Predictive Discovery Limited
Annual Report 2019

Plain-text annual report

Annual Report 2019 ABN 11 127 171 877 Corporate Directory DIRECTORS Mr Phillip Jackson Non-executive Chairman Mr Paul Roberts Managing Director Mr David Kelly Non-executive Director Company Secretaries Mr Eric Moore Mr Bruce Waddell 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 AUDITOR PKF Perth Level 5, 35 Havelock Street WEST PERTH WA 6005 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 2 | 2019 Annual Report Contents Chairman’s Letter Review of Operations Joint Venture Partner Financial Year 2018-19 Exploration Activity Directors’ Report Statement of Profit or Loss and Other 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 4 6 8 9 17 25 26 27 28 29 55 56 61 62 64 2019 Annual Report | 3 Dear Shareholders, Without doubt the single biggest event for the Company in FY 2018-19 was the Ferkessedougou North drilling results announced 4th June 2019, with thick gold intercepts and high-grade intervals reported in a newly discovered body that is up to 100m wide and at least 210m long. The discovery, named Ouarigue South, saw thick intercepts at good grades including 45.3m at 3.16g/t gold from 45.9m including 9m at 10.31g/t gold and resulted in a remarkable trading day for the Company with over 300 million shares changing hands and the share price surging over 300% to new intra-year highs. The results are a significant improvement on the initial reconnaissance RC results and suggest that overall gold grades are higher at depth. Deeper drilling along strike to the south may therefore produce higher grades than the initial, shallow RC holes. Most of the mineralised body contains reportable gold grades, which bodes well both for ore continuity and tonnage potential. At Boundiali, the Company continued to test numerous targets over a more than 20km of gold-in-soil anomalies with drilling programs at the Nyangboue Prospect (13m at 1.78g/t gold from 63m, 14m at 1.30g/t gold from 9m, 7m at 4.02g/t gold from 87m, including 1m at 10.3g/t gold) and drilling and trenching at targets BN1, BN2 and BN3 (5m at 3.49g/t gold from 28m and 7m at 1.43g/t gold from 18m). The drilling and trenching programs at Boundiali have further enhanced the potential of both permits (Boundiali North, Boundiali South) to host large tonnages of gold mineralisation with significant new gold mineralised zones outlined by these results. Also, large areas of gold-in- soil anomalies remain untested on the Boundiali Project offering substantial opportunity to discover more mineralisation on both permits. While the Cote D’Ivoire joint venture properties continue to underpin the future value proposition of Predictive, the opening-up of a new frontier in Guinea provides an exciting new opportunity for gold discovery, with 500km2 of landholdings acquired for early-stage exploration. Thus far, initial results from the Nonta, Kankan and Kaninko Permits have validated the core company strategy of securing land in prospective gold jurisdictions and completing low-cost early stage exploration work to vector down on new targets and prospects. Under the stewardship of in-country Principal Geologist Aimé Nganare, these 100%-owned properties will underpin much of the Predictive-led exploration planned for 2019-2020 field season. The Company has already delineated a number of high-potential targets at Kaninko and Kankan with drilling expected in early 2020. It gives me great pleasure to present Predictive Discovery Limited’s (Predictive, PDI or the Company) 2019 Annual Report. With significant new gold discoveries at the Ferkessedougou North and Boundiali Projects and promising results from its 100%-owned Guinea Properties, the Company’s 2019 field season was an unquestionable success. The Company also received more good news with the sale of Joint Venture Partner Toro Gold to Resolute Mining (ASX: RSG). The Company warmly welcomes Resolute to the Cote D’Ivoire Joint Venture and looks forward to continued success at the Company’s flagship properties. 4 | 2019 Annual Report “ Our objectives for the 2019-20 Financial Year include adding new gold discoveries and resource identification. “ The Company believes in running a lean operation and putting shareholder money into exploration. 2018-19 was no exception. 11,427m of RC drilling and 6,809m of trenching were completed on the Boundiali Project, 1,059 m of diamond drilling and 1,960m of trenching were completed at Ferkessedougou North and numerous BLEG, soil sampling, rock-chip sampling and field mapping programs were completed across the Cote D’Ivoire and Guinea Properties. I would like to take this opportunity to thank our joint venture partners for their continued support and counsel as we work together for mutual benefit and for their efforts which have advanced the interests of Predictive throughout the past year. The Company’s own focus continues to be on early stage exploration in what is currently the most exciting gold region in the world, with new mines and discoveries a constant reminder of the region’s immense potential. Our objectives for the 2019-20 Financial Year include adding new gold discoveries and resource identification. I thank you for your support throughout 2018-20 and hope that our progress during the forthcoming year will continue to add value to your investment in Predictive. I would like to thank my fellow board members and management as well as our in-country staff for all their efforts and success during the past year. Yours Sincerely Phillip Jackson Non-Executive Chairman 2019 Annual Report | 5 Review of Operations In 2018-2019 Predictive and Joint Venture partner, Toro Gold, focused exploration activities on the Boundiali and Ferkessedougou North Projects resulting in excellent drill results from both properties. The Company also expanded its 100%-owned position in Guinea, generating very promising early stage results. In recent years, the Company has assembled a large portfolio of properties across the world-class Birimian greenstone belts of Cote D’Ivoire, Guinea and Burkina Faso (Figure 1). Figure 1 – Predictive Discovery 100%-owned and joint venture projects in Guinea, Cote D’Ivoire and Burkina Faso 6 | 2019 Annual Report Predictive has entered into joint ventures with development-orientated partners on projects in Cote D’Ivoire and Burkina Faso. The Company holds significant minority interests (25-49%) in these projects with most exploration activity funded by these partners. This approach has already yielded gold discoveries in Cote D’Ivoire and Burkina Faso, including the recently announced Ouarigue South discovery at Ferkessedougou North Project. The Company is also in the early stages of exploring a series of 100% owned projects in Guinea, which have produced encouraging gold geochemical anomalies at the Nonta, Kankan and Kaninko Projects. Following a period of extensive project review by Resolute on its Joint Venture properties in Cote D’Ivoire Predictive announced Resolute’s plans for a drill-focused joint venture exploration program costing $2-3 million in the next 12 months. The program will target the Ferkessedougou North and Boundiali Projects, where significant gold mineralisation has already been discovered. s n o i t a r e p O f o w e i v e R Our new JV partners have strengthened the outlook for the projects, bringing a fresh approach to exploration, supporting Resolute’s objective of adding gold ounces to its portfolio. We eagerly await the commencement of diamond drilling at Ferkessedougou North and look forward to advancing both JV Projects towards what we believe could be significant gold deposits. 2019 Annual Report | 7 Joint Venture Partner Resolute Mining (ASX: RSG) Resolute Mining (Resolute) is a Resolute is a successful dividend paying gold miner with more than 30 years of experience as an explorer, developer, and operator of gold mines in Australia and Africa which have produced more than 8Moz of gold. Resolute owns four gold mines. Its flagship asset is the world class Syama Gold Mine in Mali (Syama) which can produce more than 300,000 ounces of gold per annum from existing processing infrastructure. Resolute is currently commissioning the world’s first fully automated underground mine at Syama which will deliver a low cost, large scale operation with a mine life beyond 2032. The Mako Gold Mine in Senegal is a high quality, low cost asset with average annual production of ~140,000 ounces of gold. The Ravenswood Gold Mine in Australia and the Bibiani Gold Mine in Ghana are existing large-scale assets which provide Resolute with significant production growth potential. Resolute has a pathway to annual gold production in excess of 500,000 ounces from a Global Mineral Resource base of more than 18 million ounces of gold. Resolute trades on the Australian Securities Exchange (ASX) and the London Stock Exchange (LSE) under the ticker RSG. Predictive is in joint venture with Resolute on seven granted permits and two permit applications in Cote D’Ivoire (Figure 2). The Toro Joint Venture operates through Predictive’s former subsidiary, Predictive Cote D’Ivoire SARL (Predictive CI) of which Predictive now holds 35%. Key Contact Mr Bruce Mowat (Resolute General Manager – Exploration) Mr Bruce Mowat joined Resolute in 2011 and is currently General Manager – Exploration, responsible for the Company’s exploration and development programs in Australia, Africa and other jurisdictions. Mr Mowat has spent 30 years exploring for and finding gold and base metal deposits in Australia, PNG, Indonesia and West Africa and has held senior positions in a number of companies. Prior to joining Resolute Mr Mowat was Chief Geologist for Straits Resources. Cote D’Ivoire Projects Kokoumbo, Boundiali, Kounahiri, Ferkessedougou North, Beriaboukro, Boundiali North. Deal Structure Resolute (formerly Toro Gold) earned 70% in the holding company, Predictive Discovery Cote D’Ivoire SARL through exploration expenditures on the Joint Venture projects up to December 2018. The Company estimates that Resolute’s equity increased by 5% in from January to June 2019. Predictive therefore intends to fund about 25% of the Joint Venture’s exploration budget in the 2020 financial year. 8 | 2019 Annual Report Financial Year 2018-19 Exploration Activity Cote D’Ivoire Predictive has been operating in Cote D’Ivoire since 2013 and regard it as a highly attractive destination for mining investment, both because of its high prospectivity for gold discovery and for its deserved reputation as an investor friendly jurisdiction. Apart from the Company’s own exploration successes in Cote D’Ivoire, other Australian listed explorers, such as Exore Resources (ASX: ERX) and Tietto Minerals (ASX: TIE) are reporting very exciting exploration results from the country. In recent years Predictive has expanded its ground position in Cote D’Ivoire. 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 in 2015, and with investment certainty provided by an updated Mining Act and a forward-looking Mines Administration, Cote D’Ivoire has become an attractive exploration investment destination. In Cote D’Ivoire, Predictive holds a joint venture with Resolute Mining and an agreement with Montage Gold Corporation (formerly Progress Minerals Inc) that entitles the Company to production payments from future gold mine production from new mines. The Company holds one wholly-owned exploration permit and two permit applications in the name of its 100% owned subsidiary, Ivoirian Resources SARL. Ferkessedougou North (Resolute JV) Diamond Drilling Program l y t i v i t c A n o i t a r o p x E 9 1 - 8 1 0 2 r a e Y l i a c n a n F i In June, Predictive announced the discovery of the Ouarigue South deposit (Figure 2 & 3), a mineralised body up to 100m wide and at least 210m-long from a nine-hole diamond drilling (DD) program, with a best intercept of 45.3m at 3.16g/t gold from 45.9m including 9m at 10.31g/t gold1. The diamond drilling program was designed to explore the shape and grade distribution of a gold mineralised body, which was initially encountered in reconnaissance RC drilling and trenching programs. To date, a total of 7,107m of trenching, 80 RC holes (for 4,989m) and 9 DD holes (for 1,059m) has been completed on the Ferkessedougou North Project. FNDC007 12m @ 2.1g/t Au FNDC007 10m @ 2.3g/t Au 1,065,500 mN FNDC008 35m @ 1.0g/t Au FNDC008 40m @ 3.5g/t Au 1,065,400 mN FNDC004 16m @ 2.4g/t Au 1,065,300 mN 1,065,800 mN E m 0 0 1 , 9 9 2 E m 0 0 2 , 9 9 2 E m 0 0 3 , 9 9 2 E m 0 0 4 , 9 9 2 E m 0 0 5 , 9 9 2 E m 0 0 6 , 9 9 2 E m 0 0 7 , 9 9 2 1,065,700 mN FNDC002 45m @ 1.5g/t Au FNRC006 FNDC003 FNRC005 FNRC070 FNRC004 FNDC006 13m @ 1.4g/t Au FNDC005 15m @ 2.1g/t Au 10m @ 1.7g/t Au 60m @ 1.4g/t Au 1,065,600 mN FNRC003 14m @ 1.2g/t Au FNRC002 28m @ 0.7g/t Au FNDC001 7m @ 1.8g/t Au FNDC001 11m @ 1.9g/t Au FNDC001 45m @ 3.2g/t Au FNDC001 13m @ 0.7g/t Au FNRC016 8m @1.5g/t Au 25m @ 3.1g/t Au FNRC007 FNRC008 FNRC009 FNRC001 13m @ 1.0g/t Au 24m @ 0.7g/t Au FNRC010 FNRC011 FNRC012 0 N 100 metres FERKESSEDOUGOU NORTH OUARIGUE SOUTH GOLD PROSPECT New results Diamond Holes Previous Trenches Surface Projection DD Mineralisation Surface Projection RC Mineralisation Mapped Granite from Trenches RC Holes previously released Figure 2 - Drill locality plan showing plan view locations of DD and RC gold drill intercepts. 1 ASX Announcement - CONFIRMATION OF SIGNIFICANT NEW GOLD DISCOVERY AT FERKESSEDOUGOU NORTH, COTE D’IVOIRE https://www.investi.com.au/api/announcements/pdi/02e800f8-176.pdf 2019 Annual Report | 9 In November 2019 the Joint Venture will commence a modest diamond drilling program to test extensions to the known mineralised body at Ouarigue South. Elsewhere on the 17km long gold-in-soil anomalous zone, programs of geological mapping, analysis of the infill soil samples collected by Toro and reprocessing of the aeromagnetic data. Predictive anticipates that additional drill programs aimed at identifying more granite-hosted Ouarigue South-type bodies will follow in the first half of 2020. WEST F N D C 0 0 2 5 0 0 C D N F DC001 FN FNRC016 13m @ 0.7g/t Au EAST 15m @ 2.1g/t Au 10m @ 1.7g/t Au 45m @ 3.2g/t Au 8m @ 1.5g/t Au 250 mN 45m @ 1.5g/t Au 60m @ 1.4g/t Au 11m @ 1.9g/t Au 25m @ 3.1g/t Au 200 mN 150 mN 3m @ 3.3g/t Au 7m @ 1.8g/t Au 5m @ 6.1g/t Au 0 N 50 metres FERKESSEDOUGOU NORTH CROSS SECTION X Results this release X Results previously released >0.1g/t Au grade mineralised envelope Metasediment Granite Figure 3 - Ferkessedougou North drill cross section showing interpreted geology and results of DD holes FNDC001, 002, 008 and RC hole FNRC016. 10 | 2019 Annual Report Boundiali and Boundiali North Permits (Resolute JV) The Boundiali Project consists of two permits – Boundiali North and Boundiali South (Figure 4) - which cover more than 35km of strike length of a very well-mineralised greenstone belt, which includes the Sissingue gold mine in Cote D’Ivoire and Resolute’s flagship Syama mine in Mali. l y t i v i t c A n o i t a r o p x E 9 1 - 8 1 0 2 r a e Y l i a c n a n F i Figure 4 - Boundiali Project (North and South) geochemical map results highlighting targets BN1, BN2 and BN3 and RC/DD holes (black dots). Note the large extent of untested gold-in-soil geochemical anomalies. Predictive’s first exploration program on the permit was a BLEG stream sediment survey in 2014 which discovered a series of gold stream sediment anomalies, the strongest of which was downstream of the Nyangboue Prospect. Subsequent soil sampling by then joint venture partner Toro Gold Limited in 2015-16 revealed the 6km-long Nyangboue gold geochemical anomaly. Initial RC and diamond drilling in 2016/17 on the Nyangboue Prospect returned a series of excellent drill results including 30m at 8.3g/t gold from 39m and 28m at 4.04g/t gold from 3m. In 2018 the joint venture undertook a soil geochemistry program comprising 6,338 samples on the Boundiali North permit, identifying a series of gold anomalies extending over 14km clustered around the inferred north-south Nyangboue structure which also passes through the Nyangboue gold mineralised zone, further south. Higher gold values include 1,185, 806 and 626 ppb gold. Following the initial soil sampling program, the joint venture completed a 6,809m trenching program over the Boundiali North permit. In March 2019 an RC drill rig began work with infill drilling at Boundiali South on the Nyangboue Prospect (Figure 5). Highly encouraging first results were received from a 31-hole (3,324m) infill Reverse Circulation (RC) drill program at the Nyangboue Prospect with numerous significant gold results returned with good widths and high grades with multiple +1g/t gold intercepts were recorded in every hole. Better Results included: • • • • • BRC 170: 13m at 1.78g/t gold from 63m BRC 171: 14m at 1.30g/t gold from 9m BRC 171: 7m at 4.02g/t gold from 87m, including 1m at 10.3g/t gold BRC 173: 8m at 2.91g/t gold from 53m BRC 173: 4m at 5.50g/t gold from 67m, including 1m at 10.7g/t gold • • • • BRC 175: 27m at 2.42g/t gold from 27m, including 3m at 10.3g/t gold, 4m at 4.96g/t gold from 32m, including 1m at 10.7g/t gold BRC 181: 3m at 9.69g/t gold from 137m BRC 182: 16m at 1.49g/t gold from 6m BRC 183: 9m at 2.86g/t gold from 68m, including 1m at 16.7g/t gold 2019 Annual Report | 11 Figure 5 – Nyangboue Gold Prospect with current and previous drill holes overlain gold-in-soil anomalies Based on these infill drill results, mineralisation at Nyangboue now appears to consist of a series of north-striking, sub- parallel, gold-mineralised zones dipping shallowly to the west. Given that the mineralisation is open to the north, south and down dip, there is clearly more drilling to be done at Nyangboue to determine the full size of the gold mineralised system. When combined with the new gold mineralisation discovered in the Boundiali North permit (see below), the potential scale of the mineralised systems at Boundiali continues to grow. In April the drill rig was moved to Boundiali North where a large reconnaissance RC drill program was completed testing targets identified by the trenching program (Figure 6). The RC drilling tested three strong gold-in-soil anomalies with a combined length of 7.7km within the previously defined broad, 14km long zone of soil anomalies. Better intersections included: • • • • • • • • • BNRC012 - 5m at 3.49g/t gold from 28m BNRC014 - 7m at 1.43g/t gold from 18m BNRC015 - 8m at 1.80g/t gold from 35m BNRC016 - 3m at 6.61g/t gold from 45m BNRC031 - 11m at 1.20g/t gold from 4m BNRC031 - 30m at 1.08g/t gold from 32m BNRC032 - 10m at 3.14g/t gold from 53m BNRC032 - 32m at 1.46g/t gold from 80m BRNC047 - 3m at 4.73g/t gold from 34m 12 | 2019 Annual Report l y t i v i t c A n o i t a r o p x E 9 1 - 8 1 0 2 r a e Y l i a c n a n F i Figure 6 - Boundiali North Gold Prospect Cross Section 6,809m of reconnaissance trenching at Boundiali North also encountered wide zones of anomalous gold with multiple intersections of higher values, including: • • • • • • BNTR002 - 2m at 4.96g/t gold BNTR003A - 14m at 1.01 gold within a 162m long section averaging 0.42g/t gold BNTR004 - 2m at 5.09g/t gold within a 60m long section averaging 0.48g/t gold BNTR005 - 14m at 1.80g/t gold within a 34m long section averaging 0.92g/t gold BNTR007 - 24m at 2.29g/t gold within a 58m long section averaging 1.10g/t gold BNTR008 - 10m at 2.24g/t gold within a 66m long section averaging 0.50g/t gold Predictive expects that the joint venture will carry out more drilling on both permits after the drill fire assay results are received and further assessment of past programs on the project areas is completed. Given that large areas of gold-in-soil anomalies remain undrilled on both Boundiali permits, the potential for new discoveries remains high. 2019 Annual Report | 13 Guinea During the reporting period the Company acquired five Reconnaissance Authorisations in Guinea totalling ~500km2 (Figure 7). All landholdings were identified through the Company’s PredictoreTM methodology which helps identify large and deep structures which are thought to have channelled large quantities of gold-bearing fluid from deeper in the earth’s crust, generating well mineralised gold belts including large gold deposits at surface. Figure 7 – Predictive Discovery 100%-owned Projects in Guinea The PredictoreTM methodology and a strategic analysis of the country has identified the Siguiri Basin Figure 7 as being both highly prospective for gold mineralisation and underexplored. The Siguiri Basin is part of the richly mineralised West African Birimian gold belt and consists largely of metasediments with minor granitic rocks, metavolcanics and mafic to ultramafic intrusives. In April, Predictive announced results from initial field work at Nonta and Kankan Projects. The Company sampled and assayed 50 rock chip and dump samples from artisanal mine sites and rock outcrops at Nonta with a peak value of 29g/t Au. A gold Bulk Leach Extractable Gold (BLEG) stream sediment sampling program was completed, totalling 39 samples, with results peaking at 223ppb Au and exceeding 20ppb over two stream catchment areas covering a to- tal area of 20km2. During the period, the Company also completed a gold Bulk Leach Extractable Gold (BLEG) stream sediment sampling program (peaking at 87ppb Au) on Kankan (Figure 7), totalling 42 samples. An initial soil sampling program over part of the permit, totalling 269 samples, collected on an 800 x 100m2 grid, was completed revealing a 6km long zone of gold-in-soil anomalies with a peak value of 570ppb Au. 14 | 2019 Annual Report 245ppb Au 330ppb Au 286ppb Au 292ppb Au 570ppb Au 220ppb Au l y t i v i t c A n o i t a r o p x E 9 1 - 8 1 0 2 r a e Y l i a c n a n F i 243ppb Au N 0 1km KANKAN PROJECT SOIL SAMPLING PROGRAM 20-50ppb gold anomalies 50-100ppb gold anomalies +100ppb gold anomalies Figure 8 - Kankan Project soil sampling results with wides zones of 20-50ppb gold anomalies (green), 50-100ppb gold anomalies (yellow) and +100ppb gold anomalies (red) In early October, the Company also announced encouraging initial sampling results from the Kaninko Project (Figure 9). Three prospects for potential drill targeting have been identified, Bankan Creek Prospect (peak value of 4.6g/t gold), Bankan north-east Prospect (peak values of 1.6g/t gold and 1.4g/t gold) and Bankan East Prospect (peak-value of 1.3g/t gold). The early results from Kaninko add a promising new prospect to the Guinea portfolio following the earlier results from Kankan and Nonta which identified exten- sive soil geochemical anomalies. The better results were obtained from vertical channel sampling of weathered bedrock within a 300m length of artisanal workings from which artisanal miners report that they are currently extracting significant quantities of gold. Figure 9 - Location of samples and prospects, Kaninko Exploration Permit, Guinea Larger scale geochemical surveys on the Kankan, Nonta and Kaninko properties will be undertaken in the next few months. These may be accompanied by ground geophysical surveys where appropriate. All this work is aimed at readying Predictive’s best Guinea prospects for drilling in the March Quarter of 2020. 2019 Annual Report | 15 Burkina Faso Predictive’s current tenement holdings in Burkina Faso are located in the east of the country and cover approximately 100km of strike length of the Samira Hill greenstone belt in eastern Burkina Faso. 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. During FY 2018-2019, the Progress Minerals Joint Venture (now Montage Joint Venture) completed 2,596m of RC drilling on the Tambiri permit, which lies within the wider Progress JV Area of Influence (AOI). The program was testing a gold geochemical anomaly and mineralised structure along strike from high-grade gold mineralisation drilled by Predictive in 2011-12. The drilling encountered narrow zones gold mineralisation in most holes along the Tambiri shear zone trend. The mineralised zones dip steeply to the south, consistent with the earlier Predictive drilling. Better intercepts included: • • TAMRC005: 1m at 7.23 g/t Au. TAMRC008: 4m at 4.23g/t Au from 74m including 1m at 10.90g/t Au. On completion of the Tambiri program,15,000m of RC drilling was planned to commence on the Bira Project in the March Quarter, testing 10 targets, however due to the security incident at the Tiabongou campsite, work there is currently suspended. On 18th January 2019, the Company advised of a security incident at its Progress Minerals Joint Venture in Burkina Faso, which resulted in the death of a senior employee of its Canadian joint venture partner Progress Minerals Inc. The Company extended its deepest sympathies to the family and colleagues of Kirk Woodman – a respected geologist with 20 years of experience in working on the ground in West Africa. The ongoing safety and security of every individual involved in the joint venture managed by Progress Minerals is of paramount importance to both companies. 16 | 2019 Annual Report 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 2019. t r o p e R ’ s r o t c e r i D 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 David Kelly POSITION Non-Executive Chairman Managing Director Non-Executive Director The Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. COMPANY SECRETARIES 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. Bruce Waddell Bruce Waddell was appointed as additional Company Secretary on 21 August 2017. A member of CPA Australia, he has over 25 years accounting and administration experience in the resources industry. Bruce 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 $1,459,332 (2018: $1,474,046). This was largely from exploration costs, share of losses of associates and the costs of administering the Group to 30 June 2019. REVIEW OF OPERATIONS In 2018-2019 Predictive‘s joint venture with Toro Gold Limited in Cote D’Ivoire continued to generate highly encouraging drilling results from two properties. Progress during the year included recognition of two new zones with significant resource potential – the Ouarigue South prospect and two prospects within the Boundiali North permit. The Company also opened up a new frontier for exploration in Guinea during the year, acquiring 5 properties covering a total area of 500km2 and commencing early stage exploration programs which have revealed several promising gold-in-soil anomalies. JOINT VENTURE PARTNERS Progress Minerals International Inc (now part of Montage Gold Corporation) Progress Minerals Inc (Progress) was an unlisted Canadian exploration company which was incorporated in 2016 and based in Vancouver, Canada. It changed its name to Avant Minerals during 2017-18 and merged with a company owned by Orca Gold to form Montage Gold Corporation (Montage) in August 2019. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 17 3 DIRECTORS’ REPORT Burkina Faso Permits: Kalinga, Tambifwanou, Bongou, Tamfoagou, Tangagari, Tambiri, Bira, Basieri, Haoura and Mansila. Deal Structure: Progress (now Montage) earned 51% by spending US$1 million in 2018. Predictive’s current equity interest is 49%. Cote D'Ivoire Permits (Bobosso Project): Bassawa and Wendene. Deal Structure: Montage now owns 100% in the project holding company, West African Mine Investments Pty Ltd. Predictive sold its then-30% equity in the project to Progress in 2017-18 for a cash payment of C$493,000 and a commitment by Progress to make future bonus payments to Predictive on development of up to 3 mines on the permits. Toro Gold (now Resolute Mining Limited) Toro Gold Ltd (Toro) was a private gold exploration, development and production company focused in West Africa. It was purchased by Resolute Mining Limited (Resolute) in August 2019. Predictive is in joint venture with Resolute on six granted permits and two permit applications in Cote D’Ivoire (Figure 2). The Toro Joint Venture operates through Toro Gold Equatorial (Guernsey) Limited (it previously operated through Predictive’s former subsidiary Predictive Discovery Cote D’Voire Sarl), of which Predictive now holds 30%. Cote D'Ivoire Permits: Ferkessedougou North, Boundiali, Boundiali North , Kounahiri, Kokoumbo and Beriaboukro. Deal Structure: Resolute’s current equity interest in the joint venture is 70%. FINANCIAL YEAR 2018-19 EXPLORATION ACTIVITY Project Highlights Ferkessedougou North Project (Cote D’Ivoire) – Diamond drilling following up highly encouraging trench results on the Ouarigue South prospect obtained a series of broad gold intercepts in a zone of mineralised granite and metasediments which is now known to be at least 200m long and up to 100m wide. The best gold intercepts were 45.2m at 3.2g/t Au including 9m at 10.3 g/t Au and 59.7m at 1.4g/t Au. Infill soil sampling on the surrounding area commenced immediately after these results were obtained, aimed at finding more such mineralised granite gold deposits within the 17km long zone of gold-in-soil geochemical anomalies in the permit. 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 $896,460 from 30 June 2018 to 30 June 2019. This net movement is largely due to the following factors: $0.52m net capital raising; Share of Losses in Associates, following deconsolidation of subsidiaries from Joint Venture earn-ins; Expenditure on exploring and evaluating the assets in Burkina Faso and Cote D’Ivoire; and Exploration expenses. • • • • SIGNIFICANT CHANGES IN STATE OF AFFAIRS No significant changes in the Group’s state of affairs occurred during the financial year, with the exception of a capital raising net of $0.52 million. EVENTS SUBSEQUENT TO BALANCE DATE There has not been any matter or circumstance have arisen after the balance date that has 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. 18 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 4 DIRECTORS’ REPORT 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. 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 t r o p e R ’ s r o t c e r i D Qualification Experience Interest in Shares and Options (at the date of this report) BJuris, LLB, MBA, FAICD legal and Phillip Jackson, the Chairman and a Director of the Company, is a barrister and solicitor with over 25 years 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 was 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. Shareholding: 500,000 Option holding: 550,000 (unlisted) 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 (at the date of this report) Shareholding: 3,430,941 1,215,021 (listed) Option holding: 2,200,000 (unlisted) Directorships held in other listed entities during the three years prior to the current year None PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 19 5 DIRECTORS’ REPORT Mr David Kelly Qualifications Experience Interest in Shares and Options (at the date of this report) Non-Executive Director 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. Shareholding: 225,000 Option holding: 550,000 (unlisted) Directorships held in other listed entities during the three years prior to the current year Renaissance Minerals Limited Manas Resources Limited MEETINGS OF DIRECTORS During the financial year, 15 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 Mr Phillip Jackson Mr Paul Roberts Mr David Kelly Number eligible to attend Number attended Number eligible to Number attended 5 5 5 5 5 5 attend 10 10 10 10 10 10 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 2019 to the date of this report are as follows: Grant Date 29 November 2016 29 November 2016 27 November 2017 Date of Expiry 29 November 2019 29 November 2020 30 November 2019 Exercise Price $0.2578 $0.3867 $0.060 TOTAL Number under Option 1,952,500 1,952,500 73,030,518 76,955,518 During the year ended 30 June 2019 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. 20 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 6 t r o p e R ’ s r o t c e r i D DIRECTORS’ REPORT NON AUDIT SERVICES The Board of Directors is satisfied that the provision of non-audit services by the auditor during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. Details of the amounts paid to the auditor of the Group for audit and non-audit services provided during the year are set out at note 18. AUDITOR’S INDEPENDENCE DECLARATION The auditors’ independence declaration for the year ended 30 June 2019 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. 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. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 21 7 DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued) 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. Key Management Personnel Position held during the year ended 30 June 2019 Mr Phillip Jackson Mr Paul Roberts Mr David Kelly Mr Eric Moore Mr Bruce Waddell Non-Executive Chairman Managing Director Non-Executive Director Company Secretary Company Secretary Non-salary cash-based incentives % - - - - - Options/ Rights % - - - - - Fixed Salary/Fees % 100 100 100 - - Total % 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 consulting agreement that requires 6 months’ notice of voluntary termination of employment that entitles Mr Roberts to $102,500 as a termination benefit. To 30 November 2018, Mr Waddell and Mr Moore were not remunerated by Predictive Discovery Ltd. Former Associate Aurora Minerals Limited provided company secretarial, accounting and book-keeping services to the Company under an Administration Services Agreement at a scheduled rate of $89,100 per annum. From 1 December 2018, Mr Waddell has entered into a consulting agreement at a rate of $90,000 and requires 2 months’ notice of voluntary termination of employment that entitles Mr Waddell to $15,000 as a termination benefit. Mr Moore is charged to the Company at a rate of $100 per hour for any services rendered under a new Administration Services Agreement with Aurora, with those charges amounting to $3,400 for the period. REMUNERATION DETAILS FOR THE YEAR ENDED 30 JUNE 2019 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: 22 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 8 t r o p e R ’ s r o t c e r i D DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued) Table of Benefits and Payments for the Period Ended 30 June 2019 Key Personnel Management Salary, fees and leave Other Mr Philip Jackson Mr Paul Roberts Mr David Kelly Mr Eric Moore(1) Mr Bruce Waddell(1) Total Key Management Personnel 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 $ 50,000 50,000 205,000 192,981 31,963 31,963 - - 52,500 - 339,463 274,944 $ - - - - - - - - - - - - Pension and super- annuation $ Shares/ Units $ Options/ Rights $ - - - - 3,037 3,037 - - - - 3,037 3,037 - - - - - - - - - - - - - - - - - - - - - - - - Total $ 50,000 50,000 205,000 192,981 35,000 35,000 - - 52,500 - 342,500 277,981 (1) Associate Aurora Minerals Limited provided company secretarial, accounting and bookkeeping services to the Company under an Administration Services Agreement at the scheduled rate of $89,100 per annum, which included the services of Mr Waddell and Mr Moore. From 1 December 2018, Mr Waddell is remunerated by the Company and Mr Moore’s services are paid for on an hourly basis through a new Services Agreement with Aurora. 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 30 June 2019 Mr Philip Jackson Mr Paul Roberts Mr David Kelly Mr Eric Moore Mr Bruce Waddell 825,000 4,515,021 825,000 330,000 247,500 6,742,521 - - - - - - Expired during the period (275,000) (1,100,000) (275,000) (110,000) (82,500) (1,842,500) Other changes during the period Balance at end of period Vested during the period Vested and exercisable Vested and unexercis- able - 550,000 - 3,415,021 550,000 - 220,000 - - 165,000 - 4,900,021 - 550,000 3,415,021 550,000 - 220,000 - - 165,500 - 4,900,021 - - - - - Balance at beginning of period Granted as remunerat- ion during the period Expired during the period Other changes during the period (1)(2) Balance at end of period Vested during the period Vested and exercisable Vested and unexercis- able 30 June 2018 Mr Philip Jackson Mr Paul Roberts Mr David Kelly Mr Eric Moore Mr Bruce Waddell 825,000 3,300,000 825,000 330,000 - 5,280,000 - - - - - - - - - - - - 825,000 - 1,215,021 4,515,021 825,000 - 330,000 - 247,500 247,500 (1,462,521) 6,742,521 - 825,000 4,515,021 825,000 - 330,000 - - 247,500 - 6,742,521 (1) P Roberts acquired 715,021 listed options in a rights issue and 500,000 listed options on market during the year (2) B Waddell appointed additional Company Secretary 21 August 2017 PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 23 - - - - - 9 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: PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 171 877 DIRECTORS’ REPORT Granted as remuneration during the period REMUNERATION REPORT (AUDITED) (continued) Balance at beginning of 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 2019 Mr Phillip Jackson Mr Paul Roberts Mr David Kelly Mr Eric Moore Mr Bruce Waddell - 2,708,260 - 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: - 2,708,260 - KEY MANAGEMENT PERSONNEL SHAREHOLDINGS - - - - Issued on - exercise of options during the period 500,000 722,681 225,000 - 350,000 1,797,681 Other changes during the period (1) Balance at beginning of period Purchased during the period Balance at end of period - - - - - - - - - - - - 500,000 3,430,941 225,000 - 350,000 4,505,941 Granted as remuneration during the period Granted as remuneration - during the - period - - - - 30 June 2018 Mr Phillip Jackson Mr Paul Roberts Mr David Kelly 30 June 2018 Mr Eric Moore Mr Phillip Jackson Mr Bruce Waddell Mr Paul Roberts Mr David Kelly (1) Mr Eric Moore Mr Bruce Waddell Issued on exercise of - options during - the period - - - - Balance at - beginning of 1,483,179 period - - - 1,483,179 - 1,225,081 - - - - - 1,225,081 - B Waddell appointed additional Company Secretary 21 August 2017 - - - - 1,483,179 - - Granted as - remuneration 1,483,179 during the period - - - - Issued on - exercise of - options during the period B Waddell appointed additional Company Secretary 21 August 2017 Balance at beginning of period Purchased during the period (1) - 1,225,081 - - - 1,225,081 Purchased during the period Other changes during the period (1) - - - - - - - Balance at end of 2,708,260 period - - - - - 2,708,260 - - - - - 2,708,260 - - - 2,708,260 Other changes during the period (1) Balance at end of period 30 June 2017 Mr Phillip Jackson SECURITIES RECEIVED THAT ARE NOT PERFORMANCE-BASED Mr Paul Roberts Mr David Kelly Mr Eric Moore 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. - (13,348,611) - - (13,348,611) - 14,331,790 - - 14,331,790 - 1,483,179 - - 1,433,179 - 500,000 - - 500,000 Consolidation of the company’s shares and options on a 1 for 10 basis effective 19 May 2017 - - - - - - - - - - (1) CASH BONUSES, PERFORMANCE-RELATED BONUSES AND SHARE-BASED PAYMENTS SECURITIES RECEIVED THAT ARE NOT PERFORMANCE-BASED Options were granted as remuneration during the year to key management personnel and other executives as set out No members of key management personnel received securities during the period which were not dependent upon the in notes 16 and 22. performance of the group’s share price as part of their remuneration package. END OF THE REMUNERATION REPORT 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 Signed in accordance with a resolution of the Board of Directors: in notes 17 and 23. Paul Roberts END OF THE REMUNERATION REPORT Managing Director 27 September2019 Signed in accordance with a resolution of the Board of Directors: Paul Roberts 24 | 2019 Annual Report Managing Director PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 02 October 2018 10 PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 10 Statement of Comprehensive Income STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019 Finance income Other income Gain on Sale of JV Interest Administrative payments Foreign exchange gain/(expenses) Write off of loans Gain on deconsolidation of subsidiary Share of loss in Associates Impairment of exploration expenditure Exploration expenditure pre-right to tenure Loss before income tax Income tax expense e m o c n I e v i s n e h e r p m o C r e h t O d n a s s o L r o t fi o r P f o t n e m e t a t S Consolidated Note 2019 $ 2018 $ 18,284 37,470 223,139 (712,765) (14,671) - - (129,435) (474,091) (407,263) 22,717 22,004 - (997,744) (135,265) (781,043) 789,786 - - (394,501) (1,459,332) (1,474,046) - - 24 7 6 2 Loss from continuing operations (1,459,332) (1,474,046) Other comprehensive income Items that may be not reclassified subsequently to operating result Exchange difference on translation of foreign operations 10 45,395 (1,540,949) Total comprehensive loss for the year (1,413,937) (3,014,995) Profit attributable to: Members of the parent entity (1,413,937) (3,014,995) (1,413,937) (3,014,995) Basic loss per share (cents per share) Diluted loss per share (cents per share) 11 11 (0.592) (0.592) (0.716) (0.716) The accompanying notes form part of these financial statements PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 25 11 Statement of Financial Position STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019 Current Assets Cash and cash equivalents Trade and other receivables Total current assets Non-Current Assets Property, plant and equipment Exploration expenditure Investments in associates 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 2019 $ 2018 $ 3 4 5 6 7 8 1,173,049 104,690 1,277,739 21,500 1,923,318 747,568 2,692,386 1,684,053 104,887 1,788,940 5,696 2,189,364 840,645 3,035,705 3,970,125 4,824,645 88,829 - 88,829 88,829 46,889 - 46,889 46,889 3,881,296 4,777,756 9 10 31,491,240 298,632 (27,908,576) 30,973,763 877,409 (27,073,416) 3,881,296 4,777,756 PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 26 | 2019 Annual Report 12 , 7 6 3 5 7 0 5 , , ) 6 4 0 4 7 4 1 ( , , ) 9 4 9 0 4 5 1 ( , , ) 5 9 9 4 1 0 3 ( , , 2 8 2 7 6 0 3 , , ) 7 9 8 9 4 3 ( , 6 5 7 7 7 7 4 , , 6 5 7 7 7 7 4 , , ) 2 3 3 9 5 4 1 ( , 5 9 3 5 4 , , ) 7 3 9 3 1 4 1 ( , - ) 3 2 5 3 1 ( , , 0 0 0 1 3 5 , 6 9 2 1 8 8 3 , - - - - - , 5 0 5 9 7 8 - - - , 5 0 5 9 7 8 , 5 0 5 9 7 8 - - , ) 2 7 1 4 2 6 ( - , 3 5 8 8 3 5 1 , , ) 6 4 0 4 7 4 1 ( , , ) 9 6 3 9 9 5 5 2 ( , , ) 9 4 9 0 4 5 1 ( , - - - ) 6 9 0 2 ( , ) 6 9 0 2 ( , - 5 9 3 5 4 , 5 9 3 5 4 , - - - , ) 9 4 9 0 4 5 1 ( , , ) 6 4 0 4 7 4 1 ( , - - , ) 6 1 4 3 7 0 7 2 ( , , ) 6 1 4 3 7 0 7 2 ( , , ) 2 3 3 9 5 4 1 ( , - , ) 2 3 3 9 5 4 1 ( , - - , 2 7 1 4 2 6 , 3 3 3 5 5 2 9 9 2 3 4 , , ) 6 7 5 8 0 9 7 2 ( , , 8 7 3 6 5 2 8 2 , - - - , 2 8 2 7 6 0 3 , , ) 7 9 8 9 4 3 ( , 3 6 7 3 7 9 0 3 , , 3 6 7 3 7 9 0 3 , - - - - ) 3 2 5 3 1 ( , , 0 0 0 1 3 5 , 0 4 2 1 9 4 1 3 , $ $ $ $ $ l a t o T d e s a B e r a h S s t n e m y a P e v r e s e R e v r e s e R n o i t a l s n a r T y c n e r r u C n g i e r o F s e s s o L d e t a u m u c c A l l a t i p a C d e u s s I Y T I U Q E N I S E G N A H C F O T N E M E T A T S 9 1 0 2 E N U J 0 3 D E D N E R A E Y E H T R O F : s r e n w o s a y t i c a p a c r i e h t n i s r e n w o h t i w s n o i t c a s n a r T r a e y e h t r o f s s o l e v i s n e h e r p m o c l a t o T e m o c n i e v i s n e h e r p m o c r e h t O D E T A D I L O S N O C r a e y e h t r o f s s o L 7 1 0 2 y l u J 1 t A : s r e n w o s a y t i c a p a c r i e h t n i s r e n w o h t i w s n o i t c a s n a r T r a e y e h t r o f s s o l e v i s n e h e r p m o c l a t o T e m o c n i e v i s n e h e r p m o c r e h t O s n o i t p o d e r i p x e f o r e f s n a r T l a t i p a c e r a h s f o e u s s I s t s o c n o i t c a s n a r T 9 1 0 2 e n u J 0 3 t A l a t i p a c e r a h s f o e u s s I s t s o c n o i t c a s n a r T 8 1 0 2 e n u J 0 3 t A r a e y e h t r o f s s o L 8 1 0 2 y l u J 1 t A s t n e m e t a t s l a i c n a n i f e s e h t f o t r a p m r o f s e t o n g n i y n a p m o c c a e h T 2019 Annual Report | 27 3 1 y t i u q E n i s e g n a h C f o t n e m e t a t S Statement of Changes in Equity I T R O P E R L A C N A N I F L A U N N A D E T I M I L Y R E V O C S I D E V I T C I D E R P Statement of Cash Flows STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019 Cash flows from operating activities Receipts from customers Interest received Payments for exploration expenditure Payments to suppliers and employees Note Consolidated 2019 $ - 17,262 (890,267) (653,443) 2018 $ 30,879 22,717 (2,913,887) (1,031,426) Net cash provided by (used in) operating activities 20 (1,526,448) (3,891,717) Cash flows from investing activities Proceeds from refunds of tenement acquisitions Proceeds from sales of property, plant and equipment Purchase of property, plant and equipment Payments for acquisition of tenements JV Contributions (exploration) Proceeds from conversion of remaining JV interest Cash in deconsolidated entities - - (18,208) - - 514,925 - - 725 (171,950) (130,111) 1,563,022 (45,246) 24 Net cash provided by (used in) investing activities 496,717 1,216,440 Cash flows from financing activities Proceeds from issue of shares Payment for share issue costs 531,000 (13,523) 3,067,282 (349,662) Net cash inflow from financing activities 517,477 2,717,620 Foreign exchange differences 1,250 - Net increase (decrease) in cash held (511,004) 42,343 Cash and cash equivalents at beginning of financial period 1,684,053 1,641,710 Cash and cash equivalents at end of the financial period 3 1,173,049 1,684,053 The accompanying notes form part of these financial statements 28 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 14 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 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. Basis of preparation s t n e m e t a t S l i i a c n a n F e h t o t s e t o N Statements 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. Notes to the Financial 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. The financial statements were authorised for issue, in accordance with a resolution of the directors, on 27 September 2019. The directors have the power to amend and re-issue the financial statements. 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 17 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 FINANCIAL REPORT 2019 Annual Report | 29 15 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Principles of consolidation (continued) Principles of consolidation (continued) Business Combinations (a) Business combinations occur where an acquirer obtains control over one or more businesses and results in the Business Combinations consolidation of its assets and liabilities. Business combinations occur where an acquirer obtains control over one or more businesses and results in the A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities consolidation of its assets and liabilities. 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 A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. 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 At this date, the parent shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. 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. 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 The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the recognised where a present obligation has been incurred and its fair value can be reliably measured. 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 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 The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair acquiree where less than 100% ownership interest is held in the acquiree. 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 The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair former owners of the acquiree and the equity interests issued by the acquirer. 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 Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income. former owners of the acquiree and the equity interests issued by the acquirer. 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. 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, Included in the measurement of consideration transferred is any asset or liability resulting from a contingent such amounts are recycled to profit or loss. 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 Included in the measurement of consideration transferred is any asset or liability resulting from a contingent previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of consideration classified as an asset or a liability is remeasured each reporting period to fair value through the statement of previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as comprehensive income unless the change in value can be identified as existing at acquisition date. 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 All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive comprehensive income unless the change in value can be identified as existing at acquisition date. income. All transaction costs incurred in relation to the business combination are expensed to the statement of comprehensive Interests in joint arrangements income. IFRS defines a joint arrangement as one over which two or more parties have joint control, which is the contractually Interests in joint arrangements agreed sharing of control over an arrangement. This exists only when the decisions about the relevant activities (being those that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing IFRS defines a joint arrangement as one over which two or more parties have joint control, which is the contractually control. agreed sharing of control over an arrangement. This exists only when the decisions about the relevant activities (being those that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing (i) Joint operations control. A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. In relation to its interests in joint (i) Joint operations operations, the Group recognises its: A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. In relation to its interests in joint operations, the Group recognises its: PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 30 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 16 16 s t n e m e t a t S l i i a c n a n F e h t o t s e t o N NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Principles of consolidation (continued) • • • • • Assets, including its share of any assets held jointly Liabilities, including its share of any liabilities incurred jointly Revenue from the sale of its share of the output arising from the joint operation Share of the revenue from the sale of the output by the joint operation Expenses, including its share of any expenses incurred jointly (ii) Joint ventures A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. The Group’s investment in its joint venture is accounted for using the equity method. Under the equity method, the investment in the joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the joint venture since the acquisition date. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The statement of profit or loss and other comprehensive income (OCI) reflects the Group’s share of the results of operations of the joint venture. Any change in OCI of that investee is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint venture. The aggregate of the Group’s share of profit or loss of the joint venture is shown on the face of the statement of profit or loss and other comprehensive income outside operating profit and represents profit or loss after tax and non- controlling interests in the subsidiaries of joint venture. The financial statements of the joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group. At each reporting date, the Group determines whether there is objective evidence that the investment in the joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value, then recognises the loss as ‘Share of profit of a joint venture’ in the statement of profit or loss and other comprehensive income. On loss of joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the joint venture upon loss of joint control and the fair value of the retained investment and proceeds from disposal is recognised in the statement of profit or loss. (iii) Reimbursement of the costs of the operator of the joint arrangement When the Group, acting as an operator or manager of a joint arrangement, receives reimbursement of direct costs recharged to the joint arrangement, such recharges represent reimbursements of costs that the operator incurred as an agent for the joint arrangement and therefore have no effect on profit or loss. When the Group charges a management fee (based on a fixed percentage of total costs incurred for the year) to cover other general costs incurred in carrying out the activities on behalf of the joint arrangement, it is not acting as an agent. Therefore, the general overhead expenses and the management fee are recognised in the statement of profit or loss and other comprehensive income as an expense and income, respectively. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 31 17 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (b) Revenue recognition The Group recognises revenue as follows: Interest Interest revenue is recognised using the effective interest rate method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. All revenue is stated net of the amount of goods and services tax (GST). (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. 32 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 18 s t n e m e t a t S l i i a c n a n F e h t o t s e t o N NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Employee Benefits Income Tax (continued) Income Tax (continued) (d) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 (d) 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 Current assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to settled. 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 (e) occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. 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 (e) 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 Provision is made for the company's liability for employee benefits arising from services rendered by employees to the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting end of the reporting period. Employee benefits that are expected to be settled within one year have been measured at requirements. Those cashflows are discounted using market yields on corporate bonds with terms to maturity that the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been match the expected timing of cashflows. 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 Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are requirements. Those cashflows are discounted using market yields on corporate bonds with terms to maturity that measured at the present value of the estimated future cash outflows to be made by The Group in respect of services match the expected timing of cashflows. provided by employees up to reporting date. Employee Benefits Provisions Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are (f) 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. 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. (f) Provisions The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional Provisions are recognised when The Group has a legal or constructive obligation, as a result of past events, for which it right to defer settlement of the liability for at least 12 months after the reporting date. is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Foreign Currency Transactions and Balances Foreign Currency Transactions and Balances (g) 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. 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 (g) which is the parent entity's functional and presentation currency. All other companies within The Group have Australian dollars as their functional currency. 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 Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of which is the parent entity's functional and presentation currency. All other companies within The Group have Australian the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items dollars as their functional currency. 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. 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 Exchange differences arising on the translation of monetary items are recognised in the consolidated statement of measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge. 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 non-monetary items are recognised directly in equity to the extent Exchange differences arising on the translation of monetary items are recognised in the consolidated statement of that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the consolidated comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge. statement of comprehensive income. 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. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 33 19 19 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (g) Foreign Currency Transactions and Balances (continued) 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. (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) Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the Group intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. 34 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 20 s t n e m e t a t S l i i a c n a n F e h t o t s e t o N NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (i) Investments and other financial assets (continued) Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance 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. The estimated useful lives used for each class of depreciable assets are: Class of Fixed Asset Plant and Equipment Useful Life 2 - 10 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. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 35 21 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (j) Property, Plant and Equipment (continued) 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. 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). 36 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 22 s t n e m e t a t S l i i a c n a n F e h t o t s e t o N NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Impairment of Assets (continued) 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) Associates Associates are entities over which the Group has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post- acquisition changes in the Group's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The Group discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss. (n) 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. (o) 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. (p) 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. (q) 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. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 37 23 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (r) 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. (s) 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. (t) 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. 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. $1,923,318 has been capitalised as at 30 June 2019 (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. 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 21. 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. 38 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 24 s t n e m e t a t S l i i a c n a n F e h t o t s e t o N NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (t) Critical Accounting Estimates and Judgements (continued) Key Judgements - Going Concern For the year ended 30 June 2019 the Group made a loss of $1,459,332 (2018: loss $1,474,046). 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 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. Should future capital raising and forecasts be unsuccessful, there is a significant uncertainty whether the Group will continue as a going concern and therefore realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report. Key Judgements - Recoverability of Intercompany Loan Within non-current assets of the parent entity (see note 23) there is a loan due from the 100% subsidiaries of $300,415 which is considered fully recoverable. The recoverability of this loan is dependent upon the successful development or sale of exploration assets in Burkina Faso and Cote D’Ivoire. Key Judgements - Joint arrangements Judgement is required to determine when the Group has joint control, which requires an assessment of the relevant activities and when the decisions in relation to those activities require unanimous consent. The Group has determined that the relevant activities for its joint arrangements are those relating to the operating and capital decisions of the arrangement, such as: the approval the capital expenditure programme for each year, and appointing, remunerating and terminating the key management personnel or service providers of the joint arrangement. The considerations made in determining joint control are similar to those necessary to determine control over subsidiaries. Judgement is also required to classify a joint arrangement. Classifying the arrangement requires the Group to assess their rights and obligations arising from the arrangement. Specifically, it considers: The structure of the joint arrangement – whether it is structured through a separate vehicle • • When the arrangement is structured through a separate vehicle, the Group also considers the rights and obligations arising from: The legal form of the separate vehicle The terms of the contractual arrangement Other facts and circumstances (when relevant) • • • This assessment often requires significant judgement, and a different conclusion on joint control and also whether the arrangement is a JO or a JV, may materially impact the accounting. The Group has a joint arrangement which is structured through a separate vehicle, being a company structure. This structure, and the terms of the contractual arrangement indicate that the Group has rights to the net assets of the arrangement. Given this, the Group then had to assess the other facts and circumstances relating to this arrangement. After undertaking this assessment, there were a number of indicators for both a joint venture classification and a joint operation classification. Significant judgement was therefore required to determine how these factors would be analysed. The final conclusion was that the arrangement was a joint venture. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 39 25 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (u) Adoption of New and Revised Accounting Standards 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. AASB 9 Financial Instruments AASB 9 will replaced 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’; 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. The adoption of AASB 9 did not materially impact on the Group’s financial statements other than various descriptive changes in the accounting policies. AASB 15 Revenue from Contracts with Customers AASB 15 provides (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. The adoption of AASB 15 did not materially impact on the Group’s financial statements other than various descriptive changes in the 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: AASB 16 Leases (effective from 1 January 2019) Under AASB 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 AASB 16 is adopted. The directors anticipate that the adoption of AASB 16 will not materially impact on the Group’s financial statements and continue to assess and estimate such impact.` 40 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 26 s t n e m e t a t S l i i a c n a n F e h t o t s e t o N NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 2: INCOME TAX (a) Income tax expense/benefit The components of income tax expense/benefit comprise: Current tax Deferred tax Consolidated 2019 $ 2018 $ - - - - - - (b) Reconciliation of income tax expense/(benefit) to prima facie tax payable on accounting profit/(loss) Operating (loss) before income tax Prima facie tax payable at Australian rate of 27.5% (2018: 27.5%) (1,459,332) 401,316 (1,474,046) 405,363 Adjusted for tax effect of the following amounts: Taxable/non-deductible items Non-taxable/deductible items Deferred tax expense relating to change in tax rate Deferred tax benefit relating to over-provision in prior year Income tax expense/(benefit) not brought to account Income tax expense (298,690) 121,445 - 150,409 (374,480) - (214,787) 55,617 (602,020) - 355,827 - (c) Deferred tax assets and liabilities not brought to account The directors estimate that the potential deferred tax assets and liabilities carried forward but not brought to account at year end at the Australian corporate tax rate of 27.5% (2018: 27.5%) are made up as follows: On income tax account Carry forward tax losses Deductible temporary differences Taxable temporary differences These benefits will only be obtained if: 7,238,683 4,538 (339) 7,242,882 7,011,592 33,006 (176,196) 6,868,402 (i) the group derives future assessable income of a nature and of an amount sufficient to enable the benefits from the deductions for the losses to be realised, the group continues to comply with the conditions for deductibility imposed by tax legislation, and (ii) (iii) no changes in tax legislation adversely affect the group in realising the benefit from the deduction for the losses. NOTE 3: CASH AND CASH EQUIVALENTS Cash at bank NOTE 4: TRADE AND OTHER RECEIVABLES Other receivables Consolidated 2019 $ 2018 $ 1,173,049 1,173,049 1,684,053 1,684,053 104,690 104,690 104,887 104,887 PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 41 27 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 5: PLANT AND EQUIPMENT Plant and Equipment Accumulated depreciation Consolidated Note 2019 $ 2018 $ 36,681 (15,181) 21,500 18,472 (12,776) 5,696 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 2019 Balance at the beginning of year Additions Depreciation expense Balance at 30 June 2019 Balance at 30 June 2018 Balance at the beginning of year Additions Disposals (carrying value) Depreciation expense Movement in exchange rate Balance at 30 June 2018 Plant and Equipment $ 5,696 18,209 (2,405) 21,500 82,790 171,950 (725) (233,614) (14,705) 5,696 2019 $ Total $ 5,696 18,209 (2,405) 21,500 82,790 171,950 (725) (233,614) (14,705) 5,696 2018 $ NOTE 6: EXPLORATION, EVALUATION AND DEVELOPMENT ASSETS Exploration and evaluation expenditure 1,923,318 1,923,318 2,189,364 2,189,364 2019 Balance at beginning of the year Expenditure incurred Capitalised exploration written off against sale of joint venture Impairment of capitalised exploration Balance at the end of the year 2018 Balance at beginning of the year Expenditure incurred Foreign exchange adjustment on historical capitalisation (pre- deconsolidation Deconsolidation of subsidiaries (refer to note 24) Balance at the end of the year Exploration and Evaluation $ 2,189,364 499,832 (291,787) (474,091) 1,923,318 $ 3,621,616 2,622,598 (1,067,015) (2,987,835) 2,189,364 42 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 28 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 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 no tenements were impaired during the period. s t n e m e t a t S l i i a c n a n F e h t o t 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. s e t o N In assessing the recoverability of the carrying amounts, reference is made to Note 1 (t) - 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: INVESTMENTS IN ASSOCIATES On 30 June 2018, Predictive Discovery Limited reduced its investment in Burkina Resources Pty Ltd, Burkina Resources SARL, Predictive Discovery SARL, Birrimian Pty Ltd and Birrimian BVI SARL from 100% to 49% as a result of Progress Minerals Inc earning 51% in the Burkina Faso Joint Venture by spending US $1m. Additionally, in the prior year with Toro Gold Ltd earning 65% of the Cote D’Ivoire Toro Gold Joint Venture by spending US $2.5m, Predictive Discovery Limited reduced its investment in Predictive Discovery Cote D’Ivoire SARL from 100% to 35%. As a consequence, Predictive Discovery Limited lost control of the entities previously consolidated and reducing the investments to one of significant influence over these investment and the investment was reclassified from a consolidated Joint Arrangement to an associate (refer note 24 for further detail of deconsolidation). The carrying amount of the investment at the time of the transaction was $840,645, The Group’s accounting policy (refer note 1(m)) for acquisitions of associates is to deconsolidate the previously consolidated joint arrangement, carry the investment at cost (being fair value in this instance) plus post-acquisition changes in the Group’s share of net assets of the associates. Information relating to interest in associates that are material to the Group are set out below: Ownership Interest Name Predictive Discovery SARL Country of Incorporation Burkina Faso 2019 49% Summarised Financial Information – Predictive Discovery SARL Consolidated Note 2019 $ 2018 49% 2018 $ Summarised statement of financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets 2,188,796 3,230,404 5,419,200 (3,893,554) - (3,893,554) 204,599 3,225,492 3,430,091 (1,746,447) - (1,746,447) 1,525,647 1,683,644 PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 43 29 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 7: INVESTMENTS IN ASSOCIATES (continued) Consolidated Note 2019 $ 2018 $ - - - - - - - - - 824,985 - - 824,985 Summarised statement of profit or loss and other comprehensive income Revenue Expenses Loss before income tax - (228,025) (228,025) Income tax expense Loss after income tax Other comprehensive income Total comprehensive loss No profit or loss amounts have been disclosed for the 2018 as the change to an associate from a controlled entity occurred as at 30 June 2018. Reconciliation of the Group’s carrying amount Opening carrying amount Recognised as investment Share of loss after income tax Share of movement in foreign exchange translation reserve Closing carrying amount - (228,025) - (228,025) 824,985 - (113,776) 36,358 747,567 Immaterial Associates Information relating to interest in associates that are material to the Group are set out below: Country of Incorporation Name Australia Burkina Resources Pty Ltd Burkina Resources SARL Burkina Faso Predictive Discovery Cote D’Ivoire SARL Cote D’Ivoire Birriman Pty Ltd Birriman BV SARL Sebba Resources SARL Progress Minerals SARL British Virgin Islands Burkina Faso Burkina Faso Burkina Faso Ownership Interest 2018 49% 49% 35% 49% 49% 49% 49% 2019 49% 49% 30% 49% 49% 49% 49% The following is summarised financial information for the Group's interest in immaterial associates Carrying amount of interests in immaterial associates Group’s share of loss after income tax Group’s share of loss not booked Closing carrying amount 15,659 (252,852) 237,193 - 15,659 - - 15,659 NOTE 8: CURRENT TRADE AND OTHER PAYABLES Accruals and other creditors 88,829 88,829 46,889 46,889 44 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 30 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 9: ISSUED CAPITAL 295,142,065 (30 June 2018: 236,142,065) Ordinary Shares Share issue costs written off against issued capital NOTE 9: ISSUED CAPITAL 295,142,065 (30 June 2018: 236,142,065) Ordinary Shares Share issue costs written off against issued capital Shares At 1 July 2018 Issue of shares in placement Issue of options in rights issue Options cancelled/expired At 1 July 2018 At 30 June 2019 Issue of shares in placement Issue of options in rights issue Options cancelled/expired At 1 July 2017 At 30 June 2019 Issue of shares in placements Issue of options as remuneration Options cancelled/expired At 1 July 2017 Share consolidation on 1 for 10 basis Issue of shares in placements At 30 June 2018 Issue of options as remuneration Options cancelled/expired Share consolidation on 1 for 10 basis At 30 June 2018 s t n e m e t a t S l i i a c n a n F e h t o t s e t o N Consolidated Consolidated 2018 $ 2018 $ 2019 $ 2019 $ 33,863,725 (2,372,485) 31,491,240 33,863,725 (2,372,485) Listed 31,491,240 Options 73,030,518 - Listed - Options - 73,030,518 73,030,518 - - - - 73,030,518 - - 62,138,470 - 10,892,048 - 73,030,518 - 62,138,470 10,892,048 73,030,518 33,332,725 (2,358,962) 30,973,763 33,332,725 (2,358,962) Unlisted Options 30,973,763 5,857,500 - Unlisted Options - (1,952,500) 5,857,500 3,905,000 - - (1,952,500) 5,857,500 3,905,000 - - - 5,857,500 - - 5,857,500 - - - 5,857,500 236,142,065 59,000,000 Shares - - 236,142,065 295,142,065 59,000,000 - - 163,111,547 295,142,065 62,138,470 10,892,048 - 163,111,547 - 62,138,470 236,142,065 10,892,048 - - 236,142,065 OPTIONS For information relating to the 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 21. OPTIONS For information relating to the Predictive Discovery Limited employee option plan, including details of options issued, NOTE 10: RESERVES exercised and lapsed during the financial year and the options outstanding at year end, refer to Note 21. FOREIGN CURRENCY TRANSLATION RESERVE Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive NOTE 10: RESERVES income foreign currency translation reserve. The cumulative amount is reclassified to profit or loss when the net investment is disposed of. FOREIGN CURRENCY TRANSLATION RESERVE Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive OPTION RESERVE income foreign currency translation reserve. The cumulative amount is reclassified to profit or loss when the net The option reserve records items recognised as expenses on valuation of employee share options Refer to Note 21. investment is disposed of. OPTION RESERVE The option reserve records items recognised as expenses on valuation of employee share options Refer to Note 21. NOTE 11: EARNINGS PER SHARE Reconciliation of loss Loss used in calculating earnings per share – basic and diluted NOTE 11: EARNINGS PER SHARE Net loss for the reporting period Reconciliation of loss Weighted average number of ordinary shares outstanding during the year Loss used in calculating earnings per share – basic and diluted used in the calculation of basic and diluted earnings per share Net loss for the reporting period 2019 $ Consolidated Consolidated 2019 $ (1,459,332) (1,459,332) 2018 $ 2018 $ (1,474,046) (1,474,046) (1,459,332) 246,677,779 (1,459,332) (1,474,046) 205,747,444 (1,474,046) Weighted average number of ordinary shares outstanding during the year used in the calculation of basic and diluted earnings per share PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 246,677,779 205,747,444 PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 45 31 31 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 12: CAPITAL AND LEASING COMMITMENTS LEASE COMMITMENTS (A) 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(i) Payable: -not later than 12 months -not later than 12 months and 5 years -more than 5 years Consolidated 2019 $ 2018 $ - - - - 126,812 - 126,812 2,903,146 7,558,693 - 10,461,849 - - - - 118,195 - 118,195 1,565,383 4,371,156 108,275 6,044,814 (i) Capital expenditure commitments are Predictive Discovery Limited’s share of expenditure commitment on exploration permits in Burkina Faso, Cote D’Ivoire and Guinea. Some permits are the subject of Joint Ventures in which Predictive recognises its investment as Investments in Associates (refer Note 7). Predictive can choose to dilute its interest in these Joint Ventures by not contributing to expenditure. NOTE 13: 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 9 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 2019 $ 3 4 8 1,173,049 104,690 1,277,739 88,829 88,829 2018 $ 1,684,053 104,887 1,788,940 46,889 46,889 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. 46 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 32 s t n e m e t a t S l i i a c n a n F e h t o t s e t o N NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 13: FINANCIAL RISK MANAGEMENT (continued) 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. 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. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 47 33 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 13: FINANCIAL RISK MANAGEMENT (continued) Financial liability and financial asset maturity analysis Financial liabilities due for payment Trade and other payables Total contractual outflows Financial assets - cash flows realisable Trade and other receivables Total anticipated inflows Within 1 Year 1 to 5 Years Total Contractual Cash Flow 2019 $ 2018 $ 2019 $ 2018 $ 2019 $ 2018 $ 88,829 88,829 46,889 46,889 104,690 104,690 104,887 104,887 - - - - - - - - 88,829 88,829 46,889 46,889 104,690 104,690 104,887 104,887 The financial assets and liabilities noted above are interest free. (C) MARKET RISK Foreign exchange risk i. 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. Interest rate risk ii. 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. The weighted average rate of interest earned by the Group on its cash assets during the year was 1.23% (2018: 1.23%). The table below summarises the sensitivity of the Group’s cash assets to interest rate risk. Financial Assets 30 June 2019 Total increase/(decrease) 30 June 2018 Total increase/(decrease) Effect of decrease or increase of interest rate on profit and equity -1% Profit $ Equity $ +1% Profit $ Equity $ (14,853) (14,853) 14,853 14,853 (18,537) (18,537) 18,537 18,537 NOTE 14: 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. 48 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 34 s t n e m e t a t S l i i a c n a n F e h t o t NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 14: OPERATING SEGMENTS (continued) The following is an analysis of the Group’s revenue and results from operations by reportable segment. 2019 Revenue Interest income Gain on sale of joint venture Other income Expenses Administration expenses Share based expense FX Expense Exploration expenditure expensed Impairment of Exploration Share of loss in associates Loss before tax Current assets Exploration expenditure Plant and Equipment Investments in Associates Current liabilities Net assets 2018 Revenue Interest income Other income Expenses Administration expenses Share based expense FX Expense Exploration expenditure expensed Impairment of Exploration Forgiveness of Loans Gain / (Loss) on deconsolidation of subsidiary Loss before tax Current assets Exploration expenditure Plant and Equipment Investments in Associates Current liabilities Net assets Corporate $ Gold Aust $ Gold Burk. Faso $ Gold Cote D’Ivoire $ Gold Mali $ Gold Guinea $ Total $ 18,284 223,139 37,470 - - - - - - - - 18,284 223,139 37,470 s e t o N (615,446) - (14,671) (36,631) - - - - - (19,021) - - (45,011) (14,051) (108,867) (5,710) - - (19,128) (141,096) (41,348) - - (209,520) (59,497) (129,435) (517,290) - - (14,051) (172,899) - (165,934) - (310,365) (96,973) (31,240) (712,765) - (14,671) (407,263) (150,580) (474,091),995 ) (129,435) (1,459,332) (278,793) 1,139,727 - 3,292 747,568 (69,196) 1,821,391 - - - - - - 23,776 - - - (13,455) 10,321 52,118 1,737,897 - - (6,178) 1,783,837 19,462 - - - - 19,462 42,656 185,421 18,208 - - 246,285 1,277,739 1,923,3184 21,500 747,568 (88,829) 3,881,296 Corporate $ Gold Aust $ Gold (a) Burk. Faso $ Gold Cote D’Ivoire $ Gold Mali $ Gold Guinea $ Total $ 22,717 22,004 - - - - - - - - (533,772) - 24,952 (81,017) - (20,821,194) (435,718) - - - - (159,019) - - - - - 20,038,95 1 (28,254) - (1,198) (16,415) - 1,200 - - - (297,069) - - - (21,366,310) - 753,641 - 20,197,855 36,145 (8,522) - (297,069) 1,721,637 - 5,696 840,645 (46,889) 2,521,089 - 12,651 - - - 12,651 42,664 14,630 - - - 57,294 24,639 2,162,083 - - - 2,186,722 - - - - - - - - - - - - - - - - - - - - - - - 22,717 22,004 (997,744) - (135,265) (394,501) - (781,043) 789,786 (1,474,046) 1,788,940 2,189,364 5,696 840,645 (46,889) 4,777,756 PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 49 35 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 15: 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 2019. 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 2019 $ 339,463 3,037 342,500 2018 $ 274,944 3,037 277,981 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 19: Related Party Transactions. NOTE 16: REMUNERATION OF AUDITORS Remuneration of the auditor of the parent entity for: Moore Stephens Victoria Moore Stephens Victoria PKF Perth PKF Perth -Audit services(a) -Other services -Audit services(b) -Other services Consolidated 2019 $ 21,070 13,950 49,905 - 84,925 2018 $ 38,250 4,000 42,250 (a) Additional costs relating to audit of year ending 30 June 2018. (b) Additional costs due to audit of foreign Associates being conducted in Australia rather than in-country and costs incurred in changing auditors. 50 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 36 s t n e m e t a t S l i i a c n a n F e h t o t s e t o N NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 17: CONTROLLED ENTITIES Parent Entity: Predictive Discovery Limited Subsidiaries of legal parent entity: Predictive Discovery Cote D’Ivoire Pty Ltd Ivoirian Resources Pty Ltd Gayeri Resources Pty Ltd Predictive Discovery Mali Resources Pty Ltd Battle Resources Pty Ltd (iii) Bouake Resources Pty Ltd (iii) Bougouni Resources Pty Ltd Kenieba Resources Pty Ltd Kita Resources Pty Ltd (ii) Ivoirian Resources SARL Predictive Discovery Niger SARL Gayeri Resources SARL Solna Resources SARL Predictive Discovery Mali SARL Kindia Resources SARLU (ii) Mamou Resources SARLU (ii) Country of Incorporation Percentage Owned(i) Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Cote D’Ivoire Niger Burkina Faso Burkina Faso Mali Guinea Guinea 2019 - 100% 100% 100% 100% - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2018 - 100% 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% - - (i) (ii) (iii) Percentage of voting power is in proportion to ownership Incorporated during the period Interests transfer to other parties. The entities had no assets or liabilities. NOTE 18: CONTINGENT LIABILITIES / ASSETS There are no material contingent liabilities or assets of the Group at balance date. NOTE 19: 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 $300,415 (2018: $165,466). The loan is interest free and payable on demand. Loans between deconsolidated entities were forgiven prior to 30 June 2018 (refer Note 24). Directors’ Remuneration For information relating to related party transactions with key management personnel during the financial year, refer to Note 15. Other Related Party Transactions Aurora Minerals Limited, an entity of which Mr Phillip Jackson is a director, was paid $45,075 (2018: $89,100) for administration services, including company secretarial and accounting services. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 51 37 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 20: STATEMENT OF CASH FLOWS Reconciliation of loss after income tax to net cash flow from operating activities Operating loss after income tax (1,459,332) (1,474,046) Consolidated 2019 $ 2018 $ Non-operating items in loss: Exploration expenditure Non-cash flows in loss: Gain on deconsolidation of subsidiaries Forgiveness of loans Gain on sale joint venture Depreciation Foreign exchange (gains)/losses Share of loss in associates Write off of exploration expenditure Capitalised 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 NOTE 21: SHARE BASED PAYMENTS 407,263 394,501 - - (223,139) 2,405 (9,038) 129,435 474,091 (890,267) 194 41,940 - (1,526,448) (789,786) 781,043 14,705 - - - (2,913,887) 30,879 83,566 (18,692) (3,891,717) During the period ended 30 June 2019, the Group did not enter into any share-based payments. During the period ended 30 June 2018, the Group did not enter into any share-based payments. At 30 June 2019 the Group has the following share-based payment options on issue to employees: Exercise Grant Date Expiry Date price 29 Nov 2016 29 Nov 2019 $0.2578 29 Nov 2016 29 Nov 2020 $0.3867 Start of the year 1,952,500 1,952,500 3,905,000 Granted during the year Exercised during the year - - - - - - Expired during the year Balance at the end of the year - 1,952,500 - 1,952,500 - 3,905,000 Vested and exercisable at the end of the year 1,952,500 1,952,500 3,905,000 The three tranches of options granted on 29 November 2016 were originally issued with exercise prices of $0.01805, $0.02578 and $0.03867 respectfully and in quantities of 19,525,000 options in each tranche. A 1 for 10 capital consolidation effective 19 May 2017 resulted in the quantities and conditions shown in the above table. The weighted average exercise price of options as at 30 June 2019 was $0.3225 (30 June 2018: $0.275). The weighted average remaining contractual life of options outstanding at year end was 0.92 years (30 June 2018: 1.42 years). The fair value of the options granted during the year was $nil (2018: nil). 52 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 38 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 22: EVENTS AFTER THE END OF THE REPORTING PERIOD There are no matters or circumstances that 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. NOTE 23: PARENT ENTITY DISCLOSURES s t n e m e t a t S l i i a c n a n F e h t o t 2019 $ 1,201,849 3,118,730 4,320,579 69,196 69,196 s e t o N 2018 $ 1,721,636 3,186,433 4,908,069 46,889 46,889 31,491,240 922,132 (28,161,989) 4,257,383 30,973,763 879,467 (26,992,050) 4,861,180 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 The parent entity has commitments as at 30 June 2019 that are disclosed in Note 12. RECOVERABILITY OF INTERCOMPANY LOAN Within Non-current assets is a loan due from the 100% subsidiaries of $300,415 which is considered fully recoverable. The recoverability of this loan is dependent upon the successful development or sale of exploration assets in Burkina Faso and Cote D’Ivoire. NOTE 24 – LOSS OF CONTROL – CONTROLLED ENTITIES As detailed in Note 7, during the year ended 30 June 2018, the Company’s effective shareholdings in Predictive Discovery SARL, Birrimian Pty Ltd, Birrimian BVI SARL, Burkina Resources Pty Ltd and Burkina Resources SARL changed from 100% to 49% due to Progress Minerals Inc attaining 51% earn in. In the prior year, the Company's effective holding in Predictive Discovery Cote D'Ivoire SARL changed to 35% as a result of Toro Gold Ltd attaining 65% earn in. The directors considered the requirement of the applicable accounting standard and determined that 30 June 2018 the Company no longer deemed these four entities and their respective subsidiaries to be controlled by Predictive Discovery Limited. As a result of control over the investments being reduced to significant influence over these investments, the investments were reclassified from a consolidated Joint Arrangement to an associate. The carrying amount of the investment at the time of the transaction was $840,645, The Group’s accounting policy (refer note 1(m)) for acquisitions of associates is to deconsolidate the previously consolidated joint arrangement, carry the investment at cost (being fair value in this instance) plus post-acquisition changes in the Group’s share of net assets of the associates. PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 2019 Annual Report | 53 39 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 24 – LOSS OF CONTROL (continued) Carrying amounts of assets and liabilities deconsolidated at 30 June 2018 and gain on deconsolidation was: Cash and cash equivalents Trade and other receivables Plant and equipment Capitalised exploration expenditure Trade and other payables Related party loans (JV contribution – expenditure) FX transfer Net assets/(Net liabilities) Equity investment retained Gain on deconsolidation NOTE 25: COMPANY DETAILS Consolidated 2018 $ Note 5 6 7 (45,246) (187,481) (233,614) (2,987,835) 299,346 1,563,022 1,540,949 (50,859) 840,645 789,786 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 54 | 2019 Annual Report PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 40 n o i t a r a c e D l ’ s r o t c e r i D 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: DIRECTOR’S DECLARATION Granted as FOR THE YEAR ENDED 30 JUNE 2019 remuneration during the period Issued on exercise of options during the period Other changes during the period (1) Balance at beginning of period Purchased during the period Balance at end of period DIRECTORS’ DECLARATION 30 June 2018 - Mr Phillip Jackson - Mr Paul Roberts - Mr David Kelly - Mr Eric Moore - Mr Bruce Waddell - - 1,483,179 - - - 1,483,179 The directors of the company declare that: 1. - - - - - - - 1,225,081 - - - 1,225,081 - - - - - - - 2,708,260 - - - 2,708,260 (1) B Waddell appointed additional Company Secretary 21 August 2017 The financial statements and notes, as set out on pages 11 to 40, are in accordance with the Corporations Act 2001 and: (a) comply with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and Balance at give a true and fair view of the financial position as at 30 June 2019 and of the performance for beginning of the year ended on that date of the consolidated group; period Issued on exercise of options during the period Granted as remuneration during the period Other changes during the period (1) Balance at end of period Purchased during the period (b) 2. 30 June 2017 Mr Phillip Jackson Mr Paul Roberts Mr David Kelly Mr Eric Moore The Chief Executive Officer and Chief Financial Officer have each declared that: - - 14,331,790 (13,348,611) - - the financial records of the company for the financial year have been properly maintained in - - accordance with section 286 of the Corporations Act 2001; (13,348,611) 14,331,790 - 1,483,179 - - 1,433,179 - 500,000 - - 500,000 - - - - - - - - - - (a) (1) Consolidation of the company’s shares and options on a 1 for 10 basis effective 19 May 2017 (b) the financial statements and notes for the financial year comply with the Accounting Standards; and SECURITIES RECEIVED THAT ARE NOT PERFORMANCE-BASED (c) the financial statements and notes for the financial year give a true and fair view. 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 Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. Options were granted as remuneration during the year to key management personnel and other executives as set out in notes 17 and 23. 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. END OF THE REMUNERATION REPORT This declaration is made in accordance with a resolution of the Board of Directors. Signed in accordance with a resolution of the Board of Directors: Paul Roberts Paul Roberts Managing Director Managing Director 02 October 2018 27 September 2019 PREDICTIVE DISCOVERY LIMITED ANNUAL FINANCIAL REPORT 10 PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 2019 Annual Report | 55 41 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PREDICTIVE DISCOVERY LIMITED Report on the Financial Report Opinion We have audited the accompanying financial report of Predictive Discovery Limited (the company), which comprises the consolidated statement of financial position as at 30 June 2019, 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 company and 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. In our opinion the financial report of Predictive Discovery Limited is in accordance with the Corporations Act 2001, including: i) ii) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of its performance for the year ended on that date; and Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those standards are further described in the Auditor’s Responsibility section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Material Uncertainty Related to Going Concern Without modifying our opinion, we draw attention to Note 1(t) in the financial report, which indicated that the consolidated entity incurred a net loss after tax of $1,459,332 during the year ended 30 June 2019 (2018: net loss after tax of $1,474,046). This, along with other matters as set forth in Note 1(t), indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial report of the consolidated entity does not include any adjustments in relation to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the consolidated entity not continue as a going concern. Independence We are independent of the consolidated entity in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. Level 4, 35 Havelock Street, West Perth, WA 6005 PO Box 609, West Perth, WA 6872 T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au PKF Perth is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms. Liability limited by a scheme approved under Professional Standards Legislation. 42 56 | 2019 Annual Report t r o p e R s ’ r o t i d u A t n e d n e p e d n I Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. 1. Carrying value of capitalised exploration expenditure Why significant How our audit addressed the key audit matter As at 30 June 2019 the carrying value of exploration and evaluation assets was $1,923,318 (2018: $2,189,364) which represents 48.4% of total assets and the total impairment recognised during the year was $474,091, as disclosed in Note 6. The consolidated entity’s accounting policy in respect of exploration and evaluation expenditure is outlined in Note 1(k) with the nature of critical estimates and judgements relating to this balance outlined in Note 1(t). Significant judgement is required: • • facts tested whether determining and in circumstances indicate that the exploration and evaluation assets should be for impairment in accordance with Australian Accounting Standard AASB 6 Exploration for and Evaluation of Mineral Resources (“AASB 6”); and in determining the treatment of exploration and evaluation expenditure in accordance with AASB 6, and the consolidated entity’s accounting policy. In particular: o whether areas of interest meet the recognition conditions for an asset; and o which elements of exploration and evaluation for expenditures capitalisation for each area of interest. qualify Our work included, but was not limited to, the following procedures: there are indicators of • to assess whether impairment: o assessing whether the rights to tenure of the areas of interest remained current at reporting date as well as confirming that rights to tenure are expected to be renewed for tenements that will expire in the near future; obtaining specific representations from the directors and management as to the status of ongoing exploration programmes for the areas of interest, as well as assessing if there was evidence that a decision had been made to discontinue activities in any specific areas of interest; and obtaining and assessing evidence of the consolidated entity’s future intention for the areas of interest, including reviewing future budgeted expenditure and related work programmes; o o • of assessment • considering whether exploration activities for the areas of interest had reached a stage where a economically reasonable recoverable reserves existed; testing, on a sample basis, exploration and evaluation expenditure incurred during the year the for compliance with AASB 6 and consolidated entity’s accounting policy; and • assessing the appropriateness of the related disclosures in Notes 1(k), 1 (t) and 6. 43 2019 Annual Report | 57 Directors’ Declaration 2. Equity accounting for Interest in Joint Ventures Why significant How our audit addressed the key audit matter The consolidated entity has various Interests in Associates that have a total value as at 30 June 2019 of $747,568 (2018: $840,645). This balance solely relates to the 49% interest in Predictive Discovery SARL (PD SARL) in Burkina Faso, as the other interests have been impaired to nil. This represents 18.8% of total assets. The consolidated entity’s accounting policy in respect of associates is outlined in Note 1(m). At 30 June 2019, a share of the loss of associates was recognised in the statement of profit or loss of $129,435, of which $113,776 related to PD SARL. An additional share of loss amount of $237,193 has not been recognised in the consolidated statement of profit or loss relating to the other associates as these are carried at nil value. This is disclosed within note 7 to the financial report. As disclosed in note 7, these associates are equity accounted in accordance with the requirements of AASB 128 Investments in Associates and Joint Ventures and disclosures set out in AASB 12 Disclosures of Interest in Other Entities. Our work included, but was not limited to, the following procedures: • We considered the control relationship to confirm that equity accounting is appropriate in accordance with AASB 128 Investments in Associates and Joint Ventures; • We performed the relevant audit procedures in accordance with the Australian Auditing Standards on the material assets, liabilities and expenditure within each of the material associates management accounts provided, in particular: • Existence and valuation of capitalised exploration expenditure pursuant to AASB 6; • Recoverability of receivables; • Valuation and existence of fixed assets; • Completeness and valuation of loans; and • Occurrence and existence of expenditure. • We assessed the appropriateness of the related disclosures in Note 1(m), 1 (t) and 7 to ensure they are in accordance with AASB 12 Disclosures of Interest in Other Entities. Other Information Other information is financial and non-financial information in the annual report of the consolidated entity which is provided in addition to the Financial Report and the Auditor’s Report. The directors are responsible for Other Information in the annual report. Our opinion on the Financial Report does not cover the Other Information and, accordingly, the auditor does not and will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information in the Financial Report and based on the work we have performed on the Other Information that we obtained prior the date of this Auditor’s Report we have nothing to report. Directors’ Responsibilities for the Financial Report The Directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report complies with International Financial Reporting Standards. 58 | 2019 Annual Report 44 t r o p e R s ’ r o t i d u A t n e d n e p e d n I In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using a going concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the consolidated entity to cease to continue as a going concern. We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the consolidated entity to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. 45 2019 Annual Report | 59 From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2019. In our opinion, the Remuneration Report of Predictive Discovery Limited for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. PKF PERTH SHANE CROSS PARTNER 27 SEPTEMBER 2019 WEST PERTH, WESTERN AUSTRALIA 60 | 2019 Annual Report 46 AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF PREDICTIVE DISCOVERY LIMITED In relation to our audit of the financial report of Predictive Discovery Limited for the year ended 30 June 2019, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. l n o i t a r a c e D e c n e d n e p e d n I s ’ r o t i d u A PKF PERTH SHANE CROSS PARTNER 27 SEPTEMBER 2019 WEST PERTH, WESTERN AUSTRALIA Level 4, 35 Havelock Street, West Perth, WA 6005 PO Box 609, West Perth, WA 6872 T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au PKF Perth is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms. Liability limited by a scheme approved under Professional Standards Legislation. 47 2019 Annual Report | 61 PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 871 877 SHAREHOLDER INFORMATION The shareholder information set out below was applicable at 09 October 2019 1. Number and Distribution of Equity Securities The number and class of all securities on issue: ASX Code PDI PDIO PDIAK Number 295,142,065 73,030,518 3,905,000 Description Fully Paid Ordinary Shares Quoted Listed Options expiring 30 November 2019 Unlisted Options expiring various dates 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 103 210 243 690 281 1,527 Unmarketable Parcels 964 The number of holders Ordinary shares fully paid (ASX Code: PDI): 1,527 Shares Held 37,211 749,500 1,960,575 26,376,065 266,018,714 295,142,065 Shares 11,310,045 2. Substantial Shareholders Substantial shareholders as defined by Section 671B of Australian Corporations Law are: Name Aurora Minerals Limited Capital Di Limited Equity Trustees Limited (Lowell Resources Fund A/C) Number of Shares 49,653,686 31,817,029 21,462,161 % 16.82 13.96 7.27 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 1 62 | 2019 Annual Report n o i t a m r o f n I l r e d o h e r a h S PREDICTIVE DISCOVERY LIMITED AND CONTROLLED ENTITIES ACN 127 871 877 SHAREHOLDER INFORMATION (Continued) 4. Twenty Largest Shareholders as at 09 October 2019 The twenty largest fully paid shareholders hold 56.08% of the issued capital and are tabled below: Shareholder No. of Shares % Aurora Minerals Limited Equity Trustees Limited (Lowell Resources Fund A/C) Bond Street Custodians Limited (Apicon D05711 A/C) 1. 2. Capital Di Limited 3. 4. Dyspo Pty Limited 5. Sacrosanct Pty Ltd (Sacrosanct Super Fund A/C) 6. BNP Paribas Nominees Pty Ltd (IB AU NOMS RetailClient DRP) 7. 8. Fiori Pty Ltd 9. MSI 888 Pty Ltd (MSI 888 A/C) 10. Mr Michael Robert Hodgetts 11. Sagar SMSF Pty Ltd 12. Jetosea Pty Ltd 13. Mr Alistair Campbell Leitch 14. Pajal Pty Ltd (P&A Harman Super Fund A/C) 15. Mr William Henry Hernstadt 16. Citicorp Nominees Pty Limited 17. Aggregrated Capital Pty Ltd (Super Fund No 2 Account) 18. Paso Holdings Pty Ltd 19. Micjud Pty Ltd (Chester Family) 20. Croftbank Pty Ltd (Wats Family Super Fund A/C) Total Issued Shares 5. Corporate Governance Statement 49,653,686 41,189,153 21,462,161 7,375,000 5,000,000 4,823,783 3,430,941 3,300,000 3,120,483 3,000,000 2,790,626 2,700,000 2,667,542 2,538,992 2,500,000 2,449,918 2,100,000 2,000,000 1,868,056 1,545,023 16.82 13.96 7.27 2.50 1.69 1.63 1.16 1.12 1.06 1.02 0.95 0.91 0.90 0.86 0.85 0.83 0.71 0.68 0.63 0.52 165,515,364 295,142,065 56.08 100.00 The 2019 Corporate Governance statement of Predictive Discovery Limited is available on the Company’s website at https://www.predictivediscovery.com/corporate-governance/ PREDICTIVE DISCOVERY LIMITED ANNUAL REPORT 2 2019 Annual Report | 63 MINERAL TENMENT INFORMATION (as at 09 October 2019) Name Number Location Area (sq. km) PDI Equity Kalinga (formerly Fouli) Tambifwanou (formerly Sirba) Bongou (formerly Madyabari) arrêté 2017-199/MCE/SG/DGMGC Burkina Faso 186 arrêté 2017-119/MCE/SG/DGMGC Burkina Faso 136.2 arrêté 2017-121/MCE/SG/DGMGC Burkina Faso 170.9 Tamfoagou arrêté 2017-132/MCE/SG/DGMGC Burkina Faso 83 49% 49% 49% 49% Tangagari-Takatami arrêté 2013-037/MCE/SG/DGMGC Burkina Faso 127.5 Earning 46.5%;current equity 0% (until final cash payment is made) Tambiri (formerly Bangaba) arrêté 2017-120/MCE/SG/DGMGC Burkina Faso 127.5 46.5% Bira arrêté 2016-129/MCE/SG/DGMGC Burkina Faso 10.5 Haoura arrêté 2018-232/MCE/SG/DGMGC Burkina Faso 41.8 Mansila arrêté 2018-231/MCE/SG/DGMGC Burkina Faso 107.2 Basieri arrêté 2017-133/MCE/SG/DGMGC Burkina Faso 73.5 49% 49% 49% 49% Kourakou arrêté 2018-233/MCE/SG/DGMGC Burkina Faso 178.5 100% Bolle arrêté 2019-11/MCE/SG/DGMGC Burkina Faso 239.6 100% Kokoumbo Mining exploration permit No. 307 Cote D'Ivoire 300 Predictive-Resolute Mining Limited joint venture (Predictive 30%) earning 90% in JV Boundiali Mining exploration permit No. 414 Cote D'Ivoire 299 30% Boundiali North Mining exploration permit Cote D'Ivoire 400 Predictive-Resolute Mining Limited joint venture (Predictive 30%) earning 85% in JV Kounahiri Mining exploration permit No. 317 Cote D'Ivoire 260.25 30% Ferkessedougou North Mining exploration permit No. 367 Cote D'Ivoire 400 Beriaboukro Mining exploration permit No. 464 Cote D'Ivoire 400 Predictive-Resolute Mining Limited joint venture (Predictive 30%) earning 85% in JV Predictive-Resolute Mining Limited joint venture (Predictive 30%) earning 85% in JV Nonta Kankan Kaninko Exploration permit - arrete A/2019/1161/MMG Exploration permit - arrete A/2019/1160//MMG Exploration permit - arrete A/2019/5784//MMG Guinea 100 100% Guinea 98.8 100% Guinea 98 63 100% 25% Cape Clear EL 5423 Victoria, Australia 64 | 2019 Annual Report 2019 Annual Report | 65 predictivediscovery.com 66 | 2019 Annual Report 2019 Annual Report | 67 Level 2, 33 Ord Street WEST PERTH WA 6005 T | +61 8 9216 1000 F | +61 8 9481 0411 predictivediscovery.com 

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