recognised Closing balance (ii) Deferred tax assets The movement in deferred tax assets for each temporary difference during the year is as follows: Employee Entitlements Opening balance Credited/(charged) to the income statement Amount not recognised Closing balance Accruals and payables Opening balance Credited/(charged) to the income statement Amount not recognised Closing balance Tax Losses Opening balance Under/(over) provision in prior year Credited/(charged) to the income statement Amount not recognised Closing balance Cancellation of Licence Opening balance/previous amounts not recognised Credited/(charged) to the income statement Amount not recognised Closing balance Exploration Expenditure Opening balance Credited/(charged) to the income statement Amount not recognised Closing balance Consolidated 2016 $ 2015 $ 4,812,172 (175,927) 1,976,514 (6,612,759) - 2,596,330 (17,736) 2,233,578 (4,812,172) - 6,086 (1,257) (4,829) - 7,500 (1,050) (6,450) - 5,825,356 (175,927) 255,447 (5,904,876) - 54,000 (18,000) (36,000) - - 660,604 (660,604) - 5,853 233 (6,086) - 9,000 (1,500) (7,500) - 5,119,999 (17,736) 723,093 (5,825,356) - 72,000 (18,000) (54,000) - - - - - PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 48 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 8: TAX ASSETS AND LIABILITES (continued) (iii) Deferred tax liability Exploration Expenditure Opening balance Under/(over) provision in prior year Credited/(charged) to the income statement Amount not recognised Closing balance NOTE 9: PROVISIONS CURRENT Employee entitlements NOTE 10: ISSUED CAPITAL 1,326,168,686 (30 June 2015: 650,584,343) Ordinary Shares Share issue costs written off against issued capital At 1 July 2014 Issue of shares in placement Issue of shares in rights issue Options cancelled/expired At 30 June 2015 At 1 July 2015 Issue of shares in rights issue Issue of shares for underwriting services Issue of shares for other services Options cancelled/expired At 30 June 2016 OPTIONS Shares No. 387,865,214 18,750,000 243,969,129 - 650,584,343 650,584,343 650,584,343 22,500,000 2,500,000 - 1,326,168,686 Consolidated 2016 $ 2015 $ 1,080,770 - (1,080,770) - - 2,610,522 - (1,529,752) (1,080,770) - 16,095 16,095 20,285 20,285 27,215,993 (1,814,247) 25,401,746 25,864,824 (1,683,955) 24,180,869 Listed Options No. Unlisted Options No. 25,631,075 - - (9,131,075) 16,500,000 16,500,000 - - - (8,500,000) 8,000,000 - - - - - - - - - - For information relating to Predictive Discovery Limited employee option plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year end, refer to Note 22. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 49 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 11: RESERVES FOREIGN CURRENCY TRANSLATION RESERVE Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income foreign currency translation reserve. The cumulative amount is reclassified to profit or loss when the net investment is disposed of. OPTION RESERVE The option reserve records items recognised as expenses on valuation of employee share options. Consolidated 2016 $ 2015 $ NOTE 12: EARNINGS PER SHARE Reconciliation of loss Loss used in calculating earnings per share – basic and diluted Net loss for the reporting period (7,864,047) (7,864,047) (7,060,889) (7,060,889) Weighted average number of ordinary shares outstanding during the year used in the calculation of basic and diluted earnings per share 1,017,432,114 551,201,748 NOTE 13: CAPITAL AND LEASING COMMITMENTS (A) LEASE COMMITMENTS Payable – minimum lease payments: -not later than 12 months -between 12 months and 5 years (B) OPTIONS FEE COMMITMENTS Payable – minimum lease payments: -not later than 12 months -between 12 months and 5 years -more than 5 years (C) CAPITAL EXPENDITURE COMMITMENTS Payable: -not later than 12 months -not later than 12 months and 5 years -more than 5 years Consolidated 2016 $ 2015 $ 42,536 170,145 212,681 40,318 463,654 - 503,972 40,054 164,624 204,678 398,412 166,549 55,516 620,477 2,573,417 6,596,864 - 9,170,281 2,852,334 7,695,339 - 10,547,673 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 50 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 14: FINANCIAL RISK MANAGEMENT The group's financial instruments consist mainly of deposits with banks, receivables and payables. The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows: Financial Assets Cash and cash equivalents Trade and other receivables Total Financial Assets Financial Liabilities Trade and other payables Total Financial Liabilities FINANCIAL RISK MANAGEMENT POLICIES Consolidated Note 3 4 7 2016 $ 625,917 181,266 807,183 79,280 79,280 2015 $ 717,648 188,141 905,789 322,522 322,522 Exposure to key financial risks is managed in accordance with the group’s risk management policy with the objective to ensure that the financial risks inherent in exploration activities are identified and then managed or kept as low as reasonably practicable. The main financial risks that arise in the normal course of business are market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. Different methods are used to measure and manage these risk exposures. Liquidity risk is monitored through the ongoing review of available cash and future commitments for exploration expenditure. Exposure to liquidity risk is limited by anticipating liquidity shortages and ensures capital can be raise in advance of shortages. Interest rate risk is managed by limiting the amount of interest bearing loans entered into by The Group. It is the Board's policy that no speculative trading in financial instruments be undertaken so as to limit expose to price risk. Primary responsibility for identification and control of financial risks rests with the Company Secretary, under the authority of the Board. The Board is apprised of these risks from time to time and agrees any policies that may be undertaken to manage any of the risks identified. Details of the significant accounting policies and methods adopted, including criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each financial instrument are disclosed in Note 1 to the financial statements. The carrying values less the impairment allowance for receivables and payables are assumed to approximate fair values due to their short term nature. Cash and cash equivalents are subject to variable interest rates. SPECIFIC FINANCIAL RISK EXPOSURES AND MANAGEMENT (A) CREDIT RISK Exposure to credit risk relating to financial assets arises from the potential non-performance by counter parties of contract obligations that could lead to a financial loss to the group. The group trades only with recognised, creditworthy third parties. The group has no customers and consequently no significant exposure to bad debts or other credit risks. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 51 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 14: FINANCIAL RISK MANAGEMENT (continued) With respect to credit risk arising from financial assets, which comprise cash and cash equivalents and receivables, the exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. At balance date cash and deposits were held with Australia and New Zealand Banking Group Limited. (B) LIQUIDITY RISK Liquidity risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. Prudent liquidity risk management implies maintaining sufficient cash reserves to meet the ongoing operational requirements of the business. It is the group’s policy to maintain sufficient funds in cash and cash equivalents. Furthermore, the group monitors its ongoing exploration cash requirements and raises equity funding as and when appropriate to meet such planned requirements. The group has no undrawn financing facilities. Trade and other payables, the only financial liability of the group, are due within 6 months. The tables below reflect an undiscounted contractual maturity analysis for financial liabilities. Cash flows realised from financial assets reflect management's expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates and does not reflect management's expectations that banking facilities will be rolled forward. Financial liability and financial asset maturity analysis Within 1 Year 1 to 5 Years Total Contractual Cash Flow 2016 $ 2015 $ 2016 $ 2015 $ 2016 $ 2015 $ Financial liabilities due for payment Trade and other payables Total contractual outflows Financial assets - cash flows realisable Trade and other receivables Total anticipated inflows 79,280 79,280 322,522 322,522 181,266 181,266 188,141 188,141 - - - - - - - - 79,280 79,280 322,522 322,522 181,266 181,266 188,141 188,141 The financial assets and liabilities noted above are interest free. (C) MARKET RISK Interest rate risk i. The group’s cash flow interest rate risk primarily arises from cash at bank and deposits subject to market bank rates. At balance date, the group does not have any borrowings. The group does not enter into hedges. An increase/ (decrease) in interest rates by 1% during the whole of the respective periods would have led to an increase/(decrease) in both equity and losses of less than $10,000. 1% was thought to be appropriate because it represents four 0.25 basis point rate rises/falls, which is appropriate in the recent economic climate. The majority of cash held in a cash management account earns interest income at a rate of 0.1% p.a. Foreign exchange risk ii. Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the group holds foreign currency which are other than the AUD functional currency of the group. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 52 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 15: OPERATING SEGMENTS Identification of Reportable Segments The group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The accounting policies applied for internal purposes are consistent with those applied in the preparation of these financial statements. The following is an analysis of the Group’s revenue and results from operations by reportable segment. 2016 Revenue Interest income Other income Expenses Administration expenses FX Expense Exploration expenditure written off Impairment of Exploration(i) Loss before tax Current assets Exploration expenditure(i) Plant and Equipment Current liabilities Net assets 2015 Revenue Interest income Other income Expenses Administration expenses FX Expense Exploration expenditure written off Impairment of Exploration Loss before tax Current assets Exploration expenditure Plant and Equipment Current liabilities Net assets Corporate $ 9,030 119,486 (391,063) 30,393 (48,401) (1,053,069) (1,333,624) 576,222 114,274 - (53,736) 636,760 Corporate $ 9,267 257,036 (528,433) 50,332 - - (211,798) 714,374 1,030,674 - (159,019) 1,586,029 Gold Aust $ Gold Burkina Faso Cote D’Ivoire $ $ Total $ - - - - - - - - 4,906 - - 4,906 Gold Aust $ - - - - 9,030 119,486 (294,358) (45,490) - (6,142,889) (6,482,737) 194,261 3,521,812 113,759 (33,056) 3,796,776 Gold (40,549) (5,228) - (1,909) (47,686) 36,700 34,069 - (8,583) 62,186 (725,970) (20,325) (48,401) (7,197,867) (7,864,047) 807,183 3,675,061 113,759 (95,375) 4,500,628 Burkina Faso Cote D’Ivoire $ $ Total $ - - - - - (124) (950) (1,074) - - - - - (466,419) (1,861) - (5,919,342) (6,387,622) 170,866 9,271,697 180,703 (181,914) 9,441,352 (60,161) (254) - (399,980) (460,395) 20,548 35,972 - (1,873) 54,647 9,267 257,036 (1,055,013) 48,217 (124) (6,320,272) (7,060,889) 905,788 10,338,343 180,703 (342,806) 11,082,028 (i) The exploration incurred on behalf of Corporate relates to Burkina Faso and Cote D’Ivoire, which were subsequently impaired during the year. The group operates in three principal geographical areas – Australia (country of domicile), Burkina Faso and Cote D’Ivoire. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 53 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 16: INTERESTS OF KEY MANAGEMENT PERSONNEL Refer to the Remuneration Report contained in the Directors' Report for details of the remuneration paid or payable to each member of the group's key management personnel for the year ended 30 June 2016. The totals of remuneration paid to key management personnel of the company and the group during the year are as follows: Short-term benefits Post-employments benefits OTHER KEY MANAGEMENT PERSONNEL TRANSACTIONS Consolidated 2016 $ 176,129 13,508 189,637 2015 $ 339,012 17,703 356,715 There have been no other transactions involving equity instruments other than those described in the tables above. For details of other transactions with key management personnel, refer to Note 20: Related Party Transactions. NOTE 17: REMUNERATION OF AUDITORS Remuneration of the auditor of the parent entity for: -Audit services -Other services NOTE 18: CONTROLLED ENTITIES Parent Entity: Predictive Discovery Limited Subsidiaries of legal parent entity: Predictive Discovery SARL Predictive Discovery Niger SARL Predictive Discovery Cote D’Ivoire SARL Birrimian Pty Ltd Predictive Discovery Cote D’Ivoire Pty Ltd Country of Incorporation Australia Burkina Faso Niger Cote D’Ivoire British Virgin Islands Australia (i) Percentage of voting power is in proportion to ownership Acquisitions of controlled entities There were no acquisitions during the year. Consolidated 2016 $ 39,000 6,600 45,600 2015 $ 37,000 6,600 43,600 Percentage Owned(i) 2016 - 100% 100% 100% 100% 100% 2015 - 100% 100% 100% 100% 100% PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 54 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 19: CONTINGENT LIABILITIES There are no material contingent liabilities or contingent assets of the group at balance date. NOTE 20: RELATED PARTY TRANSACTIONS Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Transactions with related parties: Intercompany Loans Predictive Discovery Limited has made loans to its subsidiaries in the amount of $18,214,918 (2015: $16,829,444). The loan is interest free and payable on demand. Directors’ Remuneration For information relating to related party transactions with key management personnel during the financial year, refer to Note 16. Other Related Party Transactions There were no other related party transactions during the year. In the previous period Churchill Services Pty Ltd, an entity associated with Ian Hobson, was paid $72,550 for company secretarial services. NOTE 21: STATEMENT OF CASH FLOWS Reconciliation of loss after income tax to net cash flow from operating activities Operating loss after income tax (7,864,047) (7,060,889) Consolidated 2016 $ 2015 $ Non-operating items in loss: Exploration expenditure Interest income Non-cash flows in loss: Share based payments Depreciation Foreign exchange (gains)/losses Write off of exploration expenditure Movement in assets and liabilities: (Increase)/decrease in receivables Increase/(decrease) in payables Increase/(decrease) in provisions Net cash outflow from operating activities 48,401 (9,030) - 1,222 20,325 7,197,867 (498) (8,007) (4,190) (617,957) 124 (9,267) - - (48,217) 6,320,272 (4,936) (131,067) 776 (933,204) PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 55 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 22: SHARE BASED PAYMENTS During the period ending 30 June 2016, the group entered into the following share-based payments: 1. The issue of 22,500,000 shares in the company as consideration to the Lead Underwriter of the renounceable rights issue that closed on 3 December 2015, for a value of $45,000; 2. The issue of 2,500,000 shares in the company as consideration for investor relations services for a period of 12 months. The group did not enter into any share-based payments during the period ending 30 June 2015. At 30 June 2016 the group has the following share-based payment options on issue to employees: Exercise price Grant Date Expiry Date 20 Aug 2010 20 Aug 2015 $0.250 27 Mar 2014 31 Mar 2017 $0.022 Start of the year 6,000,000 8,000,000 14,000,000 Granted during the year Exercised during the year - - - - - - Expired during the year (6,000,000) Balance at the end of the year - - 8,000,000 (6,000,000) 8,000,000 Vested and exercisable at the end of the year - 8,000,000 8,000,000 At 30 June 2016 the group has the following share-based payment options on issue in lieu of capital raising fees: Grant Date 5 Dec 2012 Expiry Date 30 Oct 2015 Exercise price $0.15 Start of the year 2,000,000 2,000,000 Granted during the year Exercised during the year Expired during the year - - - (2,000,000) - (2,000,000) Balance at the end of the year - - Vested and exercisable at the end of the year - - The weighted average exercise price of options as at 30 June 2016 was $0.022 (30 June 2015: $0.13). The weighted average remaining contractual life of options outstanding at year end was 0.75 (30 June 2015: 0.94). During the year ending 30 June 2016 no options were granted. During the year ending 30 June 2015 no options were granted. NOTE 23: EVENTS AFTER THE END OF THE REPORTING PERIOD On 22 August 2016 Predictive Discovery Limited announced plans to raise up to $4million in three components, being: 1. A minimum of $1m and up to $2m being raised from clients and affiliates of the Sprott Group; 2. A placement of $1.2m to large shareholders and several other sophisticated investors; and 3. A Share Purchase Plan to raise up to $0.8m. Portions of the first two components are subject to shareholder approval at a meeting to be held on 5 October 2016, while the Share Purchase Plan is expected to close on 27 September 2016. Subsequent to balance date, 45,000,000 shares were issued prior to the date of this report for consideration of $450,000 before costs as part of this capital raising. Other than the above, no matters or circumstances have arisen for the year which significantly affected or could significantly affect the operations of the group, the results of those operations, or the state of affairs of the group in future financial years. PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 56 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 24: PARENT ENTITY DISCLOSURES Assets Current assets Non-current assets Total assets Liabilities Current liabilities Total liabilities Equity Issued capital Reserves Accumulated losses Total equity CONTINGENT LIABILITIES Nil CONTRACTUAL COMMITMENTS 2016 $ 576,222 19,492,459 20,068,681 53,736 53,736 25,401,246 2,495,954 (7,882,255) 20,014,945 2015 $ 714,374 19,039,583 19,753,957 159,019 159,019 24,180,868 1,942,818 (6,528,748) 19,594,938 The parent entity has commitments as at 30 June 2016 that are disclosed in Note 13. RECOVERABILITY OF INTERCOMPANY LOAN Within Non-current assets is a loan due from the 100% subsidiaries of $18,214,918 which is considered fully recoverable. The recoverability of this loan is dependent upon the successful development or sale of exploration assets in Burkina Faso. NOTE 25: COMPANY DETAILS The registered office of the company is: The principal place of business of the company is: Predictive Discovery Limited Suite 2, Level 2 20 Kings Park Road WEST PERTH WA 6005 Predictive Discovery Limited Level 2, 33 Ord Street WEST PERTH WA 6005 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 57 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 871 877 DIRECTOR’S DECLARATION FOR THE YEAR ENDED 30 JUNE 2016 DIRECTORS’ DECLARATION The directors of the company declare that: 1. The financial statements and notes, as set out on pages 30 to 57, are in accordance with the Corporations Act 2001 and: (a) comply with Accounting Standards; and (b) give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended on that date of the consolidated group; 2. The Chief Executive Officer and Chief Financial Officer have each declared that: (a) (b) the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001; the financial statements and notes for the financial year comply with the Accounting Standards; and (c) the financial statements and notes for the financial year give a true and fair view. Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. 3. In the directors' opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. Paul Roberts Managing Director 22 September 2016 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 58 INDEPENDENT AUDITOR’S REPORT  TO THE MEMBERS OF PREDICTIVE DISCOVERY LIMITED & CONTROLLED ENTITIES   Report on the Financial Report  We have audited the accompanying financial report of Predictive Discovery Limited & controlled entities,  which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated  statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity  and the consolidated statement of cash flows for the year then ended, notes comprising a summary of  significant accounting policies and other explanatory information and the directors’ declaration of the  consolidated entity comprising the company and the entities it controlled at the year’s end or from time to  time during the financial year.  Directors’ Responsibility for the Financial Report  The directors of the company are responsible for the preparation of the financial report that gives a true and  fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such  internal control as the directors determine is necessary to enable the preparation of the financial report that  is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in  accordance with Accounting Standard AASB 101: Presentation of Financial Statements, that the financial  statements comply with International Financial Reporting Standards (IFRS).  Auditor’s Responsibility  Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit  in accordance with Australian Auditing Standards. Those standards require that we comply with relevant  ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable  assurance whether the financial report is free from material misstatement.  An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the  financial report. The procedures selected depend on the auditor’s judgment, including the assessment of the  risks of material misstatement of the financial report, whether due to fraud or error. In making those risk  assessments, the auditor considers internal control relevant to the company’s preparation of the financial  report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose  An audit also includes evaluating  of expressing an opinion on the effectiveness of the entity’s internal control. the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the  directors, as well as evaluating the overall presentation of the financial report.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our  audit opinion.  Independence  In conducting our audit, we have complied with the independence requirements of the Corporations Act  2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been  given to the directors of Predictive Discovery Limited & controlled entities, would be in the same terms if  provided to the directors as at the date of this auditor’s report.                  Auditor’s Opinion  In our opinion:  a. b. the financial report of Predictive Discovery Limited & controlled entities is in accordance with the  Corporations Act 2001, including:  i. ii. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and  of its performance for the year ended on that date; and  complying with Australian Accounting Standards and the Corporations Regulations 2001; and  the financial report also complies with International Financial Reporting Standards as disclosed in Note  1.  Emphasis of Matter – Material Uncertainty Regarding Continuation as a Going Concern  Without modifying our opinion, we draw to Note 1 (s) “Key Judgement – Going Concern” which indicates the  company  incurred  a  loss  for  the  year  ended  30  June  2016  of  $7,801,777  and  that  the  company’s  ability  to  continue  the  exploration  and  development  of  its  mining  tenements  and  meet  operational  expenditure  at  current  levels  is  dependent  upon  future  capital  raising.    These  conditions,  along  with  other  matters  as  set  forth in Note 1 (s), indicate the existence of a material uncertainty that may cast significant doubt about the  company’s  ability  to  continue  as  a  going  concern  and  therefore,  the  company  may  be  unable  to  realise  its  assets and discharge its liabilities in the normal course of business.  Emphasis of Matter ‐ Inherent Uncertainty regarding Recoverability of Capitalised Exploration and Evaluation  Assets  Without modifying the opinion expressed above, attention is drawn to the following matter. As a result of the  matter described in Note 1(s) and Note 6 to the financial statements, there is uncertainty as to whether the  company will be able to recover the carrying value of exploration expenditure for the amount recorded in the  financial  report.  The  ultimate  recovery  of  the  carrying  value  of  exploration  expenditure,  and  future  exploration  expenditure,  is  dependent  upon  the  successful  development  and  commercial  exploitation  or,  alternatively, sale of the interest in the tenements.  Report on the Remuneration Report  We have audited the remuneration report included in pages 7 to 11 of the directors’ report for the year  ended 30 June 2016.  The directors of the company are responsible for the preparation and presentation of  the remuneration report in accordance with s 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.  Auditor’s Opinion  In our opinion the remuneration report of Predictive Discovery Limited & controlled entities for the year  ended 30 June 2016 complies with s 300A of the Corporations Act 2001.  MOORE STEPHENS AUDIT (VIC)  ABN 16 847 721 257  ANDREW JOHNSON  Partner  Audit & Assurance Services  Melbourne, Victoria  22 September 2016      AUDITOR’S INDEPENDENCE DECLARATION  UNDER S 307C OF THE CORPORATIONS ACT 2001   TO THE DIRECTORS OF PREDICTIVE DISCOVERY LIMITED & CONTROLLED ENTITIES  I declare that, to the best of my knowledge and belief, during the year ended 30 June 2016, there have been:  i. ii. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001  in relation to the audit; and  no contraventions of any applicable code of professional conduct in relation to the audit.  MOORE STEPHENS AUDIT (VIC)  ABN 16 847 721 257  ANDREW JOHNSON  Partner  Audit & Assurance Services  Melbourne, Victoria  22 September 2016                                  PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 871 877 SHAREHOLDER INFORMATION The shareholder information set out below was applicable at 24 October 2016 1. Number and Distribution of Equity Securities The number and class of all securities on issue: ASX Code PDI PDIAK Number 1,631,113,686 8,000,000 Description Fully Paid Ordinary Shares Quoted Unlisted Options expiring 31 March 2017 Distribution of equity securities Size of Holding 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 and over Total Number of Holders 27 24 37 669 779 1,536 Unmarketable Parcels 300 The number of holders Ordinary shares fully paid (ASX Code: PDI): 1,536 Shares Held 4,613 85,093 331,548 40,934,684 1,589,757,748 1,631,113,686 Shares 6,919,152 2. Substantial Shareholders Substantial shareholders as defined by Section 671B of Australian Corporations Law are: Name Aurora Minerals Limited Equity Trustees Limited (Lowell Resources Fund) Merrill Lynch (Australia) Pty Limited Number of Shares 646,536,859 178,026,190 103,265,000 % 39.64 10.91 6.33 3. Voting Rights Subject to any rights or restrictions for the time being attached to any class or classes of shares, at a general meeting every shareholder or class of shareholder present in person or by proxy, attorney or representative has one vote on a show of hands and, on a poll, one vote for each fully paid share which that member holds or represents. PREDICITIVE DISCOVERY LIMITED ANNUAL REPORT 62 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 871 877 SHAREHOLDER INFORMATION (Continued) 4. Twenty Largest Shareholders as at 24 October 2016 The twenty largest fully paid shareholders hold 68.29% of the issued capital and are tabled below: Shareholder Aurora Minerals Limited Bond Street Custodians Limited (GRIPIC PH 240 A/C) 1. 2. Equity Trustees Limited (Lowell Resources Fund) 3. Merrill Lynch (Australia) Nominees Pty Limited 4. Dyspo Pty Limited 5. Aggregated Capital Pty Ltd 6. 7. Mr Michael Robert Hodgetts 8. Bond Street Custodians Limited (Apicon D05711 A/C) 9. Croftbank Pty Ltd (Watts Family Super Fund) 10. Finance Associates Pty Ltd (Super Fund A/C) 11. Technica Pty Ltd 12. Mr Rhett Anthony John Morson 13. Silver Whiting Pty Ltd 14. Dr Thomas Holland Whiting 15. Dypso Pty Ltd 16. Gecko Resources Pty Ltd 17. Toltec Holdings Pty Ltd 18. Mr Mark Andrew Tkocz 19. Dr Thomas Holland Whiting 20. ABN Amro Clearing Sydney Nominees Pty Ltd Total Issued Shares 5. Corporate Governance Statement No. of Shares 646,536,859 178,026,190 103,265,000 26,547,747 21,000,000 18,885,798 16,340,000 14,831,790 10,412,760 10,000,000 9,353,620 9,000,000 7,000,004 7,000,000 6,250,000 6,200,000 6,000,000 6,000,000 6,000,000 5,300,599 % 39.64 10.91 6.33 1.63 1.29 1.16 1.00 0.91 0.64 0.61 0.57 0.55 0.43 0.43 0.38 0.38 0.37 0.37 0.37 0.32 1,113,950,367 1,631,113,686 68.29 100.00 The 2016 Corporate Governance statement of Predictive Discovery Limited is available on the Company’s website at http://www.predictivediscovery.com/corporate/corporate-governance PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 63 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 871 877 MINERAL TENEMENT INFORMATION (as at 24 October 2016) Name Number Location Area (sq. km) PDI equity Fouli Arrêté 2014-294/MCE/SG/DGMGC Burkina Faso 186.2 100% Tantiabongou Arrêté 2013-168/MCE/SG/DGMGC Burkina Faso 93.9 100% Sirba Arrêté 2014-296/MCE/SG/DGMGC Burkina Faso 136.9 100% Madyabari Arrêté 2014-295/MCE/SG/DGMGC Burkina Faso 171.9 100% Tyekanyebi Arrêté 2015-229/MCE/SG/DGMGC Burkina Faso Tamfoagou Arrêté 2015-281/MCE/SG/DGMGC Burkina Faso 140 238 100% 100% Tangagari Arrêté 2013-37/MCE/SG/DGMGC Burkina Faso 127.5 Earning 95%; current equity 0% (until final cash payment is made) Bangaba Arrete 2015-109/MCE/SG/DGMGC Burkina Faso 128 Earning 95%; current equity 84% Kogodou South 2015-226/MCE/SG/DGMGC Burkina Faso 44.6 Earning 100%; current equity 0% (until final cash payment is made) Bira Basieri 2013-33/MCE/SG/DGMGC Burkina Faso 21 100% 2013-16/MCE/SG/DGMGC Burkina Faso 73.5 100% Kokoumbo Mining exploration permit No. 307 Cote D'Ivoire Ferkessedougou Mining exploration permit No. 310 Cote D'Ivoire joint venture Predictive-Toro (also known as Predictive Discovery Cote D’Ivoire SARL - Predictive 49%) earning 90% in JV with Ivoir Negoce (local Cote D’Ivoire company) 49% (Toro Gold Ltd 51%) 300 (after 25% area reduction) 290 (after 25% area reduction) Boundiali Mining exploration permit No. 414 Cote D'Ivoire Kounahiri Mining exploration permit No. 317 Cote D'Ivoire 399 347 49% (Toro Gold Ltd 51%) 49% (Toro Gold Ltd 51%) Beriaboukro Mining exploration permit Cote D'Ivoire 400 Ferkessedougou North Mining exploration permit Cote D'Ivoire 400 joint Predictive-Toro venture (Predictive Discovery Cote D’Ivoire SARL - Predictive 49%) earning 85% in JV with Gold Ivoire Minerals SARL (local Cote D’Ivoire company) Predictive-Toro venture (Predictive Discovery Cote D’Ivoire SARL - Predictive 49%) earning 85% in JV with Gold Ivoire Minerals SARL (local Cote D’Ivoire company) joint Wendene Mining exploration permit 779 Cote D'Ivoire 400 Bassawa Mining exploration permit 570 Cote D'Ivoire 400 Approximately 35%. Predictive may earn up to 85%. Approximately 35%. Predictive may earn up to 85%. Cape Clear EL 5434 Victoria, Australia 120 25% (Cape Clear Minerals Pty Ltd hold 75%) PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 64 This page is left intentionally blank This page is left intentionally blank This page is left intentionally blank PREDICTIVE DISCOVERY LIMITED ABN 11 127 871 877 Level 2 33 Ord Street WEST PERTH WA 6005 Telephone: +61 8 9216 1000 Facsimile: +61 8 9481 0411 Website: www.predictivediscovery.com.au 

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