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2023 ReportAnnual Report 2014 DIRECTORS AUSTRALIAN BUSINESS NUMBER 90 135 531 341 Stephen Bizzell David Christensen Geoffrey McConachy Andrew Martin Chris Anderson SECRETARY Angelo Gaudio ASX Code: AOE ADMINISTRATION AND REGISTERED OFFICE SHARE REGISTRY 36 North Terrace Kent Town SA 5067 Phone: + 61 8 8363 6989 Fax: +61 8 8363 4989 Website: www.renascor.com.au Link Market Services Limited ANZ Building Level 15, 324 Queen Street Brisbane Qld 4000 Phone: +61 2 8280 7454 Fax: +61 2 92870303 SOLICITORS AUDITORS McDonald Steed McGrath Lawyers 11-13 Gilbert St Adelaide SA 5000 Phone: +61 8 8161 5088 Fax: +61 8 8410 7266 BDO Audit (SA) Pty Ltd Level 7, BDO Centre 420 King W illiam Street Adelaide SA 5000 Phone: +61 8 7324 6000 Fax: +61 8 7324 6111 HopgoodGanim Lawyers Level 8, W aterfront Place 1 Eagle Street Brisbane Qld 4000 Phone: + 61 7 3024 0000 Fax: +61 7 3024 0300 Competent Persons Statement The exploration results reported herein, insofar as they relate to mineralisation, are based on information compiled by Mr G. W. McConachy (fellow of the Australasian Institute of Mining and Metallurgy) who is a director of Renascor. Mr McConachy has sufficient experience relevant to the style of mineralisation and type of deposits being considered to qualify as a competent pers on as defined by the 2012 edition of the Australasian code for reporting of exploration results, mineral resources and ore reserves (the JORC c ode, 2012 edition). Mr McConachy consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 1 2 15 29 31 33 40 41 42 43 44 78 79 Renascor Resources Limited Annual Report June 2014 Contents Chairman’s letter to shareholders Review of operations Directors' report Auditor's independence declaration Shareholder information Corporate governance statement Financial statements Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2014 Consolidated statement of financial position as at 30 June 2014 Consolidated statement of changes in equity for the year ended 30 June 2014 Consolidated statement of cash flows for the year ended 30 June 2014 Notes to the consolidated financial statements for the year ended 30 June 2014 Directors' declaration Independent auditor's report to the members These financial statements are the consolidated financial statements of the consolidated entity consisting of Renascor Resources Limited and its subsidiaries. The financial statements are presented in the Australian currency. Renascor Resources Limited is a company limited by shares, listed on the Australian Securities Exchange (ASX) under the code "RNU" and incorporated and domiciled in Australia. Its registered office and principal place of business is: Renascor Resources Limited 36 North Terrace Kent Town SA 5067 A description of the nature of the consolidated entity's operations and its principal activities is included in the review of operations on pages 2 to 14 and in the directors' report on pages 15 to 28, both of which are not part of these financial statements. The financial statements were authorised for issue by the directors on 30 September 2014. The directors have the power to amend and reissue the financial statements. Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial statements and other information are available on our website: www.renascor.com.au. 1 | RENASCOR RESOURCES LIMITED Annual Report 2014 Chairman’s letter to shareholders Chairman’s Letter to Shareholders Dear Shareholders, It is with great pleasure that I present Renascor’s Annual Report for the year ended 30 June 2014. Notwithstanding continued difficult conditions for junior explorers on the Australian share market, Renascor made a major exploration breakthrough during the year with multiple intersections of high-grade copper in our first drill programs at our Eastern Eyre project in the southern portion of South Australia’s Olympic Dam copper belt. Whilst this significant progress has not been fully reflected in our current share price, there is strong reason to believe upcoming exploration programs at Eastern Eyre may provide a catalyst for the re-rating of the company by the equity markets. Our strategy has, and will continue to, focus on prospects for near-term, economic discoveries on projects where we are able to apply our understanding of local geology and innovative, modern exploration techniques to quickly pass into cost-effective, targeted drill campaigns. During the year this strategy led us to focus on our Eastern Eyre project, where we identified multiple, highly prospective copper prospects that had previously been subject to an exploration prohibition. After negotiation with the relevant stakeholders, this access ban was lifted during the year, permitting Renascor to undertake comprehensive exploration in the highly prospective area for the first time in over ten years. At our 1050 East prospect, the first prospect we drilled in the project area, we discovered high-grade copper-cobalt-silver mineralisation, with results including 13m @ 1.45% Cu, 66 ppm silver and 0.17% cobalt (from 215m), including a massive sulphide interval of 8m at 2.2% Cu, 92 ppm silver and 0.26% cobalt (from 217m). Renascor considers the 1050 East discovery to represent a significant new style of copper mineralisation in the Olympic Dam domain with high potential to deliver an economic copper resource. From follow-up drilling, we have now identified an expansive copper-mineralised system with several intersections of high-grade copper and opportunities for extensions along-strike and at depth. In addition, we have established a pipeline of high quality, drill-ready exploration prospects within the Eastern Eyre project area proximate to 1050 East. The discovery at 1050 East has highlighted the importance of the Roopena-Angle Dam fault system, which extends through the project area for approximately 40 kilometres, as a potential transport system and host for extensive copper mineralisation, including the type intersected at 1050 East. As we continue drilling in the project area, we expect these prospects to provide additional opportunities to locate large-scale copper ore bodies. We have maintained a strong exploration portfolio. This portfolio includes our Warrior and Frome uranium projects, where our strategy has been to limit exploration spending, while maintaining drill-ready exploration projects that offer opportunities for economic discoveries either under present market conditions or in the event of improved investor sentiment toward uranium. During the year, through acquisition, joint venture and applications for mineral exploration licences, we added adjacent tenure to several of our projects, including the Eastern Eyre, Olary and Gairdner projects. To limit non-essential expenditure, we have also relinquished tenements considered less prospective. Our new tenements, together with our Eastern Eyre and other projects, provide us with a strong pipeline of potential projects for future growth and development. In formulating and executing our strategy, we have taken into account the uncertainty and volatility in the global markets over the past year. We have minimised cash costs by focusing on accessible, near- surface projects, where we can quickly advance toward targeted, cost-effective drill programs. We have further attempted to minimise costs by reducing personnel costs, including a 20% reduction in salary for all employees. As a result of these measures, we believe we are in a strong position to benefit from our significant work to date, as we continue to advance our exploration programs in an efficient manner. On behalf on my Board and fellow shareholders, I thank our Managing Director, David Christensen and the entire Renascor team for their dedicated work during an exciting and challenging year. I also extend my sincere thanks to you, our shareholders, for your continued support. Yours faithfully, Stephen Bizzell Chairman Review of operations Annual Report 2014 RENASCOR RESOURCES LIMITED | 2 Review of Operations Renascor Resources Limited (Renascor) is an Australian exploration company focused on the discovery and development of economically viable deposits containing copper, gold, uranium and other minerals. Renascor holds multiple exploration licenses, with activity directed particularly toward projects located in established mineral provinces of South Australia. Renascor is an active explorer, focused on quickly advancing prospects to the drill-phase and thereafter providing shareholders with opportunities for significant value appreciation upon successful drill results. We are based in South Australia, where in previous roles, our experienced team has participated directly in the discovery and development of several significant deposits. During the year, we made a major breakthrough at our Eastern Eyre project in the southern portion of South Australia’s Olympic Dam copper belt. At our 1050 East prospect, the first prospect we drilled in the project area, we discovered high-grade copper-cobalt-silver mineralisation, with results including 13m @ 1.45% Cu, 66 ppm silver and 0.17% cobalt (from 215m), including a massive sulphide interval of 8m at 2.2% Cu, 92 ppm silver and 0.26% cobalt (from 217m). Renascor considers the 1050 East discovery to represent a significant new style of copper mineralisation in the Olympic Dam domain with high potential to deliver an economic copper resource. As a result of the positive initial results in our Eastern Eyre project, a significant portion of our exploration effort during the year was directed toward advancing our 1050 East prospect and identifying similar opportunities in the project area. Within the 1050 East area, we undertook exploration programs aimed at locating extensions along-strike and at depth from the high-grade copper intersections. These programs included an induced polarisation (IP) survey, ground and drill-hole electromagnetic (EM) surveys and geochemical soil sampling programs, as well as scout drilling. We identified a massive sulphide zone in which limited basement drilling has intersected massive sulphide development or ore-grade (+1.0%) copper in nine of the eleven holes drilled to depths greater than 125m. The massive sulphide zone sits within a larger halo of elevated (+0.10%) near-surface copper, as defined by shallow (less than 125 metres) drilling. Renascor considers the presence of such widespread copper mineralisation in the 1050 East area to suggest the prospect area hosts an extensive copper system, with strong potential to host an economic ore body. The discovery of high-grade copper at 1050 East has also highlighted the significance of the Roopena-Angle Dam fault system, which extends through the project area for approximately 40 kilometres, as a potential transport system and host for extensive copper mineralisation, including the type intersected at 1050 East. During the year, Renascor completed evaluation of historical exploration results and conducted on site surveys of the project area. This resulted in the identification of multiple drill targets that Renascor considers highly prospective for large-scale copper mineralisation. Renascor has also expanded the Eastern Eyre project area by acquiring an option that includes an area extending immediately north from 1050 East through the targeted Roopena-Angle Dam fault and that hosts additional drill-ready targets. We have maintained at low-cost our interest in uranium exploration projects. Our strategy on uranium has been to limit exploration spending, while maintaining drill-ready exploration projects that offer opportunities for economic discoveries either under present market conditions or in the event of improved investor sentiment toward uranium. During the year, we completed evaluation work on two low-cost projects acquired last year: the historic Warrior uranium project in the Central Gawler Craton and our Frome project in the uranium-rich Frome Basin of South Australia. As a result of this work, we have drill-ready exploration programs prepared. We have maintained a strong exploration portfolio. During the year, through acquisition, joint venture and applications for mineral exploration licences, we added adjacent tenure to several of our projects, including the Eastern Eyre, Olary and Gairdner projects. To limit non-essential expenditure, we have also relinquished tenements considered less prospective. Our new tenements, together with our active reconnaissance exploration projects, provide us with a strong pipeline of potential projects for future growth and development. We are delighted to report that our health and safety record has been very strong, with no reportable events and no workdays lost due to accidents. Renascor is committed to keeping a safe workplace and ensuring that all of our employees and contractors remain vigilant to health and safety issues. We will continue to monitor our health and safety management systems to minimise risks, incidents and injuries. In the past year, we have had opportunities to engage positively with key groups with interests in the areas covered by our mineral tenements, including landowners, traditional owners and the Government. We remain focused on fostering strong working relationships with these groups, as well as all stakeholders, to deliver positive outcomes for all concerned as we move forward in the coming year. 3 | RENASCOR RESOURCES LIMITED Annual Report 2014 Review of operations Key Project Review Project Prospect(s) Location Primary target(s) Status Eastern Eyre 1050 East Olympic Dam copper belt, Southern Gawler Craton (SA) Copper Maiden drill program intersects extensive copper mineralisation Follow-up diamond drilling intersects multiple high-grade, massive sulphide intersections Massive sulphide target zone defined Widespread elevated copper halo defined Follow-on drill targets for additional massive sulphide development identified Eastern Eyre Nilginee, Knights, Highway Olympic Dam copper belt, Southern Gawler Craton (SA) Copper/IOCG drill targets identified Copper, IOCG Surface sampling commenced to prioritise for subsequent drill-testing Eastern Eyre Ozone, Laura Olympic Dam copper belt, Southern Gawler Craton (SA) Copper, IOCG Option agreement entered into to acquire tenements Data review completed Drill targets identified Eastern Eyre McMahons, Cocoa Dam, others Olympic Dam copper belt, Southern Gawler Craton (SA) Copper Warrior Multiple Central Gawler Craton (SA) Sandstone-hosted uranium Frome Multiple Frome Basin (SA) Sandstone-hosted uranium Copper drill targets identified Continuation of mineralised fault system from 1050 East Ground surveys commenced to prioritise for subsequent drill-testing Data review completed on advanced uranium project Drill targets identified Review of historical drill data completed Review of geophysical data completed Drill targets identified Farina Callana Adelaide Fold Belt (SA) Sedimentary copper Surface sampling completed Elevated copper and gold identified Review of operations Annual Report 2014 RENASCOR RESOURCES LIMITED | 4 Figure 1. South Australian Project Map 5 | RENASCOR RESOURCES LIMITED Annual Report 2014 Review of operations Eastern Eyre Location: Southern Gawler Craton (South Australia) Tenements: ELs 4721, 5012 and 5236 (100%) and EL 5400 and 5401 (option to acquire 100%) Area: Target: 1,534 km2 Copper At our 1050 East prospect, the first prospect drilled in the Eastern Eyre project area, Renascor intersected high-grade copper-cobalt-silver mineralisation, with results including 13m @ 1.45% copper, 66 ppm silver and 0.17% cobalt (from 215m), including a massive sulphide interval of 8m at 2.2% copper, 92 ppm silver and 0.26% cobalt (from 217m). During the past year, exploration activity at Eastern Eyre was focused on the 1050 East area and areas along-strike offering similar potential for high-grade copper mineralisation. Figure 2. Eastern Eyre project, showing prospect locations Review of operations Annual Report 2014 RENASCOR RESOURCES LIMITED | 6 Eastern Eyre (continued) Overview Renascor’s exploration at the Eastern Eyre project is targeting large-scale copper deposits within the southern portion of the Olympic Dam copper belt. See Figure 3. The Olympic Dam corridor is generally considered to be among the world’s most prospective target areas for copper deposits, hosting the massive Olympic Dam deposit, as well as other large-scale copper deposits, including Prominent Hill and Carrapateena to the north of the project area and the Hillside deposit and extensive historical copper mining district of Moonta to the south. While large target zones of the Olympic Dam corridor are often located far from infrastructure and in areas with deep cover sequences, Renascor’s project area is readily accessible, with basement targets from surface to approximately 200m depth, amongst the shallowest targets in the Olympic Dam corridor. in to its favorable location, In addition Renascor’s project area benefits from widespread copper mineralisation intersected from historical drilling in several prospect areas located adjacent to the Roopena-Angle Dam fault zone. The majority of these prospects were targeted from the late 1960s through the 1980s using geochemical surface sampling, followed by shallow drilling. The presence of multiple zones of copper mineralisation suggests to Renascor that the Roopena-Angle Dam fault zone represents a zone of extensive hydrothermal alteration. The majority of the historical exploration programs the project area generally bypassed this faulting zone, instead focusing on the areas to the west, where soil sampling provided an effective targeting mechanism. The discovery by Rex Minerals (ASX: RXM) in 2009 of the Hillside copper deposit to the south of the project area has reinforced the the importance of in deposition of ore bodies. Accordingly, Renascor considers targets located proximate to the Roopena-Angle Dam fault to represent particularly attractive (and often untested) the targets. previously the faulting zone, a major focus of Renascor’s initial exploration efforts has been the Roopena-Angle Dam fault zone. to assessing targets east of In addition identified faulting zone the Figure 3. Olympic Dam copper belt, showing location of Eastern Eyre project and significant mineral deposits Prior to Renascor’s recent activity in the project area, an additional factor hindered exploration, contributing to the lack of drill-testing performed over highly prospective areas. Dating prior to the Hillside discovery in 2009, the Department of Defence has sought to expand its Cultana Training Area, located to the east of Renascor’s Eastern Eyre project, into areas covered by portions of the project area extending west over the Angle Dam fault zone into Renascor’s EL 5012. See Figure 2. While Hillside’s discovery, as well as increased availability of geophysical targeting to modern explorers, increased the attractiveness of prospects within the faulting zone of EL 5012, the Department of Defence’s expansion plans limited the ability to gain exploration access to test this area. In 2012, the Department of Defence and the Government of South Australia agreed upon protocols for conducting exploration within the Cultana Training Area and proposed extensions into EL 5012. With these procedures clarified, Renascor commenced a program of pre-drilling exploration over the Eastern Eyre project area. This program included an analysis of previous exploration data, including surface sampling, drill intersections and aeromagnetic surveys, with a particular emphasis on a well-defined zone of surface copper anomalism as defined by rotary air blast (RAB) drilling in an area immediately adjacent to the Roopena-Angle Dam fault structure. Amongst these historical targets, Renascor identified multiple prospects, which evidenced both significant copper geochemistry from previous drilling, as well as prospectivity for proving up economic copper deposits through additional drilling in untested areas defined by zones of anomalous copper at surface. Renascor subsequently undertook geophysical surveys, including a detailed airborne EM survey over the RAB zone, and identified 1050 East and other targets for first-pass drilling. 7 | RENASCOR RESOURCES LIMITED Annual Report 2014 Review of operations Eastern Eyre (continued) 1050 East In September 2013, Renascor commenced its maiden drilling campaign at Eastern Eyre, completing 1,150 metres of reverse circulation (RC) drilling. The primary prospect targeted in this initial drill program was 1050 East. Significant results included 44m at 0.61% copper, 311 ppm cobalt and 24 ppm silver from 172m to end-of-hole in hole EERC003 on Section 6374400N. A follow-up 1,100 metre diamond drilling program confirmed several intersections of high-grade copper-cobalt-silver over Section 6374400N. See Figure 4. Key results include: 13m @ 1.45% copper, 66 ppm silver and 0.17% cobalt (from 215m) in hole EEDD012, including 8m at 2.2% copper, 92 ppm silver and 0.26% cobalt (see also Figure 5), 47m @ 0.59% copper, 55 ppm silver and 0.03% cobalt (from 172m) in hole EERCDD003, including 2m at 3.5% copper, 142 ppm silver and 0.03% cobalt, and 4m @ 1.24% copper and 69 ppm silver (from 67m) and 9m @ 1.07 copper and 29 ppm silver (from 75m) in hole EEDD013. Figure 4. Section 6374400N -- Drill traces, copper intervals and summary geology Review of operations Annual Report 2014 RENASCOR RESOURCES LIMITED | 8 Eastern Eyre (continued) 1050 East (continued) Figure 5. Hole EEDD012 – portion of massive sulphide interval from 217.5 metres to 221.5 metres Near-surface copper halo (RC/RAB) Existing zone of massive sulphides from drill intersections (~200m depth) Following the discovery of high-grade copper at 1050 East, Renascor initiated follow-on exploration, a program of targeting extensions along-strike and adjacent to the highly mineralized zones over Section 6374400N. The program included an IP survey, ground and drill-hole EM surveys, geochemical soil sampling and an ~1,100 metre reverse circulation drill program within a chargeability zone identified adjacent to high-grade in Renascor’s initial drill programs. As a result, we have now identified a massive sulphide zone in which limited basement drilling has intersected massive sulphide development or ore-grade (+1.0%) copper in nine of the eleven holes drilled to depths greater than 125 metres. The massive sulphide zone is centred on Section 6374400N, sitting within a wider, ~1.5 kilometres halo of near-surface, elevated copper (+0.10%) mineralisation. See Figure 6. intersections copper Figure 6. 1050 East prospect, showing copper grade x thickness defined by drill holes Angle Dam porphyry 9 | RENASCOR RESOURCES LIMITED Annual Report 2014 Review of operations Eastern Eyre (continued) 1050 East (continued) Within the massive sulphide zone, Renascor consider areas immediately adjacent to Section 6374400N to offer high priority targets for continued massive sulphides development. As the next-step in identifying potentially economic quantities of mineralised massive sulphides at 1050 East, Renascor intends to undertake drill-testing below and adjacent to the massive sulphide intersections over Section 6374400N. See Figure 7. Renascor interprets the mineralisation over Section 6374400N to extend down-dip from east to west, with multiple zones of massive sulphides sitting in a larger mineralised copper zone. Upcoming drilling will include testing for potential thickening of massive sulphide zones down dip from existing intersections. 47m @ 0.59% Cu, 55 ppm Ag and 0.03% Co (from 172m), incl: 2m at 3.5% Cu, 142 ppm Ag and 0.03% Co (EERCDD003) 10m @ 0.23% Cu (from 102m) and 16m @ 0.23% Cu (from 116m) (EERC02) 12m @ 0.45% Cu and 15ppm Ag (from 102m) and 16m @ 0.23% Cu (from 103m) (EERC08) 13m at 1.45% Cu, 66 ppm Ag and 0.17% Co (from 215m), incl: 3m @ 4.0% Cu, 164 ppm Ag and 0.42% Co (EEDD012) 4m @ 1.24% Cu and 65.8 ppm Ag (from 67m) and 9m @ 1.07% Cu and 29 ppm Ag (from 75m) (EEDD013) 3m @ 1.96% Cu, 24 ppm Ag and 0.11% Co (from 171m) (SOC9) 40m @ 0.37% Cu, incl: 4m @ 2.2% Cu and 51 ppm Ag (from 80m) (FW1) 36m @ 0.33% Cu, incl: 2m @ 1.0% Cu and 20 ppm Ag (from 71m) (SOC7) Figure 7. 1050 East massive sulphide zone, showing drill holes >125m, with significant mineralized intersections Review of operations Annual Report 2014 RENASCOR RESOURCES LIMITED | 10 Eastern Eyre (continued) Targets proximate to 1050 East targets In addition to the 1050 East area, Renascor considers the regional Roopena-Angle Dam fault structure (which extends through the 1050 East area) and areas proximate to this structure to offer highly prospective and untested for large-scale copper mineralisation. The discovery of high-grade copper at 1050 East has highlighted the significance of the Roopena-Angle Dam fault, which extends for approximately 40 kilometres, as a potential transport system and host for extensive copper mineralisation. In the area extending immediately south of 1050 East, Renascor has identified a number of untested copper prospects along this fault zone, including drill-ready geophysical prospects at McMahons and Cocoa Dam. See Figure 8. Significantly, only limited exploration has been conducted along this trend. the project area through to located To the north of 1050 East, Renascor has identified additional targets coincident with the extension of the Roopena-Angle Dam fault structure. The targets include two coincident gravity and magnetic targets, Ozone and Laura. See Figure 9. The structural setting of Ozone and Laura is comparable iron-ore, copper-gold to Renascor’s Spencer (IOCG) prospect the south with Renscor’s EL 5012. At Spencer, extensive drilling by WMC Resources Ltd in the 1990s outlined a significant copper-gold mineralisation within variably sheared, altered and hematite-silica veined and brecciated sediments and granite. Geophysical expressions the Ozone and Laura prospects are considerably stronger those observed over known mineralisation at Spencer, and Renascor therefore considers for development of IOCG-style mineralisation in these new prospect areas. Additional details regarding Ozone and Laura are provided below: this as a strong IOCG-style zone of indication than in Ozone. Ozone fault system. is defined by a northwest-orientated magnetic anomaly located on the western margin of the Angle A gravity Dam-Roopena anomaly of approximately 3 mGals amplitude is defined adjacent and parallel to a magnetic zone on its southern margin. Historic drilling has intersected low level copper mineralisation, but has yet to explain the source of the geophysical anomalies. Figure 8. Eastern Eyre project showing location of McMahons and Cocoa Dam in relation to 1050 East and other prospects Laura Ozone Laura. The Laura prospect is defined by a lower order elongated north-south orientated magnetic anomaly within the Roopena fault trend. A gravity anomaly of approximately 1 mGal amplitude is evident near the southern end of the magnetic trend. An additional low order gravity anomaly is evident to the east of the magnetic zone, within the Angle Dam fault trend. No drilling has been recorded in either of these target areas. Figure 9. Ozone and Laura Prospects - residual gravity contours on aeromagnetic image showing locations for untested gravity features 11 | RENASCOR RESOURCES LIMITED Annual Report 2014 Review of operations Eastern Eyre (continued) Targets proximate to 1050 East (continued) Within the southern portion of the project area (see insert map in Figure 10), Renascor has identified an untested, standout gravity target at its Nilginee prospect. The Nilginee gravity anomaly measures at least 3 milliGal amplitude, over approximately 3 square kilometres. The anomaly centre is coincident with local circular magnetic anomaly, within a broad zone of elevated gold geochemistry. The prospect area is located approximately 8 kilometres to the northeast of Arrium Limited’s (ASX: ARI) Moola copper prospect, where reports indicate an oxide zone copper-gold mineralisation within a stratabound hematite-albite-calcite-chlorite breccia of at least 1.6 kilometre strike. Next steps Figure 10. Gravity image for Nilginee prospect Renascor’s current work program is focused on identifying additional massive sulphide development within the 1050 East prospect area, as well as preparing additional targets within the Eastern Eyre Project for drill-testing in the upcoming year. Current programs include follow-up diamond drilling at 1050 East and geochemical sampling over additional prospects to prioritise for subsequent drill-testing. Review of operations Annual Report 2014 RENASCOR RESOURCES LIMITED | 12 Warrior Location: Gawler Craton (South Australia) Tenements: ELs 4570 and 4707 (100%, subject to 1% net smelter royalty) Area: Target: 416 km2 Sandstone-hosted uranium Warrior is an historic uranium project discovered by PNC Exploration Pty Ltd (PNC), the former Japanese government sponsored uranium exploration company, in the late 1970s. The project has been subject to infrequent exploration since this time. Renascor acquired the project in 2013 in exchange for a residual net smelter royalty of 1%. Renascor’s strategy at Warrior is to utilise the significant exploration work undertaken by PNC in an era of low uranium prices to create low cost opportunities to identify a valuable resource under present market conditions. Figure 11. Warrior paleochannel, showing uranium mineralised zones (A through G) as identified by PNC, over airborne EM conductivity image Prior to relinquishing Warrior in the early 1980s, PNC identified seven discrete zones of elevated uranium mineralisation. See Figure 11. Limited exploration efforts, largely undertaken between 2005 and 2008, identified prospective extensions to the Warrior paleochannel, as well as confirming the presence of elevated uranium throughout the project area. Through the use of additional coring drilling and a prompt fission neutron (PFN) tool, in both the elevated uranium zones discovered by PNC, as well as extensions to the paleochannels suggested by later exploration work, Renascor considers Warrior to offer significant prospects for the delineation of an economic uranium ore body. During the reporting period, Renascor completed an assessment of the existing drill data and confirmed a significant variation between air core results and results obtained from the limited core sampling available from adjacent holes. Renascor has identified targets for testing using core drilling and rotary mud drilling with a PFN probe. Renascor anticipates commencing drill-testing following indications of a recovery in the uranium price. 13 | RENASCOR RESOURCES LIMITED Annual Report 2014 Review of operations Frome Location: Tenements: Area: Target: Frome Basin (South Australia) ELs 5322, 5323, 5324, 5325, 5326, 4584, 4585, 4586 and 4672 (100%, subject to net smelter royalty of 0.5%-2%) 4,053km2 Sandstone-hosted uranium The Frome project is major strategic land position in the uranium-rich Frome Basin of South Australia. Renascor’s tenements cover an extensive area, within a basin that hosts several significant uranium deposits. These deposits include the Beverley uranium mine (46.3 million pounds @ 0.27% U3O8), as well as recently discovered uranium deposits at Four Mile (70.5 million pounds @ 0.33% U3O8) and Beverley North and Pepegoona (8.8 million pounds @ 0.18% U3O8). During the reprting period, Renascor completed a comprehensive review of available historical exploration data, including, in particular, existing airborne geophysical data and the limited drill undertaken to date. From this analysis, Renascor had identified drill ready targets within both southern and northern block of tenements (see Figure 12): of Form airborne EM data over the tenements, block southern Renascor has delineated a fault system that it considers comparable to the Four Mile and Pepegonna setting. This targeted fault system, same which stratigraphy as Four Mile remains relatively offering untested, immediate drill-ready targets and the potential for additional targets with further EM data. sits within the the Renascor considers terminal splays of the Paralana fault system in the northern block to offer parallels to the Beverley uranium mine, with strong potential for oxidation of fluids within Tertiary sands. Limited drilling in this area has intersected Renascor has reduced zones. identified drill-ready targets within the western portion of the tenements, proximate to the Paralana fault. Figure 12 (right). Frome Basin Project, showing location in relation to nearby uranium deposits Renascor anticipates commencing drill-testing these targets following indications of a recovery in the uranium price. Review of operations Annual Report 2014 RENASCOR RESOURCES LIMITED | 14 Farina Location: Adelaide Fold Belt (South Australia) Tenements: ELs 4627, 4628, and 4822 (100%) Area: Target: 2,372 km2 Sedimentary copper The Farina Project is made up a large, copper-prospective ground position within within South Australia’s Adelaide Fold Belt. Renascor’s exploration program here is focused on identifying and drilling prospects for potentially large tonnage Zambian Copper Belt-style, sedimentary copper deposits. Figure 13. Farina Project, showing geology and historical copper occurrences The sedimentary sequences of the Adelaide Fold Belt have long been recognised as distinctly analogous to the copper-rich Zambian Copper Belt, offering prospects for large tonnage sedimentary copper deposits. In the 1970s and early 1980s, some significant exploration programs adopted the Zambian-style sedimentary copper model within Renascor’s current project area, resulting in intersections of significant ore-grade copper in areas identified from detailed geological mapping and geochemical targeting. Renascor’s review of historical exploration in the project area has resulted in the identification of a new copper prospect, Callanna, located within an area of historical drilling on the northwest margin of exposed Adelaidean rocks. In addition, Renascor identified two prospective sedimentary copper target zones where sediments are inferred to exist beneath shallow cover and hence, amenable to EM surveying. Ground sampling undertaken during the reporting period focused on historical copper occurrences at the Callanna prospect. Results included strongly anomalous gold values (maximum 2.6 g/T gold) associated with oxide copper mineralisation. A single hand-picked sample from a small working approximately 3 kilometres north of the main Callanna prospect area returned 27% copper and 0.4 g/t gold with strongly anomalous rare earths and molybdenum, suggesting a possible granitic intrusive association. Further work programs in the project area are expected to include additional soil geochemistry and airborne EM surveys prior to drill-testing. 15 | RENASCOR RESOURCES LIMITED Annual Report 2014 Directors’ Report Directors' Report Your directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Renascor Resources Limited (referred to hereafter as the Parent Entity or the Company) and the entities it controlled at the end of, or during, the year ended 30 June 2014. Directors The following persons were directors of the Company during the whole of the financial year and up to the date of this report, unless otherwise stated: David Christensen, Managing Director David Christensen is an experienced mining executive, with recent successful experience managing exploration, mining and marketing operations. Prior to founding the Company, David served as Chief Executive Officer of Adelaide-based companies, Heathgate Resources Pty Ltd and Quasar Resource Pty Ltd. While at Heathgate and Quasar, his responsibilities included overseeing Australian operations, including the Beverley uranium mine, as well as the expansion into new projects with the discovery and development of the Four Mile deposit and numerous joint ventures. David’s experience also includes serving as President of Nuclear Fuels Corporation, a trading and marketing company, where he managed a multi-million dollar uranium portfolio and was responsible for developing sales strategy, executing trades and swaps and negotiating all contracts. David commenced his career as an attorney in California and London offices of international law firm Latham & Watkins, where he advised on corporate finance and mergers and acquisitions. David was educated at Cornell University (BA, Economics and Classical Civilizations), the University of California, Los Angeles (JD) and the Universitá di Bologna (Fulbright Fellow). Special responsibilities Managing Director Stephen Bizzell, Non-Executive Chairman Stephen is Chairman of boutique corporate advisory and funds management group Bizzell Capital Partners. He is highly experienced in the fields of corporate restructuring, debt and equity financing, mergers and acquisitions and has over 20 years corporate finance and public company management experience in the resources sector in Australia and Canada. Stephen was previously an Executive Director of Arrow Energy from 1999 to until its acquisition in 2010 by Royal Dutch Shell and PetroChina for $3.5 billion. Stephen was instrumental in Arrow’s corporate and commercial success and its growth from a junior explorer to a large integrated energy company. Stephen spent his early career in the corporate finance division of Ernst & Young and the tax division of Coopers & Lybrand and qualified as a Chartered Accountant. He is also a director of Queensland Treasury Corporation. During the past three years Stephen has also served as a Director of the following ASX listed companies: Laneway Resources Ltd (since 1996), Bow Energy Ltd (2004 to 2012), Dart Energy Ltd (2006 to 2013), Liquefied Natural Gas Limited (from 2007 to 2010) (Alternate Director), Apollo Gas Ltd (2009 to 2011), Hot Rock Ltd (2009 to 2014), Diversa Ltd (since 2010), Stanmore Coal Ltd (since 2009), Titan Energy Services Ltd (since 2011), Armour Energy Ltd (since 2012). Special responsibilities Chairman of the board Member of the Audit and Risk Management Committee Geoffrey McConachy, Executive Director Geoffrey McConachy is an accomplished geologist with over thirty years of Australian and international experience in the mining industry assessing a wide range of commodities. Prior to joining the Company, Geoffrey worked for Heathgate Resources Pty Ltd and Quasar Resources Pty Ltd, where his roles included Managing Director, Exploration. While at Heathgate and Quasar, Geoffrey led the exploration and development team in the discovery, definition and evaluation of four uranium deposits including the Four Mile deposit, for which he was co-honoured with the Prospector of the Year award from the Australian Association of Mining & Exploration Companies. His experience includes instrumental roles in the discovery of the Fosterville gold deposit in Victoria and the Potosi base metal deposit in New South Wales. Geoffrey was educated at the University of New England (BSc, Geology and Geography) (Hons). He is a fellow of the Australasian Institute of Mining and Metallurgy and a former Director of the Uranium Information Centre. Special responsibilities Member of the Audit and Risk Management Committee Andrew Martin, Non-Executive Director Andrew Martin is an executive with Deutsche Bank. Andrew has worked in a banking or advisory capacity for over 15 years, generally within the infrastructure, utilities and natural resources sectors and in recent years, has advised on transactions within these sectors. Andrew has a Bachelor of Economics (Hons) from the University of Sydney and is a founder and Alternate Director of ASX listed Stanmore Coal Limited (having been a Director from 2009 to 2014) and unlisted St Lucia Resources International Pty Limited. Special responsibilities Chairman of the Audit and Risk Management Committee Directors’ Report Annual Report 2014 RENASCOR RESOURCES LIMITED | 16 Directors (continued) includes an Chris Anderson, Non-Executive Director Chris Anderson is an experienced geophysicist with over 30 years in mineral exploration in Australia and abroad. His recent experience the Carrapateena copper-gold-uranium mine in South Australia. His earlier experience includes acting as Placer Pacific’s Exploration the Kalkaroo Manager copper-gold-molybdenum deposit in South Australia. Mr Anderson’s significant international experience includes recent geophysical interpretation in Zambia for Equinox Resources Ltd., and in Tanzania for North Mara Gold Mines, where he contributed to the discovery of the one million ounce Gokona gold deposit. From 2005 to 2010 Chris served as executive director of ASX listed Stellar Resources Ltd., with exploration interests in South Australia, New South Wales, Victoria and Tasmania. for Eastern Australia, where he was the 2005 discovery of the discovery of instrumental role instrumental in in Chris is a graduate of Adelaide University (BSc, Geology and Geophysics) (Hons), and is a fellow of Australasian Institute of Mining and Metallurgy. Special responsibilities Nil Chief Financial Officer and Company Secretary Angelo Gaudio, Chief Financial Officer and Company Secretary Angelo Gaudio has significant experience in senior financial positions within the resource sector. Prior to joining the Company in 2011, he served as Vice President, Finance and Administration with Heathgate Resources Pty Ltd, for which he managed accounting, financial affairs and procurement since the inception of the Beverley uranium mine in 1999. Angelo is a qualified accountant with over thirty-five years of finance, management and accounting experience. His expertise includes corporate finance, risk management and financial reporting, as well as corporate development and Native Title relations. Angelo is a Fellow of the Institute of Public Accountants and a Certificated member of Chartered Secretaries Australia. Directors’ Shareholdings The following table sets out each director’s shareholding as at 30 June 2014 and their relevant interest in shares, options and performance rights in the Company as at the date of this report. Director David Christensen Geoffrey McConachy Andrew Martin Stephen Bizzell Chris Anderson Fully Paid Ordinary Shares Share options 12,200,000 6,300,000 20,500,000 11,358,190 6,900,000 Nil Nil Nil Nil Nil Performance rights 840,000 810,000 - - - Meetings of directors The numbers of meetings of the Company's board of directors and of each board committee held during the year ended 30 June 2014, and the numbers of meetings attended by each director were: Stephen Bizzell David Christensen Geoffrey McConachy Andrew Martin Chris Anderson Full meetings of directors A Attended 9 9 9 9 9 B Held 9 9 9 8 9 Audit Committee meetings A Attended 2 N/A 2 2 N/A B Held 2 N/A 2 2 N/A A = Number of meetings attended B = Number of meetings held during the time the director held office or was a member of the committee during the year Principal activities Renascor Resources is an Australian-based company focused on the discovery and development of economically viable deposits containing copper, gold, uranium and other minerals. Renascor has an extensive tenement portfolio, holding interests in key mineral provinces of South Australia and the Northern Territory. The principal activity of the Group during the financial year was mineral exploration. 17 | RENASCOR RESOURCES LIMITED Annual Report 2014 Directors’ Report Dividends - Renascor Resources Limited There were no dividends declared or paid during the financial year (2013: Nil). Review and results of operations (a) Corporate and Financial For the year ended 30 June 2014, the loss for the Group after providing for income tax was $1,513,910 (2013: $528,989). This included a write down of capitalised exploration and evaluation expenditure of $827,101 and relinquishment of 17 tenements in the Northern Territory and South Australia. A Placement of 11,690,000 fully paid ordinary shares made to sophisticated investors, directors and executives was completed in June 2014 and raised $584,500 before costs. A share purchase plan offer was made to eligible shareholders and was completed in June 2014 with the issue of 9,910,000 fully paid ordinary shares raising $495,000 before costs. At 30 June the company had cash and cash equivalents of $1,424,978. (b) Exploration The Company is an active explorer, focused on quickly advancing prospects to the drill-phase and thereafter providing shareholders with opportunities for significant value appreciation upon successful drill results. As a result of the positive initial results in the Company’s Eastern Eyre project, a significant portion of the it’s exploration effort during the year was directed toward advancing it’s 1050 East prospect. Renascor undertook drilling programs aimed at locating extensions along-strike and at depth from the high-grade copper intersections. Renascor also conducted exploration activities aimed at identifying similar opportunities in the project area. The Company has maintained a strong exploration portfolio, and through acquisition, joint venture and applications for mineral exploration licences, the Company has added adjacent tenure to several of it’s projects, including the Eastern Eyre, Olary and Gairdner projects. To limit non-essential expenditure, the Company has also relinquished tenements considered less prospective. The new tenements, together with active reconnaissance exploration projects, provide the Company with a strong pipeline of potential projects for future growth and development. Detailed information on the operations of the Group and its business strategies and prospects is set out in the Review of Operations on pages 2 to 14 of this annual report Significant changes in the state of affairs There have been no significant changes in the Group’s state of affairs during the financial year other than have been disclosed elsewhere in this report. Matters subsequent to the end of the financial year On 29 August 2014, 500,000 ordinary fully paid shares were issued to nominees of Currie Resources Pty Ltd as consideration for exploration and access rights pursuant to an agreement that grants the Company an option to acquire 100% of two exploration licences, EL 5400 and EL5401 tenements. These tenements form part of the Eastern Eyre project. In the opinion of the directors, no other matter or circumstance has arisen since 30 June 2014 that has significantly affected, or may significantly affect: the Group's operations in future financial years, or the results of those operations in future financial years, or the Group's state of affairs in future financial years. Likely developments and expected results of operations The Company will continue activities in the exploration, evaluation and acquisition of viable projects with the objective of establishing a significant production business. Environmental regulation and performance The directors have put in place strategies and procedures to ensure that the Group manages its compliance with environmental regulations. The directors are not aware of any breaches of any applicable environmental regulations. Directors’ Report Annual Report 2014 RENASCOR RESOURCES LIMITED | 18 Remuneration report – audited This remuneration report sets out remuneration information for the Group’s non-executive directors, executive directors and other key management personnel of the Group and the Company. (a) Key management personnel The following persons were key management personnel of the Company during the financial year: Name Directors Stephen Bizzell David Christensen Geoffrey McConachy Andrew Martin Chris Anderson Position Non-Executive Chairman Managing Director Executive Director Non-Executive Director Non-Executive Director Other key management personnel Angelo Gaudio CFO and Company Secretary (b) Principles used to determine the nature and amount of remuneration Role of the remuneration committee The board carries out the functions of the Remuneration and Nominations Committees and is responsible for reviewing and negotiating the compensation arrangements of senior executives. It assesses the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. The board is responsible for managing: non-executive director fees; executive remuneration (directors and other executives); and the over-arching executive remuneration framework and incentive plan policies. Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the Group. The Corporate Governance Statement provides further information on the role of this committee. Relationship between remuneration and Group performance During the financial year, the Group has generated losses as its principal activity was exploration for copper, gold, uranium and other minerals within South Australia and Northern Territory. As the Group is still in the exploration and evaluation stage, the link between remuneration, Group performance and shareholder wealth is sometimes tenuous. Share prices are subject to the influence of metals prices and market sentiment toward the sector, and as such increases or decreases may occur quite independent of executive performance or remuneration. The following table shows key performance indicators for the Group over the last three years since the Company has been listed on the ASX: Key performance indicators 2014 2013 2012 Profit/(Loss) for the year attributable to owners ($) Basic earnings per share (cents) Share price (cents) at year end Increase/(decrease) in share price (%) Total KMP incentives as a percentage of profit/(loss) for the year (%) ($1,513,910) (1.3) 3.7 5.7% ($528,989) (0.5) 3.5 (32.7%) ($297,219) (0.3) 5.2 (30.7%) (2.4%) (4.6%) - Non-executive directors Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors' fees and payments are reviewed periodically by the board. The Chair's fees are determined independently to the fees of non-executive directors based on comparative roles in the external market. The Chair is not present at any discussions relating to determination of his own remuneration. Non-executive directors do not receive performance-based pay. 19 | RENASCOR RESOURCES LIMITED Annual Report 2014 Directors’ Report Remuneration report – audited (continued) (b)Principles used to determine the nature and amount of remuneration (continued) Directors' fees The current base fees were established with effect from 15 December 2010. Non-executive directors' fees are determined within an aggregate directors' fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $350,000 per annum and was approved by a special resolution of the members of the Company on 5 August 2010. The following fees have applied: Base fees Chair Other non-executive directors From 1 July 2014 From 1 July 2013 $60,000 p.a. $33,000-40,000 p.a. $60,000 p.a. $33,000-40,000 p.a. Retirement allowances for non-executive directors In line with guidance from the ASX Corporate Governance Council on non-executive directors' remuneration, no retirement allowances are provided for non-executive directors. Superannuation contributions required under the Australian superannuation guarantee legislation continue to be made as required and are deducted from the directors' overall fee entitlements. Executive pay The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and conforms to market practice for delivery of reward. The board ensures that executive reward satisfies the following key criteria for good reward governance practices: competitiveness and reasonableness; acceptability to shareholders; performance linkage / alignment of executive compensation; transparency; and capital management. The Group has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the organisation. Alignment to shareholders' interests; has economic profit as a core component of plan design; focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price; delivering constant return on assets as well as focusing the executive on key non-financial drivers of value; and attracts and retains high calibre executives. Alignment to program participants' interests: rewards capability and experience; reflects competitive reward for contribution to growth in shareholder wealth; provides a clear structure for earning rewards; and provides recognition for contribution. The framework provides a mix of fixed and long-term incentives. The board carries out the functions of the Remuneration and Nominations Committees and is responsible for reviewing and negotiating the compensation arrangements of senior executives. It assesses the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality board and executive team. The board manages remuneration and incentive policies and practices and remuneration packages and other terms of employment for executive directors, other senior executives and non-executive directors. The Corporate Governance Statement provides further information on the role of a Remuneration committee. The executive pay and reward framework has the following components: base pay and benefits, including superannuation; short-term incentive through a cash bonus may be determined by the board; and long-term incentives through the issue of unlisted share options and performance rights. The combination of these comprises an executive's total remuneration. Directors’ Report Annual Report 2014 RENASCOR RESOURCES LIMITED | 20 Remuneration report – audited (continued) (c) Principles used to determine the nature and amount of remuneration (continued) Base pay and benefits Base pay and benefits are structured as a total employment cost package which may be delivered as a combination of cash and prescribed non-financial benefits, at the executive’s discretion and subject to board approval. Executives are offered a competitive base pay that comprises the fixed component of pay and rewards to ensure base pay is set to reflect the market for a comparable role. Base pay for executives is reviewed periodically to ensure the executive's pay is competitive with the market. There is no guaranteed base pay increase included in any of the executives’ contracts. Benefits Private health insurance benefits are provided to the Managing Director. Superannuation Retirement benefits are delivered via superannuation contributions required under the Australian superannuation guarantee legislation. Other retirement benefits may be provided directly by the Group if approved by shareholders. Short-term incentives The Company currently has no formal performance related remuneration policy which governs the payment of annual cash bonuses upon meeting pre-determined performance targets. Long-term incentives Long-term incentives may be provided to directors, executives and consultants through the granting of unlisted share options and or performance rights. The granting of unlisted share options and performance rights is designed to provide long-term incentives for executives to deliver long-term shareholder returns. The granting of such options and performance rights is at the board's discretion and no individual has a contractual right to receive any guaranteed benefits. The options are issued for nil consideration and have variable vesting dates, exercise prices and maturity dates, i.e. last date to exercise the options. The performance rights plan was approved by shareholders at the 2012 annual general meeting and is designed to focus executives on delivering long-term shareholder return. Under the plan, participants are granted rights to shares which will only vest if certain performance conditions are met and the participants are still employed by the company at the end of the vesting period. Participation in the plan is at the absolute discretion of the disinterested board members. Vesting of the performance rights is subject to the following performance conditions: a) Personal Key Performance Indicators (KPI) Condition - 25% of performance rights vest on achievement of personal KPI’s measured by disinterested board members at their absolute discretion. b) Corporate Share Performance (CSP) Condition – 75% of performance rights vest based on benchmark comparison of total shareholder return (TSR), including share price growth compared to 11 selected peer companies that are listed on the ASX (see list below) over a three year period. Vesting will occur based on the company’s ranking with the peer group as follows: TSR Rank Less than 50th percentile Between 50th and 67th percentile Between 67th and 80th percentile At or above 80th percentile Proportion of performance rights that vest 0% 20% 50% 100% Once vested, the performance rights are exercisable for a period of 7 years from the grant date. Options are granted under the plan for no consideration. 21 | RENASCOR RESOURCES LIMITED Annual Report 2014 Directors’ Report Remuneration report – audited (continued) Principles used to determine the nature and amount of remuneration (continued) Long-term incentives (continued) For the corporate share performance (CSP) condition, the peer group of companies includes the following: Uranium Equities Limited Energia Minerals Limited Toro Energy Limited UraniumSA Limited Energy & Minerals Australia Limited Alligator Energy Limited Minotaur Exploration Limited Archer Exploration Limited Helix Resources Limited Mithril Resources Limited Thundelarra Exploration Limited The performance rights are issued for nil consideration and have variable vesting dates, subject to either corporate share performance condition or personal KPI condition (and the maximum number of shares which will be issued where the relevant conditions are fully satisfied which are converted on a one for one basis). The table below outlines the number of performance rights proposed to be issued to each director and executive, the number of performance rights subject to either the corporate share performance (CSP) condition or the personal key performance indicator (KPI) condition (and the maximum number of Shares which will be issued where the relevant conditions are fully satisfied). Performance Rights Recipient David Christensen Year 1 Year 2 Year 3 Total CSP Performance Rights (75%) 210,000 210,000 210,000 630,000 KPI Performance Rights (25%) 70,000 70,000 70,000 210,000 Total Geoffrey McConachy 280,000 280,000 280,000 840,000 CSP Performance Rights (75%) 202,500 202,500 202,500 607,500 KPI Performance Rights (25%) 67,500 67,500 67,500 202,500 Total Angelo Gaudio 270,000 270,000 270,000 810,000 CSP Performance Rights (75%) KPI Performance Rights (25%) 87,500 29,167 87,500 29,167 87,500 262,500 29,166 87,500 Total 116,667 116,667 116,666 350,000 (c) Details of remuneration Amounts of remuneration Details of the remuneration of the directors and the key management personnel of the Group (as defined in AASB 124 Related Party Disclosures) are set out in the following tables. The key management personnel of the Company includes the directors as per pages 15 and 16 above and Angelo Gaudio, CFO and Company Secretary who has authority and responsibility in respect of planning, directing and controlling activities of the Company and reports directly to the Managing Director. Directors’ Report Annual Report 2014 RENASCOR RESOURCES LIMITED | 22 Remuneration report – audited (continued) (c) Details of remuneration (continued) Key management personnel of the Company and the Group 2014 Name Non-executive directors Stephen Bizzell 1 Andrew Martin 1 Chris Anderson 1 Sub-total non-executive directors Executive directors David Christensen 2 Geoffrey McConachy 2 Other key management personnel Angelo Gaudio 2 Sub-total executive directors and other key management personnel Total key management personnel compensation Short-term employee benefits Long-term benefits Cash salary and fees $ Non- monetary benefits $ Long service leave $ Post- employment benefits Super- annuation $ Share- based payments Options and performance rights $ Total $ 60,000 36,613 33,000 129,613 - - - - - - - - - 3,387 - 3,387 - - - - 60,000 40,000 33,000 133,000 304,615 291,923 16,642 - 6,318 6,054 17,775 17,775 13,488 358,838 13,006 328,758 230,000 - 4,260 17,775 9,845 261,880 826,538 16,642 16,632 53,325 36,339 949,476 956,151 16,642 16,632 56,712 36,339 1,082,476 1 Subsequent to the completion of the current reporting period, it has been agreed (subject to shareholder approval) that non-executive directors will receive 50% of their compensation in shares in the Company. 2 Subsequent to the completion of the current reporting period, the service agreements of each of Messrs Christensen, McConachy and Gaudio have been amended to reduce remuneration by 20%, with a corresponding decrease in time commitment to four days per week. Key management personnel of the Company and the Group 2013 Name Non-executive directors Stephen Bizzell Andrew Martin Chris Anderson Sub-total non-executive directors Executive directors David Christensen Geoffrey McConachy Other key management personnel Angelo Gaudio Sub-total executive directors and other key management personnel Total key management personnel compensation Short-term employee benefits Long-term benefits Post- employmen t benefits Share- based payments Cash salary and fees $ Non- monetary benefits $ Long service leave $ Super- annuation $ Options and performance rights $ Total $ 60,000 36,697 34,000 130,697 - - - - - - - - - 3,303 - 3,303 - - - - 60,000 40,000 34,000 134,000 300,000 287,500 16,137 - 3,334 3,195 16,470 16,470 12,253 348,194 11,816 318,981 230,000 - 2,261 16,470 - 248,731 817,500 16,137 8,790 49,410 24,069 915,906 948,197 16,137 8,790 52,713 24,069 1,049,906 23 | RENASCOR RESOURCES LIMITED Annual Report 2014 Directors’ Report Remuneration report – audited (continued) (c) Details of remuneration (continued) The relative proportions of remuneration that are linked to performance and those that are fixed are as follows: Name Fixed remuneration At risk - STI 2014 2013 2014 2013 At risk - LTI * 2014 2013 Non-executive directors of the Company Stephen Bizzell Andrew Martin Chris Anderson 100% 100% 100% 100% 100% 100% Executive directors of the Company David Christensen Geoffrey McConachy 96.2% 96.0% 96.5% 96.3% -% -% -% -% -% -% -% -% -% -% -% -% -% -% -% -% 3.8% 4.0% 3.5% 3.7% Other key management personnel of the Group Angelo Gaudio 96.2% 100% -% -% 3.8% -% * Since the long-term incentives are provided exclusively by way of options and performance rights, the percentages disclosed also reflect the value of remuneration consisting of options and performance rights, based on the value of options and performance rights expensed during the year. (d) Bonuses and short-term incentives Key management personnel and executives were not paid cash bonuses or performance-related bonuses during the years ended 30 June 2014 and 2013. (e) Service agreements On appointment to the board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the board policies and terms, including compensation, relevant to the office of director. Remuneration and other terms of employment for the managing director, exploration director, chief financial officer and the other key management personnel are also formalised in service agreements. Provisions of the agreements relating to remuneration are set out below. David Christensen, Managing Director, has an agreement with the Company for an indefinite term, subject to six-months’ notice or a termination payment of six months. As at year ended 30 June 2014, his base salary, exclusive of superannuation, was payable at a rate of $312,000 per annum. Subsequent to the completion of the current reporting period, Mr Christensen’s service agreement was amended to reduce remuneration by 20% (reducing to a per annum rate of $249,600), with a corresponding decrease in time commitment to four days per week. The agreement provides for the payment of a private health insurance benefit and for a superannuation entitlement of 9.5% from 1 July 2014, capped to the maximum contributions of the Superannuation Guarantee Act (currently effective maximum contributions of $18,730 per annum for 2014-15). Geoffrey McConachy, Exploration Director, has an agreement with the Company for an indefinite term, subject to three-months’ notice or a termination payment of three months. As at year ended 30 June 2014, his base salary, exclusive of superannuation, was payable at a rate of $299,000 per annum. Subsequent to the completion of the current reporting period, Mr McConachy’s service agreement was amended to reduce remuneration by 20% (reducing to a per annum rate of $239,200), with a corresponding decrease in time commitment to four days per week. The agreement provides for a superannuation entitlement of 9.5% from 1 July 2014, capped to the maximum contributions of the Superannuation Guarantee Act (currently effective maximum contributions of $18,730 per annum for 2014-15). Angelo Gaudio, Chief Financial Officer and Company Secretary, has an agreement with the Company for an indefinite term, subject to three-months’ notice. As at year ended 30 June 2014, his base salary, exclusive of superannuation, was payable at a rate of $230,000 per annum. Subsequent to the completion of the current reporting period, Mr Gaudio’s service agreement was amended to reduce remuneration by 20% (reducing to a per annum rate of $184,000), with a corresponding decrease in time commitment to four days per week. The agreement provides for a superannuation entitlement of 9.5% from 1 July 2014, capped to the maximum contributions of the Superannuation Guarantee Act (currently effective maximum contributions of $18,730 per annum for 2014-15). Directors’ Report Annual Report 2014 RENASCOR RESOURCES LIMITED | 24 Remuneration report – audited (continued) (f) Share-based compensation During the financial year, the following share-based payment arrangements were granted for nil consideration: KPI based performance rights Name Approved Year for grant Years in which rights may vest Number of rights approved Fair Value per right at grant date* Value of rights at grant date* Director of the Company David Christensen Tranche 1b Tranche 2b Tranche 3b Geoffrey McConachy Tranche 1b Tranche 2b Tranche 3b Other key management personnel Angelo Gaudio Tranche 1b Tranche 2b Tranche 3b 2014 2014 2014 2014 2014 2014 2014 2014 2014 2014 2015 2016 2014 2015 2016 2014 2015 2016 70,000 70,000 70,000 67,500 67,500 67,500 $0.0520 $0.0520 $0.0520 $0.0520 $0.0520 $0.0520 $2,912 $2,912 $2,912 $2,808 $2,808 $2,808 29,167 29,167 29,167 $0.0520 $0.0520 $0.0520 $1,213 $1,213 $1,213 * The value of rights granted during the year differs to the expense recognised as part of each key management person’s remuneration because this value is the grant date fair value calculated in accordance with AASB 2 Share-based Payment. The number of above rights granted is based on non-market performance conditions and will vest on achievement of personal KPI’s measured by disinterested board members at their absolute discretion. Total shareholder return based performance rights Name Approved Year for grant Years in which rights may vest Number of rights approved Value per right at grant date* Other key management personnel Angelo Gaudio Tranche 1a Tranche 2a Tranche 3a 2014 2014 2014 2014 2015 2016 87,500 87,500 87,500 $0.0231 $0.0299 $0.0338 Value of rights at grant date* $2,021 $2,616 $2,958 * The value of rights granted during the year differs to the expense recognised as part of each key management person’s remuneration because this value is the grant date fair value calculated in accordance with AASB 2 Share-based Payment. The number of above rights granted is based on market vesting condition using a benchmark comparison of total shareholder return (TSR) with 11 selected peer companies that are listed on the ASX over a three year period. The terms and conditions of each grant of performance rights affecting remuneration in the current or a future reporting period are as follows: Grant Date Vesting Date Expiry Date Exercise Price Performance achieved # % Vested % Forfeited Tranche 1a 28 Feb 2014 28 Feb 2014 30 Nov 2019 $Nil 54th percentile Tranche 1b 28 Feb 2014 28 Feb 2014 30 Nov 2019 $Nil 80% of KPI 20% 80% Tranche 2a 28 Feb 2014 30 Jun 2014 30 Nov 2019 $Nil To be determined 20% Tranche 3a 28 Feb 2014 30 Jun 2015 30 Nov 2019 $Nil To be determined Tranche 2b 28 Feb 2014 30 Jun 2014 30 Nov 2019 $Nil To be determined Tranche 3b 28 Feb 2014 30 Jun 2015 30 Nov 2019 $Nil To be determined n/a n/a n/a 80% 20% 80% n/a n/a n/a # Subject to approval of disinterested board members a preliminary review of the CSP condition calculated that the TSR Rank achieved for Year Ended 30 June 2014 is between 50th and 67th percentile indicating that 20% of the CSP proportion of performance shares will vest. 25 | RENASCOR RESOURCES LIMITED Annual Report 2014 Directors’ Report Remuneration report – audited (continued) (g) Equity instruments held by key management personnel Options holdings Details of options held directly, indirectly or beneficially by key management personnel are as follows:* 2014 Name Directors of the Company Balance at the start of the year No. Granted during the reporting year as compensation No. Exercised during the reporting year No. Expired during the year No. Balance at the end of the year No. Vested and exercisable at the end of the reporting period No. 1,600,000 David Christensen Geoffrey McConachy 1,300,000 800,000 Andrew Martin 800,000 Stephen Bizzell 800,000 Chris Anderson - - - - - - (1,600,000) - - (1,300,000) - - - - - - (800,000) - - (800,000) - - (800,000) - - Other key management personnel of the Group - Angelo Gaudio 800,000 - (800,000) - - * Key management personnel include close family members and entities over which the key management person or their close family members have direct or indirect control, joint control or significant influence. Performance Rights holdings Details of rights held directly, indirectly or beneficially by key management personnel are as follows:* 2014 Balance at the start of the year No. Name Directors of the Company David Christensen Geoffrey McConachy Andrew Martin Stephen Bizzell Chris Anderson 630,000 607,500 - - - Approved to be granted during the reporting year as compensation No. 210,000 202,500 - - - Other key management personnel of the Group 350,000 Angelo Gaudio - Exercised during the reporting year No. Other changes during the year No. Balance at the end of the year No. Vested and exercisable at the end of the reporting period No.# - - - - - - (182,000) (175,500) - - - 658,000 634,500 - - - 98,800 94,500 - - - (75,833) 274,167 40,834 * Key management personnel include close family members and entities over which the key management person or their close family members have direct or indirect control, joint control or significant influence. # All vested and exercisable rights vested during the year. Directors’ Report Annual Report 2014 RENASCOR RESOURCES LIMITED | 26 Remuneration report – audited (continued) (g) Equity instruments held by key management personnel (continued) Shareholdings Details of equity instruments (other than options and rights) held directly, indirectly or beneficially by key management personnel* are as follows. There were no shares granted during the reporting period as compensation. 2014 Name Directors of the Company Ordinary shares David Christensen Geoffrey McConachy Andrew Martin1 Stephen Bizzell Chris Anderson Granted during reporting year as compensation Received during the year on the exercise of Performance Rights Balance at the start of the year 12,000,000 6,000,000 20,000,000 9,558,999 6,000,000 - - - - - - - - - - - - Other changes during the year 200,000 300,000 500,000 1,799,191 900,000 Balance at the end of the year 12,200,000 6,300,000 20,500,000 11,358,190 6,900,000 200,000 6,215,000 Other key management personnel of the Group Ordinary shares Angelo Gaudio 6,015,000 1 Mr Martin is a non-executive director and is a director of SLRI Pty Ltd and St Lucia Capital Fund Pty Ltd, which act as corporate trustees for trust funds which together are substantial (greater than 5%) shareholders in the Company. Mr Martin is a beneficiary of a trust ultimately holding a more than 20% interest in these trust funds. * Key management personnel include close family members and entities over which the key management person or their close family members have direct or indirect control, joint control or significant influence. (h) Other transactions with key management personnel Mr G W McConachy and Mr C. Anderson are directors of Euro Exploration Services Pty Ltd (Euro). Euro has provided the company with exploration services, geochemical sampling services as well as the provision of geological personnel services during the year. The services provided are based on normal commercial terms and conditions. During the financial year the Company incurred expenses of $87,402 (2013: $157,905) from Euro which has been capitalised as Exploration Expenditure during the financial year. An amount of $9,944 (2013: $13,172) was owing to Euro at 30 June 2014. Mr C. Anderson is a director of Pondray Pty Ltd trading as CG Anderson & Associates (CGAA). CGAA has provided geophysical services to the company. During the financial year the Company incurred expenses of $103,234 (2013: $102,400) from CGAA of which $102,400 (2013: $99,070) has been capitalised as Exploration Expenditure during the financial year. An amount of $24,513 (2013: $10,285) was owing to CGAA at 30 June 2014. Mr S. Bizzell is a director of Bizzell Capital Partners Pty Ltd (BCP). BCP has provided corporate advisory services to the company in relation to a capital raising. During the financial year the Company incurred expenses of $51,470 (2013: $Nil) from BCP which was included as a cost of the capital raising during the financial year. An amount of $11,000 (2013: $Nil) was owing to BCP at 30 June 2014. End of remuneration report - audited 27 | RENASCOR RESOURCES LIMITED Annual Report 2014 Directors’ Report Shares under option Unissued ordinary shares of the Company under option at the date of this report are as follows: Date options granted Expiry date Exercise price of shares Number under option 30 August 2010 27 October 2010 15 December 2010 17 February 2011 30 April 2012 31 December 2014 31 December 2014 $0.24 $0.24 31 December 2014 17 February 2015 30 April 2016 $0.24 $0.24 $0.054 2,000,000 700,000 2,000,000 750,000 750,000 6,200,000 Date performance rights approved Expiry date Exercise price of shares Number of Performance Rights 30 November 2012* 28 February 2014* 30 November 2019 28 February 2021 $Nil $Nil 1,650,000 350,000 2,000,000 * Performance rights granted as remuneration to the directors and the most highly remunerated officers during the year. Details of options and performance rights granted to key management personnel are disclosed on pages 24 to 26 above. No ordinary shares of the Company were issued during the year ended 30 June 2014 on the exercise of options or performance rights granted. No further shares have been issued since that date on the exercise of options or performance rights granted. Indemnification and insurance of directors, officers and auditor The Company has established an insurance policy to indemnify all directors and officers against all liabilities to a third party that may arise from their position as directors or officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. During the financial year, the Company paid a premium in respect of a contract insuring directors, secretaries and executive officers of the Company and its controlled entities against a liability incurred as director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or any of its controlled entities against a liability incurred as such an officer or auditor. Non-audit services During the financial year, the following fees for non-audit services were paid or payable to the auditor, BDO, or their related practices: Consolidated 30 June 2014 $ 30 June 2013 $ Taxation services Amounts paid to a related practice of BDO Audit (SA) Pty Ltd for tax compliance and advisory services Total remuneration for taxation services 16,493 16,493 9,000 9,000 Total fees for non-audit services 16,493 9,000 Directors’ Report Annual Report 2014 RENASCOR RESOURCES LIMITED | 28 Non-audit services (continued) The directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm related to the auditor), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. On the advice of the audit committee, the directors are satisfied that the provision of non-audit services by the auditor, as set out above, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: all non-audit services have been reviewed by the audit committee to ensure that they do not impact the integrity and objectivity of the auditor; and none of the non-audit services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Auditor’s Independence Declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 29 This report is made in accordance with a resolution of directors. David Christensen Director Adelaide Date: 30 September 2014 29 | RENASCOR RESOURCES LIMITED Annual Report 2014 Auditor’s independent declaration Auditor’s independence declaration Shareholder information Annual Report 2014 RENASCOR RESOURCES LIMITED | 30 Renascor Resources Limited Shareholder information 30 June 2014 The shareholder information set out below was applicable as at 25 August 2014. A. Distribution of equity securities Analysis of numbers of equity security holders by size of holding: Holding 1 1,001 5,001 10,001 100,001 1000 * 5,000 10,000 100,000 - - - - and over Ordinary shares Shares Options 5 23 77 274 161 540 - - - - 6 6 - - - - 14 14 * Share holdings of 10,000 shares or less is regarded as holding less than a marketable parcel of shares. B. Equity security holders Twenty largest quoted equity security holders The names of the twenty largest holders of quoted equity securities are listed below: Quoted equity securities Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ALBIANO HOLDINGS PTY LTD DAVID CHRISTENSEN SLRI PTY LIMITED ST LUCIA RESOURCES CAPITAL FUND PTY LIMITED BIZZELL NOMINEES PTY LTD CASALAMADA PTY LTD GEOFFREY WILLIAM MCCONACHY CANNC CONSULTING PTY LTD * BCP ALPHA INVESTMENTS LIMITED * CLASM PTY LTD * R & C AUSTRALIA PTY LTD CITICORP NOMINEES PTY LIMITED NATIONAL NOMINEES LIMITED HILTABA GOLD PTY LTD REDLINK PTY LTD KRAM NOMINEES PTY LTD CF2 PTY LTD * MRS TRACEY ANN MEZZINO SIXTH ERRA PTY LTD * ANGORA LANE PTY LTD * Ordinary shares Number held Percentage of issued shares 12,200,000 11,000,000 9,000,000 7,310,666 6,300,000 6,300,000 6,200,000 4,047,524 2,000,000 1,887,000 1,830,000 1,750,000 1,500,000 1,460,000 1,400,000 1,253,333 1,200,000 1,043,334 1,026,667 1,008,974 8.94% 8.06% 6.60% 5.36% 4.62% 4.62% 4.55% 2.97% 1.47% 1.38% 1.34% 1.28% 1.10% 1.07% 1.03% 0.92% 0.88% 0.76% 0.75% 0.74% TOTAL 79,717,498 58.44 % * Merged. 31 | RENASCOR RESOURCES LIMITED Annual Report 2014 Shareholder Information Shareholder information (continued) B. Equity security holders (continued) Unquoted equity securities Performance Rights Share options # Number of Performance Rights approved to be granted * Number of unissued ordinary shares under the options. Number on issue/granted 2,000,000 # 6,200,000 * Number of holders 3 6 Of the options on issue, 2,000,000 options (expiring 31 December 2014) are held by an entity related to Stephen Bizzell, a director of the Company and as such holds more than 20% of these unquoted equity securities. C. Substantial holders Substantial holders in the Company are set out below: Name Ordinary Shares Number held Percentage Andrew Martin + SLRI Pty Ltd + St Lucia Resources Capital Fund Pty Ltd David Christensen Stephen Bizzell + related interests CG Anderson + related interests 20,500,000 12,200,000 11,358,190 6,900,000 15.03% 8.94% 8.33% 5.06% TOTAL 50,958,190 37.36% D. Voting rights The voting rights attaching to each class of equity securities are set out below: (a) (b) Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Options and Performance Rights No voting rights. E. Restricted securities No restricted securities were on issue as at 25 August 2014. Shareholder information Annual Report 2014 RENASCOR RESOURCES LIMITED | 32 Shareholder information (continued) F. Interests in Tenements The Group held the following interests in tenements as at 25 August 2014: Tenement South Australia Name % Interest Application Lodged Grant Date Expiry Date EL 4721 EL 5012 EL 5236 EL 5400 EL 5401 EL 4675 EL 4836 EL 4570 EL 4707 EL 4627 EL 4628 EL 4822 EL 4394 EL 4399 EL 5301 EL 5228 EL 5307 EL 4400 EL 5322 EL 5323 EL 5324 EL 5325 EL 5326 EL 4584 EL 4585 EL 4586 EL 4672 100 100 100 - - - 0 (Option to Acquire) 0 (Option to Acquire) - - Iron Baron Cultana Old Wartaka Lincoln Gap Mt. Whyalla Gairdner Lake Harris Warrior Carnding Tent Hill Wilpoorina Willouran Cutana Outalpa Outalpa A, B & C Wompinie 100 100 100 100 100 100 100 100 100 100 100 Cowell (Hiltaba JV) 0 (Earn-in JV) Midgee Lake Callabonna Lake Yannerpi Lake Callabonna South Callabonna Coonee Creek Benagerie Ridge C Benagerie Ridge D Benagerie Ridge E Culberta Bore 100 100 100 100 100 100 100 100 100 100 04-Apr-11 03-Apr-15 13-Sep-12 12-Sep-15 08-May-13 07-May-15 30-Apr-14 30-Apr-16 30-Apr-14 30-Apr-16 22-Feb-11 21-Feb-15 15-Feb-12 14-Feb-15 21-Sep-10 20-Sep-14 28-Mar-11 27-Mar-15 13-Dec-10 12-Dec-14 13-Dec-10 12-Dec-14 17-Jan-12 16-Jan-16 10-Dec-09 09-Dec-14 10-Dec-09 09-Dec-14 09-Jul-13 08-Jul-15 01-May-13 30-Apr-15 07-Nov-12 06-Nov-14 10-Dec-09 09-Dec-14 16-Jul-12 15-Jul-17 16-Jul-12 15-Jul-17 17-Jul-12 16-Jul-17 17-Jul-12 16-Jul-17 17-Jul-12 16-Jul-17 19-Oct-10 18-Oct-14 19-Oct-10 18-Oct-14 19-Oct-10 18-Oct-14 21-Feb-11 20-Feb-15 - - - - - - - - - - - - - - - - - - - - - - Northern Territory ELA27517 ELA27518 ELA27520 NirripiNth NirripiWest GhostGumBore 0 (Application) 0 (Application) 0 (Application) 29-Jul-09 29-Jul-09 29-Jul-09 - - - - - - 33 | RENASCOR RESOURCES LIMITED Annual Report 2014 Corporate Governance Statements Corporate Governance Statements The board of directors (the Board) of the Company is responsible for the corporate governance of the Group. The Board guides and monitors the business and affairs of the Company on behalf of its shareholders by whom they are elected and to whom they are accountable. The Company’s Corporate Governance Statement is structured with reference to the Australian Securities Exchange (“ASX”) Corporate Governance Council’s (the “Council”) “Corporate Governance Principles and Recommendations, 2nd Edition”, which are as follows: Principle 1 Principle 2 Principle 3 Principle 4 Principle 5 Principle 6 Principle 7 Principle 8 Lay solid foundations for management and oversight Structure the board to add value Promote ethical and responsible decision making Safeguard integrity in financial reporting Make timely and balanced disclosure Respect the rights of shareholders Recognise and manage risk Remunerate fairly and responsibly A copy of the eight Corporate Governance Principles and Recommendations can be found on the ASX’s website. The Board is of the view that with the exception of the departures from the ASX Guidelines as set out below, it otherwise complies with all of the ASX Guidelines. ASX Principles and recommendations Summary of the Group’s Position Principle 1 – Lay solid foundations for management and oversight Recommendation 1.2 – Companies should disclose the process for evaluating the performance of senior executives The Board has not established a separate nomination committee. The directors consider that the Group is not of a size nor are its affairs of such complexity as to justify the formation of any other special or separate committees at this time. In the absence of a formally constituted nomination committee, the Board acts as a nomination committee. Members of the Board have been brought together to provide a blend of qualifications, skills and national and international experience required for managing a company operating within the mining industry. Principle 2 – Structure the board to add value Recommendation 2.1 – A majority of the Board should be independent directors While this the Group does not presently comply with recommendation, the Group may consider appointing further independent directors in the future. The Group believes that given the size and scale of its operations, non-compliance by the Group with this recommendation will not be detrimental to the Group. Recommendation 2.2 – The Chairman should be an independent director Recommendation 2.4 – The board should establish a nomination committee Mr Bizzell is a non-executive director and the current Chairman of the Board. The Group does not consider Mr Bizzell to be an independent director as defined in the ASX Guidelines on the basis that he, together with his associated entities, are in aggregate a substantial (greater than 5%) shareholder in the Group and Bizzell Capital Partners Pty Ltd, of which he is a director, provided corporate advisory services to the Group. The Group believes that given the size and scale of its operations, non-compliance by the Group with this Recommendation 2.2 will not be detrimental to the Group. The Board’s view is that the Group is not currently of the size to justify the formation of a separate nomination committee. The Board currently performs the functions of a nomination committee and where necessary will seek advice of external advisors in relation to this role. The Board shall, upon the Group reaching the requisite corporate and commercial maturity, approve the constitution of a nomination committee to assist the Board in relation to the appointment of Directors and senior management. Corporate Governance Statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 34 ASX Principles and recommendations Summary of the Group’s Position Principle 3 – Promote Ethical and Responsible Decision Making Recommendation 3.3 – Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them. Recommendation 3.4 – Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board. Recommendation 3.5 – Companies should provide the information indicated in the Guide to reporting on Principle 3. is available on The Group adopted a formal diversity policy on 8 November 2012 which the Company website, www.renascor.com.au. Given the Group’s size and scale of its operations, and the small number of its personnel the Board has not yet established any measurable objectives for achieving gender diversity and as such does not comply with this recommendation. Whilst the Group believes that the current non-compliance with this recommendation will not be detrimental to the Group, it also recognises that a talented, skilful and diverse workforce will be an important factor to the Group’s future success as the Group strives to reach the requisite corporate and commercial maturity. The board will review and consider setting measurable objectives to assist in achieving gender diversity as part of its annual compliance review. The Group Table 1 below summarises the proportion of women in the Group for year ended 30 June 2014. The Group has adopted a Corporate Ethics Policy and a Trading Policy, which are set out in the Company’s Corporate Governance Charter as well as a stand-alone Trading Policy. The Board of the Company is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs. The Corporate Governance Charter and Trading Policy are available on the Company website, www.renascor.com.au. Table 1: For Year Ended 30 June 2014, the Group’s overall workforce is detailed below: NumberP'CtageNumberP'CtageNumberP'CtageBoard (Non Executive)3100%00%3100%Executives and Senior management3100%00%3100%Technical and Administrative #267%133%3100%TOTAL889%111%9100%# Includes part-time employee and contract personnel.MalesFemalesTotal 35 | RENASCOR RESOURCES LIMITED Annual Report 2014 Corporate Governance Statements ASX Principles and recommendations Summary of the Group’s Position Principle 4 – Safeguard integrity in financial reporting Recommendation 4.2 – The audit committee should be structured so that it: - Consists only of non-executive directors - Consists of a majority of independent directors - Is chaired by an independent chair, who is not chair of the board - Has at least 3 members Mr Martin is a non-executive director and the current Chairman of the Audit and Risk Management Committee. Mr Martin is a director of SLRI Pty Ltd and St Lucia Capital Fund Pty Ltd, which act as corporate trustees for trust funds which together are substantial (greater than 5%) shareholders in the Company. Mr Martin is a beneficiary of a trust ultimately holding a more than 20% interest in these trust funds and as such, does not meet the independence requirement as defined in the ASX guidelines. Mr Bizzell is a non-executive director, the current Chairman of the Board and a member of the Audit and Risk Management Committee. The Group does not consider Mr Bizzell to be an independent director as defined in the ASX Guidelines on the basis that he, together with his associated entities, are in aggregate a substantial (greater than 5%) shareholder in the Group. Mr McConachy is an executive director and a member of the Audit and Risk Management Committee. Mr McConachy has business dealings with the Group as disclosed in note 19 to the financial statements and as such does not meet the independence requirement as defined in the ASX guidelines. On the basis of above information, the Group is of the view that that the Audit and Risk Management Committee does not consist of a majority of independent directors. While the Group does not presently comply with this Recommendation 4.2, the Group may consider appointing further independent Directors in the future. The Group believes that given the size and scale of its operations, non-compliance by this the Group with Recommendation 4.2 will not be detrimental to the Group. Principle 8 - Remunerate fairly and responsibly Recommendation 8.1 – The board should establish a remuneration committee The Board has not established a remuneration committee. The Board considers that given its size, no efficiencies or other benefits would be gained by the establishing of such committee. The role of the remuneration committee is carried out by the full Board. The Group has adopted a Remuneration Committee Charter, which the Company’s Corporate in Governance Charter available on the Company website, www.renascor.com.au. is set out Corporate Governance Statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 36 Board The Board has adopted a formal Board Charter that outlines the roles and responsibilities of directors and senior executives. the Company website, www.renascor.com.au. The Corporate Governance Charter is publicly available on The skills, experience and expertise relevant to the position of director held by each director in office at the date of the Annual Report is included in the Director’s Report. Corporate Governance Council Recommendation 2.1 requires a majority of the Board should be independent Directors. The Corporate Governance Council defines an independent director as a non-executive director who is not a member of management and who is free of any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with – the independent exercise of their judgement. In the context of director independence “materiality” is considered from both the Company and the individual director’s perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 5% of the appropriate base amount. Qualitative factors considered included whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors which point to the actual ability of the Director in question to shape the direction of the Company’s loyalty. Factors that may impact on a director’s independence are considered each time the Board meets. At the date of this report: In accordance with the Council’s definition of independence above, and the materiality thresholds set, no directors are considered to be independent: In accordance with the Council’s definition of independence above, and the materiality thresholds set, the following directors are not considered to be independent: Name David Christensen Position Managing Director Geoffrey McConachy Executive Director Reason for non-compliance Mr Christensen is Managing Director and is a substantial (greater than 5%) shareholder in the Company and as such does not meet the independence requirement as defined in the ASX guidelines. Mr McConachy is an Executive Director and has business dealings with the Group as disclosed in note 19 to the financial statements and as such does not meet the independence requirement as defined the ASX guidelines. in Stephen Bizzell Andrew Martin Chris Anderson Non-Executive Director Non-Executive Chairman Mr Bizzell is a Non-executive Director and a member of the Audit and Risk Management Committee. Together with his associated entities, he is a substantial (greater than 5%) shareholder in the Company and as such does not meet the independence requirement as defined in the ASX guidelines. Mr Martin is a non-executive director and the current Chairman of the Audit and Risk Management Committee. Mr Martin is a director of SLRI Pty Ltd and St Lucia Capital Fund Pty Ltd, which act as corporate trustees for trust funds which together are substantial (greater than 5%) shareholders in the Company. Mr Martin is a beneficiary of a trust ultimately holding a more than 15% interest in these trust funds and as such, does not meet the independence requirement as defined the ASX guidelines. Mr Anderson is a Non-executive Director and has business dealings with the Group as disclosed in note 19 to the financial statements. He is also a substantial (greater than 5%) shareholder in the Company and as such does not meet the independence requirement as defined in the ASX guidelines. Non-Executive Director in 37 | RENASCOR RESOURCES LIMITED Annual Report 2014 Corporate Governance Statements Board (Continued) The Company considers industry experience and specific expertise, as well as general corporate experience, to be important attributes of its Board members. The Directors noted above have been appointed to the Board of the Company due to their considerable industry and corporate experience. There are procedures in place, agreed by the board, to enable Directors, in furtherance of their duties, to seek independent professional advice at the Company’s expense. The term in office held by each Director in office at the date of this report is as follows: Name David Christensen Stephen Bizzell Andrew Martin Geoffrey McConachy Chris Anderson Term in office 5 years 7 months 4 years 4 years 3 years 11 months 2 years 7 months Trading Policy The board has adopted a policy and procedure on dealing in the Company’s securities by Directors, officers and employees which prohibits dealing in the Company’s securities when those persons possess inside information until it has been released to the market and adequate time has passed for this to be reflected in the security’s prices, and during certain pre-determined windows. The Company’s policy regarding dealings by directors in the Company’s shares is that directors should never engage in short term trading and should not enter into transactions when they are in possession of price sensitive information not yet released by the Company to the market; or for a period of fourteen (14) days prior to the scheduled (per ASX Listing Rules) release by the Company of (ASX), Quarterly Operations and Cash Flow Reports or such shorter period as may be approved of by the Board of Directors after receipt of notice of intention to buy or sell by a director to other members of the Board. Directors will generally be permitted to engage in trading (subject to due notification being given to the Chairperson and Secretary) for a period commencing one (1) business day after the release of (ASX) Quarterly Operations and Cash Flow Reports to the market and for a period commencing one (1) business day following the release of price sensitive information to the market which allows a reasonable period of time for the information to be disseminated among members of the public, (The Trading Policy is publicly available on the Company’s website, www.renascor.com.au). Remuneration and Nomination Committees Due to the size and scale of operations, the Company does not have separately established Remuneration or Nomination Committees. The full Board carries out the functions of Remuneration and Nomination Committees, operating under charters approved by the Board (The Remuneration Committee Charter and the Nomination Committee Charter are included in the Corporate Governance Charter which is publicly available on the Company website, www.renascor.com.au). Audit and Risk Management Committee The Board has established an Audit and Risk Management Committee, which operates under a charter approved by the Board. It is the Board’s responsibility to ensure that an effective internal control framework exists within the Company. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations such as the benchmarking of operational key performance indicators. The Board has delegated the responsibility for the establishment and maintenance of a framework of internal control and ethical standards for the management of the Company to the Audit and Risk Management Committee. The Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial reports. Two members of the Audit and Risk Management Committee are Non-Executive Directors. The members of the Audit and Risk Management Committee at the date of this report are: Andrew Martin (Chairman) Stephen Bizzell Geoffrey McConachy Corporate Governance Statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 38 Audit and Risk Management Committee (Continued) For additional details of directors’ attendance at Board and Audit and Risk Management Committee meetings and to review the qualifications of the members of the Audit and Risk Management Committee, please refer to the Directors’ Report. The Audit and Risk Management Charter is included in the Corporate Governance Charter which is publicly available on the Company’s website, www.renascor.com.au. Risk Management The Company has developed a basic framework for risk management and internal compliance and control systems which cover organisational, financial and operational aspects of the Company’s affairs. Further details of the Company’s Risk management, policies can be found within the Audit and Risk Management Committee Charter available on the Company’s website www.renascor.com.au. Recommendation 7.2 requires that the Board disclose that management has reported to it as to the effectiveness of the Company’s management of its material business risks. Business risks are considered regularly by the Board and management. As required by Recommendation 7.3, the Board has received written assurances from the Managing Director and Chief Financial Officer that to the best of their knowledge and belief, the declaration provided by them in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that they system is operating effectively in all material respects in relation to financial reporting risks. Performance Evaluation The full Board, in carrying out the functions of the Remuneration and Nomination Committees, considers remuneration and nomination issues annually and otherwise as required in conjunction with the regular meetings of the Board. The performance of the individual members of the Board is considered at the regular meetings of the Board. No formal performance evaluation of the directors was undertaken during the year ended 30 June 2014. The Board intends to undertake formal evaluations during the current financial year against indicators aligned with the financial and non-financial objectives of the Company. Remuneration It is the Company’s objective to provide maximum stakeholder benefit through the retention of a high quality Board and Executive team by remunerating directors and key executives fairly and appropriately with reference to relevant and employment market conditions. To assist in achieving this objective, the Board links the nature and amount of Executive Director’s and Officer’s emoluments to the Group’s financial and operations performance. The expected outcomes of the remuneration structure are: retention and motivation of key Executives attraction of quality management to the Group performance incentives which allow Executives to share the rewards of the success of the Group For details on the amount of remuneration and all monetary and non-monetary components for each of the (Non-Director) Executives during the period, and for all Directors, please refer to the Remuneration Report within the Directors’ Report. In relation to the payment of bonuses, options and other incentive payments, discretion is exercised by the Board, having regard to the overall performance of the Company and the performance of the individual during the period. There is no scheme to provide retirement benefits, other than statutory superannuation, to Non-Executive Directors. The Board is responsible for determining and reviewing compensation arrangements. Continuous Disclosure Policy Detailed compliance procedures for ASX Listing Rule disclosure requirements have been adopted by the Group. The Company’s Obligation of Disclosure Policy can be found within the Company’s Corporate Governance Charter on the Company’s website www.renascor.com.au. 39 | RENASCOR RESOURCES LIMITED Annual Report 2014 Corporate Governance Statements Communications The Group has designed a disclosure system to ensure it complies with the ASX’s continuous disclosure rules and that information is made available to all investors equally, promoting effective communications with shareholders and encouraging shareholder participation at general shareholder meetings. A copy of the Information Disclosure Program Procedures can be found within the Company’s Corporate Governance Charter on its website (www.renascor.com.au) in the Corporate Governance section. In addition to corporate and project information generally available on the Company’s website, in the Investors section of the Company’s website the following information is made available: ASX Releases Annual Reports Quarterly Reports Presentations Prospectus Corporate Governance Charter Trading Policy Diversity Policy Other Information Further information relating to the Company’s corporate governance practices and policies has been made publicly available on the Company’s web site www.renascor.com.au. Consolidated statement of profit or loss and other comprehensive income Annual Report 2014 RENASCOR RESOURCES LIMITED | 40 Financial statements Renascor Resources Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2014 Revenue Other income Administration and consulting Depreciation and amortisation expense Employee benefits expense Legal fees Office accommodation Impairment of exploration costs Other expenses Loss before income tax Income tax expense Loss for the year Other comprehensive income Other comprehensive income for the year, net of tax Notes 5 (a) 5 (b) 6 6 6 6 7 Consolidated 30 June 2014 $ 30 June 2013 $ 60,388 192,195 158,627 (169,424) (8,808) (584,674) (21,879) (26,941) (827,101) (94,098) (1,513,910) 161,818 (175,640) (9,458) (528,875) (35,904) (30,893) (16,936) (85,296) (528,989) - (1,513,910) - (528,989) - - Total comprehensive income for the year (1,513,910)) (528,989) Loss is attributable to: Owners of Renascor Resources Limited Total comprehensive income for the year is attributable to: Owners of Renascor Resources Limited (1,513,910) (528,989) (1,513,910) (528,989) Earnings per share for loss attributable to the ordinary owners of the Parent Entity: Basic earnings per share Diluted earnings per share 28 28 Cents Cents (1.3) (1.3) (0.5) (0.5) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 41 | RENASCOR RESOURCES LIMITED Annual Report 2014 Consolidated statement of financial position Renascor Resources Limited Consolidated statement of financial position As at 30 June 2014 ASSETS Current assets Cash and cash equivalents Trade and other receivables Other Total current assets Non-current assets Property, plant and equipment Exploration and evaluation Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Accumulated losses Total equity Consolidated 30 June 2014 $ 30 June 2013 $ Notes 8 9 10 11 13 14 15 1,424,978 161,210 28,419 1,614,607 2,658,106 216,780 34,884 2,909,770 13,459 6,942,371 6,955,830 22,267 6,162,500 6,184,767 8,570,437 9,094,537 198,823 108,799 307,622 309,248 66,704 375,952 25,421 25,421 8,790 8,790 333,043 384,742 8,237,394 8,709,795 17 18(a) 18(b) 10,803,970 1,018,436 (3,585,012) 8,237,394 9,798,800 982,097 (2,071,102) 8,709,795 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Consolidated statement of changes in equity Annual Report 2014 RENASCOR RESOURCES LIMITED | 42 Renascor Resources Limited Consolidated statement of changes in equity For the year ended 30 June 2014 Consolidated Notes Contributed equity $ Share-based Payments Reserve $ Accumulated losses $ Total equity $ Balance at 1 July 2012 9,758,800 917,275 (1,542,113) 9,133,962 Loss for the year Total comprehensive income - - - - (528,989) (528,989) (528,989) (528,989) Transactions with owners in their capacity as owners: Contributions of equity net of transaction costs Share options issued 17(b) 18(a) 40,000 40,000 - - 64,822 64,822 - - - 40,000 64,822 104,822 Balance at 30 June 2013 9,798,800 982,097 (2,071,102) 8,709,795 Balance at 1 July 2013 Loss for the year Total comprehensive income 9,798,800 982,097 (2,071,102) 8,709,795 - - - - (1,513,910) (1,513,910) (1,513,910) (1,513,910) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs Share options issued 17(b) 1,005,170 18(a) - 1,005,170 - 36,339 36,339 - - - 1,005,170 36,339 1,041,509 Balance at 30 June 2014 10,803,970 1,018,436 (3,585,012) 8,237,394 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 43 | RENASCOR RESOURCES LIMITED Annual Report 2014 Consolidated statement of cash flows Renascor Resources Limited Consolidated statement of cash flows For the year ended 30 June 2014 Consolidated 30 June 2014 $ 30 June 2013 $ Cash flows from operating activities Receipts from Goods & Services Tax paid Payments to suppliers and employees (inclusive of goods and services tax) Interest received Other (Research & Development tax concession) Other (DMITRE PACE funding grant) Net cash inflow (outflow) from operating activities 127,874 186,627 (864,879) (959,001) 68,409 183,676 5b 161,818 - 5b 40,000 - 27 (466,778) (588,698) Cash flows from investing activities Payments for property, plant and equipment Payments for exploration expenditure Net cash inflow (outflow) from investing activities Cash flows from financing activities Proceeds of loan from shareholder Repayment of loan from shareholder Payment for share issue expenses Proceeds from issues of shares Net cash inflow (outflow) from financing activities 10 - (1,979) (1,771,521) (1,859,176) (1,771,521) (1,861,155) - - (74,830) 1,080,000 1,005,170 - - - - - - Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Cash and cash equivalents at end of year (1,233,128) (2,449,853) 2,658,106 5,107,959 1,424,978 2,658,106 8 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 44 Notes to the consolidated financial statements 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Summary of significant accounting policies Financial risk management Critical accounting estimates and judgments Segment information Revenue Expenses Income tax expense Current assets - Cash and cash equivalents Current assets - Trade and other receivables Non-current assets - Property, plant and equipment Non-current assets - Exploration and evaluation, development and mine properties Non-current assets - Deferred tax assets Current liabilities - Trade and other payables Current liabilities - Provisions Non-current liabilities - Provisions Non-current liabilities - Deferred tax liabilities Contributed equity Reserves and retained earnings Dividends Key management personnel disclosures Remuneration of auditors Commitments and contingent liabilities Related party transactions Subsidiaries Interests in joint ventures Events occurring after the reporting period Reconciliation of profit after income tax to net cash outflow from operating activities Earnings per share Share-based payments Parent Entity financial information Application of new and revised Accounting Standards Page 45 51 53 54 55 55 56 57 57 58 58 59 59 60 60 60 61 62 62 62 64 65 66 66 66 67 67 68 69 73 74 45 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 1 Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Group consisting of Renascor Resources Limited (''Company'' or ''Parent Entity'') and its subsidiaries. Renascor Resources Limited is a for-profit entity for the purpose of preparing these financial statements. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The presentation currency used in this financial report is Australian dollars. (i) Compliance with IFRS The consolidated financial statements of the Group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (ii) Historical cost convention These financial statements have been prepared on a historical cost basis, as modified by the revaluation of available-for-sale investments and financial assets and liabilities (including derivative financial instruments) at fair value through profit and loss. (iii) Going Concern The financial statements have been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. This includes the realisation of capitalised exploration expenditure of $6,942,371 (30 June 2013: $6,162,500). The Group has incurred a loss after tax for the year of $1,513,910 (2013; $528,989) and operations were funded by a net cash outflow of $1,233,128 (2013: $2,449,853). At 30 June 2014, the Group had net current assets of $1,306,985 (30 June 2013: $2,533,818). The consolidated entity’s ability to continue as a going concern is contingent on raising additional capital and/or the successful exploration and subsequent exploitation of its areas of interest through sale or development. Should the Group not achieve the matters set out above, then there would be significant uncertainty over the ability of the Group to continue as a going concern, and, therefore it may be required to realise its assets and discharge its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of liabilities that might result should the Company be unable to continue as a going concern and meet its debts as and when they fall due. (b) Principles of consolidation (i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Renascor Resources Limited (‘company’) as at 30 June 2014 and the results of all subsidiaries for the year then ended. Renascor Resources Limited and its subsidiaries together are referred to in these financial statements as the Group or the consolidated entity. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity (refer to note 1(h)). Joint Arrangements (ii) Joint arrangements are arrangements in which one or more parties have joint control (the contractual sharing of control of an arrangement where decisions about relevant activities require unanimous consent of the parties sharing control). Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 46 1 Summary of significant accounting policies (continued) (b) Principles of consolidation (continued) (iii) Joint Operations The consolidated entity has entered into joint arrangements which are classified as joint operations because the parties to the joint arrangements have rights to the assets and obligations for the liabilities, rather than to the net assets, of the joint arrangements. The consolidated entity has recognised its direct right to, as well as its share of jointly held, assets, liabilities, revenues and expenses of joint operations which have been included in the financial statements under the appropriate headings. Details of joint operations are set out in note 25. (c) Foreign currency translation Functional and presentation currency (i) Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which it operates (‘the functional currency'). The consolidated financial statements are presented in Australian dollars, which is the Company's functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation. Foreign exchange gains and losses that relate to borrowings are presented in profit or loss, within finance costs. All other foreign exchange gains and losses are presented in profit or loss on a net basis within other income or other expenses. (d) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid. Interest income is recognised on a time proportion basis using the effective interest method. (e) Cash and cash equivalents For the purpose of presentation in the statements of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term and highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (f) Trade receivables Trade and other receivables are recognised initially at cost less any impairment losses. Trade and other receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. (g) Income tax The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. 47 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 1 Summary of significant accounting policies (continued) (g) Income tax (continued) Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. (h) Business combinations The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred and the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group's share of the net identifiable assets acquired are recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. (i) Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets other than goodwill that have previously been impaired are reviewed for possible reversal of impairment at each reporting date. (j) Property, plant and equipment All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. The cost of an item of plant and equipment also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 48 1 Summary of significant accounting policies (continued) (j) Property, plant and Equipment (continued) Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Depreciation on plant and equipment (excluding land) is calculated on a straight line basis over the estimated useful life of the asset. The expected useful lives in the current and comparative periods are as follows: - Plant and equipment 3 – 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 (note 1(i)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. (k) Exploration and evaluation expenditure Exploration and evaluation expenditure is carried forward in the financial statements, in respect of areas of interest for which the rights of tenure are current and where: (i) such costs are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; or (ii) exploration and/or evaluation activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and while active and significant operations in, or in relation to, the area are continuing. Exploration expenditure incurred that does not satisfy the policy stated above is expensed in the period in which it is incurred. Exploration expenditure that has been capitalised which no longer satisfies the policy stated above is written off in the period in which any capitalised exploration expenditure no longer satisfies that policy. The net carrying value of each area of interest is reviewed regularly and, to the extent to which this value exceeds its recoverable value, that excess is provided for or written off in the year in which this is determined. (l) Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless an unconditional right exists to defer payment 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. (m) Provisions Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. The Group has obligations to restore and rehabilitate certain areas where drilling has occurred on exploration tenements. These obligations are currently being met as the drilling is completed and as such no provision has been recognised. 49 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 1 Summary of significant accounting policies (continued) (n) Employee benefits (i) Short-term employee obligations Liabilities for wages and salaries, including non-monetary benefits expected to be settled wholly within 12 months after the end of each reporting period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. (ii) Other long-term employee obligations The liability for annual leave and long service leave not expected to be settled wholly within 12 months of the reporting date, are recognised as part of the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future salaries and wages levels, experience of employee departures and periods of service. Expected future payments are discounted using national government bond rates at the end of the reporting period with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Regardless of when settlement is expected to occur, liabilities for long service leave and annual leave are presented as current liabilities in the statement of financial position if the entity does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period. (iii) Retirement benefit obligations Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss when they are due. (iv) Share-based payments Share-based compensation benefits are provided to directors, executives and consultants through the granting of unlisted share options and performance rights. Detailed information is set out in note 29. Options and performance rights are granted for no cash consideration. When these share options and performance rights are granted, the fair value of the options and performance rights issued are recognised as an employee benefits expense with a corresponding increase in equity. The amount recognised as an expense is adjusted to reflect the number of share options and performance rights for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of share options and performance rights that meet the related service and non-market performance conditions at the vesting date. The fair value of share options and performance rights are measured using an appropriate pricing model. Measurement inputs include the share price on measurement date, exercise price of the instrument, expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option and performance rights. Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. Upon the exercise of options and performance rights, the balance of the share-based payments reserve relating to those options and performance rights is transferred to share capital. (o) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 50 1 Summary of significant accounting policies (continued) (p) Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing: the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares by the weighted average number of ordinary shares outstanding during the financial year (refer to note 28). (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. (q) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Managing Director, who is the Group's chief operating decision maker. The Managing Director is responsible for allocating resources and assessing performance of the operating segments. Refer to note 4 for segment reporting information. (r) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. (s) Parent Entity financial information The financial information for the Parent Entity, Renascor Resources Limited, disclosed in note 30 has been prepared on the same basis as the consolidated financial statements, except as set out below. Investments in subsidiaries (i) Investments in subsidiaries are accounted for at cost in the financial statements of the Parent Entity. 51 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 2 Financial risk management The Group considers its capital to comprise its ordinary share capital and accumulated losses. The Group does not have a formally established treasury function. The board is responsible for managing the Group’s finance facilities. The Group does not currently undertake hedging of any kind and is not directly exposed to currency risk. The Group holds the following financial instruments: Financial assets Cash and cash equivalents Trade and other receivables Financial liabilities at amortised cost Trade and other payable Consolidated 30 June 2014 $ 30 June 2013 $ 1,424,978 161,210 1,586,188 2,658,106 216,780 2,874,886 198,823 198,823 309,248 309,248 (a) Market risk (i) Cash flow and fair value interest rate risk As at 30 June 2014 and 30 June 2013, the Group had no borrowings. The table below summarises the Group's exposure to interest rate risk at the end of the reporting period: Consolidated 30 June 2014 30 June 2013 Weighted average interest rate % Balance $ Weighted average interest rate % Balance $ Cash and cash equivalents Trade and other receivables Trade and other payables Net exposure to cash flow interest rate risk 3.46 % - % - % 1,424,978 161,210 (198,823) 1,387,365 3.78 % - % - % 2,658,106 216,780 (309,248) 2,565,638 An analysis by maturities is provided in (c) below. The Group analyses its interest rate exposure on a dynamic basis. (ii) Summarised sensitivity analysis The table below summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk. Consolidated 30 June 2014 Financial assets Interest rate risk - 1.0% + 1.0% Carrying amount $ Profit $ Other equity $ Profit $ Other equity $ Cash and cash equivalents 1,424,978 (14,250) Trade and other receivables 161,210 Financial liabilities Trade and other payables (198,823) - - Total increase/ (decrease) 1,387,365 (14,250) - - - - 14,250 - - 14,250 - - - - Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 52 2 Financial risk management (continued) (a) Market risk (continued) Consolidated 30 June 2013 Financial assets Interest rate risk -1.0% +1.0% Carrying amount $ Profit $ Other equity $ Profit $ Other equity $ Cash and cash equivalents 2,658,106 (26,581) Trade and other receivables 216,780 Financial liabilities Trade and other payables (309,248) - - Total increase/ (decrease) 2,565,638 (26,581) - - - - 26,581 - - 26,581 - - - - (b) Credit risk Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted. If wholesale customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: Trade and other receivables Counterparties without external credit rating Total trade and other receivables Cash and cash equivalents Minimum rating of A Total cash and cash equivalents Consolidated 2014 $ 2013 $ 161,210 161,210 216,780 216,780 1,424,978 2,658,106 1,424,978 2,658,106 53 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 2 Financial risk management (continued) (c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and close out market positions. At the end of each reporting period the Group held a combination of term deposits and deposits at call of $1,424,978 (2013: $2,658,106) that are expected to readily generate cash inflows for managing liquidity risk. The Group has sufficient funds to finance its operations and exploration activities and to allow for reasonable contingencies. Maturities of financial liabilities The tables below analyse the Group's financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. Less than 6 months 6 - 12 months Less than 1 year Between 1 and 5 years Over 5 years Group - At 30 June 2014 $ $ $ $ $ Total contract ual cash flows $ Carrying Amount (assets)/ liabilities $ Trade payables Total (198,823) (198,823) - - - - - - - (198,823) (198,823) - (198,823) (198,823) Group - At 30 June 2013 Less than 6 months 6 - 12 months Less than 1 year Between 1 and 5 years Over 5 years $ $ $ $ $ Total contractu al cash flows $ Carrying Amount (assets)/ liabilities $ Trade payables Total (309,248) (309,248) - - - - - - - (309,248) (309,248) - (309,248) (309,248) 3 Critical accounting estimates and judgments Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. Estimates and judgments are continually evaluated and are based on management's historical experience and knowledge of relevant facts and circumstances at that time. The Group makes estimates and judgments concerning the future. The resulting accounting estimates and judgments may differ from the related actual results and may have a significant effect on the carrying amounts of assets and liabilities within the next financial year and on the amounts recognised in the financial statements. Information on such estimates and judgments is contained in the accounting policies and/or notes to the financial statements. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 54 3 Critical accounting estimates and judgments (continued) (i) Exploration and evaluation expenditure Expenditure incurred on exploration and evaluation activities have been carried forward in accordance with Note 1 (k) on the basis that exploration and evaluation activities have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in relation to the area are continuing. Exploration expenditure incurred that does not satisfy the policy stated above is expensed in the period in which it is incurred. Exploration expenditure that has been capitalised which no longer satisfies the policy stated above is written off in the period in which the decision is made. Details of capitalised exploration and evaluation costs are presented in Note 11. (ii) Impairment of property, plant and equipment, deferred exploration and development expenditure and mine properties The Group reviews for impairment of property, plant and equipment, exploration and development expenditure and mine properties in accordance with the accounting policy stated in note 1(i) to 1(k). With the exception of deferred exploration (refer Note 11), the recoverable amount of these assets has been determined based on higher of the assets' fair value less costs to sell and value in use. These calculations require the use of estimates and judgments. (iii) Income taxes Judgement is required in determining not to recognise deferred tax assets for tax losses. Total unused tax losses are shown at note 7(c). (iv) Share-based payments Management has determined that the Black Scholes and Monte Carlo simulation models are appropriate techniques to determine the fair value of share-based payments. These models require the use of input assumptions, including expected volatility, expected life, expected dividend rate and expected risk-free rate of return. The list of inputs used to calculate the fair values of share-based payments are provided in Note 29. 4 Segment information The Group has identified its operating segments based on the internal reports that are reviewed and used by the Managing Director (chief operating decision maker) and the board of directors in assessing performance determining the allocation of resources. The Group is managed primarily on a geographic basis, that is, the location of the respective areas of interest (tenements) in Australia. Operating segments are determined on the basis of financial information reported to the board which is at the consolidated level. The Group does not have any products or services it derives revenue from. Accordingly, management currently identifies the Group as having only one reportable segment, being the exploration for copper, gold, uranium and other minerals in Australia. There have been no changes in the operating segments during the year. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole. 55 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 5 Revenue and Other Income (a) Revenue Interest income (b) Other Income Research and development tax concession DMITRE PACE funding grant Note: As at 30 June 2014 the research and development tax concession cash payment had not yet been received. 6 Expenses Profit/(Loss) before income tax includes the following specific expenses: Depreciation Office furniture and equipment Computer equipment Total depreciation Exploration costs Exploration expenditure incurred Exploration expenditure written off Finance costs - net Interest and finance charges paid/payable for financial liabilities not at fair value through profit or loss Fair value gains on interest swaps cash flow hedges - transfer from equity Finance costs expensed Employee benefits expense Employee share based payments expense Defined contribution superannuation expense Other share based payments expense Minimum lease payments Consolidated 30 June 2014 $ 30 June 2013 $ 60,388 192,195 118,627 161,818 40,000 - 158,627 161,818 Consolidated 30 June 2014 $ 30 June 2013 $ 768 8,040 8,808 708 8,750 9,458 - 827,101 827,101 - 16,936 16,936 - - - - - - 485,373 447,756 24,069 57,050 528,875 36,339 62,962 584,674 - 4,523 26,941 30,893 Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 56 7 Income tax expense (a) Income tax expense: Current tax Deferred tax Deferred income tax (revenue) expense included in income tax expense comprises: Decrease (increase) in deferred tax assets (note 12) (Decrease) increase in deferred tax liabilities (note 16) Consolidated 30 June 2014 $ 30 June 2013 $ - - - - - - (1,778,987) 1,778,987 - (1,547,432) 1,547,432 - (b) Numerical reconciliation of income tax expense to prima facie tax payable Profit/(Loss) from continuing operations before income tax expense (1,513,910) (528,989) Tax at the Australian tax rate of 30% (2013: 30%) Tax effect of amounts which are not deductible (taxable) in calculating Taxable income: Non-taxable income: - Debt forgiveness (454,173) (158,697) - - - Research and development tax concession (35,588) (48,545) Non-deductible expenses: Entertainment Share-based payments - - - Other Deferred tax asset not recognised Under / over provision for income tax Income tax expense (c) Tax losses 285 10,902 - 478,575 - 454,173 660 8,578 1,057 196,947 - 158,697 - - Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 30% 3,167,519 950,256 1,754,896 526,469 (d) Unrecognised temporary differences Temporary differences for which deferred tax assets have not been recognised: Temporary differences Potential tax benefit @ 30% - - - - 57 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 8 Current assets - Cash and cash equivalents Cash at bank and in hand (a) Cash at bank and on hand Consolidated 30 June 2014 $ 30 June 2013 $ 1,424,978 2,658,106 Cash at bank accounts are interest bearing attracting normal market interest rates. As funds are held with AA/AA1 to A/A1 credit rated financial institutions (as per S&P/Moody's ratings) there is minimal counterparty credit risk of funds held. (b) Fair value The carrying amount for cash and cash equivalents equals the fair value. 9 Current assets - Trade and other receivables GST refundable Research & Development Tax Concession receivable Sundry receivables Consolidated 30 June 2014 $ 30 June 2013 $ 41,229 118,627 1,354 161,210 45,729 161,818 9,233 216,780 (a) Fair value risk Due to the short-term nature of current receivables, their carrying amount is assessed to approximate their fair value. (b) Credit risk The maximum exposure to credit risk at the end of each reporting period is the carrying amount of each class of receivables mentioned above. Refer to note 2 for more information on the risk management policy of the Group and the credit quality of the entity's trade receivables. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 58 10 Non-current assets - Property, plant and equipment Consolidated Gross carrying amount Balance at 30 June 2012 Additions Depreciation charge Balance at 30 June 2013 Additions Depreciation charge Balance at 30 June 2014 Computer Equipment Cost Accumulated depreciation Net book amount Plant and Equipment Cost Accumulated depreciation Net book amount Computer equipment $ Office furniture and equipment $ Total $ 26,514 1,125 (8,750) 18,889 - (8,040) 10,849 3,232 854 (708) 3,378 - (768) 2,610 29,746 1,979 (9,458) 22,267 - (8,808) 13,459 Consolidated 30 June 2014 $ 31,549 (20,700) 10,849 4,444 (1,834) 2,610 30 June 2013 $ 31,549 (12,660) 18,889 4,444 (1,066) 3,378 11 Non-current assets - Exploration and evaluation expenditure Exploration and evaluation Opening balance Acquisitions through business combinations Impairment Expenditure incurred Closing balance Consolidated 30 June 2014 $ 6,162,500 - (827,101) 1,606,972 6,942,371 30 June 2013 $ 4,291,316 - (16,935) 1,888,119 6,162,500 Exploration and evaluation expenditure comprises of net direct costs and includes an appropriate portion of related salaries & wages expenditure associated with each area of interest. During the financial year the Group has allocated $593,758 of internal personnel costs (2013: $603,001) and management fees for joint venture tenements of $3,256 (2013: $30,076) which form part of the exploration expenditure for the year. The recoverability of exploration and evaluation assets depends on successful developments and commercial exploitation of tenement areas. 59 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 12 Non-current assets - Deferred tax assets Consolidated The balance comprises temporary differences attributable to: Deductible temporary differences - - - Accruals and other payables Employee benefits Expenses deductible over 5 years Tax losses Total deferred tax assets 30 June 2014 $ 30 June 2013 $ 9,273 40,266 103,434 8,715 22,648 141,754 1,626,014 1,778,987 1,374,314 1,547,432 Set-off of deferred tax liabilities pursuant to set-off provisions (note 16) Net deferred tax assets (1,778,987) (1,547,432) - - Movements: Opening balance at 1 July Credited to profit or loss Closing balance at 30 June 1,547,432 231,555 1,778,987 1,006,390 541,042 1,547,432 13 Current liabilities - Trade and other payables Trade payables Sundry creditor and accrued expenses Other payables Consolidated 30 June 2014 $ 88,709 110,114 - 198,823 30 June 2013 $ 219,850 92,941 (3,543) 309,248 Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 60 14 Current liabilities – Provisions Consolidated 30 June 2014 $ 30 June 2013 $ Employee benefits 108,799 66,704 Provision for employee benefits is made for annual leave owed as at 30 June 2014 15 Non-current liabilities – Provisions Consolidated 30 June 2014 $ 30 June 2013 $ Employee benefits 25,421 8,790 Provision for employee benefits is made for long service leave owed as at 30 June 2014 16 Non-current liabilities - Deferred tax liabilities Consolidated 30 June 2014 $ 30 June 2013 $ The balance comprises temporary differences attributable to: Assessable temporary differences - - Interest receivable Exploration and evaluation expenditure Total deferred tax liabilities 149 1,778,838 1,778,987 2,556 1,544,877 1,547,432 Set-off of deferred tax liabilities pursuant to set-off provisions (note 12) Net deferred tax liabilities (1,778,987) - - (1,547,432) Movements: Opening balance at 1 July Charged to profit or loss Closing balance at 30 June 1,547,432 213,555 1,778,987 1,006,390 541,042 1,547,432 61 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 17 Contributed equity 30 June 2014 Shares 30 June 2013 Shares 30 June 2014 $ 30 June 2013 $ (a) Share capital Ordinary shares Fully paid (b),(c) 134,600,000 114,800,000 10,803,970 9,798,800 (b) Movements in ordinary share capital: Date Details Notes Number of shares Issue price $ 1 July 2012 Opening balance 114,000,000 9,758,800 31 August 2012 Ordinary shares issued to Hiltaba Gold Pty Ltd - election securities for right to earn-in pursuant to the Cowell joint venture agreement 800,000 $0.05 40,000 30 June 2013 Balance 114,800,000 9,798,800 5 May 2014 2 June 2014 30 June 2014 30 June 2014 30 June 2014 Placement - Ordinary shares issued Share Purchase Plan (SPP) – Ordinary shares issued. Placement - Ordinary shares issued to directors Placement - Ordinary shares issued Less: Transaction costs arising on share issue, net of tax 6,640,000 $0.05 332,000 9,910,000 $0.05 495,500 3,200,000 1,850,000 21,600,000 $0.05 $0.05 160,000 92,500 1,080,000 (74,830) 30 June 2014 Balance 136,400,000 10,803,970 (c) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. (d) Options and performance rights Information relating to options and performance rights issued, exercised and lapsed during the financial year and options and performance rights outstanding at the end of the reporting period, is set out in note 29. (e) Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of its capital structure comprising equity and cash. The Group reviews the capital structure on a semi-annual basis. As part of this review the Group considers the cost of capital and the risks associated with each class of capital. Due to the nature of the Group’s activities, being that of exploration, the Directors believe that the most advantageous way to fund activities is through equity. The Group’s exploration activities are monitored against budget and cash flow forecasts are prepared and maintained to ensure that adequate funds are available. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 62 18 Reserves and accumulated losses (a) Reserves Share-based payments Movements: Share-based payments Balance 1 July Performance rights granted Balance 30 June Options and performance rights granted arise from: Performance rights approved for issue to directors and executives (refer note 29(a)) Options issued to consultants (refer note 29(a)) Options issued to Hiltaba Gold Pty Limited (refer note 29(b)) (b) Accumulated losses Movements in accumulated losses were as follows: Balance 1 July Net loss for the year Balance 30 June Consolidated 30 June 2014 $ 30 June 2013 $ 1,018,436 982,097 982,097 36,339 1,018,436 917,275 64,822 982,097 36,339 - - 36,339 24,069 4,523 36,230 64,822 Consolidated 30 June 2014 $ 30 June 2013 $ 2,071,102 1,513,910 3,585,012 1,542,113 528,989 2,071,102 (c) Nature and purpose of reserves (i) Share-based payments The share-based payments reserve is used to recognise the fair value of equity instruments issued to directors, executives, consultants and others. 19 Dividends The directors did not declare a dividend for the June 2014 period. Parent Entity 30 June 2014 $ 30 June 2013 $ Franking credits available for subsequent financial years based on a tax rate of 30% (2013: 30%) - - 63 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 20 Key management personnel disclosures (a) Key management personnel compensation Consolidated 30 June 2014 $ 30 June 2013 $ 972,793 16,632 56,712 36,339 1,082,476 964,334 8,790 52,713 24,069 1,049,906 Short-term employee benefits Long-term benefits Post-employment benefits Share-based payments (b) Details of remuneration Details of the remuneration of each director of the Company and each of the other key management personnel of the Group, including their personally related entities, are set out in the remuneration report on pages 18 to 26. (c) Other transactions with key management personnel Mr G W McConachy and Mr C Anderson are directors of Euro Exploration Services Pty Ltd (Euro). Euro has provided the company with exploration services, geochemical sampling services as well as the provision of geological personnel services during the year. The services provided are based on normal commercial terms and conditions. During the financial year the Company incurred expenses of $87,402 (2013: $157,905) from Euro which has been capitalised as Exploration Expenditure during the financial year. An amount of $9,944 (2013: $13,172) was owing to Euro at 30 June 2014. Mr C Anderson is a director of Pondray Pty Ltd trading as CG Anderson & Associates (CGAA). CGAA has provided geophysical services to the company. During the financial year the Company incurred expenses of $103,234 (2013: $102,400) from CGAA of which $102,400 (2013: $99,070) has been capitalised as Exploration Expenditure during the financial year. An amount of $24,513 (2013: $10,285) was owing to CGAA at 30 June 2014. Mr S. Bizzell is a director of Bizzell Capital Partners Pty Ltd (BCP). BCP has provided corporate advisory services to the company in relation to a capital raising. During the financial year the Company incurred expenses of $51,470 (2013: $Nil) from BCP which was included as a cost of the capital raising during the financial year. An amount of $11,000 (2013: $Nil) was owing to BCP at 30 June 2014. . Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 64 21 Remuneration of auditors During the year the following fees were paid or payable for services provided by the auditor of the Parent Entity, and its related practices: Consolidated 30 June 2014 $ 30 June 2013 $ BDO Audit (SA) Pty Ltd (i) Audit and other assurance services Amounts paid/payable for audit and review of financial statements for the entity or any entity in the Group: Total remuneration for audit and other assurance services 32,800 32,800 2,035 36,000 2,0 36,000 37,000 50,750 (ii) Taxation services Amounts paid/payable to a related practice of the auditor for tax compliance and advisory services for the entity or any entity in the Group: Total remuneration for taxation services 16,493 0 0 9,000 7,570 7,570 Total auditors' remuneration 49,293 45,000 The auditor of Renascor Resources Limited is BDO Audit (SA) Pty Ltd. It is the Group’s policy to employ the auditors on assignments additional to their statutory audit duties where their expertise and experience with the Group are important. These assignments are principally for taxation advice and the services are provided by a related practice of the auditor. 65 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 22 Commitments and contingent liabilities In order to maintain current rights to tenure to exploration tenements, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These amounts are subject to renegotiation when application for a mining lease is made and at other times. These amounts, which are not provided for in the financial report and are expected to be capitalised as incurred but not recognised as liabilities, are as follows: Exploration and mining lease commitments Consolidated 30 June 2014 $ 30 June 2013 $ Commitments in relation to exploration and mining leases held at the end of each reporting period but not recognised as liabilities, payable: Within one year Later than one year but not later than five years Later than five years 4,081,713 574,179 - 4,655,892 1,206,000 2,641,000 - 3,847,000 To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum expenditure requirements are not met, the Company has the option to negotiate new terms or relinquish the tenements. The Company also has the ability to meet expenditure requirements by joint venture or farm-in agreements. Exploration and mining lease contingent liabilities The Group has previously entered into Asset Sale Agreements with Hillment Pty Ltd to acquire tenement EL 4570 and a similar agreement with Hiltaba Gold Pty Ltd for EL4707. Under each agreement, the company has granted a 1% royalty of the Net Smelter Return. The timing and amount of any financial effect relating to these agreements are dependent on the successful exploration and subsequent exploitation of the associated tenements. Operating Lease Commitments Non-cancellable operating lease commitments: Within one year Later than one year but not later than five years Later than five years Consolidated 30 June 2014 $ 30 June 2013 $ - - - - 12,017 - - 12,017 The office lease expired on 30 November 2013. The company is currently negotiating a short term lease and office rent is payable monthly in advance on a month to month basis. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 66 23 Related party transactions (a) Parent Entities The Parent Entity within the Group is Renascor Resources Limited. (b) Subsidiaries Interests in subsidiaries are set out in note 24. (c) Key management personnel Disclosures relating to key management personnel are set out in note 20. 24 Subsidiaries Significant investments in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(b). Name of entity incorporation Class of shares Equity holding Country of 2014 % 2013 % Kurilpa Uranium Pty Ltd Australia Ordinary Astra Resources Pty Ltd Australia Ordinary 100 100 100 100 25 Joint Operations (a) Kokotha Joint Venture On 21 February 2014 the Company entered into an agreement with SAEX Pty Ltd to terminate any remaining obligations under the joint venture agreement (the Kokotha Joint Venture Agreement) dated 27 February 2012. Pursuant to the agreement to terminate the joint venture agreement, tenement EL 4836 was subsequently transferred to the company. (b) Cowell Joint Venture On 26 October 2010 the Company entered into a joint venture agreement (the Cowell Joint Venture Agreement) with Hiltaba Gold Pty Ltd, a subsidiary of Stellar Resources Limited (ASX: SRZ). During the year ended 30 June 2012, having met the minimum spend of $500,000, pursuant to the Cowell Joint Venture Agreement, the Company elected to continue the joint venture, and it may now earn a 75% interest if it spends $3,000,000 toward exploration expenditure on EL 5307 (previously EL 3978) over 4 years. As at 30 June 2014 exploration expenditure of $1,236,793 (2013: $1,209,966), solely funded by the Company has been recorded. 67 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 26 Events occurring after the reporting period On 29 August 2014, 500,000 ordinary fully paid shares were issued to nominees of Currie Resources Pty Ltd (Currie) as consideration for exploration and access rights pursuant to an agreement between the Company and Currie Resources Pty Ltd that also grants the Company an option to acquire 100% of two exploration licences, EL 5400 and EL5401 tenements in the Gawler Craton, South Australia. No other matter or circumstance has arisen since 30 June 2014 that has significantly affected, or may significantly affect: the Group's operations in future financial years, or the results of those operations in future financial years, or the Group's state of affairs in future financial years. 27 Reconciliation of profit after income tax to net cash outflow from operating activities Profit / (loss) for the year Depreciation and amortisation Recoveries – JV Management Fees Write Off Exploration/Inventories Non-cash director, executive and consultant benefits expense - share-based payments Change in operating assets and liabilities, net of effects from purchase of controlled entity: Consolidated 30 June 2014 $ (1,513,910) 8,808 - 827,101 30 June 2013 $ (528,989) 9,458 (30,076) 16,936 36,339 28,592 (Increase) / decrease in trade and other receivables (Increase) / decrease in other assets Increase / (decrease) in trade and other payables Increase / (decrease) in provisions Net cash inflow / (outflow) from operating activities (55,570) (129,577) 6,464 3,474 54,123 10,734 58,727 30,750 (466,778) (588,698) Non-cash financing and investing activities Shares issued to Callabonna Uranium for no cash consideration in respect of Exploration and Evaluation activities Share options issued to Hiltaba Gold Pty Ltd for no cash consideration in respect of Exploration and Evaluation activities - (40,000) - (36,230) Shares options issued to consultants for no cash consideration - (4,523) Performance rights issued to executive directors for no cash consideration (36,339) (24,069) Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 68 28 Earnings per share (a) Basic earnings per share From continuing operations attributable to the ordinary owners of the Company Total basic earnings per share attributable to the ordinary owners of the Company (b) Diluted earnings per share From continuing operations attributable to the ordinary owners of the Company Total diluted earnings per share attributable to the ordinary owners of the Company Consolidated 30 June 2014 Cents 30 June 2013 Cents (1.3) (1.3) (1.3) (1.3) (0.5) (0.5) (0.5) (0.5) (c) Reconciliations of earnings used in calculating earnings per share Basic earnings per share Profit / (loss) attributable to the ordinary owners of the Company used in calculating basic earnings per share From continuing operations (d) Weighted average number of shares used as the denominator Consolidated 30 June 2014 $ 30 June 2013 $ (1,513,910) (1,513,910) (528,989) (528,989) Consolidated 30 June 2014 Number 30 June 2013 Number Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options and performance rights* Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 116,638,137 114,666,301 - - 116,638,137 114,666,301 * Options and performance rights are considered anti-dilutive as the Group is loss making (i) Options and performance rights The options and performance rights have not been included in the determination of basic earnings per share. Options and performance rights could potentially dilute earnings per share in the future. Details relating to the options and performance rights are set out in note 29. 69 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 29 Share-based payments (a) Share based payments to directors, executives and consultants Set out below are summaries of options granted to directors, senior management and consultants: Grant Date Expiry date Consolidated – 2014 30 Aug 2010 30 Aug 2010 27 Oct 2010 Total 15 Dec 2013 31 Dec 2014 31 Dec 2014 Weighted average exercise price Exercise price Balance at start of the year Number Granted during the year Number Exercised during the year Number Expired/ Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number $0.24 $0.24 $0.24 8,100,000 1,000,000 700,000 9,800,000 $0.24 - - - - - - - - 8,100,000 - - 1,000,000 1,000,000 - - 700,000 700,000 8,100,000 1,700,000 1,700,000 $- $- $0.24 $0.24 $0.24 Grant Date Expiry date Exercise price Balance at start of the year Number Granted during the year Number Exercised during the year Number Expired/ Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number Consolidated – 2013 30 Aug 2010 30 Aug 2010 27 Oct 2010 Total 15 Dec 2013 $0.24 8,100,000 - 31 Dec 2014 31 Dec 2014 - - 1,000,000 700,000 - 9,800,000 - - - - $0.24 $0.24 - - - - Weighted average exercise price $0.24 $- $- $- 8,100,000 1,000,000 700,000 9,800,000 $0.24 8,100,000 1,000,000 700,000 9,800,000 $0.24 8,100,000 share options expired during on 15 December 2013 and the weighted average remaining contractual life of the above share options outstanding at the end of the period was .0.50 years. (2013: 0.64 years). There was no amount of the equity settled share-based payment recognised in the current period in respect of the options granted above to directors and executives (2013: $Nil). There was no amount of the equity settled share-based payment recognised in the current period in respect of the options granted above to consultants (2013: $4,523).Amounts previously recognised have been included under administration and consulting expense in the statement of profit or loss and other comprehensive income. Set out below are summaries of performance rights granted to directors and senior management: Grant Date Expiry date Consolidated – 2014 Exercise price Balance at start of the year Granted during the year Exercised during the year Lapsed during the year Balance at end of the year 28 Feb 2014 30 Nov 2012 Total 28 Feb 2021 30 Nov 2019 - $Nil $Nil 1,237,500 1,237,500 350,000 - 412,500 - 274,167 1,292,500 762,500 - 433,333 1,566,667 75,833 357,500 Vested and exercisable at end of the year 40,834 192,500 233,334 Weighted average exercise price $Nil $Nil $Nil $Nil $Nil $Nil Consolidated – 2013 30 Nov 2012 Total 30 Nov 2019 $Nil 1,237,500 - 1,237,500 - - - - 1,237,500 - 1,237,500 - - Weighted average exercise price $Nil $Nil $Nil $Nil $Nil $Nil The weighted average remaining contractual life of the above performance rights outstanding at the end of the period was 5.90 years (2013: 6.42 years). The amount of the equity settled share-based payment expense recognised in the current period in respect of the performance rights granted above to directors and executives is $36,339 (2013: $24,069) and has been included under employee benefits expense in the statement of profit or loss and other comprehensive income. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 70 29 Share-based payments (continued) (b) Exploration and evaluation share based payments (continued) During the year ended 30 June 2012 the Company issued 750,000 ordinary shares and 750,000 unlisted $0.054 options, expiring 30 April 2016, to Hiltaba Gold Pty Ltd, for the right to earn-in pursuant to the Cowell Joint Venture Agreement. The options vested on 30 April 2013 and can be exercised at any time up to the expiry date. There was no amount of the equity settled share-based payment recognised in the current period in respect of the ordinary shares above (2013: $40,000). Amounts previously recognised have been included as exploration and evaluation expenditure within the non-current assets in the statement of financial position. Set out below are summaries of the granted options: Grant Date Expiry date Exercise price Balance at start of the year Number Granted during the year Number Exercised during the year Number Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number Consolidated – 2014 20 Dec 2010 30 Apr 2012 17 Feb 2015 30 Apr 2016 $0.24 $0.054 750,000 750,000 - - - - - - 750,000 750,000 750,000 750,000 Total 1,500,000 Weighted average exercise price $0.147 - $- - $- - $- 1,500,000 1,500,000 $0.147 $0.147 Grant Date Expiry date Exercise price Balance at start of the year Number Granted during the year Number Exercised during the year Number Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number Consolidated – 2013 20 Dec 2010 30 Apr 2012 17 Feb 2015 30 Apr 2016 - - 750,000 750,000 - - - - - - 750,000 750,000 750,000 750,000 Total - 1,500,000 Weighted average exercise price $0.147 - $- - $- - $- 1,500,000 1,500,000 $0.147 $0.147 The weighted average remaining contractual life of the above share options outstanding at the end of the period was 1.24 years (2013: 2.23 years). There was no amount of the equity settled share-based payment recognised in the current period in respect of the options granted above (2013: $36,230). Amounts previously recognised have been included as exploration and evaluation expenditure within the non-current assets in the statement of financial position. (c) Equity raising share based payments During the year ended 30 June 2011, the Group issued 3,000,000 unlisted options, expiring 31 December 2014 to various broker consultants involved in raising equity for the Company’s listing on the Australian Stock Exchange (ASX). Of the options issued, 2,000,000 options were issued to an entity related to Stephen Bizzell, a director of the Company. The options vested upon issue and can be exercised at any time up to the expiry date. 71 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 29 Share-based payments (continued) (c) Equity raising share based payments (continued) Set out below are summaries of granted options: Grant Date Expiry date Exercise price Balance at start of the year Number Granted during the year Number Exercised during the year Number Forfeited during the year Number Balance at end of the year Number Vested and exercisable at end of the year Number Consolidated – 2014 30 Aug 2010 15 Dec 2010 31 Dec 2014 31 Dec 2014 $0.24 $0.24 1,000,000 2,000,000 - - - - - - 1,000,000 2,000,000 1,000,000 2,000,000 Total 3,000,000 - - - 3,000,000 3,000,000 Weighted average exercise price $0.24 $- $- $- $0.24 $0.24 Grant Date Expiry date Exercise price Balance at start of the year Number Granted during the year Number Exercised during the year Number Forfeited during the year Number Balance at end of the year Number Consolidated – 2013 30 Aug 2010 15 Dec 2010 31 Dec 2014 31 Dec 2014 $0.24 $0.24 1,000,000 2,000,000 - - - - - 1,000,000 2,000,000 - Vested and exercisable at end of the year Number 1,000,000 2,000,000 Total 3,000,000 - - - 3,000,000 3,000,000 Weighted average exercise price $0.24 $- $- $- $0.24 $0.24 The weighted average remaining contractual life of the above share options outstanding at the end of the period was 0.5 years (2013: 1.5 years). There was no amount of the equity settled share-based payment recognised in the current period in respect of the options granted above. (2013: $Nil). (d) Fair value of performance rights granted Non-market related performance rights The assessed fair value at grant date of performance rights with non-market related vesting conditions were valued using the Black-Scholes model. The values derived from these models are allotted equally over the period from grant date to vesting date. The expense recognised is adjusted to reflect the number of rights for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. Black-Scholes Model inputs Grant date Performance rights conditions test date Expiry date Weighted average exercise price Weighted average life of the performance rights Weighted average underlying share price Expected share price volatility Weighted average risk free interest rate Number of performance rights issued Value (Black-Scholes) per performance right Expected percentage of performance rights to vest on achievement of KPI’s Tranche 1b# Tranche 2b# 28/02/2014 30/06/2013 28/02/2021 $Nil 7 years 28/02/2014 30/06/2014 28/02/2021 $Nil 7 years Tranche 3b# 28/02/2014 30/06/2015 28/02/2021 $Nil 7 years $0.052 122.94% 2.60% 166,667 $0.052 $0.052 122.94% 2.60% 166,667 $0.052 $0.052 122.94% 2.60% 166,666 $0.052 80% 80% 80% Total value of rights issued $6,933 $6,933 $6,933 Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 72 29 Share-based payments (continued) (d) Fair value of performance rights granted (continued) Market related performance rights granted The assessed fair value at grant date of performance rights is allotted equally over the period from grant date to vesting date. Fair values at grant date are determined using Monte Carlo Simulation. This method involves the use of a computer model to represent the operation of a complex financial system. A characteristic of the Monte Carlo Simulation is the generation of a large number of random samples from a specified probability distribution or distributions to represent the role of risk in the market. Monte Carlo simulates the path of the share price according to a probability distribution assumption. After a large number of simulations, the arithmetic average of the outcomes, discounted to the pricing date, is calculated to represent the performance right value. Monte Carlo Simulation is an approach that can accommodate complex exercise conditions. In particular, it can be used when the portion of options exercised depends on some function of the whole path followed by the share price, rather than just its value at expiry. The following table lists the inputs to the model used to value CSP performance rights for the year ended 30 June 2014: Monte Carlo Simulation inputs Grant date Performance rights conditions test date Expiry date Weighted average exercise price Weighted average life Weighted average underlying share price Expected share price volatility Weighted average risk free interest rate Number of performance rights issued Value (Monte Carlo) per performance rights Total value of performance rights issued Tranche 1# Tranche 2# Tranche 3# Tranche 1a# Tranche 2a# Tranche 3a# 30/11/2012 30/11/2012 30/11/2012 28/02/2014 28/02/2014 28/02/2014 30/06/2013 30/06/2014 30/06/2015 30/06/2013 30/06/2014 30/06/2015 30/11/2019 30/11/2019 30/11/2019 28/02/2021 28/02/2021 28/02/2021 $Nil 7 years $Nil 7 years $Nil 7 years $Nil 7 years $Nil 7 years $Nil 7 years $0.082 $0.082 $0.082 $0.052 $0.052 $0.052 94.12% 94.12% 94.12% 122.94% 122.94% 122.94% 2.50% 2.50% 2.50% 2.60% 2.60% 2.60% 412,500 412,500 412,500 87,500 87,500 87,500 $0.0311 $0.0323 $0.0333 $0.0231 $0.0299 $0.0338 $12,829 $13,324 $13,736 $2,021 $2,616 $2,958 # Historical volatility of a group of comparable companies has been used as the basis of determining expected share price volatility, as it is assumed that this is indicative of future movements. No adjustment has been made to the life of the option based on no past history regarding any expected early exercise or any variation of the expiry date. Accordingly the expected life of the options has been taken to the full period of time from grant date to expiry date, which may fail to eventuate in the future. The board determines the number of vested performance rights as at the test date based on assessment of achievement of the market based performance conditions. If the performance conditions have not been met, performance rights lapse and do not carry forward to the next test date. Performance rights that have not previously been exercised may lapse for a controllable event which causes cessation of employment. (e) General terms and conditions All of these options and performance rights were issued by the Company and entitle the holder to one ordinary share in the Company for each option and performance rights that may be exercised. The options and performance rights were granted for no consideration. Once vested the options and performance rights can be exercised at any time up to the expiry date. Options and performance rights granted carry no dividend or voting rights. During the periods covered by the above tables, 8,100,000 options expired and 433,333 performance rights lapsed. 73 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 30 Parent Entity financial information (a) Summary financial information The individual financial statements for the Parent Entity show the following aggregate amounts: Parent Entity Statement of Financial Position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Shareholders' equity Contributed equity Share-based payment reserves Retained earnings Total equity Profit / (loss) for the year Total comprehensive income 30 June 2014 $ 30 June 2013 $ 1,614,357 2,909,513 7,201,170 8,815,527 6,205,522 9,115,035 307,622 25,422 333,044 375,347 8,790 384,137 8,482,483 8,730,898 10,803,970 1,018,436 (3,339,923) 8,482,483 9,798,800 982,097 (2,049,999) 8,730,898 (1,289,924) (1,289,924) (510,795) (510,795) (b) Contingent liabilities of the Parent Entity The Parent Entity has entered into Asset Sale Agreements with Hillment Pty Ltd to acquire tenement EL 4570 and a similar agreement with Hiltaba Gold Pty Ltd for EL4707. Under each agreement, the company has granted a 1% royalty of the Net Smelter Return. The parent entity did not have any contingent liabilities as at 30 June 2014. (c) Contractual commitments for the acquisition of property, plant or equipment As at 30 June 2014, the Parent Entity had no contractual commitments for the acquisition of property, plant or equipment. (d) Guarantees As at 30 June 2014, the Parent Entity had not guaranteed the debts of any subsidiary Company. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 74 31 Application of new and revised Accounting Standards (a) New and amended standards and interpretations The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity. The following Accounting Standards and Interpretations are most relevant to the consolidated entity: AASB 10 Consolidated Financial Statements The consolidated entity has applied AASB 10 from 1 July 2013, which has a new definition of 'control'. Control exists when the reporting entity is exposed, or has the rights, to variable returns from its involvement with another entity and has the ability to affect those returns through its 'power' over that other entity. A reporting entity has power when it has rights that give it the current ability to direct the activities that significantly affect the investee's returns. The consolidated entity not only has to consider its holdings and rights but also the holdings and rights of other shareholders in order to determine whether it has the necessary power for consolidation purposes. AASB 11 Joint Arrangements The consolidated entity has applied AASB 11 from 1 July 2013. The standard defines which entities qualify as joint arrangements and removes the option to account for joint ventures using proportional consolidation. Joint ventures, where the parties to the agreement have the rights to the net assets are accounted for using the equity method. Joint operations, where the parties to the agreements have the rights to the assets and obligations for the liabilities, will account for its share of the assets, liabilities, revenues and expenses separately under the appropriate classifications. AASB 12 Disclosure of Interests in Other Entities The consolidated entity has applied AASB 12 from 1 July 2013. The standard contains the entire disclosure requirement associated with other entities, being subsidiaries, associates, joint arrangements (joint operations and joint ventures) and unconsolidated structured entities. The disclosure requirements have been significantly enhanced when compared to the disclosures previously located in AASB 127 'Consolidated and Separate Financial Statements', AASB 128 'Investments in Associates', AASB 131 'Interests in Joint Ventures' and Interpretation 112 'Consolidation - Special Purpose Entities'. AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 The consolidated entity has applied AASB 13 and its consequential amendments from 1 July 2013. The standard provides a single robust measurement framework, with clear measurement objectives, for measuring fair value using the 'exit price' and provides guidance on measuring fair value when a market becomes less active. The 'highest and best use' approach is used to measure non-financial assets whereas liabilities are based on transfer value. The standard requires increased disclosures where fair value is used. 75 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 31 Application of new and revised Accounting Standards (continued) (a) New and amended standards and interpretations (continued) AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) The consolidated entity has applied AASB 119 and its consequential amendments from 1 July 2013. The standard eliminates the corridor approach for the deferral of gains and losses; streamlines the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring remeasurements to be presented in other comprehensive income; and enhances the disclosure requirements for defined benefit plans. The standard also changed the definition of short-term employee benefits, from 'due to' to 'expected to' be settled within 12 months. Annual leave that is not expected to be wholly settled within 12 months is now discounted allowing for expected salary levels in the future period when the leave is expected to be taken. AASB 127 Separate Financial Statements (Revised), AASB 128 Investments in Associates and Joint Ventures (Reissued) and AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards The consolidated entity has applied AASB 127, AASB 128 and AASB 2011-7 from 1 July 2013. AASB 127 and AASB 128 have been modified to remove specific guidance that is now contained in AASB 10, AASB 11 and AASB 12 and AASB 2011-7 makes numerous consequential changes to a range of Australian Accounting Standards and Interpretations. AASB 128 has also been amended to include the application of the equity method to investments in joint ventures. AASB 2012-2 Amendments to Australian Accounting Standards - Disclosures - Offsetting Financial Assets and Financial Liabilities The consolidated entity has applied AASB 2012-2 from 1 July 2013. The amendments enhance AASB 7 'Financial Instruments: Disclosures' and requires disclosure of information about rights of set-off and related arrangements, such as collateral agreements. The amendments apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement. AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle The consolidated entity has applied AASB 2012-5 from 1 July 2013. The amendments affect five Australian Accounting Standards as follows: Confirmation that repeat application of AASB 1 'First-time Adoption of Australian Accounting Standards' is permitted; Clarification of borrowing cost exemption in AASB 1; Clarification of the comparative information requirements when an entity provides an optional third column or is required to present a third statement of financial position in accordance with AASB 101 'Presentation of Financial Statements'; Clarification that servicing of equipment is covered by AASB 116 'Property, Plant and Equipment', if such equipment is used for more than one period; clarification that the tax effect of distributions to holders of equity instruments and equity transaction costs in AASB 132 'Financial Instruments: Presentation' should be accounted for in accordance with AASB 112 'Income Taxes'; and clarification of the financial reporting requirements in AASB 134 'Interim Financial Reporting' and the disclosure requirements of segment assets and liabilities. AASB 2012-10 Amendments to Australian Accounting Standards - Transition Guidance and Other Amendments The consolidated entity has applied AASB 2012-10 amendments from 1 July 2013, which amends AASB 10 and related standards for the transition guidance relevant to the initial application of those standards. The amendments clarify the circumstances in which adjustments to an entity's previous accounting for its involvement with other entities are required and the timing of such adjustments. AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirement The consolidated entity has applied 2011-4 from 1 July 2013, which amends AASB 124 'Related Party Disclosures' by removing the disclosure requirements for individual key management personnel ('KMP'). Corporations and Related Legislation Amendment Regulations 2013 and Corporations and Australian Securities and Investments Commission Amendment Regulation 2013 (No.1) now specify the KMP disclosure requirements to be included within the directors' report. Notes to the consolidated financial statements Annual Report 2014 RENASCOR RESOURCES LIMITED | 76 31 Application of new and revised Accounting Standards (continued) (b) New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2014. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below. AASB 9 Financial Instruments and its consequential amendments This standard and its consequential amendments are applicable to annual reporting periods beginning on or after 1 January 2017 and completes phases I and III of the IASB's project to replace IAS 39 (AASB 139) 'Financial Instruments: Recognition and Measurement'. This standard introduces new classification and measurement models for financial assets, using a single approach to determine whether a financial asset is measured at amortised cost or fair value. The accounting for financial liabilities continues to be classified and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating to the entity's own credit risk is to be presented in other comprehensive income unless it would create an accounting mismatch. Chapter 6 'Hedge Accounting' supersedes the general hedge accounting requirements in AASB 139 and provides a new simpler approach to hedge accounting that is intended to more closely align with risk management activities undertaken by entities when hedging financial and non-financial risks. The consolidated entity will adopt this standard and the amendments from 1 July 2017 but the impact of its adoption is yet to be assessed by the consolidated entity. AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities The amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The amendments add application guidance to address inconsistencies in the application of the offsetting criteria in AASB 132 'Financial Instruments: Presentation', by clarifying the meaning of 'currently has a legally enforceable right of set-off'; and clarifies that some gross settlement systems may be considered to be equivalent to net settlement. The adoption of the amendments from 1 July 2014 will not have a material impact on the consolidated entity. AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets These amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The disclosure requirements of AASB 136 'Impairment of Assets' have been enhanced to require additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposals. Additionally, if measured using a present value technique, the discount rate is required to be disclosed. The adoption of these amendments from 1 July 2014 may increase the disclosures by the consolidated entity. AASB 2013-4 Amendments to Australian Accounting Standards - Novation of Derivatives and Continuation of Hedge Accounting These amendments are applicable to annual reporting periods beginning on or after 1 January 2014 and amends AASB 139 'Financial Instruments: Recognition and Measurement' to permit continuation of hedge accounting in circumstances where a derivative (designated as hedging instrument) is novated from one counter party to a central counterparty as a consequence of laws or regulations. The adoption of these amendments from 1 July 2014 will not have a material impact on the consolidated entity. AASB 2013-5 Amendments to Australian Accounting Standards - Investment Entities These amendments are applicable to annual reporting periods beginning on or after 1 January 2014 and allow entities that meet the definition of an 'investment entity' to account for their investments at fair value through profit or loss. An investment entity is not required to consolidate investments in entities it controls, or apply AASB 3 'Business Combinations' when it obtains control of another entity, nor is it required to equity account or proportionately consolidate associates and joint ventures if it meets the criteria for exemption in the standard. The adoption of these amendments from 1 July 2014 will have no impact on the consolidated entity. 77 | RENASCOR RESOURCES LIMITED Annual Report 2014 Notes to the consolidated financial statements 31 Application of new and revised Accounting Standards (continued) (b) New Accounting Standards and Interpretations not yet mandatory or early adopted (continued) Annual Improvements to IFRSs 2010-2012 Cycle These amendments are applicable to annual reporting periods beginning on or after 1 July 2014 and affects several Accounting Standards as follows: Amends the definition of 'vesting conditions' and 'market condition' and adds definitions for 'performance condition' and 'service condition' in AASB 2 'Share-based Payment'; Amends AASB 3 'Business Combinations' to clarify that contingent consideration that is classified as an asset or liability shall be measured at fair value at each reporting date; Amends AASB 8 'Operating Segments' to require entities to disclose the judgements made by management in applying the aggregation criteria; Clarifies that AASB 8 only requires a reconciliation of the total reportable segments assets to the entity's assets, if the segment assets are reported regularly; Clarifies that the issuance of AASB 13 'Fair Value Measurement' and the amending of AASB 139 'Financial Instruments: Recognition and Measurement' and AASB 9 'Financial Instruments' did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amount, if the effect of discounting is immaterial; Clarifies that in AASB 116 'Property, Plant and Equipment' and AASB 138 'Intangible Assets', when an asset is revalued the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount (i.e. proportional restatement of accumulated amortisation); and Amends AASB 124 'Related Party Disclosures' to clarify that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a 'related party' of the reporting entity. The adoption of these amendments from 1 July 2014 will not have a material impact on the consolidated entity. Annual Improvements to IFRSs 2011-2013 Cycle These amendments are applicable to annual reporting periods beginning on or after 1 July 2014 and affects four Accounting Standards as follows: Clarifies the 'meaning of effective IFRSs' in AASB 1 'First-time Adoption of Australian Accounting Standards'; Clarifies that AASB 3 'Business Combination' excludes from its scope the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself; Clarifies that the scope of the portfolio exemption in AASB 13 'Fair Value Measurement' includes all contracts accounted for within the scope of AASB 139 'Financial Instruments: Recognition and Measurement' or AASB 9 'Financial Instruments', regardless of whether they meet the definitions of financial assets or financial liabilities as defined in AASB 132 'Financial Instruments: Presentation'; and Clarifies that determining whether a specific transaction meets the definition of both a business combination as defined in AASB 3 'Business Combinations' and investment property as defined in AASB 140 'Investment Property' requires the separate application of both standards independently of each other. The adoption of these amendments from 1 July 2014 will not have a material impact on the consolidated entity. Directors’ Declaration Annual Report 2014 RENASCOR RESOURCES LIMITED | 78 In the directors' opinion: Renascor Resources Limited Directors' declaration 30 June 2014 (a) (b) (c) the financial statements and notes set out on pages 40 to 77 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and give a true and fair view of the Group's financial position as at 30 June 2014 and of its performance for the financial year ended on that date, and (ii) the remuneration disclosures included on pages 18 to 26 of the directors’ report (as part of the audited Remuneration Report) for the year ended 30 June 2014, comply with section 300A of the Corporations Act 2001. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable, and Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The directors have been given the declarations by the Managing Director and Chief Financial Officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the directors. David Christensen Director Adelaide Date: 30 September 2014 79 | RENASCOR RESOURCES LIMITED Annual Report 2014 Independent auditor’s report to members Independent auditor’s report to members Independent auditor’s report to members Annual Report 2014 RENASCOR RESOURCES LIMITED | 80
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